an educated man is unfit to be a slave
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Pisani: Citi Pricing Its Preferred Offering
Published: Tuesday, 9 Mar 2010 | 6:08 PM ET
Text Size
By: Bob Pisani
CNBC Reporter
Traders telling me that Citigroup will be pricing its preferred offering, $25 par, at a yield of 8.875 percent.
Size is roughly $2 billion; one trader said it was “multiple times oversubscribed.”
A Citigroup [C 3.82 0.26 (+7.3%) ] spokesperson would not confirm the terms or that it would price tonight. But traders feel it will likely do so, or tomorrow morning at the latest.
Other Financials Moving Tuesday:
Fannie Mae [FNM 1.07 0.06 (+5.94%) ]
Freddie Mac [FRE 1.28 0.09 (+7.56%) ]
AIG [AIG 32.77 3.67 (+12.61%) ]
Bank of America [BAC 16.80 0.06 (+0.36%) ]
LINK: http://www.cnbc.com/id/35786160/site/14081545?__source=yahoo|headline|quote|text|&par=yahoo
Fannie Mortgage Bond Spreads Shrink to Record
Mar 9 2010, 1:30 PM ET
Fannie Mae and Freddie Mac's mortgage-backed securities are trading at yields that are the closest ever to Treasury bonds, reports Bloomberg. That means investors are differentiating less between these agency mortgage bonds and Treasuries. And that makes sense.
Bloomberg explains:
The difference between yields on Washington-based Fannie
Mae's current-coupon 30-year fixed-rate mortgage bonds and 10-
year Treasuries was unchanged today at 0.63 percentage point,
matching the smallest spread since at least 1984, according to
data compiled by Bloomberg.
***Government bailout still seems to be getting resistance from the bears for lack of results?***
I'd like to keep an eye on these stocks in the short-term:
Here's an idea of where the stock were just 18-24 months ago, even as far back as 3 years ago, to give you an idea of what kind of damage was done to the financial system:
Now let's ponder for a minute, if it's true that the Federal Reserve bank has been responsible for all collapses both current and ever since 1913, and most certainly 1929, then wouldn't it be a safe bet that if they're older then damn near all of an entire 2 or 3 generations, and are still around, would it be safe to say that they'll survive for at least one more economic inflationary period, at least until the next presidential inauguration?
Would rate on the ten year increasing be beneficiary to these companies? Would this stabilize the financial system and allow more people to buy homes... I'm not sure I can answer that but the charts formation seems to somehow vibe with the above...
Bailed-out U.S. financial stocks surge
*Are these the kind of stocks that will benefit from the rest of the Barack Obama administration's tenure? Even performing better then silver and gold?
* Citi up as Fairholme's Berkowitz says it is underpriced
* Fox Business reports U.S. may sell all Citi shares soon
* Citi closes up 7.3 pct, AIG ends 12.6 pct higher
* Freddie Mac closes up 7.6 pct, Fannie Mae up 5.9 pct
(Recasts, adds analyst comment, updates options data)
NEW YORK, March 9 (Reuters) - The shares of companies bailed out by the U.S. government during the financial crisis surged on Tuesday, fueled by speculation about money-making asset sales, cheap valuations and a recovery.
Citigroup Inc (C.N) stock rose as much as 8.4 percent after a prominent fund manager said the bank's shares were underpriced. Citi shares closed 7.3 percent higher.
Insurer American International Group Inc (AIG.N) rose as much as 19.6 percent before closing 12.6 percent higher at $32.77.
And government-owned mortgage companies Freddie Mac (FRE.N) and Fannie Mae (FNM.N) were up as much as 18.5 percent and 15 percent, respectively. Freddie Mac closed 7.6 percent higher at $1.28 while Fannie Mae ended 5.9 percent higher at $1.07
"The markets have that emotional resilience of 'Hey, we're one year out of the abyss.' A lot of things have gone up just on the rising tide syndrome," said Ken Grant, a Partner at Waterstone Private Wealth Management in Owasso, Oklahoma.
"It's probably a little more optimistic than rational."
Web information site optionMonster.com co-founder Jon Najarian said government-owned stocks such as Citigroup, AIG, Fannie Mae and Freddie Mac rallied in contrast with with Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N) and Morgan Stanley (MS.N), which are not government-owned and closed lower.
