Tag Archives: Bloomberg L.P.

Administration Says Obamacare Website Repair Goals Reached

According to Bloomberg,

President Barack Obama raised the stakes on his three-year-old health-care overhaul yesterday, declaring that fixes to his administration’s troubled insurance exchange website make it ready to sign up 800,000 people a day.

The site, healthcare.gov, is sure to be tested immediately today — “Cyber Monday” — when deals from online retailers draw more Americans to their computers and the Internet.

The site’s stated new capacity of 50,000 simultaneous users hasn’t been proven in the real world, and U.S. officials aren’t certain the site will hold up, according to a person familiar with the repairs who asked not to be identified because the information isn’t public. At the same time, the reduced error rate of 0.75 percent per page, down from 6 percent in October, still means many users will encounter a glitch in clicking through multiple pages to enroll in a health plan.

If consumers find continuing problems with the site “it is going to help drive this to a huge advantage for the Republican party, for a broader agenda which will not be just fixing the website; it’ll be scaling back the law,” said Robert Blendon, a professor of health policy and political analysis at the Harvard School of Public, in a telephone interview.

The effect of the repairs may not be known until the middle of January, when the administration reports on enrollment in December. About 100,000 people signed up for coverage through the federal system last month, a roughly four-fold increase from October even as healthcare.gov was undergoing repairs, said a person familiar with program’s progress.

Open Mind

Healthcare.gov

Healthcare.gov

The enrollment jump may be an encouraging trend for the administration, signaling that consumers are keeping an open mind about the U.S.-run exchange even as it suffered software glitches and breakdowns. Americans face a mid-December deadline to sign up for coverage beginning Jan 1.

In a report released yesterday by the Health and Human Services Department, the administration said it has fixed or improved more than 400 software issues and made the site between two and five times faster through a series of hardware upgrades, including new servers. The site’s average response time has fallen from eight seconds in October to less than one second over the past three weeks, the report said.

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Stocks Drop With Treasuries, Gold as Fed Discusses Taper

According to Bloomberg,

The Standard & Poor’s 500 Index capped its first three-day slump since September and Treasuries slid as the Federal Reserve indicated it may reduce monetary stimulus in coming months as the U.S. economy improves. Gold and silver extended losses while the dollar strengthened.

Gold Bars

Gold Bars

The S&P 500 fell 0.4 percent to 1,781.37 by 4:32 p.m. in New York after earlier climbing as much as 0.4 percent. Ten-year Treasury note yields increased nine basis points to 2.80 percent. Silver and gold dropped more than 2 percent and oil erased earlier gains. The Bloomberg U.S. Dollar Index, a gauge of the currency against 10 major peers, rose 0.4 percent. The euro slid against most peers with the European Central Bank said to weigh a negative deposit rate to ward off deflation.

Fed policy makers expected economic data to signal ongoing improvement in the labor market and “thus warrant trimming the pace of purchases in coming months,” according to minutes of the Federal Open Market Committee’s Oct. 29-30 meeting released today. Stocks pared gains earlier as Fed Bank of St. Louis President James Bullard said a reduction in bond purchases is “on the table” for the next policy meeting in December.

“The market’s trying to decide what it means,” Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial Inc., which oversees more than $1 trillion, said by phone. “It puts the market on guard for what does the data over the next two months hold.”

As of yesterday, four of five investors expected the Fed to delay a decision on the first cuts to bond buying until March 2014 or later, with 5 percent looking for a move next month, according to the latest Bloomberg Global Poll. Only one in 20 said the central bank will begin to reduce its purchases at its Dec. 17-18 meeting, according to the poll yesterday of investors, traders and analysts who are Bloomberg subscribers.

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VIX Trader Betting $13 Million on 88% Jump in Fear Gauge

According to Bloomberg,

An investor bought $13 million in call options on the Chicago Board Options Exchange Volatility Index, betting the gauge will rally at least 88 percent in the next four months.

About 100,000 VIX March calls were purchased with a strike price of 23 for about $1.30 each, according to Trade Alert LLC. The contracts were among the five most-traded on U.S. options exchanges today, based on data compiled by Bloomberg.

