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Post by Conrad Alvin Lim on Jun 10, 2006 3:47:44 GMT -4
THE WEEK'S TOP NEWS AND ANALYSIS, JUNE 5-9By MarketWatch Last Update: 7:29 PM ET Jun 9, 2006It was a week that put the swoon back in June as tough talk from Fed Chairman Ben Bernanke Monday left investors into a sour mood that never wore off. Even the "termination" of Abu Musab al-Zarqawi, the leader of al-Qaida in Iraq, on Thursday wasn't enough to pull the markets out of their funk. For the week, the Dow Jones Industrial Average lost 3.2% to end at 10,891.92, a four-month low. It was the worst weekly performance for the Dow in more than a year. The Nasdaq Composite Index lost ground every day this week to end Friday at 2,135.06. And the S&P 500 Index wound up at 1,252.30, off nearly 3% for the week. "MarketWatch Weekend," aired on CBS television stations, investigates whether consumers will buy premium wines from discount vintners like Gallo. Preview the show.Our weekend feature examines whether the U.S. oil industry is ready for another severe hurricane season. - Tom Bemis, assistant managing editorBernanke talks tough on inflation despite slowdownAlthough the anticipated slowdown in growth is underway, financial markets shouldn't question the inflation-fighting credentials of the Federal Reserve Bank, Chairman Ben Bernanke said Monday. See Full StoryAl-Zarqawi killed in Baghdad air strikeAbu Musab al-Zarqawi, the leader of al-Qaida in Iraq, has been killed in a Baghdad air strike, Iraq's prime minister said Thursday. See Full StoryCisco to buy back up to $5 billion in sharesCisco Systems Inc. (CSCO : 19.97, +0.08, +0.4% ) said Thursday it plans to buy back up to $5 billion worth of common shares and that Chief Executive John Chambers will also be named chairman. See Full StoryU.S. debt continues to expand at fast clip in first quarterAmericans increased their household debt at an annual rate of 11% in the first quarter, the fastest growth in nearly 20 years, the Federal Reserve said in its quarterly flow of funds report. See Full StoryEuropean Central Bank hikes key rate by a quarter pointThe European Central Bank on Thursday raised its key interest rate for the third time in seven months, part of a global rate tightening trend as rising oil prices rattle inflation-wary bankers. See Full StoryAirline industry foresees more lossesThe airline industry is expected to lose about $3 billion in 2006, slightly less than a year earlier, as global economic trends continue to lift U.S. and other carriers out a slump that began in 2001, according to a forecast from the International Air Transport Association. See Full StoryElan, Biogen slide on Tysabri newsShares of partners Elan and Biogen Idec slid on Monday after they announced that while the Food and Drug Administration has ruled to allow its recalled multiple sclerosis drug Tysabri back on the market, the drug's use will be significantly restricted. See Full StoryEnergy key at weekend's G8 meeting in RussiaEnergy security will be a focus for Group of Eight finance ministers as they gather in St. Petersburg, Russia this weekend against a backdrop of simmering inflationary concerns over high oil and commodity prices. See Full StoryThomas Kostigen's Ethics Monitor: Broad impact of HIV/AIDS compels us to actBusinesses, economies and people will suffer because of HIV/AIDS. It's scary, it's real, but we tend to, or at least I do anyway, gloss over stories about the disease. After all if you aren't suffering from it, why should you care? Doesn't it seem as if there are already enough people concerned, donating and conducting research to find a cure? See Full StoryThe 7 deadly sins of home remodelingThe in-ground swimming pool is a huge asset to the social lives of Greg Gabbard's college-aged children -- it's so popular with them and their friends, their father wants to charge admission. See Full Story
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Post by Conrad Alvin Lim on Jun 14, 2006 0:15:18 GMT -4
A tenth on the core CPI could be decisiveInflation expected to moderate in May, but will it be enough for the Fed?By Rex Nutting, MarketWatch Last Update: 5:56 PM ET Jun 13, 2006WASHINGTON (MarketWatch) -- When it comes to the market reaction to the May consumer price index report, a tenth of a percentage point could make all the difference. The Labor Department will report on consumer inflation on Wednesday at 8:30 a.m. It's the most anticipated economic event of the week, because it could be the deciding factor in whether the Federal Reserve raises interest rates again in late June or holds rates steady. Economists expect the CPI to rise 0.4% in May after a 0.6% gain in April. That would push the year-over-year inflation rate up to 4% from 3.6%. But the more important number for the markets is the core CPI, which excludes food and energy costs. The Fed watches core prices for underlying inflationary trends. Economists expect the core CPI to rise 0.2% after rising 0.3% in both March and April. A 0.2% gain would push the year-over-year increase to 2.4%, above the Fed's so-called comfort zone. "This week's core CPI number is hugely important," said Ian Shepherdson, chief U.S. economist for High Frequency Economics. "Another 0.3% rise would seal a June hike, a 0.2% wouldn't change much, and 0.1% would re-open the whole question of how much pressure is in the system." Ahead of the CPI figures, most analysts expect the Fed will raise overnight lending rates again on June 29 out of concern that inflationary pressures are building to unacceptable levels. Higher rates can cool the economy, bringing supply and demand back into balance and curbing the ability of firms to raise prices. But higher rates could cool the economy too much. Fed officials are wary of raising rates too high, knowing that inflation typically peaks