Finance Blog number 1

Having professional baseball in South Florida is a factor in attracting new business, Frank Nero, president of the Beacon Council, testified Monday in the Marlins stadium funding lawsuit.

Nero's testimony wrapped up day six of the trial. Two more witnesses are expected before testimony ends Tuesday.

Nero said the Marlins have been a factor in "selling" South Florida since 1992. Upon cross examination, however, Nero said he couldn't point to any single business that moved here as a result of the Marlins presence. He also said no analysis of Marlins' economic impact has been performed since 1991.

The Beacon Council has endorsed a new $525 million stadium in Little Havana.

Earlier Monday, Tony Villamil, chief executive officer of Coral Gables-based Washington Economic Group, testified for the county that a new baseball stadium such as the one planned by the Marlins "serves the public purpose of economic development."

Braman has alleged the city and county are engaging in illegal funding schemes to build the proposed $525 million stadium on the site of the former Orange Bowl. Last week, Miami-Dade Circuit Court Judge Jeri Beth Cohen threw out three more counts of the lawsuit, leaving only two remaining.

The remaining issues are whether a referendum should be ordered because the funding plan relies partly on property tax revenue, and whether the stadium represents a paramount public purpose.

Villamil is a business economist familiar with sources of funding for sports facilities and the political climate in Florida supporting public funding.

He testified that modern stadiums with modern amenities, when located in a city's urban core, help economic development of that area.

Villamil said stadiums have a larger impact than the direct benefits of construction spending, jobs, ticket sales and tourism. An example would be media exposure.

"It is part of the portfolio of amenities of the state or a region, what economists call externality benefits," he said.

The Florida Marlins' current home, Dolphin Stadium, is inappropriate for baseball because of summer heat and rain, remote location and a design catering to professional football, Villamil said electronic check payday advance.

He also referred to a study he helped produce about the economic impact of having a successful Marlins franchise in a new ballpark.

The study suggested a $208 million annual overall impact on gross state product, including $85 million in labor impact, with 2,273 jobs supported by the Marlins. The study also said local and state governments would capture an additional $14 million in taxes and revenue.

Villamil also said Gov. Charlie Crist seems more supportive of tax rebates for new stadiums than former Gov. Jeb Bush.

He acknowledged under cross-examination that the studies on economic impact he had done were based on 2001 data, and he was unable to verify the Marlins' financial information. The study examined stadium sites along the Miami River and at Bicentennial Park, but not the Little Havana site where the Orange Bowl once stood.

The Marlins have fought attempts to bring their financial information into court. County officials have acknowledged they never saw the team's financial statements.

Villamil testified under cross-examination that he would recommend the city and county verify the Marlins' financial information before spending hundreds of millions of dollars on them.

Cohen asked Villamil if he would present a paper to peers at an economic conference today based on 2001 data. Villamil said he would not.

The trial is expected to conclude Tuesday. Cohen said Friday she believes a recent Supreme Court case requiring a public vote on the use of tax-increment financing applies to the Braman case — a hint she may rule that a referendum is needed for the Marlins stadium, as well. But, she has not issued a ruling on that question yet.

MacroGenics buys California-based Raven Biotechnologies

By Vandana Sinha

Staff Reporter

MacroGenics Inc. has acquired Raven Biotechnologies Inc., a South San Francisco, Calif., cancer stem cell company, in an all-stock transaction.

The deal, whose terms weren’t disclosed, widens the Rockville company’s cancer-fighting capabilities, nine months after it had licensed its key drug candidate and what many considered its cash cow, a Type I diabetes treatment, to Eli Lilly & Co.

MacroGenics leaders said the move is an effort to diversify its offerings and open the door to other pharmaceutical partnerships, so it’s less tied solely to Eli Lilly.

“You can think of this as an acceleration and diversification of our entire platform to make us a much more fully integrated biotechnology company,” said Scott Koenig, president and chief executive officer of MacroGenics. “This creates a lot of opportunities for new partnerships.”

MacroGenics, a privately held company with 104 local employees, is taking over a 48-person company, expecting to downsize that head count to 31 in California. The West Coast employees will remain there, but he said local operations may grow as the combined company pursues plans to take its first cancer stem cell product into clinical trials in the next two years.

The purchase also gives MacroGenics access to Raven’s database of 1,300 antibodies, or drug-fighting proteins, that target a variety of cancers.

