Finance Blog number 1

New Zealand’s dollar reached its highest level since exchange-rate controls ended in 1985 after a report showed the nation’s trade surplus widened by almost twice economists’ estimates to a record in April.

The so-called kiwi has risen 8.8 percent against the greenback since Feb. 25, the second-best performer among 16 major counterparts, as Asian demand drove up prices for New Zealand’s milk, lumber and meat exports. Australia’s dollar touched a three-month low against its New Zealand counterpart amid signs the bigger nation’s economy is cooling.

“Resilience of the kiwi has been very impressive,” said Mitul Kotecha, Hong Kong-based head of global foreign-exchange strategy at Credit Agricole CIB, a unit of France’s second- biggest bank. “The numbers today from New Zealand are obviously helping out as the trade data was far stronger than the market had expected.”

The kiwi rose to as high as 82.19 U.S. cents before trading at 81.78 cents as of 3:41 p.m. in Sydney. It closed at 81.92 U.S. cents in New York on May 27. The previous record of 82.14 U.S. cents was established in February 2008.

Australia’s dollar was at $1.0684 from $1.0706 on May 27 in New York, after earlier rising to $1.0737, the highest since May 11. The currency was at NZ$1.3066 from NZ$1.3058 after touching NZ$1.3019, the weakest level since Feb. 2. The Aussie fell to 86.30 yen from 86.49 yen.

Commodities Driving Surplus

The New Zealand dollar’s gain makes its exports more expensive, hampering the nation’s economic recovery from two earthquakes in the South Island city of Christchurch that killed more than 180 people and caused an estimated NZ$15 billion in reconstruction costs. Prime Minister John Key told reporters in Wellington today that the kiwi was trading at “unsustainable levels” for non-commodity exporters.

The exchange rate was “more bearable” for the commodity sector because of high export prices, he said.

Exports outpaced imports by NZ$1.11 billion ($908 million) from a revised NZ$578 million surplus in March, Statistics New Zealand said today in Wellington. The median estimate in a Bloomberg News survey of economists was for a NZ$600 million surplus.

Prices of New Zealand’s commodity exports gained for an eighth month to a record in April, according to an index calculated by ANZ National Bank Ltd. Exports to China, New Zealand’s second-biggest export market after Australia, surged 42 percent to NZ$5.39 billion in the year ended March 31, government figures showed.

‘Rising Incomes’

“Rising incomes in the Asian region will generate a long- run demand for agricultural commodities, with the New Zealand economy better placed than most” as a supplier, Richard Grace, chief currency strategist and head of international economics at Commonwealth Bank of Australia, wrote in a note to clients May 27. “These developments will be reflected in a higher New Zealand dollar.”

The Aussie halted its two-day gain against the greenback as the statistics bureau in Sydney said that gross operating profits at companies declined 2 percent in the first quarter from the previous three months, when they dropped a revised 1.7 percent.

Weaker GDP

Australia’s Treasurer Wayne Swan said before a government report on gross domestic product this week that natural disasters in the nation probably cut more than 1 percentage point from economic growth in the first quarter.

Swan’s latest estimate was higher than one he made in April that put damage to GDP in the first quarter at 0.75 percentage point. The median estimate in a Bloomberg News survey of economists is for a 0.3 percent contraction from the final three months of 2010.

Gains in New Zealand’s dollar were limited as its 10-day relative strength index versus the U.S. dollar rose to 70.23, above the level of 70 that suggests an asset’s price has risen too fast and is poised to reverse course.

“The kiwi’s recent rise was rapid,” said Takuya Kawabata, a researcher in Tokyo at Gaitame.com Research Institute Ltd., a unit of Japan’s largest currency margin company. “It’s not surprising to see some correction.”

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Federal regulators are seeking to block VeriFone Systems Inc.’s proposed purchase of rival electronic-payment provider Hypercom Corp.

