SANA, Yemen — Al Qaeda in the Arabian Peninsula has rapidly evolved into an expanding and ambitious regional terrorist network thanks in part to a weakened, impoverished and distracted Yemeni government.
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Internal Conflicts and the Growing Influence of Al QaedaGraphic
Internal Conflicts and the Growing Influence of Al Qaeda
Related
Obama Says Al Qaeda in Yemen Planned Bombing Plot, and He Vows Retribution (January 3, 2010)
After Failed Attack, Britain Turns Focus to Yemen (January 2, 2010)
While Yemen has chased two homegrown rebellions, over the last year the Qaeda cell here has begun sharing resources across borders and has been spurred on to more ambitious attacks by a leadership strengthened by released Qaeda detainees and returning fighters from Iraq.
The priorities of the Yemeni government have been fighting a war in the north and combating secessionists across the south. In the interim, Al Qaeda has flourished in the large, lawless and rugged tribal territories of Yemen, creating training camps, attacking Western targets and receiving increasing popular sympathy, Yemeni and American officials say.
Al Qaeda’s growing profile in Yemen became clear after a Nigerian man, Umar Farouk Abdulmutallab, 23, was able to overstay his visa here by several months, connect with Qaeda militants and leave this country with a bomb sewn into his underwear.
In his weekly address on Saturday, President Obama for the first time directly blamed Al Qaeda in the Arabian Peninsula for the bombing attempt and said that fighting the group would be a high priority. “In recent years, they have bombed Yemeni government facilities and Western hotels,” he said, adding, “So as president, I’ve made it a priority to strengthen our partnership with the Yemeni government.”
The core of the group here is still thought to be small, perhaps no more than 200 people. But the group has the important advantage of being part of a larger, regional structure, having merged a year ago with the Saudi branch of Al Qaeda to form Al Qaeda in the Arabian Peninsula. And it has been able to originate fairly sophisticated operations here, in Saudi Arabia and now on an airliner headed for Detroit.
Though Yemen played an early role in Al Qaeda’s history — it is Osama bin Laden’s ancestral homeland, and it was the staging ground for the 2000 attack on the American destroyer Cole — the key chapters in the story of Al Qaeda’s rise here have been written recently by leaders who were released from detention at Guantánamo Bay, Cuba, escaped from Yemeni prisons or were drawn to shelter here by common cause and ideology.
Those men have transformed and reoriented a weak local Qaeda cell that had made a kind of peace with the government after 2003. In the year since the Saudi and Yemeni branches merged, Al Qaeda has taken full advantage of the government’s preoccupation with the rebellions, building support from the tribal structures and traditions in Yemen’s poor and lawless territories.
One big moment came in February 2006, when 23 imprisoned men suspected of being members of Al Qaeda escaped from a high-security prison, reportedly with the aid of some Yemeni security forces. All but three or four of the men were eventually recaptured or killed by Yemeni security forces. But one prisoner, Nasser al-Wuhayshi, became leader of the Qaeda cell in Yemen and moved to reorganize it, focusing it on attacks against nearby Western targets. Another prisoner, Qassim al-Raimi, became the military commander.
The next year, Mr. Wuhayshi found a deputy and, perhaps, a rival for leadership, Said Ali al-Shihri, 36, a Saudi citizen. He was released from six years’ detention in Guantánamo Bay in December 2007 to a Saudi-run rehabilitation program. He disappeared from Saudi Arabia and emerged in Yemen, and he is considered by many to be the rising star of the local movement. Mr. Shihri had traveled to Afghanistan in 2001 and was apparently wounded there, and he was captured crossing back into Pakistan in December of that year.
Another Guantánamo detainee, also captured in Pakistan in 2001 and released to a Saudi rehabilitation program, is Ibrahim Suleiman al-Rubaysh, 30, a Saudi who also disappeared and is now described as the mufti, or theological guide, to Al Qaeda of the Arabian Peninsula.
Anwar al-Awlaki, an American-born, English-speaking Internet imam of Al Qaeda here, returned to Yemen, his family’s home, in 2004. He was arrested in 2006 on security charges and was released in December 2007 after 18 months in prison. He then went to Britain and is believed to have returned to Yemen last spring.
Saturday, January 2, 2010
U.S. Sees an Opportunity to Press Iran on Nuclear Fuel
WASHINGTON — As President Obama faces pressure to back up his year-end ultimatum for diplomatic progress with Iran, the administration says that domestic unrest and signs of unexpected trouble in Tehran’s nuclear program make its leaders particularly vulnerable to strong and immediate new sanctions.
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Glyn Davies, right, the United States ambassador to the International Atomic Energy Agency, with Mohamed ElBaradei, the agency's departing director, in November in Vienna.
Related
Iran Gives West One-Month ‘Ultimatum’ to Accept Nuclear Counterproposal (January 3, 2010)
More on Iran's Nuclear Program
The long-discussed sanctions would initiate the latest phase in a strategy to force Iran to comply with United Nations demands to halt production of nuclear fuel. It comes as the administration has completed a fresh review of Iran’s nuclear progress.
In interviews, Mr. Obama’s strategists said that while Iran’s top political and military leaders remained determined to develop nuclear weapons, they were distracted by turmoil in the streets and political infighting, and that the drive to produce nuclear fuel appeared to have faltered in recent months.
The White House wants to focus the new sanctions on the Islamic Revolutionary Guards Corps, the military force believed to run the nuclear weapons effort. That force has also played a crucial role in the repression of antigovernment demonstrators since the disputed presidential election in June.
Although repeated rounds of sanctions over many years have not dissuaded Iran from pursuing nuclear technology, an administration official involved in the Iran policy said the hope was that the current troubles “give us a window to impose the first sanctions that may make the Iranians think the nuclear program isn’t worth the price tag.”
While outsiders have a limited view of Iran’s nuclear program, the Obama administration officials said they believed that the bomb-development effort was seriously derailed by the exposure three months ago of the country’s secret enrichment plant under construction near the holy city of Qum. Exposure of the site deprived Iran of its best chance of covertly producing the highly enriched uranium needed to make fuel for nuclear weapons.
In addition, international nuclear inspectors report that at Iran’s plant in Natanz, where thousands of centrifuges spin to enrich uranium for nuclear fuel, the number of the machines that are currently operating has dropped by 20 percent since the summer, a decline nuclear experts attribute to technical problems. Others, including some European officials, believe the problems may have been accentuated by a series of covert efforts by the West to undermine Iran’s program, including sabotage on its imported equipment and infrastructure.
These factors have led the administration’s policy makers to lengthen their estimate of how long it would take Iran to accomplish what nuclear experts call “covert breakout” — the ability to secretly produce a workable weapon.
“For now, the Iranians don’t have a credible breakout option, and we don’t think they will have one for at least 18 months, maybe two or three years,” said one senior administration official at the center of the White House Iran strategy. The administration has told allies that the longer time frame would allow the sanctions to have an effect before Iran could develop its nuclear ability.
Another administration official said that Israeli officials, while still publicly hinting that they might take military action against Iran’s nuclear facilities, “now feel that what’s happening in Iran makes the country vulnerable to real sanctions,” and might give Mr. Obama more time to persuade China and Russia to go along. A senior Israeli diplomat in Washington said that in back-channel conversations “Obama has convinced us that it’s worth trying the sanctions, at least for a few months.”
Sanctions will be a difficult balancing act for the administration, since it acknowledges that three previous rounds of sanctions have failed to deter Iran, and it also wants to avoid angering Iranians protesting in the streets by depriving them of Western goods. That is why the administration is focusing on the Revolutionary Guards, who are increasingly detested by the protesters, and who have built up billions of dollars of business interests in telecommunications, oil and construction.
The administration aims to get Arab and Asian nations to join Europe in cutting off financial transactions with front companies for the Revolutionary Guards.
China and Russia have been particularly reluctant and could seize on the Obama administration’s view of Iran’s nuclear troubles to resist Mr. Obama’s argument that new sanctions are needed now to punish Iran’s defiance of the United Nations Security Council mandate that it cease enriching uranium.
Iran’s insistence that its nuclear program is for civilian purposes only is roundly rejected by Western officials and, in internal reports, by international nuclear inspectors. Yet Washington’s assessments of how much progress Iran has made toward a weapon have varied greatly over the past two years, partly a reflection of how little is known about the inner workings of the country’s nuclear programs.
Mr. Obama’s top advisers say they no longer believe the key finding of a much disputed National Intelligence Estimate about Iran, published a year before President George W. Bush left office, which said that Iranian scientists ended all work on designing a nuclear warhead in late 2003.
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European Pressphoto Agency
Glyn Davies, right, the United States ambassador to the International Atomic Energy Agency, with Mohamed ElBaradei, the agency's departing director, in November in Vienna.
Related
Iran Gives West One-Month ‘Ultimatum’ to Accept Nuclear Counterproposal (January 3, 2010)
More on Iran's Nuclear Program
The long-discussed sanctions would initiate the latest phase in a strategy to force Iran to comply with United Nations demands to halt production of nuclear fuel. It comes as the administration has completed a fresh review of Iran’s nuclear progress.
In interviews, Mr. Obama’s strategists said that while Iran’s top political and military leaders remained determined to develop nuclear weapons, they were distracted by turmoil in the streets and political infighting, and that the drive to produce nuclear fuel appeared to have faltered in recent months.
