Wednesday, August 25, 2010

Yen looks likely to stay strong

The yen may hold near 15-year highs against the dollar around the 80-85 zone in coming months as a confluence of factors play in favour of the Japanese currency despite the country's weak economy.

Japan's focus on hedging any purchases of U.S. Treasuries, the downward dollar pressure from falling U.S. yields, the prospect of more Federal Reserve easing and the Bank of Japan's inaction on deflation all suggest the yen can remain strong.

Finance Minister Yoshihiko Noda stepped up his rhetoric on Tuesday by warning the yen's recent moves were clearly one-sided, but his remarks were not strong enough to stop traders from pushing it to new highs against the dollar on growing scepticism that Japan would intervene to curb yen gains.  

TREASURIES AND FALLING YIELDS

Japanese investors, especially banks, have been huge buyers of U.S. Treasuries, especially in recent months.
The latest Ministry of Finance data shows Japanese investors snapped up 2.2 trillion yen ($26 billion) of U.S. sovereign bonds in June. Total foreign bond buying accelerated to $55 billion last month and has been hefty so far in August. 

All things equal, such purchases would weaken the yen against the U.S. currency.
But Japanese banks tend to fund their Treasury buying with dollars via the U.S. repo market. Institutional investors such as life insurers are taking advantage of lower U.S. interest rates to currency hedge their purchases by selling dollars in FX forwards JPYF= -- thus neutralising the currency impact.

Still, the U.S. bond buying has been big enough to play a role in yields falling to 16-month lows, eroding the traditional U.S. yield advantage over Japanese bonds whose yields are also falling, though not at the same pace.

The spread between five-year Treasury yields US5YT=RR and JGB yields JP5YTN=JBTC has shrunk a full percentage point in the past four months, while the 90-day correlation between that yield spread and dollar/yen has climbed to a very strong 0.96 -- showing the role that yield spreads are playing.
The same is true for German Bund yields DE5YT=TWEB and euro/yen.

The deleveraging of banks has meant that many in major countries are increasing their holdings as a share of total assets, just as inflation slows and could turn into deflation -- keeping G3 yields under pressure relative to JGB yields.

YEN NOT THAT STRONG, REALLY

The yen's climb to a 15-year peak against the dollar and a nine-year high against the euro has spurred a barrage of warnings from Japanese officials about the dangers to the country's exporters and fragile economy.
The rise against those currencies has resulted in the yen's trade-weighted index -- or nominal effective exchange rate (NEER) -- hitting an all-time high.

The yen's inflation-adjusted index (REER) is at an 18-month high, but is still 32 percent below its 1995 peak because of falling prices in Japan for the better part of 15 years.

Of course, the relatively weak yen REER matters little for big Japanese firms that had planned for a dollar/yen rate closer to 90 this year and are scrambling to limit the hit to their earnings from its strength, on top of a slowing global economy.

YEARNING FOR YEN

One surprise this year has been foreign central banks finding a new place for the yen in their foreign reserves.
The bulk of overseas buying of Japanese assets this year has been in short-term money market instruments, as seen most clearly in China's record buying spree of Japanese debt. 

Such demand for Japanese debt, either as part of foreign reserve diversification or due to investors seeking a temporary parking place for their money, has likely helped support the yen.

YEARNING FOR HIGHER YIELDS

While the yen has climbed broadly, it has not risen as much as higher-yielding currencies such as the Brazilian real BRLJPY=R and South African rand ZARJPY=R thanks mainly to sizable Japanese investment abroad.
Japanese investors shovelled $173 billion into overseas equities, bonds and money market instruments in January-July. Such overseas investments by Japanese investment trusts, or "toushin" funds, are heading towards higher-yielding currencies and emerging market assets rather than the dollar.

BOJ STANDS PAT, FED SEEN ACTING

The Bank of Japan has showed no inclination to fight the deflationary forces gripping the Japanese economy, even as the Fed looks poised to increase quantitative easing, and many market watchers believe it has little power to turn the tide anyway.

So far, increases in its special funding operations have done little to stem the yen's rise or spur bank lending.
The BOJ's total balance sheet size remains well below its quantitative easing peak in 2006, while the Fed's has nearly tripled since the collapse of Lehman Brothers.

The perception that the Fed may be more aggressive than the BOJ has been one factor undermining the greenback.

So in many ways, the yen's rise simply reflects that it is the anti-dollar and anti-euro among G3 currencies in a world where the developed world is struggling after the financial crisis but emerging markets are still thriving.

July existing home sales plummet to 15-year low

 Existing home sales sharply fell in July, reflecting the expiration of the government's home buyer tax credits. The data also suggested that the pervasive weakness in the housing market will probably continue to stall the economic recovery.
A view of a home for sale in Los Angeles in this February 24, 2010 file photo.
The National Association of Realtors (NAR) reported that sales of previously occupied homes fell 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July, the lowest level since May 1995, from a downwardly revised 5.26 million in June.
Economists expected existing home sales in July to decline to 4.75 million from 5.37 million in June.
"Home sales were eye-wateringly weak in July and suggest that the double-dip in house prices that we warned about at the start of the year is just around the corner," said Paul Dales, U.S. economist at Capital Economics.
"Overall, it is becoming abundantly clear that the housing market is undermining the already faltering wider economic recovery. With the increasingly inevitable double-dip in prices yet to come, things could yet get a lot worse," said Dales.
Total housing inventory at the end of July rose 2.5 percent to 3.98 million existing homes available for sale, representing a 12.5-month supply at the current sales pace, up from an 8.9-month supply in June.
Year-over-year, July existing home sales fell 25.5 percent from 5.14 million last year.
“A soft sales pace likely will continue for a few additional months. Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired,” said Lawrence Yun, NAR's chief economist. “Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September.”
To receive a government incentive worth as much as $8,000, buyers must have signed contracts by the end of April. Deadline for the deals needed to complete by June 30 was extended to September 30.
Yun said the pace of a sales recovery could pick up quickly given the rock-bottom mortgage interest rates and historically high housing affordability conditions, provided the economy consistently adds jobs.

Trefis: Intel May Have Overpaid For McAfee

Intel could have overpaid McAfee in its $7.68 billion deal to buy the security software maker, according to Trefis, a stock analysis firm.
Intel Corporation President and CEO Paul S. Otellini walks off the stage following his keynote address at the Oracle OpenWorld conference in San Francisco. Trefis says Intel may have a difficult time justifying the premium paid for McAfee.
In order to justify a price of $48 a share, McAfee needs to boost its corporate security market share to 26 percent and its consumer security market share to 36 percent by 2016, Trefis said.
On Aug 19, Intel Corp. said it is buying McAfee Inc. for $48 per share in cash, in a deal that will augment the chip giant's security portfolio.
At $48 a share, Intel is paying about 19 times earnings for McAfee and 4 times book value. Following the deal, McAfee's shares surged to $47 from about $30. The Trefis price estimate for McAfee's stock is only around $32.
"Based on McAfee's fundamentals, we think Intel overpaid.  However, we could be proved wrong if McAfee manages to dramatically boost its shares of the corporate and consumer security software markets over the next few years," Trefis said.

