Erlaube mir diesen Thread zu eröffnen um mir interessant erscheinende Meldungen die sonst nicht recht dazupassen zu posten.

China Stocks Cheaper Than U.S., First Time Since 2006

Chinese stocks became cheaper than
U.S. shares for the first time in more than two years relative to
earnings after the country's central bank told lenders to set
aside a record amount of money in reserve to curb inflation.
The 44 percent slump this year in China's CSI 300 Index, the
steepest decline among the world's 20 biggest equity markets,
closed the price-earnings gap with the Standard & Poor's 500
Index from a 127 percent premium at the start of 2008.

Bei so was bin ich sehr skeptisch. Hängt alles auch von der Branchegewichtung ab und Turn-around Situationen mancher Unternehmen. Das verzerrt das KGV. Außerdem ist das Risiko bei China Aktien höher. Neue Gesetze sind abzusehen und von einem Tag auf den anderen kann dort eine ganze Branche zugrunde gerichtet werden indem ein neues Gesetz eingeführt wird.

allein die massiven financials-verluste in den USA verzerren das KGV.

ich würde auch nicht in china investieren, aber ich fand es trotzdem interessant.

Daimler startet neues Aktienrückkaufprogramm

Daimler AG / Aktienrückkauf

Veröffentlichung einer Ad-hoc-Mitteilung nach § 15 WpHG, übermittelt durch
die DGAP - ein Unternehmen der EquityStory AG.
Für den Inhalt der Mitteilung ist der Emittent verantwortlich.
---------------------------------------------------------------------------

• Weitere Optimierung der Kapitalstruktur angestrebt
• 10% der ausstehenden Aktien im Gegenwert von maximal 6 Mrd. € sollen
erworben werden

Stuttgart - Zur weiteren Optimierung der Kapitalstruktur des Unternehmens
hat der Vorstand der Daimler AG ein neues Aktienrückkaufprogramm
beschlossen. Der Aufsichtsrat der Daimler AG hat diesem Beschluss
zugestimmt.

In Ausübung der Ermächtigung der Hauptversammlung vom 9. April 2008 sollen
nach dem Beschluss des Vorstands 10% oder ca. 96,4 Mio. der ausstehenden
Aktien im Gegenwert von maximal 6 Mrd. € erworben werden. Zur Optimierung
des Rückkaufs sollen Aktien auch über Derivate erworben werden können.

Die weitere Optimierung der Kapitalstruktur hat das Ziel, die Verwendung
von im Vergleich zu Fremdkapital teurem Eigenkapital zu reduzieren. Dadurch
wird vermieden, dass Investitionsentscheidungen aufgrund zu hoher
Kapitalkosten limitiert werden.

Das Aktienrückkaufprogramm wird über die Börse abgewickelt werden, wobei
Derivate auch außerhalb der Börse gehandelt werden können.

Die Dauer des Aktienrückkaufs ist nach dem Vorstandsbeschluss bis zur
Hauptversammlung am 8. April 2009 befristet.

Der Erwerb erfolgt zum Zweck der späteren Einziehung der Aktien ohne
Herabsetzung des Grundkapitals. Die Aktien sollen darüber hinaus zur
Bedienung von Aktienoptionsprogrammen eingesetzt werden können.

Der Rückkauf soll nach dem Beschluss des Vorstands unter Führung eines
Kreditinstituts erfolgen, das seine Entscheidung über den Zeitpunkt der
einzelnen Rückkäufe und den Einsatz von Derivaten unabhängig und
unbeeinflusst von der Daimler AG trifft.

Das Unternehmen hatte sein erstes Aktienrückkaufprogramm Ende August 2007
gestartet. Bis zum 28. März 2008 wurden 99,8 Mio. Aktien im Wert von 6,2
Mrd. € zurückgekauft.

Die weitere Optimierung der Kapitalstruktur hat das Ziel, die Verwendung
von im Vergleich zu Fremdkapital teurem Eigenkapital zu reduzieren. Dadurch
wird vermieden, dass Investitionsentscheidungen aufgrund zu hoher
Kapitalkosten limitiert werden.


Der Begründung zweiter Teil scheint mir absurd. Im Umkehrschluß würde das heißen, daß Daimler derzeit sinnvolle Investitionen nicht durchführt, weil zu viel Eigenkapital da ist?

>Die weitere Optimierung der Kapitalstruktur hat das Ziel,
>die Verwendung
>von im Vergleich zu Fremdkapital teurem Eigenkapital zu
>reduzieren. Dadurch
>wird vermieden, dass Investitionsentscheidungen aufgrund zu
>hoher
>Kapitalkosten limitiert werden.

Schwachsinn!!! Insbesondere der zweite Satz! Wer schreibt denn nur so was ....

>>Die weitere Optimierung der Kapitalstruktur hat das
>Ziel,
>>die Verwendung
>>von im Vergleich zu Fremdkapital teurem Eigenkapital zu
>>reduzieren. Dadurch
>>wird vermieden, dass Investitionsentscheidungen aufgrund
>zu
>>hoher
>>Kapitalkosten limitiert werden.
>
>Schwachsinn!!! Insbesondere der zweite Satz! Wer schreibt denn
>nur so was ....

WACC geht natürlich rauf wenn der Eigenkapital-Anteil steigt - insofern ist die Argumentation schon schlüssig.

>>Die weitere Optimierung der Kapitalstruktur hat das
>Ziel,
>>die Verwendung
>>von im Vergleich zu Fremdkapital teurem Eigenkapital zu
>>reduzieren. Dadurch
>>wird vermieden, dass Investitionsentscheidungen aufgrund
>zu
>>hoher
>>Kapitalkosten limitiert werden.
>
>Schwachsinn!!! Insbesondere der zweite Satz! Wer schreibt denn
>nur so was ....

Austria Börsebrief:

Daimler (ISIN DE0007100000, Euro 44,65) startet heuer nun
das neue Aktienrückkaufprogramm. Wir begrüßen dies ausdrücklich,
denn damit verbessert der Konzern seine Kapitalstruktur.

Gehört das nicht eigentlich ins Forum ausländische Aktien etc.?

>Gehört das nicht eigentlich ins Forum ausländische Aktien etc.?


Ist es nicht dort?

Goldman Sachs Group Inc., the
world's biggest securities firm, surpassed analysts' estimates
as gains in prime brokerage, asset management and commodities
buoyed second-quarter profit.
Net income declined 11 percent to $2.09 billion, or $4.58 a
share, in the three months ended May 30 from $2.33 billion, or
$4.93, a year earlier, the New York-based company said today.
The earnings exceeded the highest estimate of 19 analysts
surveyed by Bloomberg and the shares rose in New York trading.

Morgan Stanley Profit Drops 57% on Debt Losses, Meets Estimates

By Christine Harper
June 18 (Bloomberg) -- Morgan Stanley, the second-biggest
U.S. securities firm, said profit dropped 57 percent, in line
with analysts' estimates, as the firm suffered declines in
trading and investment banking.
Earnings from continuing operations fell to $1.03 billion,
or 95 cents a share, in the second quarter from $2.36 billion,
or $2.24, a year earlier, the New York-based firm said today in
a statement on Business Wire. The average estimate of 19
analysts surveyed by Bloomberg was for earnings of 92 cents a
share.

HBOS Plc, the U.K. mortgage lender that
plans to raise 4 billion pounds ($7.8 billion) in a rights offer,
said bad home loans rose 17 percent this year, ``in line'' with its
forecast even as it predicted a bigger drop in house prices.
HBOS wrote down 200 million pounds in the corporate
investment unit, with half of that related to its stakes in
homebuilders. The bank, which said in April it would write down
2.8 billion pounds of its Treasury investments, said there were
almost no additional writedowns as of the end of May.
``The writedowns were broadly expected,'' said Magnus
Mathewson, a London-based analyst at Hichens, Harrison & Co. who
has an ``underweight'' rating on the stock. ``Rising arrears in
buy-to-let and self-certification mortgages are no surprise.''
HBOS, the U.K.'s biggest mortgage lender, plans to shore up
capital after writing down about 3.6 billion pounds on asset-
backed and credit-related securities in the past year. The offer
follows a 12.3 billion-pound share sale by Royal Bank of Scotland
Group Plc and comes after Bradford & Bingley Plc cut the price of
a planned rights offer and was forced to sell a stake to private
equity firm TPG Inc. as defaults increased.
HBOS forecast U.K. home prices will fall as much as 9 percent
this year, more than it forecast before. The number of home sales
will fall 45 percent, it said. Bad loans rose to 4.95 billion
pounds as of the end of May, HBOS said.
``We look forward to a stronger second half,'' the Edinburgh-
based bank said in a statement today. ``For the year as a whole we
expect a resilient performance.''