The White House wants to focus the new sanctions on the Islamic Revolutionary Guards Corps, the military force believed to run the nuclear weapons effort. That force has also played a crucial role in the repression of antigovernment demonstrators since the disputed presidential election in June.
Although repeated rounds of sanctions over many years have not dissuaded Iran from pursuing nuclear technology, an administration official involved in the Iran policy said the hope was that the current troubles “give us a window to impose the first sanctions that may make the Iranians think the nuclear program isn’t worth the price tag.”
While outsiders have a limited view of Iran’s nuclear program, the Obama administration officials said they believed that the bomb-development effort was seriously derailed by the exposure three months ago of the country’s secret enrichment plant under construction near the holy city of Qum. Exposure of the site deprived Iran of its best chance of covertly producing the highly enriched uranium needed to make fuel for nuclear weapons.
In addition, international nuclear inspectors report that at Iran’s plant in Natanz, where thousands of centrifuges spin to enrich uranium for nuclear fuel, the number of the machines that are currently operating has dropped by 20 percent since the summer, a decline nuclear experts attribute to technical problems. Others, including some European officials, believe the problems may have been accentuated by a series of covert efforts by the West to undermine Iran’s program, including sabotage on its imported equipment and infrastructure.
These factors have led the administration’s policy makers to lengthen their estimate of how long it would take Iran to accomplish what nuclear experts call “covert breakout” — the ability to secretly produce a workable weapon.
“For now, the Iranians don’t have a credible breakout option, and we don’t think they will have one for at least 18 months, maybe two or three years,” said one senior administration official at the center of the White House Iran strategy. The administration has told allies that the longer time frame would allow the sanctions to have an effect before Iran could develop its nuclear ability.
Another administration official said that Israeli officials, while still publicly hinting that they might take military action against Iran’s nuclear facilities, “now feel that what’s happening in Iran makes the country vulnerable to real sanctions,” and might give Mr. Obama more time to persuade China and Russia to go along. A senior Israeli diplomat in Washington said that in back-channel conversations “Obama has convinced us that it’s worth trying the sanctions, at least for a few months.”
Sanctions will be a difficult balancing act for the administration, since it acknowledges that three previous rounds of sanctions have failed to deter Iran, and it also wants to avoid angering Iranians protesting in the streets by depriving them of Western goods. That is why the administration is focusing on the Revolutionary Guards, who are increasingly detested by the protesters, and who have built up billions of dollars of business interests in telecommunications, oil and construction.
The administration aims to get Arab and Asian nations to join Europe in cutting off financial transactions with front companies for the Revolutionary Guards.
China and Russia have been particularly reluctant and could seize on the Obama administration’s view of Iran’s nuclear troubles to resist Mr. Obama’s argument that new sanctions are needed now to punish Iran’s defiance of the United Nations Security Council mandate that it cease enriching uranium.
Iran’s insistence that its nuclear program is for civilian purposes only is roundly rejected by Western officials and, in internal reports, by international nuclear inspectors. Yet Washington’s assessments of how much progress Iran has made toward a weapon have varied greatly over the past two years, partly a reflection of how little is known about the inner workings of the country’s nuclear programs.
Mr. Obama’s top advisers say they no longer believe the key finding of a much disputed National Intelligence Estimate about Iran, published a year before President George W. Bush left office, which said that Iranian scientists ended all work on designing a nuclear warhead in late 2003.
Harley-Davidson revs up to lure Indian fans
For most Indians, the term “chopped hog” would probably summon up visions of roast suckling pig in Goa, one of the country’s few pork-eating states.
But recently, bike fans in Mumbai’s gritty former textile mills district got a taste of what American author Hunter S. Thompson meant by the term in his book, Hell’s Angels.
Harley
Hell of a ride: Harley allowed Indian enthusiasts to test drive some of its ‘hogs’
EDITOR’S CHOICE
India delays mobile number portability - Dec-31
India mines riches as west’s back office - Dec-29
Two-wheelers make up ground on cars - Nov-25
In a publicity event before the formal opening of sales in India next year, US classic motorcycle maker Harley-Davidson turned over a collection of its “hogs” – the CVO, Touring, Softail, Dyna and Sportster models – to local enthusiasts for test rides.
“Maybe today a young Indian who sees a Harley can’t afford it,” Anoop Prakash, Harley-Davidson’s India director, says of the bike’s starting price of Rs700,000 ($15,000). “But if he falls in love with the bike now, he’ll buy it when he can.”
Harley-Davidson is the latest of the world’s motorcycle brands to target the Indian consumer. The country is the world’s second-largest two-wheeler market after China, with sales of 3.52m units in the first half of the fiscal year ending next March, up 15 per cent against a year earlier.
While Harley will appeal to the richest urban riders, the bulk of the Indian market – and the attraction for mainstream motorcycle companies – lies at the lower end of the consumer pyramid, particularly in the vast rural hinterlands.
Harley’s motorbikes serve every possible transport function, from commuter vehicle and family car to beast of burden and even a gift as part of a dowry.
The market leader is Hero Honda, 26 per cent owned by India’s Munjal business family and 26 per cent by Japan’s Honda.
The company, which began business in India in 1983 and today makes more than half the country’s motorcycles, has had a blockbuster start to the financial year in spite of the downturn, with sales up 21 per cent year-on-year between April and November to 3.04m units.
Its main competitor is homegrown motorcycle producer, Bajaj Auto, whose market share in November reached nearly 27 per cent, up from about 23 per cent earlier in the year, on the back of sales of new models. Bajaj sold 11 per cent more motorcycles between April and November against a year earlier.
Rural areas today account for about 40 per cent of Hero Honda’s sales, a number that is expected to rise steadily beyond 50 per cent in coming years as rural incomes increase, Pawan Munjal, the chief executive of Hero Honda, said.
With motorcycle penetration in rural India below 7 per cent of the market compared with about 25 per cent in urban areas, there is plenty of room for growth.
“The sales ratio between rural and urban sales is slowly inching up, and I do believe the bigger growth will keep coming from the rural market,” Mr Munjal told the Financial Times.
Some analysts believe a poor monsoon this year could curb rural spending, with farmers preferring to put on hold discretionary purchases such as motorcycles until the fate of their crops becomes clear.
“Farmers are indeed upgrading from bicycles to motorcycles. Even those who don’t need motorcycles are buying them. With the bad monsoon, they may put this on hold,” HSBC analyst Sachin Gupta said in a recent report.
But farmers still have extra money in their pockets after a $16bn government farm loan waiver.
The government has also increased its support prices for crops by 11 per cent, a move that should offset the loss of income from the monsoon, according to Jatin Chawla, an analyst at IIFL, a Mumbai-based brokerage.
The other much-touted threat to India’s motorcycle market is the emerging “ultra low-cost car” segment, led by the Tata Nano, with a starting price of about Rs100,000.
Tata Group chairman, Ratan Tata, says the Nano’s direct target market is motorcycle users. But analysts say motorcycles are still far cheaper to run. Not surprisingly, Hero Honda’s Mr Munjal is also a sceptic.
“The Nano is priced closer to premium end bikes, and the premium end bike user is not a Nano user,” says Mr Munjal.
Harley-Davidson’s Mr Prakash is not targeting Nano buyers. With other high-end motorcycles making inroads into India, such as Italy’s Ducati, he is keen to spread the religion.
Harley plans to open five dealerships in the country’s most prosperous cities and states next year.
Marc Billimoria, a banker and one of the test riders, said: “We’ve never had something like this in India ... it’s a dream come true.”
But recently, bike fans in Mumbai’s gritty former textile mills district got a taste of what American author Hunter S. Thompson meant by the term in his book, Hell’s Angels.
Harley
Hell of a ride: Harley allowed Indian enthusiasts to test drive some of its ‘hogs’
EDITOR’S CHOICE
India delays mobile number portability - Dec-31
India mines riches as west’s back office - Dec-29
Two-wheelers make up ground on cars - Nov-25
In a publicity event before the formal opening of sales in India next year, US classic motorcycle maker Harley-Davidson turned over a collection of its “hogs” – the CVO, Touring, Softail, Dyna and Sportster models – to local enthusiasts for test rides.
“Maybe today a young Indian who sees a Harley can’t afford it,” Anoop Prakash, Harley-Davidson’s India director, says of the bike’s starting price of Rs700,000 ($15,000). “But if he falls in love with the bike now, he’ll buy it when he can.”
Harley-Davidson is the latest of the world’s motorcycle brands to target the Indian consumer. The country is the world’s second-largest two-wheeler market after China, with sales of 3.52m units in the first half of the fiscal year ending next March, up 15 per cent against a year earlier.
While Harley will appeal to the richest urban riders, the bulk of the Indian market – and the attraction for mainstream motorcycle companies – lies at the lower end of the consumer pyramid, particularly in the vast rural hinterlands.
Harley’s motorbikes serve every possible transport function, from commuter vehicle and family car to beast of burden and even a gift as part of a dowry.
The market leader is Hero Honda, 26 per cent owned by India’s Munjal business family and 26 per cent by Japan’s Honda.
The company, which began business in India in 1983 and today makes more than half the country’s motorcycles, has had a blockbuster start to the financial year in spite of the downturn, with sales up 21 per cent year-on-year between April and November to 3.04m units.
Its main competitor is homegrown motorcycle producer, Bajaj Auto, whose market share in November reached nearly 27 per cent, up from about 23 per cent earlier in the year, on the back of sales of new models. Bajaj sold 11 per cent more motorcycles between April and November against a year earlier.