Business Market

For the business market, McAfee offers anti-virus, anti-spyware and anti-spam software, data encryption and authentication services, and mobile phone security products.
Trefis said McAfee's share of this market grew to around 14.7 percent in 2009 from 11.2 percent in 2006 and accounts for about 34 percent of the $32 Trefis price estimate for McAfee's stock.
"Although McAfee faces stiff competition from Symantec in the business security market, we expect its share to grow modestly over the next few years, reaching 15.4% by the end of the Trefis forecast period," Trefis said, adding that McAfee is moving aggressively to expand the range of software that it hosts and delivers to customers over the Internet.
According to Trefis, the market for hosted software, also known as software-as-a-service (SaaS), has been growing at an annual rate of 30 percent over the last few years, and McAfee continues to expand its data loss prevention offerings, which is a critical area for business customers.
"If McAfee's share of the business security software market reaches 26% by 2016, instead of the 15.4% that we currently forecast, there could be a 25% upside to the $32 Trefis price estimate for McAfee's stock," Trefis noted.

Consumer Market

Trefis expects McAfee's consumer market share to reach 22.4 percent by the end of the its forecast period, despite competition from Symantec and smaller players like CA Technologies, AVG, TrendMicro and Kaspersky Labs.
McAfee sells several products to protect users from malware, spam and phishing attacks. Consumer antivirus software constitutes around 32 percent of the $32 Trefis price estimate for McAfee's stock. McAfee's share of this market grew to about 20.3 percent in 2009 from 16.5 percent in 2006.
McAfee's recent extension of its multi-year partnerships with Acer and Dell also bodes well for the company in the context that Acer and Dell are the world's second- and third-largest PC makers, respectively.
"If Intel manages to increase McAfee's consumer antivirus market share to around 36% by 2016, there could be an upside of at least 20% to the $32 Trefis price estimate for McAfee's stock," Trefis said.
Shares of Intel closed at $18.70 Monday on Nasdaq, while shares of McAfee ended Monday's trading at $47.10.

Wal-Mart deli meat recalled on contamination concerns, Tyson shares slide

Roast beef and ham sandwiches sold at delicatessens of retail giant Wal-Mart Stores Inc. (NYSE.WMT) are being suspected of being contaminated with bacteria and if consumed, can result in a fatal disease, the US Department of Agriculture (USDA) has warned in a voluntary recall announcement.

The USDA said, Tuesday, Zemco Industries in Buffalo, New York, has recalled around 380,000 pounds of deli meat that could possibly be contaminated with the bacteria Listeria monocytogenes. Zemco is a unit of food producer Tyson Foods Inc. (NYSE.TSN).

The USDA said suspicion of contamination was first triggered when retail samples collected by food inspectors in Georgia were found to contain the bacteria.
The department said it has not yet received any reports of illnesses associated with the meat but warned that consumption of the recalled product could possibly cause "listeriosis, an uncommon but potentially fatal disease." 

The disease, which is recognized by symptoms such as high fever, severe headache, stiff neck and nausea, is rarely contracted by healthy people but infants, elderly people and those with weakened immunity system such as HIV patients, pregnant mothers or those undergoing chemotherapy are vulnerable to this disease, the USDA said.

According to department spokesman Gary Mickelson, it is possible that most of the recalled deli meat "have already been consumed." Nonetheless, Wal-Mart has been directed to remove the recalled products from its store shelves.

In a company release, Wal-Mart said the recall does not affect individual retail packages of deli meat but does impact Marketside Grab and Go sandwiches including the Ham and Swiss Sandwich, Italian Hero Sandwich, Roast Beef and Cheddar Sandwich, and Smokehouse Hero Sandwich.

The retail giant said it is cooperating closely with the USDA in making the recall a success and has advised its customers who recently purchased the recalled products to return them "for a full refund."
"The safety of customers is a top priority at Wal-Mart, and that includes offering safe, high quality foods at the most affordable prices," the retailer said.
Tyson Foods Inc., which owns Zemco, said it decided to announce the voluntary recall as soon as it heard that a sample of the supermarket deli roast beef and ham analyzed by the Georgia Department of Agriculture was found to contain the bacteria.
"Only one company, Wal-Mart, received the recalled deli meats. The company has been contacted and has instructed its stores to remove the products from shelves and is destroying any remaining products still in its possession," Tyson said in a press release. Shares of the company were trading down 1.87 percent at $16.28 during afternoon session, Tuesday.

The recalled products are: 
 
- 25.5-pound cases of "Marketside Grab and Go Sandwiches Black Forest Ham With Natural Juices Coated with Caramel Color" with the number 17800 1300.

- 28.49-pound cases of "Marketside Grab and Go Sandwiches Hot Ham, Hard Salami, Pepperoni, Sandwich Peppers" with the number 17803 1300.

- 32.67-pound cases of "Marketside Grab and Go Sandwiches Virginia Brand Ham With Natural Juices, Made in New York, Fully Cooked Bacon, Sandwich Pickles, Sandwich Peppers" with the number 17804 1300.
- 25.5-pound cases of "Marketside Grab and Go Sandwiches Angus Roast Beef Coated with Caramel Color" with the number 17805 1300.
The recalled products were produced between June 18 and July 2, 2010 and bear "Use By" dates between August 20 and September 10, 2010.

Google's app Goggles to hit iPhones but awaits Apple's 'Yes'

Google's Android specific application Goggles is set to hit Apple Apps Store, a dream come true for iPhone users, provided Apple says yes.
Google staff engineer David Petrou's keynote address at the Hot Chips conference in Stanford University, confirmed that the application was still in the works.

Goggles application was released by Google last December. It allows image-based web search using the phone camera. The application comes embedded with the Android-phone OS.

When a user captures an image with a phone camera, the application allows the user to search the web using the captured image. Then it searches the index on Google's database of images, returning results close to the image.
Goggles can scan books, paintings, company logos etc. Recently Google bought Like.com, a visual search company to leverage its visual-search capabilities raising hopes that it will combine this acquisition to complement Goggles and its GPS applications.
But Google's aspiration to be on Apple's Apps Store speaks volumes about the importance of Apple Apps store for the overall apps market. Google is apparently keen to be on the Apple list to gain a share in apps revenue and also popularity that comes from a listing on the Apple Store.

However, the release of the anticipated application for iPhone depends on the stringent approval method employed by Apple over its Apps Store. Last year, Apple removed Google's Voice-enabled applications from its apps store and is yet to provide a plausible reason for the removal.

The approval of Goggles for iPhone will be a much-awaited event as it will help gauge Apple's intention whether it will continue its closed-wall approach or rescind on its rigidity.