The U.S. Securities and Exchange Commission denied rumors it is considering curbing short sales on companies in which the government owns stakes, which some analysts cited as a reason for the rising stocks.
AIG option volume was five times greater than normal, with about 223,000 calls and 98,000 puts traded, according to option analytics firm Trade Alert.
AIG call option action was scattered across the front-month March contracts with strike prices ranging from $22 to $45, Reuters data show.
Cantor Fitzgerald & Co's director of institutional derivatives sales and trading, Mike Khouw, said such activity could be a signal investors are buying AIG calls to hedge a short position or make a bullish speculative play.
"There is a lot of chatter now that AIG is going to have more asset sales coming up relatively shortly," Khouw said.
Jud Pyle, chief investment strategist at Options News Network, a division of option market making firm PEAK6 Investments, said the Citi rally is causing investors to wonder if AIG might see increased proceeds from its remaining assets and that a government stake could be working to the companies' advantage.
"If there is speculation that the stocks have been held down too much by that potential overhang, then that could be another reason for the rally," Pyle said.
AIG said its policy is not to comment on unusual market activity.
AN IMPROVING BALANCE SHEET
In an interview with Fortune, Fairholme fund manager Bruce Berkowitz argued Citigroup's balance sheet is improving, the bank is well capitalized and the stock is trading at a lower valuation than many of its peers.
"The price is right," Berkowitz told Fortune. "It's just a question of when it becomes obvious to everyone that the worst is over."
Berkowitz, who calculated that even Citigroup's bad assets now return more than 5 percent, manages $11 billion at Fairholme, Fortune said. Morningstar recently named Fairholme a top fund manager over the last decade, the magazine reported.
Separately, the U.S. government is considering shedding its 7.7 billion Citigroup shares over the next few months, according to Fox Business Network's Charlie Gasparino. Previously, investors thought the United States would look to sell over the course of the year.
Jon Diat, a spokesman for Citigroup, declined to comment, as did a U.S. Treasury spokeswoman.
The U.S. government is eligible to start selling its stake of about 27 percent in the bank later this month.
Citigroup shares rose 26 cents to close at $3.82 after trading as high as $3.86. Those prices are well above the $3.25 level at which the U.S. government bought the shares.
Citigroup option trades were heavy, with overall volume of about 1.71 million contracts, six times greater than usual, Trade Alert figures show.
The volume was led by the trading of 1.43 million call option contracts where the bulk of the activity was in the $4 Citi call strikes that expire in March and April. (Reporting by Dan Wilchins and Clare Baldwin in New York and Doris Frankel in Chicago; editing by Richard Chang, Gary Hill and Andre Grenon)
LINK: http://www.reuters.com/article/idCNN0911488720100309?rpc=44
What's with the speculative buying here, did someone start a juicy rumor?
***HUI rolling over intraday, false breakout?... Gold and silver volatile but remain flat over Friday's close... resistance is holding up, a small pullback before the true breakout or is the dollar strength for real?
Sometimes the HUI can lead the markets, watch for a ''potential'' roll-over here in the broader market indicies as the big wigs in Wall Street come back from lunch...
***$GOLD & $ILVER Cup N' Handle on chart***
A strong Friday has me watching for a break-out as early as Monday, keep and eye on the resistance point for $GOLD on the chart:
Watch for a close over 1123---
$ILVER already seems to be hinting that it's already broke-out!
Green close Monday and it's on>>> [Target - $18]
Bank bailout watchdog warns of commercial real estate crisis
WASHINGTON (Reuters) - The commercial real estate market has fallen more than 40 percent from early 2007 and a wave of loan failures in the next few years could threaten the economy just as it struggles back to its feet, a report from the panel overseeing the $700 billion bank bailout said.
"A significant wave of commercial mortgage defaults would trigger economic damage that could touch the lives of nearly every American," said the report, released on Thursday.
Elizabeth Warren, a Harvard Law School professor who chairs the five-member Congressional Oversight Panel, told reporters on a conference call that the report did not endorse specific policy recommendations because members were split.
"The panel is clear that government cannot and should not keep every bank afloat," the report said. "But neither should it turn a blind eye to the dangers of unnecessary bank failures and their impact on communities."
Asked to clarify, Warren suggested to reporters that the government could allow some banks to fail while closely watching the situation, and could step in if the pace of failures became too rapid.