Rural areas today account for about 40 per cent of Hero Honda’s sales, a number that is expected to rise steadily beyond 50 per cent in coming years as rural incomes increase, Pawan Munjal, the chief executive of Hero Honda, said.
With motorcycle penetration in rural India below 7 per cent of the market compared with about 25 per cent in urban areas, there is plenty of room for growth.
“The sales ratio between rural and urban sales is slowly inching up, and I do believe the bigger growth will keep coming from the rural market,” Mr Munjal told the Financial Times.
Some analysts believe a poor monsoon this year could curb rural spending, with farmers preferring to put on hold discretionary purchases such as motorcycles until the fate of their crops becomes clear.
“Farmers are indeed upgrading from bicycles to motorcycles. Even those who don’t need motorcycles are buying them. With the bad monsoon, they may put this on hold,” HSBC analyst Sachin Gupta said in a recent report.
But farmers still have extra money in their pockets after a $16bn government farm loan waiver.
The government has also increased its support prices for crops by 11 per cent, a move that should offset the loss of income from the monsoon, according to Jatin Chawla, an analyst at IIFL, a Mumbai-based brokerage.
The other much-touted threat to India’s motorcycle market is the emerging “ultra low-cost car” segment, led by the Tata Nano, with a starting price of about Rs100,000.
Tata Group chairman, Ratan Tata, says the Nano’s direct target market is motorcycle users. But analysts say motorcycles are still far cheaper to run. Not surprisingly, Hero Honda’s Mr Munjal is also a sceptic.
“The Nano is priced closer to premium end bikes, and the premium end bike user is not a Nano user,” says Mr Munjal.
Harley-Davidson’s Mr Prakash is not targeting Nano buyers. With other high-end motorcycles making inroads into India, such as Italy’s Ducati, he is keen to spread the religion.
Harley plans to open five dealerships in the country’s most prosperous cities and states next year.
Marc Billimoria, a banker and one of the test riders, said: “We’ve never had something like this in India ... it’s a dream come true.”
Friday, January 1, 2010
Asia Stocks Rise Second Week for Biggest Annual Gain Since 1993
Jan. 2 (Bloomberg) -- Asian stocks rose for the second week, capping the MSCI Asia Pacific Index’s biggest annual gain since 2003, after China raised its economic growth figures and Japan said industrial production increased. Hitachi Ltd., Japan’s fourth-largest company by sales, added 4 percent. Suning Appliance Co., China’s biggest home- appliance retailer by market value, climbed 5.9 percent. Korea Electric Power Corp. jumped 4.1 percent in Seoul after leading a group that won the United Arab Emirates’ first order for a nuclear-power plant.
“The global economy is just about bottoming out,” said Masaru Hamasaki, chief strategist at Tokyo-based Toyota Asset Management Co., which oversees the equivalent of $14 billion. “I don’t expect huge economic growth, but I do see things recovering.”
The MSCI Asia Pacific Index rose 0.7 percent to 120.45 in a holiday-shortened week. The gauge climbed 34 percent in 2009, its biggest annual gain since 2003, on signs government spending and lower interest rates are bolstering economies.
Japan’s Nikkei 225 Stock Average rose 0.5 percent in the country’s three-day trading week, after factory output increased in November from October and the government said on Dec. 25 that gross domestic product will probably expand 1.4 percent in the year starting April 1.
The Nikkei 225 has plunged 73 percent since it climbed to an intraday record of 38,957.44 on the final business day of 1989, the world’s worst performer in the period. Japan’s broader Topix index rose 5.6 percent this year, the lowest return among benchmark equity gauges for the world’s 10 largest markets.
Hong Kong’s Hang Seng Index and Australia’s S&P/ASX 200 Index both climbed 1.7 percent this week.
Growth Estimate
The Shanghai Composite Index advanced 4.3 percent this week as China raised its 2008 growth estimate to 9.6 percent from 9 percent on Dec. 25, and said 2009’s quarterly figures will also increase.
Japan’s Cabinet Office said Dec. 25 that the economy will expand for the first time in three years, while the Trade Ministry said on Dec. 28 factory output increased 2.6 percent in November from October. The median estimate of 24 economists surveyed by Bloomberg News was for a 2.5 percent gain.
Hitachi climbed 4 percent to 284 yen. The maker of washing machines and nuclear reactors will sign a contract valued at as much as 1 trillion yen ($11 billion) early in 2010 for a high- speed train project in the U.K., the Sankei newspaper reported, without citing anyone.
Consumer Stocks
Suning Appliance Co., China’s biggest home appliance retailer by market value, added 5.6 percent to 20.78 yuan. GD Midea Holding Co., the nation’s second-biggest publicly traded appliance maker, gained 2.4 percent to 23.30 yuan.
“Consumer stocks are good bets as they will receive most of the government support next year,” Wei Wei, an analyst at West China Securities Co. in Shanghai, said Dec. 28. Central bank Governor Zhou Xiaochuan said on Dec. 31 the People’s Bank of China will maintain a “moderately loose” monetary policy.
The Shanghai Composite Index rallied 80 percent in 2009 as government spending and a credit boom helped the nation’s economy recover from its steepest slump in more than a decade.
Korea Electric jumped 4.1 percent to 34,100 won in Seoul. Its partners in the nuclear-power bid also gained, with Doosan Heavy Industries & Construction Co. soaring 9.7 percent to 81,100 won and Hyundai Engineering & Construction Co. climbing 4.3 percent to 70,900 won.
“We will probably start to see more business deals like this one, bit by bit,” said Toyota Asset Management’s Hamasaki.
The MSCI Asia Pacific Index’s 2009 advance has outpaced gains of 23 percent by the S&P 500 in the U.S. and 28 percent for the Dow Jones Stoxx 600 Index in Europe. Stocks in the MSCI gauge trade at an average of 23 times estimated earnings, compared with 18 times for the Standard and Poor’s 500 Index in the U.S. and 16 times for the Dow Jones Stoxx 600 Index in Europe.
Global Rally
The 2009 gain in Asian stocks is part of a global rally that has boosted the MSCI World Index by 27 percent, the steepest increase since 2003. The gauge plunged 42 percent in 2008, the most since inception 40 years ago, as mounting losses from the collapse of the U.S. subprime mortgage market and the bankruptcy of Lehman Brothers Holdings Inc. led investors to exit equities.
In October, the International Monetary Fund estimated global growth of 3.1 percent in 2010, compared with an estimated 1.1 percent contraction in 2009.
“Investors are generally a lot more relaxed right now,” Prasad Patkar, who helps manage about $1.6 billion at Platypus Asset Management in Sydney, said Dec. 31. “The sixty-four- million dollar question is: what happens next year where we could have a much stronger economic backdrop but tighter liquidity conditions? Markets may well end up consolidating gains in 2010 rather than making another big move upwards.”
Among stocks that fell in the week were Japan Airlines Corp. and Asiana Airlines Inc., both of which plunged on debt concerns.
Japan Airlines, Asia’s biggest carrier by sales, tumbled 31 percent to 67 yen, the lowest close since the stock began trading in 2002, on speculation it will file for bankruptcy. Asiana Airlines lost 13 percent to 3,645 won in Seoul after the carrier’s parent said it may restructure debt at affiliates.
“The global economy is just about bottoming out,” said Masaru Hamasaki, chief strategist at Tokyo-based Toyota Asset Management Co., which oversees the equivalent of $14 billion. “I don’t expect huge economic growth, but I do see things recovering.”
The MSCI Asia Pacific Index rose 0.7 percent to 120.45 in a holiday-shortened week. The gauge climbed 34 percent in 2009, its biggest annual gain since 2003, on signs government spending and lower interest rates are bolstering economies.
Japan’s Nikkei 225 Stock Average rose 0.5 percent in the country’s three-day trading week, after factory output increased in November from October and the government said on Dec. 25 that gross domestic product will probably expand 1.4 percent in the year starting April 1.
The Nikkei 225 has plunged 73 percent since it climbed to an intraday record of 38,957.44 on the final business day of 1989, the world’s worst performer in the period. Japan’s broader Topix index rose 5.6 percent this year, the lowest return among benchmark equity gauges for the world’s 10 largest markets.
Hong Kong’s Hang Seng Index and Australia’s S&P/ASX 200 Index both climbed 1.7 percent this week.
Growth Estimate
The Shanghai Composite Index advanced 4.3 percent this week as China raised its 2008 growth estimate to 9.6 percent from 9 percent on Dec. 25, and said 2009’s quarterly figures will also increase.
Japan’s Cabinet Office said Dec. 25 that the economy will expand for the first time in three years, while the Trade Ministry said on Dec. 28 factory output increased 2.6 percent in November from October. The median estimate of 24 economists surveyed by Bloomberg News was for a 2.5 percent gain.
Hitachi climbed 4 percent to 284 yen. The maker of washing machines and nuclear reactors will sign a contract valued at as much as 1 trillion yen ($11 billion) early in 2010 for a high- speed train project in the U.K., the Sankei newspaper reported, without citing anyone.
Consumer Stocks
Suning Appliance Co., China’s biggest home appliance retailer by market value, added 5.6 percent to 20.78 yuan. GD Midea Holding Co., the nation’s second-biggest publicly traded appliance maker, gained 2.4 percent to 23.30 yuan.
“Consumer stocks are good bets as they will receive most of the government support next year,” Wei Wei, an analyst at West China Securities Co. in Shanghai, said Dec. 28. Central bank Governor Zhou Xiaochuan said on Dec. 31 the People’s Bank of China will maintain a “moderately loose” monetary policy.
