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>>70% of all US jobs created since 2008 were in TEXAS:
Rick Perry to Obama’s EPA: Don’t mess with Texas
By Patrick Gleason | Published: 06/16/10 at 12:01 AM | Updated: 06/16/10 at 3:15 PM
Much of the current focus on the EPA these days surrounds its move to be the largest regulator of the nation’s economy by treating carbon as a pollutant under the Clean Air Act. As controversial and arduous a task as that may be, it hasn’t precluded the agency from finding time to go after the most prosperous state in the nation. After years of threatening to do so, the EPA recently announced plans to take over Texas’ air quality permitting system.
Since 1994, Texas has operated under a flex permitting system whereby overall emission caps are established for power plants and petrochemical facilities in the state. The caps are applied to each facility as a whole and it is up to management to abide by these limits. The system has served Texas well, improving air quality during a time in which the state has experience rapid economic and population growth. Sounds like a model that federal officials would hold up for other states to consider, right? Not so much.
Last month the EPA announced it will reverse the state’s permitting program and revert to the previous system in which caps are assigned to each individual greenhouse gas emitting source within a facility, such as a boiler. This onerous regulatory regime adds significant costs that will be passed on to the consumer in the form of higher energy prices and diminished job opportunities.
This federal power grab is unwarranted and will have adverse consequences for the state’s economy. Chad Burke, president & CEO of the Economic Alliance Houston Port Region warned earlier this month that an EPA takeover would jeopardize the 30,000 people directly employed by the petrochemical industry in the Houston Port Region alone, along with the 300,000 jobs indirectly tied to the industry.
Many in Texas believe this is part of an overall trend of the White House targeting a state that it resents for succeeding by governing in a way that is antithetical to the Administration’s big government agenda.
“It’s pretty apparent that Barack Obama has all but declared war on Texas,” said Michael Quinn Sullivan, president of Texans for Fiscal Responsibility. “The latest shot is this EPA regulatory takeover. Texas has done a great job of taking care of itself. But here comes the Obama administration to overrun the state.”
Environmental groups have long criticized Texas’ flex permitting system, claiming that it gives too much leeway for pollution. However, such contentions are not supported by facts on the ground. As was previously mentioned, under the flex permitting system, air quality has actually improved in the state, making the EPA takeover a heavy-handed solution to a non-problem.
According to Kathleen Hartnett-White, Director of the Texas Public Policy Foundation’s Armstrong Center for Energy & the Environment, the flex permitting system yields more environmental benefits than the regulatory structure that the EPA is trying to impose upon the state.
“We have a record that shows that we have significantly reduced emissions. It’s regrettable that the EPA is trying to seize control for control’s sake,” said White.
This federal power grab prompted an immediate response from Governor Rick Perry who, in a May 28 letter to President Obama, contended that the EPA’s actions would replace the 16 year-old permitting system with a “less effective Washington-based, bureaucratic-led, command-and-control mandate.” Perry went on to note that over the last 10 years the state’s flex permitting system has yielded a 22 percent reduction in ozone and a 46 percent decrease in Nitrogen Oxide emissions.
This is not the first time Perry has gone toe-to-toe with the EPA. In February, Governor Perry sued the EPA over its December 2009 declaration that it would begin regulating CO2 as a pollutant.
Perry’s opposition to the EPA’s move to reverse the state’s flex permitting program has been echoed by other lawmakers and state officials. “This action undermines Texas’ successful clean air programs and will cost the state thousands of jobs while growing the federal bureaucracy,” said Rep. Ken Paxton, a state legislator representing Texas’ 70th House District.
There are plenty reasons for the EPA to leave Texas alone. Aside from serving as the nation’s economic powerhouse over the past decade, Texas has been among the first states to emerge from the recession. According to a recent report produced by Dallas-based bank Comerica, Inc., the Texas economy began to rebound in September of last year, five months before job growth bottomed out in the rest of the nation.
Since 2008, 70% of the jobs created in the U.S. were located in Texas and the Lone Star State is now home to more Fortune 500 companies than any other state. The White House doesn’t like the fact that Texas’ small government model has continually succeeded, both environmentally and economically, while the Administration’s heavy-handed policies have driven this nation deeper in debt and retarded economic recovery.
“We don’t need more of what doesn’t work,” added Sullivan. “Let Texas take care of Texas.”
Amen.
Read more: http://dailycaller.com/2010/06/16/rick-perry-to-obama%E2%80%99s-epa-don%E2%80%99t-mess-with-texas/#ixzz0rSth14mq
WTF? Report: Rahm Emanuel Expected to Quit
Published June 21, 2010
File: White House Chief of Staff Rahm Emanuel, left, stands with former White House Counsel Greg Craig and Press Secretary Robert Gibbs at a White House briefing. (AFP)
White House Chief of Staff Rahm Emanuel is expected to leave his job within six to eight months because he is fed up with the "idealism" of President Barack Obama's closest advisers, The London Daily Telegraph reported Monday.
The newspaper cited Washington insiders, who said Congress veteran Emanuel, 50, is also concerned about burning out and losing touch with his three children due to the pressure of the job.
"I would bet he will go after the midterms," said one source, a leading Democratic consultant.
"Nobody thinks it's working, but they can't get rid of him -- that would look awful. He needs the right sort of job to go to, but the consensus is he'll go."
"It might not be his fault, but the perception is there," said the consultant. "Every vote has been tough, from health care to energy to financial reform.
"Democrats have not stood behind the President in the way Republicans did for George W. Bush, and that was meant to be Rahm's job."
Emanuel is known as an abrasive pragmatist who has clashed with the idealistic inner circle around Obama.
Although he is believed to have a cordial working relationship with the President, The Telegraph reported Obama aides are frustrated that Emanuel "failed to deliver a smooth ride for the President's legislative program that his background promised."
The newspaper said Emanuel had told friends he envisaged the high-pressure White House role as an 18-month job. He is reportedly interested in running for mayor of Chicago, his home town.
http://www.foxnews.com/politics/2010/06/21/report-rahm-emanuel-quit-obama-idealism/
UKT:Gold reclaims its currency status as the global system unravels
We already know that the eurozone money markets seized up violently in early May as incipient bank runs spread from Greece to Portugal and Spain, threatening the first big sovereign default of our era.
Jean-ClaudeTrichet, the president of the European Central Bank (ECB), talked days later of "the most difficult situation since the Second World War, and perhaps the First".
By Ambrose Evans-Pritchard
Published: 5:43PM BST 20 Jun 2010
The ECB’s latest monthly bulletin gives us some startling details. It reveals that the bank’s "systemic risk indicator" surged suddenly to an all-time high on May 7 as measured by EURIBOR derivatives and stress in the EONIA swaps market, exceeding the strains at the height of the Lehman Brothers crisis in September 2008. "The probability of a simultaneous default of two or more euro-area large and complex banking groups rose sharply," it said.
This is a unsettling admission. Which two "large and complex banking groups" were on the brink of collapse? We may find out in late July when the stress test results are published, a move described by Deutsche Bank chief Josef Ackermann as "very, very dangerous".
And are we any safer now that the EU has failed to restore full confidence with its €750bn (£505bn) "shock and awe" shield, that is to say after throwing everything it can credibly muster under the political constraints of monetary union? This is the deep angst that lies behind last week's surge in gold to an all-time high of $1,258 an ounce.
The World Gold Council said on Friday that the central banks of Russia, the Philippines, Kazakhstan and Venezuela have been buying gold, and Saudi Arabia’s monetary authority has "restated" its reserves upwards from 143m to 323m tonnes. If there is any theme to the bullion rush, it is fear that the global currency system is unravelling. Or, put another way, gold itself is reclaiming its historic role as the ultimate safe haven and benchmark currency.
It is certainly not inflation as such that is worrying big investors, though inflation may be the default response before this is all over. Core CPI in the US has fallen to the lowest level since the mid-1960s. Unlike the blow-off gold spike of the Nixon-Carter era, this rally has echoes of the 1930s. It is a harbinger of deflation stress.
Capital Economics calculates that the M3 money supply in the US has been contracting over the past three months at an annual rate of 7.6pc. The yield on two-year Treasury notes is 0.71pc. This is an economy in the grip of debt destruction.
Albert Edwards from Societe Generale says the Atlantic region is one accident away from outright deflation - that 9th Circle of Hell, "abandon all hope, ye who enter" . Such an accident may be coming. The ECRI leading indicator for the US economy has fallen at the most precipitous rate for half a century, dropping to a 45-week low. The latest reading is -5.70, the level it reached in late-2007 just as Wall Street began to roll over and then crash. Neither the Fed nor the US Treasury were then aware that the US economy was already in recession. The official growth models were wildly wrong.
David Rosenberg from Gluskin Sheff said analysts are once again "asleep at the wheel" as the Baltic Dry Index measuring freight rate for bulk goods breaks down after a classic triple top. The recovery in US railroad car loadings appears to have stalled, with volume still down 10.5pc from June 2008.
The National Association of Home Builders’ index of "future sales" fell in May to the lowest since the depths of slump in early 2009. RealtyTrac said home repossessions have reached a fresh record. A further 323,000 families were hit with foreclosure notices last month. "We’re nowhere near out of the woods," said the firm.
It is an academic question whether the US slips into a double-dip recession, or merely grinds along for the next 12 months in a "growth slump". For Europe, nothing short of a sustained global boom can lift the eurozone out of the deflationary quicksand already swallowing up the South.
Spain had to pay a near-record spread of 220 basis points over German Bunds last week to clear away an auction of 10-year bonds, roughly what Greece was paying in March. Leaked transcripts of a closed-door briefing to the Cortes by a central bank official revealed that Spanish companies have been shut out of the capital markets since Easter. Given that the Spanish state, juntas, banks and firms have together built up foreign debts of €1.5 trillion, or 147pc of GDP, and must roll over €600bn of these debts this year, this is a crisis unlikely to cure itself.
By their actions, investors show that they do believe the EU can be relied upon to back its rescue rhetoric with hard money, and for good reason. Germany’s coalition risks breaking up at any moment, fatally damaged by popular fury over the Greek bail-out. Far-Right populist Geert Wilders is suddenly the second force in the Dutch parliament. Flemish separatists have just won the Belgian elections in Flanders. The likelihood that an ever-reduced group of German-bloc creditors facing disorder and budget cuts at home will keep footing the bill for an ever-widening group of Latin-bloc debtors in distress is diminishing by the day.
Fitch Ratings said it will take "hundreds of billions" of bond purchases by the ECB to stop the crisis escalating. Since Bundesbank chief Axel Weber has already deemed the first tranche of purchases to be a "threat to stability", it is a safe bet that Germany will fight tooth and nail to prevent such a move to full-blown quantitative easing. The blood-letting along the fault-line between Teutonic and Latin Europe will go on, as the crisis festers.
Yet the markets are already moving on, in any case. They doubt whether the EU’s strategy of imposing of wage cuts on half of Europe without offsetting monetary and exchange stimulus can work. Such a policy crushes tax revenues and risks tipping states into a debt-deflation spiral, as if everbody had forgotten the lesson of the 1930s.
Greece’s public debt will rise from 120pc to 150pc of GDP under the IMF-EU plan. There is a futile cruelty to this. As Russia’s finance minister Alexei Kudrin acknowledges, a Greek "mini-default" has become inevitable.
EU president Herman Van Rompuy confessed that EMU lured countries into a fatal trap. "It was like some kind of sleeping pill, some kind of drug. We weren’t aware of the underlying problems," he said.
What he has yet to admit is that the North-South imbalances built up since the euro was launched - indeed, because the euro was launched - cannot be corrected by further loans from the North or by pushing the South in depression. The political fuse will run out before this reactionary and self-defeating policy is tested to destruction.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7841961/Gold-reclaims-its-currency-status-as-the-global-system-unravels.html
>>BP spill prompts exodus from energy?
Fund Strategy - Adam Lewis - 4 hours ago
The fallout from the Gulf of Mexico oil spill has led global fund managers to cut their energy weightings in record numbers, according to the latest Bank of America Merrill Lynch Fund Manager survey.
In June a net 7% of global asset allocators were overweight in the energy sector, down from a net 37% in May, which Merrill Lynch claims is the biggest monthly swing the survey has ever recorded.
Managers remain cautious about the prospects for global economic growth, with a net 24% predicting the world economy will strengthen in the next 12 months. This is down from 42% in May and 61% in April. (article continues below)
Despite this wariness, however, global managers dropped their cash levels from 4.3% in May to 4.1% in June, although asset allocators did raise their cash overweights to the highest level since May last year.
Gary Baker, the head of European equity strategy at Bank of America Merrill Lynch Global Research, says: “There seems to be little panic among investors and managers now see equity valuations at their cheapest level since March 2009.”