The panel "is deeply concerned that commercial loan losses could jeopardize the stability of many banks, particularly the nation's mid-size and smaller banks, and that as the damage spreads beyond individual banks that it will contribute to prolonged weakness throughout the economy," the report said.
Warren said there are about $1.4 trillion worth of outstanding commercial real estate loans in the United States that will need to be refinanced before 2014, and about half of them are already "underwater," an industry term that refers to loans with a higher amount than the property's current value.
Unlike residential loans, which are frequently amortized over three decades, commercial real estate loans are usually made with 3- to 5-year terms and include a balloon payment at the end of the term. In normal circumstances, these loans are refinanced before the term ends.
"Without new financing, the properties face foreclosure, banks face insolvency, and the customers, businesses and renters in those properties face a great deal of uncertainty," Warren said.
The report outlined six tools that could be used "to relieve some of the pressure" in commercial real estate and allow for refinancing, including injecting capital into the troubled banks and purchasing bad loans. The report also suggested the government could establish a guarantee fund for some financial firms and work to improve access to credit for small businesses.
The report said the largest losses are scheduled to begin next year and could range as high as $200 billion to $300 billion.
(Reporting by Corbett B. Daly; Editing by Gary Hill)
LINK: http://www.reuters.com/article/idUSTRE61A0PV20100211
***10-4 (over and out!)***
Dow closed today at 9908.39, down 103.84 points or 1.04%
Dow closes below 10,000 for first time in 3 months
Stocks fall as investors remain wary of rising debt problems in Europe; Dow slides 104
By Tim Paradis, AP Business Writer , On Monday February 8, 2010, 6:01 pm EST
NEW YORK (AP) -- The Dow Jones industrial average closed below 10,000 for the first time in three months Monday on nagging concerns about debt loads in Europe.
The Dow, down almost 104 points, had its 10th triple-digit move in 16 trading days. Shares of big banks pulled the market lower, extending a slump that has led to four straight weekly losses.
Mounting deficits in weaker European economies including Greece, Portugal and Spain have raised questions about the health of the global financial system. That compounded concerns about growth in China and proposed U.S. bank regulations took the market down from a 15-month high reached in January.
Greece's finance minister said Monday the government is preparing to boost some taxes to shore up its finances. But civil servants opposed to cutbacks have pledged to strike on Wednesday.
Brett Hryb, a portfolio manager with MFC Global Investment Management in Toronto, said the latest concern is that the financial troubles in a country like Greece, whose economy is small compared with the rest of Europe, will spill into other countries.
"Clearly Greece itself is nothing. It's just a blip. It's what the contagion could be," he said.
Monday's drop extends the stumble the market began in mid-January. At that time, China announced plans to contain economic growth and the Obama administration proposed rules to restrict trading by large financial institutions.
The Dow fell 103.84, or 1 percent, to 9,908.39. On Thursday, the Dow traded below the psychological barrier of 10,000 for the first time since November. It hadn't closed below that mark since Nov. 4. and first closed above 10,000 in March 1999. The Dow is still up 51.3 percent since last March.
The broader Standard & Poor's 500 index fell 9.45, or 0.9 percent, to 1,056.74, while the Nasdaq composite index fell 15.07, or 0.7 percent, to 2,126.05.
Bond prices edged higher, pushing yields lower. The yield on the benchmark 10-year Treasury note was flat at 3.57 percent from late Friday.
The dollar fell against other major currencies, while gold rose.
Crude oil rose 70 cents to settle at $71.89 per barrel on the New York Mercantile Exchange.
Questions about the global economy have interrupted a 10-month climb in stocks, which hit 12-year lows last March. The Dow is down 817 points, or 7.6 percent, from its recent high of 10,725.43 on Jan. 19.
Jerry Webman, chief economist at OppenheimerFunds Inc., said he doesn't expect that problems with rising debt loads in Europe will cascade into other parts of the world's economy, but he remains cautious.
"Right now, when anybody says the word 'contained' I start to tremble," he said, referring to his skepticism about those who downplay worries about Greece and other countries with rising deficits.
Webman is also concerned by the shrugs that have greeted corporate earnings reports. Three out of four of the companies in the S&P 500 index that have reported results for the fourth quarter have posted stronger sales and profit numbers than analysts forecast, according to Thomson Reuters.
"The market is obviously not that enthusiastic about these good bottom-line and good top-line numbers," Webman said, adding that he sees that as a reason to be concerned about the direction of stocks.