The Shanghai Composite Index rallied 80 percent in 2009 as government spending and a credit boom helped the nation’s economy recover from its steepest slump in more than a decade.
Korea Electric jumped 4.1 percent to 34,100 won in Seoul. Its partners in the nuclear-power bid also gained, with Doosan Heavy Industries & Construction Co. soaring 9.7 percent to 81,100 won and Hyundai Engineering & Construction Co. climbing 4.3 percent to 70,900 won.
“We will probably start to see more business deals like this one, bit by bit,” said Toyota Asset Management’s Hamasaki.
The MSCI Asia Pacific Index’s 2009 advance has outpaced gains of 23 percent by the S&P 500 in the U.S. and 28 percent for the Dow Jones Stoxx 600 Index in Europe. Stocks in the MSCI gauge trade at an average of 23 times estimated earnings, compared with 18 times for the Standard and Poor’s 500 Index in the U.S. and 16 times for the Dow Jones Stoxx 600 Index in Europe.
Global Rally
The 2009 gain in Asian stocks is part of a global rally that has boosted the MSCI World Index by 27 percent, the steepest increase since 2003. The gauge plunged 42 percent in 2008, the most since inception 40 years ago, as mounting losses from the collapse of the U.S. subprime mortgage market and the bankruptcy of Lehman Brothers Holdings Inc. led investors to exit equities.
In October, the International Monetary Fund estimated global growth of 3.1 percent in 2010, compared with an estimated 1.1 percent contraction in 2009.
“Investors are generally a lot more relaxed right now,” Prasad Patkar, who helps manage about $1.6 billion at Platypus Asset Management in Sydney, said Dec. 31. “The sixty-four- million dollar question is: what happens next year where we could have a much stronger economic backdrop but tighter liquidity conditions? Markets may well end up consolidating gains in 2010 rather than making another big move upwards.”
Among stocks that fell in the week were Japan Airlines Corp. and Asiana Airlines Inc., both of which plunged on debt concerns.
Japan Airlines, Asia’s biggest carrier by sales, tumbled 31 percent to 67 yen, the lowest close since the stock began trading in 2002, on speculation it will file for bankruptcy. Asiana Airlines lost 13 percent to 3,645 won in Seoul after the carrier’s parent said it may restructure debt at affiliates.
Thursday, December 31, 2009
Brown Says U.K., U.S. Exploring New Airport Security Measures
Jan. 1 (Bloomberg) -- Prime Minister Gordon Brown said the U.K. government is working with President Barack Obama on tightening airport security and rooting out potential terrorists after a Nigerian man tried to blow up a trans-Atlantic aircraft.
“The threat can only be met through enhanced cooperation,” Brown said in a statement posted on a government Web site in London today. “It has been another wake-up call for the ongoing battles we must wage.”
Brown said Britain and the U.S. are examining advanced x- ray technology, equipment that detects a trace of explosives on passengers and full-body scanners that penetrate clothes.
The comments are aimed at answering concerns that Britain is harboring communities of extremists planning to attack Western nations. Umar Farouk Abdulmutallab, who was arrested on Dec. 25 after a bomb hidden in his trousers fizzled, lived in the U.K. before boarding a plane from Amsterdam to Detroit.
Brown said he ordered a review of U.K. airport security on Dec. 28 and that he will receive preliminary findings in the next few days. Obama has ordered similar measures.
U.K. has barred 180 people from entering the country on national security grounds, Brown said. Britain has deported eight people citing security concerns since July 2005, when bombs exploded in a London bus and subway trains. Eight more have left voluntarily.
“We have to take on extremists wherever they are based, in Afghanistan, Pakistan and all around the world, including here in Britain,” Brown wrote in the message. “We nevertheless need to remain vigilant against people being radicalized here as well as abroad.”
For Related News and Information:
To contact the reporter on this story: Reed Landberg in London at landberg@bloomberg.net.
Last Updated: December 31, 2009 19:01 EST
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* Yahoo! Buzz Jan. 1 (Bloomberg) -- Prime Minister Gordon Brown said the U.K. government is working with President Barack Obama on tightening airport security and rooting out potential terrorists after a Nigerian man tried to blow up a trans-Atlantic aircraft.
“The threat can only be met through enhanced cooperation,” Brown said in a statement posted on a government Web site in London today. “It has been another wake-up call for the ongoing battles we must wage.”
Brown said Britain and the U.S. are examining advanced x- ray technology, equipment that detects a trace of explosives on passengers and full-body scanners that penetrate clothes.
The comments are aimed at answering concerns that Britain is harboring communities of extremists planning to attack Western nations. Umar Farouk Abdulmutallab, who was arrested on Dec. 25 after a bomb hidden in his trousers fizzled, lived in the U.K. before boarding a plane from Amsterdam to Detroit.
Brown said he ordered a review of U.K. airport security on Dec. 28 and that he will receive preliminary findings in the next few days. Obama has ordered similar measures.
U.K. has barred 180 people from entering the country on national security grounds, Brown said. Britain has deported eight people citing security concerns since July 2005, when bombs exploded in a London bus and subway trains. Eight more have left voluntarily.
“We have to take on extremists wherever they are based, in Afghanistan, Pakistan and all around the world, including here in Britain,” Brown wrote in the message. “We nevertheless need to remain vigilant against people being radicalized here as well as abroad.”
“The threat can only be met through enhanced cooperation,” Brown said in a statement posted on a government Web site in London today. “It has been another wake-up call for the ongoing battles we must wage.”
Brown said Britain and the U.S. are examining advanced x- ray technology, equipment that detects a trace of explosives on passengers and full-body scanners that penetrate clothes.
The comments are aimed at answering concerns that Britain is harboring communities of extremists planning to attack Western nations. Umar Farouk Abdulmutallab, who was arrested on Dec. 25 after a bomb hidden in his trousers fizzled, lived in the U.K. before boarding a plane from Amsterdam to Detroit.
Brown said he ordered a review of U.K. airport security on Dec. 28 and that he will receive preliminary findings in the next few days. Obama has ordered similar measures.
U.K. has barred 180 people from entering the country on national security grounds, Brown said. Britain has deported eight people citing security concerns since July 2005, when bombs exploded in a London bus and subway trains. Eight more have left voluntarily.
“We have to take on extremists wherever they are based, in Afghanistan, Pakistan and all around the world, including here in Britain,” Brown wrote in the message. “We nevertheless need to remain vigilant against people being radicalized here as well as abroad.”
For Related News and Information:
To contact the reporter on this story: Reed Landberg in London at landberg@bloomberg.net.
Last Updated: December 31, 2009 19:01 EST
* Business Exchange
* Delicious
* Digg
* Newsvine
* Propeller
* Yahoo! Buzz Jan. 1 (Bloomberg) -- Prime Minister Gordon Brown said the U.K. government is working with President Barack Obama on tightening airport security and rooting out potential terrorists after a Nigerian man tried to blow up a trans-Atlantic aircraft.
“The threat can only be met through enhanced cooperation,” Brown said in a statement posted on a government Web site in London today. “It has been another wake-up call for the ongoing battles we must wage.”
Brown said Britain and the U.S. are examining advanced x- ray technology, equipment that detects a trace of explosives on passengers and full-body scanners that penetrate clothes.
The comments are aimed at answering concerns that Britain is harboring communities of extremists planning to attack Western nations. Umar Farouk Abdulmutallab, who was arrested on Dec. 25 after a bomb hidden in his trousers fizzled, lived in the U.K. before boarding a plane from Amsterdam to Detroit.
Brown said he ordered a review of U.K. airport security on Dec. 28 and that he will receive preliminary findings in the next few days. Obama has ordered similar measures.
U.K. has barred 180 people from entering the country on national security grounds, Brown said. Britain has deported eight people citing security concerns since July 2005, when bombs exploded in a London bus and subway trains. Eight more have left voluntarily.
“We have to take on extremists wherever they are based, in Afghanistan, Pakistan and all around the world, including here in Britain,” Brown wrote in the message. “We nevertheless need to remain vigilant against people being radicalized here as well as abroad.”
Lambert Says U.K. Delay in Deficit Curbs May Hurt the Pound
Jan. 1 (Bloomberg) -- Richard Lambert, a former Bank of England policy maker now leading the Confederation of British Industry, said any delay in curbing the government’s budget deficit may lift interest rates and depress the pound.
“The government has not yet established a credible path back to fiscal stability,” Lambert said in a statement released in London today. “The longer this is delayed, the greater the threat to long-term interest rates and sterling.”
Chancellor Alistair Darling last month set out a plan to cut in half Britain’s budget deficit over the next four years, saying a quicker reduction may hurt the nation’s recovery from the worst recession on record. The deficit will peak next year at 13.2 percent of gross domestic product, the most in the Group of 20 nations, according to the International Monetary Fund.
Lambert also said the international banking crisis “is far from resolved.” While conditions at U.K. banks have improved, “there could be more aftershocks,” he said, adding that lending to companies is declining and that policy makers have yet to reform banking regulations.
“While another setback cannot be ruled out, the more likely outcome is that the economy will bump along the bottom for a little while before starting a fragile recovery driven by higher exports, investment in working capital, and a slightly stronger pattern of domestic consumption,” Lambert said.
“The government has not yet established a credible path back to fiscal stability,” Lambert said in a statement released in London today. “The longer this is delayed, the greater the threat to long-term interest rates and sterling.”