Negative sentiment towards the eurozone, which peaked in last month’s survey, has abated. The percentage of global managers who said they would underweight Europe fell to a net 12% in June, down from 30% in May. There was also a change in currency views, with managers taking their least negative view on the euro since November 2006. In June only a net 14% of managers viewed the euro as overvalued, versus 45% in May.
A total of 207 fund managers with $606 billion (£411 billion) of assets participated in the survey. It was conducted in partnership with TNS, a market research firm, from June 4-10.
http://www.fundstrategy.co.uk/markets/bp-spill-prompts-exodus-from-energy/1013666.article
NYP: Goldman's great timing for unloading BP stock
By MICHAEL GRAY
Last Updated: 7:36 AM, June 20, 2010
The smartest guys in the room strike again: Goldman Sachs liquidated more than half of its position in BP just prior to the Gulf oil spill on April 20 of this year, according to Securities and Exchange Commission filings.
The excellent call came just after Goldman Sachs International Chairman Peter Sutherland stepped down from the BP chairmanship last December, when he was replaced by former Ericsson chief Carl-Henric Svanberg effective January 1.
Between January and March of this year, Goldman sold 4.9 million shares, or 57.8 percent, closing out whole positions in three of its biggest funds, according to SEC filings.
BP shares were averaging $57 a share for the first quarter, rising for most of 2009 from a low of $35 in March of the year. BP shares closed Friday on the NYSE at $31.76.
Read more: http://www.nypost.com/p/news/business/goldman_great_timing_for_unloading_wEe19Ge1RQRQNUeCvOVdYI#ixzz0rS8vYkmU
Read more: http://www.nypost.com/p/news/business/goldman_great_timing_for_unloading_wEe19Ge1RQRQNUeCvOVdYI#ixzz0rS8kNDy2
BP: UK Funds buying BP to proping up PPS: London’s City Buys BP While Wall Street Flees Risk in U.S.
June 20, 2010, 8:00 PM EDT
June 21 (Bloomberg) -- BP Plc, the worst oil investment this year on Wall Street, is finding its backers in the City of London.
Investors have bought more shares of BP than they have sold every day this month in London, according to so-called money flow data compiled by Bloomberg, even as the stock slumped to a 13-year low. In contrast BP’s American depositary receipts have recorded a net $185 million outflow in New York since the April 20 accident, the data show.
As the worst oil spill in U.S. history spurs attacks from President Barack Obama and soils Florida’s beaches and the Louisiana marshlands, London investors are backing BP’s embattled chief executive officer, Tony Hayward. After a five-year string of accidents and deadly disasters at BP facilities, U.S. Representative Bart Stupak suggested last week its safety record could justify pulling the company’s operating permits in the U.S.
“There’s a feeling in the U.K. that BP has been singled out unfairly and that there’s long-term value in the stock,” said Iain Armstrong, an analyst at Brewin Dolphin Ltd., which oversees more than $31 billion in London and increased its BP holdings in May. “In the U.S., it’s a very emotive issue, and politicians are making it much more personal and vindictive. If you’re a U.S. fund manager and BP doesn’t manage to stop the leak, you’ve got a lot to answer for.”
Hayward drew criticism again this weekend after attending a yacht race off the south coast of England, watching sailboats on the Solent at a time when fishing in the Gulf of Mexico is curtailed because of BP’s spill.
‘PR Gaffes’
Hayward’s attendance was “part of a long line of PR gaffes and mistakes,” White House Chief of Staff Rahm Emanuel said on ABC’s “This Week” television program. “We can all conclude that Tony Hayward is not going to have a second career in PR consulting.”
BP agreed last week to cancel nine months of dividend payments, saving about $7.5 billion, sell $10 billion of assets and reduce investment to raise cash to meet Obama’s demand for a $20 billion fund for victims of the spill.
“When people turn on the news they see this gusher pouring out,” said Ronald Sorenson, CEO of W.H. Reaves & Co. in Jersey City, New Jersey, which manages $1.6 billion in assets, including BP shares. “That puts a lot of pressure on advisers. Individual investors take this very personally.” Sorenson said he’s sold shares for individual investors since the spill began.
Biggest Loss
The London-listed stock is down 44 percent since the explosion on the Deepwater Horizon rig that killed 11 workers and started the leak on the seabed. The shares fell to a 13- year low of 342 pence on June 15, wiping about 60 billion pounds ($89 billion) off the company’s value. BP closed at 357.45 pence on June 18. The ADR is down 45 percent this year, more than any other company in the 11-member CBOE Oil Index.
Money flow attempts to measure the capital moving in and out of a security by adding the value of higher, or uptick, trades and subtracting the value of downticks. As prices fall, money flows are usually negative, turning positive as prices rise. A divergence between money flow and price may signal a change in the trend.
The method was pioneered by Laszlo Birinyi, founder of the Westport, Connecticut-based research and money-management firm Birinyi Associates Inc.
“People in the U.K. are buying the stock, taking advantage of the discount” since the stock plunged, said Cleve Rueckert, an equity analyst at Birinyi’s firm. “But when a stock starts to slide like this, it’s hard to say when it will turn around.”
City Vs Wall Street
Birinyi’s October 2007 forecast that a recovery in banks would be wiped out presaged an 82 percent plunge in the Standard & Poor’s 500 Financials Index through March 6 of the next year.
The split over BP between U.K. and U.S. investors extends to analysts. The U.K. stock has 26 “buy” recommendations, while 12 analysts recommend holding the stock and two say to sell. In contrast, almost as many U.S. analysts advise against purchasing the stock as buying it. The ADRs have seven “buy” recommendations, five “holds” and one “sell.”
“I’m sure anger is fuelling the selling,” said John Olson, managing partner at Houston Energy Partners, a hedge fund unit of Sanders Morris Harris Group Inc. “We’ve had a media firestorm, and the flames have been fanned by the Obama administration.”
Stonewalling Congress
Moody’s Investors Service cut the company’s debt rating by three levels last week on concern litigation claims will be an “overhang” on BP’s creditworthiness for years. Fitch Ratings pushed BP down six notches to two grades above “junk.”
U.S. lawmakers accused Hayward, 53, of stonewalling and dodging questions about the causes of the explosion when he testified before a Congressional committee last week. The New York Daily News previously called the CEO “the most hated -- and clueless -- man in America.”
“I don’t think the image that comes across in the States is at all fair to him,” said Timothy Guinness, CEO of Guinness Atkinson Asset Management in London, which owns BP shares. “He is very hard working, he is very conscientious, he is trying to do the right thing. The fall was overdone, the upside from here is quite significant.”
Guinness said he’s buying BP shares for more aggressive investors, anticipating a gain of as much as 50 percent during the next year.
‘Long-Term Perspective’
After taking over from John Browne in May 2007, Hayward pledged to apply a “laser-like focus” to improving safety, declaring the goal one of his three top priorities.
To turn BP around, Hayward will have to regain the confidence of U.S. regulators, politicians and investors. BP became the biggest producer of oil and gas in the U.S. after spending $100 billion buying Chicago’s Amoco Corp. and Atlantic Richfield Co. of Los Angeles between 1998 and 2000. About 26 percent of its production is in America, stretching from Alaska’s Prudhoe Bay in the Arctic to the deep waters of the Gulf of Mexico.
“When things look the worst, that’s usually when the value opportunities present themselves,” said Lothar Mentel, chief investment officer for Octopus Investments Ltd. in London. “But you do have to have a long-term perspective.”
--With assistance from Andrea Catherwood in London and Deirdre Bolton and Jim Polson in New York. Editors: Stephen Cunningham, Tim Coulter
To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net; Eduard Gismatullin in London at egismatullin@bloomberg.net.
To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net
BL: London's City Buys BP While Wall Street Holders Flee Increasing U.S. Risk
By Brian Swint and Eduard Gismatullin - Jun 20, 2010
BP Plc, the worst oil investment this year on Wall Street, is finding its backers in the City of London.
Investors have bought more shares of BP than they have sold every day this month in London, according to so-called money flow data compiled by Bloomberg, even as the stock slumped to a 13-year low. In contrast BP’s American depositary receipts have recorded a net $185 million outflow in New York since the April 20 accident, the data show.
As the worst oil spill in U.S. history spurs attacks from President Barack Obama and soils Florida’s beaches and the Louisiana marshlands, London investors are backing BP’s embattled chief executive officer, Tony Hayward. After a five-year string of accidents and deadly disasters at BP facilities, U.S. Representative Bart Stupak suggested last week its safety record could justify pulling the company’s operating permits in the U.S.
“There’s a feeling in the U.K. that BP has been singled out unfairly and that there’s long-term value in the stock,” said Iain Armstrong, an analyst at Brewin Dolphin Ltd., which oversees more than $31 billion in London and increased its BP holdings in May. “In the U.S., it’s a very emotive issue, and politicians are making it much more personal and vindictive. If you’re a U.S. fund manager and BP doesn’t manage to stop the leak, you’ve got a lot to answer for.”
Hayward drew criticism again this weekend after attending a yacht race off the south coast of England, watching sailboats on the Solent at a time when fishing in the Gulf of Mexico is curtailed because of BP’s spill.
‘PR Gaffes’
Hayward’s attendance was “part of a long line of PR gaffes and mistakes,” White House Chief of Staff Rahm Emanuel said on ABC’s “This Week” television program. “We can all conclude that Tony Hayward is not going to have a second career in PR consulting.”
BP agreed last week to cancel nine months of dividend payments, saving about $7.5 billion, sell $10 billion of assets and reduce investment to raise cash to meet Obama’s demand for a $20 billion fund for victims of the spill.
“When people turn on the news they see this gusher pouring out,” said Ronald Sorenson, CEO of W.H. Reaves & Co. in Jersey City, New Jersey, which manages $1.6 billion in assets, including BP shares. “That puts a lot of pressure on advisers. Individual investors take this very personally.” Sorenson said he’s sold shares for individual investors since the spill began.
Biggest Loss
The London-listed stock is down 44 percent since the explosion on the Deepwater Horizon rig that killed 11 workers and started the leak on the seabed. The shares fell to a 13- year low of 342 pence on June 15, wiping about 60 billion pounds ($89 billion) off the company’s value. BP closed at 357.45 pence on June 18. The ADR is down 45 percent this year, more than any other company in the 11-member CBOE Oil Index.
Money flow attempts to measure the capital moving in and out of a security by adding the value of higher, or uptick, trades and subtracting the value of downticks. As prices fall, money flows are usually negative, turning positive as prices rise. A divergence between money flow and price may signal a change in the trend.
The method was pioneered by Laszlo Birinyi, founder of the Westport, Connecticut-based research and money-management firm Birinyi Associates Inc.
“People in the U.K. are buying the stock, taking advantage of the discount” since the stock plunged, said Cleve Rueckert, an equity analyst at Birinyi’s firm. “But when a stock starts to slide like this, it’s hard to say when it will turn around.”
City Vs Wall Street
Birinyi’s October 2007 forecast that a recovery in banks would be wiped out presaged an 82 percent plunge in the Standard & Poor’s 500 Financials Index through March 6 of the next year.
The split over BP between U.K. and U.S. investors extends to analysts. The U.K. stock has 26 “buy” recommendations, while 12 analysts recommend holding the stock and two say to sell. In contrast, almost as many U.S. analysts advise against purchasing the stock as buying it. The ADRs have seven “buy” recommendations, five “holds” and one “sell.”
“I’m sure anger is fuelling the selling,” said John Olson, managing partner at Houston Energy Partners, a hedge fund unit of Sanders Morris Harris Group Inc. “We’ve had a media firestorm, and the flames have been fanned by the Obama administration.”
Stonewalling Congress
Moody’s Investors Service cut the company’s debt rating by three levels last week on concern litigation claims will be an “overhang” on BP’s creditworthiness for years. Fitch Ratings pushed BP down six notches to two grades above “junk.”
U.S. lawmakers accused Hayward, 53, of stonewalling and dodging questions about the causes of the explosion when he testified before a Congressional committee last week. The New York Daily News previously called the CEO “the most hated -- and clueless -- man in America.”
“I don’t think the image that comes across in the States is at all fair to him,” said Timothy Guinness, CEO of Guinness Atkinson Asset Management in London, which owns BP shares. “He is very hard working, he is very conscientious, he is trying to do the right thing. The fall was overdone, the upside from here is quite significant.”
Guinness said he’s buying BP shares for more aggressive investors, anticipating a gain of as much as 50 percent during the next year.
‘Long-Term Perspective’
After taking over from John Browne in May 2007, Hayward pledged to apply a “laser-like focus” to improving safety, declaring the goal one of his three top priorities.
