Finance Blog number 1

The U.S. Department of Commerce’s Economic Development Administration has awarded Jacksonville $1.32 million in federal funding to repair Lake Fretwell.

The investment will fund repairs and expansion of Lake Fretwell, an existing storm water retention facility located at the former Cecil Field Naval Air Station. The storm water retention lake was damaged by flooding from Tropical Storm Fay in 2008.

The improvements to the lake will allow a major expansion of Cecil Commercial Park to create future jobs and attract private investment. The project will also protect residential neighborhoods downstream, prevent roadway and property flooding damage such as occurred in 2008, and stop further erosion of the lake’s levy.

Source

Stocks got pummeled Thursday, with the Dow, Nasdaq and S&P 500 losing enough to fall into "correction territory" - marked by a drop of more than 10% off the rally highs.

Worries about how the European debt crisis and slump in the euro will impact the global recovery fueled the selling, extending the month-long declines.

The Dow Jones industrial average (INDU) fell 376 points, seeing its biggest one-day point loss since February 10, 2009. Thursday’s point loss was equivalent to 3.6%, the biggest one-day percentage loss since March 5 of 2009.

The loss was bigger than that in the so-called "flash crash" earlier this month in which the Dow lost nearly 1000 points during the session, but ended up closing down just shy of 348 points or 3.2%.

The Nasdaq (COMP) fell 94 points, seeing its biggest one-day point loss since December 1, 2008. The point loss Thursday was equivalent to 4.1%, its biggest one-day percentage loss since Feb. 17, 2009.

The S&P 500 (SPX) declined 43 points, its biggest one-day point loss since January 20, 2009. It was equivalent to a percentage loss of 3.9, the S&P’s worst since April 20, 2009. Thursday’s point and percentage drops for the Nasdaq and S&P were bigger than those made on the day of the flash crash.

The CBOE Volatility index, the VIX (VIX), Wall Street’s fear gauge, spiked 30% to a 14-month high of 45.48.

Stocks slumped in the morning, trimmed losses in the afternoon as the euro turned positive and then resumed the selling, ending just above the lows of the day. The afternoon selloff intensified after the Wall Street reform bill cleared a key hurdle in the Senate. The bill is expected to pass the Senate. Investors also kept an eye on the escalating conflict between North Korea and South Korea.

After weeks of selling, all three major gauges are now officially in a "correction," technically defined as a loss of more than 10% from the rally highs. The Dow is now down 10.2% from its April 26 high, the S&P 500 is down 12% from its April 23 high and the Nasdaq is down 12.9% from its April 23 high. The Nasdaq was already in a correction prior to Thursday’s selloff.

The correction does not reflect any change in the fundamentals of the U.S. economy or corporate profit outlook, but rather a confluence of events, said Timothy Ghriskey, chief investment officer at Solaris Asset Management.

"I don’t think people are worrying about a double-dip recession in the United States," Ghriskey said. "But there is uncertainty about Europe’s economy and the sustainability of the euro."

In addition to being in a correction, the S&P 500 closed below the 200-day moving average, a key technical level market pros monitor. These events tend to have a big impact one way or the other on market direction, Ghriskey said.

Falling below these technical levels could put a floor under the selling, said Steven Goldman, market strategist at Weeden & Co. He said investors may be better able to tolerate all the uncertainty about Europe when the market has pulled back from the 2010 highs.

"If we are still in a bull market, these might be levels where someone would want to get in," he said. "But we’ve done a lot of damage technically and the pendulum hasn’t swung yet to where we’re seeing a healing."

Beyond the reaction to the immediate headlines, the stock market may have already been vulnerable to selling, said Brett Hammond, chief investment strategist at TIAA-CREF no credit check payday loans.

"The European debt issues and the euro are very important," he said. "But the market was already poised for a pullback after the enormous run up in the stock market since March of 2009."

He said that the historic rally was partly fueled by anticipation that an economic and corporate profit recovery would take hold and that the consumer would take over from the government as an engine of growth. While some of that has happened, market participants may have been betting on a bigger comeback.