Petrou said that developing Goggles for clients other than Android is no mean feat. "It's actually a significant penalty (having) different code bases," underscoring need for a such more open Apple iOS environment.
Google staff engineer David Petrou's keynote address at the Hot Chips conference in Stanford University, confirmed that the application was still in the works.
Goggles application was released by Google last December. It allows image-based web search using the phone camera. The application comes embedded with the Android-phone OS.
When a user captures an image with a phone camera, the application allows the user to search the web using the captured image. Then it searches the index on Google's database of images, returning results close to the image.
Goggles can scan books, paintings, company logos etc. Recently Google bought Like.com, a visual search company to leverage its visual-search capabilities raising hopes that it will combine this acquisition to complement Goggles and its GPS applications.
But Google's aspiration to be on Apple's Apps Store speaks volumes about the importance of Apple Apps store for the overall apps market. Google is apparently keen to be on the Apple list to gain a share in apps revenue and also popularity that comes from a listing on the Apple Store.

However, the release of the anticipated application for iPhone depends on the stringent approval method employed by Apple over its Apps Store. Last year, Apple removed Google's Voice-enabled applications from its apps store and is yet to provide a plausible reason for the removal.

The approval of Goggles for iPhone will be a much-awaited event as it will help gauge Apple's intention whether it will continue its closed-wall approach or rescind on its rigidity.
Petrou said that developing Goggles for clients other than Android is no mean feat. "It's actually a significant penalty (having) different code bases," underscoring need for a such more open Apple iOS environment.

Toshiba to unveil world’s first 3D TV without special glasses, ahead of Christmas

Toshiba Corporation, Japanese electronics maker plans to sell the world's first 3D televisions by the end of this year which do not require glasses to watch, said an AFP report.

The company plans to unveil three models of 3D televisions of 21 inches screen before the Christmas Eve with an expected price of several thousand dollars, the report said.

Toshiba wants to incorporate a new technology in 3D televisions displaying stereoscopic images for the viewers which avoids wearing special 3D vision glasses.

"People can enjoy images in three dimensions from various positions and suffer less stress," the report said.
Earlier, 3D television launches from major electronic makers in Japan saw a poor response in terms of sales and customers were annoyed to wear glasses every time. 

Toshiba spokeswoman declined to comment on the report. "We are not in a position to make any announcement," the report said quoting her.

SABMiller, Asahi may engage in bidding war for Foster's beer unit

The world's second largest brewer SABMiller Plc (LON.SAB) and smaller Japanese rival Asahi Breweries Ltd (TYO.2502) are reportedly planning to acquire Australia's biggest brewer Foster's Group's (ASX.FGL) beer operations for about £7 billion ($10 billion) but are yet to make a formal offer.

According to the Sunday Times, which first broke the news, the London-listed SABMiller is planning to buy Carlton & United Breweries, the beer making unit of Foster's. However, a bidding war is expected to erupt as Japan's No.2 brewer Asahi Breweries could also make an offer. China's China’s Bright Food Group Co. and Tsingtao Brewery Co. and Canada's Molson Coors could also join the bidding fray.
Carlton & United Breweries is an attractive buy because it has a profit margin of 38.5 percent. Without the unit, which generates around 85 percent of Foster's earnings, Foster's will become a much smaller company.  
According to market analysts, it is likely that SABMiller will end up acquiring Carlton & United Breweries because it will help the maker of beer brands such as Peroni, Pilsner Urquell and Miller Lite, which already gets about 85 percent of its profit from the emerging markets of Latin America, Africa and Asia, expand its business further and put it in a position to reclaim the title from Anheuser-Busch InBev as the world's largest brewer.
InBev, which owns beer brands such as Budweiser and Stella Artois, bought Anheuser-Busch for $52 billion in 2008, helping the new entity vault past SABMiller as the world's largest beer maker. In 2009, SAB Miller reported a profit of $2.16 billion on revenue of $18.7 billion while Anheuser-Busch InBev reported a profit of $4.6 billion on almost $37 billion in revenue.
SABMiller is expected to buy the company before Foster's goes ahead with its plan of splitting the unit from its struggling wine business next year.
According to Sanford C. Bernstein analyst Trevor Stirling, Foster's is "well within SAB's firepower."
Agrees Arnhem Investment Management analyst Theo Mass, SABMiller is the "most logical bidder" and "seven billion pounds would be a good opening statement if there is a bid."
However, Asahi could pose a threat, analysts said. The Japanese brewer, which is looking to expand and diversify beyond the local beer market, announced earlier this month that it is planning to set aside $9.2 billion for acquisitions over the next five years, with eyes on Asia and Oceania.
Shares of Foster's closed up 7.56 percent at A$6.26 on the Australian Stock Exchange following reports of the potential bids. Shares of SABMiller, which already owns Foster's brand in India and hold the US brewing rights, were trading up 0.54 percent at 1861 pence on the London Stock Exchange at 2.39PM (BST). Asahi's shares closed up 0.62 percent at 1629 on the Tokyo Stock Exchange.
Any deal looks likely to make August not only the biggest deal making month of 2010 but also put it on course to beat its own record of $260 billion set in 2006. According to Dealogic, global M&A volume in August so far is $172.7 billion, of which $87.1 billion worth of deals were announced last week.

Potash formally rejects BHP's "low ball" offer, seeks out white knight

The world's largest fertilizer Potash Corp. of Saskatchewan (NYSE.POT) officially rejected Australian mining giant BHP Billiton's (NYSE.BHP) $38.6 billion takeover bid, Monday, as it expects "superior offers or other alternatives" to emerge.

Last week, BHP made an unsolicited bid of $38.6 billion, offering to buy Potash for $130 per share. Potash, however, rejected the offer, saying it was "grossly inadequate" and undervalued its assets.
BHP, unfazed, turned hostile and took its offer directly to Potash's shareholders by placing advertisements for a tender offer that would run till October 19.
Meanwhile, Potash put in place a shareholder rights plan – commonly known as a poison pill – to protect itself from BHP's "unsolicited" interest and advised its shareholders not to act on BHP's bid until it proposed a recommendation.

Potash CEO Bill Doyle, who stands to make nearly $400 million from stock options if BHP ends up buying Potash, said Potash's board is not opposed to a sale but it is opposed "to a steal" of the company.

According to Doyle, BHP is being opportunistic and trying to buy Potash when the shares of fertilizer producers are trading low.

Doyle said the fertilizer industry is going through a downturn as farmers hit by the recession are scrimping on their spending. However, the fertilizer industry is poised for a cyclical recovery because while farmers can get away with the practice of not using fertilizers for one or two growing seasons, crop yields decline sharply after that as the soil becomes depleted of nutrients.

The International Fertilizer Industry Association also predicts that global demand for fertilizer in 2010-11 will rise by 4.8 percent to 170.4 million metric tons as rising standards of living and development in China and India are also putting increasing pressure on farmers to produce more crops from a declining amount of farmland. For instance, China has 20 percent of the world's population but just 6 percent of its arable land, which is dwindling further on account of pollution and heavy industrialization.
Rising food demand and adverse weather have already driven up the prices for corn, soybeans and wheat by as much as 40 percent since June, and potash consumption is seen rising by at least 10 percent over the next year.