The Justice Department on Thursday filed a civil antitrust lawsuit in federal district court to stop the deal, warning it would harm competition in the market for point-of-sale terminals in the U.S. Such terminals are used by retailers and other firms to accept electronic payments with credit cards and debit cards.

VeriFone Systems announced plans to buy Hypercom in November in an all-stock deal valued at $485 million, including $65 million of debt.

Christine Varney, head of the Justice Department’s antitrust division, said that allowing VeriFone to buy Hypercom would likely drive up prices for point-of-sale terminals since the two companies together control more than 60 percent of the U.S. market for terminals used by the largest retailers.

Last month, Hypercom said it would sell its U.S. payment systems business to France’s Ingenico SA for $54 million in cash to alleviate antitrust concerns about the deal with VeriFone cash advance to savings account. Verifone would then acquire Hypercom’s networking products operations.

But that was not enough to satisfy the Justice Department since Ingenico is the only other significant provider of point-of-sale systems in the United States.

The sale of part of Hypercom’s business to Ingenico, the Justice Department said in a suit filed in U.S. District Court in Washington, D.C., would not create a new, independent competitor in the market and would make it easier for VeriFone and Ingenico to coordinate pricing for point-of-sale terminals.

“The proposed divestiture does not resolve the significant competitive concerns posed by the merger, and in some ways exacerbates them,” Varney said in a press release.

Verifone had no immediate comment. And Hypercom did not respond to requests for comment.

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China’s new home price growth slowed in Beijing and Shanghai in March as the government intensified property curbs, sending the property stock index to its highest in a year.

New home prices in the capital of Beijing rose 4.9 percent in March from a year earlier, easing from a 6.8 percent gain in February, the statistics bureau said on its website today. In Shanghai, the country’s financial hub, prices climbed 1.7 percent last month, down from 2.3 percent growth in February. Of the 70 cities monitored by the government, 67 cities posted gains, down from 68 in the first two months, the data showed.

The government said last week that its measures are working. About 40 cities said last month they will cap new home prices below annual economic and disposable per-capita income growth or keep them steady following the central government’s measures to rein in housing values. China also said yesterday it will raise banks’ reserve requirements starting April 21 to cool inflation, and central bank Governor Zhou Xiaochuan said monetary tightening will continue for “some time.”

“The turning point for home prices is getting closer and closer,” Shen Jian-guang, a Hong Kong-based economist at Mizuho Securities Asia Ltd., said in a phone interview. “The government is sending a strong signal to further tighten the liquidity and continue to control home prices.”

Challenges

Premier Wen Jiabao said last week in a cabinet meeting that the country faces challenges including rising property prices in many cities even as real estate transactions shrink. The government also raised the minimum down payment for second-home purchases this year and levied taxes on residences in Shanghai and Chongqing. Beijing and Guangzhou imposed restrictions on housing purchases in February, while the central bank raised interest rates twice this year.

The measure tracking property stocks on the Shanghai Composite Index rose 0.9 percent to the highest since April 16, 2010, at the 11:30 a.m. midday break. It also posted the biggest gain among the five industry groups on the benchmark gauge.

Home prices in Sanya on southern Hainan island fell the most by 0.6 percent last month from a year earlier. Nanchong in the western Sichuan province posted a 0.5 percent decline, while prices in Quanzhou in the country’s southeast were unchanged, the statistics bureau said.

‘Clear Sign’

New home prices in Beijing were unchanged in March from February, when they recorded a 0.4 percent month-on-month gain. In Shanghai, they added 0.2 percent in March, down from a 0.9 percent increase in February from the previous month. Of the 70 cities, 12 posted price declines in March from February, when only eight cities reported a drop in housing values, according to the data.

It’s a “clear sign that the market is cooling,” said Sun Mingchun, chief economist at Daiwa Securities Capital Markets in Hong Kong, adding that month-on-month data is more reflective of market trends. “Once we get higher bases and further price declines in the coming months, we should see year-on-year price changes turning negative in more and more cities.”