Chancellor Alistair Darling last month set out a plan to cut in half Britain’s budget deficit over the next four years, saying a quicker reduction may hurt the nation’s recovery from the worst recession on record. The deficit will peak next year at 13.2 percent of gross domestic product, the most in the Group of 20 nations, according to the International Monetary Fund.
Lambert also said the international banking crisis “is far from resolved.” While conditions at U.K. banks have improved, “there could be more aftershocks,” he said, adding that lending to companies is declining and that policy makers have yet to reform banking regulations.
“While another setback cannot be ruled out, the more likely outcome is that the economy will bump along the bottom for a little while before starting a fragile recovery driven by higher exports, investment in working capital, and a slightly stronger pattern of domestic consumption,” Lambert said.
Wednesday, December 30, 2009
Asian Consumer Spending Spurs Retailers’ Bonds to Best Returns
Dec. 31 (Bloomberg) -- Parkson Retail Group Ltd. and Shinsegae Co. led Asian retailers whose dollar bonds delivered the best returns of any industry group in the region this year as consumer spending rose.
Asia consumer company bonds returned 56 percent on average, according to an index compiled by JPMorgan Chase & Co., beating those of financial companies at 36 percent, industrial companies at 32 percent and utilities at 22 percent. The extra yield spread investors demand to own the retailers’ dollar notes instead of U.S. Treasuries narrowed 19.02 percentage points to 4.76 percentage points since Jan. 2, JPMorgan data show.
“One of the big stories of 2009 has been the rebalancing of growth towards domestic demand in Asia,” Sebastien Barbe, head of emerging-market research for Calyon, said in a phone interview from Hong Kong. “Consumer demand, particularly in India, China and Indonesia, has been more resilient than people expected at the beginning of the year. That’s contributed to the narrowing of spreads.”
Chinese retail sales may rise by more than 15 percent to exceed 12.5 trillion yuan ($1.83 trillion) this year, Trade Minister Chen Deming said on Dec. 24, as government stimulus measures and record bank lending spurred the fastest-growing major economy. Sales at South Korea’s major department stores rose for a ninth month in November, the Ministry of Knowledge Economy said Dec. 18. Spending at the three biggest chains climbed 6.4 percent from a year earlier.
Credit Recovery
PT Matahari Putra Prima, Indonesia’s second-biggest retailer by market value, and Shinsegae, which runs Korea’s biggest discount-store chain, sold dollar bonds this year as credit markets recovered from the worst global recession since the Great Depression and the 2008 collapse of Lehman Brothers Holdings Inc.
Shinsegae, based in Seoul, sold $200 million of three-year, 6.125 percent bonds in June 2008 that yielded 3 percent yesterday, according to Royal Bank of Scotland Group Plc. They were yielding 10.6 percent on Jan. 1, the Edinburgh-based lender’s prices show.
Beijing-based Parkson Retail, which owns department stores in 29 cities in China according to its Web site, sold $125 million of 7.125 percent notes due 2012 in May 2007 that yielded 6.099 percent yesterday, according to Nomura Holdings Inc. The notes yielded 20.8 percent on Jan. 9, Nomura prices show.
Rare Bonds
“If Parkson came out with another bond people would snap it up because retail dollar bonds are rare in Asia and there’s always a lot of interest from investors in this sector,” said Anthony Shum, a Hong Kong-based director of Asia-Pacific debt capital markets for Barclays Capital. “Parkson, with its stores in China, has been influenced by the government stimulus and Chinese New Year should also have a positive effect.”
Asian retail dollar bonds last outperformed their peers in 2006, when they delivered a 13 percent return compared with 6 percent for financials, utilities and industrials, JPMorgan data show. The notes handed investors a loss of 29 percent last year, almost double the 15 percent loss on bonds of the region’s financial companies.
“Employment in many east Asian economies has shown surprising resilience while real estate prices in a number of key markets have held up well, or even risen, despite large declines in the U.S. and parts of Europe,” said Tan Kim Eng, a Singapore-based credit analyst at Standard & Poor’s. “These factors have supported consumption, and with an expected recovery next year they must have led many to expect companies in the consumer sector will do well.”
Asia consumer company bonds returned 56 percent on average, according to an index compiled by JPMorgan Chase & Co., beating those of financial companies at 36 percent, industrial companies at 32 percent and utilities at 22 percent. The extra yield spread investors demand to own the retailers’ dollar notes instead of U.S. Treasuries narrowed 19.02 percentage points to 4.76 percentage points since Jan. 2, JPMorgan data show.
“One of the big stories of 2009 has been the rebalancing of growth towards domestic demand in Asia,” Sebastien Barbe, head of emerging-market research for Calyon, said in a phone interview from Hong Kong. “Consumer demand, particularly in India, China and Indonesia, has been more resilient than people expected at the beginning of the year. That’s contributed to the narrowing of spreads.”
Chinese retail sales may rise by more than 15 percent to exceed 12.5 trillion yuan ($1.83 trillion) this year, Trade Minister Chen Deming said on Dec. 24, as government stimulus measures and record bank lending spurred the fastest-growing major economy. Sales at South Korea’s major department stores rose for a ninth month in November, the Ministry of Knowledge Economy said Dec. 18. Spending at the three biggest chains climbed 6.4 percent from a year earlier.
Credit Recovery
PT Matahari Putra Prima, Indonesia’s second-biggest retailer by market value, and Shinsegae, which runs Korea’s biggest discount-store chain, sold dollar bonds this year as credit markets recovered from the worst global recession since the Great Depression and the 2008 collapse of Lehman Brothers Holdings Inc.
Shinsegae, based in Seoul, sold $200 million of three-year, 6.125 percent bonds in June 2008 that yielded 3 percent yesterday, according to Royal Bank of Scotland Group Plc. They were yielding 10.6 percent on Jan. 1, the Edinburgh-based lender’s prices show.
Beijing-based Parkson Retail, which owns department stores in 29 cities in China according to its Web site, sold $125 million of 7.125 percent notes due 2012 in May 2007 that yielded 6.099 percent yesterday, according to Nomura Holdings Inc. The notes yielded 20.8 percent on Jan. 9, Nomura prices show.
Rare Bonds
“If Parkson came out with another bond people would snap it up because retail dollar bonds are rare in Asia and there’s always a lot of interest from investors in this sector,” said Anthony Shum, a Hong Kong-based director of Asia-Pacific debt capital markets for Barclays Capital. “Parkson, with its stores in China, has been influenced by the government stimulus and Chinese New Year should also have a positive effect.”
Asian retail dollar bonds last outperformed their peers in 2006, when they delivered a 13 percent return compared with 6 percent for financials, utilities and industrials, JPMorgan data show. The notes handed investors a loss of 29 percent last year, almost double the 15 percent loss on bonds of the region’s financial companies.
“Employment in many east Asian economies has shown surprising resilience while real estate prices in a number of key markets have held up well, or even risen, despite large declines in the U.S. and parts of Europe,” said Tan Kim Eng, a Singapore-based credit analyst at Standard & Poor’s. “These factors have supported consumption, and with an expected recovery next year they must have led many to expect companies in the consumer sector will do well.”
Australian Stocks Rise on Commodity Prices; Qantas Advances
Dec. 31 (Bloomberg) -- Australian stocks climbed as metal and oil prices rose amid optimism the global economic recovery is strengthening.
BHP Billiton Ltd., the world’s largest mining company and Australia’s biggest oil producer, gained 1 percent as copper extended yesterday’s rally in New York, while crude rose for a seventh day. Fortescue Metals Group Ltd., Australia’s No. 3 iron-ore producer, rallied 2.5 percent. Qantas Airways Ltd. advanced 2.4 percent on signs global air travel is picking up.
Australia’s S&P/ASX 200 Index rose 0.8 percent to 4,870.70 as of 1:03 p.m. in Sydney. The gauge, which tumbled 41 percent last year as the global recession deepened, is headed for a 31 percent gain this year as government stimulus measures help shore up economies. New Zealand’s NZX 50 Index advanced 0.3 percent and is set for a 19 percent annual gain.
“Investors are generally a lot more relaxed right now,” said Prasad Patkar, who helps manage about $1.6 billion at Platypus Asset Management in Sydney. “The sixty-four-million dollar question is: what happens next year where we could have a much stronger economic backdrop but tighter liquidity conditions? Markets may well end up consolidating gains in 2010 rather than making another big move upwards.”
Economic Recovery
Futures on the Standard & Poor’s 500 Index were little changed. The gauge added less than 0.1 percent yesterday as a report from the Institute for Supply Management-Chicago Inc. showed U.S. companies expanded in December at the fastest pace in almost four years. Most U.S. stocks fell amid speculation the Federal Reserve will withdraw stimulus measures.
BHP Billiton climbed 1 percent to A$43.12. Santos Ltd., Australia’s third-largest oil and gas producer, added 0.5 percent to A$14.07. Fortescue rallied 2.5 percent to A$4.46, after the cash price for iron ore delivered to China, the world’s biggest buyer, rose the most in more than five months to its highest this year, according to The Steel Index.
Copper futures in New York gained 0.8 percent in after- hours trading to the highest level since Aug. 28, 2008. Prices also rose on speculation a mine strike will disrupt supplies from Chile, the world’s largest producer. Crude oil added 0.5 percent today, taking a seven-day advance to 8.1 percent.