To turn BP around, Hayward will have to regain the confidence of U.S. regulators, politicians and investors. BP became the biggest producer of oil and gas in the U.S. after spending $100 billion buying Chicago’s Amoco Corp. and Atlantic Richfield Co. of Los Angeles between 1998 and 2000. About 26 percent of its production is in America, stretching from Alaska’s Prudhoe Bay in the Arctic to the deep waters of the Gulf of Mexico.
“When things look the worst, that’s usually when the value opportunities present themselves,” said Lothar Mentel, chief investment officer for Octopus Investments Ltd. in London. “But you do have to have a long-term perspective.”
To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net; Eduard Gismatullin in London at egismatullin@bloomberg.net.
WOW! LH, that's WONDERFUL news! HAPPY FATHER'S DAY!
Not a better present than that...I can imagine how happy you are.
OT: Van der Sloot a Dead Man, Says Ex-Con, his mom should buy a black dress...
Predicts Dutchman Charged in Stephany Flores Slaying Will Be Killed by Fellow Inmates in Peru
(CBS) Joran van der Sloot is a goner.
June 19, 2010
So says prison expert and ex-con Larry Levine, founder of Wall Street Prison Consultants.
On "The Early Show on Saturday Morning," Levine said van der Sloot will never last in prison in Peru, where he's being held for the May 30 slaying of 21-year-old business student Stephany Flores in his Lima hotel room.
The Dutchman is also still the chief suspect in the 2005 disappearance in Aruba of Alabama teen Natalee Holloway.
And, says Levine, he probably doesn't have much time left.
Van der Sloot Tried to Create Alibi, Sources Say
Grisly van der Sloot Hotel Room Photos Surface
Inside Notorious Prisons van der Sloot Faces
Asked by co-anchor Chris Wragge what advice he'd give van der Sloot, Levine said, "I'd tell him, 'You're not gonna make it,' that 'What you need to do is pray, because someone's gonna kill ya, and just enjoy the rest of the time you have left on Earth.'
"You know, that's a dangerous place. ... You've got murderers there, terrorists there - you've got bad people. And the problem he's facing is that the father of Stephany (Flores) ... is a prominent person. And this is an impoverished prison. And you pay off the right people, ya know, someone will stick a knife right in the guy.
"They'll be lining up to kill him. He has no hope. He has no chance.
"And I could give advice to his mother, that I would go out and buy a black dress and get ready for the funeral, because it's gonna be all over pretty soon."
That's the case even though van Sloot is being kept away from fellow inmates, Levine says. "He's in solitary. He's living in a cellblock that has ten cells to it. He's living by himself. ... His existence is just about over. … It doesn't really matter if they isolate him because, even in a U.S. prison, people can get to people.
"I talked to my buddy, Bobby the Bookmaker, in Vegas. He says you can't even get a line on the guy, because he's a dead man. Nobody's picking up the action on this. The show's over for this kid. He needs to face the facts."
Levine says van der Sloot may even see the handwriting on his cell's walls. "I read a report somewhere that he's got a Bible in his cell. He's probably reading the Bible.
"And he's probably trying to plan his next move, but he doesn't have a lot of options. This isn't like the U.S. judicial system, where you're innocent until proven guilty. It's the Napoleonic system, where you're guilty until proven innocent. He's got a lawyer who he probably cannot understand. He's just thrown into an environment where he has no hope of survival. His existence is gonna be nil.
"He doesn't have any money on the inside. I mean, in this prison, if you can get money on the inside, you can get drugs, you can get special food, you can get a woman in your cell. You can get just about anything you want. But he's in an isolation unit.
"He has nothing and he has no hope."
http://www.cbsnews.com/stories/2010/06/19/earlyshow/saturday/main6597757.shtml
>>David Kotok: BP Oil Spill Will Cause 1 Million Permanent Lost Jobs
Joe Weisenthal | Jun. 20, 2010, 8:24 AM
David Kotok of Cumberland Advisors is out with the latest in his sobering, but must-read OIl Slickonomics series. This time he does some math on the direct economic impact on Gulf States.
We estimate that an extended moratorium, which we now expect to continue because of Obama political calculus, will cost up to 200,000 higher-paying jobs in the oil drilling and oil service business and that the employment multiplier of 4.7 will put the total job loss at nearly 1 million permanent employment shrinkage occurring over the next few years. Five states have a regional recession/depression development underway. Alaska could become the sixth state on the damaged list.
Readers may note that for the Gulf region, they can watch the Beige Books of the Atlanta and Dallas Federal Reserve Banks for economic details over the next several months.
And we must not be deceived by the $20 billion fund. It is not nearly enough to cover the liabilities that may develop for BP and its partners, who are already in dispute with each other over who is going to pay for what and when and how much. Remember at $4300 fine for each leaked barrel of oil, the $20 billion is likely to just cover the fine. We expect that the total cleanup and payment of the liabilities to all injured parties in all five states may approach 5 times that amount.
Read more: http://www.businessinsider.com/david-kotok-bp-oil-spill-will-cause-1-million-permanent-lost-jobs-2010-6#ixzz0rOlXLEY7
NYP: $7-a-gallon gas? - The folly of O's oil-spill 'fix'
By BEN LIEBERMAN
Last Updated: 4:31 AM, June 19, 2010
Posted: 12:02 AM, June 18, 2010
President Obama has a solution to the Gulf oil spill: $7-a-gallon gas.
That's a Harvard University study's estimate of the per-gallon price of the president's global-warming agenda. And Obama made clear this week that this agenda is a part of his plan for addressing the Gulf mess.
So what does global-warming legislation have to do with the oil spill?
Good question, because such measures wouldn't do a thing to clean up the oil or fix the problems that led to the leak.
The answer can be found in Obama Chief of Staff Rahm Emanuel's now-famous words, "You never want a serious crisis to go to waste -- and what I mean by that is it's an opportunity to do things that you think you could not do before."
AFP/Getty Images
Obama: Using Gulf crisis to push unpopular cap-and-trade bill.
That sure was true of global-warming policy, and especially the cap-and-trade bill. Many observers thought the measure, introduced last year in the House by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.), was dead: The American people didn't seem to think that the so-called global-warming crisis justified a price-hiking, job-killing, economy-crushing redesign of our energy supply amid a fragile recovery. Passing another major piece of legislation, one every bit as unpopular as ObamaCare, appeared unlikely in an election year.
So Obama and congressional proponents of cap-and-trade spent several months rebranding it -- downplaying the global-warming rationale and claiming that it was really a jobs bill (the so-called green jobs were supposed to spring from the new clean-energy economy) and an energy-independence bill (that will somehow stick it to OPEC).
Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) even reportedly declined to introduce their new cap-and-trade proposal in the Senate on Earth Day, because they wanted to de-emphasize the global-warming message. Instead, Kerry called the American Power Act "a plan that creates jobs and sets us on a course toward energy independence and economic resurgence."
But the new marketing strategy wasn't working. Few believe the green-jobs hype -- with good reason. In Spain, for example, green jobs have been an expensive bust, with each position created requiring, on average, $774,000 in government subsidies. And the logic of getting us off oil imports via a unilateral measure that punishes American coal, oil and natural gas never made any sense at all.
Now the president is repackaging cap-and-trade -- again -- as a long-term solution to the oil spill. But it's the same old agenda, a huge energy tax that will raise the cost of gasoline and electricity high enough so that we're forced to use less.
The logic linking cap-and-trade to the spill in the Gulf should frighten anyone who owns a car or truck. Such measures force up the price at the pump -- Harvard Kennedy School's Belfer Center for Science and International Affairs thinks it "may require gas prices greater than $7 a gallon by 2020" to meet Obama's stated goal of reducing emissions 14 percent from the transportation sector.
Of course, doing so would reduce gasoline use and also raise market share for hugely expensive alternative fuels and vehicles that could never compete otherwise. Less gasoline demand means less need for drilling and thus a slightly reduced chance of a repeat of the Deepwater Horizon spill -- but only slightly. Oil will still be a vital part of America's energy mix.
Oil-spill risks should be addressed directly -- such as finding out why the leak occurred and requiring new preventive measures or preparing an improved cleanup plan for the next incident. Cap-and-trade is no fix and would cause trillions of dollars in collateral economic damage along the way.
Emanuel was wrong. The administration shouldn't view each crisis -- including the oil spill -- as an opportunity to be exploited, but as a problem to be addressed. And America can't afford $7-a-gallon gas.
Ben Lieberman is senior analyst of energy and environmental policy in The Heritage Founda tion's Roe Institute.
Read more: http://www.nypost.com/p/news/opinion/opedcolumnists/gallon_gas_9GlF3o1xIcIBelOV3k0RsK#ixzz0rN0yXt9m
GOLD: COT Weekly Data Discloses Biggest Euro Short Covering Episode In History
Submitted by Tyler Durden on 06/18/2010 15:30 -0500
The CFTC Commitment of Traders is out and, it's a doozy: the amount of short covering in net spec EUR short positions hits what is certainly an all time record, as just under 50 thousand (49,585) short contracts are covered. This represents a huge 44% of all outstanding EUR net shorts (-111,945) as of the prior week. No wonder the EUR surged, and no wonder Goldman downgraded the EURUSD - in tried and true fashion we wonder how many banks tightened up margin requirements only to force the biggest short squeeze in history. It is only logical that every sellside desk would try to sucker as many clients as they could in advance of this rampage. The current net spec short position takes total shorts back to levels from mid-April, when the euro was trading in the 1.30 range. This is very bad news for existing EUR longs as it is now guaranteed that all weak hands have certainly been shaken out. Any additional move higher will actually have to occur for truly fundamental reasons. Alas, those will not be coming any time soon.
5.Your rating: None Average: 5 (10 votes)
http://www.zerohedge.com/article/cot-weekly-data-discloses-biggest-euro-short-covering-episode-history
Bear Ahead? Goldman's Observations On The Schism Between Macro And Micro Investors; Weekly Charts
Submitted by Tyler Durden on 06/19/2010 10:29 -0500
David Kostin continues his attempt to reconcile the apparent incongruity between very bearish macro and just slighly bullish micro investors. In a recent trip to London, David Kostin conducts a detailed investigation on this divergence: "Through a combination of 1x1s and group breakfasts, lunches and dinners we exchanged views with a large cross section of macro equity, fixed income, and FX hedge funds, classic long/short equity hedge funds, and growth, value and global long-only mutual funds."
The take home is that really pretty much everyone (at least in Europe) has a bearish tilt. We wonder when Goldman will readjust its EPS expectations appropriately.
Here are his observations about how investors view the market:
1.Clients do not lack conviction. Our commentary last week discussed the tug-of-war between macro and micro data (Strong micro vs. weak macro: Understanding the Bull and Bear arguments for US Equities, June 11, 2010). This week we outline the dialogue with macro and micro investors. Clients currently have particularly strong views compared with the level of conviction expressed during previous visits. Sometimes investors have a relatively neutral view of opportunities and risks and position themselves for a variety of market outcomes. We did not find that to be the case this time.
2.Macro-driven investors have a bearish view of US equities and are positioned accordingly. By macro-driven investors we do not mean exclusively macro hedge funds but rather any investor who views the investment decision process from a top-down perspective. Many long-only investors as well as FX and equity hedge funds fall into this category.
3.Macro-driven investors view price action as the starting point for their investment discussion. Specifically, this group of clients interpreted the recent 14% drop in the S&P 500 through an economic lens. The term most commonly used to describe the correction was fallout from the economic “shock” of heightened sovereign credit risk in Europe. These investors argued that the US stock market decline appropriately reflected the downshift in fundamentals and greater likelihood of contagion to the US.
4.The macro-oriented community expressed a fairly consistent set of bearish beliefs: (a) European sovereign debt problems would persist for an extended period; (b) Euro would continue to weaken and could fall towards parity vs. US Dollar from current 1.23; (c) Sovereign debt crisis eventually would spread to the US and would probably come sooner than many currently expect; and (d) Both US and European equity indices do not reflect reduced economic growth prospects for developed markets from tighter fiscal policy necessary to address sovereign credit concerns.
5.Micro-driven investors were more balanced in their views than their macro counterparts, although only a few could be described as bullish.
6.Micro-driven investors expect and are positioned for US stocks to outperform European stocks in both local currency and US Dollar terms. Several investors noted they were currently more overweight US stocks in their portfolio compared with their historical allocations. Faster relative EPS growth of US firms was cited by several fund managers as one argument for the overweight positioning. The lack of a continent-wide bank stress-test analogous to the Fed’s 2009 report on the health of systemically-important US financials firms was identified as a headwind for European share prices. If such a test is conducted, and the exam is perceived to be rigorous, necessary dilution would be known, capital could be raised, and broad indexes could rally. Such a test is being discussed but there are no details.
