October 18, 2011   36 notes

GLOBAL MARKETS-Stocks dip on China fears, warning to France


* China growth data, French rating threat weigh* Government bonds, dollar riseBy Caroline ValetkevitchNEW YORK, Oct 18 (Reuters) - World stocks slipped on Tuesday and government bonds rose as slower-than-expected Chinese growth and a warning to France about keeping its top credit rating turned investors cautious.The warning from ratings agency Moody’s compounded investor jitters after comments this week by Germany’s finance minister, who said he saw no definitive solution on the euro zone debt crisis right away.The MSCI world equity index was down 0.6 percent, paring earlier losses as U.S. stocks turned modestly higher. The world index is still up roughly 11 percent from a 15-month low earlier this month.U.S. stocks’ gains were led by the financial sector after major banks reported quarterly results, including Bank of America . The second-largest U.S. bank by assets rose 6.8 percent to $6.44, while shares of Goldman Sachs were up 2 percent at $98.90 even after it posted a wider-than-expected quarterly loss.The Dow Jones industrial average was up 21.19 points, or 0.19 percent, at 11,418.19. The Standard & Poor’s 500 Index was up 5.21 points, or 0.43 percent, at 1,206.07. The Nasdaq Composite Index was up 3.75 points, or 0.14 percent, at 2,618.67.European stocks dipped 0.2 percent while emerging stocks lost 2.3 percent.”Risk aversion came back because everybody is focused on Europe,” said Suvrat Prakash, interest rate strategist at BNP Paribas in New York. “It seems that people are not counting on the European Union summit,” for a solution on the euro zone’s fiscal problems.Moody’s cautioned it may slap a negative outlook on France’s Aaa credit rating in the next three months if costs from helping to bail out banks and other euro zone members stretch its budget too thin.Optimism over a key European Union summit on Oct. 23 waned after German Finance Minister Wolfgang Schaeuble said on Monday that even though European governments would adopt a five-point platform to address the crisis, a definitive solution would not be reached at the summit.In Asia, China’s gross domestic product growth eased to 9.1 percent in July-September at an annual rate, slightly below forecasts of 9.2 percent, indicating the world’s second-largest economy expanded at its slowest pace since the second quarter of 2009.U.S. Treasuries edged higher, pushing benchmark yields to their lowest in two weeks.Benchmark 10-year Treasury prices rose 13/32 in price to yield 2.11 percent compared with 2.18 percent late on Monday. Yields fell as low as 2.08 percent, their lowest since Oct 7.The French/German 10-year government bond yield spread widened to a euro era record of 101 basis points. French debt also underperformed its triple-A rated peer the Netherlands.Brent crude oil prices were lower, while the dollar gained 0.4 percent against a basket of major currencies. The euro fell 0.3 percent to $1.3701.After the U.S. stock market’s close on Tuesday, Apple was due to report results. Its shares were down 0.1 percent at $419.40.

October 17, 2011   25 notes

UPDATE 1-Hedge fund woes don’t slow stock pickers’ meeting


* Big interest in rubbing shoulders with famous tradersBy Svea Herbst-Bayliss and Katya WachtelNEW YORK, Oct 17 (Reuters) - Poor performance does not seem to be much of a hindrance when it comes to investors shelling out thousands of dollars to hear famous hedge fund managers share some of their wisdom about picking stocks.Beginning on Monday, some 600 people who have written big checks will attend the 7th annual Value Investing Congress in New York. The two-day event is a chance for investors, lesser-known money managers and financial advisers to rub shoulders with William Ackman, David Einhorn, Jim Chanos, Leon Cooperman and other titans in the $2 trillion hedge fund industry.This year’s conference, after offering some steep discounts on tickets initially priced at $4,000, is fairly well-attended, even though many of the featured speakers are nursing hefty losses.In fact, the conference’s principal organizer, Whitney Tilson, is the manager of T2 Partners, a small hedge fund that is down 30 percent for the year. Ackman’s $10 billion Pershing Square Capital Management is down 16 percent for the year.But those attending the conference did not seem to mind that many of the speakers were having off-years. Maybe that has something to with the fact the Value Investing Congress is focused on managers who specialize in finding stocks that are unloved with payoffs that can be years down the road.”Value investors tend to look longer ahead than a hedge fund guy and maybe they are more forgiving,” said Jason Slocock, a private investor who came from London.ANOTHER CUP OF JOEThen again, the biggest buzz during the first day of the conference did not come from a manager identifying a beaten-up stock to buy. It came when Greenlight Capital founder David Einhorn, whose $8 billion fund is down 6 percent this year, told the crowd about a stock he was betting against.Einhorn wowed the crowd with the news that his fund was selling short shares of Green Mountain Coffee Roasters Inc , a company that not too long ago was a darling stock of the the hedge fund set. Some of the coffee company’s early boosters included John Thaler’s JAT Capital and Philippe Laffont’s Coatue Capital. William Danoff, a top mutual fund manager at Fidelity Investments, also liked the stock.Green Mountain shares immediately plummeted 10 percent on the news Einhorn was shorting it because of concerns about the company’s accounting practices and business prospects.”If you get one usable idea it can pay off handsomely and pay for conferences for the next 20 years,” said Allen Benello, a portfolio manager at hedge fund White River Partners in San Francisco.Still, the ideas being touted here are hardly exclusive as they are now available not only to hundreds of other conference attendees, but also to anyone with an Internet connection. Indeed, news of Einhorn’s short bet was a hot topic on Twitter, even as the manager was still going through his lengthy presentation.Many at the conference were waiting for Tuesday’s presentations when Ackman, one of the industry’s biggest stars, is scheduled to speak.Chanos, a famed short-seller warned investors on Monday not to simply chase a beaten down-stock believing it has hidden value. His presentation to the paying crowd was called: “Beware the global value trap!”Chanos, who runs Kynikos Associates, said: “If I can’t work out how a company is making money after reading their 10K three times, we open a file on it.”Other featured speakers included Cooperman, whose Omega Advisors is down 12.36 percent, and Eminence Capital’s Ricky Sandler, whose fund is off 6.53 percent this year. The list of speakers even included Vladimir Jelisavic, co-founder of Longacre Fund Management, a one-time $800 million fund that recently announced plans to liquidate because of poor performance.GENIUSES AMONG USEven with those sorry numbers, investors said the conference offers attendees a chance to walk among greatness.”You have ideas here you don’t get in the office,” said Brian Cann, who works at RBC DS Private Investment Management in Ontario. “It is like when you can be sitting there for hours and nothing happens and then you and your colleague go to the pub and suddenly you have 42 new ideas.”Conference organizers said this year’s attendance beat last year’s event. But organizers had to offer heavy discounts off the original ticket price to woo people to come.

