Category Archives: ECB

U.S. Retail Holiday: Sales Up 2.3%, Foot Traffic Declines

According to Bloomberg,

U.S. retailers eked out a 2.3 percent sales gain on Thanksgiving and Black Friday, in line with a prediction for the weakest holiday results since 2009.

Sales at brick-and-mortar stores on Thanksgiving and Black Friday rose to $12.3 billion, according to a report yesterday from ShopperTrak. The Chicago-based researcher reiterated its prediction that sales for the entire holiday season will gain 2.4 percent, the smallest increase since the last recession.

Black Friday Shopping (Bloomberg)

Black Friday Shopping (Bloomberg)

Retailers offered more and steeper deals on merchandise from flat-screen televisions to crockpots that, while luring shoppers, may ultimately hurt fourth-quarter earnings. Many consumers showed up prepared to zero in on their favored items while shunning the impulse buys that help retailers’ profits.

“You could get the same deals online as you could get in the store, and yet there were still a ton of people out there,” Charles O’Shea, a senior analyst at Moody’s Investors Service in New York, said in an interview. Going out to stores, “is part of the experience,” he said.

About 97 million people planned to shop online or in stores on Friday, with about 140 million intending to do so Thanksgiving through Sunday, the National Retail Federation said. That’s down from 147 million last year.

With more stores opening on Thanksgiving, sales were pulled forward from Friday, Bill Martin, ShopperTrak’s founder, said in a telephone interview. Sales on Friday fell 13.2 percent from last year, with foot traffic down 11.4 percent. Foot traffic for  the combined Thanksgiving-Black Friday period rose 2.8 percent to more than 1.07 billion store visits, ShopperTrak said.

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Do-Nothing Congress Dithers on Budget as Deadline Nears

According to Bloomberg,

Congress’s latest attempt at crafting a budget plan is on track to end up the same way as others have in the past decade: with little or no agreement.

Negotiators have little chance of breaking this string of futility, even after a 16-day government shutdown in October that cost the U.S. economy $24 billion. If they do, it’ll only be to curb automatic spending cuts, including $19 billion that hits the Pentagon starting in January.

Now budget experts, labor unions and business groups are saying enough’s enough, and questioning why lawmakers can’t live within their means the way ordinary Americans do and instead lurch from one budget standoff to the next.

“It’s a stupid way to run a country,” said Maya MacGuineas, head of the Campaign to Fix the Debt, a non-partisan advocacy group whose members include business leaders and former lawmakers. “Change comes from two possible things: a crisis or leadership.”

One of the co-chairmen of the campaign is Michael Bloomberg, founder and majority owner of Bloomberg News parent Bloomberg LP and the New York City mayor.

Unlike with previous budget panels, including the failed 2011 supercommittee, there are no immediate consequences if the budget conference misses its Dec. 13 deadline — the U.S. won’t default on its debt and the federal government won’t shut down for lack of funding.

The committee’s lack of progress is frustrating outside groups, especially business executives, who say congressional lawmakers’ habit of governing by crisis and temporary spending bills is hurting the economy and costing jobs.

‘Chilling Effect’

“The uncertainty has a chilling effect on job creators, households and anybody who’s trying to see around a corner,” said MacGuineas, who is also president of the Committee for a Responsible Federal Budget, a fiscal advocacy group.

Congress in 2009 last passed a budget resolution, the equivalent of a household budget that sets spending parameters for the federal government.

In 2010, disagreement over how to handle the scheduled expiration of tax cuts enacted under former President George W. Bush prevented agreement on a budget resolution and Republicans won the House majority, creating a divided Congress.

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Hedge Funds See Further Profit From Glencore-Xstrata

Hedge funds are betting that commodities trader Glencore will succeed in its battle for miner Xstrata, in a long-running deal that has been profitable for arbitrageurs and is still attracting funds looking to make money.