The local company plans to combine those antibody candidates with its own platform technology, one of which allows them to kill pathogens more effectively and the other to allow the antibodies to react to multiple cancer targets at once.

MacroGenics also plans to push forward on four other clinical studies by the end of next year, including on treatments for the West Nile Virus, neurological complications and cancer no fax payday loan. In October, the company signed the deal with Eli Lilly, which gave the larger pharmaceutical rights to its trademark diabetes drug for $41 million in up-front cash and up to $200 million in potential payments for meeting other clinical and regulatory milestones — an event that earned MacroGenics some criticism for selling off its most promising drug.

“But we never positioned ourselves as being a single-product company,” Koenig said. “The acquisition of Raven is evidence of that.”

Montgomery & Co. LLC served as the financial adviser to Raven. Arnold & Porter LLP served as legal adviser to MacroGenics.

U.S. Treasury Secretary Henry Paulson, who arrived in Washington two years ago from the summit of American capitalism, is being pummeled by the markets that nurtured him.

Investors are rebuffing Paulson's plan to rescue the nation's two largest mortgage-finance companies. Shares of Fannie Mae have slid 31 percent, Freddie Mac has lost 32 percent and the Standard & Poor's 500 Financial Index has fallen 8 percent since his July 13 pledge of government support. Yesterday the skepticism spread to his own Republican Party, signaling what may be a tough fight ahead for his proposal.

Paulson, who came from Goldman Sachs Group Inc. expecting his biggest tasks to be forging a compromise on Social Security and fostering an economic dialogue with China, today faces a deepening housing crisis and a stock market lower than the day he started.

“This is a man who finds himself in a whirlpool he never dreamed he'd see,'' said David Kotok, chairman and chief investment officer of Cumberland Advisors Inc., a Vineland, New Jersey, firm that manages $1 billion.

He is also advocating policies he might not have expected to embrace. Paulson's recognition that the threats Fannie Mae and Freddie Mac pose require a federal response helped convince President George W. Bush to back the rescue plan.

“In the short term, you do what you need to do to protect the financial system,'' Keith Hennessey, the director of Bush's National Economic Council, said in an interview.

`Systemic Financial Risk'

The Bush administration's decision to back the mortgage companies, as well as the Federal Reserve's aid for Bear Stearns Cos. earlier this year, are “specific cases that could involve systemic financial risk'' Hennessey said.

When Paulson, 62, started at Treasury in July 2006, consumer confidence in the U.S. was rising, stocks were advancing and crude oil cost half what it does today. His agenda included helping American businesses and workers become more competitive.

“The global economy has been more robust than at any point I can recall,'' the former Goldman Sachs chairman said in his first major speech, in August 2006, at Columbia University's business school in New York.

That changed a year later. U.S. credit markets began to deteriorate in August 2007 as debt linked to mortgage-backed securities fell in value, altering Paulson's initial plans to address “long-term challenges'' to economic growth.

First Steps

As the crisis unfolded, sending stocks down for five straight months between November 2007 and March of this year, Paulson's initial efforts to respond met with only limited success.

He organized a group of mortgage lenders and services into an alliance called “Hope Now'' to help struggling homeowners. It was criticized by House Financial Services Committee Chairman Barney Frank for moving too slowly.

Paulson tried to get banks including Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. to start an $80 billion fund to draw investors back into the market for short- term debt. Under an agreement he brokered, the fund would buy some of the $320 billion in assets held by structured- investment vehicles. The effort never got off the ground, because the banks decided to arrange their own rescues.

As the instability spread to Bear Stearns earlier this year, he helped organize the Fed's response: a $30 billion package to help facilitate JPMorgan's purchase of Bear in March paydayloans. The government's help was needed to prevent the collapse of Wall Street's fifth-biggest bank from taking down the financial system, Paulson said.

Unprecedented Problems

“To be fair, he's facing problems that no one has ever faced before,'' said Peter Wallison, a fellow at the American Enterprise Institute in Washington and a former Treasury general counsel.

Those problems have multiplied with Fannie Mae and Freddie Mac. The companies have struggled as mortgage defaults soared, sending the value of mortgage-backed securities — their main investment — plummeting.