Not surprisingly, Potash formally rejected BHP's bid on Monday.
"The Potash Corp. board of directors is unanimous in its belief that the BHP Billiton offer substantially undervalues Potash Corp. and fails to reflect both the value of our premier position in a strategically vital industry and our unparalleled future growth prospects," Doyle said in a statement.
"The bottom line is value," Doyle said on Monday. "No one thinks the low ball bid of $130 has any traction whatsoever."
Potash also said it has been approached by several other parties interested in buying its assets.
"Potash Corp has been approached by, and has initiated contact with, a number of third parties who have expressed an interest in considering alternative transactions," the company said in a statement on Monday.
"Discussions are being pursued with several of these third parties in order to generate value enhancing alternatives," the company said.
But finding a "white knight" may not be easy, market analysts said.

According to the analysts, Vale SA of Brazil, the Anglo-Australian Rio Tinto Group and China's energy and chemicals group Sinochem as well as a consortium led by Chinese private equity fund Hopu Investment Management, all of whom have interest in securing supply of potash, a vital crop nutrient used to help boost crop yields by improving the ability of plants to withstand dry soil, could emerge as potential bidders.
However, among them, state-run Sinochem is the likely favorite to challenge BHP as Potash owns 22 percent stake in its subsidiary Sinofert Holdings, China's top potash producer and fertilizer importer.

Sinochem spokesman Li Qiang said the company would "pay close attention" to BHP's offer and did not rule out a counter bid as Sinochem is "interested in overseas potash investment opportunities."
In case Sinochem, which reported revenues of $39 billion in 2009, makes a counter offer, a bidding war may erupt driving up the price of Potash to as much as $60 billion.

But it is doubtful whether Sinochem will be able to keep up with BHP in the bidding war. BHP has already asked a syndicate of banks - Barclays Capital, BNP Paribas, JP Morgan, Royal Bank of Scotland and Santander - to arrange a $45 billion loan to facilitate Potash's takeover.
However, if Sinochem is backed by China's $300 billion sovereign wealth fund, China Investment Corp. (CIC), it would have enough firepower to counter BHP's bid. China has a major interest in securing potash reserves as China, the second biggest importer of potash after India, fears that a BHP-Potash deal could give BHP more control over potash prices.

"The growth of China's potash demand in the long run will exceed the expansion of its own production," said Beijing Orient Agribusiness Consultant Co. analyst Xu Hongzhi. "China has tried to invest in potash mines in other countries but the record doesn't show much success."

"China has been acquiring production across a number of commodity classes," Macquarie analysts led by Duncan McKeen wrote in an August 17 research note. "Given that it is still a large net importer of potash, it may be a logical buyer of potash production."

Agrees Philip Keevil, senior partner at Compass Advisers LLP. According to Keevil, if the Chinese government "wants to get behind Sinochem, then they can blow BHP out of the water."
Meanwhile, analysts also claim it is also doubtful whether BHP will be willing to be drawn into a bidding war if the price goes past $150 per share.

According to Deutsche Bank analysts, BHP's net debt will be $47 billion at the end of 2011 if the deal is done at the current price and $53 billion if the bid is lifted to $150 a share.
Though a BHP-Potash deal will leave the new entity with no serious contender in the fertilizer sector, "there are risks involved and they (BHP Billiton) would be taking on a lot of debt," Mine Life analyst Gavin Wendt said.

Agrees Paul Xiradis, chief executive of fund manager Ausbil Dexia. According to Xiradis, though Potash is a good buy, it is unlikely whether BHP will be drawn into a bidding war.
"I'm sure that there will be a limit on how far BHP will take this, because while it will be very attractive for the longer term, they don't want to destroy that long-term prospect by overpaying," he said.
A case that comes to mind is Rio Tinto's $38 billion acquisition of aluminum producer Alcan in 2007. After Rio bought Alcan, price of the metal fell sharply and Rio became mired in a massive debt that left it crippled for years.

"There will be a point where they will have to walk away if they don't achieve it," Xiradis said.
Potash is being advised by Goldman Sachs, RBC Capital Markets and BofA Merrill Lynch while XYZ are advising BHP.

Shares of US-listed BHP, which is expected to report a profit of about $12.6 billion, a jump on last year's $10.7 billion on Wednesday when it announces its latest quarterly earnings, closed down 0.46 percent at $67.13. Shares of Potash closed up 0.35 percent at $150.20.

US stocks extend losses after housing data

US stocks extended their losses on Tuesday after July existing-home sales plummeted to the lowest level in 15 years.

The S&P 500 Index has declined 13.59 points, or 1.27 percent, to trade at 1,053.77 at 10:30 am EDT. The Dow Jones Industrial Average has dropped 112.61 points, or 1.11 percent, to trade at 10,061.80. The Nasdaq Composite has dipped 1.41 percent.

The National Association of Realtors (NAR) reported that sales of previously occupied homes plunged 27.2 percent in July, the biggest one month drop ever, to a seasonally-adjusted annual rate of 3.83 million units from a downwardly revised 5.26 million units in May.

Economists had expected existing home sales to fall to the 4.75 million units in July. Year-over-year, existing home sales fell 25.5 percent from 5.14 million in July2009. 

Total housing inventory at the end of July climbed by 2.5 percent to 3.98 million existing homes available for sale, representing a 12.5-month supply at the current sales compared to an 8.9-month supply in June.
Among the Dow30 components, Caterpillar plunged 3.11 percent, while Disney and GE declined more than 2 percent.


The euro advanced 0.32 percent to 1.2697 against the dollar and the yen advanced to a 15-year high of 83.8150 against the greenback.
Crude oil futures declined 1.92 percent and copper futures fell 1.77 percent after housing data. In precious metal sector, gold futures declined 0.07 percent and silver futures rose 1.51 percent.
European stock markets plunged after worse than expected US home sales data. Markets are currently trading lower with FTSE 100 trading down by 116.23 points, DAX30 down by 129.95 points and CAC 40 down by 93.72 points.

Dell launches $100 smart phone in US on AT&T

ROUND ROCK (TEXAS): Dell Inc said on Tuesday its Aero smart phone is now on sale in the US for $99 with a two-year AT&T contract. Dell has been selling similar phones in China and Brazil since late last year and has been promising a US version since January.

The world's No 2 personal computer maker, behind Hewlett-Packard Co, has been looking for ways to diversify its business as profit margins on traditional PCs have grown thinner and thinner. Dell also wants to stay relevant as more everyday computing tasks get done on smart phones instead of desktops and laptops.

The Dell Aero uses an older version of Google Inc's Android operating system than many competing phones on the market today. The Aero uses version 1.5, also called ``cupcake,'' while most phones now use version 1.6 or higher. Dell says it has done a significant amount of work adding features to the base Google system.

The Aero has a 3.5-inch touch screen and a 5-megapixel camera, and it has photo and video editing functions built in. Dell says the Aero can sync with Windows Media Player and music without copy protection from Apple Inc.'s iTunes.

Dell has a second Android device for sale already through AT&T Inc. The Streak, which costs $300 with a two-year contract or $550 without, has a 5-inch (12.5-centimeter) screen. Dell is marketing it as a small tablet computer, but it can also be used as a phone.