Arbs, hungry for action after a lean period for M&A, have been buzzing around the deal for months, attracted by its size, liquidity and complexity, and many profited from last week’s move by Glencore(GLEN.L) to sweeten its now 23 billion pound all-share bid.

Reported by Laurence Fletcher and Sophie Sassard, Reuters, Xstrata (XTA.L) was expected to recommend the offer as early as next week, although Qatar Holding – its second-biggest investor after Glencore – has yet to make its decision public.

However, after a breakthrough in talks last week, brokered by former British prime minister Tony Blair, many funds believe it is only a matter of time before the deal gets the Qataris’ stamp of approval.

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Hedge Fund Grabs A Piece of Office Depot

Activist investment fund Starboard Value grabbed a 13.3 percent stake in Office Depot Monday and laid out a series of changes the office products retailer can implement in order to become a more profitable company.

In a letter to Office Depot’s board, Starboard said it believes the retailer is “deeply undervalued” and a “substantial opportunity” now exists for the company to improve its performance andvaluation.

Reported by Roland Jones, NBC News, Starboard’s stock purchase makes it Office Depot’s largest common shareholder. It follows a number of similar bids by investors to boost the value of besieged bricks-and-mortar retailers.

Starboard, which is known for targeting smaller companies it thinks are undervalued, recently launched a campaign to revitalize former Internet giant AOL, pushing the company to change its strategy.

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Ex-Touradji Trader Crone Starts Citrine Commodity Hedge Fund

Paul Crone, the former head trader at Touradji Capital Management LP who left the firm in March after seven years, has started a metals hedge fund in New York, according to Citrine Capital Management LLC, his new company.

Reported by Chanyaporn Chanjaroen, Bloomberg, Citrine, located on the 34th floor of the Chrysler Building, has a team of three led by Crone, who’s chief investment officer, according to a statement. The fund will trade listed derivatives in base metals, gold and platinum-group metals, Crone said in an e-mail interview, declining to specify how much money the fund has raised nor its target size.

Crone, 40, is among traders starting hedge funds this year looking to profit from a bull run in commodities that began last month as policy makers from China to the U.S. ramp up stimulus to boost their economies. Commodity hedge funds tracked by the Newedge Commodity Trading Index advanced 0.9 percent on average in August, erasing the year’s loss.

Citrine hired Mike Connolly, formerly at HSBC Securities USA Inc., as a trader, and Drew Ries, who used to work at Susquehanna International Group LLP, as chief operating officer, according to the e-mailed statement. Energy Alpha Strategies, a London-based commodity-focused investment firm, is a so-called strategic partner, it said.

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Hedge Funds Back Off Banks as Mutual Funds Dip In

Hedge funds who have tried to make money out of European banks during the euro debt crisis are becoming frustrated with the sector’s erratic movements just as some bigger, and more patient, institutions are dipping tentatively back in.

European bank stocks .SX7P have risen more than 25 percent since late July, fuelled by relief over new crisis-fighting plans, in particular the ECB’s latest announcements which have triggered hopes of a more lasting solution.

But the sector at the root of the global financial crisis has repeatedly disappointed investors after each attempt to call a floor, from a rally at the beginning of 2009 on hopes that the worst of the global credit crunch was over to short-lived optimism over the European Central Bank’s liquidity injections.

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Hedge Fund Founder Says Bonds Are ‘Quite Close to Cash Under the Bed’

What’s a better investment — U.S. bonds or the underside of your mattress? Ray Dalio wonders if it’s the latter.

Dalio founded the hedge fund Bridgewater Associates. He tells the Council on Foreign Relations: “You are quite close to cash under the bed being better than Treasurys. Because essentially you know you’re going to get it back if it’s under the bed.”

The rate on the 10-year Treasury note is about 1.7 percent. Earlier this summer, it scraped to its lowest on record, under 1.4 percent.

Dalio says the risk of super-low returns is that buyers of Treasurys, including foreign governments that finance U.S. government deficits, will go elsewhere as soon as a reasonable alternative emerges.

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