Blogging

I started work today and I might not be able to blog as frequently as I want anymore.  But I’m still fixing my schedule so I hope to be able to still do this even with definite overtimes, making my own dinner, watching the telly, and working out.

Murdoch considering suing BBC

In an interview today with Sky News Australia, the business and media mogul hinted he would sue BBC for stealing materials from his newspaper.

Mr Murdoch, interviewed on Sky News Australia, was asked how he would be able to instigate his proposal to charge for newspaper websites such as The Times in the UK or The Australian when the BBC and ABC produced free news content on their sites.

“But we are better,” said Mr Murdoch, chairman of News Corp. “And anyway, if you look at them, most of their stuff is stolen from the newspapers now, and we’ll be suing them for copyright.

“They will have to spend a lot more money on a lot more reporters to cover the world when they can’t steal from newspapers.”

But he added that he didn’t think it would be necessary to go to court.

No comment was gathered from BBC.

Source: FT

Kraft launches hostile bid for Cadbury… but was rejected

Before 9am today, Kraft launched a hostile bid for the confectionery maker  Cadbury.  The deal: 300p in cash and 0.2589 Kraft shares for every Cadbury share, bringing the total value to £9.8bn or 717p a share.  Note that this is the same offer that was offered back in September although back then, the value stood at 745p a share.

Cadbury was, however, quick to reject.  Following is the statement released by the company:

9 November 2009

Cadbury Statement in Response to Announcement by Kraft Foods of a Formal Offer

Cadbury plc (‘Cadbury’) notes the announcement of an unsolicited offer by Kraft Foods Inc. (‘Kraft’) of 300p and 0.2589 Kraft shares per Cadbury share, implying a value for each Cadbury share of 717 pence (based on the closing price of USD 26.78 for a Kraft share on 6 November 2009 and an exchange rate of 1.6609 USD / GBP) (the ‘Offer’).

The Offer’s cash price per share and exchange ratio are unchanged from Kraft’s announcement of 7 September. However, due to the fall in the Kraft share price since then, the implied value for each Cadbury share is around 4% lower. Therefore, the Offer is worse than the proposal that the Board has previously rejected as
fundamentally undervaluing Cadbury and its prospects.

Accordingly, the Board recommends shareholders reject the Offer and in due course will be communicating with shareholders to set out in more detail why it believes the Offer falls well short of reflecting the value of Cadbury.

Roger Carr, Chairman of Cadbury, said: ‘The repetition of a proposal which is now of less value and lower than the current Cadbury share price does not make it any more attractive. As a result, the Board has emphatically rejected this derisory offer and has strengthened its resolve to ensure the true value of Cadbury is fully understood by all.

‘Cadbury is an exceptional standalone business. It has strong iconic brands, a sharp category focus and an enviable geographic scope. Our successful financial delivery and strong business model reinforce the Board’s belief in both the strategy and prospects of Cadbury as an independent company.

‘Kraft’s offer does not come remotely close to reflecting the true value of our company, and involves the unattractive prospect of the absorption of Cadbury into a low growth conglomerate business model.

‘I am confident Cadbury will deliver significant value – which should accrue wholly to our shareholders.’

Ends

Fascinating development.

Source: Cadbury

Poison pills for S Korea

South Korea is considering allowing poison pills to drive away prospective takeover bids for South Korea’s companies.

The justice ministry said it was holding a public hearing on Monday to discuss the introduction of a “poison pill” clause in commercial laws, which would give shareholders the right to quickly buy new shares at a discount when they face an unsolicited takeover bid.

The Federation of Korean Industries, a business lobby group, has urged the government to introduce defensive measures, saying South Korean companies are coming under increasing pressure from corporate raiders. But some shareholder rights groups have said that the latest measures could be a backward step in efforts to improve corporate governance.

The growing pressure comes from the fact that in recent years, foreign investors have come to the emerging market, whose companies used to be run by families, chaebols, as well as the state.

Source: FT

Unemployment reaches 10.2%

The US lost 190,000 jobs in October, bringing the unemployment rate to a 26-year high of 10.2%.  This news sent both the dollar and the Treasurys higher and the index futures down.  The number is higher than expected.

The unemployment rate rose from 9.8 to 10.2 percent in October, and nonfarm payroll employment continued to decline (-190,000), the U.S. Bureau of Labor Statistics reported today. The largest job losses over the month were in construction, manufacturing, and retail trade.

Total nonfarm payroll employment declined by 190,000 in October. In the most recent 3 months, job losses have averaged 188,000 per month, compared with losses averaging 357,000 during the prior 3 months. In contrast, losses averaged 645,000 per month from November 2008 to April 2009. Since December 2007, payroll employment has fallen by 7.3 million.

Construction lost 62,000 jobs while manufacturing shed a thousand less jobs than construction. It was slightly better for retail losing 40,000 jobs. Health care continued to add jobs, giving 29,000 people jobs.

The change in total nonfarm payroll employment for August was revised from 201,000 job losses to 154,000 while that from September was revised from 263,000 to a better 219,000.