In earnings news, the toymaker Hasbro Inc. said its profit surged 77 percent in the fourth quarter while drugstore chain CVS Caremark Corp. said its earnings rose 11 percent. The results beat analysts' estimates.
Hasbro jumped $3.91, or 12.7 percent, to $34.71, while CVS rose $1.65, or 5.3 percent, to $32.72.
Among financials, Bank of America Corp. fell 52 cents, or 3.5 percent, to $14.48, while Britain's HSBC Holdings PLC fell $1.07, or 2.1 percent, to $50.31.
Three stocks fell for every two that rose on the New York Stock Exchange, where consolidated volume came to 4.2 billion shares compared with 6.5 billion Friday.
The Russell 2000 index of smaller companies fell 6.49, or 1.1 percent, to 586.49.
Britain's FTSE 100 rose 0.6 percent, Germany's DAX index gained 0.9 percent, and France's CAC-40 rose 1.2 percent. Earlier, Japan's Nikkei stock average fell 1.1 percent.
LINK: http://finance.yahoo.com/news/Dow-closes-below-10000-for-apf-50495606.html?x=0&sec=topStories&pos=4&asset=&ccode=
Today is playing out just as I had expected, see the previous message for the charts, it looks like the bear market is here and confirmed! Of course at the moment the Dow is still teetering on 10k, so the market is still in denial, but once that psychology changes, it will happen fast... Stay tuned!
***WATCH $GOLD HERE***
Could get a nasty shakeout if the double-bottom fails... next level would naturally be the psychological $1,000 level in which the bulls would choose to defend, but a little thinking outside the box might suggest that if this double-bottom fails, the bears are going to be scratching stop-losses a bit past $1,000 the ounce!
Perhaps an odd number like 977 comes to mind!
The last time $GOLD has traded below its 200 day moving average? January 2009. I'd say we're due for a classic shakeout before the true phenomenal run-up takes place!
***There seems to be a lot of distribution taking place in stocks!***
Take a look at AAPL (Apple), one of the more popular tech-traders, people love it because it's a popular company, and creates great volatile trading with lots of volume... after hitting a record high price last week, today's announcement of the "ipad" created a ton of volume as did yesterday's run-up to the news. Was the market really that thrilled the world has another electronic device? To me, the volume is telling me that distribution took place today, and with the news and AAPL failing to break a new high on such volume, it tells me we have about a 3:1 chance that the stock is going to break lower as this volume is going to create a load of resistance... watch out below, and notice the doji candlestick!
How about GOOG (Google), while it had one helluva run-up into it's recent high, that high was NOT an all-time high, and with the sell-off has come accelerated volume and even a large gap-lower last week:
How about BAC, it has been in a distribution channel since gapping down in October, watch the bottom of that channel, if that breaks, it's one tall-tale sign the market is in big trouble (again)!
Even gold stocks aren't immune to this recent downturn, check out NEM, the largest publicly-traded gold company and the only one that is a member of the S&P 500. Notice the 4 gap-downs since December, notice the influx of volume in the past 2 weeks, most of it pressuring the stock to the downside:
Can't leave Microsoft out of this, check out that downturn last week which breached the 50 day moving average!
Overall, some might argue that tech stocks lead the market, well keep an eye on QQQQ, that 50 day moving average at 44.87 is going to create a lot of resistance, currently trading at 44.70, when will it next close above the 50 day moving average? Tomorrow? Next month? 2011!?
***PTEK - .6111 - Not an endorsement by any means, just something I'd like to keep an eye on, as they are losing money quarter after quarter... it's also a microcap.
"PokerTek, Inc. engages in the development, manufacture, and marketing of electronic poker-related products for use in the gaming and amusement markets. The company?s product line includes PokerPro system, an electronic poker table that provides an automated poker-room environment to commercial casinos, tribal casinos, cruise ships, and card clubs; and Heads-Up Challenge, an amusement platform that enables two players to compete against each other for entertainment purposes in non-gambling venues, such as bars and restaurants. It sells its products in the United States, Canada, Europe, Australia, and internationally. The company was founded in 2003 and is based in Matthews, North Carolina."
You've been seeing some of that financing you talk about take place in the past few days, the price and volume action is a tall-tale sign of what's happening and the main reason companies are publicly-traded.
This stock was mentioned on a local Baltimore radio station yesterday morning, that was the reason for the record volume and price increase... just FYI for those wondering...