Ex-Bear Stearns Fund Managers Arrested by FBI Agents

Two former managers at Bear Stearns
Cos. hedge funds were arrested at their homes this morning by
agents of the Federal Bureau of Investigation over their roles in
the collapse of hedge funds that ignited the subprime mortgage
crisis last year.
Ralph Cioffi, 52, was arrested at his Tenafly, New Jersey,
home and Matthew Tannin, 46, was arrested at his Manhattan
apartment, said James Margolin, a spokesman for the FBI's New
York office. He said they were to be taken to federal court in
Brooklyn for a court appearance later today in connection with an
indictment.
The arrests are the first in a U.S. probe of possible fraud
by banks and mortgage companies whose investment in subprime
loans and securities plunged in value. The U.S. Securities and
Exchange Commission may sue the two men as early as today,
claiming they committed fraud, people with knowledge of the case
said.
``The arrests are appropriate given the magnitude and the
egregiousness of their alleged misconduct,'' said attorney Steven
B. Caruso, who is representing investors in arbitration claims
against the hedge funds. Cioffi and Tannin engaged in a ``gross
violation of the public trust that was given to them by
investors,'' he said.
Cioffi's lawyer, Edward Little, declined to comment. A
telephone call to Tannin's lawyer, Nina Beattie, wasn't
immediately returned.
Cioffi was a senior portfolio manager of the two funds that
collapsed and Tannin served as his chief operating officer. The
funds invested almost all of their assets in subprime-mortgage-
related securities. Their investment bets failed last June when
prices for collateralized-debt obligations, called CDOs, linked
to loans plummeted amid rising late payments by borrowers with
poor credit histories or heavy debts.
U.S. prosecutors are focusing on an e-mail sent by the two
suggesting that their funds were headed for trouble, four days
before they told investors they were comfortable with their
holdings, the Wall Street Journal reported today, citing people
familiar with the situation.
Tannin e-mailed Cioffi saying that he was afraid that the
market for bond securities they had invested in was ``toast,''
and suggested shutting the funds, the Journal said. The two have
told colleagues that they quickly were convinced that Tannin's
concerns were misplaced, the newspaper said.
SEC spokesman John Nester declined to comment.

CME Will Repurchase Shares, Pay Special Dividend

CME Group Inc., the world's largest
futures exchange, will repurchase as much as $1.1 billion of its
stock and plans to pay a special dividend of about $350 million.
The board approved the share buyback to be completed within
18 months, the Chicago-based company said today in a statement.
The dividend of $5 a share will be paid after CME Group closes
its $8.7 billion purchase of Nymex Holdings Inc.
CME Group rose as much as $15.74, or 3.7 percent, to $445
in trading before U.S. markets opened. The stock has lost 37
percent this year, compared with a 39 percent drop in the
FTSE/Mondo Visone Exchanges Index that tracks 19 publicly traded
exchanges.

Barclays to Raise $8.9 Billion to Shore Up Capital

Barclays Plc, Britain's fourth-biggest
bank, plans to sell 4.5 billion pounds ($8.9 billion) of stock
mostly to investors in the Middle East and Asia to boost capital
depleted by credit-related writedowns.
Barclays rose as much as 6.4 percent in London trading, the
biggest gain in two months, after the London-based bank said in a
statement it will offer 1.58 billion new shares to investors
including institutions in Qatar, Singapore, China and Japan.
While half the new money will be used to bolster Barclay's
capital after financial institutions worldwide wrote down $399
billion dollars linked to subprime-mortgage losses, the rest will
be used for ``business opportunities out there,'' including
acquisitions, Chief Executive Officer John Varley told reporters.
``We expect the longer-term growth prospects of the company
to be higher than its domestic U.K. peers,'' Merrill Lynch analyst
John-Paul Crutchley wrote in a note to clients today. He has an
``underperform'' rating on the stock.
Barclays rose as much as 19.75 pence and traded up 5.9
percent to 329 pence at 9 a.m., valuing the bank at 21.6 billion
pounds. The shares are down 35 percent this year, underperforming
the eight-member FTSE All-Share Banks Index, which fell 27
percent.
Barclays will offer shares to Challenger, a company
representing Qatar's royal family, Qatar Investment Authority,
Temasek Holdings Pte, China Development Bank, Sumitomo Mitsui
Financial Group Inc.
Sumitomo will buy 500 million pounds of new stock at 296
pence a share. Barclays's individual investors will be able to
``claw back'' the additional 4 billion pounds of shares that
overseas and institutional investors have agreed to buy at 282
pence apiece.

Discount

By finding overseas investors to guarantee proceeds of the
share sale, Barclays isn't relying on investment banks to
underwrite the offering. Credit Suisse Group and JPMorgan Cazenove
are working with Barclays Capital as joint brokers on the sale.
Barclays's offer of 500 million pounds to Sumitomo is priced
at a 4.7 percent discount to the bank's closing share price
yesterday. The rights offering of 4 million pounds is priced at a
9.25 percent discount to yesterday's close of 310.75 pence a
share. Current investors will be able to buy three new shares for
every 14 shares they own.

`Better Way'

``It's probably a better way to raise the money than some of
the other rights issues,'' said Leigh Goodwin, an analyst at Fox-
Pitt Kelton Ltd. in London who has an ``in-line'' rating on the
stock. ``It will be interesting to see if people have
confidence,'' he said.
British banks face slower growth amid higher funding costs
and rising defaults as house prices fall at the fastest rate since
the recession of the 1990s. The credit-market freeze has halted
sales of mortgage-backed securities, which lenders including HBOS
and Bradford & Bingley Plc use to fund property loans. Banks have
raised about $304 billion to help cover losses since the collapse
of the U.S. mortgage market.
The share offering will enable Barclays to lift its core
equity Tier 1 capital ratio, a measure of financial strength,
above its target of 5.25 percent, the bank said.
Barclays has written down 1.7 billion pounds on credit assets
so far this year. That is less than Royal Bank of Scotland, the
U.K.'s second-biggest bank, which wrote down 5.9 billion pounds
this year, and less than HBOS, the U.K.'s biggest mortgage lender,
which marked down 2.8 billion pounds.
Sovereign wealth funds have made investments in Citigroup
Inc., Merrill Lynch & Co., Morgan Stanley and UBS AG, which this
month raised 16 billion Swiss francs ($15.4 billion) in a rights
offer after getting 13 billion francs earlier this year from
investors in Singapore and the Middle East.

Citigroup May Write Down $8.9 Billion, Goldman Says

Citigroup Inc., the bank that's
posted the biggest losses from the collapse of the U.S. mortgage
market, may take an additional $8.9 billion in net writedowns in
the second quarter, Goldman Sachs Group Inc. said.
Goldman also lowered its rating on U.S. brokerages to
``neutral'' from ``attractive,'' saying the pace of deterioration
in the industry ``appears to be far worse than'' it originally
anticipated, according to a June 25 note.
``The turnaround in business trends that we had been
expecting in the second half of 2008 may not occur as quickly as
we should have thought,'' Goldman said. ``We see multiple
headwinds for Citigroup,'' such as risks of further writedowns,
higher consumer provisions, and the potential need for additional
capital raisings, dividend cuts or asset sales, Goldman said.
Goldman joined UBS AG and Merrill Lynch & Co. in predicting
more writedowns for New York-based Citigroup, already reeling
from $42.9 billion of credit-related losses. Citigroup Chief
Executive Officer Vikram Pandit has announced 13,000 job cuts
this year, and the bank this month forecast ``substantial''
additional writedowns and more losses on consumer loans.
Citigroup may write down $7.1 billion of collateralized debt
obligations and associated hedges, and $1.2 billion for other
asset classes, Goldman said. It may need to post a $600 million
loss to reflect the mark-to-market value of its own structured
note liabilities, New York-based Goldman said.

