Hedge funds gripped by crisis of performance

July 28, 2013 12:33 pm

Hedge funds gripped by crisis of performance

By Dan McCrum in New York

Hedge funds have a performance problem. Since the turn of the decade, Wall Street’s master stock pickers have spectacularly failed to beat the market. The crisis of performance comes as the industry is under intense scrutiny over the source of past returns, with SAC Capital facing criminal insider trading charges that threaten to undermine the record of one of the world’s most successful hedge funds. The firm says it has done nothing wrong. While many hedge funds fared better than the stock market during the financial crisis, and rode the 2009 recovery back to health, they have been confounded by sometimes violent market moves over subsequent years. Read more of this post

Procter & Gamble: Time to freshen up; Investors are hoping that AG Lafley will unveil plans to reinvigorate the company

July 28, 2013 3:27 pm

Procter & Gamble: Time to freshen up

By Barney Jopson

Investors are hoping that AG Lafley will unveil plans to reinvigorate the company

Nick Mangold, a burly American footballer, eases his 6ft 4in frame into a barber’s chair and lets the Gillette whisker trimmer get to work on his bushy beard. The New York Jets star is in Greenwich Village as a celebrity spokesman for Procter & Gamble, which counts Gillette as one its many brands. But a clean cut is not on the cards. “I’m not a complete shave guy, as your eyes will attest,” he says. The Fusion ProGlide Styler, a $19.99 razor-cum-trimmer, helps ensure “the wife won’t kill me”, Mr Mangold explains, but his strawberry blonde beard still bears hints of the unruly haystack to which it was once likened. For P&G, beards are big business. But this pillar of corporate America is in need of more than a trim. With a market value of $223bn, it has long been the gold standard in inventing, packaging and advertising high-end products to clean hair, bodies, clothes and dishes. But the personal and household products group has reached a defining juncture in its 175-year history. In both developed and emerging economies, it faces consumer markets that are more cost-conscious, commoditised and volatile. Analysts, long in awe of its consistently high performance, are now asking: has the P&G playbook run its course? Read more of this post

Betting on start-ups can revive a tired presidency; Making things easier for risk-takers is a way to reach elusive economic goals

July 28, 2013 5:17 pm

Betting on start-ups can revive a tired presidency

By Edward Luce

Making things easier for risk-takers is a way to reach elusive economic goals

George W Bush was supposed to have said: “The problem with the French is they don’t have a word for entrepreneur.” Unfortunately he never said it (though he really should have). Today’s Washington is also ambivalent about the French word. In a bitterly gridlocked town, every politician still pays lip service to small businesses. Yet by turning a blind eye to the needs of struggling entrepreneurs, the town is conniving in their declining fortunes. President Barack Obama would help his embattled presidency and the US economy if he embraced the cause of America’s entrepreneurs. Read more of this post

Industrial giant GE is trying to do business in just-opened Myanmar, where they badly need the stuff it makes and sells. So why is this storied multinational struggling?

Why GE’s Myanmar Venture Has not been Easy

by Simon Montlake | Jul 29, 2013

The industrial giant is trying to do business in just-opened Myanmar, where they badly need the stuff it makes and sells. So why is this storied multinational struggling?

In the midday haze outside the Thingaha Hotel in Naypyidaw, the new capital of Myanmar, the national flag droops alongside the Stars and Stripes and General Electric’s corporate logo. Inside the Grand Ballroom the staff scurries with last preparations for a meticulously planned gala dinner. Heading up this coming-out party is Stuart Dean, a blue-eyed, rawboned American and GE’s chief for Southeast Asia. Read more of this post

H&M Aiming to Catch Zara With Delayed American Web Push

H&M Aiming to Catch Zara With Delayed American Web Push

Hennes & Mauritz AB (HMB) began selling cheap-chic clothes online in Sweden about the same time Google Inc. (GOOG) started crunching its first search results. Fifteen years later, H&M’s American fans are still waiting for Web shopping.

