Don Miller
Deutsche Boerse/NYSE Mega-Merger More About Derivatives Than Stocks
The merger yesterday (Tuesday) of Germany's Deutsche Boerse AG and NYSE Euronext Group (NYSE: NYX) will create the world's largest financial exchange. But most observers feel the deal is being driven more by the exploding market in derivatives and other exotic instruments than good old-fashioned stock trading.
While the $9.53 billion all-stock deal creates the world's largest trader of equities, it's the chance to exp
and the combined entity's presence in derivatives markets that held the real appeal, according to most observers.
Under the terms of the deal, Deutsche Boerse shareholders will control 60% of the new company, with NYSE shareholders owning 40%. One Deutsche Boerse share will be exchanged for one share of the new company's stock, while each share of NYSE Euronext will be swapped for 0.47 share of new company stock, The Wall Street Journal reported.
China Rate Increase a Responsible Move to Tame Inflation
China yesterday (Tuesday) accelerated its campaign against surging inflation by raising interest rates for the third time since mid-October in advance of reports expected to suggest prices are racing ahead at the fastest pace the nation has seen in 30 months.
The benchmark one-year lending rate today will increase to 6.06% from 5.81%, the People's Bank of China (PBOC) said on its Website. The one-year deposit rate will rise to 3% from 2.75%.
The move was hardly cheered by investors, but most analysts believe it was the appropriate action to take considering the country's torrid inflation.
Cocoa Prices Skyrocket As Ivory Coast Election Dispute Spawns Export Ban
Political turbulence in the Ivory Coast yesterday (Monday) shot cocoa prices higher, as Alassane Ouattara, the internationally recognized leader of the country, called for a one-month ban on exports.
The export ban by the world's largest producer of cocoa beans comes as the new leader hopes to choke off funding for the incumbent, Laurent Gbagbo, who has refused to concede defeat.
China's Yuan Policy will be the Source of Much Discussion, but Little Change During President Hu's Visit
It's unlikely U.S. President Barack Obama will make much headway in his efforts to influence China's yuan policy when he meets with Chinese President Hu Jintao in Washington this week. President Hu made that abundantly clear on Sunday when he rejected U.S. arguments that allowing the yuan to appreciate against the dollar would help the government in Beijing tame inflation.
In response to written questions from The Wall Street Journal and the Washington Post, Hu said he favors greater cooperation with the United States on economic issues but he called the present U.S. dollar-dominated currency system a "product of the past," the newspapers reported on their Web sites.
The Chinese president said his government is fighting inflation with a package of policies, including interest rate increases, and that rising prices can "hardly be the main factor in determining the exchange rate policy," according to a transcript of the answers.
Housing Crisis Could Peak in 2011 as Foreclosures Rise to Record
The housing crisis could peak in 2011, as the number of homeowners receiving foreclosure notices climbs about 20%, putting a further drag on prices, according to the latest forecast from RealtyTrac Inc.
As high unemployment persists and banks resume seizures after a moratorium to correct paperwork snafus, the market will see a steady increase in volume this year, the tracker of housing data reported.
"We will peak in foreclosures and probably bottom out in pricing, and that's what we need to do in order to begin the recovery," Rick Sharga, RealtyTrac's senior vice president, said in an interview at Bloomberg News headquarters in New York. "But it's probably not going to feel good in the process."
Properties receiving notices of default, auction or repossession rose 2% from a year earlier to a record 2.87 million in 2010, the Irvine, California-based data seller said yesterday (Thursday). Actions against homeowners in default jumped despite a plunge in filings in the latter part of the year – including a 26% drop in December – as banks were forced to review their practices.
Shipping Prices Sink as Mining Companies Rack Up Record Profits
As big mining companies are set to book record profits the shipping companies that deliver the precious raw materials are plagued with the lowest freight rates since 2002.
Average leasing costs for capesizes, the 1,000-foot-long ships hauling iron ore and coal, will drop 34% to $22,000 a day this year, according to a Bloomberg News survey of eight fund managers and analysts.
When prices last plummeted that low, China's economy, the biggest consumer of the minerals used in steel and power, was 75% smaller and the benchmark Standard & Poor's GSCI commodity index stood 67% lower, Bloomberg reported.
This time, the problem isn't a potential economic meltdown, which caused shipping prices to tank in 2008-2009, but a glut of new capacity coming to the world's shipping lanes.
About 200 capesizes, spanning some 35 miles end-to-end, will leave shipyards this year, expanding the fleet by 18%, the Bloomberg survey showed.
While Clarksons PLC, the world's biggest shipbroker, expects seaborne trade in iron ore and coal cargoes to surpass 2 billion metric tons for the first time this year, the 7% increase won't be enough to overcome the glut.
Hot Stocks: Vestas Wind Systems A/S (PINK:VWDRY) Could Bounce Back in 2011
Danish wind turbine maker Vestas Wind Systems A/S (PINK ADR: VWDRY) has been racking up an impressive number of new orders lately – especially in the burgeoning Chinese market. Combined with several new manufacturing plants that will increase capacity in the United States, the surge should boost the company's performance in 2011.
Vestas, the world's biggest maker of wind turbines, said last week that its orders from China last year reached a record high.
"In 2010, Vestas has announced almost 1,000 megawatts (MW) worth of orders in China alone, which is a record high order intake for Vestas in this competitive market," the company said in a statement announcing an order from Chongli Construction Investment Huashi Wind Power Company Ltd.
Vestas got an order for 58 turbines with total capacity of 49.3 megawatts from Chongli China and logged multiple orders from Germany in the past week.
Motorola 4G Phone Comes to Verizon – Will the iPhone be Next?
Verizon Communications Inc. (NYSE: VZ) last week struck a deal to make Motorola Inc. (NYSE: MOT) the first handset maker to enter the market using the carrier's new, fourth-generation (4G) high-speed network.
The network, which employs a technology called Long-Term Evolution (LTE), is designed to provide wireless Internet connections fast enough to compete with land-based cable modems or fiber optic technology.
"We've got LTE smartphones on the horizon," Stratton told The Wall Street Journal in an interview. "Motorola will be right there."
China Auto Market Will Continue to Drive Sales for Western Manufacturers in 2011
The world's largest carmakers, including Toyota Motor Corp. (NYSE ADR: TM), General Motors Co. (NYSE: GM) and Volkswagen AG, expect China's red-hot economy to keep auto sales rolling at a record pace in 2011, making it the third year in a row the Red Dragon will top the U.S. in car sales.
China's vehicle sales jumped 46% in 2009, dethroning the United States as the world's largest auto market and ending more than a century of American dominance that started with the Model T Ford.
The nation's sales of passenger cars, buses and trucks rose to 13.6 million in 2009, the fastest pace in at least 10 years, according to the China Association of Automobile Manufacturers. At the same time, U.S. sales tumbled 21% to 10.4 million, the lowest level since 1982, according to Autodata Corp.
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