Existing home prices in Beijing fell 0.1 percent from February, while those in Shanghai jumped 0 low fee cash advance.4 percent.

China’s home sales value rose 26 percent in the first quarter to 860.7 billion yuan ($132 billion) from last year, driving all property transactions 27 percent higher to 1.02 trillion yuan, the statistics bureau reported last week.

Hot Money

Hot money inflows into the Chinese property market is creating bubbles in some cities, Jiang Jianqing, chairman of Industrial & Commercial Bank of China Ltd., the world’s largest bank by market value, said on April 15.

Moody’s Investors Service lowered its outlook for China’s property sector on April 14 to “negative” from “stable” on concern residential sales could decline by as much has 30 percent as local government enforce housing restrictions.

The effects of the government’s controls on the property market were evident in the first quarter, Sheng Laiyun, spokesman for the statistics bureau, said in Beijing on April 15. China’s investment in real estate rose 34 percent to 885 billion yuan in the first quarter, the government said last week.

“Property investment is still robust and we are seeing a mixed picture,” said Shen Minggao, Citigroup Inc.’s China research head. “It’s too early to draw a conclusion on whether the government curbs took effect. It might also be because these are lagging indexes.”

Mounting Concerns

The International Monetary Authority said April 11 that rapid credit growth has created “mounting concerns about the potential for steep corrections in property prices” in China.

Today’s figures came after private data showed the country’s housing market remained robust. China’s home prices rose 0.6 percent in March, expending gains, SouFun Holdings Ltd., operator of China’s biggest real estate website, reported on April 1.

There will be more government measures in the next month, Du Jinsong, a Hong Kong-based analyst for Credit Suisse Group AG, said in an interview with Bloomberg Television today.

“This is a wakeup call for some of those who are very bullish,” said Du, who predicted in November the government will introduce more property curbs. “That means the government will definitely come up with more measures.”

China Vanke Co., the country’s biggest publicly traded developer, said March contracted sales value fell 37 percent from a year earlier in 14 major cities including Shanghai, Beijing and Guangzhou.

“Local government implementation will be critical, and all developers are quite cautious and are focusing on getting presales early,” Christie Ju, head of Hong Kong and China research at Jefferies Equity Research, said in an e-mailed response to queries.

China stopped releasing national average property prices and changed methodology of the survey starting this year, the statistics bureau announced on Feb. 17.

–Bonnie Cao. Editors: Linus Chua, Malcolm Scott

To contact Bloomberg News staff for this story: Bonnie Cao in Beijing at +86-21-6104-3035 or bcao4@bloomberg.net

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Global stocks recovered Friday despite a fresh 30-month high in oil prices, as investors breathed a sigh of relief that a strong aftershock in Japan did not cause much damage.

The main source of relief was that there was no fresh damage at the Fukushima Dai-ichi nuclear power complex, where workers have been frantically trying to control overheated reactors since they lost cooling systems in last month’s tsunami.

Japan’s Nikkei 225 index led the advance, finishing up 1.9 percent at 9,768.08 _ its highest closing since the quake.

Shares of Tokyo Electric Power Co., which owns the Fukushima plant, soared 13.5 percent. The company, known as TEPCO, has been under intense pressure to stabilize the tsunami-damaged plant since it began leaking radiation. After weeks of struggling, workers finally managed to stop highly radioactive water from flowing into the Pacific Ocean on Wednesday.

The strong performance in Japan carried through into European trading, where the main indexes recouped losses recorded in the wake of the quake Thursday.

“After a weak close on Thursday, following another earthquake in Japan, stocks have bounced back strongly as it became clear this was not as bad as first feared,” said Anthony Grech, head of research at IG Index.

The FTSE 100 index of leading British shares was up 0.8 percent at 6,056 while Germany’s DAX rose 0.5 percent to 7,218. The CAC-40 in France was 0.8 percent higher at 4,060.