long after the economy starts to stall. In May, energy prices probably rose about 2%, said Nigel Gault, an economist for Global Insight. Gasoline prices -- after seasonal adjustments -- probably increased about 4.5%, about half April's gain. Question marksAs for the core CPI, there are two main question marks, both revolving around statistical issues, not fundamental ones: Apparel prices and homeownership prices. Apparel prices have been falling for most of the past eight years and are down 11% from 1998 levels. But apparel prices spiked higher in March and April, rising at the fastest rate since 1990. Was that a statistical fluke caused by faulty seasonal adjustments, or a new trend toward higher prices? Most economists are counting on some kind of payback in apparel prices in May, which would hold the core CPI down. "Our 0.2% forecast on the core CPI hinges on apparel prices," although apparel accounts for just 5% of the CPI, said Joseph LaVorgna, an economist for Deutsche Bank. "If apparel prices fall more than expected we may round down to 0.1% on core," LaVorgna said. "Conversely, if they stay stubbornly high, we could be looking at 0.3%, which would obviously be troubling to financial markets. We think that the risks to our core CPI forecast are symmetrical -- we can envision 0.1% or 0.3%." Owners' equivalent rentThe other issue comes from owners' equivalent rent, which is the method the Labor Department uses to measure the price of owning a home. In both March and April, owners' equivalent rent rose 0.4% for the second and third time since late 2001. With equivalent rent accounting for nearly one-fourth of the CPI, those 0.4% gains were a major factor in nudging the core CPI up 0.3% in March and April. But some economists said the acceleration in the core CPI didn't show more inflation, but rather was the perverse result of a slowing housing market. The government recognizes that homes not only provide shelter services, but are also assets that add to individuals' wealth, just as stocks and bonds do. Asset prices are not included in the CPI. Read the government's explanation.To measure just the price of the shelter services and not the long-term value of owning the asset, the government essentially assumes that homeowners rent their homes to themselves. It computes an implied rent called "owners' equivalent rent" by asking them how much their house would rent for. That's the "opportunity cost" of owning instead of renting. During the heady days of the housing boom, more people wanted to buy a home in order to cash in on the big gains. Condos were converted from rentals to owner-occupied. Home construction boomed and rental vacancy rates soared, keeping rents down even as housing prices were rising at double-digit rates. But now, more people find themselves priced out of the market, or are hesitant to pay the asking prices. Vacancies are falling and rents are going up. So, even though home price appreciation is now slowing, it's finally showing up in the CPI, years late. The impact on the CPI has been to understate the inflation in housing during the boom, and to overstate inflation during the correction. Fed may not be swayedApparel prices and equivalent rents could have a major impact on the CPI, but might not sway Fed officials. They understand the statistical problems with the CPI, which is one reason why they seem to prefer a different gauge of inflation known as the personal consumption expenditure price index, which treats housing costs differently. The core PCE index has been slightly better behaved than the core CPI. It's risen 2.1% in the past year, compared with 2.3% for the core CPI. Yet another gauge that's gaining adherents who say it's more accurate -- the market-based PCE index -- has risen just 1.8% in the past year. Unfortunately, the PCE price indexes for May won't be released until June 30, the day after the Fed's meeting. "To the extent a pickup in core prices mainly reflects higher rents, and the pickup in rents is a byproduct of the sharp weakening in home sales recently, we believe the implications for monetary policy are less straightforward than a broad-based pickup," said Sam Coffin, an economist for UBS. "Sharp weakening in home sales and prices, if sustained, would likely lead to a significant slowing in growth, shifting the risks on inflation to the downside again."
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pathfinder
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Post by pathfinder on Jun 14, 2006 5:28:07 GMT -4
Goldman to Buy U.K.'s AB Ports for 2.5 Billion Pounds (Update2)
June 14 (Bloomberg) -- Goldman Sachs Group Inc. and its bidding partners agreed to buy Associated British Ports Holdings Plc, the U.K.'s biggest port company, after raising their offer to 2.5 billion pounds ($4.6 billion).
The Goldman-led team will pay 810 pence a share in cash, London-based Associated British Ports said today in a statement. Shares in the port operator rose as much as 3.7 percent above the offer price on speculation of a competing bid.
The sale of Associated British Ports, which owns 21 ports stretching from the south coast of England to the northwest of Scotland, is the third takeover of a British harbor owner in the past six months as an increase in world trade and expectations of steady earnings attract investors.
``There could well be more bidding because Associated British Ports is very attractive, has highly visible earnings and good assets,'' said John Lawson, an analyst in London at Investec Securities, which has a ``hold'' recommendation on the stock.
Shares of Associated British Ports, which was first sold by Prime Minister Margaret Thatcher in 1983, rose as much as 63 pence, or 8.1 percent, to 840 pence and were up 7.2 percent at 833 pence as of 9:13 a.m. in London, valuing the company at 2.5 billion pounds.