Apple's iPhone 4 starts at $199 with a two-year AT&T contract. That's the same price after rebate as the Droid Incredible, made by HTC Corp for Verizon.

Smaller banks struggle to recover, failure rate higher in 2010 than 2009

While most sectors and metrics of the U.S. economy have improved or at least stabilized, bank failures have actually increased in 2010 from both 2009 and 2008.

So far in 2010, 118 U.S. banks have already failed, compared to the 84 banks that have failed January 2009 through August 2009, according to the FDIC.

Including August numbers, banks are failing at the rate of 14.75 banks per month in 2010. At this rate, there will be 177 bank failures this year, compared to 140 in 2009 and 25 in 2008.

The vast majority of failed banks from 2008-2010 have been smaller banks that have less than $10 billion in assets -- in fact, about 80 percent of all failed banks had less than $1 billion in assets, according to NERA Economic Consulting.


In almost all cases, the deposits of the failed bank were assumed by another financial institution.

Michael Cosgrove, principal of the Econoclast in Dallas, said bank failures are a lagging indicator, meaning its deterioration and recovery lags those of the broader economy. Indeed, bank failures did not peak until third quarter 2009; by then the worst of the recession was already over and economic recovery was gaining momentum.

Currently, about mid-way through third quarter 2010, banks are still failing at an alarmingly high rate. Cosgrove said the smaller banks have a larger share of their portfolio in real estate compared to big banks. Consequently, the quality of their balance sheets remain poor as the U.S. real estate sector continues to struggle with the aftermath of its crash.

Banks like these will likely fail for the remainder of this year and the next year; indeed, they will continue to fail until the real estate sector stabilizes, said Cosgrove.

In addition to their real estate problems, small banks are struggling with lending revenues; they are constrained by regulators limiting the amount of loans they can make and a dearth of creditworthy borrowers.

Dividing the data by quarter, 21 banks failed in first quarter 2009, 24 in second quarter 2009, 50 in third quarter 2009, 45 in fourth quarter 2009, 41 in first quarter 2010, 45 in second quarter 2010 and 32 so far in third quarter 2010.

Interestingly, bank failures have been inversely correlated with U.S. economic performance and the stock market. In 2008, the stock market plunged 37 percent. In first quarter 2009, it dropped another 14 percent percent. Then, from second quarter 2009 to first quarter 2010, the stock market surged 44 percent.

Similarly, U.S. GDP contracted at an annual rate of 4.9 percent in first quarter 2009, contracted 0.7 percent in second quarter 2009, expanded 1.6 percent in third quarter 2009, then expanded 5.0 percent in fourth quarter 2009 and advanced 3.7 percent in first quarter 2010.

Meanwhile, as illustrated above, the number of bank failures were relatively low from 2008 to the second quarter 2009, but picked up and remained high since the third quarter of 2009.

In the second quarter of 2010, the economy hit a soft patch. The stock market declined 12 percent and GDP growth slowed to 2.4 percent. The number of bank failures is little changed and remains elevated at 45 in this period.

Plane with 96 passengers crashes in NE China: Xinhua

LONDON: A passenger plane with 96 people on board crashed in Yichun City in northeast China's Heilongjiang Province on Tuesday night, Xinhua news agency quoted government and airline company sources as saying.

Xinhua said the plane belonged to Henan Airlines, but gave no further details. Officials in Yichun said the plane crashed at about 1010 p.m. Emergency services were rushing to the scene.

HP could triumph Dell in 3Par battle, analyst says

Hewlett-Packard (HP) is likely to outlast Dell in a protracted bidding war for 3Par Inc. due to its relative size advantage and its presence in the high-end storage market, an analyst with ThinkEquity said adding that Dell could raise its offer for the storage company.

On August 23, HP launched a rival offer to buy Storage Company 3Par Inc., for $24 a share, trumping Dell's offer of $18 a share, a move that will strengthen HP's corporate data-center business. HP's offer has an enterprise value of $1.6 billion, while Dell had earlier agreed to buy 3Par for $1.15 billion.
"HPQ's presence in the high-end Storage market via its Hitachi Data Systems (HDS) relationship could allow it to achieve faster payback than Dell on its investment. This factor alone is likely to make HPQ bid higher," analyst Rajesh Ghai said in a note to clients.

Apart from potential for faster payback, HP may be in a better position to withstand a prolonged bidding war with Dell, given its greater market cap, free cash flow, and cash balance, the analyst noted.
Ghai, however, said he believes Dell remains likely to stay in the race a little longer, if not anything but to make the deal dearer for HP.
"Hence, we do expect a fresh competing bid for 3Par from Dell, in the near future," the analyst said.
Bloomberg reported earlier that Dell is readying a sweetened offer for data-storage provider 3Par.
The offer may be sent in the coming days, Bloomberg reported citing a person, who declined to be identified because the plans haven't been made public.

3Par deal-A revenue booster

Ghai said both HP and Dell are likely to see incremental revenue at 3Par's 60 percent plus gross margins. For its first quarter ended June 30, California-based 3Par reported a gross margin of 64 percent with revenues rising 22 percent to $54.26 million.
The analyst added that the deal could be accretive for either acquirer at current prices, assuming either acquirer retains about $60 million in incremental annual operating expense from 3Par on its books.
"We also point out a HPQ victory may be near-term positive for EMC while negative for HDS. This reverses in the event of a Dell victory," Ghai said.
If HP wins 3Par deal, it is likely to replace HDS over time with 3Par's T-Class as its high-end storage offering, while Dell is likely to do the same with EMC's Clariion mid-range line with 3Par's F-Class.
Both acquirers may be incented by the possibility of replacing their thin reseller margins with Par's 60 percent plus gross margins.

Dell's Issues with the Deal

Unlike for HP, the high-end storage market is a relatively new segment for Dell, and hence, it might take longer for Dell to achieve revenue leverage in this segment than it may be for HPQ.
Competing in this segment is likely to bring Dell in further conflict with its long-time partner EMC Corp.
Dell's relationship with EMC is broader in nature, as their deal covers Data Domain and Celerra NAS besides Clariion, making it more difficult for Dell to break the relationship. The analyst said even if Dell wins 3Par bid, it is likely to persist with EMC, which might complicate replacement of Clariion revenue with 3Par's F-Class in the mid-range in the future.
HPs Big Pocket
On a trailing twelve month basis, HP generated $7.56 billion of free cash flow compared to Dell's $1.95 billion. Meanwhile, HP currently has $14.2 billion in cash on its balance sheet while Dell has $10.9 billion, signaling HP has deeper pockets than Dell, which might enable it to outlast Dell in a prolonged bidding war.
3PAR's shares are currently trading at a premium to HP's offer, which reflects the market's belief that Dell or another acquirer may come in with yet a higher bid, and rumors afloat that EMC or NetApp could jump in the fray.
However, Ghai said he do not expect a competing bid from either NTAP or EMC.
"We do not believe EMC is likely to put down $2 billion to prevent fresh competition in the high-end Storage market. We also believe NTAP is unlikely to enter the fray given its experience fighting a larger competitor in the bidding war for DDUP last year," Ghai said.
"While Dell can certainly come in with another bid, at the end of the day 3Par is worth more to HP than it is to Dell, given HP's existing enterprise hardware and services businesses," Ghai added.
Shares of HP closed Monday's trading at $39.04, while Dell ended Monday's trading at $11.94.
Meanwhile, shares of 3Par were up 3.3 percent at $26.95 in the pre-market trading Tuesday after closing Monday's trading at $26.09.