Wall Street was poised for a solid opening, too _ Dow futures were up 0.3 percent at 12,390 while the broader Standard & Poor’s 500 futures rose 0.4 percent to 1,333.

Investor sentiment remains fairly buoyant even though this week has seen interest rate increases from the European Central Bank and the People’s Bank of China, and confirmation that Portugal is looking to tap a European bailout fund.

The euro remained supported in the markets by the ECB’s decision Thursday to raise its main interest rate by a quarter percentage point to 1 bad credit payday advance.25 percent and expectations it will hike again, despite worries over Portugal.

The 17-nation currency posted a fresh 15-month high of $1.4422 on Thursday and by late morning was trading at $1.4404.

With scheduled economic news sparse, investors will be keeping a close watch on developments in Hungary, where finance ministers from the EU are gathering. Portugal’s bailout request is set to be the main topic of discussion.

In addition, investors will be monitoring news in the U.S., where a government shutdown is looking increasingly likely as the Democrats and Republicans struggle to agree to a budget agreement.

“The potential for unscheduled events to send markets ‘running for cover’ remains extremely potent, and with the U.S. budget deal clock standing at 1 second to midnight, and the EU summit likely to be hijacked by deliberations on a rescue package for Portugal, allied with the ongoing civil war in Libya, speculators will remain very nervous, and many long-term investors sidelined,” said Marc Ostwald, a strategist at Monument Securities.

The fighting in Libya was in fact dominating sentiment in the oil markets, as the country produces a little under 2 percent of the world’s daily oil output. Benchmark crude for May delivery was up $1.30 at $111.60 a barrel, the highest since September 2008, in electronic trading on the New York Mercantile Exchange.

Earlier in Asia, Hong Kong’s Hang Seng added 0.5 percent to 24,396.07, and South Korea’s Kospi was up 0.3 percent at 2,127.97.

Mainland Chinese shares edged higher with the benchmark Shanghai Composite Index closing up 0.7 percent to 3,030.02, and the Shenzhen Composite Index of China’s smaller, second exchange rising 1.15 percent to 1,285.99.

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Japan’s Nikkei stock index nose-dived more than 12 percent Tuesday as the earthquake-shattered country faced an unfolding nuclear crisis after a radiation leak was detected at a crippled power plant. Other Asian markets also tumbled.

The benchmark Nikkei 225 stock average sank a staggering 1,201.2 points, or 12.5 percent, to 8,422.21 in afternoon trading, extending losses of 6 percent Monday _ the first trading day since a devastating earthquake and tsunami struck the northeastern coast, washing away towns and killing more than 10,000 people.

The broader Topix lost 13 percent, while other Asian markets were sharply down, suffering a ripple effect.

The stock sell-off hit nearly every business sector, with electric companies under intense pressure again. The Tokyo Electric Power Co., which operates the crippled nuclear plant, was overwhelmed with sell orders and had yet to trade. Toshiba Corp., a maker of nuclear power plants, was also untraded.

Other companies with nuclear power-related businesses faced a second day of free-falling losses. Mitsubishi Heavy Industries tumbled 19 percent, Kobe Steel Ltd. dived 17 percent, and Hitachi Ltd. shed 8.5 percent. Cosmo Oil, whose refinery caught fire after the quake, slid by 18 percent.

Car makers declined partly because quake-stricken northeastern Japan is a major center for auto production, complete with a myriad of parts suppliers and a network of roads and ports for efficient distribution.

Major vehicle manufactures halted production after the quake, and their shares continued to capsize. Toyota Motor Corp., the world’s largest automaker, fell 11 percent. Honda lost 7.4 percent and Nissan dropped 10.2 percent. Mitsubishi Motors Corp. lost 14.4 percent and truck-maker Isuzu Motors Ltd. plunged 8.6 percent.