Dresdner Kleinwort Wasserstein is buying at least 100 million pounds of Associated British Ports' stock for a client at 820 pence each, traders familiar with the matter said.
The port operator has ``had no other approaches,'' Chief Executive Officer Bo Lerenius said in a telephone interview.
Bidding Partners
Goldman, the world's biggest securities firm by market value, is buying the port operator in partnership with the Borealis Infrastructure Management Inc. unit of the Ontario Municipal Employees Retirement Fund, Canada's No. 4 pension fund, and GIC Special Investments, the private-equity division of the Singapore Government Investment Corp., which manages the island state's foreign reserves.
Borealis and GIC Special Investments will each own 33 percent of the port operator, Goldman will own 23 percent and a unit of Prudential Plc, Britain's second-biggest insurer, will hold 10 percent, said a spokesman for the bidding group who commented on condition he not be named. The group's first bid was 730 pence a share in March.
The transaction ``is an excellent opportunity for shareholders to realize the significant value that has been created,'' Associated British Port Chairman Chris Clark said in the statement.
BAA Spurns Bid
The agreement with Associated British Ports comes eight days after BAA Plc, the owner of London Heathrow airport, spurned a 10.2 billion-pound bid from a team led by Goldman in favor of a lower offer from Spain's Grupo Ferrovial SA.
Goldman Chief Executive Officer Hank Paulson said in April that the world's most profitable securities firm wouldn't participate as an equity investor in hostile takeover bids.
Transport assets including ports, roads and airports are being snapped up as banks and pension funds seek steady returns to match their liabilities over time. Macquarie Bank Ltd., Australia's biggest securities firm, pioneered the approach.
DP World, which is owned by the government of Dubai, United Arab Emirates, in March bought Peninsular & Oriental Steam Navigation Co. for $6.8 billion after agreeing to sell U.S. operations to overcome opposition from Congress.
PD Ports Plc, owner of the English ports of Tees and Hartlepool, was bought in December by Babc*ck & Brown Infrastructure Group, the owner of Australia's second-biggest coal port, for 607 million pounds.
Lerenius, who joined in 1999 from Swedish shipper Stena Line AB, has lifted profit at its 21 U.K. ports by signing long-term contracts with importers including BHP Billiton, the world's largest mining company. Goldman today said the CEO and Chief Financial Officer Richard Adam would keep their positions.
Cargo Volumes Increase
Cargo handled by Associated British Ports rose 4.3 percent to 134.8 million metric tons in 2005, helped by a surge in demand for coal. Operating profit rose 54 percent to 171.1 million pounds last year.
Net income has almost doubled to 99.9 million pounds in the past five years as Associated British Ports signed more contracts with customers including London-based International Power Plc and Electricite de France SA, the world's largest power company.
To contact the reporter on this story: Richard Blackden in London at rblackden@bloomberg.net.
Last Updated: June 14, 2006 04:43 EDT
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Post by Conrad Alvin Lim on Jun 16, 2006 0:34:32 GMT -4
Gates to give up day-to-day role at MicrosoftRay Ozzie takes on chief software architect position By Michael Paige, MarketWatch Last Update: 8:33 PM ET Jun 15, 2006LOS ANGELES (MarketWatch) -- Microsoft Corp. said late Thursday that Bill Gates was immediately handing over his role as chief software architect to Chief Technology Officer Ray Ozzie and will transition out of his day-to-day role at the world's largest software company over the next two years. Gates, Microsoft's (MSFT : 22.07, +0.19, +0.9%) chairman, said he made the decision to give up his daily involvement with the company he co-founded in order to devote more of his time to global health and education work through the Bill and Melinda Gates Foundation. In recent years, Gates, 50, had been slowly backing away from the daily running of the company's business, yet investors and company watchers said his departure nevertheless will mark an important loss for the company. Todd Lowenstein, who co-manages the HighMark Value Momentum fund (HMVMX : 22.57, +0.53, +2.4%) said that while the news doesn't derail his positive view on Microsoft's stock, Gates' plans are a blow. "You'd like to have his visionary capabilities, and just will and determination there to help drive the organization," Lowenstein said. "Microsoft has a lot of capable managers, but when you lose brain power like his, in terms of applying that day to day, that will be sorely missed." The almost 500,000 Microsoft shares held by Lowenstein's $500 million fund make up about 2.25% of its portfolio, he said. Analyst Matt Rosoff at Directions on Microsoft, an independent research firm that tracks the company, said similarly said Gates exit from the firm's daily operations won't be drastically felt, though he continued to have an important role on technical matters and the company's direction. What's more, "Bill Gates' most important role is the founder of Microsoft, and that's not transferable," the analyst said. "Everybody knew Bill Gates was going to retire at some point, and I think the company handled it as well as they possibly could by hiring a well-respected technologist, Ray Ozzie, and announcing a slow transition over several years rather than a sudden departure," Rosoff observed. Smooth, orderly transitionThe Redmond, Wash.