“It’s nice to see the market surging across the line, as opposed to staggering,” said Ben Potter, a research analyst at IG Markets in Melbourne. “Investor sentiment across Asia heading into 2010 is cautiously optimistic. There seems to be a general view that the economic recovery is still on track.
Qantas Airways rose 2.4 percent to A$3. International air travel rose 2.1 percent last month from a year earlier, the International Air Transport Association said yesterday in an e- mailed statement. Freight demand jumped 9.5 percent.
“The improvement trends for both passenger and freight are being exaggerated by the sharp fall in demand experienced during the second half of 2008,” IATA said.
BHP Billiton Ltd., the world’s largest mining company and Australia’s biggest oil producer, gained 1 percent as copper extended yesterday’s rally in New York, while crude rose for a seventh day. Fortescue Metals Group Ltd., Australia’s No. 3 iron-ore producer, rallied 2.5 percent. Qantas Airways Ltd. advanced 2.4 percent on signs global air travel is picking up.
Australia’s S&P/ASX 200 Index rose 0.8 percent to 4,870.70 as of 1:03 p.m. in Sydney. The gauge, which tumbled 41 percent last year as the global recession deepened, is headed for a 31 percent gain this year as government stimulus measures help shore up economies. New Zealand’s NZX 50 Index advanced 0.3 percent and is set for a 19 percent annual gain.
“Investors are generally a lot more relaxed right now,” said Prasad Patkar, who helps manage about $1.6 billion at Platypus Asset Management in Sydney. “The sixty-four-million dollar question is: what happens next year where we could have a much stronger economic backdrop but tighter liquidity conditions? Markets may well end up consolidating gains in 2010 rather than making another big move upwards.”
Economic Recovery
Futures on the Standard & Poor’s 500 Index were little changed. The gauge added less than 0.1 percent yesterday as a report from the Institute for Supply Management-Chicago Inc. showed U.S. companies expanded in December at the fastest pace in almost four years. Most U.S. stocks fell amid speculation the Federal Reserve will withdraw stimulus measures.
BHP Billiton climbed 1 percent to A$43.12. Santos Ltd., Australia’s third-largest oil and gas producer, added 0.5 percent to A$14.07. Fortescue rallied 2.5 percent to A$4.46, after the cash price for iron ore delivered to China, the world’s biggest buyer, rose the most in more than five months to its highest this year, according to The Steel Index.
Copper futures in New York gained 0.8 percent in after- hours trading to the highest level since Aug. 28, 2008. Prices also rose on speculation a mine strike will disrupt supplies from Chile, the world’s largest producer. Crude oil added 0.5 percent today, taking a seven-day advance to 8.1 percent.
“It’s nice to see the market surging across the line, as opposed to staggering,” said Ben Potter, a research analyst at IG Markets in Melbourne. “Investor sentiment across Asia heading into 2010 is cautiously optimistic. There seems to be a general view that the economic recovery is still on track.
Qantas Airways rose 2.4 percent to A$3. International air travel rose 2.1 percent last month from a year earlier, the International Air Transport Association said yesterday in an e- mailed statement. Freight demand jumped 9.5 percent.
“The improvement trends for both passenger and freight are being exaggerated by the sharp fall in demand experienced during the second half of 2008,” IATA said.
Tuesday, December 29, 2009
Japan Air Plunges to Record Amid Bankruptcy Reports
Dec. 30 (Bloomberg) -- Japan Airlines Corp., Asia’s biggest carrier by sales, plunged to a record in Tokyo trading after reports the carrier may enter bankruptcy proceedings led investors to sell shares on the year’s last trading day.
Japan Air fell as much as 32 percent to 60 yen and traded at 66 yen as of 11 a.m. local time. The volume of shares sold was five times the daily average for the past three months.
“Shareholders are becoming convinced that bankruptcy will be the case,” said Mitsushige Akino, who manages the equivalent of $450 million at Tokyo-based Ichiyoshi Investment Management Co. “They are dumping the stock. JAL’s value will be zero if it goes bankrupt.”
A state-affiliated agency charged with rescuing Japan Air met creditors yesterday to discuss a proposed bankruptcy, the Yomiuri newspaper said, without citing anyone. Japan Air owed its four main lenders, including Mitsubishi UFJ Financial Group Inc., at least 529 billion yen ($5.8 billion) as of July.
Bankruptcy is the preferred option being pursued by the agency, known as the Enterprise Turnaround Initiative Corporation, the Asahi newspaper reported yesterday, without saying where it got the information. The agency is scheduled to decide on a plan for the unprofitable airline next month.
Mizuho, Sumitomo Mitsui
Japan Air’s lenders opposed bankruptcy in yesterday’s meeting, according to the Yomiuri’s report. The Tokyo-based airline’s biggest creditors also include Mizuho Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and the state- affiliated Development Bank of Japan.
Japan Air officials were unavailable for comment due to a holiday, according to a person answering the phone at the carrier’s head office.
Takashi Takeuchi, a spokesman for Mitsubishi UFJ, was unavailable, and a spokeswoman for Sumitomo Mitsui said the company had no immediate comment. Mizuho spokesman Tomohiro Sakauchi declined to comment.
Japan’s government has pledged to keep Japan Air operating as it bails out the carrier for the fourth time since 2001. The company has posted three losses in four years and reported a net loss of 63.2 billion yen in the fiscal year ended March 31 as international travel slumped amid a global recession.
The airline secured a 100 billion yen bridge loan from a state-affiliated bank and is trying to persuade staff and retirees to accept pension cuts as it battles to avoid collapse. It has also received competing investment offers from Delta Air Lines Inc. and American Airlines.
Japan Air shares have declined 69 percent this year, the biggest drop on the Nikkei 225 Stock Average, which has risen 20 percent.
Japan Air fell as much as 32 percent to 60 yen and traded at 66 yen as of 11 a.m. local time. The volume of shares sold was five times the daily average for the past three months.
“Shareholders are becoming convinced that bankruptcy will be the case,” said Mitsushige Akino, who manages the equivalent of $450 million at Tokyo-based Ichiyoshi Investment Management Co. “They are dumping the stock. JAL’s value will be zero if it goes bankrupt.”
A state-affiliated agency charged with rescuing Japan Air met creditors yesterday to discuss a proposed bankruptcy, the Yomiuri newspaper said, without citing anyone. Japan Air owed its four main lenders, including Mitsubishi UFJ Financial Group Inc., at least 529 billion yen ($5.8 billion) as of July.
Bankruptcy is the preferred option being pursued by the agency, known as the Enterprise Turnaround Initiative Corporation, the Asahi newspaper reported yesterday, without saying where it got the information. The agency is scheduled to decide on a plan for the unprofitable airline next month.
Mizuho, Sumitomo Mitsui
Japan Air’s lenders opposed bankruptcy in yesterday’s meeting, according to the Yomiuri’s report. The Tokyo-based airline’s biggest creditors also include Mizuho Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and the state- affiliated Development Bank of Japan.
Japan Air officials were unavailable for comment due to a holiday, according to a person answering the phone at the carrier’s head office.
Takashi Takeuchi, a spokesman for Mitsubishi UFJ, was unavailable, and a spokeswoman for Sumitomo Mitsui said the company had no immediate comment. Mizuho spokesman Tomohiro Sakauchi declined to comment.
Japan’s government has pledged to keep Japan Air operating as it bails out the carrier for the fourth time since 2001. The company has posted three losses in four years and reported a net loss of 63.2 billion yen in the fiscal year ended March 31 as international travel slumped amid a global recession.
The airline secured a 100 billion yen bridge loan from a state-affiliated bank and is trying to persuade staff and retirees to accept pension cuts as it battles to avoid collapse. It has also received competing investment offers from Delta Air Lines Inc. and American Airlines.
Japan Air shares have declined 69 percent this year, the biggest drop on the Nikkei 225 Stock Average, which has risen 20 percent.
Bankers Get $4 Trillion Gift From Barney Frank: David Reilly
Dec. 30 (Bloomberg) -- To close out 2009, I decided to do something I bet no member of Congress has done -- actually read from cover to cover one of the pieces of sweeping legislation bouncing around Capitol Hill.
Hunkering down by the fire, I snuggled up with H.R. 4173, the financial-reform legislation passed earlier this month by the House of Representatives. The Senate has yet to pass its own reform plan. The baby of Financial Services Committee Chairman Barney Frank, the House bill is meant to address everything from too-big-to-fail banks to asleep-at-the-switch credit-ratings companies to the protection of consumers from greedy lenders.
I quickly discovered why members of Congress rarely read legislation like this. At 1,279 pages, the “Wall Street Reform and Consumer Protection Act” is a real slog. And yes, I plowed through all those pages. (Memo to Chairman Frank: “ystem” at line 14, page 258 is missing the first “s”.)
The reading was especially painful since this reform sausage is stuffed with more gristle than meat. At least, that is, if you are a taxpayer hoping the bailout train is coming to a halt.
If you’re a banker, the bill is tastier. While banks opposed the legislation, they should cheer for its passage by the full Congress in the New Year: There are huge giveaways insuring the government will again rescue banks and Wall Street if the need arises.
Nuggets Gleaned
Here are some of the nuggets I gleaned from days spent reading Frank’s handiwork:
-- For all its heft, the bill doesn’t once mention the words “too-big-to-fail,” the main issue confronting the financial system. Admitting you have a problem, as any 12- stepper knows, is the crucial first step toward recovery.
-- Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts” talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule.