Market breadth was negative. On the New York Stock Exchange, losers beat winners 19 to one on volume of 2.13 billion shares. On the Nasdaq, decliners beat advancers 11 to 1 on volume of 3.37 billion shares.

Euro: The euro was little changed versus the dollar after falling in the morning and gaining through the late afternoon. The euro has seesawed over the last few days after plunging to a four-year low of $1.2234 on Monday. The dollar fell 0.2% versus the yen, erasing bigger morning losses.

Economy: Reports on jobless claims and leading economic indicators (LEI) disappointed, while the Philadelphia Fed index, a regional reading on manufacturing, topped forecasts.

The number of Americans filing new claims for unemployment rose last week to 471,000 from 446,000 the prior week. Economists surveyed by Briefing.com expected claims to fall to 439,000.

Continuing claims, the number of Americans who have been receiving benefits for a week or more, fell to 4,625,000 from 4,665,000 in the previous week. Economists thought claims would fall to 4,600,000.

After the start of trading, the Conference Board released its index of leading economic indicators. LEI fell 0.1% in April after rising 1.3% in March. The index was expected to have risen 0.2%.

The Philadelphia Fed index rose to 21.4 in May from 20.2 in April, topping predictions for a rise to 20.7.

After the mini-crash: New rules continue to be proposed in the wake of the May 6 stock market selloff, in which erroneous trading in hundreds of issues created a panic that dragged down the broad market. Since then, most of the trades have been cancelled, but regulators remain unclear as to what exactly caused the selloff.

Out-of-control computer trading may have caused the slump, Securities and Exchange Commission chairwoman Mary Schapiro told a Senate panel Thursday.

On Tuesday, the SEC proposed new rules that would impose circuit breakers, or a temporary pause, on individual stocks that experience extreme swings. There are already circuit breakers in place for the broad markets, but this would impact individual stocks.

World markets: Markets in Europe slumped, as the euro continued its slide versus the dollar. The British FTSE 100 fell 1.7%, the German DAX lost 2% and the French CAC 40 fell 2.3%.

Asian markets tumbled. The Japanese Nikkei fell 1.5%, while the Hong Kong Hang Seng fell 0.2%.

Commodities: U.S. light crude oil for June delivery fell $1.86 to settle at $68.01 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $4.50 to settle at $1,188.60 an ounce.

Bonds: Treasury prices rallied, lowering the yield on the 10-year note to 3.24% from 3.36% late Wednesday. Treasury prices and yields move in opposite directions. 

Source

Charlie Dooley may not like the idea of a casino in north St. Louis County, but that’s not stopping the people who want to build one.

The day after the St. Louis County executive made public his opposition to the proposal to build a $350 million casino just south of the Columbia Bottoms Preservation Area, the developers’ attorney said his group plans to plow ahead regardless.

The site, in Spanish Lake along the Mississippi, is a good spot for Missouri’s 13th casino, said Ed Griesedieck, lawyer and spokesman for North County Development LLC. And it’s in a part of the region that sorely needs the jobs a casino would bring.

"Mr. Dooley spells out that he has a vague notion that people don’t want this," Griesedieck said Wednesday. "I think that comment is not in touch with the tens of thousands of out-of-work workers in that area."

Local environmentalists have argued that the project would harm fragile wetlands by the confluence of the Missouri and Mississippi, and on Tuesday, Dooley said he agreed. But Griesedieck notes that the project was previously zoned for industrial use and is not in a conservation area, just near one.

"There needs to be a distinction there," he said.

The project has strong support from labor unions and some elected officials. But it also has met with vocal opposition from various corners.

Dooley presented his stance in a letter to the Missouri Gaming Commission, which will ultimately decide where to put the casino. A "no" vote from the county executive would likely weigh heavily in their thinking.

Griesedieck said his group — which includes Madison County attorney Brad Lakin and Argo Products owner Kenneth Goldstein, among others — will try to prevail on Dooley to change his mind.

"We hope he reconsiders," he said.

Source

A "Smart TV" breakthrough is reportedly ready to be launched this week by Google Inc. Intel Corp. and Sony Corp.

Search giant Google (NASDAQ:GOOG) and chip giant Intel (NASDAQ:INTC) will unveil a deal to bring Web services to Sony's televisions at Google's annual developer conference this week in San Francisco, the Financial Times reported.