7.A key difference between the micro and macro schools of investing is how precedent and incremental data points are processed. Macro investors focus on price action because they believe it incorporates shifts in macroeconomic trends and associated risk premiums. However, when shown empirical data from the initial recovery phase after previous bear markets in 1974, 1982, 1987, 1990, and 2002 that the magnitude of the rebound, the frequency of pull-backs, and the size of the corrections since March 2009 are entirely consistent with prior experience, the observation is dismissed with the claim that the current sovereign debt crisis is unique (see Exhibit 2).
Similar arguments were undoubtedly made before. In 1975, after the S&P 500 had rallied 53% from its 1974 bear market low, the index dropped by 14% as bankruptcy loomed for New York City. The fate was only narrowly avoided through the creation of an off-balance sheet SPV after the Federal government rejected a plea for funds. Familiar-sounding parallels?
8.Macro clients also dismissed every incrementally positive company data point with the statement, “Yes, but the next data point will be negative and reflect the second-half slowdown. Don’t you recall how fast business activity collapsed in 2008; why won’t we repeat that experience in 2010?” The profit cycle is expanding now in contrast with two years ago when it was contracting. Firms are vigilant on their cost structure and margins are close to all-time highs. Although order books could collapse, data points indicate we are in a sharp “V”-shaped profit recovery, even if economic growth remains weak.
http://www.zerohedge.com/article/goldmans-observations-schism-between-macro-and-micro-investors-weekly-charts
ZH: 12 American Warships, Including One Aircraft Carrier, And One Israeli Corvette, Cross Suez Canal On Way To Red Sea And Beyond
Submitted by Tyler Durden on 06/19/2010 23:27 -0500
Arabic newspaper Al-Quds al-Arabi reports that 12 American warships, among which one aircraft carrier, as well as one Israeli corvette, and possibly a submarine, have crossed the Suez Canal on their way to the Red Sea. Concurrently, thousands of Egyptian soldiers were deployed along the canal to protect the ships.
The passage disrupted traffic into the manmade canal for the "longest time in years."
The immediate destination of the fleet is unknown. According to Global Security, two other carriers are already deployed in the region, with the CVN-73 Washington in the western Pacific as of May 26, and the CVN-69 Eisenhower supporting operation Enduring Freedom as of May 22.
It is unclear at first read what the third carrier group may be, but if this news, which was also confirmed by the Jerusalem Post and Haaretz, is correct, then the Debka report about a surge in aircraft activity in the Persian Gulf is well on its way to being confirmed. There has been no update on the three Israeli nuclear-armed subs that are believed to be operating off the coast of Iran currently.
From the original article, translated by Google and Zero Hedge:
>>Egypt allows use of Suez Canal for build-up of war against Iran
Arab Monitor - 5 hours ago
Cairo, 19 June – Egypt allowed eleven US Navy battleships transporting an aircraft carrier, infantry troops, armoured vehicles and ammunition as well as one Israeli warship to cross from the Mediterranean Sea into the Red Sea via the Suez Canal.
Talking to the London-based daily Al-Quds, which reported the news, retired Egyptian General Amin Radi, chairman of the national security affairs committee, told the paper that “the decision to declare war on Iran is not easy, and Israel, due to its wild nature, may start a war just to remain the sole nuclear power in the region.”
http://www.arabmonitor.info/news/dettaglio.php?idnews=30880&lang=en
YIKES: Greenspan Says U.S. May Soon Reach Borrowing Limit
By Jacob Greber - Jun 17, 2010
Former Federal Reserve Chairman Alan Greenspan said the U.S. may soon face higher borrowing costs on its swelling debt and called for a “tectonic shift” in fiscal policy to contain borrowing.
“Perceptions of a large U.S. borrowing capacity are misleading,” and current long-term bond yields are masking America’s debt challenge, Greenspan wrote in an opinion piece posted on the Wall Street Journal’s website. “Long-term rate increases can emerge with unexpected suddenness,” such as the 4 percentage point surge over four months in 1979-80, he said.
Greenspan rebutted “misplaced” concern that reducing the deficit would put the economic recovery in danger, entering a debate among global policy makers about how quickly to exit from stimulus measures adopted during the financial crisis. U.S. Treasury Secretary Timothy F. Geithner said this month that while fiscal tightening is needed over the “medium term,” governments must reinforce the recovery in private demand.
“The United States, and most of the rest of the developed world, is in need of a tectonic shift in fiscal policy,” said Greenspan, 84, who served at the Fed’s helm from 1987 to 2006. “Incremental change will not be adequate.”
Rein in Debt
Pressure on capital markets would also be eased if the U.S. government “contained” the sale of Treasuries, he wrote.
“The federal government is currently saddled with commitments for the next three decades that it will be unable to meet in real terms,” Greenspan said. The “very severity of the pending crisis and growing analogies to Greece set the stage for a serious response.”
Yields on U.S. Treasuries have benefitted from safe-haven demand in recent months because of the European debt crisis, a circumstance that may not last, said Greenspan, who now consults for clients including Pacific Investment Management Co., which has the world’s biggest bond fund.
Benchmark 10-year Treasury notes yielded 3.20 percent as of 12:11 p.m. in Tokyo today, down from the year’s high of 4.01 percent in April and compared with as high as 5.32 percent in June 2007, before the crisis began. Yields have remained low “despite the surge in federal debt to the public during the past 18 months to $8.6 trillion from $5.5 trillion,” Greenspan said.
The swing in demand toward American government debt and away from euro-denominated bonds is “temporary,” he said.
“Our economy cannot afford a major mistake in underestimating the corrosive momentum of this fiscal crisis,” Greenspan said. “Our policy focus must therefore err significantly on the side of restraint.”
To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net
>>$1260 - Gold Rises to a Record in London, New York on European Concern
By Nicholas Larkin - Jun 18, 2010
Gold rose to a record in London and New York as investors bought the metal to protect wealth from Europe’s financial turbulence and on concern that the economic recovery isn’t as strong as expected.
Gold rose to $1,258.25 an ounce in London and futures reached $1,260.90 in New York. The metal is heading for a 10th straight annual increase, the longest run since at least 1920, amid speculation that debt-cutting measures by European nations will slow growth. U.S. data yesterday showed slowing manufacturing growth and an increase in jobless claims.
The metal’s “unique property as the ultimate safe-haven currency is making gold an attractive investment,” said Bayram Dincer, a commodity analyst at LGT Capital Management in Pfaeffikon, Switzerland. “Gold’s recent price move is a function of euro-zone debt worries. Investors are looking to substitute assets and currencies with gold.”
Gold for immediate delivery was up 1 percent at $1,257.63 an ounce at 12:47 p.m. in London. Gold futures for delivery in August were up 0.8 percent at $1,259.10 an ounce on the Comex in New York.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net.
BL: BP's U.S. Future Teeters as CEO, Lawmakers Clash on Oil Spill
By Joe Carroll and Jessica Resnick-Ault - Jun 18, 2010
BP Plc Chief Executive Officer Tony Hayward’s failure to set safety standards to prevent the Gulf of Mexico oil spill may cost the company control over U.S. oil fields, refineries and pipelines that account for more than one- third of its sales, lawmakers and analysts said.
Less than 24 hours after Hayward met President Barack Obama’s demand to set aside $20 billion to clean up and compensate victims of the worst oil spill in U.S. history, lawmakers yesterday accused the BP CEO of “stonewalling.” Hayward appeared before a House committee probing the cause of the April 20 offshore rig explosion that killed 11 workers.
Citing a five-year string of accidents and deadly disasters at BP-operated facilities, Representative Bart Stupak suggested the poor safety record could justify banning the London-based company from doing business in the U.S.
“Setting up the fund was a nice pro-active approach by BP, but in reality it’s going to take a decade for them to recover and regain public trust in this country,” said Jonathan Dison of Bender Consulting, a risk management and strategy firm that has advised BP, Chevron Corp. and Royal Dutch Shell Plc.
At risk is BP’s standing as the biggest producer in the U.S., built up after spending $100 billion buying Amoco Corp. and Atlantic Richfield Co.
Shares Gain
BP rose as much as 5.5 percent in London trading before paring gains to trade 2.1 percent higher at 356.40 pence as of 12:50 p.m. local time. The shares have lost 44 percent of their value since the April 20 explosion and fire aboard the Deepwater Horizon rig.
BP’s senior unsecured ratings were cut three levels to A2, the sixth-highest investment grade, from Aa2 by Moody’s Investors Service today, which warned that further downgrades are possible.
The cost of credit-default swaps protecting BP’s debt against default for one year fell 7 basis points to 624 basis points, prices from CMA DataVision in London show.
Congressman Stupak didn’t elaborate on how BP could be banned from operating in the U.S. and whether such authority rests with Congress, the administration, or regulatory agencies.
Scrutiny of BP’s operations in the U.S. intensified after a fire killed 15 workers at its Texas refinery in 2005, and will increase further following the rig disaster, said John Bresland, chairman of the U.S. Chemical Safety and Hazard Investigation Board.
The board added an investigation into the cause of the rig disaster to a list of federal probes into BP, Bresland said in an interview yesterday. The probe was requested by Representative Henry Waxman, a California Democrat.
New Investigation
“Our investigation will look at 2 years before the incident, a year before it, the day before, what happened on that day, up to the time the explosion took place,” Bresland said.
BP was cited for 760 safety violations in the past half decade by the U.S. Occupational Safety and Health Administration, compared with eight each for ConocoPhillips and Sunoco Inc., two for Citgo Petroleum Corp. and one for Exxon Mobil Corp., Representative John Sullivan, an Oklahoma Republican, said during yesterday’s hearing.
Inspections of the company’s five U.S. plants after the Texas refinery fire resulted in a fine of $21 million by the Occupational Safety and Health Administration for safety violations. Last year, discovery of more violations resulted in BP being slapped with a record fine of $87.4 million.
‘Extremely Frustrated’
In his testimony yesterday, Hayward not only failed to convince lawmakers he was committed to making BP safer, he may have deepened suspicion of the company by repeatedly pleading ignorance to events that took place under his command, said Matt Eventoff, a partner at New Jersey communications firm, Princeton Public Speaking.
“Mr. Hayward’s comments today, saying ‘I don’t know’ 66 times, evaporated any feeling of responsibility,” Eventoff said. “Any goodwill that the company bought back yesterday eroded today with his testimony.”
Questioned by the panel about BP practices that may have led to the disaster, Hayward said it was too early in the investigation to know the cause.
Stupak, a Michigan Democrat, told Hayward he and other committee members were “extremely frustrated with your lack of candor and inability to answer questions.” Waxman described the CEO’s responses as “stonewalling.”
“I’m not stonewalling,” Hayward responded. According to a transcript of his testimony, Hayward said at least 23 times he was not involved in decisions.
‘Laser-like Focus’
After taking over from John Browne in May 2007, Hayward, now 53, pledged to apply a “laser-like focus” to improving safety at the company, declaring it one of his three top priorities along with people and performance.
In Nov. 2007 he said that BP already was making “great progress” on safety. He simplified BP’s corporate structure and cut several thousand jobs.
This year, at a March 2 presentation to analysts, Hayward focused on financial performance.
“Our direction is clear: the unrelenting pursuit of competitive leadership in respect of cash costs, capital efficiency and margin quality,” he said.
BP is the biggest crude and gas producer in the Gulf of Mexico. The company has amassed about 500 deep-water exploration leases in the Gulf.
BP has spent about $1.6 billion on containing and cleaning up the spill so far. The company’s spending for cleanup and liabilities may reach $40 billion, Standard Chartered Plc estimated last week.
The yield premium investors demand to hold BP’s 500 million pounds of 4 percent bonds due 2014 decreased 1 basis point to 359 basis points, according to HSBC Holdings Plc prices on Bloomberg. The spread on the company’s 1 billion euros of 2016 notes tightened 6 basis points to 531 basis points.
To contact the reporters on this story: Joe Carroll in Washington at jcarroll8@bloomberg.net, Jessica Resnick-Ault in New York at jresnickault@bloomberg.net
And yet...BP gaps over $32, lol. BUY PUTS CHEAP..Expiration Friday games are a gift to smart traders
And that's all I'm gonna say about that!
GM! >>Copper down 2.88, FCX, BHP follow, GOLD RECORD: 1255, we bought gold calls all week
RIG gaps over $51, and me full of RIG calls :)
S&P futures wobbly, we been tracking those big block sells of SPY all week
Watch out below!
>>Copper down 2.88, FCX, BHP follow, GOLD RECORD: 1255, we bought gold calls all week
RIG gaps over $51, and me full of RIG calls :)
S&P futures wobbly, we been tracking those big block sells of SPY all week
Watch out below!
>>JOBLESS CLAIMS UP - higher than expected, futures take a hit...
EFin: BP dividend woes will force fund managers to look overseas
William Hutchings
11 Jun 2010
Any decision by oil giant BP to suspend its next dividend payment could spur a backlash among retail investors and hasten the end of an era for UK equity income funds as they refocus to invest globally
BP is a favourite investment of many UK equity income funds, which aim to generate a regular income by investing in companies that pay high dividends.