If the hype is to be believed this time around — the Stockholm-based retailer has postponed twice before — in August H&M will enter the world’s biggest online apparel market, allowing American shoppers to click to buy $12.95 zebra-striped ballet flats and $59.95 trenchcoats. Read more of this post

Recall in Japan Blemishes Skin-Whitening Industry; Booming Business in Asia Is Shaken After Women Using Kao’s Kanebo Products Develop Splotches

July 28, 2013, 2:25 p.m. ET

Recall in Japan Blemishes Skin-Whitening Industry

Booming Business in Asia Is Shaken After Women Using Kanebo Products Develop Splotches

MAYUMI NEGISHI

TOKYO—Under the glare of the sun, 27-year-old Ria Ko holds a parasol, wears long gloves and applies a new layer of SPF 50 sunscreen every couple of hours. Her pale complexion is hard won—acquired through a decade of effort to stay clear of the sun—and each freckle that appears causes her a moment of distress. From Tokyo to Mumbai to Shanghai, the skin-whitening industry is booming and projected to grow into a $20 billion business globally by 2018, according to Global Industry Analysts. In Asia, a fair complexion is synonymous with beauty, higher social position and wealth. Companies are scrambling to develop the next hot product in a culture that for centuries has identified light skin as a status symbol—because it proved that a woman was exempt from field work. But the industry has been shaken after Japan’s second-biggest cosmetics company, Kanebo Cosmetics Inc. said last week that it has confirmed the appearance of white stains—some bigger than 2 inches in diameter—on the faces, necks, and hands of thousands of women who had used its skin-lightening products. Read more of this post

Chinese Search for Infant Formula Goes Global; The Baby Formula Barometer

July 25, 2013

Chinese Search for Infant Formula Goes Global

By EDWARD WONG

At the Sheung Shui station in Hong Kong, near the Chinese border, the trade in baby milk powder is heavy

HONG KONG — The group of 40 mainland Chinese tourists made all the requisite shopping purchases on a recent trip to Europe: silk scarves, Swiss watches, Louis Vuitton handbags. And baby milk powder, of course. Loads of it. Rushing shelves at a supermarket in Germany, Chinese shoppers stuffed a half-dozen large cans into bags, one of the tourists said. “One woman told me, ‘If it was easier to carry, we would buy more; it’s good and cheap here,’ ” recalled the tourist, Zhang Yuhua, 60, who bought two cans. Chinese are buying up infant milk powder everywhere they can get it, outside of China. And that has led to shortages in at least a half-dozen countries, from the Netherlands to New Zealand. The lack of supply is a reminder of how the consumption patterns of Chinese — and their rising food and environmental safety concerns — can have far-reaching impacts on critical daily goods around the world. Read more of this post

80% Of US Adults Are Near Poverty, Rely On Welfare, Or Are Unemployed

80% Of US Adults Are Near Poverty, Rely On Welfare, Or Are Unemployed

Tyler Durden on 07/28/2013 16:47 -0400

Despite consumer confidence at a six-year high, the latest AP survey of the real America shows a stunning four out of five U.S. adults struggle with joblessness, are near poverty, or rely on welfare for at least parts of their lives amid signs of deteriorating economic security and an elusive American dream. Hardship is particularly on the rise among whites, based on several measures. Pessimism among whites about their families’ economic futures has climbed to the highest point since at least 1987. “Poverty is no longer an issue of ‘them’, it’s an issue of ‘us’,” as ‘the invisible poor’ – lower income whites – are generally dispersed in suburbs (Appalachia, the industrial Midwest, and across America’s heartland, from Missouri, Arkansas and Oklahoma up through the Great Plains) where more than 60% of the poor are white. More than 19 million whites fall below the poverty line of $23,021 for a family of four – accounting for more than 41% of the nation’s destitute – nearly double the number of poor blacks and as one survey respondent noted “I think it’s going to get worse.” Read more of this post

Blackstone is finding fewer opportunities in India, where it says “serious governance issues” threaten to erode investor returns amid the slowest pace of economic growth in a decade. “The most prudent assumptions made of India are turning out to be highly optimistic”

Blackstone Sees Fewer Breaks as Singh Founders: Corporate India

Blackstone Group LP (BX) is finding fewer opportunities in India, where it says “serious governance issues” threaten to erode investor returns amid the slowest pace of economic growth in a decade. The world’s largest manager of alternative assets including private equity and real estate has been “very cautious” in Asia’s third-biggest economy because it is becoming more difficult for the government to make the right decisions, Akhil Gupta, chairman of Blackstone’s Indian unit, said in an interview in his office in Mumbai. “The most prudent assumptions made of India are turning out to be highly optimistic,” he said. “One doesn’t see a way out. I haven’t ever seen such pessimism when we talk to Indian company or government officials.” Read more of this post

