Financial News

Solar Subsidies Fail

Feb 11th

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Driving into the futureThere have been many debates about the stimulus package and whether or not it will help. It turns out that the solar subsidies did create jobs. Unfortunately the majority of jobs where created overseas and solar manufacturing jobs were actually lost here in the the US.

Solar Subsidies Fail to Create Green Jobs, Again

Despite massive amounts of stimulus funding being spent on wind farms—nearly $2 billion—the vast majority (80%) of it has been spent on overseas companies. ABC contacted Russ Choma at the Investigative Reporting Workshop who suggested that the project has resulted in nearly 6,000 jobs for overseas manufacturers and only a few hundred over here.

To add insult to injury, ABC’s Jonathan Karl reports that “a recent report by American Wind Energy Association showed a drop in U.S. wind manufacturing jobs last year.” That’s right—even with a government-subsidized demand, wind manufacturing decreased.

As Foundry readers may remember, this not the first time that China has benefited from a country deciding to waste its money subsidizing the green projects. Derek Scissors reported back in August how Chinese companies were benefiting from Germany’s decision to heavily subsidize solar power.    –more

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Prius Next On The Recall List

Feb 8th

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Toyota Prius (ZVW30)

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With so many cars being recalled by Toyota, it makes you wonder how they passed quality control.  Toyota vehicles were known for quality and they held their value well.  I think that Toyota owners will still stick with Toyota through the recalls.

Toyota President apologizes… again, calls situation a “crisis” *UPDATE

Fifteen days after Toyota announced a recall of 2.3 million vehicles in the U.S. for sticking accelerator pedals, the company’s president and grandson of its founder made a formal apology at an evening news conference in Japan on Friday night (early morning EST). Akio Toyoda has been largely silent during the last two weeks as his company struggles to contain the fallout from recalls affecting over nine million vehicles on multiple continents. The only other time he’s spoken on record was during an interview at the World Economic Forum in Davos, Switzerland last Friday when he told a Japanese interviewer, “I am deeply sorry.” What’s the reason for today’s remarks? Toyoda told the audience of press, “”I came out here today because I would not want our customers to spend the weekend wondering whether their cars are safe.”

The company president also announced that a committee would be created to look at Toyota’s quality issues and address them going forward, something his predecessor, Katsuake Watanabe, also did back in 2006. Finally, in regards to braking issues with the 2010 Prius revealed yesterday, Toyoda said the company would soon announce how it plans to address them. Despite reports coming out of Japan to the contrary, there has been no official confirmation from Toyota that the new Prius will be recalled. Both the Japanese and U.S. governments have also opened investigations on the Prius and Toyota has pledged its cooperation.

We also learned yesterday of brake issues in the Ford Fusion Hybrid and Mercury Milan Hybrid after Consumer Reports experienced a sudden loss of braking power in a Fusion Hybrid and contacted the automaker. The issue sounds similar to what some owners are experiencing in the 2010 Prius, though we’ve only heard of this one instance and Ford has already responded with a TSB to repair the issue with a software upgrade.    –more

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ADP Employment Report: They’re Hiring Again!

Feb 4th

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Automatic Data Processing, LLC

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Who would have thought that a loss of 22,000 jobs last month was good news.  The good news is that it is the smallest job loss in two years and midsized companies had a net increase of 9,000 jobs.  Are we on the road to recovery? Too soon to tell, but this is a step in the right direction.

ADP employment report: Midsize firms start hiring again

After leading the charge in laying off workers during most of the recession, they added a net 9,000 workers last month, the ADP National Employment Report said Wednesday. That’s the first employment growth among companies with 50 to 499 workers in two years.

Overall, the economy still lost 22,000 jobs between December and January, according to the ADP report. But that was the smallest decline since February 2008.

“Growth of overall private employment is on the verge of turning positive,”Joel Prakken, chairman of Macroeconomic Advisers, said in a release. The company puts out the monthly report, based on private payroll data, in partnership with Automatic Data Processing. On Friday, the US Labor Department will release the official unemployment figures for January.

Midsized businesses still have a long way to go. They have lost nearly 3.2 million since the recession began, according to ADP. Nationally, these firms employ more than 42 million Americans, far more than large companies (17.8 million) and nearly as many as small businesses (48 million).    –more

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Toyota Motor Company Falls 16%, Boosts Ford

Feb 3rd

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ToyotaThe Toyota recall has drastically hurt business for them, but helps boost business for other car manufacturers. The question now is, will Toyota be able to recover from the all the bad press surrounding the recall?  I think so.