In a typical year, BP accounts for more than 13% of dividend payouts of the FTSE 100 list of largest UK quoted companies. If the company pays no dividend this year, investors in income funds – many of whom are pensioners who rely on the funds as a steady source of earnings - could find their income cut by a seventh. As a result, they are expected to look more favourably at global equity income funds.
Dick Saunders, chief executive of the Investment Management Association, a trade body for UK asset managers, said: “A decision by BP to avoid paying a dividend would encourage the already-growing interest in international or global income products. Diversifying outside the UK reduces the exposure to the impact of a single event.”
Charles Richardson, chief executive of UK fund manager Veritas Asset Manager, which runs a global equity income fund, said: “BP will provide an important catalyst to raise the issue in people’s minds. It reinforces the argument that investing in global equities offers a broader opportunity set and diversification: if you want to invest in the best companies, don’t restrict yourself, go global.”
Sticking to funds that invest only in UK equities has the advantage of holding shares in companies that retail investors recognise, and protects them from the risk of foreign exchange losses, so fund managers and investment consultants expect UK equity income funds to remain popular for some time. However, the trend favours global or international equity funds.
Ian Chimes, managing director of PSigma Asset Management, a UK fund manager that runs UK equity income funds, said: “BP will be an issue, there would be a lot of disappointment and it will make people more willing to look overseas. UK funds remain attractive relative to cash, however.”
Ben Yearsley, a funds analyst at Hargreaves Lansdown, a UK firm that recommends funds to retail investors, said: “Most UK equity income funds have 4% or 5% in BP. If the company doesn’t pay a dividend, it might make a few more people think about turning to global equity income funds.
“I expect most people will continue to hold UK assets as the main part of their portfolio, but investors have been looking increasingly at overseas equity income funds for the last two years.”
Invesco Perpetual, whose star manager Neil Woodford runs £16bn in UK equity income funds, more than any other manager, launched a global equity fund 18 months ago. It said at the time that it had identified a gap in the UK market for these funds. Paul Boyne, who manages the fund, said: “BP will encourage investors to look at global equity income.”
Consultants said most UK asset management companies have been investing in overseas equities, and said UK managers would be able to cope well with any shift of investors from UK equities to global equities. The IMA's Dick Saunders said: "I don't think it will be detrimental to London at all. We are probably better-placed than anywhere else when it comes to managing global equity portfolios. We can hold our own against anybody."
http://www.efinancialnews.com/story/2010-06-11/equity-income-fund-managers-will-shift-to-global-equities
Recovery? FedEx Earnings Forecast Trails Estimates on Sluggish Recovery
By Mary Schlangenstein and Mary Jane Credeur
June 16 (Bloomberg) -- FedEx Corp., the world’s largest air-cargo carrier, forecast annual profit that trailed analysts’ estimates on a slower pace of recovery for express shipments.
Earnings for the fiscal year that began June 1 will be $4.40 to $5 a share, the Memphis, Tennessee-based company said today in a statement. Analysts projected $5.07, the average of 21 estimates compiled by Bloomberg.
The forecast suggests global shipping growth may be slower than some investors and analysts anticipated. FedEx faces higher pension costs, as well as expenses for restored contributions to employee retirement accounts and for raises after halting both in the recession. Profit this quarter will be 85 cents to $1.05 a share, compared with analysts’ estimates of $1.02.
Earnings growth will be “constrained by significant increases in fixed pension” and aircraft-related costs, Alan Graf, chief financial officer, said in the statement.
FedEx fell $1.90, or 2.3 percent, to $81.11 at 7:51 a.m. before the start of New York Stock Exchange composite trading. The shares have dropped less than 1 percent this year.
FedEx’s annual forecast has missed analysts’ estimates in seven of the past eight years and “similar risk exists this year given returning expenses to support growth, benefits restoration and pension costs,” Jon Langenfeld, an analyst at Robert W. Baird & Co., wrote in a June 1 note to clients.
The Milwaukee-based analyst rates FedEx shares “neutral”
FedEx also reported net income of $419 million, or $1.33 a share, for the quarter ended May 31. The results met the average estimate from 18 analysts’ projections compiled by Bloomberg. Revenue rose 20 percent to $9.43 billion.
To contact the reporters on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net
Last Updated: June 16, 2010 08:00 EDT
>>Ouch! Louisianans say Bush did a better job on Katrina
By: David Freddoso
Online Opinion Editor
06/15/10 10:44 PM EDT
Public Policy Polling buried the lede on their latest survey. This one is going to leave a mark:
Louisianans believe that President George W. Bush did a better job handling the crisis in the state than President Obama, 50 to 35. But most Louisianans think the oil spill is far more critical than Hurricane Katrina. Louisianans overwhelmingly believe that the effects of the oil spill will be far more harmful to Louisiana in the long term than Hurricane Katrina, 76 to 17%
http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/ouch-louisianans-say-bush-did-a-better-job-on-katrina-96440714.html
Thank you and GM!
Fannie delisted, to become .ob. Remember when we were screaming warnings here, that FNM and FRE were going dilute their shares and wipe out shareholders?
Ah...the dubious joys of being far-sighted
Good Morning!
>>BP Dividend ‘Off the Table’ as Obama Demands Gulf Spill Fund
By Brian Swint
June 16 (Bloomberg) -- BP Plc will suspend its $10 billion dividend as President Barack Obama’s demand to set aside cash for the Gulf of Mexico spill stretches the company’s finances, analysts said.
“The dividend is off the table,” said Alastair Syme, an oil and gas analyst at Nomura Holdings Inc. in London. “Until they have some clarity on the costs of the spill, they can’t do anything.”
BP Chairman Carl-Henric Svanberg will meet Obama at the White House today to discuss how to compensate victims of the spill after Obama in an Oval Office address yesterday called for creation of a fund. Lawmakers, who will question Chief Executive Officer Tony Hayward tomorrow, have said the company should suspend the dividend and put $20 billion in an independently administered escrow account to pay claims.
Bloomberg forecasts show that BP is unlikely to pay a cash dividend in the second and third quarters. BP’s payments accounted for about 14 percent of all dividends in the U.K.’s benchmark FTSE 100 stock index last year. Fitch Ratings yesterday lowered BP’s credit score by six grades to BBB, two levels above junk, on concern costs will escalate.
“Hayward’s response to the president is very important, and the dividend could be fairly easy to give,” said Gudmund Halle Isfeld, an analyst at DnB NOR ASA in Oslo. “If I were an investor, I would say it’s okay to suspend the dividend for a quarter or two to ensure the company gets through the storm.”
BP spokeswoman Sheila Williams said no decision on the second-quarter dividend has been made.
Fitch said it would be “surprised” if BP didn’t suspend the quarterly payout until the full costs are known. Cleanup and liabilities may reach $40 billion, Standard Chartered Plc estimated last week.
‘Lack of Access’
“It’s not financially obvious how they could set up an escrow, given their credit rating and lack of access to credit markets,” Nomura’s Syme said. “It’s in the interest of BP to do something rather than nothing but they’re constrained by liquidity.”
Credit investors are pricing in a more than 39 percent chance BP will default within five years. The rising risk implied by credit-default swaps is up from 7 percent a month ago, according to CMA DataVision.
BP had $5 billion of cash available, $5.25 billion of credit lines it hadn’t used and another $5.25 billion of stand- by bank facilities, BP said in an investor conference call June 4. Fitch said yesterday it expects BP’s lenders to allow the company to use the credit lines if needed.
BP generated $27.7 billion in cash flow from operations last year and posted profit of $6 billion in the first quarter. Capital spending will total about $20 billion the company said in this year’s strategy presentation.
Cleaning Up
The company has spent about $1.6 billion on containing and cleaning up the spill so far.
If BP maintains its dividend this year at the 2009 level the dividend yield, or annual payout as a percentage of the current share price, will be more than 10 percent. That compares to 2.8 percent for Exxon Mobil Corp. and 5.9 percent for Royal Dutch Shell Plc.
“BP has the strength of balance sheet and free cash flow to sustain dividends at existing levels for now,” Collins Stewart analyst Gordon Gray wrote in a note today. “However, the rising level of public anger in the U.S., including pressure for BP to establish an escrow account for spill compensation, now point to the likelihood that BP will not pay a cash dividend for the second quarter.”
To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.
Last Updated: June 16, 2010 06:36 EDT
>>: BP Oil Spill Lawsuits Spread to States Beyond Gulf Coast
By Laurel Brubaker Calkins and Margaret Cronin Fisk
June 16 (Bloomberg) -- BP Plc faces more than 225 lawsuits in 11 states as litigation from businesses, individuals and investors continues to increase almost two months after the Deepwater Horizon oil rig exploded.
In addition to scores of claims brought in five states along the Gulf shore, coastal businesses and property owners in Georgia and South Carolina have sued for damages from the drifting oil, which has yet to round the southern tip of Florida and enter the Atlantic Ocean.
Investors in three states, including Louisiana and Alaska, have sued BP’s board of directors for allegedly causing more than $50 billion in shareholder losses by failing to implement safety policies that would have prevented the spill. In a separate class-action lawsuit in Florida, the company is accused of “a pattern” of criminal acts including fraud. That suit seeks triple damages under federal civil racketeering law.
“The damage is not just suffered at ground zero along the Gulf Coast,” said Mark Lanier, a Houston lawyer representing dozens of fishermen and property owners against BP. “The shock waves reverberate across state lines and across occupational lines.”
A judge may decide there isn’t a strong enough connection between some damage claims and the spill itself and those claims will be thrown out, Lanier said yesterday in a phone interview. “But we’re not at that point yet,” he said.
Primary Liability
BP, as owner of the underwater lease, has primary liability for damages caused by the tens of millions of gallons of crude oil that have spewed from the damaged well since the April explosion and sinking of the Deepwater Horizon. Almost all the lawsuits also name Transocean Ltd., which owned the rig, along with Cameron International Corp. and Halliburton Energy Services Inc., which provided the rig’s blowout prevention equipment and cementing services, respectively.
David Nicholas, a BP spokesman, didn’t immediately return a call seeking comment yesterday.
BP America Inc. Chairman Lamar McKay told Congress in May that the company will pay all “legitimate” claims related to the spill. On June 2, Credit Suisse estimated the combined cleanup, restoration and litigation costs of the spill could top $37 billion.
President Barack Obama said yesterday in a televised speech that he will tell BP Chairman Carl-Henric Svanberg in a White House meeting today that the London-based company must set aside “whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company’s recklessness.”
Securities Lawsuits
Three lawsuits claiming securities fraud were filed by BP investors in federal courts in Louisiana. The lawsuits, each seeking to represent buyers of BP American depositary receipts in a class action, claim the company and its officials inflated share values by issuing “materially false and misleading statements” about BP’s safety record and protocols.
“BP’s procedures for minimizing its financial losses from drilling rig problems were no more than fantasies,” said lawyers for the Johnson Investment Counsel in a June 7 filing in Lafayette, Louisiana. “BP was simply not the enterprise that its public communications pictured.”
The lawsuit claims BP’s actions cost investors more than $56 billion in share value by May 25. The plaintiff is an investment holding company, said its attorney Stanley M. Chesley at Waite, Schneider, Bayless & Chesley in Cincinnati.
Directors Targeted
At least five so-called derivative lawsuits brought by shareholders on behalf of BP were filed against current and former officers and directors of the company. These lawsuits, filed in state and federal courts in Alaska, Delaware and Louisiana, contend that company mismanagement led to the April 20 explosion.
The spill “is a catastrophe of epic proportions brought by the greed and fraudulent conduct of BP,” according to a civil racketeering lawsuit filed June 12 in Florida that names as defendants the company, various corporate entities, and Chief Executive Officer Tony Hayward.
The lawsuit alleges that BP “successfully infiltrated” the Minerals Management Service, the federal regulatory agency overseeing off-shore drilling, and “systematically submitted unsubstantiated and erroneous exploration and oil spill response plans and lease agreements.”
Although oil has yet to leave the Gulf of Mexico, three proposed class-action lawsuits were filed last week in federal court in Charleston, South Carolina, on behalf of property owners, tourism-related businesses, real estate companies and other businesses in six coastal counties. Lawyers involved in those cases say fears the slick will foul beaches later this summer already have caused tourists to cancel trips and vacation rentals.
‘Already Hurting Us’
“The actual spill may not have reached our shores but the effects have,” attorney Aaron Jophlin of the Bell Legal Group LLC in Georgetown, South Carolina, said in an interview. “We hear the effects from our friends and neighbors that, man, it’s already hurting us.”