Chicago Next? Windy City Cash Balance Plummets To Only $33 Million As Debt Triples

Chicago Next? Windy City Cash Balance Plummets To Only $33 Million As Debt Triples

Tyler Durden on 07/28/2013 11:06 -0400

While everyone’s attention is focused on the Detroit bankruptcy, and just what assets the city will sell in lieu of raising a DIP loan, perhaps it is time to refocus attention to the city 300 miles west: Chicago. According to the Chicago Sun Times citing year-end audits, Obama’s former right hand man, Rahm Emanuel, closed the books on 2012 with $33.4 million in unallocated cash on hand — down from $167 million the year before — while adding to the mountain of debt piled on Chicago taxpayers. In addition to a liquidity problem, Chicago may also be quite insolvent as the city’s total long-term debt soared to nearly $29 billion. That’s $10,780 for every one of the city’s nearly 2.69 million residents. More than a decade ago, the debt load was $9.6 billion or $3,338 per resident. Of course, in a world in which debt is “wealth”, this is great news… at least until debt becomes “bankruptcy.” Read more of this post

U.S. chief executives can’t break cost-cutting habit

U.S. chief executives can’t break cost-cutting habit

Fri, Jul 26 2013

By Lewis Krauskopf, Patricia Kranz and Lucia Mutikani

(Reuters) – A disconcerting trend lurks beneath the recent round of solid profit forecasts announced by companies ranging from United Technologies Corp (UTX.N: Quote, Profile, Research, Stock Buzz) to Wendy’s Co (WEN.O: Quote, Profile, Research, Stock Buzz): More than three years into the recovery, CEOs are still relying on cost cuts to prop up earnings.

While the cuts are not as severe as those that followed the 2008 financial crisis, companies remain cautious, mindful that revenue growth is still tepid. As a result, many appear to be more comfortable wringing efficiencies out of their businesses than gearing up for accelerated production. Read more of this post

Young, Rich Real-Estate Dummies

Young, Rich Real-Estate Dummies

The Wall Street Journal reports that well-to-do young Americans prefer to put their savings into “safe” luxury real estate rather than “risky” equities. Some are wealthy heirs and heiresses who have nothing better to do with their money. Others are members of the nouveau riche, cashing out their Facebook shares for houses in San Francisco. Yet most people described in the article are simply young, rich and dumb.

Matt Winter, a 28-year-old interior designer in L.A. says that he “always felt that having your money in property is the safest and best thing to do if you want to grow your personal wealth.” That was why he spent $1.7 million on his new home, after having spent about $1 million on his first home two years ago. Winter goes on to say that he owns no stocks because equities “spook him.” Read more of this post

Wall Street’s Biggest Job Cuts Yet to Come, Whitney Says

Wall Street’s Biggest Job Cuts Yet to Come, Whitney Says

Wall Street firms must cut more jobs to boost their return on equity and satisfy shareholders, said Meredith Whitney, a banking analyst and founder of Meredith Whitney Advisory Group LLC.

“The biggest layoffs are ahead of us,” Whitney said in a Bloomberg Television interview today with Tom Keene, Sara Eisen and Scarlet Fu. “It’s no fun, it’s painful but you have to downsize dramatically, get more efficient on every single line of business.” Read more of this post

The poison pill in India’s search for cheap food

The poison pill in India’s search for cheap food

1:35am EDT

By Rajendra Jadhav and Jo Winterbottom

MUMBAI/NEW DELHI (Reuters) – Nearly a decade ago, the Indian government ruled out a ban on the production and use of monocrotophos, the highly toxic pesticide that killed 23 children this month in a village school providing free lunches under a government-sponsored program. Despite being labeled highly hazardous by the World Health Organization (WHO), a panel of government experts was persuaded by manufacturers that monocrotophos was cheaper than alternatives and more effective in controlling pests that decimate crop output. Read more of this post

ETF Wolves in Sheep’s Clothing: Financial advisors are increasingly using passive, index-tracking ETFs to implement strategies that are just as active as what you’d find in the most aggressive mutual funds

SATURDAY, JULY 27, 2013

Wolf in Sheep’s Clothing

By CORRIE DRIEBUSCH | MORE ARTICLES BY AUTHOR

Financial advisors are increasingly using passive, index-tracking ETFs to implement strategies that are just as active as what you’d find in the most aggressive mutual funds.