Payouts in Doubt

Goldman cut its six-month price target for Citigroup to $16
and put the New York-based investment bank on its ``conviction
sell'' list. Citigroup closed at $18.85 in New York trading
yesterday, having dropped 36 percent this year.
Citigroup probably won't be able to keep its current 7
percent dividend yield and may need to raise more capital,
according to the report. Goldman estimated Citigroup could
generate $3.5 billion in capital a year by cutting payouts in
half.
``Given the firm's current level of earnings power, we do
not believe the dividend is safe,'' it said. ``We believe any
additional capital raises will be in the form of common equity,
dividend cuts and or additional asset sales.''
Citigroup is more exposed to hedges on its leveraged loan
and commercial mortgage-backed securities portfolios than Merrill
and JPMorgan Chase & Co., indicating higher potential losses,
Goldman said.
Merrill analyst Guy Moszkowski this week said Citigroup may
post another $8 billion of writedowns this year. UBS analyst
Glenn Schorr on June 20 said Citigroup probably will post a
second-quarter loss of 40 cents a share after $8.7 billion of
asset writedowns.

Allianz Rises 25% When Dresdner Gets `Goodbye' in Worst Deal

Allianz SE investors may get more from
the sale of Dresdner Bank than they ever got from the purchase.
Disposing of the Frankfurt-based bank and its Dresdner
Kleinwort securities unit would lift Allianz by at least 25
percent, said Lutz Roehmeyer, a fund manager at Landesbank Berlin
Investment. Europe's largest insurer is in talks to sell or merge
the banking division, and analysts predict Dresdner may fetch
about $11 billion, or about half the takeover price.
Dresdner has been a drag on Allianz since the Munich-based
company bought it for almost $21 billion in 2001 to sell more
insurance through bank branches. Bad loans at Dresdner contributed
to the insurer's first annual loss in at least half a century in
2002, while the securities unit had 2.2 billion euros ($3.5
billion) of subprime-related writedowns in the past year.
``Above all, what investors want to see is Allianz kiss
Dresdner and especially its investment banking unit goodbye,''
said Berlin-based Roehmeyer, who helps oversee $20.5 billion and
owns Allianz shares.
Questions about possible markdowns have weighed on Allianz,
which trades at 6.2 times estimated earnings, a lower multiple
than Axa SA and Assicurazioni Generali SpA, its two largest
competitors in Europe. Allianz's price-to-earnings ratio compares
with a median of 8.65 times for Europe's 25 biggest insurers, data
compiled by Bloomberg show.

`Dresdner Discount'

``The Dresdner discount is the main reason Allianz shares are
cheaper,'' said Ernst Konrad, who helps oversee about $38 billion,
including the insurer's stock, as head of equities at BayernInvest
in Munich. ``The shares are bound to rise should Allianz find a
solution for Dresdner. The better the solution, the higher the
upside potential.''
Allianz Chief Executive Officer Michael Diekmann said last
month that talks were taking place about a possible sale or merger
of Dresdner. Commerzbank AG, Germany's second-largest bank, and
London-based Lloyds TSB Group Plc are among the companies that
expressed interest, people with knowledge of the matter said
earlier this month. Gesa Walter, an Allianz spokeswoman, declined
to comment.
The German insurer has dropped 61 percent in Frankfurt
trading since the Dresdner acquisition was announced on April 1,
2001, more than the 47 percent drop in the Bloomberg Europe 500
Insurance Index. The stock fell 1.8 percent to 112.48 euros by 11
a.m. today, bringing declines this year to 24 percent.
The strategy that led to the Dresdner purchase was devised by
former CEO Henning Schulte-Noelle, who was replaced by Diekmann in
2003 after the Dresdner deal and a decline in stock markets
worldwide led to the full-year loss.

Worst Deal

Since its takeover of Dresdner, Allianz has cut more than
18,000 jobs at the bank, or about 40 percent of the workforce, and
shed about $48 billion of bad loans to revive profit. Even so,
Dresdner posted a first-quarter loss of 513 million euros on
writedowns at the securities unit, which was created from the
merger in 2000 of Dresdner Kleinwort and Bruce Wasserstein's
Wasserstein Perella & Co. After joining Dresdner, Wasserstein's
firm and Goldman Sachs Group Inc. advised on the sale to Allianz.
``Dresdner was Allianz's worst deal with the biggest value
destruction in absolute terms,'' said Lucio Di Geronimo, an
analyst at UniCredit in Munich who recommends buying the shares.
``For Allianz, it's essential to get its ownership in Dresdner
below 20 percent, as in that case they would only have to account
for it as a normal investment and wouldn't have to bear Dresdner's
risks.''

Toxic Assets

Daimler AG took that route last year when CEO Dieter Zetsche
sold 80.1 percent of Chrysler to New York-based private-equity
firm Cerberus Capital Management LP, ending its nine-year
ownership of the U.S. carmaker. Daimler wound up investing $650
million to shed Chrysler and $19 billion in retirement
liabilities, after former CEO Juergen Schrempp paid $36 billion
for the carmaker in 1998.
The 118-year-old insurer announced plans in March to separate
Dresdner's private and corporate-client unit from the remainder of
the bank, which includes Dresdner Kleinwort, an initiative it
expects to complete by the end of August. When Allianz bought
Dresdner, it had envisioned ``a stock market flotation'' for the
investment bank within a few years, the company said at the time.
For Allianz, it's critical that Dresdner Kleinwort and
whatever ``toxic assets'' remain on its balance sheet are disposed
of as part of any deal, WestLB analyst Andreas Schaefer wrote in a
June 16 note to clients.
Dresdner Kleinwort, headed by Stefan Jentzsch, posted a 759
million-euro pretax loss in 2007 following a pretax profit of 422
million euros a year earlier. The unit's name was changed from
Dresdner Kleinwort Wasserstein in 2006.

Banks for Sale

``Allianz had a window of opportunity during two years of
booming investment banking business to sell Dresdner Kleinwort,''
Landesbank Berlin Investment's Roehmeyer said. ``Trying to sell it
now amid the credit crisis is a terrible sign for management.''
Selling Dresdner and its securities unit may prove
challenging, in part because Deutsche Post AG in Bonn and New
York-based Citigroup Inc. are also trying to dispose of banking
units in Germany, analysts said.
Deutsche Post, Europe's largest postal operator, may sell its
majority stake in Deutsche Postbank AG, Germany's biggest consumer
bank with more than 14.5 million customers. Citigroup, reeling
from record losses on subprime assets, is weighing a sale of its
Dusseldorf-based Citibank Privatkunden AG, the market leader for
consumer loans in Germany, with 340 branches and about 3.2 million
clients.

Overshadowing Insurance

``Should Allianz not succeed in selling Dresdner, the banking
discount will continue to weigh on the shares,'' UniCredit's Di
Geronimo said. ``In that case, one can only hope that Allianz will
make use of the next recovery phase for banking shares to give the
sale another try.''
In an indication that the banking unit has come to dominate
investors' concerns, Dresdner was mentioned 32 times on the
insurer's last analyst call on May 9, compared with nine times for
Allianz, even after Chief Financial Officer Helmut Perlet said he
didn't plan to speculate about the bank.
Allianz canceled its annual investors' meeting in mid-July,
saying it wasn't ready to discuss ``important topics that enjoy
high attention within the investment community.''
Allianz's insurance units, which accounted for more than 85
percent of operating profit during the past three years, reported
record net income in 2007.
``Let's hope they are going to focus on insurance going
forward,'' BayernInvest's Konrad said.

France Telecom Withdraws TeliaSonera Takeover Offer

France Telecom SA, Europe's third-
biggest telephone company, withdrew its unsolicited bid to buy
TeliaSonera AB for 244 billion kronor ($40.8 billion) after the
Swedish company rejected the offer as too low.
Talks with the board of Stockholm-based TeliaSonera failed
to produce an agreement on financial terms, the Paris-based
company said in a statement today.
The decision may weigh on TeliaSonera shares and boost those
of France Telecom, which have fallen 21 percent since Le Figaro
reported April 16 the French company was interested in buying
TeliaSonera. Some analysts and shareholders opposed the cash and
stock bid, saying Chief Executive Officer Didier Lombard should
focus on acquisitions in faster-growing emerging markets.
``The fact that they're not going ahead is a good thing,''
said Rob Goyens, an analyst at Dexia Securities in Brussels.
``The story behind TeliaSonera wasn't totally clear. The
synergies weren't very extensive.'' He has a ``buy'' rating on
France Telecom.
The bid would have created Europe's biggest telephone
company, boosted customers by 39 percent to 237 million and saved
almost 700 million euros a year by 2013, France Telecom said.
Citigroup Inc. analysts Terence Sinclair and Michael Williams
labeled the June 5 offer ``a poor deal for both parties.''
France Telecom Chief Financial Officer Gervais Pellissier
said June 19 that room to raise the cash portion of the offer was
``very limited'' and the company was ready to walk away from a
possible deal.