Fears about the safety of nuclear power weighed on the shares of companies involved in uranium mining. Energy Resources of Australia Ltd., one of the world’s largest uranium producers, fell 13.2 percent in Sydney.

Even the rare stocks that did well Monday _ industrial and materials companies, which gained due to expectations that they would benefit when Japan rebuilds _ tumbled Tuesday.

Japanese construction company Kajima Corp. dropped 19 percent and Nishimatsu Construction Co. Ltd. skidded 27.2 percent. Analysts said that while the Japanese economy remained virtually shut down, companies in China and elsewhere could fill the void.

Throughout Asia, investors fled stocks as the crisis in the world’s No. 3 economy seemed only to escalate. South Korea’s Kospi was down 3.4 percent to 1,903.21, and Australia’s S&P/ASX 200 fell 2.7 percent to 4,500.20.

Hong Kong’s Hang Seng index slumped 3.8 percent to 22,449.60, and mainland China’s Shanghai Composite Index lost 2.1 percent to 2,874.63.

On Wall Street Monday, concerns over the economic impact of the earthquake and tsunami in Japan led to a broad sell-off. The Dow Jones industrial average lost 51.24, or 0.4 percent, to 11,993.16.

The broader S&P index fell 7.89 points, or 0.6 percent, to 1,296.39. Nine out of the 10 sectors that make up the Standard and Poor’s 500 index lost ground. Utilities companies fell 1.4 percent, the most of any group.

The Nasdaq composite dipped 14.64, or 0.5 percent, to 2,700.97.

Benchmark crude for April delivery dropped $1.90 to $99.29 a barrel on the New York Mercantile exchange. The contract added 3 cents to settle at $101.19 on Monday on the Nymex.

The dollar was worth 81.52 Japanese yen Tuesday, down from 81.88 yen late Friday. Major natural disasters like earthquakes tends to bolster the yen because investors expect the Japanese public and insurance companies to buy back their home currency in order to fund the country’s reconstruction, increasing demand for the yen.

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In some quarters, a German firm’s takeover of the New York Stock Exchange is being portrayed as a harbinger of American decline. It may, instead, be a sign of strength.

If you’re troubled by this deal, watch closely the next time a TV reporter does a live shot from the exchange floor. Do you see much activity?

“It looks emptier than a dead mall,” says Michael Alderson, a professor of finance at St. Louis University. “Twenty years ago, it looked like the Galleria on the day before Christmas. Geography doesn’t matter in a world of electronic trading.”

Electrons certainly don’t care whether they’re moving through wires owned by Deutsche Börse, by an American company called NYSE Euronext or, as the exchange was structured until a 2005 reorganization, by a clubby group of Wall Street insiders.

New York hasn’t lost its relevance as a financial center, but the NYSE is no longer the hub of world financial activity. For decades, big companies like Microsoft and Cisco Systems haven’t wanted or needed an NYSE listing.

Even for stocks that the NYSE does list, most of the trading happens elsewhere. “The volume done on the exchange itself is just about 20 percent of the total volume,” notes Scott Marcouiller, chief technical market strategist at Wells Fargo Advisors. “The rest of it has gone to various electronic sytems.”

Those are run by companies like BATS Global Markets in Kansas City and Direct Edge in Jersey City, N.J. But, again, geography doesn’t matter.

In the big picture, the exciting action isn’t even in stock trading. It’s in derivatives.

Whole categories of derivatives that used to be traded bank to bank, such as credit-default swaps, must be cleared through an exchange to comply with new U.S. financial regulations. NYSE Euronext wants to compete in that arena, and its merger with Deutsche Börse will create the world’s largest futures exchange. That will make it a formidable competitor against other derivatives players like CME Group in Chicago and ICE in Atlanta.

If you want to worry about something, worry about the fact that our weak currency gives European firms an advantage in bidding for U.S. businesses. Worry about whether regulations make it too expensive for American firms to raise capital, but don’t worry about who owns a prominent patch of Wall Street real estate.