Central to the effort are the Android operating system from Google and the Atom microprocessor from Intel.

The Santa Clara chipmaker's CEO, Paul Otellini hinted at what is to come in remarks to analysts last week. "The revolution we're about to go through is the biggest single change in television since it went color."

Electronics manufacturer have been scrambling to find ways to integrate the Web with TVs, Blu-ray players and settop boxes. At their annual show in Las Vegas in January, a host of new equipment and services were announced including movies from Los Gatos-based Netflix Inc. (NASDAQ:NFLX), Internet radio from San Francisco-based Pandora Inc., and social networking from San Francisco-based Twitter Inc. and Palo Alto-based Facebook Inc.

The Android OS could be very attractive to equipment makers if it gives them a way to generate money from online advertising, Google's main money maker.

"Consumer electronics manufacturers want a piece of this pie and Google is the player in this very crowded space that can immediately offer them revenue share," Kurt Scherf, principal analyst at research firm Parks Associates, told the Financial Times.

Source

Aryx Therapeutics Inc. lost $6.4 million in the March quarter, down from a loss of $9.8 million a year earlier.

The Fremont drug business (NASDAQ: ARYX), which cut itself down to 17 workers in February, had no revenue during the quarter. It also had no revenue a year ago in the first quarter.

Since it started, Aryx has accumulated a deficit of $193,499,000. Drug companies often run up big deficits while seeking and testing possible treatments.

At quarter’s end, Aryx had $6.3 million in cash and near money. That’s just enough money to operate until September.

Aryx has hired investment bank Cowen to help it figure out its future.

Source

Henry Paulson and Timothy Geithner, two key players in the government’s bailout of the financial system, said Thursday that steps should be taken to shed light on the darker corners of Wall Street in order to prevent another crisis from happening.

Paulson, who was Treasury Secretary at the height of the 2008 financial meltdown, and his successor, Geithner, who was president of the Federal Reserve Bank of New York at the time, both testified before the Financial Crisis Inquiry Commission in Washington.

The commission, which is holding a series of hearings this year to investigate the causes of the crisis, is probing unconventional and lightly regulated lending practices known as "the shadow banking system."

"The lesson of this crisis, and of the parallel financial system, is that we cannot make the economy safe by taking functions central to the business of banking, functions necessary to help raise capital for businesses and help businesses hedge risk, and move them outside banks, and outside the reach of strong regulation," " Geithner said in prepared remarks.

Geithner said the parallel, or shadow, banking system grew rapidly over the last few decades, reaching about $8 trillion in assets at its peak and rivaling the traditional banking system.

But the nation’s regulatory framework, which is designed to limit excessive-risk taking in a traditional setting, did not keep pace with the innovations in the shadow banking system, he said.

As the crisis intensified, Geithner added, the system became instable and investors panicked. In response, the government implemented "aggressive policy measures" to avert a second Great Depression, he said.

"This was a pure failure of market discipline," said Geithner, referring to the rapid buildup of risk in the shadow banking system. If regulators had broader authority to curb risky bank behavior, "such a large emergency response would not have been necessary."

"That is a key reason why financial reform is necessary," he said.

The Senate on Wednesday took a major step forward in the push to create a Wall Street reform package by approving a bipartisan deal to unwind big financial firms that are considered too big to fail. But lawmakers are still debating a number of other proposals, including new rules for the derivatives market and new consumer protections.

While Paulson’s testimony echoed many of Geithner’s comments, the former Treasury Secretary and Goldman Sachs alum cautioned against over-regulating the non-traditional banking system.

The shadow banking system, which he described as large credit and capital markets, helps provide short and long-term funding for municipal governments, corporations and individuals savings account payday loans. These credit markets "have greatly benefited our nation, spurring growth and prosperity at all levels of our economy," he said.

Paulson acknowledged that the system was marred by "global excesses and regulatory flaws," but he said lawmakers should not throw the baby out with the bathwater.

"In our haste to deal with the flaws in the non-bank financial system, we should not move ourselves back to a system of consolidated, monolithic commercial banks," said Paulson.