October 17, 2011

Was South Africa right to deny Dalai Lama a visa?


By Isaac Esipisu Given that China is South Africa’s biggest trading partner and given the close relationship between Beijing and the ruling African National Congress, it didn’t come as a huge surprise that South Africa was in no hurry to issue a visa to the Dalai Lama. Tibet’s spiritual leader will end up missing the 80th birthday party of Archbishop Desmond Tutu, a fellow Nobel peace prize winner. He said his application for a visa had not come through on time despite having been made to Pretoria several weeks earlier. (Although South Africa’s government said a visa hadn’t actually been denied, the Dalai Lama’s office said it appeared to find the prospect inconvenient). Desmond Tutu said the government’s action was a national disgrace and warned the President and ruling party that one day he will start praying for the defeat of the ANC government. It’s the second time the Dalai Lama has been unable to honour an invitation to South Africa by Tutu after failing to make it to a meeting in 2010. South Africa will certainly win more plaudits in Beijing, which last week agreed to $2.5 billion in investment projects with during a visit by South African Deputy President Kgalema Motlanthe. But pro-Tibet activists say South Africa is undermining its credentials as a country of freedom and democracy, established after the end of white minority rule a generation ago. Is Pretoria right in not giving the Tibetan spiritual leader a visa? Is it following the best economic interests of the country of 50 million? Is it bowing to undue interference from Beijing?

October 15, 2011   25 notes

Thales CEO says Safran talks continuing -report


PARIS Oct 15 (Reuters) - Talks between French aerospace companies Thales and Safran are continuing over an asset swap, with valuation terms still to be agreed, the chief executive of Thales was reported as saying.The two companies have been under pressure from the French government to streamline their investments in optronics and avionics to avoid strains on the national defence budget.In an interview published on Saturday in French business weekly Investir, Thales CEO Luc Vigneron confirmed that the talks covered optronics and inertial navigation activities.”We are currently examining the conditions in which we could carry out the swap. Then will come the question of the valuation,” he said.”We have a real desire to succeed in this,” he added.Sources familiar with the matter said this week more time was needed to overcome differences between Thales and Safran over asset valuation, rejecting a media report that the long-awaited deal was ready.Vigneron reiterated in comments to Investir that Thales, which supplies systems for the aerospace and defence sectors, was interested in weapons manufacturer Nexter.”It is all a question of opportunities, but if it’s true that we are heading towards some leaner years in defence, that should intensify pressure for greater integration between operators.”Thales has carried out a string of small acquisitions recently, but this did not rule out “more substantial” targets, Vigneron added.Regarding reports of a planned sale of an IT business, the CEO reiterated that Thales had a programme to divest about 1 billion euros ($1.4 billion) of less competitive activities — including those covered by the Safran talks — without citing IT assets.Thales does not need to sell businesses in order to fund any potential payment to Safran as part of an asset swap, he said.Vigneron also repeated Thales’ guidance for an operating margin of 5 percent in 2011 and 6 percent in 2012. ($1 = 0.721 Euros)