“It reminds me of the ’80s, when we were all worried that the Japanese were taking over because they were buying Pebble Beach and Rockefeller Center,” Marcouiller says. That scare was short-lived, and in fact was a symptom of a bubble economy back in Japan.

More importantly, the nothing’s-sacred nature of our financial system is actually what makes America great.

“I call it financial Darwinism,” Marcouiller says. “They (NYSE Euronext) can get on this train that’s speeding faster globally, or they can walk alone and be left far behind.”

Capitalism doesn’t work like that everywhere. When prominent companies in Spain or France or Brazil are threatened with a takeover, political leaders talk seriously about the need to preserve and protect a “national champion.”

Here, we may wax nostalgic about the exchange that was founded under a Manhattan buttonwood tree in 1792, but we also know that nostalgia isn’t good economic policy. If the electrons don’t care who owns the wires and computers that make up a global securities market, then neither should we.

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Stocks were mixed in early trading Monday, the same day that President Obama unveils his budget proposal for the next fiscal year.

Obama is sending Congress a $3.73 trillion budget that includes a five-year freeze on many domestic spending programs. Republicans and Democrats have argued recently over whether deep spending cuts will slow the economy’s slow recovery.

Bond prices held steady after some of the details of the budget proposal were revealed. The yield on the benchmark 10-year Treasury note was 3.64 percent, unchanged from late Friday. A jump in Treasury bond prices could suggest that investors see U.S. debt as increasingly risky.

The Dow Jones industrial average fell 20 points, or 0.2 percent, to 12,253 in early trading. The S&P 500 rose less than a point to 1,329. The Nasdaq composite gained 4 points, or 0.2 percent, to 2,814. .

MGM Resorts International Inc. fell 3.3 percent after reporting a loss of $139 million last quarter, a little less than analysts had expected. Wal-Mart Stores Inc. lost 1 percent after analysts at JPMorgan downgraded the company.

Stocks ended last week with a moderate gain Friday after the resignation of Egyptian president Hosni Mubarak. The Dow rose to its highest close since June 2008.

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Bank of America has agreed to pay $410 million to settle a federal lawsuit alleging the bank charged excessive overdraft fees.

The suit is one of several filed against several banks from plaintiffs in 14 states, which were consolidated in a federal court in Florida. Other banks named in related suits include Wells Fargo and Citibank.

The nation’s largest bank said in a court filing Friday that it has reached a memorandum of understanding to settle the claims in the suit by paying $410 million. The settlement is subject to court approval.

Consumers alleged the bank processed the payments in a way that caused more overdrafts.

Customers pay overdraft fees when they spend more money than remains in their accounts business card. The fees can reach $35 apiece. Before federal law changed this summer, banks frequently charged overdraft fees on numerous transactions in a single day.

Anne Pace, a spokeswoman for the Charlotte, N.C., bank, said Saturday that BofA is “pleased to reach a fair resolution” to the case. BofA has already has addressed many related customer concerns, she said.

Wells Fargo is appealing a $203 million judgment in a separate California case.

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U.K. mortgage approvals fell to the lowest level since March 2009 last month as demand for housing weakened amid cold weather and the prospect of the government’s fiscal squeeze.

The number of home loans fell to 40,000 from 45,000 in November, the Bank of England said in London today, citing data from six banks. The value of loans fell to 8.9 billion pounds ($14.2 billion), with net lending dropping to 800 million pounds, the lowest since records began in January 2009.

Recent data have shown a mixed picture of the U.K. housing market as the government steps up spending cuts and increases the sales-tax rate, undermining consumer confidence. A separate release from the Council of Mortgage Lenders showed gross mortgage lending fell 6 percent in December on the month.

“Lenders reported that housing market activity remained subdued, partly reflecting a weakening of house prices and potential impacts on incomes from fiscal consolidation,” the central bank said in its report. “Lenders expected both housing market activity and gross lending for house purchase to be broadly flat in 2011, with house prices expected to be little changed or to decline slightly.”