-based company said Gates would make the transition over two years in order to ensure a "smooth and orderly" transfer of his responsibilities. After June 2008, Gates will continue to serve as chairman and an adviser on key development projects at the company he co-founded with childhood friend Paul Allen over three decades ago. Widely respected as a technology industry visionary, Ozzie will immediately take on Gates' title of chief software architect and begin working with Gates on all technical architecture and product oversight. Ozzie was given a broadened role under Microsoft's recent shake-up of its corporate structure. The 50-year-old executive, who's seen as brilliant in innovating software delivered over networks, had been tasked under the earlier overhaul with driving Microsoft's software-based services strategy and activity across its business. Meanwhile, Microsoft said Craig Mundie, also a chief technical officer, would immediate assume the new role of chief research and strategy officer. He will work closely with Gates to take on responsibility for technology research and incubation efforts. Mundie, 56, will additionally work with Brad Smith, general counsel, on the company's intellectual property policy work. Gates praised the company's management and said he expects Microsoft to be able to make the transition "without missing a beat." He said the company continues to generate "almost a billion dollars in profit" each month. The Microsoft chairman said he sees himself remaining the company's biggest shareholder. In 2000, Steve Ballmer took on the role of chief executive that gave the energetic executive full management responsibility for the company. A reordering of priorities Commenting on his plans, Gates said: "This was a hard decision for me. I'm very lucky to have two passions that I feel are so important and so challenging." "As I prepare for this change, I firmly believe the road ahead for Microsoft is as bright as ever," he added. During a conference call to discuss his plans, Gates emphasized that he wasn't retiring, but rather "reordering" his priorities. Gates, the world's wealthiest man, has given increasing amounts of time and energy to his philanthropic efforts. The charitable foundation he founded in 2000 with his wife now has assets of $29.1 billion and focuses on issues like improving health and curtailing extreme poverty in developing countries. The company's stock edged down 7 cents in evening trading following the news, changing hands at $22. Shares had closed the regular session at $22.07, up 19 cents on the day.
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Post by Conrad Alvin Lim on Jun 25, 2006 22:31:24 GMT -4
Fed expected to boost rates again Release calendar includes housing, inflation, consumer confidence By Rex Nutting, MarketWatch Last Update: 6:01 AM ET Jun 25, 2006
WASHINGTON (MarketWatch) -- There's no suspense about the decision of the Federal Reserve on Thursday: They'll raise rates. The anticipation comes from the statement, what the Fed will say about how the economy is doing, where inflation is heading, and what the Fed will do next.
The Federal Open Market Committee meeting on Wednesday and Thursday will dominate the economic news this week. Economic data on housing sales, consumer spending, consumer confidence and inflation will get plenty of attention as well.
Finally, first-quarter gross domestic product will be revised higher.
With all the Fed officials singing from the same hymnal over the past three weeks, it's pretty clear that they see the "unwelcome" burst in core inflation in the past few months as the biggest risk to stability. A rate hike on Thursday is assured, with some people beginning to talk about whether the FOMC could surprise everyone with a half-point rate hike, rather than the quarter point hikes they've done for the past 16 meetings.
When the FOMC statement is released on Thursday at about 2:15 p.m. Eastern, every sentence, every word, and every comma will be dissected, parsed and examined thoroughly. Someone will probably send it through an MRI just in case there's something hidden really deep in the words.
The FOMC statement explains officials' reasoning and prepares the markets for what will happen next.
"We believe the new directive will be at least as hawkish as the last directive," said Ethan Harris, the top U.S. economist for Lehman Bros. A hawk in this context means to be an aggressive and committed solider in the war against inflation. Harris argues that the Fed's talk-tough campaign has been part of a successful effort to regain credibility after markets and economists began to question the Fed's conviction.
It's worked, so why change it?
"A dovish directive would undercut this credibility campaign, and would risk putting the Fed back behind the curve in its battle against inflation," Harris said. Most economists agree that the Fed will likely acknowledge that growth has slowed. As the Beige Book said, there are "signs of deceleration" in the economy.
In May, the statement stated that "growth is likely to moderate to a more sustainable pace." Since then, job growth has slowed, retail sales weakened, housing sank further, and income growth was flat. The Fed's statement on inflation could be the most important part of the announcement.
In May, the Fed said: "As yet, the run-up in the prices of energy and other commodities appears to have had only a modest effect on core inflation, ongoing productivity gains have helped to hold the growth of unit labor costs in check, and inflation expectations remain contained."
That statement is still largely true. Core inflation has risen, but not because of the run-up in energy and other commodity prices. It's the rise in rents that's fueled the acceleration in core inflation. The productivity and unit labor costs numbers got a lot better since the May meeting. And, largely because gasoline prices have eased and the Fed has talked tough, inflation expectations have settled back down after a bumpy ride in late May and early June. The Fed could justifiably keep the inflation paragraph the same. But it probably won't, Harris said. FOMC will probably alter the inflation statement to acknowledge "a pickup in core inflation," he said.