Source: BLS

BoE extends QE program

From FT:

The Bank of England’s monetary policy committee voted on Thursday to expand its vast programme of pumping cash into the UK economy by £25bn, in a sign it remains worried about the outlook in spite of incipient signs of recovery.

[T]he addition of a further £25bn to the programme, which is likely to be used mostly to buy government debt, signals a slowing down in the pace of the Bank’s monetary easing. In August, the Bank had opted to expand the programme by £50bn, which has been used up during the past three months.

The governor of the Bank wrote to the chancellor, Alastair Darling to seek approval for expanding the asset purchase facility, which will take the total programme undertaken by the Bank to £200bn. The new money will be spent during the next three months.

FT Alphaville is putting together reactions from analysts. Here’s one from Thomson Reuters strategist Divyang Shah:

The 25bn coupled with the fact that the purchases are going to be paced over 3-months also highlights the low probability that QE will be expanded in the future. But given the way in which the economy has tended to surprise to the downside, the impact of higher unemployment and credit outlook it is never a good idea to write off the potential for further QE completely.

Read the news via FT, or the reactions via FT Alphaville.

Talk of town: Buffett buys Burlington Northern

The Oracle of Omaha buys the remaining 77.4% stake at Burlington Northern it doesn’t already own.  Meanwhile, he dumps some more stocks of Moody’s.

Some feature on the deals:

Bloomberg: Berkshire buys Burlington in Buffett’s biggest deal

BusinessInsider: S&P: Berkshire could lose covered AAA rating due to Burlington Buy

DealJournal: Montana farmers fear a Buffett dictatorship

NYT: Buffett bets big on railroads’ future

Clusterstock: Buffett dumps more Moody’s

FT: Safe signals from Buffett’s train deal

Period table of bloggers

Hat tip to Ritholtz for this. Via The Reformed Broker. This looks awesome… and dorky.

Source: Big Picture

FOMC statement

Following the Fed’s 2-day meeting, the central bank keeps the rate at between 0 and 0.25% while believing that economic activity has continued to show improvements. Other things worth noting are: the reduction in agency debt to be bought, from $200bn to $175bn, due to limited availability, as well as the identification of 3 economic conditions which might affect the decision to raise rates in the future.  For now, the Fed maintains its stance of “exceptionally low levels of federal funds rate for an extended period of time”.

Read the entire FOMC statement:

For immediate release

Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to pick up. Conditions in financial markets were roughly unchanged, on balance, over the intermeeting period. Activity in the housing sector has increased over recent months. Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.

With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. The amount of agency debt purchases, while somewhat less than the previously announced maximum of $200 billion, is consistent with the recent path of purchases and reflects the limited availability of agency debt. In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

Source: Fed

Stanley Works to buy Black & Decker

From WSJ:

Stanley Works and Black & Decker Corp. agreed to a $4.5billion all-stock deal that combines two iconic U.S. hand-tool and power-tool makers whose fortunes have faded amid a collapse in the housing market and a broader industrial slowdown.

Stanley is the smaller company, based on sales and employees, but will be the acquirer in the deal, which comes amid a slow period in deal making.

The deal holds a 22% premium for Black & Decker shareholders, who will own 49.5% of the company, while Stanley holders will have the rest. Black & Decker shareholders are receiving 1.275 shares of Stanley for each share of Black & Decker. Black & Decker shares closed Monday at $47.34. Stanley shares closed at $45.15.

The two companies are a tad close to my heart because of our business.

Source: WSJ

Another rate hike from the Australian central bank

While investors await for the Fed’s decision on Wednesday whether to keep the rate at the historic lows or even change the wording of its policy stance via its minutes, the Australian central bank again moved in conjunction with developments in the global economy by raising its key rate by another 25 basis points in just 1 month.  This brings Australia’s cash rate to 3.5%.

The Reserve Bank’s move reflects concerns that inflationary pressures are beginning to build and fears that a residential property bubble could be forming.

By world standards, Australia’s economy has performed solidly during the global downturn, skirting recession by recording only one quarter of contraction.

The Australian government this week upgraded its economic growth forecast for the 12 months to next June to 1.5 per cent, a turnround on the 0.5 per cent contraction predicted only six months ago.

Canberra this week also forecast that unemployment would peak at 6.75 per cent, down from a previous estimate of 8.5 per cent, and predicted that budget deficits and government borrowings would be lower than it expected in May.

This isn’t much of a headline in the sense that it isn’t much of a market mover.  We wait for the Fed’s minutes on Wed and the ECB and BoE’s on Thursday.

Source: FT

Roubini knows how to parteh

It felt strange seeing Roubini partying with the chicks and with a wide grin on his face but well, it happened:

With a hot, Gwyneth-Paltrow-look-alike chick

Now isn't that smile precious... and rare

 

Another chick... who looks drunk

And another... oh wait, this isn't a chick.

Photos courtesy of Gawker. ht to Clusterstock.