The pound was little changed against the dollar today and traded at $1.5903 as of 11:09 a.m. in London. Data from the Office for National Statistics showed retail sales dropped the most ever for a December as snowfall and higher prices undermined Britons’ holiday shopping.

Housing Demand

A British housing-market gauge stayed close to an 18-month low in December as cold weather hurt demand and fewer people put their properties on the market, the Royal Institution of Chartered Surveyors said on Jan. 18. Hometrack Ltd. said on Jan. 12 that banks won’t increase mortgage lending this year as tougher regulation and a lack of funds curb access to credit.

The CML report showed gross mortgage lending was at 11 billion pounds last month, the weakest since 2000. Mortgage approvals are at less than half the level seen at the peak of the market in 2007, according to Bank of England data.

The central bank said today the U.K.’s largest lenders indicated that while the number of home loans granted in December was “little affected” by cold weather, mortgage applications were “affected somewhat.”

Policy makers held the key interest rate at a record low of 0.5 percent this month and bond-purchase program at 200 billion pounds as they assessed signs the economic recovery is slowing.

The mortgage-approvals data published today are based on reports from Banco Santander SA, Barclays Plc, HSBC Holdings Plc, Lloyds Banking Group Plc, Nationwide Building Society and Royal Bank of Scotland Group Plc. The banks accounted for 75 percent of U.K. home loans granted at the end of November.

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The Department of Homeland Security canceled Boeing’s border fence program Friday, putting an end to a five-year-long project plagued by delays and technical problems.

The Secured Border Initiative Net, or SBI Net, is a network of ground tower-mounted sensors, cameras and radars that President George W. Bush’s administration backed five years ago as a security measure.

It was originally envisioned to stretch the 1,969-mile U.S.-Mexican border, but initial phases of the $1 billion project took longer than anticipated to complete and covered just a small portion, 53 miles in Arizona, since the project began.

In a statement Friday, Homeland Security Secretary Janet Napolitano said SBI Net “cannot meet its original objective of providing a single, integrated border security technology solution.”

The program was part of Boeing’s St. Louis County-based defense unit, but the termination of the contract is not expected to affect local jobs.

Homeland Security will use the technology gleaned from SBI Net to develop a plan costing less than $750 million that will cover the remaining 323 miles of the Arizona border, according to an assessment the Homeland Security agency sent to Congress on Friday.

“There is no ‘one-size-fits-all’ solution to meet our border technology needs, and this new strategy is tailored to the unique needs of each border region, providing faster deployment of technology, better coverage, and a more effective balance between cost and capability,” Napolitano said in the statement.

Boeing wouldn’t comment on whether it will bid on the new program proposed by the Homeland Security cash advance.

“It’s really too early to speculate about that,” said Deborah Bosick, Boeing SBI Net’s spokesperson. “They haven’t come out with their requirements yet.”

In a statement, Boeing said it appreciated Homeland Security’s recognition of “the value of the integrated fixed towers Boeing has built, tested and delivered so far.”

“We are proud of the accomplishments of our team and of the unprecedented capabilities delivered in the last year that provide Border Patrol agents increased safety, situational awareness and operational efficiency,” the statement continued. “Boeing remains committed to providing valuable solutions and supporting DHS.”

Loren Thompson, a defense analyst at the Lexington Insitute, a Lexington, Va.-based think tank, said the news wasn’t unexpected but is a setback for Boeing, which has sought to diversify in recent years.

“This is a big disappointment for Boeing,” Thompson said. It really won’t have an impact on the company’s financial results, “but it was a new line of business they were hoping to expand into.”

Boeing sought to diversify as its sales of military planes dropped in recent years.

Despite the project’s cancellation by Homeland Security, Boeing won’t abandon efforts to build its border security and surveillance systems business, he said.

The Houston Chronicle and Bloomberg News contributed to this report.

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