Owners of condominiums and hotels in Alabama and the Florida Panhandle, where oil is now washing ashore on beaches regularly listed among those with the world’s whitest sand, have filed dozens of lawsuits over lost business. Charter boat operators, fishing guides, marinas, souvenir vendors and watercraft-rental shops as far south as the Florida Keys are suing.
Some of New Orleans’s largest convention hotels, including the Marriott Convention Center and Wyndham Riverfront, have sued over bookings they claim they will lose now and into the future. Meeting planners, who work years in advance, may avoid booking conventions in coastal resorts just as they did after Hurricane Katrina devastated much of the central Gulf Coast in 2005, lawyers for the hotels say.
Katrina Effect
While most New Orleans hotels and restaurants reopened fairly quickly after Katrina, “We still had a tail of lost business for a couple of years” as meeting planners avoided the region, said Steve Herman, a lawyer for the hotels.
Restaurant owners throughout the Gulf Coast are suing over higher seafood prices and the reduced supply of fresh shrimp, oysters and fish, as the National Oceanic and Atmospheric Administration has closed 32 percent of the Gulf to commercial fishing. About 75 percent of shrimp and 20 percent of all seafood consumed in the U.S. comes from the Gulf, according to papers filed in multiple lawsuits.
Restaurateurs also are suing over lost income, claiming customers are avoiding seafood altogether over fears of contamination.
Fishing Fleet
Whole fleets of fishing industry workers have arrived at Gulf courthouses, including 11,700 individually named Vietnamese-American commercial fishermen who filed six lawsuits against BP and Transocean in federal court in Houston.
Thirty-three Mexican citizens who own or work on fishing boats or in seafood processing plants along the U.S. Gulf coast have sued BP and Transocean over lost income from the closure of Gulf waters.
Residents in Kentucky and Tennessee, who own Gulf beachfront properties, have sued over lost income from rental cancellations as well as the lost enjoyment of their own vacation homes.
“BP has grievously injured the entire country, not simply a city, parish, county or state,” Houston attorney Michael Holley, who represents multiple spill victims, said yesterday in an interview. “Hundreds of thousands -- soon to be millions -- of Americans are seeking redress anywhere it can be obtained, and the litigation will continue to spread as the oil and the harm continues to flow.”
BP shares have dropped 48 percent since the spill. They fell 3.8 percent to 342 pence in London trading yesterday, the lowest price since April 1997.
To contact the reporters on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com; Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net.
Last Updated: June 16, 2010 00:01 EDT
BL: Asia Stocks Gain a 5th Day, Metals, Oil Rise on U.S. Optimism
By Rocky Swift and Yoshiaki Nohara
June 16 (Bloomberg) -- Asian stocks rose for a fifth day and metals advanced as economic reports added to optimism a U.S. recovery will support global growth.
The MSCI Asia Pacific Index climbed 1.1 percent to 115.64 at 4 p.m. in Tokyo, set for the highest close since May 18. Advancers led decliners 5 to 1. The Stoxx Europe 600 increased 0.5 percent to 255.60 at 8 a.m. in London. Copper headed for its longest winning streak in 11 months and oil traded near a one- month high. Standard & Poor’s 500 Index futures fell 0.2 percent.
Economists said a report today will show U.S. industrial production expanded in May by the most in four months, adding to evidence the global recovery may shrug off Europe’s debt crisis. The Federal Reserve Bank of New York said yesterday its manufacturing gauge advanced for an 11th month, helping propel the S&P 500 index up 2.4 percent yesterday.
“Stocks seem to have become more resilient after taking into account a lot of negative factors,” said Masahide Tanaka, a senior strategist in Tokyo at Mizuho Trust & Banking Co. “Risk sentiment is improving as economies in the U.S. and China seem to be holding steady, easing concern about a double dip.”
Japan’s Nikkei 225 Stock Average rose 1.8 percent, the biggest increase among equity benchmarks in the Asia-Pacific region. South Korea’s Kospi Index advanced 0.9 percent and Australia’s S&P/ASX 200 gained 1.1 percent. Markets in Hong Kong, China and Taiwan are closed today for a holiday.
Relative Value
MSCI’s Asian gauge has slumped more than 10 percent from its 52-week high on April 15 as swelling budget deficits prompted credit downgrades of Greece, Spain and Portugal. The retreat has driven down the average price of shares in the gauge to 14.8 times estimated earnings. The ratio sank to 13.8 times on May 18, the lowest level since December 2008.
Toyota Motor Corp., which gets about 28 percent of sales from North America, increased 1.2 percent in Tokyo. Samsung Electronics Co., a chipmaker that reaps 20 percent of revenue in America, rose 2.6 percent in Seoul. Nintendo Co. jumped 5.2 percent after it introduced a handheld 3-D video-game player.
Companies that produce materials led gains among the MSCI gauge’s 10 industry groups. BHP Billiton Ltd., the world’s largest mining company, rose 2.2 percent in Sydney and was the biggest contributor to the index’s increase. Rio Tinto Group, the world’s third-ranked mining company, increased 2.8 percent. Mitsubishi Corp., which gets 40 percent of sales from commodities, gained 2.3 percent in Tokyo.
Copper’s Winning Streak
Copper advanced for a seventh day, the longest streak since July 2009. Three-month copper on the London Metal Exchange gained as much as 1.4 percent to $6,770 a metric ton. Among other LME-traded metals, aluminum rose 1.2 percent to $2,037 a ton, zinc increased 1.2 percent to $1,861.50 a ton and nickel added 1.1 percent to $20,440 a ton.
“Market worries about some of the more pessimistic economic scenarios appear to have abated,” David Moore, commodity strategist at Commonwealth Bank of Australia, wrote in a report today. “Strong gains on international equity markets imparted a positive spin on base metal market sentiment.”
Crude oil traded near a one-month high in New York at $76.92 a barrel, after jumping 2.4 percent yesterday as gains in U.S. equities restored confidence that fuel demand will increase.
“The indexes in the U.S. are getting better so everyone is thinking that crude oil demand will increase,” said Ken Hasegawa, a manager for commodity derivative sales at broker Newedge in Tokyo. “Oil is trading in a range. Up or down depends on the financial markets so one has to see the movements of the euro and the stock markets.”
Takeover Target
Woori Finance Holdings Co. advanced 3.3 percent after it was named as a potential takeover target by the chairman-nominee at KB Financial Group Inc., owner of the nation’s biggest lender. Euh Yoon Dae, nominated as chairman of KB Financial yesterday, discussed potential bids for companies including Woori with a panel that recommended him to the post, committee head Lim Suk Sig said.
South Korea’s won rose 1.4 percent to 1,210.75 per dollar, reaching its highest level in almost two weeks, as overseas investors added to their holdings of Korean shares for a fourth day. The Philippine peso climbed 0.6 percent to 46.156 per dollar as the central bank said overseas remittances increased 5.4 percent in April from a year earlier.
“We’re seeing some positive signs from Europe, but we’re still being cautious,” said Jae Sung Park, a currency dealer at Woori Investment & Securities. It will be hard for the won to trade below 1,200 against the dollar today “because the authorities will want to intervene at that level.”
Industrial Output
Output at U.S. factories, mines and utilities increased 0.9 percent in May, the most since January, after a 0.8 percent gain in April, according to a Bloomberg News survey before the Federal Reserve report today. The Fed Bank of New York said yesterday its Empire State Index of manufacturing in the region rose to 19.57 in June from 19.11 the previous month.
The cost of protecting Asia-Pacific corporate and sovereign bonds from non-payment fell, according to traders of credit- default swaps. The Markit iTraxx Australia index dropped 9 basis points to 127 basis points, according to Nomura Holdings Inc. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan declined 8 basis points to 130 basis points, Royal Bank of Scotland Group Plc prices show.
To contact the reporters on this story: Rocky Swift in Tokyo at rswift5@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.
Last Updated: June 16, 2010 03:01 EDT
BL: San Diego May Use Bankruptcy to Roll Back Benefits
Commentary by Joe Mysak
June 16 (Bloomberg) -- The city of San Diego should consider Chapter 9 municipal bankruptcy to help it reduce fringe benefits, pension and health obligations.
That’s one of the suggestions made by the San Diego County Grand Jury, which does the normal duties of recommending indictments as well as reporting on local governments and special districts.
San Diego is the fifth major city in the U.S. this year, and the second in California, where people are talking about bankruptcy as a means to “restructure and reorganize their assets and debts while providing relief from current and future obligations,” in the words of the grand jury’s 22-page report, published on June 8.
San Diego has unfunded liabilities of $2.2 billion in its pension plan and $1.3 billion for health care, which the report calls “unsustainable.”
More than two years of cutting budgets and the mounting public pension crisis have made the unthinkable an option, maybe even an attractive one.
“Municipalities are not required to raise taxes or cut costs to the bone before filing for reorganization under Chapter 9,” the grand jury report says, quoting from a presentation at an October 2009, San Diego County Taxpayers Association seminar.
Open Discussion
San Diego has been wrestling with pension and benefits costs for years. In 2006, the city settled fraud allegations by the Securities and Exchange Commission for failing to disclose to investors that its pension system was underfunded.
The recommendation that the mayor and city council convene a panel of municipal bankruptcy experts to talk about it is the last of 16 suggestions made by the grand jury. That it was made at all, in a wealthy city like San Diego, is disturbing.
“It will be difficult to make the case that the city is insolvent,” said Natalie Cohen of National Municipal Research Inc. in New York in an e-mail this week. “It seems the grand jury report is looking to bust open the discussion about the irrevocable nature of pension obligations -- which will continue to eat up the city’s budget.”
As the report says in its introduction: “One of the underlying causes of the current structural imbalance is the underfunding of the city’s pension obligation by previous city administrations.”
This is a familiar story, both in California and around the country. As of June 30, 2009, the San Diego City Employees Retirement System has only 66.5 percent of the money needed to pay for future pension obligations, according to the report.
Punish the Public
The report contains an extensive discussion of San Diego’s retirement system, and recommends that the city investigate replacing it with some sort of alternative.
Among the report’s other recommendations are having someone else run the libraries, selling portions of parks and charging for trash collection: a fairly standard grab bag.
There’s also a little discussion on how to reduce headcount.
Did you ever have a feeling that there’s a vindictive element to some of the cuts governments do manage to make? That is, when they are absolutely at the end of their tethers and are forced to fire people, did you ever think that the government somehow (and unbelievably, if you ask me) tries to punish the public? It’s almost as though those in charge say, “Fine, we’ll cut back, but you’ll never have clean streets again.”
In other words, if the city makes cuts as painful and obvious as possible, we’ll all learn our lesson. I’m not sure what the lesson is. I suspect it depends upon who you are. Don’t lose your job? Offer to pay more taxes? Don’t ask if government might run more efficiently ever again?
There’s a hint of this in the grand jury report.
Too Many Managers
The city, it says, acted “improvidently” in cutting the public safety workforce, such as mounted patrolmen and the canine unit. Meanwhile, “there are now anywhere from seven to nine layers of costly management between the mayor and a blue- collar worker in the field.”
The recommendations: “Eliminate redundant positions and extraneous levels of management and supervision as employees leave city service through attrition,” and “Restore the cuts to public safety personnel as a priority.”
There’s a startling level of clarity in the grand jury report on the city of San Diego’s financial crisis. I just hope it hasn’t come too late.
(Joe Mysak is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: Joe Mysak in New York at jmysakjr@bloomberg.net
Last Updated: June 15, 2010 21:00 EDT
>>Climate-Change Measure Lacks Momentum Even After BP Spill, Democrats Say
By Lisa Lerer and Simon Lomax
June 16 (Bloomberg) -- The BP Plc oil spill in the Gulf of Mexico is unlikely to create enough momentum to pass a comprehensive climate bill sought by President Barack Obama, say leading Senate Democrats.
Many Democrats don’t want to vote in this election year on whether to cap the greenhouse-gas emissions linked to climate change, saying they prefer to work in the coming months on legislation directly responding to the spill.
“The climate bill isn’t going to stop the oil leak,” said Senator Dianne Feinstein, a California Democrat. “The first thing you have to do is stop the oil leak.”
Obama, in a speech to the nation last night, praised a climate plan passed by the House last year and said the U.S. “can’t afford not to change how we produce and use energy.” Earlier this month, he said the only way to develop clean energy is by “finally putting a price on carbon pollution.”
The House voted last June to create the first national limits on greenhouse-gas emissions. The measure would regulate carbon dioxide from power plants, refineries and factories through a cap-and-trade program in which companies buy and sell a declining number of pollution rights.
Senator John Kerry, a Massachusetts Democrat who introduced similar legislation in his chamber last month, said yesterday that it doesn’t have the votes yet needed to overcome a Republican filibuster.
“We don’t have the 60 votes yet, I know that,” Kerry told reporters. “But we’re close enough to be able to fight for it.”
November Elections
Some Democratic lawmakers have raised concerns that voting on the climate plan could create a political backlash in the November elections.