Next Step

``The question is what the next step is for France
Telecom,'' Goyens said. ``You can assume they'll continue to be
on the takeover path. That's not necessarily a negative thing, as
long as they are better candidates than TeliaSonera.''
TeliaSonera and the Swedish government, which owns 37.3
percent of the company, rejected the cash-and-stock bid within
hours and said they were open to higher offers. France Telecom
said it would only proceed with a friendly takeover.
France Telecom had offered to pay for 52 percent of
TeliaSonera with cash, and 48 percent in stock. It offered three
new France Telecom shares for 11 TeliaSonera shares, with a cash
guarantee option for the first 500 shares. The offer valued
TeliaSonera at 54.30 kronor a share based on France Telecom's
closing stock price June 27.
``TeliaSonera is a strong business with excellent growth
prospects in its own right,'' TeliaSonera Chairman Tom von
Weymarn said in a statement. ``The board and management are
focused on developing the company to its full potential, driving
strong and sustainable earnings growth and maximizing value for
all shareholders.''

`Far Below'

Von Weymarn said on June 5 the offer was ``far below'' the
company's value. TeliaSonera fell 2.4 percent to close at 49.80
kronor on June 27.
Telenor ASA, the Nordic region's biggest phone company, is
considering acquiring TeliaSonera and hired Nordea Bank AB and
JPMorgan Chase & Co. to evaluate a possible deal, Svenska
Dagbladet reported April 29, citing unidentified people familiar
with the plan. The two companies first established contact a year
ago, the newspaper said.
A merger between Telia AB and Norway's Telenor ASA failed in
December 1999 after two years of talks because the governments
couldn't agree on which country should run the new company. Telia
instead acquired Finnish counterpart Sonera Oyj in 2002, and
Finland owns 13.7 percent of TeliaSonera.

Customer Value

France Telecom's offer valued each of TeliaSonera's 114
million customers at about $368. That compares with the $454
Verizon Wireless agreed to pay for each of Alltel Corp.'s 13
million customers when excluding the debt portion of the deal.
Lombard is seeking growth in emerging markets, where mobile-
phone growth is faster than in Western Europe. He's also said the
company needs to bulk up in the face of competition for services
from the likes of Google Inc., Nokia Oyj and Microsoft Corp.
France Telecom has introduced Internet TV and bought content
such as the rights to French soccer matches to keep fixed-line
clients and spur sales per user. Growth at home is held back by
competition from Neuf Cegetel and Iliad SA, and because nine out
of 10 French people already have a mobile-phone account.
Deutsche Telekom AG is Europe's biggest phone company,
followed by Telefonica SA.

Moody's Says Some Employees Breached Code of Conduct

Moody's Corp., owner of the second-
largest credit-ratings company, ousted the head of its structured
finance unit and said employees violated internal rules in
assigning Aaa ratings to last year's worst performing securities.
Some Moody's Investors Service staff breached rules for
ranking European constant proportion debt obligations, or CPDOs,
the company said in a statement distributed today. In a separate
release, Moody's said Noel Kirnon, who also oversaw the credit
policy committee, is leaving the company.
U.S. and European regulators are tightening rules for
Moody's, Standard & Poor's and Fitch Ratings. Lawmakers such as
Congressman Barney Frank demanded tougher regulation, saying
ratings companies misled investors by providing top rankings on
subprime-related securities that lost as much as 80 percent of
their value. Moody's said today that employees, not the company's
practices, were to blame.
``I am deeply disappointed by the conduct that occurred in
this incident,'' Chief Executive Officer Raymond McDaniel said in
the statement.
Moody's said on May 21 that it began a review of its CPDO
ratings after a report by the Financial Times said some senior
staff were aware in early 2007 of a computer error. The glitch
gave the top Aaa rating to CPDOs that should have been ranked as
much as four levels lower, the FT said. Moody's altered some
assumptions to avoid having to assign lower grades after fixing
the error, the FT said.
Moody's fell 34 cents to $34.10 in New York Stock Exchange
composite trading at 10 a.m. The stock is 25 percent since the FT
report.

Sullivan & Cromwell

Moody's hired law firm Sullivan & Cromwell to conduct the
review.
The firm found that Moody's personnel didn't make changes to
the methodology for rating European CPDOs to mask any model
error, Moody's said today. The monitoring committee did engage in
``conduct contrary to Moody's code of professional conduct,'' the
ratings company said.
Under those guidelines, a committee may only ``consider
credit factors relevant to the credit assessment and may not
consider the potential impact on Moody's, or on an issuer, an
investor or market participant,'' Moody's said.
Employees involved face disciplinary proceedings that may
include termination, Moody's said.
Kirnon will leave the company July 31 and will be replaced
on a temporary basis by Andrew Kimball, 58. A search for a
permanent replacement is underway, Moody's said. Moody's didn't
give a reason for Kirnon's departure.
Richard Cantor, 50, will take over as chief credit officer
and chairman of the company's credit policy committee.

Ford Motor Co. said June sales fell 28
percent, the seventh straight monthly decline for the No. 2 U.S.
automaker, as gasoline prices above $4 a gallon drove consumers
away from fuel-thirsty trucks.
Total vehicle sales dropped to 174,091, Dearborn, Michigan-
based Ford said today in a statement on PR Newswire. Ford is the
first major automaker to report June sales, and its decline was
in line with analysts' forecasts.
Ford said sales of its F-Series large pickup, which accounts
for about a quarter of total sales, plunged 41 percent. Along
with General Motors Corp., Ford plans cuts to its pickup and
sport-utility vehicle output this year as buyers flock to more
fuel-efficient cars.
The change in consumer behavior ``sure looks like it's going
to be lasting,'' Gerald Meyers, a professor at the University of
Michigan and a former chief executive officer of American Motors
Corp., said in a Bloomberg Television interview yesterday. ``The
auto companies are behaving like it's going to be permanent.''
Sales of Ford's Fusion midsize sedan gained 18 percent last
month.
The SAAR, or seasonally adjusted annual rate, a measurement
of sales without regard to seasonal fluctuations, probably fell
to 13.2 million cars and light trucks last month, down 16 percent
from 15.7 million a year earlier, based on a Bloomberg survey of
30 analysts and economists. That would be the lowest since March
1993.

GM, Chrysler

GM's sales decreased 21 percent and Chrysler's 25 percent,
according to a survey of five of the analysts. U.S. auto sales
are on a pace to plunge to 14.5 million units for 2008, the
lowest in 15 years, according to Deutsche Bank. The annual
industry average this decade has been 16.8 million.
Last month had three fewer selling days than June 2007. That
means Detroit's automakers may report figures roughly 12
percentage points lower than the analysts' adjusted estimates.
A decrease would extend the industry's sales slump to eight
straight months, the longest tumble in seven years. Average
gasoline prices in June topped $4 a gallon for the first time and
consumer confidence reached a 16-year low, prompting more
Americans to postpone purchases of new vehicles.
Those who did buy were drawn to cars and ``crossover''
wagons that blend car and truck features. On June 1, the industry
had the lowest supply of cars for that date in at least 17 years,
according to trade publication Automotive News.

Falling Car Inventories

Inventories of compact cars and gasoline-electric hybrids
are ``going down at a rate we've never really seen before, and
automakers are caught a bit unprepared,'' Jesse Toprak, an
Edmunds.com analyst in Santa Monica, California, said in an
interview. ``It might take several years to fully meet the
consumers' demands.''
GM is ramping up production of cars and smaller SUVs by
almost 50,000 units this year in response to consumers' ``close
attention to fuel-efficiency,'' sales chief Mark LaNeve said in a
June 23 conference call with reporters.
Tokyo-based Honda Motor Co.'s sales were running 16 percent
ahead of June 2007 after the first 20 days, according to a
company e-mail sent to analysts. Honda's car sales were up 37
percent in the period, and truck sales down 15 percent, the e-
mail said. The figures were adjusted for selling days.
More than 40 percent of Americans who said they are spending
less than they did six months ago pointed to the price of
gasoline as the reason, according to a Bloomberg/Los Angeles
Times survey.
Forty-two percent of Americans said they've delayed buying a
new vehicle indefinitely because of fuel prices, according to a
June 25 survey by Kelley Blue Book of Irvine, California.
A gallon of gasoline rose 2.8 percent from May 31 to a
record $4.09 on June 30, according to motorist group AAA.
Asian automakers outsold Detroit's Big Three in the U.S. for
the first time in May. Their share of the world's largest auto
market was 48.2 percent, compared with 44.5 percent for U.S.
based automakers.
Among the top 10 automakers by sales volume, just three have
increased sales this year through May: Honda, Mazda Motor Corp.
and Nissan Motor Co. Industrywide sales fell 11 percent in May.