Obviously someone at FRPT is responsible or had access to these checks, whether theft or not, this is something that should be "protected."
***$GOLD - IS END GAME HERE?***
Or is this just the B in the A-B-C pullback... inquiring minds would love to know... we see oil increasing and the dollar again losing value, and of course $ILVER is outgaining $GOLD again... hmmm... if this is it, parabolic movement much higher would not surprise me... remember the only store in the mall where one can make money is the one where you sell your $GOLD to them!
Duh!...
Who's really making the $$$ on that transaction???
It's so funny to see the insiders still peddling stock at .0001 on this board, lol.
Dow 9119.77; Oil 79.97; Gold 1462.5
End of 2010 wag by me...
***Rising yields on the ten-year will suck people away and give false hope of a recovery in the dollar and the economy, which could provide a short-term swoon in the price of $ILVER & $GOLD...
See below, 3.5% to 3.8% in the chart below is a big move... haven't seen this type of movement in a while...
***FAILED RETEST OF 50 DAY MOVING AVERAGE TODAY***
If today's low breaks this week, look for a swoon towards the 200 day moving average or around the psychological $1,000 mark... Near-term we have more downward pressure than upwards likely due to the resistance that was built off of this entire sell-off...
While a break above today's high and 50 day moving average would be bullish, it's hard to see the move snapping back up to test all-time highs, a consolidation pattern lasting approximately 3-months would be more likely in that scenario with a test of the 200 day MA still likely to take place...
And still pulling back from its record highs... $ GOLD lost 40 today to $1097 on the spot market... HUI -5.87%, we'll find out soon if these are leading market indicators or not.
Without inflation of the currency, I don't see how the Dow has a shot at staying over 10,000...
Today, gold and the dollar went up almost in a simultaneous fashion while the HUI lost about 2%, who's the leader in this market?
You might be on to something, do you really think so, the connection has meaning? I'm thinking metaphorically, 9-11-2001 was a symbol to destroy something, perhaps the value of the U.S. dollar AKA the Federal Reserve Note, it more or less topped out that day with gold bottoming?
Is H1N1 in turn a symbolic meaning to destroy the healthcare of America given 3,000 page legislation?
How can someone possibly understand what ef they are voting for in one night?
Gold Advances to Record on Weaker Dollar, Increasing Demand
By Glenys Sim
Nov. 12 (Bloomberg) -- Gold advanced to a record for a second day, driven by speculation that the dollar will extend declines while demand for the precious metal increases as central banks and investors step up purchases.
Gold for immediate delivery rose as much as 0.4 percent to $1,121.90 an ounce. The December-delivery contract on the Comex division of the New York Mercantile Exchange gained for a ninth day, also to a record. Investor Marc Faber said gold wouldn’t again trade at less than $1,000. Shares of producers surged.
“The U.S. dollar’s direction will continue to drive gold prices in the near term,” James Steel, HSBC Securities analyst, wrote in a note e-mailed today. Gold priced in dollars tends to move in the opposite direction to the U.S. currency.
Gold has risen 27 percent this year, heading for a ninth annual gain, the longest winning run since at least 1948, as the Dollar Index tumbled 7.8 percent. The currency has dropped on record-low U.S. interest rates and increased government borrowing to combat recession in the world’s top economy.
“We will not see less than the $1,000 level again,” Faber said at a conference yesterday. “Central banks are all the same. They are printers. Gold is maybe cheaper today than in 2001, given the interest rates. You have to own physical gold.”
The precious metal is below its nominal high after accounting for inflation. Spot gold’s $850 an ounce peak in January 1980 is equivalent to $2,227.84 today after adjusting for inflation, according to the U.S. Labor Department’s inflation calculator.
Gold priced in Australian dollars is 22 percent below its record of about A$1,542.28 an ounce, and the metal in euros is 4.7 percent off its peak, both reached in February.
India, Sri Lanka
News last week of bullion purchases by the Indian and Sri Lankan governments has raised speculation other countries will follow suit. Analysts at Bank of America Merrill Lynch, Societe Generale SA and Barclays Capital have forecast further purchases by central banks, already the biggest holders.
Gold for immediate delivery traded at $1,121.08 an ounce at 10:05 a.m. Singapore time. December-delivery gold advanced as much as 0.7 percent to $1,121.90 an ounce in the longest winning streak since the nine days ending Aug. 26, 1982.
