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With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
Former McKinsey Director Pleads Guilty in Galleon Scandal; Unemployment Claims Drop; EPA Tightens Ozone Standards; Cold Snap Threatens Natural Gas Production; State Tax Collections Plummet; Oil Slides From a 15-month High
- Anil Kumar, a former McKinsey & Co director, yesterday (Thursday) pleaded guilty to securities fraud and conspiracy charges in Manhattan federal court in what U.S. prosecutors have called the biggest hedge fund insider trading case ever. Kumar was charged with leaking confidential information to Galleon Group founder Raj Rajaratnam, becoming the seventh person involved with the case to plead guilty, Reuters reported. Kumar, 51, has been free on $5 million bail since his Oct. 16 arrest and was fired last month by McKinsey. He faces up to 25 years in prison. According to U.S. prosecutors and a civil complaint by the U.S. Securities and Exchange Commission, Kumar in August 2008 shared inside information about transactions involving Advanced Micro Devices Inc. (NYSE: AMD) and two Abu Dhabi entities with Rajaratnam, who then traded on the information.
- Americans filed fewer claims for unemployment benefits than forecast last week, indicating improving sales and production gains are prompting companies to slow the pace of firings. Initial jobless applications rose to 434,000 in the week ended Jan. 2, from a 16-month low of 433,000 the prior week, the Labor Department reported yesterday (Thursday) in Washington. The median estimate of economists surveyed by Bloomberg News projected an increase to 439,000. The number of people receiving unemployment insurance dropped, and those receiving extended benefits increased. The four-week moving average of initial claims, fell to 450,250 last week, the lowest since the September 2008 Claims have fallen 36% since reaching a 26-year high of 674,000 in March.
- The U.S. Environmental Protection Agency (EPA) yesterday (Thursday) backed away from controversial Bush-era environmental regulations, proposing stricter national smog standards. Tighter pollution rules are expected to impact factories, oil and natural-gas companies, and utilities, which will be required to reduce their emissions of Nitrogen oxides. The standards govern what is known as ground-level ozone, which has been linked to asthma and other respiratory illnesses. The agency proposed setting the acceptable ozone limit in the air between 0.06 and 0.07 parts per million (ppm). Under President George W. Bush the EPA reduced the acceptable limit in the air to 0.075 ppm from the previous limit of 0.084 ppm. "Using the best science to strengthen these standards is a long overdue action that will help millions of Americans breathe easier and live healthier," said EPA Administrator Lisa Jackson in a statement.
- Most of Florida's citrus crop escaped damage from freezing temperatures this week, but growers are bracing for a renewed freeze threat this weekend. Blasts of Arctic winds and drifting snow slowed business in the agricultural sector threatening to disrupt natural gas production. Brutally cold temperatures gripped much of the northern United States and Canada yesterday (Thursday). In Europe, heavy snowfall protected the wheat crop in the continent's western region from being damaged by frosts. Houston Texas- based energy research company Tudor Pickering Holt & Co LLC told Reuters natural gas production might be disrupted if cold weather causes oil well heads to freeze in key producing states like Texas and Louisiana. Treacherous road conditions amid the snow and ice was slowing activity in the agricultural sector, especially in the movement of grains and livestock.
- Tax collections by U.S. state governments plunged the most in 46 years in the first three quarters of 2009 as the recession shrank revenue from sources including personal income, Bloomberg reported, citing research by the Nelson A. Rockefeller Institute of Government, a public policy research arm of the State University of New York. Revenues dropped $80 billion, or 13.3%, compared with the same nine months of 2008, to $523 billion, the institute said. It was the fourth straight quarterly decline. "The first three quarters of 2009 were the worst on record…in terms of the decline in overall state tax collections, as well as the change in personal income and sales tax collections," Rockefeller analysts Lucy Dadayan and Donald J. Boyd wrote in the report. States have been forced to cut spending, raise taxes and pass down costs to local governments to cope with $193 billion of combined budget deficits in the current fiscal year, according to a Center on Budget and Policy Priorities report issued last month.
- U.S. crude for February delivery yesterday (Thursday) fell 52 cents from Wednesday's 15-month high of $83.52 to settle at $82.66 a barrel on the New York Mercantile Exchange (NYMEX). London Brent crude fell 38 cents to settle at $81.51 a barrel. The decline was largely a result of speculation among investors who feared China's move to rein in lending will dent demand for commodities.