Chicago Board Options Exchange

Chicago Board Options Exchange

 

 

 

 

 

 

 

 

In another transaction, a person spent $5.1 million in a bet that the Standard & Poor’s 500 Index will rise more than 10 percent in the next three months. The trade involved buying about 31,000 February calls for about $1.65 per contract with an exercise price of 1,975 on the U.S. equity benchmark, according to Trade Alert.

“The S&P 500 (SPX) trade looks like a melt-up trade and the VIX trade is the melt-down trade,” Justin Golden, a partner at Lake Hill Capital Management LLC, said in an e-mail. The New York-based hedge fund trades options on equity indexes and commodities. “Either way, in order for either of these to pay off you need significant movement in some direction.”

The two trades — one that makes money with higher volatility, the other profiting with equity gains — show seemingly opposing wagers on the direction of the stock market as investors gauge the prospect of continued monetary stimulus after a four-year bull market. The transactions may be used to speculate on the direction of the VIX (VIX) or S&P 500, or to hedge swings in other investments.

‘More Hopeful’

The S&P 500 is up 25 percent this year, putting it on track for the biggest annual gain since 2003, as the Federal Reserve maintained bond purchases to spur economic growth and corporate earnings topped analysts’ estimates. Investors may see political turmoil over the next three months as Congress’s self-imposed deadline to agree on a fiscal 2014 budget comes next month and the law now funding the government expires Jan. 15.

The S&P 500 fell 0.1 percent to 1,789.25 at 3:32 p.m. in New York. The VIX, which moves in opposite direction of the equity gauge about 80 percent of the time, gained 2.1 percent to 13.38. The VIX was about 12.9 when the calls were purchased this morning.

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GE: Plans Partial IPO of Consumer Finance Unit in 2014

According to Bloomberg,

General Electric Co. (GE) will finish shrinking its finance business by 2015 after spinning off the North American consumer lending unit, capping Chief Executive Officer Jeffrey Immelt’s effort to reduce credit risks.

As much as 20 percent of the unit will be sold in a 2014 initial public offering, GE Capital CEO Keith Sherin said today at an investor meeting in Norwalk, Connecticut. In a second step, the remaining shares will be distributed to GE stockholders in a tax-free transaction.

Divesting the business, whose products include store credit cards for companies such as Wal-Mart Stores Inc. (WMT) and J.C. Penney Co., bolsters Immelt’s bid to boost the share of earnings from units making industrial goods such as medical scanners. He has been slimming GE Capital since credit markets froze in the 2008-09 financial crisis, imperiling the parent company.

“GE isn’t reducing finance because it has a new religious attachment to industrial,” said Brian Langenberg, principal and director of research at Chicago-based Langenberg & Co. “This is about reducing the potential for future pain.”

The company has been chipping away at the finance unit by shedding real estate and home loans. GE Capital’s ending net investment, a measure of its balance sheet excluding non-interest-bearing liabilities and cash, slid to $418 billion last year from $556 billion in 2008. GE estimated it will fall as low as $300 billion with the consumer lending spinoff.

‘Last Step’GE CEO Jeffrey Immelt (Bloomberg)

“This the final last step, the biggest step remaining in the transformation of the portfolio of GE Capital,” Sherin said at the investor meeting.

GE rose 0.8 percent to $27.20 at the close in New York. The shares have gained 30 percent this year, beating the 26 percent advance for the Standard & Poor’s 500 Index.

An IPO registration statement will be filed next quarter, and the transaction completed “later in 2014,” Fairfield, Connecticut-based GE said in a filing. Proceeds will remain with the new company to help it start as an independent lender, Sherin said. He declined to give a valuation for the business.

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BMW: to Make Lone Shift to Carbon Fiber to Gain Auto Edge

According to Bloomberg,

Bayerische Motoren Werke AG (BMW)’s bid to save its cars from potential extinction starts with hundreds of thousands of fine white strands snaking upwards in a production hall in rural Washington.

Looped through an almost mile-long course, what looks like the world’s thinnest rice noodles will be stretched, toasted and eventually scorched black to create carbon fiber — a material thinner than human hair and yet tougher than steel.

BMW will use the sleek, black filaments for the passenger frame of the i3 electric car, which goes on sale at dealers in Germany tomorrow and around the world in the coming months. It’s the first effort to mass produce a car made largely from carbon fiber and represents the biggest shift in automobile production since at least the 1980s when the first all-aluminum car frames were made.