-- Oh, hold on, the Federal Reserve and Treasury Secretary can’t authorize these funds unless “there is at least a 99 percent likelihood that all funds and interest will be paid back.” Too bad the same models used to foresee the housing meltdown probably will be used to predict this likelihood as well.
More Bailouts
-- The bill also allows the government, in a crisis, to back financial firms’ debts. Bondholders can sleep easy -- there are more bailouts to come.
-- The legislation does create a council of regulators to spot risks to the financial system and big financial firms. Unfortunately this group is made up of folks who missed the problems that led to the current crisis.
-- Don’t worry, this time regulators will have better tools. Six months after being created, the council will report to Congress on “whether setting up an electronic database” would be a help. Maybe they’ll even get to use that Internet thingy.
-- This group, among its many powers, can restrict the ability of a financial firm to trade for its own account. Perhaps this section should be entitled, “Yes, Goldman Sachs Group Inc., we’re looking at you.”
Managing Bonuses
-- The bill also allows regulators to “prohibit any incentive-based payment arrangement.” In other words, banker bonuses are still in play. Maybe Bank of America Corp. and Citigroup Inc. shouldn’t have rushed to pay back Troubled Asset Relief Program funds.
-- The bill kills the Office of Thrift Supervision, a toothless watchdog. Well, kill may be too strong a word. That agency and its employees will be folded into the Office of the Comptroller of the Currency. Further proof that government never really disappears.
-- Since Congress isn’t cutting jobs, why not add a few more. The bill calls for more than a dozen agencies to create a position called “Director of Minority and Women Inclusion.” People in these new posts will be presidential appointees. I thought too-big-to-fail banks were the pressing issue. Turns out it’s diversity, and patronage.
-- Not that the House is entirely sure of what the issues are, at least judging by the two dozen or so studies the bill authorizes. About a quarter of them relate to credit-rating companies, an area in which the legislation falls short of meaningful change. Sadly, these studies don’t tackle tough questions like whether we should just do away with ratings altogether. Here’s a tip: Do the studies, then write the legislation.
Consumer Protection
-- The bill isn’t all bad, though. It creates a new Consumer Financial Protection Agency, the brainchild of Elizabeth Warren, currently head of a panel overseeing TARP. And the first director gets the cool job of designing a seal for the new agency. My suggestion: Warren riding a fiery chariot while hurling lightning bolts at Federal Reserve Chairman Ben Bernanke.
-- Best of all, the bill contains a provision that, in the event of another government request for emergency aid to prop up the financial system, debate in Congress be limited to just 10 hours. Anything that can get Congress to shut up can’t be all bad.
Even better would be if legislators actually tackle the real issues stemming from the financial crisis, end bailouts and, for the sake of my eyes, write far, far shorter bills.
(David Reilly is a Bloomberg News columnist. The opinions expressed are his own.)
Hunkering down by the fire, I snuggled up with H.R. 4173, the financial-reform legislation passed earlier this month by the House of Representatives. The Senate has yet to pass its own reform plan. The baby of Financial Services Committee Chairman Barney Frank, the House bill is meant to address everything from too-big-to-fail banks to asleep-at-the-switch credit-ratings companies to the protection of consumers from greedy lenders.
I quickly discovered why members of Congress rarely read legislation like this. At 1,279 pages, the “Wall Street Reform and Consumer Protection Act” is a real slog. And yes, I plowed through all those pages. (Memo to Chairman Frank: “ystem” at line 14, page 258 is missing the first “s”.)
The reading was especially painful since this reform sausage is stuffed with more gristle than meat. At least, that is, if you are a taxpayer hoping the bailout train is coming to a halt.
If you’re a banker, the bill is tastier. While banks opposed the legislation, they should cheer for its passage by the full Congress in the New Year: There are huge giveaways insuring the government will again rescue banks and Wall Street if the need arises.
Nuggets Gleaned
Here are some of the nuggets I gleaned from days spent reading Frank’s handiwork:
-- For all its heft, the bill doesn’t once mention the words “too-big-to-fail,” the main issue confronting the financial system. Admitting you have a problem, as any 12- stepper knows, is the crucial first step toward recovery.
-- Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts” talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule.
-- Oh, hold on, the Federal Reserve and Treasury Secretary can’t authorize these funds unless “there is at least a 99 percent likelihood that all funds and interest will be paid back.” Too bad the same models used to foresee the housing meltdown probably will be used to predict this likelihood as well.
More Bailouts
-- The bill also allows the government, in a crisis, to back financial firms’ debts. Bondholders can sleep easy -- there are more bailouts to come.
-- The legislation does create a council of regulators to spot risks to the financial system and big financial firms. Unfortunately this group is made up of folks who missed the problems that led to the current crisis.
-- Don’t worry, this time regulators will have better tools. Six months after being created, the council will report to Congress on “whether setting up an electronic database” would be a help. Maybe they’ll even get to use that Internet thingy.
-- This group, among its many powers, can restrict the ability of a financial firm to trade for its own account. Perhaps this section should be entitled, “Yes, Goldman Sachs Group Inc., we’re looking at you.”
Managing Bonuses
-- The bill also allows regulators to “prohibit any incentive-based payment arrangement.” In other words, banker bonuses are still in play. Maybe Bank of America Corp. and Citigroup Inc. shouldn’t have rushed to pay back Troubled Asset Relief Program funds.
-- The bill kills the Office of Thrift Supervision, a toothless watchdog. Well, kill may be too strong a word. That agency and its employees will be folded into the Office of the Comptroller of the Currency. Further proof that government never really disappears.
-- Since Congress isn’t cutting jobs, why not add a few more. The bill calls for more than a dozen agencies to create a position called “Director of Minority and Women Inclusion.” People in these new posts will be presidential appointees. I thought too-big-to-fail banks were the pressing issue. Turns out it’s diversity, and patronage.
-- Not that the House is entirely sure of what the issues are, at least judging by the two dozen or so studies the bill authorizes. About a quarter of them relate to credit-rating companies, an area in which the legislation falls short of meaningful change. Sadly, these studies don’t tackle tough questions like whether we should just do away with ratings altogether. Here’s a tip: Do the studies, then write the legislation.
Consumer Protection
-- The bill isn’t all bad, though. It creates a new Consumer Financial Protection Agency, the brainchild of Elizabeth Warren, currently head of a panel overseeing TARP. And the first director gets the cool job of designing a seal for the new agency. My suggestion: Warren riding a fiery chariot while hurling lightning bolts at Federal Reserve Chairman Ben Bernanke.
-- Best of all, the bill contains a provision that, in the event of another government request for emergency aid to prop up the financial system, debate in Congress be limited to just 10 hours. Anything that can get Congress to shut up can’t be all bad.
Even better would be if legislators actually tackle the real issues stemming from the financial crisis, end bailouts and, for the sake of my eyes, write far, far shorter bills.
(David Reilly is a Bloomberg News columnist. The opinions expressed are his own.)
Sunday, December 27, 2009
IBM, Qualcomm, Sunrise Senior Living, 3Par: U.S. Equity Preview
Dec. 27 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.
Electronics for Imaging Inc. (EFII:US): The digital- printing company said its tender offer was oversold and that it had accepted orders to buy about 5.5 million shares at $12.75 a share.
International Business Machines Corp. (IBM:US): The world’s largest computer-services provider may rise as the company focuses on expanding in emerging markets and projects geared to information technology and infrastructure, Barron’s reported, citing an interview with Chief Executive Officer Sam Palmisano.
Qualcomm Inc. (QCOM:US): The world’s biggest maker of chips for mobile phones said that Len Lauer, chief operating officer, has resigned and accepted a job as chief executive officer at another company.
Sunrise Senior Living Inc. (SRZ:US): The manager of retirement communities said its Sunrise Connecticut Avenue Assisted Living unit amended its credit line. The company made a $5 million payment on the principal of $29.5 million of borrowings outstanding and suspending or amending some covenants.
3Par Inc. (PAR:US): The data-storage provider may rise as the company expands its customer base and gains market share, making it an attractive takeover target, Barron’s reported, without citing anyone.
Electronics for Imaging Inc. (EFII:US): The digital- printing company said its tender offer was oversold and that it had accepted orders to buy about 5.5 million shares at $12.75 a share.
International Business Machines Corp. (IBM:US): The world’s largest computer-services provider may rise as the company focuses on expanding in emerging markets and projects geared to information technology and infrastructure, Barron’s reported, citing an interview with Chief Executive Officer Sam Palmisano.
Qualcomm Inc. (QCOM:US): The world’s biggest maker of chips for mobile phones said that Len Lauer, chief operating officer, has resigned and accepted a job as chief executive officer at another company.
Sunrise Senior Living Inc. (SRZ:US): The manager of retirement communities said its Sunrise Connecticut Avenue Assisted Living unit amended its credit line. The company made a $5 million payment on the principal of $29.5 million of borrowings outstanding and suspending or amending some covenants.
3Par Inc. (PAR:US): The data-storage provider may rise as the company expands its customer base and gains market share, making it an attractive takeover target, Barron’s reported, without citing anyone.
Hands Says Banker Pay Takes From the Economy, Telegraph Reports
Dec. 27 (Bloomberg) -- Guy Hands, the private-equity investor, said bankers’ pay attracts “many of the most talented individuals in society,” removing them from jobs in the “real” economy, the Sunday Telegraph reported, citing a letter to investors in his Terra Firma Capital Partners Ltd.