“There’s not a great call for it in the Democratic caucus,” said West Virginia Democratic Senator Jay Rockefeller, who has argued against taking up the bill. Feinstein said last week she believed climate legislation could be passed next year.
As an alternative, Democrats are working on an energy plan that would increase safety regulations on offshore drilling, raise or eliminate the cap on oil companies’ economic liability, promote energy efficiency and mandate more use of renewable electricity.
“The front wheel of anything we do on energy is going to be addressing regulations and safety with respect to offshore drilling, particularly deep-well drilling,” said Senator Byron Dorgan, a Democrat from North Dakota.
Senate Majority Leader Harry Reid, a Nevada Democrat, has asked committee leaders to draft energy provisions to bring to the floor next month. Democrats plan to meet tomorrow to discuss what should be included.
Republican Support
Reid would be unlikely to include a climate provision in the bill unless it had significant Republican support, Reid spokesman Jim Manley said in an e-mail.
Republican backing would be needed to offset likely opposition from Democrats representing some rural and industrial states, who fear capping greenhouse gases would raise electric bills for consumers and business.
To counter those concerns, Kerry and Lieberman yesterday released a study by the Environmental Protection Agency that said the plan would cost the average U.S. household less than dollar a day.
Still, Senate Republicans and some Democrats from rural states say they see little connection between the oil spill and legislation to cap greenhouse-gas emissions.
Coal Emissions
“It’s unrelated,” said Senator Ben Nelson, a Democrat from Nebraska. “Obviously the emissions that we are talking about are primarily coal-fired electricity generation from Nebraska. That doesn’t have much to do with the Gulf.”
No Republicans have supported Kerry-Lieberman legislation thus far. South Carolina Republican Senator Lindsey Graham, who worked on a climate bill with the pair for months, dropped his support in late April.
Republicans said yesterday that Obama shouldn’t use the Gulf spill to rally support for cap-and-trade legislation.
The cost of carbon dioxide allowances is effectively a “new national energy tax” that will do nothing to “stop this spill and clean it up,” said Senate Republican Leader Mitch McConnell of Kentucky. The “justifiable public outrage” over the oil spill shouldn’t be employed “as a tool for pushing a divisive new climate change policy,” he said.
Energy-Only Bill
Senator Jeff Bingaman, a New Mexico Democrat and chairman of the Senate Energy and Commerce committee, said yesterday he plans to advocate for an energy-only bill that passed his panel last June. The measure would require utilities to get as much as 15 percent of their power from renewable sources by 2021.
The Senate “should definitely do an energy bill” that doesn’t include a carbon cap-and-trade program, said Senator Kent Conrad, a North Dakota Democrat. Kerry and Lieberman could be given a chance to add their climate plan as an amendment, he said.
The White House and other supporters of a climate bill want a comprehensive plan to be the main legislative vehicle, arguing that public concern over the oil spill provides momentum. “Now is the moment for this generation to embark on a national mission to unleash American innovation and seize control of our own destiny,” Obama said in his speech last night.
Pollster Joel Benenson said surveys he conducted for the League of Conservation Voters showed that 63 percent of likely voters contacted in May and June said they would support legislation to “limit pollution” by “charging energy companies for carbon pollution in electricity or fuels like gas.”
“In the aftermath of the spill, people firmly believe Congress needs to do more than just make BP pay,” wrote Benenson, who conducted polling for Obama’s presidential campaign.
“It would take 60 votes in the Senate,” to pass a climate bill, Dorgan said yesterday on C-SPAN’s Washington Journal. “I doubt very much whether those 60 votes exist right now.”
To contact the reporters on this story: Lisa Lerer in Washington at llerer@bloomberg.net; Simon Lomax in Washington at slomax@bloomberg.net.
Last Updated: June 16, 2010 00:00 EDT
BL: Russia to Buy Canadian, Aussie Dollars for First Time
By Paul Abelsky and Maria Levitov
June 16 (Bloomberg) -- Russia may add the Australian and Canadian dollars to its international reserves for the first time after fluctuations in the U.S. dollar and euro.
“Adding the Australian dollar is being discussed,” Alexei Ulyukayev, the central bank’s first deputy chairman, said in an interview at an event hosted by Bloomberg in Moscow last night. “There are pros and cons. We have added the Canadian dollar but haven’t yet begun operations” with the currency.
U.S. dollars account for 47 percent of Russia’s reserves, while euros make up 41 percent, British pounds 10 percent and Japanese yen 2 percent, Ulyukyaev said in November. The central bank has reduced dollars from 50 percent in 2006, when euros accounted for 40 percent and the remaining 10 percent was in yen and pounds. Russia’s international reserves, the world’s third biggest, reached $458.2 billion on June 4.
President Dmitry Medvedev last year suggested Russia would reduce its use of the U.S. dollar as a reserve currency after the greenback lost 34 percent of its value against the euro in 2 ½ years. The euro fell to a four-year low of $1.1877 on June 7 and has dropped 22 percent since Nov. 25 on investor concern policy makers may fail to contain Europe’s debt crisis.
Push to Diversify
Russia’s push to diversify reserves “is more a result of their desire to do something in response to the extreme volatility of the dollar and the euro,” said Elena Matrosova, a Moscow-based economist at BDO International, the financial consultancy that lists the central bank among its clients. The Canadian or Australian dollar “can’t be truly called international reserve currencies because of their very limited liquidity,” she said.
The Australian dollar traded near the strongest level since mid-May, at 86.43 U.S. cents as of 6:40 a.m. in London.
The Canadian and Australian dollars have been among the best performers in the past 12 months as investors speculated a recovering global economy would increase demand for the countries’ raw materials. The Canadian dollar has gained 10 percent against the U.S. currency and 23 percent versus the euro during that period. The Australian dollar is up 8.6 percent and 21 percent, respectively.
Ruble Gains
Medvedev has pushed for the creation of regional reserve currencies and in July produced a prototype coin for a “world currency,” which he said was needed to stabilize the global economy.
Central Bank Chairman Sergey Ignatiev said May 27 that Russia hadn’t changed the currency structure of its reserves after year-end figures showed Bank Rossii increased the portion held in dollars.
The U.S. dollar may account for more than half of Russia’s foreign currency reserves by the end of this year, Paris-based BNP Paribas estimated last month.
The ruble has gained almost 11 percent against the euro and 0.2 percent versus the dollar in the past 12 months. The Russian currency strengthened for a fifth day against the greenback, climbing 0.7 percent to 31.1450 for its longest winning streak in two months.
Russia had a net capital inflow of about $3 billion in May after an inflow of between $3 billion and $4 billion in the previous month, said Ulyukayev.
“There was a small capital inflow of about $3 billion in May, according to preliminary calculations,” he said.
The Russian government forecasts no net capital inflow this year after outflows of $52.4 billion in 2009.
To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@bloomberg.net.
Last Updated: June 16, 2010 02:58 EDT
Hmmm: London Financial Vacancies Jump 82% on Year as Firms Rebuild, Survey Shows
By Gavin Finch
June 16 (Bloomberg) -- Job vacancies at London’s financial- services companies rose 82 percent in the year to May as firms continued to rebuild businesses hurt during the credit crisis.
The number of job vacancies in the City, as London’s main financial district is known, and elsewhere in the British capital rose to 5,733 in May from 3,150 a year earlier, recruitment consultant Morgan McKinley said in a statement today. Employment openings was 3 percent higher compared with April, the survey showed.
“Hiring activity shows a gradual upward trajectory despite the distractions of a change in government and the continuing euro-zone issues,” according to Andrew Evans, managing director of Morgan McKinley’s financial services division. Economic uncertainty in Europe and next week’s emergency Budget in Britain meant it was difficult to predict further job growth, Evans said.
Chancellor of the Exchequer George Osborne will say in his Mansion House speech later today that the emergency Budget on June 22 will announce plans for a levy on banks, the Financial Times reported today, without attribution.
Securities firms continue to hire as the Office for National Statistics said today that unemployment in the three months to April slipped to 2.47 million people from 2.51 million.
‘Significant Upside’
Nomura Holdings Inc. has been adding to its fixed income team in London following its acquisition of Lehman Brothers Holdings Inc.’s European units in 2008, while accounting firm KPMG aims to recruit 300 consultants starting this year, The Times newspaper in London reported on Feb. 1.
Barclays Plc, the U.K.’s third-largest bank by assets, hired 750 bankers in Europe and Asia last year. The bank reported a 29 percent rise in first-quarter profit for 2010.
Credit Suisse Group AG, Switzerland’s biggest bank by market value, plans to hire more than 130 sales people at its investment bank this year, David Mathers, chief operating officer of the investment bank, told a conference in March.
“There is still significant upside potential in many of our businesses,” he said.
Average City salaries rose 9 percent in May from the previous month to 55,353 pounds ($81,502), the survey showed.
The rise in vacancies follows a 12 percent drop in financial services job vacancies in April, Morgan McKinley said.
To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net
Last Updated: June 16, 2010 04:53 EDT
BL: BP Swaps Imply 39% Chance of Default as Bonds Extend Slide: Credit Markets
By John Detrixhe and Shannon D. Harrington
June 16 (Bloomberg) -- Credit investors are pricing in a more than 39 percent chance BP Plc will default within five years as it tangles with the Obama administration over cleanup costs and claims for the biggest oil spill in U.S. history.
The rising risk implied by credit-default swaps is up from 7 percent a month ago, according to CMA DataVision. BP swaps climbed 112 basis points today to a record 618, CMA prices show. Investors are demanding 800 basis points more in yield to own BP debt due next year rather than Treasuries.
Pressure is building on BP with Chairman Carl-Henric Svanberg called to a meeting at the White House today to discuss setting up an escrow account to pay residents for damages from the accident. BP, which had $27.7 billion in cash flow from operations in 2009, was cut six levels to BBB from AA by Fitch Ratings because of mounting costs from the well that’s spewed crude into the Gulf of Mexico for eight weeks.
“There’s still so much uncertainty as to what ultimately the liability is and what the government is going to do,” said Jason Chen, a partner and head of research at hedge fund Sancus Capital Management in New York, founded in August by former JPMorgan Chase & Co. traders.
BP’s $750 million of 1.55 percent notes due in 2011 dropped 2.1 cents to 92.25 cents on the dollar yesterday, the lowest on record, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bonds traded the most ever, according to data compiled by Bloomberg.
Approaching Distressed
The securities, which traded as high as 101.2 cents in February, pay a spread of 804 basis points. That’s approaching distressed levels, which refers to companies in default or with relative yields of more than 1,000 basis points, or 10 percentage points.
Tristan Vanhegan, a spokesman for London-based BP, declined to comment on default-swap and bond prices.
Elsewhere in credit markets, the extra yield investors demand to hold corporate bonds instead of government debt was unchanged at 198 basis points, according to Bank of America Merrill Lynch’s Global Broad Market Corporate Index. Yields averaged 4.133 percent.
Teva Pharmaceutical Industries Ltd., the world’s biggest maker of generic drugs, tapped the bond market for the first time in more than four years, selling $2.5 billion of debt in three parts.
Proceeds from the offering by the Petah Tikvah, Israel- based drugmaker may be used to repay $800 million drawn from a line of credit in connection with its 2008 purchase of Barr Pharmaceuticals Inc. and to finance the acquisition of Ratiopharm GmbH, according to a prospectus filed with the U.S. Securities and Exchange Commission.
Phoenix Financing
Phoenix Group, the indebted drug wholesaler started by deceased billionaire Adolf Merckle, is close to obtaining as much as 3.6 billion euros ($4.4 billion) in financing, according to two people familiar with the negotiations.
Phoenix, based in Mannheim, Germany, may reach an agreement with banks by early next month on 2.6 billion euros in syndicated loans to refinance existing debt, said the people, who spoke on condition of anonymity. The company also has plans to sell as much as 1 billion euros in hybrid bonds, they said.
Bank of America Corp. plans to sell $1 billion of bonds backed by automobile loans as soon as this week, according to a person familiar with the offering, who declined to be identified because terms aren’t public.
Credit Risk
Benchmark measures of corporate credit risk were little changed in Europe, with the Markit iTraxx Europe Index of 125 companies with investment-grade ratings 0.5 basis point lower at 127.5, Markit Group Ltd. prices show.
The Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, closed 4.5 basis points lower at 118.6 basis points, the lowest since June 3, according to Markit.
The indexes typically fall as investor confidence improves and rise as it deteriorates. Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
Greek Bonds
Credit-default swaps on Greece, which has the second- largest budget deficit in the euro region after Ireland, signal an almost 50 percent probability of default within five years. The country’s credit rating was cut four steps to below investment grade on June 14 by Moody’s Investors Service, which cited “substantial” risks to growth from austerity measures tied to European Union and International Monetary Fund aid.