Paulson this week asked Congress to approve a plan to let the Treasury increase the companies' credit lines from $2.25 billion each, buy shares in them if necessary and give the Federal Reserve a role in setting their capital requirements.

He won the approval of Bush, who has “tremendous confidence'' in Paulson, Hennessey said. “There's no one with more experience, institutional knowledge and the connections to help the president.''

Credibility Questioned

At the same time, Paulson's credibility has been called into question both by the market reaction to his efforts and at a hearing yesterday in the Senate.

“The market has reacted to your plan by driving down Fannie Mae shares 26 percent today,'' Senator Jim Bunning, a Kentucky Republican, told the Treasury chief. “Freddie Mac's are down 29 percent at this moment, just in case you are interested in how the markets are reacting to your wonderful plan.''

After a verbal lashing from senators of both parties, Paulson emphasized the urgency of the proposal.

This “will be a great confidence-builder throughout the world, to see Republicans and Democrats, both houses come together and do something quickly here,'' he said.

Other lawmakers praise Paulson's willingness to work with Democrats. “One of the things that Paulson has done is get the president to be sensible,'' Frank, a Massachusetts Democrat, said in an interview yesterday.

`Still Optimistic'

Paulson took the hearing in stride, David Nason, the Treasury's assistant secretary for financial institutions, said in an interview late yesterday. “We're still optimistic that we're going to be able to get this done on a short time frame,'' Nason said.

Still, as Paulson spoke to the Senate panel, yields widened between Freddie Mac's and Fannie Mae's five-year debt and five-year U.S. Treasuries, signaling doubt that the government response would help.

Paulson has repeatedly emphasized the virtues of “market discipline'' — code words for self-policing. Now, with Fannie Mae and Freddie Mac in crisis, he has endorsed what critics say may be an open-ended commitment to save them.

“They say there are no atheists in a foxhole,'' said Harvard economist Jeffrey Frankel, a former Clinton administration official. “Well, there are no libertarians in a financial crisis, either.''

Source

Four Tampa Bay area tourism entities are finalists for the 2008 Flagler Awards, presented annually by Visit Florida, the state’s tourism marketing organization. The program acknowledges outstanding achievement in promoting and marketing tourism.

TradeWinds Island Resorts and the Salvador Dali Museum in St. Petersburg, the Bradenton Area Convention and Visitors Bureau and the Sarasota & Her Islands Convention and Visitors Bureau will be recognized at the 2008 Governor’s Conference on Tourism, Aug. 17-19 in Orlando. The Seminole Tribe of Florida, based in Hollywood and operating the Hard Rock Hotel and Casino in Tampa, also will be recognized.

The program’s top honor, the "Henry," will be awarded in each of 15 categories encompassing a wide variety of marketing tools and activities. A "Best of Show" award will be presented in three annual marketing budget categories: under $100,000; from $100,000 to $1 million; and more than $1 million instant payday advance.

Last year’s finalists included the Sarasota & Her Islands CVB, the Seminole Hard Rock Hotel & Casino, the St. Petersburg/Clearwater CVB and Tampa Bay Ghost Tours.

The Flagler Awards are open to all individuals, private businesses and not-for-profit organizations offering a product or service that promotes tourism to or within Florida.

The Federal Reserve may hold off on its first interest-rate increase since 2006 until policy makers judge that financial markets are stable enough to allow the central bank to withdraw its lending backstop for Wall Street.

Raising rates while at the same time removing securities dealers' access to direct loans from the central bank would be a double hit to markets that officials probably want to avoid, Fed watchers said. The Fed also may have a hard time justifying higher borrowing costs before it has a plan for ending emergency lending to nonbanks.

The timing difficulty, along with continued strains in credit markets, means traders may be mistaken in estimating the odds of a rate boost by year-end at 74 percent.

“We think they'll wait until 2009,'' said Brian Sack, who used to head the Fed's monetary and financial market analysis group before he joined Macroeconomic Advisers LLC as senior economist in Washington. Successfully dealing with an end to the Primary Dealer Credit Facility is “a hurdle for credit markets to get past before the Fed will likely start tightening,'' he said.

Bernanke, who spurred expectations for a rate increase when he said last month the Fed would “strongly resist'' a jump in inflation expectations, speaks today on financial stability and regulation. His remarks to a Federal Deposit Insurance Corp. forum are scheduled for 8 a.m. in Arlington, Virginia. Treasury Secretary Henry Paulson also speaks.