The outlook section could also be tweaked. In May, the FOMC said: "The committee judges that some further policy firming may yet be needed to address inflation risks but emphasizes that the extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information."
Peter Kretzmer, an economist at Bank of America, said the FOMC could signal some flexibility by saying that "some further policy firming may yet be needed over time.
Or the Fed could begin to signal that the end of the tightening cycle is getting closer without promising too much by saying that "the level of interest rates is approaching a level that is consistent with a reduction in inflationary pressures over the medium-term," said Brian Bethune, U.S. economist for Global Insight. "The Fed does not want to be 'pre-committing' well in advance of meetings," Harris said. "At the same time, it wants to be clear that battling inflation is the first priority."
The data The calendar of economic releases is fairly busy. The highlights are the housing sales numbers for May, the consumer confidence index for June, and the core inflation numbers for May.
"Ongoing deterioration in housing sector fundamentals points to declines in both new and existing home sales in May," said Jan Hatzius, chief economist for Goldman Sachs.
New home sales probably dropped about 4% to a seasonally adjusted annual rate of 1.15 million from 1.20 million in April, according to a survey of economists conducted by MarketWatch. The new home sales figures will be released on Monday at 10 a.m. Higher mortgage rates and still-high prices pushed housing affordability to a 15-year low in May. Inventories of unsold homes have soared in recent months.
Existing home sales probably fell about 2% to a seasonally adjusted annual rate of 6.64 million in May from 6.76 million in April, the survey says. The pending home sales index fell for the fourth-straight month. The figures will be released on Tuesday at 10 a.m.
The consumer confidence index is expected to be unchanged at about 103.1 in June. Gasoline prices have retreated, but the consumer confidence index released by the Conference Board seems to be more influenced by labor market conditions than by gasoline prices, in contrast to the index released by the University of Michigan, which showed a small gain in early June.
A weaker job market, a falling stock market and continued weakness in housing should offset the gains from lower gas prices, economists say. The confidence index will be released on Tuesday at 10 a.m.
One of the most significant pieces of news will come on Friday morning at 8:30 a.m., after the Fed announcement, when the Commerce Department reports on the May core inflation numbers as part of the income and spending report. The Labor Department's core consumer price index rose 0.3% for a third month in a row in May, but the Commerce Department's separate inflation gauge, known as the core personal consumption expenditure price index, is expected to rise just 0.2% in May. That would keep the year-over-year increase in core inflation at 2.1%, above the Fed's comfort zone, but below the 2.4% growth in the core CPI.
The Fed prefers the Commerce Department figure over the core CPI. The core PCE index uses the CPI data, but assigns different weights to the goods and services in the CPI market basket. In particular, it gives less weight than the CPI does to shelter costs, which have been the main driver of the increase in core CPI this year, even as housing prices have softened. The rest of the income report could be interesting as well. Incomes probably fell after adjusting for inflation. Spending was probably flat in real terms. First-quarter gross domestic product likely will be revised up to 5.5% annualized from 5.3% earlier. The revision will be released Thursday at 8:30 a.m.
The main source of GDP revision is the improvement in the trade gap compared with earlier projections. For the second quarter, economists see GDP slowing to 3%, as consumer spending and residential investment fade.
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Post by Conrad Alvin Lim on Jun 25, 2006 22:37:49 GMT -4
Arcelor accepts Mittal's $33.65 billion offerBy Aude Lagorce, MarketWatch Last Update: 8:02 PM ET Jun 25, 2006LONDON (MarketWatch) -- Arcelor SA's board of directors on Sunday unanimously recommended acceptance of a sweetened takeover bid of $50.59 a share from rival Mittal Steel in a deal valued at $33.65 billion. The companies scheduled a Monday-morning press conference at Arcelor's Luxembourg headquarters to discuss the proposed merger creating Arcelor-Mittal, which would give Arcelor shareholders 50.5% of the new company, which would control 10% of the global steel market. "All of the key conditions established by the Board and presented by the Management Board as well as the observations made by the European works council in terms of valuation, industrial plan and corporate governance, have been met," Arcelor said in a statement. But the bitter five-month-battle between Mittal (MT : 32.17, +0.72, +2.3%) and Russian rival Severstal for Arcelor may not be over. Shortly after the Arcelor board's decision was announced, Severstal said it was studying "all its options" in light of its previous May 26 "legal agreement" with Arcelor to merge, according to media reports. "We have an agreement to merge that ties us to the board of directors of Arcelor ... We are very surprised that the board did not invite us to discuss our revised offer, and did not give use the opportunity to respond, as we had requested," the company said in a statement, according to media reports. Arcelor Chairman Joseph Kinsch will be chairman of combined steel giant for three years and Mittal Chairman and Chief Executive Lakshmi Mittal will be board president. The Mittal family will own 43% of the merged company, according to a statement from Arcelor. "We have paid a fair price for what is a very good business," Mittal said in a statement. "We are delighted that is now what we have achieved." The majority of Arcelor's board of directors would be made up of independent directors. Arcelor executives would have a greater presence on a separate management board for a set period. Arcelor said the proposed merger agreement, upon which shareholders are scheduled to vote Friday, provides: - A mixed offer at a price equal to 13 Mittal Steel shares and 150.6 euros in cash per 12 Arcelor shares, or 12.55 euros in cash and 1.084 Mittal Steel shares per Arcelor share
- A cash offer at a price equal to 40.4 euros per Arcelor share
- An exchange offer at an exchange ratio of 11 Mittal Steel shares per 7 Arcelor shares
- A mixed offer for Arcelor convertible bonds (OCEANEs) at a price equal to 13 Mittal Steel shares and 188.42 euros per 12 Arcelor OCEANEs.