Deutsche Bank AG, Germany's biggest
bank, said it will report a profit in the second quarter and won't
need additional capital, sending shares higher after four days of
declines.
The stock rose as much as 3.7 percent and was up 1.05 euros to
53.50 euros at 9:20 a.m. in Frankfurt after Deutsche Bank said
today in a statement that its Tier 1 ratio, a measure of capital
strength, will remain about 9 percent. ``Therefore, the bank does
not expect its financial performance in the second quarter to
result in a requirement for further capital,'' it said.
Frankfurt-based Deutsche Bank, scheduled to report second-
quarter earnings on July 31, reported its first quarterly loss in
five years in April after writing down the value of loans for
leveraged buyouts and asset-backed securities by 2.7 billion euros
($4.27 billion). The shares dropped 4.4 percent yesterday in
Frankfurt, the most in a month, on speculation that the company may
lower its earnings outlook.
``This is comforting news, especially the fact that the Tier 1
ratio remains at the top end of Deutsche Bank's target
range,'' said Konrad Becker, an analyst at Merck Finck & Co. in
Munich who recommends holding the shares. ``They had to do
something as the shares were under heavy pressure lately.''
Banks and securities firms have raised $322 billion in the
past year after record writedowns and credit losses of $403 billion
following the collapse of the U.S. subprime mortgage market.
Deutsche Bank's core equity Tier 1 ratio was 9.2 percent at
the end of the first quarter, above its target range of 8 percent
to 9 percent.

`Positive News'

``At first glance this is some much-needed positive news for
Deutsche in particular but also for the whole sector,'' said Helge
Rechberger, head of equity market research at Raiffeisen
Zentralbank in Vienna. He said he remains ``cautious'' about the
financial industry.
Deutsche Bank shares have dropped 50 percent over the past
year compared with a 45 percent decline by the 59-member Bloomberg
European Banking Index.
Deutsche's shares ``have been under massive pressure lately
and now we will see the showdown,'' said Thomas Nagel, a trader
at Equinet AG in Frankfurt.
Deutsche Bank can look to the future with ``full confidence''
and will continue to report ``strong results,'' Chief Executive
Officer Josef Ackermann told shareholders at the annual general
meeting on May 29. The company can't give a forecast for the year
because of market turmoil, he said at the time.
The bank has retreated from its previous full-year target of
pretax profit of 8.4 billion euros, which excludes one-time items,
amid the financial crisis and declining securities revenue.
Ackermann said at the time he couldn't rule out further
``external shocks'' that would pull down the price of some assets.
Deutsche Bank doesn't expect ``large'' valuation problems, he
added.
Deutsche Bank shares dropped 2.9 percent on June 27 after
Citigroup Inc. analysts said Deutsche Bank may need to raise
capital. Ackermann also said in May that there were no plans for a
capital increase.

Yahoo Rises on Report Microsoft Hasn't Lost Interest (Update2)

Yahoo! Inc., the second-ranked
Internet search engine, rose in German trading after the Wall
Street Journal said Microsoft Corp. approached media companies
about working together to break up Yahoo.
Yahoo shares gained as much as 7 percent. Microsoft talked
with Time Warner Inc., News Corp. and others, the newspaper said,
citing people familiar with the negotiations. The talks may be
preliminary and may not lead to a deal, the newspaper said.
The negotiations indicate that Microsoft still covets
Yahoo's Internet search business to compete with Google Inc.,
said Jack Neele, who helps oversee $200 billion at Robeco NV in
Rotterdam. Yahoo ended negotiations about a combination with
Redmond, Washington-based Microsoft on June 12.
``It's clear that they're still interested,'' said Neele,
who doesn't hold Microsoft or Yahoo shares. ``Microsoft still has
this tiny problem in search: They're losing market share to
Google. If they want to deal with that seriously, they need to
buy market share or invest in it themselves and that hasn't been
successful so far.''
Yahoo climbed 6.4 percent to the equivalent of $21.49 as of
12:44 p.m. in Frankfurt from the close of $20.20 in U.S. trading
yesterday. Before today, the shares had fallen 33 percent from
this year's high of $29.98 on Feb. 14, two weeks after
Microsoft's initial $31-a-share takeover offer. Microsoft fell 3
cents to the equivalent of $26.84.
After Microsoft's unsolicited bid, Yahoo explored
alternatives that included talks in February with Rupert
Murdoch's News Corp., a person with knowledge of the discussions
said at the time. Murdoch said in March he wouldn't challenge
Microsoft's attempt to purchase Yahoo.

Higher Bid

Microsoft raised its initial bid of $44.6 billion to $47.5
billion. Yahoo ended the talks after Microsoft made a final
proposal to buy $8 billion of Yahoo shares for $35 each and
acquire the search business. The same day, Yahoo forged an
agreement to allow Google to sell some of the advertisements
Yahoo runs alongside Internet search results.
Under the discussions now taking place, Microsoft would buy
Yahoo's search operations, the Journal said. Another company,
such as Time Warner's AOL or News Corp.'s MySpace, would combine
with the rest of Yahoo, the newspaper said. News Corp. owns the
Wall Street Journal.
Microsoft representatives also met Carl Icahn, who is
seeking to gain control of Yahoo's board, to encourage him in his
proxy battle, the newspaper said.
Microsoft spokesman Frank Shaw told Bloomberg News the
company had no comment.
Investors have been speculating that Microsoft and Yahoo
will revive discussions. On June 24, a person with knowledge of
the matter said Microsoft hadn't resumed talks with Yahoo,
contradicting a blog report that day that sent the Internet
company's shares up 11 percent.

GM's China Sales Growth Slows on More Competition

General Motors Corp., the biggest
overseas automaker in China, said sales growth in the country
slowed in the first half as competition intensified with Toyota
Motor Corp. and Volkswagen AG.
The carmaker boosted sales by about 14 percent from a year
earlier in China over the past six months to more than 590,000
vehicles, Joseph Lau, vice president for GM China, said in a
telephone interview today, citing preliminary data. That
compares with a growth rate of 19 percent last year.
GM, which hasn't had a yearly profit since 2004, is
counting on growth in China, where the overall market grew 19
percent through May, as demand in North America plunges. Toyota
started selling the Yaris compact in the first half and
Volkswagen introduced the Lavida compact, while GM didn't have
any brand new models in the country.
``Shanghai GM has been facing difficulties by relying on
existing models to compete with rivals that have added new
ones,'' said Lau. Shanghai General Motors Co. is GM's sole car
venture in China.
Demand in China has made Asia Detroit-based GM's second-
most profitable market. It earned $286 million before taxes in
the region in the first quarter compared with a $812 million
loss in North America.
The slowdown comes as the company's sales in the U.S.
plunge. GM's U.S. sales dropped 16 percent in the first half,
outpacing the overall market's 10 percent decline.
Sales growth may slow further in the second half of the
year as inflation, higher fuel prices and a declining stock
market hurt consumer demand, Lau said. He expects GM to keep its
12 percent market share this year.

New Buick Model

GM, which added three revamped models in the first half,
will start selling its first hybrid car in China, a locally made
version of the Buick Lacrosse sedan, around late July or early
August, Lau said. It will be their sole brand new model in the
market this year, according to Lau.
Prices for regular gasoline rose 16 percent to 6.2 yuan a
liter ($3.42 a gallon) in Beijing on June 20th after the
government raised wholesale fuel prices.
``GM is going through a downturn in China this year because
of a lack of popular new models,'' said Yi Junfeng, an analyst
at Changjiang Securities Co. in Shanghai. ``Given the rising
fuel prices, GM will find it even harder to expand sales in the
second half.''
The company plans to add a new Buick sedan in China in the
first quarter of 2009 to challenge Toyota's Camry and
Volkswagen's Magotan, said Lau. The model will be produced in
Shanghai.