Fed Powers

The Fed started the PDCF in March, invoking its powers under “unusual and exigent circumstances'' to forestall a collapse in confidence after the near-bankruptcy of Bear Stearns Cos.

New York Fed President Timothy Geithner, who spearheaded the central bank's rescue of Bear Stearns, said June 9 that the Fed's emergency measures would be in place as long as markets remained distressed. Persistent credit strains may leave officials unwilling to end the PDCF in September, after they said March 16 it would last for “at least'' six months.

Credit-default swaps on Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Morgan Stanley debt are trading close to their highest since March. The contracts let investors bet on the risk that a company will default on its bonds.

Another gauge of financial stress watched by the Fed has also 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.

`Severe Stranglehold'

In addition, commercial-bank loans outstanding have dropped to their lowest level since March, Fed statistics show instant payday loan. That will “put a severe stranglehold on economic growth,'' said former Fed governor Lyle Gramley.

Raising rates in such an environment “would be a very risky strategy,'' said Gramley, now senior economic adviser at Stanford Group Co. in Washington. “I don't think they're going to do that, and I think markets have been premature in jumping to that conclusion.''

The Federal Open Market Committee on June 25 kept its target rate for overnight loans between banks at 2 percent, ending a series of seven reductions since September.

Futures prices on the Chicago Board of Trade indicate investors place 47 percent odds the Fed will raise the benchmark rate to at least 2.25 percent at or before the Sept. 16 meeting. That probability is 74 percent for the end of the Dec. 16 FOMC gathering.

One at a Time

“They're going to pick one instrument at a time to tighten policy,'' predicted New York-based Merrill Lynch economist Drew Matus, who used to work at the New York Fed.

While nothing would prevent the Fed from taking such action, increasing the cost of credit while at the same time lending to Wall Street may spur criticism the central bank is misusing its emergency authority.

The Fed is only supposed to lend to nonbanks under emergency circumstances when no other “adequate'' credit is available. The PDCF and the Fed loans to secure Bear Stearns's takeover by JPMorgan Chase & Co. were the first extension of funds to nonbanks since the 1930s.

Richmond Fed President Jeffrey Lacker and Philadelphia Fed chief Charles Plosser have already criticized the PDCF for raising the danger of future financial crises by increasing incentives for firms to take on more risk.

The PDCF was one of three tools the Fed introduced since December to combat the credit crisis. The central bank has a $200 billion program of lending Treasuries to the primary dealers in U.S. government bonds. The Fed also auctions $75 billion of cash loans to commercial banks every two weeks.

“If those tools work, then monetary policy can go back to addressing what it should be addressing, which is inflation,'' John Ryding, the founding partner of RDQ Economics in New York who used to work as an economist at Bear Stearns and at the Bank of England, said in an interview with Bloomberg Radio. “The problem is, I think it's clear, that there's still a lot of fragility in the system.''

Source

Ukraine increased its forecast of inflation for 2008 and said the country's economic growth in the first half lagged behind its projection for the year.

The inflation rate will be 15.9 percent at the end of the year, more than a previous forecast of 15.3 percent, Justice Minister Mykola Onishchuk told journalists today after a government meeting to approve changes to the 2008 state budget.

Ukraine's cabinet has rejected demands by President Viktor Yushchenko to trim this year's budget deficit to tackle inflation, which was 31.1 percent in May. Yushchenko disagrees with Prime Minister Yulia Timoshenko on policies including how to fight inflation and the sale of state assets.

The country's economy grew 6.4 percent in the first half of 2008, Timoshenko said before today's meeting, which was held to ensure that the legislature adopts the 2008 budget before its summer recess, which starts on July 14 payday loans application. The cabinet has forecast growth of 6.8 percent in gross domestic product for the year.

Timoshenko said today that a “significant'' amount of this year's 30.4 billion hryvnia ($6.61 billion) budget surplus will be used to develop the agricultural and energy industries, shipbuilding, aviation and the upgrading of roads.

The government will continue with planned social spending and increase financing to prepare for the Euro 2012 soccer tournament, which will be co-hosted by Ukraine, Timoshenko said.

Yushchenko had invited Timoshenko, the head of central bank and the Ukrainian parliament speaker to meet on July 7 to agree on budget changes.

Source