Toyota Motor Company falls 16%, FoMoCo up 25%

How do you know if a recall has affected your sales? If you find yourself below the Chrysler Group in sales performance. That’s exactly what happened to Toyota Motor Company in January 2010, as the early effects of its sticking pedal recall sank sales 16 percent versus the same month last year. And the recall was only announced on January 21, directly affecting only about a third of the month’s selling days. We’ll be watching closely to see if Toyota can recover those lost sales in February, which may depend on the outcome of two House hearings scheduled to investigate how its recalls have been handled.

Ford Motor Company, meanwhile, continues to ride a wave of positive press and industry accolades to higher sales. Its group rose sales some 25 percent last month to beat all auto-making companies. Sales for the Ford brand itself rose 26 percent by volume alone. General Motors also has something to smile about, as Chevrolet roared back with sales up 36 percent and sales overall (including non-core brands that are still clearing out inventory) that jumped 14 percent.

Perhaps the single most surprising result is Kia, which for months has stood atop the sales performance charts with fellow Korean brand Hyundai and Subaru. While those two continued their winning ways, up 24 and 28 percent respectively, Kia sales remained flat. That said, there were only 24 selling days in January 2010 versus 26 in January 2009, so Kia did sell more vehicles per day in January than it did last year.    –more

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Obama Budget: Spend More To Reduce The Deficit

Feb 2nd

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El Presidente Barry Hussein Obama - The November Socialist Revolution!When I hear the term “spending freeze” I think no more additional spending, but apparently there is a different definition used by Obama.  To him it means no additional funding to certain projects, but other programs may continue to spend.

I just don’t see how increasing spending by over $3 trillion will help cut the national debt. To me spending more money means you go deeper in debt. Does the government have a different set of mathematical rules?

The Obama Budget: Higher Taxes, Higher Spending and More Debt

President Barack Obama will submit a $3.8 trillion budget proposal for fiscal 2011 to Congress today. One might hope that given last year’s $1.4 trillion budget deficit was an all-time high and the President promised a spending “freeze” in last week’s State of the Union, this budget might signal a change in direction from the White House. No such luck. President Obama’s new budget is full of billions of dollars in new spending for failed government programs, higher taxes on American families and businesses, and deficit spending for as far as the eye can see.

At the very least, the budget document President Obama is submitting today exposes his spending “freeze” promise for the fraud that it is. As outlined last week, the administration would halt spending increases for only a $447 billion sliver of our total budget, with a total of $15 billion to be saved. That is less than half a percent off of last year’s spending. Worse, this isn’t even an across-the-board spending freeze; it is an aggregate one. So “spending cuts” in parts of the budget are immediately channeled to others. For example, even though the federal government does not need any money for the Census next year, President Obama counts the $5 billion spent this year as a “spending cut” that can be immediately spent on other government programs, such as a16% increase in Department of Education funding, a 6.8% increase in Department of Energy funding, and increases for ineffective Health and Human Services programs like Head Start and sex education.

Given the best case scenario, the most the White House hopes to save from this supposed spending “freeze” is$15 billion. And that is easily dwarfed by just the $100 billion President Obama wants for his Economic Stimulus II plan. Then there are the tax hikes, including higher taxes on families earning more than $250,000 and a brand new tax on financial institutions to pay for the failed automobile union bailout.

And what is the end result of all of President Obama’s new taxes and spending? A record national debt. According to the White House Office of Management and Budget, the United States will post a $1.556 trillion deficit in fiscal 2010, which the Obama administration claims will be reduced to $1.267 trillion in fiscal 2011, thanks to their budget. Given this administration’s budget forecasting record, however, expect that final deficit number to go up. The Obama administration now forecasts $5.08 trillion in debt over the next five years; that is 35% more debt than they forecast just 12 months ago.

A common sense budget would move our country in a much different direction. For starters, the remaining TARP and stimulus funds should both be rescinded. Next, instead of the President’s fungible “aggregate” spending freeze, tough hard spending caps should be enacted. Finally, Congress should disclose the massive unfunded obligations of Social Security, Medicare and Medicaid; put those programs on long-term budgets; and enact the necessary entitlement and programmatic reforms that can keep government within those limits. –more

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The Apple iPad is Released

Jan 28th

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Apple iPad Tablet ConceptApple unveiled the iPad yesterday and there was a lot of hype surrounding the release further solidifying the fact that Apple knows how to do PR.  As for the device it is a cool piece of technology, but that is about it.  There are some fun things you can do to waste time and you can browse the Internet.  They even include a calendar.