The dollar traded near a two-week low against the euro today before a report tomorrow that is forecast to show Europe’s economy expanded last quarter, damping demand for the U.S. currency. “The dollar is firmly in a downtrend,” said Takeshi Tokita, vice president of foreign-exchange sales at Mizuho Corporate Bank Ltd. in Tokyo.
Producers Rally
Newcrest Mining Ltd., Australia’s biggest producer, gained 2 percent to A$36.02, Lihir Gold Ltd. rose 2.6 percent to A$3.50 and Sino Gold Mining Ltd. added 2.1 percent at A$7.75 at 12:28 p.m. Sydney time on the Australian stock exchange.
Newmont Mining Corp. Chief Executive Officer Richard T. O’Brien said yesterday that $900 an ounce will act as a floor for the price. Shares in the largest U.S. producer of the metal have more than doubled over the past year
The U.S. currency fell to $1.5014 per euro at 9:40 a.m. in Tokyo from $1.4987 in New York yesterday, when it touched $1.5048, the lowest level since Oct. 26. Gross domestic product in the 16-nation euro region expanded 0.5 percent in the third quarter from the second quarter, when it fell 0.2 percent, a Bloomberg News survey of economists showed. The European Union will release the report tomorrow.
Jim Rogers, the investor who predicted the start of the commodities rally in 1999, this month reiterated a forecast that bullion will surge to at least $2,000 over the next decade. To be sure, Nouriel Roubini, the economist who predicted the global economic crisis, said Rogers’s forecast is “utter nonsense.”
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
Last Updated: November 11, 2009 21:10 EST
LINK: http://www.bloomberg.com/apps/news?pid=20601081&sid=a2ujIdS3OzHk
Gold Climbs to Record as India’s Central Bank Buys IMF Bullion
By Claudia Carpenter and Pham-Duy Nguyen
Nov. 3 (Bloomberg) -- Gold jumped to a record after India’s central bank bought 200 metric tons of the metal from the International Monetary Fund, heightening speculation that there may be more official purchases.
Gold futures for December delivery rose to a record $1,087 an ounce on the New York Mercantile Exchange’s Comex unit and traded at $1,084.20 at 1:28 p.m., up $30.20, or 2.9 percent. A close at that price would be the biggest gain for a most-active contract since March 19.
“This will encourage other countries and other investors, especially Indians, who are big buyers anyway, to jump into the market,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois.
The Reserve Bank of India paid $6.7 billion for the bullion, which it bought from Oct. 19 to Oct. 30. It was “the biggest single central-bank purchase that we know about for at least 30 years in such a short period,” said Timothy Green, the author of “The Ages of Gold.” “The only comparable event was the U.S.’s steady purchases in the 1930s and 1940s.”
Prices also rose to an all-time high in gold traded in Indian rupees. Central banks, the biggest holders of gold, may diversify out of the dollar and buy bullion as ballooning U.S. debt and low interest rates weaken the currency.
“It is but a matter of time until China and the IMF announce much of the same,” said Dennis Gartman, an economist and the editor of the Gartman Letter in Suffolk, Virginia.
Rising on Dollar
Before today, gold gained 19 percent this year as the U.S. Dollar Index, which measures the greenback’s performance against six major currencies, slid 6.2 percent. The previous record for bullion traded in New York was $1,072 on Oct. 14.
“The fall in the U.S. dollar seems to be pushing all the central banks to strengthen their portfolios with gold,” said N.R. Bhanumurthy, a professor at the National Institute of Public Finance and Policy in New Delhi. “Gold is a safe store of value compared to the U.S. dollar.”
India’s purchase buoyed gold as industrial metals slumped on concern that governments will remove economic-stimulus measures, crimping demand for raw materials. Copper and lead both fell as much as 2.8 percent on the London Metal Exchange.
India held 350 tons of gold at the end of 2008, making it the 12th-largest government owner, according to the GFMS Ltd. 2009 Gold Survey. The additional 200 tons propels the country past Russia into ninth place, according to GFMS figures. India is the largest buyer of gold for jewelry and investment.
Unusual Move
“You usually associate Indian consumers buying gold more than you do the central bank,” said Mario Innecco, an MF Global Ltd. broker in London. Gold averaged about $1,049 in the two weeks when the IMF gold sale occurred. Prices may rise to $1,125 by year-end, Innecco said.