The cost of insuring $10 million of Greece’s bonds for five years today jumped $19,500 to $830,500 a year, making the nation’s debt the third most expensive to protect after Venezuela and Argentina, according to CMA.
In emerging markets, the extra yield investors demand to own bonds relative to government debt fell for a second day. Spreads tightened 8 basis points to 314 basis points, the narrowest since June 3, according to JPMorgan’s Emerging Market Bond index.
Argentine warrants linked to gross domestic product rose to the highest price in a month as investors bet growth in South America’s second-biggest economy will trigger payments.
The dollar-denominated GDP warrants rose 0.1 cent on the dollar to 7.35 cents at 4:34 p.m. in New York, the highest since May 18.
Inverted Yield Curve
BP’s shorter-term borrowing costs are rising in a signal lenders are increasingly concerned they may face losses. BP notes due in 2011 yield 154 basis points more than the company’s 4.75 percent bonds due in 2019, Trace data show. The shorter- maturity debt yielded 326 basis points less as of April 29.
Investors typically demand additional yield on shorter- maturity debt when risk is concentrated in the nearer term, causing the so-called yield curve to invert.
BP’s cost to clean up the spill may escalate enough to threaten the oil company’s future, said former Shell Oil Co. President John Hofmeister, who now runs the advocacy group Citizens for Affordable Energy.
“The current political movement by the U.S. government is basically an unlimited liability,” Hofmeister, who ran the U.S. operations of Royal Dutch Shell Plc, Europe’s largest oil company by market value, from early 2005 through mid-2008, said yesterday at a Bloomberg Link Boards & Risk Conference in Washington. “At some point the entity will have to defend itself.”
60,000 Barrels Daily
The BP well is gushing as much as 60,000 barrels of oil a day, the government said, raising for the fifth time an official estimate that had begun at 1,000 barrels a day in April.
BP had $6.84 billion in cash and near-cash as of the end of the first quarter, according to a regulatory filing. It has spent $1.6 billion to stop the leak, clean it up and compensate local businesses and residents, according to figures posted on the company’s website. Liabilities may reach $37 billion, according to a June 2 report from Credit Suisse Group AG.
Interest rates on some floating-rate municipal bonds guaranteed by BP have surged to as much as 10 percent on concern the costs of the cleanup and litigation are spiraling higher.
Yields on short-term bonds backed by BP to build sewage and solid-waste disposal facilities at a chemical plant in Will County, Illinois, and a refinery in Texas City, Texas, were as low as 0.5 percent at the beginning of the month. BP backs more than $3.5 billion of U.S. municipal obligations, according to Bloomberg data.
BP bonds have lost 14.6 percent this month, after declining 2.62 percent in May, according to Bank of America Merrill Lynch index data. The overall U.S. energy company index has fallen 1.3 percent in June.
‘Asset Values’
The fall in BP’s bond prices has to be seen in the “context of the asset values and the earnings capability of this company,” said Joel Levington, managing director of corporate credit at Brookfield Investment Management Inc. in New York. “When you’re talking about a company that can earn $20 billion in 2011, before its dividend, that’s significant flexibility.”
Bonds of some companies associated with drilling and the spill may be attractive because their liabilities are more easily understood than BP’s, according to Chen. The leak began after an April 20 explosion on the Deepwater Horizon rig owned by Transocean Ltd. Anadarko Petroleum Corp. owns 25 percent of the well.
Anadarko’s $750 million of 6.2 percent bonds due in 2040 climbed 1.75 cents to 83 cents on the dollar, the fourth straight daily rise, Trace data show. The debt traded as low as 75 cents on June 9. Transocean’s $1 billion of 6 percent debt due in 2018 increased 1.56 cents to 88.1 on the dollar, the third consecutive daily increase.
“There is definitely a case to be made for going long select bonds of the peripheral Gulf spill names, like Transocean or other drillers,” Chen said. “Going long BP is a more difficult case to make because there’s no sense as to the ultimate liability amount.”
To contact the reporter on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net
Last Updated: June 16, 2010 05:23 EDT
RuhRoh: Euro Weakens, Spanish Bonds Fall on Deficit Concerns; U.S. Futures Decline
By Stephen Kirkland
June 16 (Bloomberg) -- The euro weakened, snapping a two- day rally against the dollar, and the bonds of Spain, Portugal and Greece fell on concern Europe’s deficits will persist. U.S. index futures declined and European stocks pared gains.
The euro depreciated 0.3 percent to $1.2293 as of 11:20 a.m. in London. The extra yield investors demand to hold Spanish 10-year bonds instead of benchmark German bunds rose to the highest since the euro’s 1999 debut. Futures on the Standard & Poor’s 500 Index dropped 0.3 percent and the Stoxx Europe 600 Index added 0.2 percent. The MSCI Emerging Markets Index advanced for a seventh day, increasing 0.5 percent. Gold climbed to within 1.4 percent of the record.
Spanish Prime Minister Jose Luis Rodriguez Zapatero announces a labor-law overhaul today to tame one of Europe’s biggest budget deficits after unions called for a general strike in September, the first in eight years. Debt levels in Spain and Portugal may “snowball” in coming years and additional budget cuts are needed to meet deficit targets, the European Commission said in a May 26 draft document obtained by Bloomberg.
“Focus is back on Spain after a couple of days of news about global growth,” said Arne Lohmann Rasmussen, chief currency analyst with Danske Bank A/S in Copenhagen.
The euro dropped 0.5 percent against the Swiss franc, 0.2 percent the pound, and 0.1 percent compared with the yen. The 16-nation currency has weakened 14 percent this year against the dollar.
Spreads Widen
The difference in yield, or spread, between Spanish and German 10-year bunds, Europe’s benchmark government debt securities, widened to 219 basis points, from 206 basis points yesterday, according to Bloomberg generic data. The Portuguese- German spread increased 17 basis points to 295 basis points, and the Greek-German yield difference rose 10 basis points to 651 basis points.
Credit-default swaps on Spanish government debt rose 10 basis points to 256, compared with the record-high closing level of 275 basis points on May 6, according to CMA DataVision.
The European Union denied a report that the International Monetary Fund, the EU and the U.S. are putting together a 250 billion-euro ($307 billion) credit line for Spain.
The drop in U.S. futures indicated the S&P 500 may pare some of yesterday’s 2.4 percent rally that erased the index’s loss for the year. Output at factories, mines and utilities increased 0.9 percent in May, the biggest jump since January and the 10th gain in 11 months, according to the median estimate of 82 economists surveyed by Bloomberg News before the Federal Reserve’s report due at 9:15 a.m. in Washington. Other data may show wholesale prices and home construction declined last month.
BP ‘Recklessness’
In Europe, Daimler AG led automakers lower, retreating 2.2 percent in Frankfurt. Schroders Plc fell 2.3 percent in London as Citigroup Inc. recommended selling the shares.
BP Plc gained 1.1 percent, rebounding from its lowest level in 13 years. U.S. President Barack Obama vowed that the company will pay for all damage caused by its “recklessness” and that the government would commit to restoring the Gulf Coast.
The MSCI Asia Pacific Index rallied 1.1 percent to a four- week high. Toyota Motor Corp., a carmaker that gets about 28 percent of its sales from North America, gained 1.2 percent in Tokyo. Nintendo Co. jumped 5.2 percent in Osaka, Japan, after the company introduced a new handheld video-game player. Markets in Hong Kong, China and Taiwan were closed today for a holiday.
The MSCI emerging index extended its longest stretch of gains in two months as benchmark equity gauges in every major developing nation open for trading today except Morocco rose. Romania’s BET Index jumped 1.9 percent, the most worldwide, and the country’s government bonds rallied after Prime Minister Emil Boc survived a no-confidence vote. South Korea’s won led gains in emerging-market currencies, strengthening 1.4 percent against the dollar.
Gold, Oil
Gold climbed 0.1 percent to $1,235.20 an ounce, compared with a record $1,252.11 on June 8. Copper increased 0.1 percent to $6,688 a metric ton on the London Metal Exchange, the seventh consecutive advance. Crude oil for July delivery on the New York Mercantile Exchange dropped 0.4 percent to $76.66 a barrel.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net;
SFC: BP oil spill Corexit dispersants suspected in widespread crop damage
Just when you thought the damages BP could cause was limited to beaches, marshes, oceans, people's livelihoods, birds and marine life, there's more.
BP's favorite dispersant Corexit 9500 is being sprayed at the oil gusher on the ocean floor. Corexit is also being air sprayed across hundreds of miles of oil slicks all across the gulf. There have been widespread reports of oil cleanup crews reporting various injuries including respiratory distress, dizziness and headaches.
Corexit 9500 is a solvent originally developed by Exxon and now manufactured by the Nalco of Naperville, Illinois. Corexit is is four times more toxic than oil (oil is toxic at 11 ppm (parts per million), Corexit 9500 at only 2.61ppm).
In a report written by Anita George-Ares and James R. Clark for Exxon Biomedical Sciences, Inc. titled "Acute Aquatic Toxicity of Three Corexit Products: An Overview" Corexit 9500 was found to be one of the most toxic dispersal agents ever developed.
According to the Clark and George-Ares report, Corexit mixed with the higher gulf coast water temperatures becomes even more toxic. The UK's Marine Management Organization has banned Corexit so if there was a spill in the UK's North Sea, BP is banned from using Corexit.
The danger to humans can be expected. The warnings on the Corexit packaging is straightforward. Breathing in Corexit is not recommended.
It seems NALCO Corexit is also dangerous to crops.
VIDEO: AIR FORCE DELIVERING WIDE SPREAD AERIAL SPRAYING OF COREXIT
COREXIT 9500 killing crops in Mississippi? Worse to come:
This is directly related to BP's criminal use of Corexit 9500, which they continue to spray
Wait until hurricane season
Funds selling? BP shares slip ahead of White House meeting
Robert Barr, Associated Press Writer, On Wednesday June 16, 2010, 5:39 am
The analysts say they believe the pressure on the shares is due to a sell-off by U.S. institutions "unwilling to be seen to be maintaining big positions in the stock, particularly ahead of end-June quarter reporting to investors."
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LONDON (AP) -- Shares in BP PLC slipped in London trading Wednesday ahead of what promises to be a tense meeting between the oil company's chairman and President Barack Obama in Washington.
Obama has vowed to make BP pay for all of the damage caused by its leaking well in the Gulf of Mexico, and has demanded that the company set up an independently controlled fund to assure that it will pay.
"I will meet with the chairman of BP and inform him that he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company's recklessness," Obama said in an address from the White House on Tuesday.
That idea had been kicking around for a while, and Obama's statement didn't rattle the markets.
BP shares were down just 0.5 percent at 340.25 pence ($5.03) on the London Stock Exchange after briefly trading higher. They had traded at about 655 pence before the April 20 explosion which killed 11 workers on the drilling rig.
Obama has invited BP Chairman Carl-Henric Svanberg, who has kept a very low profile since the leak erupted eight weeks ago, to the White House meeting.
BP said Wednesday that Group Chief Executive Tony Hayward, BP America President Lamar McKay and Managing Director Robert Dudley would accompany Svanberg.
The company had said Tuesday that it shares Obama's goal of "shutting off the well as quickly as possible, cleaning up the oil and mitigating the impact on the people and environment of the Gulf Coast. We look forward to meeting with President Obama tomorrow for a constructive discussion about how to best achieve these mutual goals."
Obama has come under pressure for his response to the crisis.
An Associated Press-GfK poll released Tuesday found 52 percent of those surveyed don't approve of Obama's handling of the spill, but 83 percent disapprove of BP's performance.
BP said Tuesday it had approved initial payments on 90 percent of commercial large loss claims filed so far. The 337 checks totaled $16 million for businesses that had filed claims of more than $5,000, BP said.
The company added that it has issued approximately 25,000 checks totaling $63 million to cover small and large claims, and expects the total to rise to $85 million by the end of the week.
BP, which earned a profit of $6.1 billion in the first three months of this year, says it has spent in excess of $1.4 billion so far in attempts to stop the flow of oil billowing up from the seabed.
On June 3, the company announced it had set up a $360 million escrow account to pay for the construction of six sections of Louisiana barrier islands approved by the U.S. government.
Gordon Gray and James Evans, analysts at Collins Stewart in London, on Wednesday downgraded their target price for BP shares from 575 pence to 450 pence. They added that they believe BP will bow to U.S. pressure to suspend dividends.
"We think the balance of probability points to BP's shares offering good value at current levels. However, we think the risks of investing remain high and view BP as an investment for the risk-tolerant and the long-term at present," they said in a research note.
The analysts say they believe the pressure on the shares is due to a sell-off by U.S. institutions "unwilling to be seen to be maintaining big positions in the stock, particularly ahead of end-June quarter reporting to investors."