Hands said banking jobs remove workers from “more entrepreneurial, creative or leadership roles,” according to the Telegraph. Bankers get paid 60 percent to 80 percent of profits when business goes right while shareholders and the government pay the costs when business goes wrong, Hands said.
Recovering equity markets after the worst global recession since World War II are a sign that “for a while we have pulled back from the brink,” the Telegraph said, citing Hands. “The fundamental cause of the crisis, primarily that the West is living beyond its means on borrowed money from the East, has yet to be addressed.”
Hands said banking jobs remove workers from “more entrepreneurial, creative or leadership roles,” according to the Telegraph. Bankers get paid 60 percent to 80 percent of profits when business goes right while shareholders and the government pay the costs when business goes wrong, Hands said.
Recovering equity markets after the worst global recession since World War II are a sign that “for a while we have pulled back from the brink,” the Telegraph said, citing Hands. “The fundamental cause of the crisis, primarily that the West is living beyond its means on borrowed money from the East, has yet to be addressed.”
Treasury Yield Curve Steepens to Record on Debt Demand Concern
Dec. 25 (Bloomberg) -- Treasuries fell, with the difference in yields between 2- and 10-year notes widening to a record amount, as investors bet the U.S. recovery will fuel inflation and reduce demand at the government’s debt auctions.
The 10-year note’s yield climbed to the highest level in four months as reports showed increases in sales of existing homes and orders for durable goods. The U.S. will sell a record- tying $118 billion of 2-, 5- and 7-year notes next week.
“We are in a steepening trend,” said John Spinello, chief technical strategist in New York at Jefferies Group Inc., one of the Federal Reserve’s 18 primary dealers, which are required to bid at government debt auctions. “It was the recognition that the Treasury will be extending the debt as we know it and the economy is showing signs of recovery.”
The benchmark 10-year note’s yield rose 26 basis points on the week, or 0.26 percentage point, to 3.80 percent, according to BGCantor Market Data. That’s the highest level since Aug. 10. The 3.375 percent security due in November 2019 fell 2 5/32 or $21.56 per $1,000 face amount to 96 16/32.
Two-year note yields rose 18 basis points on the week to 0.97, the highest level since Oct. 30. The note to be sold on Dec. 28 in a record-tying $44 billion offering traded at 1.02 percent in pre-auction trading. The debt drew a yield of 0.802 percent, the lowest ever, at the last auction, a $44 billion offering on Nov. 23.
‘Inflationary Pressures’
The difference, or spread, between 2- and 10-year note yields widened to 2.88 percentage points on Dec. 22. The previous record of 2.81 percentage points was set on June 5, when Treasuries plunged after a government report showed the smallest decline in U.S. payrolls in eight months. Ten-year note yields touched 4 percent the following week, the highest level in 2009.
“If you are going to have a recovery, you are going to have higher inflationary pressures, so the curve should continue to steepen from here,” said Dan Greenhaus, chief economic strategist at Miller Tabak & Co. in New York. “The curve could reach 300 to 325 basis points.”
Holders of U.S. Treasuries of all maturities have lost 3.3 percent this year, according to Bank of America Merrill Lynch indexes. That would be the worst performance since 1994.
American consumers’ spending and incomes climbed in November, indicating that the biggest part of the economy is poised to strengthen as the labor market recovers, government reports showed. Purchases rose 0.5 percent and incomes increased 0.4 percent.
Debt Sales
Existing home sales rose 7.4 percent last month to a 6.54 million annual rate, the highest since February 2007, from a revised 6.09 million pace the prior month, the National Association of Realtors said on Dec. 22. Sales were expected to rise to a 6.25 million annual rate, according to the median forecast in a Bloomberg News survey of economists.
Excluding demand for transportation equipment, bookings for long-lasting goods climbed a greater-than-forecast 2 percent in November, figures from the Commerce Department showed on Dec. 24 in Washington.
The U.S. will sell $44 billion in two-year notes on Dec. 28, $42 billion in five-year debt the next day and $32 billion in seven-year securities on Dec. 30. The five-year sale and seven-year offering equal the all-time highest issues of the securities set last month.
Seven-Year Auction
“The seven-year coming just a day before New Year’s eve, when the Fed had been a strong buyer of the seven-year sector to help out mortgage rates, that’s probably the auction to worry about,” Michael Pond, an interest-rate strategist in New York at primary dealer Barclays Plc, said on Dec. 24 in an interview on Bloomberg TV. “The two-year should be well spoken for. At year-end, there is plenty of demand for short paper. It’s really further out the curve that you have to worry about.”
President Barack Obama is borrowing unprecedented amounts for spending programs. U.S. marketable debt increased to a record $7.17 trillion in November from $5.80 trillion at the end of last year.
Treasury officials on Nov. 4 announced a long-term target of six to seven years for the average maturity of Treasury debt and said the department wants to cut back on its issuance of bills and two- and three-year notes.
Treasury yields will increase in 2010 as the Fed ends purchases of mortgage and agency securities, Barclays’s Pond said. The yield on the benchmark 10-year note may climb to 4.5 percent, he said.
The Fed said on Dec. 16 it will continue purchases of agency mortgage-backed securities totaling $1.25 trillion and about $175 billion of agency debt through the first quarter of next year. The Federal Open Market Committee and the Fed’s Board of Governors reiterated that “most of the Federal Reserve’s special liquidity facilities will expire on Feb. 1 2010.” The central bank completed a $300 billion program of Treasury purchases in October.
The 10-year note’s yield climbed to the highest level in four months as reports showed increases in sales of existing homes and orders for durable goods. The U.S. will sell a record- tying $118 billion of 2-, 5- and 7-year notes next week.
“We are in a steepening trend,” said John Spinello, chief technical strategist in New York at Jefferies Group Inc., one of the Federal Reserve’s 18 primary dealers, which are required to bid at government debt auctions. “It was the recognition that the Treasury will be extending the debt as we know it and the economy is showing signs of recovery.”
The benchmark 10-year note’s yield rose 26 basis points on the week, or 0.26 percentage point, to 3.80 percent, according to BGCantor Market Data. That’s the highest level since Aug. 10. The 3.375 percent security due in November 2019 fell 2 5/32 or $21.56 per $1,000 face amount to 96 16/32.
Two-year note yields rose 18 basis points on the week to 0.97, the highest level since Oct. 30. The note to be sold on Dec. 28 in a record-tying $44 billion offering traded at 1.02 percent in pre-auction trading. The debt drew a yield of 0.802 percent, the lowest ever, at the last auction, a $44 billion offering on Nov. 23.
‘Inflationary Pressures’
The difference, or spread, between 2- and 10-year note yields widened to 2.88 percentage points on Dec. 22. The previous record of 2.81 percentage points was set on June 5, when Treasuries plunged after a government report showed the smallest decline in U.S. payrolls in eight months. Ten-year note yields touched 4 percent the following week, the highest level in 2009.
“If you are going to have a recovery, you are going to have higher inflationary pressures, so the curve should continue to steepen from here,” said Dan Greenhaus, chief economic strategist at Miller Tabak & Co. in New York. “The curve could reach 300 to 325 basis points.”
Holders of U.S. Treasuries of all maturities have lost 3.3 percent this year, according to Bank of America Merrill Lynch indexes. That would be the worst performance since 1994.
American consumers’ spending and incomes climbed in November, indicating that the biggest part of the economy is poised to strengthen as the labor market recovers, government reports showed. Purchases rose 0.5 percent and incomes increased 0.4 percent.
Debt Sales
Existing home sales rose 7.4 percent last month to a 6.54 million annual rate, the highest since February 2007, from a revised 6.09 million pace the prior month, the National Association of Realtors said on Dec. 22. Sales were expected to rise to a 6.25 million annual rate, according to the median forecast in a Bloomberg News survey of economists.
Excluding demand for transportation equipment, bookings for long-lasting goods climbed a greater-than-forecast 2 percent in November, figures from the Commerce Department showed on Dec. 24 in Washington.
The U.S. will sell $44 billion in two-year notes on Dec. 28, $42 billion in five-year debt the next day and $32 billion in seven-year securities on Dec. 30. The five-year sale and seven-year offering equal the all-time highest issues of the securities set last month.
Seven-Year Auction
“The seven-year coming just a day before New Year’s eve, when the Fed had been a strong buyer of the seven-year sector to help out mortgage rates, that’s probably the auction to worry about,” Michael Pond, an interest-rate strategist in New York at primary dealer Barclays Plc, said on Dec. 24 in an interview on Bloomberg TV. “The two-year should be well spoken for. At year-end, there is plenty of demand for short paper. It’s really further out the curve that you have to worry about.”
President Barack Obama is borrowing unprecedented amounts for spending programs. U.S. marketable debt increased to a record $7.17 trillion in November from $5.80 trillion at the end of last year.
Treasury officials on Nov. 4 announced a long-term target of six to seven years for the average maturity of Treasury debt and said the department wants to cut back on its issuance of bills and two- and three-year notes.
Treasury yields will increase in 2010 as the Fed ends purchases of mortgage and agency securities, Barclays’s Pond said. The yield on the benchmark 10-year note may climb to 4.5 percent, he said.
The Fed said on Dec. 16 it will continue purchases of agency mortgage-backed securities totaling $1.25 trillion and about $175 billion of agency debt through the first quarter of next year. The Federal Open Market Committee and the Fed’s Board of Governors reiterated that “most of the Federal Reserve’s special liquidity facilities will expire on Feb. 1 2010.” The central bank completed a $300 billion program of Treasury purchases in October.
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