Volkswagen, Toyota

Volkswagen started building at least six new or revamped
models in China in the first half. It added the Lavida compact
car last month.
Toyota boosted sales in China 62 percent last year to
500,000 on the popularity of Camry and Corolla sedans and aims
to lift sales 40 percent this year. The Camry was the country's
fourth-bestselling car last year following Volkswagen's Santana
and Jetta and GM's Excelle.
GM plans to invest as much as $5 billion in China over five
years through 2012 to expand its share of the world's fastest
growing major vehicle market, Kevin Wale, president of GM's
China unit said in December.
The company plans to spend about $1 billion a year on car
and engine development, production facilities, technical and
after-sales support and infrastructure, according to the company.
``GM is optimistic about demand in the Chinese market and
will actively keep on investing in China over the next five
years,'' said Lau.

UBS AG may post $6.9 billion of
additional writedowns and seek to raise more capital, Citigroup
Inc. said a day after Chairman Peter Kurer told a newspaper the
Swiss bank won't need more funds.
The Zurich-based company, which wrote down $38 billion over
the past three quarters, still carries $83 billion of ``risk
exposures that are likely to require further markdowns,''
London-based Citigroup analyst Jeremy Sigee said in a note today.
Sigee, who rates UBS a ``hold'' with a ``high risk'' caveat,
estimates the company may post a loss of 4.5 billion Swiss francs
($4.4 billion), and announce writedowns of as much as 7 billion
francs when it reports earnings Aug. 12.
He blamed a slump in financial markets for asset price
declines, and said UBS may need to raise more capital, either
from asset sales or from shareholders. Kurer yesterday told Swiss
newspaper Finanz & Wirtschaft that the bank won't need more funds.
Banks and securities firms have turned to investors for $322
billion to replenish reserves after $403 billion of writedowns
and credit losses tied to the collapse of the U.S. subprime
mortgage market. UBS trails only Citigroup in credit losses and
capital raising after turning to investors for $29.5 billion
since the credit crisis started a year ago.
Speculation financial firms would need more funds helped
drive an index of European banking shares down 8.3 percent in the
previous five days. UBS has fallen 56 percent this year.

UBS AG, the European bank hardest hit
by the U.S. subprime crisis, said it may avoid a loss in the
second quarter after about 3 billion Swiss francs ($2.9 billion)
in tax credits.
UBS rose as much as 8.2 percent in Swiss trading after the
Zurich-based bank said second-quarter results may be ``at or
slightly below break-even.'' Citigroup Inc. analysts this week
forecast a net loss of 4.56 billion francs for the quarter and
about 7 billion francs in asset writedowns.
Chief Executive Officer Marcel Rohner is cutting 5,500 jobs,
shutting businesses at the investment-banking unit and trying to
stem defections among wealthy clients after 25.4 billion francs
of net losses in the previous three quarters. UBS, scheduled to
publish quarterly results on Aug. 12, said today it sees no need
to raise further capital.
``The results are better than analysts expected because of
tax credits and UBS clearly wanted to show that it didn't do that
bad,'' said Florian Esterer, a senior portfolio manager at
Swisscanto Asset Management, which oversees about $63 billion.
Banks worldwide have announced $402 billion in writedowns
and credit losses related to the subprime crisis. Markdowns at
UBS, which amounted to more than $38 billion in the previous
three quarters, led the bank to raise more than $29 billion of
capital from investors this year.
UBS climbed 1.02 francs, or 4.9 percent, by 9:06 a.m. in
Zurich trading. The stock fell 66 percent over the past year,
cutting the company's market value to 65.1 billion francs.
The Swiss bank said the tax credits are related to its
losses to date, without elaborating.

Money Management

UBS, which posted a profit of 5.55 billion francs in the
second-quarter of last year, said financial market turmoil
contributed to writedowns and a loss at the investment bank in
the past three months. UBS's money management division suffered
client defections in the quarter, with the withdrawals most
pronounced in April, UBS said.
``What worries me are the net new money outflows, which
indicate a serious problem for the franchise,'' Esterer said.
The U.S. Department of Justice is probing whether UBS helped
rich clients evade American taxes, and a federal judge this week
authorized the Internal Revenue Service to issue a summons to the
bank for client information as part of the probe. The bank has
said that it's ``working diligently'' with both Swiss and U.S.
authorities.
Growth in assets from affluent clients at UBS, the largest
manager of money for the wealthy, slowed to 8.8 percent in 2007
from 13 percent in the previous year, according to an annual
survey by Scorpio Partnership released last week.

Strategic Review

Chairman Peter Kurer, who replaced Marcel Ospel in April,
told shareholders at the annual meeting that he will lead a
strategic review of all of the bank's businesses to make them
better complement the wealth management unit, which he called
UBS's ``core franchise.''
The bank plans to inform shareholders about results of the
review at an extraordinary shareholders meeting on Oct. 2. The
meeting was called to elect four new board members, as Kurer
seeks to increase the level of financial expertise on the board
after criticism from shareholders including former UBS President
Luqman Arnold.
UBS brought in Jerker Johansson from Morgan Stanley in mid-
March to run its investment-banking unit. Johansson in May took
control of the firm's fixed-income business from Andre Esteves,
who ran it for less than 10 months and left in June.
Johansson also announced plans to shut the U.S. municipal
bond business, split off proprietary trading of both stocks and
debt into a separate unit within the investment bank, and hired
former Morgan Stanley colleague Thomas Daula as chief risk
officer for the division.
UBS is cutting about 26 percent of the headcount at its
fixed-income division, and about 9 percent in investment banking
and equities.

As President George W. Bush meets
with counterparts from the Group of Eight nations, he faces a
new deficit: U.S.-traded stocks have declined to less than the
combined value of those from the rest of the G-8, according to
data compiled by Bloomberg.
The combined value of companies traded on equities
exchanges in Japan, the U.K., France, Canada, Germany, Italy and
Russia was $15.16 trillion at the end of trading on July 4.
Market value in the U.S. totaled $14.95 trillion, the data show.
The chart of the day compares the value of U.S.-traded
shares and the capitalization in the seven other G-8 nations.
Values are in dollars to account for currency shifts. The U.S.
has trailed its seven counterparts since June 21.
``A sharp reversal began in early June,'' Goldman Sachs
Group Inc. said in a report from Tokyo. ``Housing prices
continue to decline rapidly, the credit crunch is becoming
increasingly evident in lending data, oil is marking new highs,
and -- last but not least -- the labor market is unraveling,''
the report said.
The market capitalization of the rest of the G-8 nations
first exceeded the U.S.'s on Nov. 7, 2007, when Washington
Mutual Inc., the largest savings and loan, plunged the most in
20 years. The dollar also fell to the lowest in 30 years against
a basket of six major currencies that day. The value of U.S.-
traded shares then regained the top position most of the time
through March, show the data, which date back five years.
Leaders of the U.S., Japan, Germany, the U.K., France,
Italy, Russia and Canada are meeting from today to July 9 in
Toyako, Japan. It will be Bush's final G-8 summit as president.
``The U.S. believes in a strong dollar policy,'' Bush said
at a news conference with Japanese Prime Minister Yasuo Fukuda
yesterday. The economy of the U.S. remains fundamentally strong
even as growth has slowed, he said.
DBS Group Holdings Ltd. said in a report today to ``expect
lots of comments regarding the world's growing concern about the
weakness of the U.S. dollar, especially its link in driving up
oil prices and fanning global inflation.''

Deutsche Bank AG, Lehman Brothers
Holdings Inc. and UBS AG say the Standard & Poor's 500 Index will
gain the most in 26 years during this year's second half. That
isn't going to happen, if history is any guide.
The S&P 500 will rise 18 percent by January, according to
the consensus projection of 10 U.S. strategists surveyed by
Bloomberg. The forecasts are based partly on estimates that
profits will jump 50 percent in the fourth quarter after falling
for the past year.
Even if that happens, it may not be enough. In 2001, the
last time profits fell as much, they then had to climb for three
straight quarters before stocks rebounded. Analysts' earnings
estimates for this year still represent a decline from 2006
levels, making the strategists' optimism harder to justify,
investors say.
``If they're accurate, I'll give them a big kiss,'' said
Randy Bateman, who oversees $15 billion as chief investment
officer at Huntington Bancshares Inc. in Columbus, Ohio. ``I
don't think those are very realistic figures.''
The S&P 500 dropped 1.2 percent last week to 1,262.90,
coming within a percentage point of a ``bear market,'' defined as
a 20 percent plummet from its peak in October. Based on the
index's closing price of 1,280 on June 30, the average strategist
forecast of 1,515 by year-end calls for the biggest rally of any
second half for the S&P 500 since Ronald Reagan was in the White
House in 1982.