US home sales dive to 15-year low

WASHINGTON: Sales of previously owned US homes took a record drop in July to their lowest pace in 15 years, suggesting further loss of momentum in the economic recovery.

As the National Association of Realtors issued the report, Chicago Federal Reserve President Charles Evans warned that the risk of a double-dip recession was higher than six months ago although he did not think output would contract, describing the recovery as ongoing but modest.

Existing home sales dropped a record 27.2 percent from June to an annual rate of 3.83 million units, the lowest since May 1995. June's sales pace was revised down to a 5.26 million-unit pace from a previously reported 5.37 million.

Analysts polled by Reuters had expected sales to fall 12 percent to a 4.70 million-unit rate last month.

"This is a worrisome report and while it reflects the volatility caused by the end of the (government home-buyer) tax credits, it also indicates a deterioration in the underlying trend for housing demand," said Michelle Meyer, senior U.S. economist at Bank of America Merrill Lynch in New York.

"For the overall economy, the dangerous link to housing is home prices and this report signifies that home prices should fall considerably faster, which could tip the economy back into a recession. We are, however, not quite there yet but this is a worrisome report."

Tuesday, August 24, 2010

General Motors in huge share sale

General Motors has paved the way for an initial public offering (IPO), expected to be the second largest, perhaps even the largest, share sale in US history.
GM, 61%-owned by the US government, has officially filed its proposals with the Securities and Exchange Commission.
The move begins the timetable for the IPO, which analysts believe will raise between $12bn (£7.7bn) and $20bn.
It means the US Treasury can begin selling part of the stake it took after a $50bn bailout of the carmaker.

Company executives have said for months they were planning to re-float GM, as the carmaker seeks to repay the rescue funds received from the US and Canadian governments.
"It signals the return to normalcy, to being able to start paying the taxpayer back... Getting the company back to a traditional publicly traded company," said Rebecca Lindland, director of consultancy IHS Automotive.
The 700-page filing of the IPO paperwork with the SEC came nearly a week after GM reported second-quarter profits of $1.6bn, its biggest profit in six years.
The share sale is expected to take place later this year. The largest US IPO so far is Visa's 2008 offering that raised $19.7bn

Unanswered questions
 
GM, the biggest US carmaker, said it would apply for listings on the New York and Toronto stock exchanges, but did not say exactly how many shares it would sell.

"The amount of securities offered will be determined by market conditions and other factors at the time of the offering," GM said in a statement.
"The number of shares to be offered and the price range for the offering have not yet been determined," it added.
Analysts have speculated that the US Treasury will sell about a fifth of the 304 million GM shares it holds, reducing its stake to under 50%.
The IPO would have to bring in $70bn just to pay back all of the GM's stakeholders, but analysts are not expecting anything close to that size.
Demand for GM shares in the financial markets is unclear, and its advisers will now begin the job of pitching the company to potential investors around the world.
News of the IPO also comes a week after GM's chief executive, Edward Whitacre, announced plans to resign.
He will hand over to current board member Dan Akerson, but will stay on as chairman until the end of the year.
Mr Whitacre joined GM in July last year to help restructure the carmaker and prepare its return to full private-sector ownership.
GM has cut more than 65,000 jobs in the US and closed factories in an attempt to cut costs in the last year.
It has also sold its Saab brand and wound down others, though it has retained its European brands, Opel and Vauxhall.
GM has already repaid $8.4bn worth of loans to the US and Canadian governments.

Oriflame workers detained in Iran as operations shut

Iranian authorities have closed the Tehran operations of Oriflame Cosmetics and detained five workers, the Swedish firm has said.

The reasons for the move were disputed, with Tehran alleging fraud and Oriflame saying the authorities disliked it employing women in certain roles.
Last week, Iran's commerce and culture ministries called the company illegal and blocked its local internet site.
Oriflame said the move could be because it employs women as sales consultants.
According to a statement on the company's website on Monday, "business conditions in Iran have deteriorated in recent months".
The statement continued: "The authorities have now closed operations in Tehran. The authorities have also detained three members of staff and two sales consultants without disclosed reasons.
"Oriflame has not at present access to detailed information relating to the background to, or effects of, the current situation."
In Tehran, state radio reported that the company had violated tax regulations and custom law, and operated an illegal marketing scheme.
An an Iranian newspaper, Kayhan, accused the company of supporting opposition members in Iran.
In an interview with the Associated Press news agency, Oriflame's chief financial officer, Gabriel Bennet, rejected the allegations.
"Of course this is not true. We are running a business in Iran like anywhere else in the world, according to good international code of conduct," he said.

Hewlett Packard trumps Dell with $1.6bn bid for 3PAR

Computer maker Hewlett Packard (HP) has launched a $1.6bn (£1bn) bid for data storage firm 3PAR, trumping a $1.2bn offer made by rival Dell last week.

Along with IBM, the two firms are looking into more profitable business areas outside of making computers.
The bids come as part of a glut of merger and acquisitions activity in the technology sector, including last week's $7.8bn bid for McAfee by Intel.
The HP bid pushed Wall Street higher in early trade, before shares lost ground.

On a day of light trading, the main Dow Jones index closed down 0.4% at 10,174 points.
Shares in 3PAR rose almost 45%, while those in HP slipped 2%.

'Good fit'

HP said that, if its offer was accepted, the deal should be closed by the end of the year.
Analysts said the battle between two of the world's three largest computer makers to gain control of 3PAR showed their determination to move into so-called cloud computing - technology that allows access to data servers over the internet.
"One of the growth areas in technology is in the enterprise storage space," Joel Levington at Brookfield Investment Management told Bloomberg.
"3PAR's products fit in well there. It's an easy way to gain product breadth."
He also expressed doubts about whether Dell would be able to match HP's offer.

Woolworths stores remain unused 18 months after closure

More than 300 former Woolworths stores are still empty a year and a half after the chain collapsed.

The Local Data Company, which provides information on the retail sector, says this represents some 40% of the once-national chain.
The company said some experts believed about 150 stores may never be used as shops again.
The biggest group now using the outlets are discount retailers, including Poundland.

It, along with 99p Stores and B&M Bargains, occupy 25% of former premises.
The next biggest takers of ex-Woolworths stores are supermarkets. New owners include Iceland, which has taken more than 60 premises, and Waitrose.
Less common new uses include a health centre and a library, while a few have reopened stocking a similar range of products under similar sounding names, such as Alworths and Wellworths.
The best take-up of old Woolworths has been in Greater London, where 81% have now been reoccupied, followed by those in Yorkshire and the Humber area at 64%.
Last year the number of empty stores was 60% and one analyst said that despite many stores remaining empty, the latest figures provided some encouraging news of the retail climate.
Andrew Garbutt, retail and leisure director at PricewaterhouseCoopers, said: "The Local Data Company's research shows the UK high street is experiencing a gradual recovery, with vacant ex-Woolworths stores being filled gradually."
Woolworths went into administration in 2008 after facing increased competition from supermarkets and online retailers.