Some pairings just make sense — Scarlett and Rhett, peanut butter and jelly, exchange-traded funds and index investing. But when the pairing is put into a different context — a campy musical version of Gone with the Wind, or a PB&J-filled breakfast cereal — it becomes a distinctly different thing. And that “different thing” is happening in the world of ETFs. Financial advisors are increasingly using passive, index-tracking ETFs to implement strategies that are just as active as what you’d find in the most aggressive mutual funds. For some investors, it’s a natural fit. But for others, particularly those drawn in by the allure of passive ETFs, it’s going to be stomach-churning. Read more of this post

A Race to Save the Orange by Altering Its DNA

July 27, 2013

A Race to Save the Orange by Altering Its DNA

By AMY HARMON

CLEWISTON, Fla. — The call Ricke Kress and every other citrus grower in Florida dreaded came while he was driving. “It’s here” was all his grove manager needed to say to force him over to the side of the road. The disease that sours oranges and leaves them half green, already ravaging citrus crops across the world, had reached the state’s storied groves. Mr. Kress, the president of Southern Gardens Citrus, in charge of two and a half million orange trees and a factory that squeezes juice for Tropicana and Florida’s Natural, sat in silence for several long moments. “O.K.,” he said finally on that fall day in 2005, “let’s make a plan.” In the years that followed, he and the 8,000 other Florida growers who supply most of the nation’s orange juice poured everything they had into fighting the disease they call citrus greening. To slow the spread of the bacterium that causes the scourge, they chopped down hundreds of thousands of infected trees and sprayed an expanding array of pesticides on the winged insect that carries it. But the contagion could not be contained. Read more of this post

Volatility Hits Hong Kong Exchange Fund with $3.25 billion investment losses in the second quarter; De facto central bank sees “immense shocks” ahead

July 26, 2013, 8:40 a.m. ET

Volatility Hits Hong Kong Exchange Fund

De facto central bank sees “immense shocks” ahead

CHESTER YUNG

HONG KONG—Hong Kong’s de facto central bank suffered an investment loss of 25.2 billion Hong Kong dollars (US$3.25 billion) in the second quarter, due to declines in the value of its bond holdings and foreign-exchange losses during a period of heightened market volatility. The Hong Kong Monetary Authority’s Exchange Fund lost 19.6 billion Hong Kong dollars on its bond holdings during the quarter, reversing a gain of 2.8 billion Hong Kong dollars in the first quarter. It also lost 6.1 billion Hong Kong dollars on local equities as the benchmark Hang Seng Index fell 6.7%, while losses from foreign-exchange movements totaled 5.9 billion Hong Kong dollars. The HKMA uses the fund to manage its assets and maintain the Hong Kong dollar’s peg to the U.S. dollar, as well as to ensure the territory’s financial stability. Read more of this post

Foreign banks in China dropping out of retail banking

Foreign banks in China dropping out of retail banking

Staff Reporter

2013-07-28

Due to adjustment in business structure and continuing deficits, a number of foreign banks have started closing their retail banking branches in China. In mid-July, Deutsche Bank China folded its last retail banking branch in Huamao, Beijing. According to the Beijing Business Today, the the bank closed the branch, opened on Nov 29, 2007, after deciding to focus on corporate banking, forgoing its original ambition to diversify its services. Deutsche Bank is not the first foreign bank exiting the retail banking market in China. Previously, the Royal Bank of Scotland left the retail banking sector in order to concentrate its resources on corporate and wholesale banking. The Bank of East Asia (China) has also pulled out of the retail banking business for some of its smaller branches, according to Beijing Business Today. Read more of this post

Blown it: China’s offshore wind farms suffer repeated setbacks

Blown it: China’s offshore wind farms suffer repeated setbacks

Staff Reporter

2013-07-28

In 2010, the Chinese government successfully held public bids for the nation’s first four offshore wind farm projects, all off the coast of Jiangsu province, but three years on,the four projects have yet to break ground due to a number of factors, including difficulties in the coordination for the use of the sea area, an unclear power-rate policy, the immaturity of peripheral industrial chain and a protracted approval process. “The progress of the project is slower and the time for approval longer than expected,” an executive of one of the bid-winning enterprises has admitted. Read more of this post