The IMF’s executive board on Sept. 18 approved the sale of 403.3 tons of the metal, pledging to avoid disrupting the market. The board sought to use the sales of about an eighth of the organization’s total stockpile to help shore up its finances. China, now the sixth-largest holder of gold, has increased its gold reserves by 76 percent since 2003, to 1,054 tons, the official Xinhua News Agency reported in April.
President Barack Obama has increased the nation’s marketable debt to an unprecedented $7 trillion as the government borrows to fund spending programs intended to revive economic growth. The Federal Reserve has kept the benchmark U.S. interest rate between zero and 0.25 percent since December.
Bullish Sign
Gold rose today even as the dollar index rallied to a four- week high, a bullish sign to investors, said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, have risen 41 percent this year.
“This is safe-haven buying,” McGhee said. “Gold is decoupling from the dollar, which can make it even more bullish.”
The metal has outperformed stocks and bonds this year as it heads for the ninth straight annual gain. The Standard & Poor’s 500 Index has risen 15 percent in 2009 through yesterday while returns on the benchmark 10-year U.S. Treasury note are down 5.7 percent.
Gold may average $1,125 in 2010, “with strong investment demand anchored by a negative real-interest-rate environment and probable central bank purchases,” analysts at Toronto-based Desjardins Securities Inc. said in a report.
Among other precious metals, silver futures for December delivery rose 72 cents, or 4.4 percent, to $17.16 an ounce on the Comex. Before today, the most-active contract climbed 46 percent this year.
Platinum futures for January delivery climbed $22.90, or 1.7 percent, to $1,361 an ounce, erasing an earlier decline on the Nymex. December palladium gained 90 cents, or 0.3 percent, to $327.25 an ounce.
To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
Last Updated: November 3, 2009 13:29 EST
LINK: http://www.bloomberg.com/apps/news?pid=20601087&sid=a1X3kSog4vSk&pos=2
What's taking place today is definitely different...
It's on the pink sheets now, so technically, they may never file what they need to, could that be a correct assumption? Or is the SEC "forcing" them to file all necessary forms as if they were listed on a major market?
There are, but will they ever come to light for the cool-aid drinkers?
Do you or does anyone here know how many shares are currently outstanding and authorized?
Amazing, so they are openly letting them continue to sell shares even though they can't verify their financial claims over the past year?
U.S. Said to Target Wave of Insider-Trading Networks (Update2)
By Joshua Gallu and David Scheer
Oct. 19 (Bloomberg) -- Federal investigators are gearing up to file charges against a wider array of insider-trading networks, some linked to the criminal case against billionaire hedge-fund manager Raj Rajaratnam that shook Wall Street last week, people familiar with the matter said.
The pending crackdown, based on at least two years of investigation, targets securities professionals including hedge- fund managers, lawyers and other Wall Street players, the people said, declining to be identified because the cases aren’t public. Some probes, like the one focused on Rajaratnam, rely on wiretaps. Others stem from a secret Securities and Exchange Commission data-mining project set up to pinpoint clusters of people who make similar well-timed stock investments.
Investigators have struggled to build cases against large institutional investors such as hedge-fund managers, who often deflect regulatory queries about suspiciously timed bets, arguing they’re statistical flukes amid millions of trades. The case against Rajaratnam, built on recorded conversations within a web of alleged conspirators, offers a glimpse of how U.S. investigators are using more aggressive tactics to cut through the blizzard of trading and trace the flow of information.
“If you’re going to shoot the king, you better shoot to kill,” said Bradley Bennett, a law partner at Baker Botts LLP in Washington who formerly focused on insider-trading cases as an SEC investigator. “If they’re going to take on a billionaire, they need to have the strongest possible cases. The defendant’s own words are the strongest possible evidence.”
Intel, McKinsey, IBM
SEC spokesman John Nester declined to comment, as did Alejandro Miyar, a spokesman for the Justice Department.
Rajaratnam, who founded the Galleon Group in 1997, was arrested with five alleged conspirators on Oct. 16 in what prosecutors called the biggest insider-trading ring targeting a hedge fund. Prosecutors said he and his firm reaped as much as $18 million by investing on tips from a hedge fund, a credit- rating firm and employees within companies including Intel Capital, McKinsey & Co. and IBM Corp. IBM said today it put executive Robert Moffat, one of Rajaratnam’s alleged conspirators, on temporary leave following the charges.