"Tenders to the offers above will be subject to a pro-ration and allocation procedure that will ensure that in the aggregate the portion of the consideration paid consisting of Mittal Steel shares and the portion of the consideration consisting of cash will be 69% and 31%, respectively," Arcelor said. "The negotiated exchange offer ratio implies relative valuations of 60% for Arcelor shareholders and 40% for Mittal Steel shareholders, Arcelor said. "Therefore, taking into account the cash portion of Mittal Steel's offer, the shareholders of Arcelor and Mittal Steel will hold 50.5% and 49.5% of Arcelor-Mittal, respectively." Up until two weeks ago, when discussions between Mittal and Arcelor started in earnest, the Luxembourg-based steelmaker had been firmly opposed to a deal, arguing that the two groups had divergent strategies. In its efforts to fend off Mittal, Arcelor in May agreed a $16 billion tie-up with Russian producer Severstal. Shortly after the Mittal/Arcelor talks started, Severstal, which is owned by Russian billionaire Alexei Mordashov, decided to improve the terms of its offer to address some of the shareholders' concerns that could have blocked a deal. But that wasn't enough as investors pushed for Arcelor to merge with its bigger rival with more international operations. Rotterdam-based Mittal first approached Arcelor in January with an unsolicited $22.7 billion bid. Arcelor Chief Executive Guy Dolle tried to fend off the bid with a $6 billion buyback and the ringfencing of recently acquired Canadian producer Dofasco into an independent Dutch foundation with control over the unit. In mid-May, Mittal raised its offer by 34% to $32.9 billion but was again rebuffed. A few days later, in the ultimate snub, Arcelor agreed a hook-up with Russia's second-largest producer Severstal. See Battle Timeline. In the following weeks, Lakshmi Mittal waged a war of words on the deal, taking out numerous ads in financial newspapers urging Arcelor shareholders to reject the Severstal deal and arguing that it would give control of the combined company to Mordashov.
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Post by Conrad Alvin Lim on Jun 29, 2006 5:27:42 GMT -4
THE FED No surprises expected from Fed Quarter-point rate hike seen as foregone conclusion[/u] By Rex Nutting & Greg Robb, MarketWatch
WASHINGTON (MarketWatch) -- The Federal Open Market Committee began its two-day meeting on Wednesday with a foregone conclusion: another increase in the central bank's target interest rate.
"The June FOMC meeting is not expected to provide surprises. A 25 basis point rate increase is well forecast," said Brian Fabbri, chief economist at BNP Paribas.
Fed officials have proclaimed that they are not happy about the acceleration in consumer prices, especially over the past few months. Chairman Ben Bernanke said recent increases were "unwelcome."
Fed watchers and financial markets took Bernanke's comment as a sure sign that the FOMC would boost the overnight rate from 5% currently to 5.25% on Thursday to slow the economy.
There is some chatter about the FOMC making a bolder, half-point move. See full story. But the majority of economists dismiss the notion, saying it would only be a sign of panic at the central bank.
Economists expect the Fed to tweak their policy statement, but to retain the key phrase that "some further policy firming may yet be needed to address inflation risks."
"Overall we expect the FOMC to continue to signal that rate hikes are likely at future meetings, without making any commitments as to timing or magnitude," said Dean Maki, economist at Barclays Capital.
Jim O'Sullivan, economist at UBS Securities, said the goal of the Fed statement is "to be as market-neutral as possible." As a result, they will retain much of the statement from May 10.
O'Sullivan said the statement is hawkish enough to support another rate hike in August, while flexible enough for a pause in August if the data warrants.
Although the outcome is known, the Fed officials will have a very tough two-day session. Their task is to dig through the economic data, sort out the trends and set a new course for monetary policy, two years after starting on the long march toward interest-rate neutrality.
There is a growing consensus that the federal funds rate could go to 5.75%, or 6% or even higher in the next few months as inflation rates inevitably accelerate.[/b][/color]
That could happen, but there's also a chance that U.S. economic growth will slow in the coming months to a pace that would give the Fed a reason to pause. The housing market and consumer spending have already slowed noticeably under the pressure of higher interest rates and higher energy costs. Many economists are concerned that the Fed could go too far.
Edward Keon, economist at Prudential Equity Group, said a rate hike on Thursday would slightly increase the probability of a recession to 20% from his current estimate of 10%.