Unrepentant Bull

Strategists at Deutsche Bank, Lehman Brothers and UBS are
the most bullish and expect the benchmark for American equities
to climb to a record in the second half. Binky Chadha, Deutsche
Bank's New York-based chief strategist, says the S&P 500 will end
the year at 1,650, up 29 percent from June 30.
Ian Scott, Lehman's global strategist, is predicting an
advance of 27 percent to 1,630, while David Bianco at UBS says
the index will increase at least 25 percent.
The S&P 500's rebound ``is going to be one of the greatest
roars we've seen,'' Bianco said. ``The market has way too many
fears baked into the valuation right now. The fear out there is
the earnings are about to collapse and interest rates are about
to surge on inflationary fears. Neither is going to happen.''
Strategists' annual forecasts have been off by an average of
14 percentage points since 2000, according to data compiled by
Bloomberg. They haven't projected an annual decline in at least
eight years.

`Monkey With Abacus'

At the start of the year, strategists told clients to expect
an average 11 percent advance in the S&P 500 in 2008 to 1,634,
Bloomberg data show. The measure has dropped 14 percent so far.
``A monkey with an abacus is probably better at the end of
the day,'' said Peter Sorrentino, a Cincinnati-based senior money
manager at Huntington Asset Advisors, which oversees $16.7
billion. ``To read the strategists' input is intriguing and
thought-provoking, but at the end of the day, you'd better have
your own tools. We're nowhere near as optimistic as some of the
forecasts.''
The U.S. housing slump, the worst since the Great
Depression, will drag down economic growth and profits, and limit
share gains, Sorrentino said.
The economy grew 0.45 percent last quarter, according to
economists surveyed by Bloomberg. Employers cut jobs for a sixth
consecutive month in June, the longest string of payroll declines
since the last recession, while service industries shrank,
signaling the slowdown may deepen.

Alcoa Kickoff

Profits at S&P 500 companies fell for three straight
quarters and are estimated to have dropped 11.2 percent in the
second quarter, according to data compiled by Bloomberg. Four
consecutive periods of declines would be the most since the last
recession in 2001.
Alcoa Inc., the world's third-largest aluminum producer,
kicks off the second-quarter earnings season tomorrow. The New
York-based company earned 67 cents a share, 17 percent less than
a year earlier, according to consensus estimates.
In the third and fourth quarters, analysts expect average
profits for S&P 500 companies to increase by 10.5 percent and
49.8 percent. Financial firms -- the hardest hit by the collapse
of the subprime mortgage market, with more than $400 billion in
credit losses and writedowns globally -- are forecast to report a
gain of more than fivefold in the final three months.
Last quarter, earnings at banks, brokerages and insurance
companies probably fell 60.1 percent. Under the analysts'
projections, profits at U.S. companies would increase by 5.6
percent for the full year.

Paying It Forward

``Earnings in a lot of sectors should look good,'' said
James Swanson, Boston-based chief investment strategist at MFS
Investment Management, which oversees $204 billion. He expects
the S&P 500 to gain 23 percent to 1,580 by Dec. 31. ``Financials
should be making money again. There's certainly a lot of wreckage
now, but there are bargains out there.''
The Federal Reserve's most aggressive interest rate cuts
since the 1980s will lift the market as the benefits for
businesses and consumers start to be reflected in share prices,
Swanson said. The Fed has lowered the benchmark rate by 3.25
percentage points to 2 percent since September.
Shares may still drop even after earnings recover, which is
what happened during the last recession. The S&P 500 lost 13
percent during the five quarters of profit declines between 2001
and 2002. In the last three quarters of 2002, when earnings
increased again, the index fell a further 23 percent.
``There's always going to be ebbs and flows in the economy,
but we believe that this is a start of a significant bear
market,'' David Tice, founder of the $1.2 billion Prudent Bear
Fund, said on Bloomberg Television. ``We are going to pay the
price for it with much lower stock prices.''

General Motors Corp. rose in German
trading after the Wall Street Journal said the automaker may cut
white-collar jobs and is considering whether to drop some of its
eight brands, which include Buick, Saturn and Saab.
The Detroit-based automaker is also considering options for
boosting liquidity to help it get through the economic slowdown,
the newspaper said, citing people familiar with the situation.
GM advanced 21 cents, or 2.1 percent, to the equivalent of
$10.33 as of 9:42 a.m. in Frankfurt. The stock rose 1.4 percent
to $10.12 on July 3, the last day of U.S. trading before the
Independence Day holiday. GM has plunged 59 percent this year.
The automaker's sales in the U.S. dropped 16 percent in
the first half as record gasoline prices eroded demand for the
company's TrailBlazer sport-utility vehicles and Chevrolet
pickups. The carmaker's shares fell to a 54-year-low last
week after Merrill Lynch & Co. said GM faced the possibility
of bankruptcy.
Options for workforce cuts and for raising funds will be
presented to GM's board of directors in early August, the
Journal said. GM probably won't drop its Cadillac and Chevrolet
brand names, yet other brands could go, the newspaper said.
Many truck engineers may lose their jobs, following GM's
announcement last month that it will postpone designing its next
generation of trucks and sport-utility vehicles, the Journal said.
Voice and e-mailed messages sent outside normal business
hours to GM spokesman Tom Wilkinson weren't returned.

Cash, Credit Lines

GM had $24 billion in cash and marketable securities and
access to about $7 billion in undrawn U.S. loans on March 31, at
least $6 billion more than it initially figured it would need for
a U.S. decline, Chief Financial Officer Ray Young said on May 13.
The automaker plans to cut North American production this
quarter 12 percent to about 900,000 vehicles. Automakers book
sales when a car or truck is built, so lost output reduces
revenue. Strikes at GM's largest axle supplier and two of its own
plants trimmed production in the region 27 percent last quarter.
The annualized U.S. sales rate for June fell to 13.6
million cars and light trucks, the lowest since 1993.
Automakers, including GM, said dealers didn't have enough fuel-
efficient cars on their lots to meet customer demand. GM is
adding 50,000 cars and so-called crossover sport-utility
vehicles, which combine car and light-truck features, to its
2008 production plans.
The average U.S. price of gasoline rose to a record $4.10 a
gallon last week, according to motorist group AAA.

Microsoft May Revive Yahoo Talks If Board Replaced

Microsoft Corp. said it may renew
talks for a transaction with Yahoo! Inc. if Carl Icahn succeeds
in replacing the board, throwing its weight behind the
billionaire investor's fight for control of the Internet company.
Microsoft said it might try to buy the search business or
the whole company, pushing Yahoo's shares up as much as 12
percent. Microsoft has been in talks over the past week with
Icahn, who controls about 69 million Yahoo shares, or about 5
percent.
The software maker's support lends Icahn ammunition in his
bid to unseat the directors and replace Yahoo Chief Executive
Jerry Yang after they rejected earlier overtures from Microsoft.
Investors including T. Boone Pickens, chairman of BP Capital LLC,
and Third Point LLC, led by activist investor Daniel Loeb, have
said they will back Icahn's slate.
Yahoo rose $1.97 to $23.32 at 9:34 a.m. New York time in
Nasdaq Stock Market trading. Earlier the stock rose as high as
$23.85, the most since Feb. 1, when Microsoft initially disclosed
an offer for the Internet company. Microsoft, based in Redmond,
Washington, climbed 36 cents to $26.34.
There can be no assurance of a transaction, Microsoft said
in an e-mailed statement today. Yahoo spokeswoman Tracy Schmaler
didn't immediately return a call seeking comment.
Microsoft dropped a $47.5 billion takeover bid for
Sunnyvale, California-based Yahoo in May after Yang demanded more
money. The software maker later began talks on an alternative
transaction, which collapsed last month. Combining with Yahoo
would help Microsoft triple its share of U.S. Internet searches,
narrowing the gap with market leader Google Inc.
Yahoo ``is now moving toward a precipice,'' Icahn said in a
separate statement today. ``It is time for a change.''