Still, Paulson identified four areas where tighter regulation is needed, including securitization, commercial paper, derivatives and money market mutual funds.

Paulson also took the opportunity to offer his explanation of the factors that led up to the crisis. He said the housing bubble, at the heart of the problem, was exacerbated by government policy and irresponsibility on the part of both borrowers and lenders, namely Fannie Mae and Freddie Mac.

But the crisis was also rooted in imbalances in global capital flows, over-leveraged financial institutions, poor consumer protection and "an archaic and outmoded financial regulatory system," he said.

"Many mistakes were made by all market participants, including financial institutions, investors, regulators, and the rating agencies, as well as by policy makers," said Paulson.

He supported the steps policy makers have taken to safeguard the system, but added that risks remain. "A number of the root causes are not being addressed and remain sources of danger to our country," Paulson said.

The testimony came one day after the commission heard from former Bear Stearns executives, including the former chief executive, James Cayne, who argued that the failure of the Wall Street bank was due to market volatility, spurred by unfounded speculation, and not risky behavior.

In his comments Thursday, Geithner said Bear Stearns and Lehman Brothers, two of the main casualties of the crisis, were among the main players in the market for overnight repurchase, or "repo," agreements, asset-backed commercial paper and other structured investment vehicles that make up the shadow banking system.

Bear Stearns was crippled in March 2008 as investors and creditors fled the bank amid fears about its exposure to risky mortgage-backed securities. The investment bank was bought by JPMorgan for about $2.2 billion, or $10 a share, in a fire sale orchestrated by the government.

Lehman Brothers, meanwhile, became the largest bank failure in history when it succumbed to losses in September 2008. 

Source

Emerson Electric Co., the electrical products maker seeking to acquire Chloride Group Plc, fell the most in more than a year after second-quarter sales trailed estimates and data showed Chinese manufacturing was slowing.

Ferguson-based Emerson dropped $3.44, or 6.4 percent, to $50.18 in New York Stock Exchange composite trading, the biggest percentage decline since Feb. 17, 2009. The shares have gained 18 percent this year.

Revenue for the quarter was $5.14 billion, compared with an average estimate of $5.22 billion from 12 analysts surveyed by Bloomberg. Net income climbed 8.6 percent to $405 million, or 53 cents a share, from $373 million, or 49 cents, a year ago.

"Revenues came in light, which is different than most diversified industrials," Joel Levington, a managing director of corporate credit for Brookfield Investment Management Inc. in New York, said in an e-mail. Concern that Chinese manufacturing is slowing pulled some stocks lower, "and China has been an area of growth," he said.

Emerson last week made a $1.1 billion (723 million pound) offer to buy Chloride, Britain’s largest maker of backup power equipment, to expand its network power division.

Ferguson Chief Executive David Farr declined to discuss Emerson’s efforts to acquire Chloride, citing U.K takeover panel rules, on a conference call with analysts Tuesday.

"We are investing in the emerging markets, we are investing in new products, and we are positioning ourselves for what I would call a slow, steady recovery," he said.

Source

CHARLESTON, W.Va. — The federal government says it has conducted surprise inspections at 57 problem coal mines across the country in hopes of preventing another explosion like the one that killed 29 miners in West Virginia.

Investigators suspect methane gas and coal dust in the April 5 blast at Massey Energy’s Upper Big Branch mine.

The Mine Safety and Health Administration said Wednesday that the weekend inspections targeted mines known to have problems with methane. Inspectors also went to mines known for allowing too much coal dust to pile up as well as those with ventilation problems.

The agency says it sent 275 inspectors on the raids that included 23 mines in West Virginia and 14 in Kentucky. The rest were scattered across the country.

The agency did not say how many citations it issued.

Three Peabody Energy Corp. mines were among those inspected. They included the company’s Willow Lake mine in Saline County, Illinois, as well as the Air Quality No. 1 mine in Indiana and Twentymile mine in Colorado.

Other Illinois mines that were part of the inspection blitz were Tri County Coal LLC’s Crown III mine in Macoupin County and American Coal Co.’s Galatia mine in Saline County.

Jeffrey Tomich of the Post-Dispatch contributed to this report.

Source