Fed officials know that the 16 rate increases since June 2004 haven't fully hit the economy. There's a lot of monetary tightening in the pipeline already. The tough rhetoric from Fed officials in the past month could be "open mouth" operations aimed at cementing the FOMC's inflation-fighting reputation, rather than signaling any further tightening in policy through open market operations. The two-day meeting of the Fed is designed specifically to give monetary-policy makers the time to discuss the economic outlook in preparation for Bernanke's testimony to the banking committees on July 19 and 20.
In February, the FOMC said the economy would likely grow about 3.5% in 2006 and between 3% and 3.5% in 2007. It said core inflation would likely accelerate to a range of 1.75% to 2.5% in 2006 before settling back to under 2% next year.
So far, that forecast looks pretty accurate. The question for policymakers is whether it's still their best guess.
The FOMC's statement on Thursday and Bernanke's testimony in three weeks will shed more light on the Fed's outlook.
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Post by Conrad Alvin Lim on Jul 5, 2006 10:42:44 GMT -4
Enron founder, former chairman Kenneth Lay dead - CNBC By Michael Baron Last Update: 10:14 AM ET Jul 5, 2006
NEW YORK (MarketWatch) -- Kenneth Lay, the former chairman of Enron as well as a founder of the company, is dead, according to a report on CNBC. Lay was convicted of fraud and conspiracy charges by a federal jury in Houston on May 25 for his part in the high-profile collapse of Enron. CNBC said Lay died at his home in Aspen, Colo., of a heart attack. Jeffery Skilling, the ex-CEO of Enron, was also convicted in late May. The pair had yet to be sentenced for the charges, and each man was facing at least 20 years in prison.
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Post by Conrad Alvin Lim on Jul 10, 2006 5:53:50 GMT -4
STOCKS TO WATCH Dominion Homes, MetLife, Alcoa By Ruth Mantell, MarketWatch Last Update: 1:50 PM ET Jul 8, 2006
SAN FRANCISCO (MarketWatch) -- Among the companies whose shares are expected to see active trading in Monday's session are Dominion Homes Inc., MetLife Inc. and Alcoa Inc.
Alcoa (AA : 33.55, +0.13, +0.4%) is expected to report earnings per share for the second quarter of 86 cents, according to analysts polled by Thomson First Call.
Audiovox Corp. (VOXX : 13.39, -0.21, -1.5%) will report first-quarter results after the markets close.
Bank of Granite Corp. (GRAN : 19.78, -0.61, -3.0%) is expected to report second-quarter per-share income of 34 cents.
Chattem Inc. (CHTT : 29.09, -0.96, -3.2%) is seen reporting per-share income for the second quarter of 58 cents.
CVS Corp. (CVS : 30.46, +0.36, +1.2%) is scheduled to report June sales.
Electroglas Inc. (EGLS : 2.95, -0.10, -3.3%) is expected to report a loss per share for the fourth quarter of 14 cents.
Helen of Troy Ltd. (HELE : 18.27, -0.16, -0.9%) is seen posting first-quarter per-share earnings of 26 cents.
Schnitzer Steel Industries (SCHN : 36.59, +0.11, +0.3%) is expected to report per-share earnings of 96 cents for the third quarter.
Standard Microsystems Corp. (SMSC : 20.47, -1.09, -5.1%) is seen reporting first-quarter earnings per share of 24 cents.
WD-40 Co. (WDFC : 32.94, -0.75, -2.2%) is expected to post third-quarter earnings per share of 38 cents.
After Friday's closing bell, Dominion Homes (DHOM : 8.73, +0.22, +2.6%) reported second-quarter sales of 356 homes worth $66.2 million vs. 655 homes worth $123.1 million in the same period a year earlier.
Citigroup Inc. (C : 49.08, -0.19, -0.4%) sold more than 22.4 million shares of MetLife (MET : 50.90, -0.33, -0.6%) , unloading the stake that the bank received when it sold its Travelers Life & Annuity business to the insurer last year.
General Motors Corp. (GM : 29.48, +0.28, +1.0%) said Friday it would hold exploratory discussions with Renault SA and Nissan Motor Co. regarding an alliance. Analysts have given a mixed reception to the idea, floated by GM's influential minority shareholder Kirk Kerkorian.
Industrial conglomerate 3M (MMM : 74.10, -7.29, -9.0%) on Friday said it expects earnings excluding items for the second quarter to miss its previous outlook due to lower-than-expected sales volumes and higher-than-anticipated new capacity start-up costs in its optical-systems division.
Watch list Apollo Investment Corp. (AINV : 18.03, -0.36, -2.0%) said former U.S. senator Thomas Daschle has resigned from its board effective as of today. Daschle told the New York-based investment company that he resigned because other commitments made him unable to continue as a director.
Applied Materials Inc. (AMAT : 16.08, -0.30, -1.8%) said it has completed its $464 million cash acquisition of Applied Films Corp., a supplier of equipment used in manufacturing flat panel displays.
AT&T Inc. (T : 27.74, +0.08, +0.3%) and BellSouth Corp.'s (BLS : 36.51, +0.22, +0.6%) Cingular Wireless said it is refuting points made in a lawsuit against the company by the Foundation for Taxpayer and Consumer Rights. The foundation has alleged that Cingular Wireless misled and overcharged millions of AT&T cell phone users when Cingular bought AT&T Wireless.