The Federal Reserve may extend
securities dealers' access to direct loans from the central bank
into 2009 as long as emergency conditions ``continue to
prevail,'' Chairman Ben S. Bernanke said.
``The Federal Reserve is strongly committed'' to financial
stability and is ``considering several options, including
extending the duration of our facilities for primary dealers
beyond year-end,'' Bernanke said in a speech to a conference in
Arlington, Virginia.
Bernanke also endorsed proposals to set up a federal
liquidation process for a failing investment bank. The Treasury
should ``take a leading role in any such process, in consultation
with the firm's regulator and other authorities,'' he said.
The comments reflect the Fed's assessment last month that
financial markets ``remain under considerable stress,'' even
after the Fed started the unprecedented lending programs in
March. Bernanke at the same time is aiming to address criticism
that the Fed's loans to Wall Street may encourage more reckless
lending, sowing the seeds of future crises.
The Fed chairman didn't comment on the outlook for the
economy or monetary policy in the prepared text of his remarks
today to a Federal Deposit Insurance Corp. forum on mortgage
lending. Treasury Secretary Henry Paulson and JPMorgan Chase &
Co. Chief Executive Officer Jamie Dimon are also scheduled to
speak at the event.

Lending Programs

The Fed's Primary Dealer Credit Facility, which provides
direct loans, and the Term Securities Lending Facility, which
auctions as much as $200 billion in Treasuries, were created in
March in response to the credit crisis and collapse of Bear
Stearns Cos. Both programs are aimed at the 20 primary dealers in
U.S. government debt.
Bernanke's speech today marks the first time he has
indicated how long he may extend both programs, which were
created under the Fed's authority to lend to nonbanks in
``unusual and exigent circumstances.'' Officials in March said
the PDCF would last for ``at least'' six months.
The Fed is working with the Securities and Exchange
Commission and securities dealers ``to increase the firms'
capital and liquidity buffers,'' Bernanke said.
Securities firms have cut back on their use of the programs
in recent weeks. The balance of loans outstanding from the PDCF
dropped to zero as of July 2, the first time that's happened
since the program began. On March 26, the end of the first full
week of operation, the PDCF had a balance of $37 billion.

Bids Decline

Bids in the TSLF's weekly auctions, in which dealers swap
securities such as mortgage-backed debt for Treasuries from the
New York Fed, have declined since the start of the program. In
the July 3 operation, firms submitted bids for $26.1 billion out
of $50 billion of Treasuries offered.
One gauge of financial stress watched by the Fed has
remained elevated. The difference between the overnight indexed
swap rate, a measure of what traders expect for the Fed's
benchmark rate, and three-month interbank loans in dollars was
0.78 percentage point yesterday, about the same as the start of
May.
``Although short-term funding markets remain strained, they
have improved somewhat since March,'' Bernanke said.
Bernanke's comments on the resolution authority are in line
with Treasury Secretary Henry Paulson's July 2 statement that
``any commitment of government support should be an extraordinary
event that requires the engagement of the executive branch.''

Bair's Call

FDIC Chairman Sheila Bair has also said an agency should be
given such liquidation authority for investment banks. The FDIC
has that power over lenders whose deposits it insures. In the
case of commercial banks, the use of taxpayer funds in an
emergency requires the approval of two-thirds majorities of the
FDIC and Fed boards, and of the Treasury secretary in
consultation with the president.
``Despite the complexities of designing a resolution regime
for securities firms, I believe it is worth the effort,''
Bernanke said today. ``In particular, by setting a high bar for
such actions, the adverse effects on market discipline could be
minimized.''
Bernanke endorsed several ways for the Fed and other U.S.
agencies to gain more oversight of investment banks and financial
markets. Congress should legislate ``consolidated supervision''
of investment banks and other big securities firms, with the
unspecified regulator having authority over capital, liquidity
holdings and risk management, he said.
The Fed itself should also get ``explicit oversight
authority'' over payment and settlement systems, putting the Fed
on par with counterparts from around the world, Bernanke said.

New Responsibility

Congress may consider giving the Fed responsibility for
``promoting the overall stability of financial markets,''
Bernanke said. Still, ``it would be particularly important to
make clear that any government intervention to avoid the
disorderly liquidation of firms on the verge of bankruptcy should
use clearly defined tools and processes,'' he said.
The Fed will play a part in setting capital cushions at
securities firms under an agreement yesterday with the SEC
designed to dispel concern a failing financial company without
central bank oversight could threaten the economy.
The Fed and SEC will collaborate in determining ``guidelines
or rules concerning the capital, liquidity and funding''
arrangements of investment banks, the accord said. They will also
cooperate in designing ``risk management systems and controls''
for securities firms.

Hedge Funds Report Worst First-Half Performance in Two Decades

Hedge funds turned in their worst
first-half performance in almost two decades because of the
credit crunch and the onset of a bear market in stocks.
Hedge funds declined by an average 0.7 percent in June,
bringing the year-to-date loss to 0.75 percent, data compiled by
Hedge Fund Research Inc. show. It's the worst start to a year
since the Chicago-based firm began tracking returns in 1990. The
$1.9 trillion industry has posted one losing year, in 2002, when
funds fell 1.45 percent.
Managers attracted a net $16.5 billion during the first
three months of the year, down from $30.4 billion in the fourth
quarter, Hedge Fund Research reported. Investors have become less
tolerant of losses and are shifting assets to traders who have
shown they can thrive in turbulent markets, said Antonio Munoz,
who runs EIM Management USA in New York, which farms out $15
billion to hedge funds.
``We don't see investors pulling the plug across the board
and putting their capital into cash,'' Munoz said.
Joseph Oughourlian's Amber Capital Management LP and Polygon
Investment Partners LLP are among the firms hurt by redemptions.
Amber Capital had $2.5 billion of withdrawals as of July 1 after
the New York-based firm dropped 9.5 percent in the first half,
according to investors. Oughourlian, who focuses on companies
going through corporate changes such as mergers, oversaw $6.6
billion at the start of the year. The fund returned 38 percent in
2006 and 13 percent in 2007.

Fund Outflows

London-based Polygon, co-founded by former UBS AG hedge-fund
chief Paddy Dear, had redemptions of about $1.5 billion this year
through May as its Global Opportunities fund lost 4 percent.
``Investors are showing less patience than before to live
through the bad times,'' said Patrik Safvenblad, head of hedge-
fund research in Stockholm for DnB NOR ASA, Norway's biggest bank.
Assets in Renaissance Technologies Corp.'s institutional
equities fund, run by James Simons, declined 25 percent to $15
billion this year as the fund dropped 8.5 percent and clients
withdrew cash, investors said. Almost all the money went into the
East Setauket, New York-based firm's institutional futures fund,
which has climbed 8.6 percent this year and now has $7 billion.
Executives at the hedge-fund firms all declined to comment.
Hedge funds are mostly private pools of capital whose
managers participate substantially in the profits from their
speculation on whether the price of assets will rise or fall.

Bear Market

Stock markets in the U.S., Europe and Asia have been falling
since October amid mounting losses from subprime mortgages,
rising oil prices and the weaker U.S. dollar against most major
currencies.
The Standard & Poor's 500 Index has dropped 19 percent from
its peak on Oct. 9, the U.K.'s FTSE 100 Index fell 18 percent and
Japan's Nikkei 225 Index tumbled 24 percent. A decline of more
than 20 percent in 12 months is considered a bear market.
Stock hedge funds fell by an average 3.3 percent this year,
according to Hedge Fund Research. Funds that invest in
convertible bonds dropped 7.6 percent on average.
``After saying for years they needed more volatility, many
managers suddenly couldn't cope with it,'' said Bob Michaelson,
group investment director for Fleming Family & Partners Asset
Management Ltd. in London, which invests about 25 percent of its
4 billion pounds ($7.8 billion) in hedge funds.
John Paulson and Philip Falcone have successfully navigated
the markets and are attracting new investors. Paulson, who runs
the $33 billion Paulson & Co. in New York, returned 26 percent in
his Advantage Plus Fund through June, according to investors.
Falcone, who heads the $26 billion Harbinger Capital
Partners in New York, has racked up a 42 percent return for his
main Harbinger Capital Partners Fund, clients said.

Rookie Managers

Quantitative Investment Management LLC, a Charlottesville,
Virginia-based firm that uses computer models to make investment
decisions, has gained 6.7 percent this year in its main fund,
which has grown to $3.6 billion after the returns and $700
million in inflows, investors said.
Some new funds run by managers who previously worked at
larger hedge fund groups have gotten off to a fast start,
according to a survey published by Absolute Return magazine.
The biggest stand-alone startup was Greenwich, Connecticut-
based Conatus Capital Management LP, which raised $2.3 billion.
The firm was started earlier this year by David Stemerman,
formerly of Stephen Mandel's Lone Pine Capital LLC. Highliner
Investment Group LP in Chicago raised $1.5 billion. Highliner was
founded by Anand Parekh, who was previously global stock head for
Ken Griffin's Citadel Investment Group LLC.