Starting at around $500 it seems a little pricey for what it does, or should I say what it doesn’t do.  There is no camera and no phone.

Apple Introduces the iPad

Looking dapper in jeans and a black mock turtle-neck, Steve Jobs took the stage today and officially introduced his iPad to the world. As we’ve been seeing and hearing from so many rumors as of late, it appears as if the iPhone got the super-size treatment, complete with a home button.

At only half an inch thin, and sporting a 9.7″ screen, the iPad weighs in at only one and a half pounds. It’s powered by Apple’s very own chip – the A4 – ans “screams” at 1GHz. Available with 16, 32, or 64GB flash storage, and has 802.11n Wi-Fi and Bluetooth 2.1 + EDR. Oh, and you can run it for 10 hours (a month in standby!) while watching videos. Wow! So far, no mention of any cellular carrier connectivity.

If you’re a current iPhone user, much of the interaction with the iPad looks to be very familiar. For instance, tilting the iPad gives you portrait or landscape viewing — both orientations support a lovely full screen keyboard. It also appears that the app icons on the “home screen” change orientation too.    –more

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Berkshire Hathaway Will Enter The S&P 500

Jan 27th

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Warren Buffett speaking to a group of students...

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This is big news as it Berkshire Hathaway will be replacing Northern Santa Fe on the S&P 500.

Buffett & Berkshire Snag S&P 500 Spot

It has been speculated that this may occur, but few were expecting this news this soon. Warren Buffett has been notified by Standard & Poor’s Indexes that Berkshire Hathaway Inc. (NYSE: BRK-B) will replace Burlington Northern Santa Fe (NYSE: BNI) in the S&P 500.

The change is still on a date to be determined.

The total float will have to be calculated out, but this will not likely be the full float nor the full market capitalization of Berkshire Hathaway that will be included in the S&P 500 Index because of the Warren Buffett and Buffett Trust stakes.

Berkshire Hathaway will also join the S&P 100 on a date to be determined. The merger is expected to be completed in February. That is what the recent stock split did for investors. We still think Buffett should consider adopting a similar stock split for the A shares, although at a smaller ratio. The B-shares closed at $68.00 today and shares rose by over 7% to $73.05 on 777,347 after-hours shares as of 5:49 PM EST.

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Obama Plan Could Hurt Hedge Funds

Jan 25th

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President Elect Barack ObamaObama’s plan could have more drastic effects than previously thought. The plan places a limit on what banks can “own” as well as where they can invest. This article explores some of the side effects.

Hedge Funds Could Be Hurt by Obama’s Plan

Experts say that Obama’s plan to reform commercial banks could have an adverse impact on hedge funds and private equity. On Thursday, President Obama presented his plan to stop commercial banks and institutions owning banks from “owning, investing in or sponsoring” private equity and hedge funds which would remove a significant source for alternative asset funds. The President is aiming to curb risk in the banking sector but private equity firms and hedge funds may pay a penalty too.
“Although the full implications of Obama’s statement remain unclear, the potential disruption that such widespread reform could bring to the alternatives industry is significant, and could affect hundreds of banking institutions in the U.S. investing in alternatives,” Preqin’s Tim Friedman said.

If Europe follows the U.S. lead, it could have a big impact on powerful investment houses in the region’s banks. If restrictions are limited to the U.S. there would still be a knock-on effect in Europe and Asia because many U.S. banks also invest in funds in those regions.

Tim Syder, deputy managing partner of U.K. buyout firm Electra, said a similar move in Europe would have a greater affect at the top end of the private equity market.    –more

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Venture Investments Were Down In 2009

Jan 22nd

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Father and son surf lesson in Morro Bay, CA 12 of 12Venture investments are down, but the number of deals are still going strong. Venture capitalists seem to look at more smaller deals rather than a few large deals to help spread their money around.

2009 venture investments lowest since 1997, cleantech fell 52 percent

Now that 2009 is over, we can add up the numbers on how much venture firms invested in startups during all of 2009 — and, well, it was a lot less than in the past. Over the course of the year, VCs invested a total of $17.7 billion in 2,795 deals, the lowest total since 1997, according to the MoneyTree Report from the National Venture Capital Association and PricewaterhouseCoopers.