Barclays customer accounts hit by computer glitch

Thousands of Barclays customers were unable to access their bank accounts or withdraw money from cash machines on Saturday due to a computer glitch.

The bank's system froze up around 2pm, causing customers to abandon purchases at the tills during one of the busiest shopping times of the week.
The nationwide seizure also hit telephone and online banking services.
Barclays' telephone banking centres were inundated with customer complaints.
A Barclays spokeswoman was unable to elaborate on the cause of the problems.
She told the BBC: "We became aware of the problem - which was resolved quickly - early on Saturday afternoon. We apologise to customers for any inconvenience."
She added it was still not yet clear what had caused the glitch, but said the company was looking into it "as a matter of priority".
Barclays is Europe's sixth-biggest bank by market value. It signed a two-year deal with NCR earlier this month for the management and maintenance of its UK network of ATMs. But Barclays said the issue was not related to NCR.

Bovis Homes invests in new land

Bovis Homes has reported a pre-tax profit of £3.5m in the first six months of 2010, after investing in more land.

Bovis, which made an £8.6m loss in the same period last year, said it added 1,874 consented plots - land with planning permission - to its land bank.
The addition represents about one year of land supply, the company said.
Bovis repeated its intention to resume its dividend as confidence returns to the industry after homebuilders were hit hard during the recession.
"Making investments in land at what we believe to be a low point in the housing market cycle is the right thing to do," David Ritchie, Bovis chief executive, told the BBC.
"We're not suggesting that house prices will rise; we're suggesting there is an opportunity to buy land today at current prices and make strong returns."
But he added: "Clearly activity is a concern and we are aware of that."
The group said it had £79m net cash in hand at the end of June and was "positive" about future expansion and improved profits.

Household finances 'under pressure in August'

Household finances came under pressure on all fronts in August, according to market researchers Markit and YouGov.
Their Household Finance Index showed people were increasingly worried about losing their jobs and higher costs of living, despite the growing economy.
Some 30% of the 2,000 households polled said their finances had worsened from last month; 6% said they had improved.
And a Centre for Economics and Business Research (CEBR) study showed family spending power falling 2.5% in a year.
The CEBR survey, carried out on behalf of supermarket chain Asda and based on Office for National Statistics data, measured the amount of money that households had left to spend after paying taxes and buying basic items.
It indicated that the average UK household had discretionary income of £175 a week in July 2010, down from £180 a year earlier.

The outlook for earnings growth is poor and it is unlikely to keep up with growth in the price of essential goods and services," said CEBR economist Charles Davis.
"The combined impact? Reductions in family spending power into 2011."

Household gloom

Nearly 69% of Household Finance Index (HFI) respondents reported a rise in the price of their goods and services in August from July, the highest level since Markit and YouGov began their survey 18 months ago.
Tim Moore, economist at Markit, said: "Stronger growth in the UK economy has done little to put a floor under the downturn in household finances."
BBC business correspondent Joe Lynam says the HFI is intended to accurately anticipate changing consumer behaviour, and its latest findings seem to contradict the official data which shows the UK economy had grown quite well in the second quarter.
UK inflation eased to 3.1% in July from 3.2% in June. The Bank of England says "temporary" factors are to blame for the recent strength in inflation - and that it is likely to fall back below the Bank's 2% target in 2012.
But it seems individuals are not as confident. The survey found 86% of those polled expected a rise in their cost of living.
With government cutbacks and likely tax rises looming, nearly half of the respondents expected their finances to weaken further over the coming year - while only a quarter felt their incomes would improve.
Job security featured prominently in the results with 22% of private sector respondents reporting a drop in job security, compared to 6% who said they felt more secure.
A weak housing market completes the depressing picture, with about 23% believing their property had lost value in August, compared with 9% who thought it had increased.
Mr Moore said the findings represented "a downbeat mood" which spanned the household income spectrum.

Businesses 'paying more' to borrow than last year

Bank fees and costs for small and medium-sized enterprises (SMEs) have risen since the end of last year.

The Institute of Chartered Accountants in England and Wales (ICAEW) says many small businesses are unable to borrow from banks, because their lending criteria are too restrictive.
Banks say demand has fallen as firms focus on paying back existing loans.
A separate report shows commercial lending is still sharply lower than at the height of the boom.
The annual survey from the National Association of Commercial Finance Brokers (NACFB) reveals that in the mid-2000s, nearly £20bn was being borrowed, but this went down to under £7bn and is now just over that.

"If you look at late 2007 [to] early 2008, our members probably had over 100 lenders to choose from for commercial finance. That now is below 50," Adam Tyler, the NACFB's chief executive, told BBC Radio 5 live's Wake Up To Money.
"It's become increasingly difficult to actually place business, whether it's with the High Street lenders or with smaller companies."
Last week, the government set up a task force involving the major banks and key government departments to examine whether banks are making life too tough for SMEs.
In a piece published on the BBC News website, Angela Knight, the chief executive of the British Bankers' Association, points to last week's Trends in Lending report from the Bank of England, which said the evidence was that demand from small businesses for bank loans remained weak.
'More choosy' The ICAEW's findings were published in its latest business confidence monitor, put together with Grant Thornton.
Michael Izza, the chief executive of ICAEW, said: "Before the recession, banks were lending to businesses they probably shouldn't have been lending to and they were guilty of probably being rather exuberant in their lending.

"[Now] banks are being a little more choosy about who they lend to. They're also charging more money, they're making sure that the lending they do make to businesses, they can make money on. They've been getting their balance sheets in order for the last year or so."
As well as noting a rise in fees, such as those levied for arranging an overdraft, the ICAEW backed up the banks' assertion about demand, saying many SMEs were concentrating on paying off debts and managing with the money they had.
Despite complaints from some businesses about the banks' attitude to lending, the ICAEW survey found the percentage of SMEs saying access to capital is a challenge fell to 20%, from 30% at the end of 2009.
It added that businesses reporting late payment was a "considerably more stubborn problem" for them.
The report also found waning confidence among businesses, despite what it called a noticeable improvement in their financial health.
It suggests the economy, which is currently running at more than 4% below pre-recession levels, will slow later this year.
'Factor invoicing' Meanwhile, the NACFB, which is the UK's trade body for business finance brokers, says it has seen an increase in the total amount of business written in the past year.
However, this is only 39% of the volume of business being written in 2007.
The NACFB's report said the biggest growth area of lending had come in "factor invoicing".
Mr Tyler explained how it works: "As you raise an invoice, you pass that invoice to a company who will pay you a percentage of that invoice immediately.
"If you take a figure of 90% - if you raise an invoice for £10,000, you'll receive £9,000 immediately. You'll receive the balance, or a percentage of the balance, once that invoice is actually settled by the company."
But the cost of using factor invoicing can be high, with finance firms charging a percentage of the value of the invoice and administration fees.
James Winnister runs a security and fire installation business called J-Tech Systems, and has to use factor invoicing to manage his cashflow.
He says it costs him between £500 and £1,000 a month - money he would like to put back into the business.