The strategy started taking shape six years ago, as Norbert Reithofer, then the newly appointed chief executive officer, examined trends affecting the industry and concluded that increased environmental awareness would likely prompt tougher emissions regulations that could make the future of autobahn cruisers like the 5-Series sedan unsustainable.

Business ThreatsFreshly Made Carbon Fiber (Bloomberg)

“Looking forward to 2020, we saw threats to our business model,” Chief Financial Officer Friedrich Eichiner, who was head of strategic planning at the time, said in an interview in his sparsely furnished office in BMW’s landmark four-cylinder headquarters building in Munich. “We had to find a way to bring models like the 6-Series, 7-Series and X5 into the future.”

For BMW to continue to sell cars that live up to the company’s “ultimate driving machine” claim, the manufacturer needed to offset those emissions with a viable electric vehicle for growing cities, where more and more potential customers would live. That was the start of the i3.

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Samsung: Plan Galaxy Phone Using Wraparound Display

According to Bloomberg,

A Samsung Electronics Co. Galaxy advertisement (Bloomberg)

A Samsung Electronics Co. Galaxy advertisement (Bloomberg)

Samsung Electronics Co. (005930) plans to release a Galaxy smartphone next year with a display that wraps around the edges so users can read messages or monitor stocks while looking from an angle, according to two people familiar with the plans.

The phone will use an upgraded version of Samsung’s technology called Youm, currently featured in the curved Galaxy Round handset, the people said, asking not to be identified because the plans haven’t been released. The three-sided display may be used in the S or Note series of premium handsets or may be the first in a new line, the people said. Samsung plans to have each side of the display operate independently.

The world’s largest maker of handsets is fighting with Apple Inc. (AAPL) to introduce innovative devices as they brace for a slowdown in the high-end smartphone segment, where Samsung sells about one of every three devices. Apple is developing new iPhone designs including bigger screens with curved glass and enhanced sensors that can detect different levels of pressure, a person familiar with the plans said Nov. 10.

“Samsung is the dominant player,” Lee Do Hoon, an analyst at CIMB Group Holdings Bhd in Seoul, said by phone today. “That gives it a competitive advantage over Apple in the race to make phones with bendable displays.”

Smartphone Saturation

Samsung doesn’t have a specific release date for the new device, the people said, with one person saying the handset is more likely to come out during the second half of next year. The Youm technology was shown at the Consumer Electronics Show in Las Vegas in January. Chenny Kim, a spokeswoman for Suwon, South Korea-based Samsung, declined to comment.

The company is diversifying its product portfolio by expanding its use of flexible displays, unveiling the Galaxy Gear smartwatch and registering a design patent for eyeglasses that can answer phone calls while the user exercises.

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Armajaro Trading Sold to Ecom After Loss of $7.6 Million

According to Bloomberg,

Armajaro Holdings Ltd., founded by Anthony Ward and Richard Gower, agreed to sell its soft commodities trading unit to Ecom Agroindustrial Corp., the world’s second-biggest coffee and third-largest cocoa trader.

Armajaro won’t disclose the price, Brian Buckley, a spokesman at the company’s public relations representative Brunswick Group LLP, said by phone from London today. The company’s trading arm, Armajaro Trading Ltd., reported a loss of $7.6 million in the year ended September 2012.

“Our stakeholders in both companies will benefit greatly from the combined service offerings and strengths of the companies,” Andrew Halle, Ecom’s chief executive officer, said in a statement e-mailed today. “It moves us further down the path of being the leading integrated soft-commodity company.”

Alain Poncelet, deputy CEO of coffee and cocoa at Pully, Switzerland-based Ecom, will become CEO of Armajaro Trading, according to the statement. Mark Dendle, Ecom’s chief financial officer, will have the same role at the newly purchased unit.

Armajaro Trading posted the loss after a profit of $17.3 million in 2011, a filing with U.K.’s Companies House showed. The company received $30 million from Armajaro Trading Group Ltd. in 2012, according to the filing. Andrew Stone, former CEO at the London-based company, left in August, the second CEO to resign in less than a year. Richard Ryan departed in 2012.

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