Monthly Archives: August 2011

Bank of America Deal to Sell CCB Shares Shows How to Profitably Do Business with China

As reported by The Wall Street Journal’s Dan Fitzpatrick and David Benoit, Bank of America Corp. bought itself some breathing room as it agreed to sell more than $8 billion of China Construction Bank Corp. stock, its second multibillion-dollar deal in a week, while recognizing a $3.3 billion gain on the sale of CCB shares. How American companies like Bank of America can profitably do business with China is the title of the kick off panel at Golden Networking‘s China Leaders Forum 2011, “How American Companies Can Plug into the Chinese Rocket-Propelled Economy?”,, October 7, New York City, forum that will examine the challenges facing American companies that want to grow and expand their business in China, the opportunities to find Chinese investment partners that can provide a much-needed capital injection while opening the Chinese market, as well as important considerations to look at so that the high-powered Chinese rocket doesn’t crash anytime soon.

CCB confirmed that Bank of America agreed to sell about 13.1 billion of its Hong Kong-listed H shares to institutional investors. The Beijing-based lender didn’t give any details about the deal but said it expects the share sale to be completed in third quarter. The buyers of the stake include Singapore state investment company Temasek Holdings Pte. Ltd. and its wholly owned hedge fund, Seatown, according to people familiar with matter. The two funds were part of a group of buyers that included a Chinese investment fund, the people said. It was unclear how the stake was divided up. This sale represents about half of the company’s stake in the Chinese lender. Under the deal, which was long anticipated by analysts and investors, Bank of America will continue to hold a 5% stake in China Construction Bank.

China Leaders Forum 2011 is produced by Golden Networking (, the premier networking community for business executives, entrepreneurs and investors. 

Is Warren Buffett’s Chinese Winner a Stinker now?

As reported by Shira Ovide from WSJ–One of Warren Buffett’s favored playthings/investments, Chinese car-and-battery maker BYD, is getting crushed this morning after a disappointing earnings report.

Li Lu, the man once seen as possible successor to Buffett, helped introduce the Oracle of Omaha to BYD. Buffett invested in BYD in 2008, and it looked at first like a winner, climbing more than six-fold.

Lately, though, earnings disappointments seem to have become commonplace for BYD. Earlier this summer, BYD shares plunged after a disappointing earnings report.

Read more here.

U.S.: A Response To Buffett And Obama on Tax Issue by former McKinsey and American Express Harvey Golub

As reported by Harvey Golub from WSJ–Over the years, I have paid a significant portion of my income to the various federal, state and local jurisdictions in which I have lived, and I deeply resent that President Obama has decided that I don’t need all the money I’ve not paid in taxes over the years, or that I should leave less for my children and grandchildren and give more to him to spend as he thinks fit. I also resent that Warren Buffett and others who have created massive wealth for themselves think I’m “coddled” because they believe they should pay more in taxes. I certainly don’t feel “coddled” because these various governments have not imposed a higher income tax. After all, I did earn it.

Now that I’m 72 years old, I can look forward to paying a significant portion of my accumulated wealth in estate taxes to the federal government and, depending on the state I live in at the time, to that state government as well. Of my current income this year, I expect to pay 80%-90% in federal income taxes, state income taxes, Social Security and Medicare taxes, and federal and state estate taxes. Isn’t that enough?

Read more here.

China Passes U.S. as World’s Biggest PC Market

As reported by Owen Fletcher from the WSJ in BEIJING—China for the first time has passed the U.S. to become the world’s biggest personal-computer market, highlighting the growing importance of a country where big U.S. PC makers have struggled to compete against China’s Lenovo Group Ltd.

The shift underlines rapid industry changes in the PC industry world-wide. Consumer demand for PCs has soared in emerging markets, while it has faltered in developed markets. Meanwhile, the rise of smartphones and tablet computers, most notably Apple Inc.‘s iPhone and iPad, has raised concerns that purchases of such products could eat into demand for traditional desktop and laptop PCs. Reflecting those challenges, Hewlett-Packard Co., which is the world’s biggest PC maker but has lost popularity with Chinese consumers, last week said it is considering a sale or spinoff of its personal-computer business.

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New York: Stocks Are Unshaken after the Earthquake in DC as Investors Become Optimistic about Ben Bernanke Speech

As reported by Steven Russolillo from New York—U.S. stocks registered sharp gains despite another bleak dose of economic data—and an earthquake—as investors grew increasingly optimistic that Federal Reserve Chairman Ben Bernanke will act later this week to spur economic growth.

The Dow Jones Industrial Average jumped 301 points, or 2.8%, to 11155, led by Exxon Mobil, which rose 3%, and DuPont’s 2.6% advance. The rally builds on the blue-chip index’s 37-point gain in Monday’s rocky session.

Stocks earlier had pared some gains after an earthquake of magnitude 5.9 hit Virginia. Tremors were felt up the East coast, through Washington, D.C. , and up to New York City.

Read more here.

Gold up to $3000? If gold is like Nasdaq, it could go up 60% from here

As reported by Brett Arends from Boston MarketWatch–

I’ve just spent the last six weeks on book leave, and I’ve realized I’ve been writing about the wrong topic.

My new book is about money and the Bible. Instead I should have saved myself the effort and just banged out a cheap, superficial pamphlet with a title that would have sold a million copies: “Gold $36,000.”

After all, look at all the money Jim Glassman and Kevin Hassett made from publishing “Dow 36,000” near the peak of the 1990s boom! The reading public loves extrapolation. You can always sell a mania book.

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WSJ: Standard and Poor’s Cuts Ratings for over 10,000 Muni Issues to keep the same level with federal government debt

As reported by Michael Aneiro from the WSJ, Standard and Poor’s downgraded more than 11,000 public finance issues to keep them in line with its newly lowered rating on federal government debt.

S&P said it had lowered to double-A-plus from triple-A the ratings on certain public finance debt issues linked to the federal government, matching the downgrade it applied to U.S. government debt last Friday.

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New York: Standard and Poor’s Lowers rating from ‘AAA’ to ‘AA’ on certain municipal housing issues

As reported from Reuters in New York, Aug. 8, 2011 – Standard & Poor’s Ratings Services said today it lowered to ‘AA+’ from ‘AAA’ the ratings on certain public finance debt issues that have mortgage insurance with the Federal Housing Administration (FHA).

In addition, the ratings on other public finance debt issues that have or potentially will have mortgage revenue invested in short-term instruments guaranteed by the U.S. government have also been lowered to ‘AA+’ from ‘AAA’.

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Municipal Bonds Weaken As S&P Announces Widespread Downgrades

As reported from The Wall Street Journal, the municipal bond market weakened Tuesday after Standard and Poor’s downgraded more than 11,000 public finance issues to keep them in line with its newly lowered rating on federal government debt.

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Treasury Yield Curve Flattest due to the Concern of U.S. Recovery Halting

As reported by Susanne Walker and Cordell Eddings from Bloomberg, the extra yield Treasury investors get to hold 30-year bonds instead of two-year notes shrank to the narrowest in a week on speculation the U.S. economic recovery is stalling.

The long bonds rose as much as two points as stocks pared gains. Federal Reserve Bank of Philadelphia President Charles Plosser told Bloomberg Radio today that policy makers should have waited to see how the economy performed before pledging on Aug. 9 to hold interest rates at record lows for two years.

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