Falconbridge Ltd. (FAL : 53.29, -0.41, -0.8%) reiterated its recommendation of Inco Ltd.'s (N : 67.09, -0.34, -0.5%) offer to acquire Falconbridge as a response to Xstrata Plc's extension of its current offer for Falconbridge.
Global Payment Technologies Inc. (GPTX : 1.84, +0.13, +7.6%) said Thomas Oliveri, chief operating officer, has resigned for personal reasons.
Hologic Inc. (HOLX : ; 46.68, -0.73, -1.5%) said it signed a consent agreement with the Federal Trade Commission that would resolve the dispute regarding Hologic's acquisition of the Mammotest prone bed breast biopsy system intellectual property. Also, Hologic said the FTC has closed its investigation into Hologic's pending acquisition of Suros Surgical Systems Inc.
Hurray Holdings Co. (HRAY : 5.20, -0.13, -2.4%) said it sees a significant negative impact on its wireless value added services business for the rest of 2006 due to new operator policies introduced by wireless operator China Mobile Communication Corp.
Intevac Inc. (IVAC : 21.63, -0.61, -2.7%) said it has filed a patent infringement lawsuit in the U.S. District Court for the Central District of California against Unaxis USA Inc., and affiliates. The suit claims infringement of a patent related to Intevac's 200 Lean magnetic media sputtering equipment.
Johnson Outdoors Inc. (JOUT : 17.28, -0.01, -0.1%) said it sees a loss of more than $1.2 million due to the flooding and temporary closure of its Binghamton, N.Y., plant and offices.
Linn Energy LLC (LINE : 20.61, -0.12, -0.6%) said the Nasdaq has indicated that the company is now compliant with all marketplace rules. The oil and gas concern added that its shares will remain listed. The company became current in its reporting requirements it filed its 2005 Form 10-K and first quarter 2006 Form 10-Q.
Mair Holdings Inc.'s (MAIR : 5.85, +0.15, +2.6%) Mesaba Aviation Inc. unit said June traffic fell 38.8% to 108.6 million revenue passenger miles. Load factor, or the percentage of a plane filled with passengers, rose 1.5 percentage points to 72.8%, while net capacity fell 40% to 149.3 million available seat miles.
Mediware Information Systems Inc. (MEDW : 9.87, -0.11, -1.1%) said Jill Suppes has stepped down as chief financial officer to pursue other interests.
MI Developments Inc. (MIM : 34.20, -0.86, -2.5%) said Doug Tatters has resigned from his position as chief financial officer. The Canadian real estate company said John Simonetti, its chief executive officer, will also be its interim CFO.
Nicor Inc. (GAS : 41.80, +0.11, +0.3%) said it has reached a tentative agreement with the staff of the enforcement division of the Securities and Exchange Commission in settlement of an anticipated civil action. Under the settlement, the Naperville, Ill.-based natural gas company will be subject to disgorgement of one dollar, a $10 million monetary fine and an injunction.
Parker Hannifin Corp. (PH : 76.98, +0.71, +0.9%) said June North American industrial orders rose 7% from levels reached during the same period last year. Rest-of-world industrial orders rose 8%.
Petroleum Development Corp. (PETD : 36.38, -1.69, -4.4%) said the Nasdaq has indicated that the company is compliant with its marketplace rules. Nasdaq will continue to list the concern's shares.
Teck Cominco Ltd. (TCK : 61.88, +0.88, +1.4%) said it has received European regulatory clearance for its proposed acquisition of Canadian nickel mining company Inco Ltd. (N : 67.09, -0.34, -0.5%). Teck Cominco said it has now received all necessary anti-trust clearances in its $16 billion bid to acquire Inco.
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Post by Conrad Alvin Lim on Jul 11, 2006 21:36:30 GMT -4
Standard & Poor's Announces Change to U.S. IndexLast Update: 5:48 PM ET Jul 11, 2006NEW YORK, July 11, 2006 /PRNewswire-FirstCall via COMTEX/ -- Windstream Corp. (NYSE: WIN) will replace Cooper Tire & Rubber Co. (CTB : 10.82, +0.02, +0.2%) in the S&P 500 after the close of trading on Monday, July 17. Windstream is the company being formed by the combination of the wireline segment of S&P 500 constituent Alltel Corp. (GD : 68.66, +1.76, +2.6%) and Valor Communications Group Inc. (VCG : 11.63, -0.06, -0.5%) in a transaction scheduled to be completed on or about that date. At today's close of trading Cooper Tire & Rubber had a market cap of roughly $664 million, ranking 500th in the index. Standard & Poor's will monitor this transaction, and post any relevant updates on its website: www.standardandpoors.com. Windstream provide voice, broadband and entertainment services to customers in 16 states. Headquartered in Little Rock, AR, the company will be added to the S&P 500 GICS (Global Industry Classification Standard) Integrated Telecommunication Services Sub-Industry index.
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