On the bright side, the worst hit came from numbers that we’ve already reported on, since investments really plummeted during the first half of this year. Funding went up in the third quarter, and more-or-less held steady in the fourth. The amount invested went down from $5.1 billion in the third quarter to $5.0 billion in the fourth quarter, but the numbers of deals went up from 689 to 794. So VCs were making smaller bets, but they placed more fo them. Another reason for optimism: There were more seed and early-stage deals in Q4 than in any other quarter this year, so new ideas are still getting money.

Two of the industries we spend a lot of time covering at VentureBeat took a big funding hit in 2009. Internet-specific companies received $2.9 billion dollars, down 39 percent from 2008. Cleantech fell even further to $1.9 billion, a decline of 52 percent. Meanwhile, VCs put more money into biotech ($3.5 billion) than any other sector, and even then, biotech saw a 19 percent drop from 2008.

NVCA President Mark Heesen acknowledged the drop in a statement released with the report, saying, “The venture industry had no choice but to slow the investment pace in 2009.” But he also offered an optimistic view of the year to come.    –more

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Proposal Set to Limit Success in Banking

Jan 21st

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Are You Experienced?Now I am confused. The Democrats lose a Senate seat to the Republicans so Obama takes it out on Wall Street by bringing back laws similar to those from the depression.  The banks will be losing all of the most profitable practices and be cut down to holding deposits and giving loans.  No more investing, etc.

This seems odd to me.  The banks and large financial institutions made a lot of money and took advantage of government programs and risky investments.  They should have been allowed to fail, but instead the government taught them that if they need more money they can get it from the government.

Now the government wants to make laws to limit the successfulness of a bank.

If we were to look at how the government has spent money then the people should be allowed to step in and fire the management, the politicians. Non-essential programs would be cut, which would be most of them.

Instead the government is set to raise the deficit to over $14 Trillion and has voted to spend $40,000,000+ on land in the Virgin Islands.

That is how the government plans to solve our its economic problems?

Proposal Set to Curb Bank Giants

President Barack Obama on Thursday is expected to propose new limits on the size and risk taken by the country’s biggest banks, marking the administration’s latest assault on Wall Street in what could mark a return, at least in spirit, to some of the curbs on finance put in place during the Great Depression, according to congressional sources and administration officials.

The past decade saw widespread consolidation among large financial institutions to create huge banking titans. If Congress approves the proposal, the White House plan could permanently impose government constraints on the size and nature of banking.

Mr. Obama’s proposal is expected to include new scale restrictions on the size of the country’s largest financial institutions. The goal would be to deter banks from becoming so large they put the broader economy at risk and to also prevent banks from becoming so large they distort normal competitive forces. It couldn’t be learned what precise limits the White House will endorse, or whether Mr. Obama will spell out the exact limits on Thursday.

Mr. Obama is also expected to endorse, for the first time publicly, measures pushed by former Federal Reserve Chairman Paul Volcker, which would place restrictions on the proprietary trading done by commercial banks, essentially limiting the way banks bet with their own capital. Administration officials say they want to place “firewalls” between different divisions of financial companies to ensure banks don’t indirectly subsidize “speculative” trading through other subsidiaries that hold federally insured deposits.    –more

CASTLE NUGENT NATIONAL HISTORIC SITE .

(a) Establishment- There is established as a unit of the National Park System the Castle Nugent National Historic Site on the Island of St. Croix, U.S. Virgin Islands, in order to preserve, protect, and interpret, for the benefit of present and future generations, a Caribbean cultural landscape that spans more than 300 years of agricultural use, significant archeological resources, mangrove forests, endangered sea turtle nesting beaches, an extensive barrier coral reef system, and other outstanding natural features.
(b) Boundaries- The historic site consists of the approximately 2,900 acres of land extending from Lowrys Hill and Laprey Valley to the Caribbean Sea and from Manchenil Bay to Great Pond, along with associated submerged lands to the three-mile territorial limit, as generally depicted on the map titled `Castle Nugent National Historic Site Proposed Boundary Map’, numbered T22/100,447, and dated October 2009.
(c) Map Availability- The map referred to in subsection (b) shall be on file and available for public inspection in the appropriate offices of the National Park Service, Department of the Interior.
(d) Acquisition of Land-
(1) IN GENERAL- Except as provided in paragraph (2), the Secretary is authorized to acquire lands and interests in lands within the boundaries of the historic site by donation, purchase with donated or appropriated funds, or exchange.
(2) U.S. VIRGIN ISLAND LANDS- The Secretary is authorized to acquire lands and interests in lands owned by the U.S. Virgin Islands or any political subdivision thereof only by donation or exchange.    –more

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