Rajaratnam, born in Sri Lanka’s capital, Colombo, has a net worth of $1.3 billion, making him the 559th richest person in the world, according to Forbes Magazine. In the early years of this decade, Galleon ranked among the world’s 10 largest hedge funds, managing $7 billion at its peak in 2008.
No Plea Entered
Rajaratnam hasn’t yet entered a plea. His lawyer, Jim Walden, said last week that prosecutors are misconstruing the evidence and that the case isn’t as strong as they allege.
U.S. senators including Pennsylvania Democrat Arlen Specter have pressed regulators to more aggressively scrutinize hedge funds. Some of those concerns were spurred by the SEC’s decision in 2006 to close an insider-trading probe of Pequot Capital Management Inc., once the world’s biggest hedge- fund manager, after investigators said they lacked evidence to bring the case.
The SEC later reopened part of the inquiry focusing on whether Pequot abused information from a former Microsoft Corp. employee. In August, Pequot and founder Arthur Samberg, 68, said they may be sued by the agency. Insider-trading claims would be “without merit,” they said.
Many cases begin when stock exchanges send the SEC reports on traders who place profitable bets shortly before corporate announcements. Someone who rarely trades may have difficulty explaining later what prompted an uncharacteristic investment. Hedge funds, on the other hand, can more plausibly attribute their windfalls to skill or chance.
Blue Sheets
To overcome that hurdle, the SEC began using computer software about two years ago to sift hundreds of millions of electronic trading records, known as blue sheets, attached to the stock exchange reports about suspicious incidents, according to people familiar with the project. By looking for patterns in the library of data, they identified groups of traders who repeatedly made similar well-timed bets.
Once investigators find a cluster of correlated trades, they tap other sources of information to unravel how its members obtain and share tips, the people said. For example, if a group profits on trades before a series of corporate takeovers, the SEC may check so-called league tables listing which investment banks or law firms advised the deals. If one firm was involved in all of them, an employee there may be the source of the leak.
Data Mining
The data-mining strategy yielded one of its first cases in February, when the SEC and U.S. prosecutors charged takeover advisers at UBS AG and Blackstone Group LP with taking part in an $8 million insider-trading case, people familiar with the inquiry said. Authorities used a “novel” technique to detect the scheme, the SEC’s lead investigator on the case, Daniel Hawke, said at the time, without elaborating.
While the investigation of Rajaratnam didn’t stem from the data-mining project, it did start with the SEC’s identification of suspicious trades, people with knowledge of the case said.
Investigators developed at least one informant in the ring, who began meeting in November 2007 with agents from the Federal Bureau of Investigation, according to charging documents. Prosecutors also obtained warrants for wiretaps, a level of surveillance typically reserved for organized crime, drug syndicates and terrorism prosecutions.
Prosecutors are also being helped by at least three of Rajaratnam’s former colleagues, the Wall Street Journal reported today, citing people familiar with the criminal investigation. Those people include California hedge-fund managers Ali Far and Choo Beng Lee, the Journal said.
Further Surveillance
Surveillance during the probe of Rajaratnam, 52, led investigators to other suspects and more charges are likely, people familiar with the matter said. U.S. Attorney Preet Bharara said Oct. 16 the Justice Department will continue using wiretaps to root out insider-trading.
The SEC is adopting other strategies to crack difficult cases. SEC Enforcement Director Robert Khuzami, a former federal prosecutor who joined the agency in March, said last week that he’s seeking greater access to grand-jury evidence and wants to expand deal-making and cooperation with informants.
“Insider-trading cases are notoriously difficult to prosecute because the evidence is often circumstantial,” said Bill Mateja, a former Justice Department lawyer now at Fish & Richardson PC in Dallas. “If law enforcement is actively going to go out and target this with covert investigative techniques, I think it’s going to keep people on their toes.”
The filed cases are U.S. v. Rajaratnam, 09-02306, and U.S. v. Chiesi, 09-02307, U.S. District Court for the Southern District of New York (Manhattan).
To contact the reporters on this story: Joshua Gallu in Washington at jgallu@bloomberg.net; David Scheer in New York at dscheer@bloomberg.net.
Last Updated: October 19, 2009 11:43 EDT
LINK: http://www.bloomberg.com/apps/news?pid=20601087&sid=apNewkPGwwrE
Nice; where are you in that picture puppydotcom?