£70m tidal power scheme goes on display in Anglesey

Plans to harness tidal power off the coast of Anglesey are going on public display.

Marine Current Turbines and RWE npower renewables hope to generate a fifth of the island's electricity needs from the £70m project.
If given the go-ahead, seven turbines between the Skerries and Carmel Head would act like an underwater windmill.
A two-day exhibition is starting in Holyhead. Technical studies have been carried out for the past 18 months.
The 10MW tidal farm would be located about 1km off the island, close to the Skerries, a group of rocks and islands off the north west coast.
Developers, who first announced the plans two years ago, say the Skerries Tidal Stream Array would essentially be a windmill under the sea surface.


The offshore planning application is due to be submitted to the Welsh Assembly Government next month, with 2013-14 the target date for the start of commissioning.
Those consulted include Anglesey council, the Countryside Council for Wales, RSPB, Maritime & Coastguard Agency, as well as sailing and fishing groups.
Joseph Kidd, development manager at MCT, said: "We consider the Skerries stretch of water to be an ideal site for a small tidal farm and we are keen to hear people's views before we finalise the planning application.
"The exhibition is also an opportunity for people to learn more about the advantages of tidal power and how our scheme can benefit the Anglesey economy.

"The scheme will not only generate clean energy but also give local firms the chance to be involved in the tidal farm's installation and operation."
MCT already operates a single turbine tidal energy project in Strangford Lough in Northern Ireland.
It says local engineering, diving and marine support businesses have benefited from the project over the past three years.
The joint developers have set up SeaGeneration Wales Ltd to operate the project.
Anglesey MP Albert Owen said: "I welcome all forms of renewable energy and hope that people will take this opportunity to look at this technology and the future that Anglesey has in tidal power."
The exhibition at Holyhead Town Hall opens on Monday (1400-2000 BST) and Tuesday (0900-1400BST).

BP rejects claims it is hiding data on rig explosion

Energy giant BP has been accused of hiding key data needed to investigate the Gulf of Mexico oil disaster.

Transocean, the company that owned the oil rig, alleged that BP is refusing to hand over information it needs about the explosion.
The claim is made in a letter from one of Transocean's lawyers sent to members of President Barack Obama's cabinet.

BP rejected the allegation, saying the letter contained "misguided and misleading assertions".
Nevertheless, the claim risks piling further pressure on BP, which has borne the brunt of political and public criticism for the disaster on 20 April which killed 11 workers and caused the worst oil spill in US history.
In the letter, Steven L Roberts, lawyer for Transocean, writes: "BP has continued to demonstrate its unwillingness, if not outright refusal, to deliver even the most basic information to Transocean.
"This is troubling, both in light of BP's frequently stated public commitment to openness and a fair investigation and because it appears that BP is withholding evidence in an attempt to prevent any other entity other than BP from investigating," he wrote.
According to a report by the AFP news agency, the letter was sent to members of Mr Obama's team and leading Members of Congress.
Transocean is facing 249 lawsuits for damages over the disaster. The company has asked a court to limit its liabilities to $27m (£17.3m), saying it was not responsible.

Toxic Plame

A scientific study of the effects of the spill, meanwhile, has confirmed the continued presence of a toxic chemical residue one kilometre below the sea surface

The investigation, carried out in June by the Woods Hole Oceanographic Institute, shows a plume of crude oil-based chemicals up to 200m high and 2km wide, extending 35km from the spill site.
'Disappointed' In a statement, BP said it was "unequivocal and steadfast" in its commitment to discover why the Deepwater Horizon rig exploded.
"We are disappointed that Transocean has opted to write a letter with so many misguided and misleading assertions, including the assertion that BP is 'withholding evidence'" on the explosion and spill.
"We have been at the forefront of co-operating with various investigations commissioned by the US government and others into the causes of the Deepwater Horizon tragedy," BP said.

Intel in $7.68bn McAfee takeover

The world's biggest chip maker, Intel, has agreed to buy the security technology firm, McAfee.
Intel will pay $7.68bn (£5bn) in cash.

Under the terms of the deal, Intel said it would pay $48 per share in cash for McAfee, almost 60% higher than its closing price on Wednesday.
Through buying McAfee, a leading security technology firm, Intel intends to build security features into its microprocessors which go into products such as laptops and phones.
The two companies said they had been working together for 18 months and that, should the takeover pass regulatory and shareholder approval, the first new products would be revealed early next year.

Both boards of directors have unanimously approved the deal.
However, the announcement took many analysts by surprise and sent McAfee's shares 58% higher to $47.17, close to the proposed purchase price.
Intel shares, meanwhile, fell by 3.2% to $18.97.
Mobile growth Tim Danton, editor of PC Pro magazine, said the announcement came out of the blue.
"Intel does buy a lot of companies and it does have a lot of more cash than anyone else out there. So it making a big acquisition isn't a surprise, but you may have thought it more likely to buy another hardware firm," he told the BBC.
"No doubt Intel is looking ahead and seeing that the laptop and desktop market are probably past their heyday and the big growth area is mobile.
"For a company like Intel, it's nowhere near as strong in the mobile area as it is in the laptop and desktop areas, so it's probably looking for new ways to get streams and revenues in the future."
But he added: "Perhaps that is Intel's point of view but not everybody else's. The reaction from investors has been quite negative."

Intel    McAfee
Founded
1968
1987
Revenue (2009)
$35bn   
$2bn
Net income (2009)
 $4.4bn
$173m
No. of employees
80,400
6,100

 Cloud computing
The deal is likely to reduce Intel's net earnings slightly in the first year.
An Intel company statement said that the acquisition reflected that security was now a fundamental component of online computing.
It added that today's security approach did not fully address the billions of new internet-ready devices, including mobile and wireless devices, TVs, cars, medical devices and cash machines.

A key worry for technology users is the security threat posed by the fast-growing field of cloud computing - the ability to access, change and interact with data on any platform with a net connection, including smartphones.

A key worry for technology users is the security threat posed by the fast-growing field of cloud computing - the ability to access, change and interact with data on any platform with a net connection, including smartphones.

Canadian economic growth 'slows' amid drop in housing

Canadian economic growth slowed in July amid a decline in the housing market, a leading economic index shows.

The world's tenth largest economy grew 0.4% last month, down from 0.7% in June, according to Statistics Canada.
Sales of durable retail goods declined, while the manufacturing sector saw a 2.2% growth in durable goods orders.
The Canadian leading index of 10 economic components has averaged 0.9% growth per month over the past 12 months. Growth rarely exceeds 1%.
The slowdown was caused largely by a 4.1% drop in the housing index, which is composed of new housing starts and house sales.
Coinciding with that decline was a 0.6% drop in retail sales, including furniture, appliances and other durable household goods.

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