Finance Blog number 1

Facebook co-founder Eduardo Saverin has renounced his U.S. citizenship, a move expected to save him hundreds of millions of dollars in taxes stemming from the company’s impending initial public offering.

The Brazil-born 30-year-old became a U.S. citizen in 1998 but has lived in Singapore since 2009. Giving up his citizenship will allow him to avoid paying taxes on billions of dollars of capital gains when Facebook launches its IPO Friday. Singapore does not have a capital gains tax.

Saverin gave up his citizenship in the first quarter of this year, the U.S. Internal Revenue Service said.

“Eduardo recently found it to be more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” Saverin’s New York-based spokesman Tom Goodman said Tuesday in a statement.

Goodman said that because Saverin plans to invest in Brazilian and global companies that have strong interests in entering Asian markets, “it made the most sense for him to use Singapore as a home base absolutely free credit score.”

Saverin has a 4 percent stake in Facebook, which has headquarters in Menlo Park, California. Analysts say the company could be worth $100 billion.

Saverin, who moved to the U.S. from Brazil in 1992, founded Facebook with Mark Zuckerberg in 2004 while the two were students at Harvard University. Saverin gained additional fame when his conflict with Zuckerberg and departure from the company was depicted in the 2010 movie “The Social Network.”

Source

Get free instant insurance rates for universal, whole, variable and term life insurance from the nation's leading Insurance companies.

Greek President Karolos Papoulias will today take on the task of trying to persuade political leaders to form a government and avert a new election amid mounting concern the country may leave the euro area.

Evangelos Venizelos, the socialist Pasok leader, will return the third, and final, mandate to form a government to Papoulias at a meeting in Athens today, after Alexis Tsipras, the leader of the biggest anti-bailout party, Syriza, turned down an appeal to join a unity government.

Tsipras

Get Fast Cash Loans upto $1500 in 1 Hr. Bad Credit Ok.Apply.

JPMorgan’s surprise $2 billion trading loss prompted a sell-off in financial stocks Friday, but the broader market rose as investors decided this was a problem for investment banks and not other industries.

The Dow Jones industrial average rose 31 points in morning trading after bouncing back from a 76-point decline. The Standard & Poor’s 500 index rose four points to 1,362. The Nasdaq composite index, which is heavily weighted with technology stocks, was up 20 points at 2,954.

Financial stocks in the S&P fell 1 percent, while the other nine industry groups rose. For that, the other investment banks could thank JPMorgan, America’s biggest bank. The stock plunged 8 percent, dragging other banks with big Wall Street operations down with it. Morgan Stanley fell 4.3 percent and Goldman Sachs fell 3 percent.

Retail-focused banks fared better. Bank of America and Wells Fargo each declined just 0.3 percent.

JPMorgan’s blunder comes in the midst of a political battle over how closely to regulate banks, though JP Morgan’s CEO Jamie Dimon said the trades would not have been affected by the so-called Volcker rule, expected to take effect this summer. Still, the $2 billion loss is sure to be used as ammunition by those pushing for tighter regulation of investment banks.

Tech stocks did well. Intel rose 1.8 percent after it told analysts that it is on track to meet sales expectations. Tech investors were relieved to hear that one day after Cisco Systems prompted selling in tech shares by being pessimistic about sales. Microsoft shares rose 2 percent. Semiconductor maker Nvidia jumped 8.6 percent, the most in the S&P 500, after reporting revenue that was higher than analysts were expecting.

Consumer discretionary stocks were also up. Retailer Bed Bath & Beyond jumped 4.5 percent, one of the biggest gains in the S&P 500 index, and video streaming and DVD-by-mail company Netflix rose 6.6 percent.

Also Friday, the Labor Department said that the producer price index, which measures price changes before they reach the consumer, dropped 0.2 percent last month. It was the first decline since December and the biggest drop since October. Declines were driven by gas and energy prices. That’s good news for consumer spending.

Separately, a closely watched measure of consumer confidence from the University of Michigan released Friday morning was better than analysts had expected. The index was at its highest level since January 2008.

Crude and gasoline futures slid again. Oil fell 44 cents to $96.64 per barrel. Gold prices fell a half-percent to $1,587.70 per ounce.

European stocks were mixed. France’s CAC 40 index fell 0.3 percent, but Britain’s FTSE 100 rose by the same percentage and Germany’s DAX rose 0.7 percent. Borrowing costs for Germany and France fell, while costs for Italy and Spain rose as investors remain focused on Greece, where another general election is expected for next month following the failure of attempts to form a government.

Source

U.S. job growth slumped in April for a second straight month. It pointed to a steadily growing but still sluggish economy that could tighten the presidential race.

A drop in the unemployment rate wasn’t a necessarily a healthy sign for the job market. The rate fell from 8.2 percent in March to 8.1 percent in April. But that was mainly because more people gave up looking for work.

People who aren’t looking for jobs aren’t counted as unemployed.

The 115,000 jobs added in April were fewer than the 154,000 jobs created in March, a number the government revised up from its first report a month ago of 120,000. It also marked a sharp decline from December through February, when the economy averaged 252,000 jobs per month.

The percentage of adults working or looking for work has fallen to its lowest level in more than 30 years. Many have become discouraged about their prospects.

___

Here’s what The Associated Press’ reporters are finding:

___

TEPID ECONOMY, TEPID HIRING

Over time, strong economic growth is vital for strong job growth.

But early this year, hiring accelerated much faster than economic growth did. Job gains averaged a strong 229,000 in the first three months. But the economy grew at a sluggish annual rate of 2.2 percent.

Economists began to wonder: Would growth catch up with hiring? Or would hiring slow to match economic growth (as measured by gross domestic product, or GDP)?

Some economists say April’s disappointing job growth suggests an answer, and it’s not a cheerful one:

“It now appears that jobs have decelerated into line with GDP, rather than GDP accelerating to catch up with jobs,” said Nigel Gault, an economist at IHS Global Insight.

___

REVISING HISTORY

The job market seems to look better with hindsight.

The Labor Department has revised job growth upward for 10 straight months _ and for 18 of the past 21. Over the past 10 months, it’s added 413,000 jobs to the original estimates.

The job figures are revised twice. They’re updated in the two months after they first come out. And they’re revised again in an annual update meant to capture updated employment data from the states.

History shows that the updated totals typically follow the trend in job creation: When the economy is creating jobs consistently, the revisions tend to be positive. Months of job losses typically lead to negative revisions.

___

THE POLITICAL DEBATE

A falling unemployment rate would seem to be good news for President Barack Obama’s re-election hopes. Dating to 1956, no incumbent president has lost when unemployment fell in the two years leading to an election.

On Election Day, unemployment will almost surely be less than it was two years earlier: 9.8 percent in November 2010.

But for the past two months, the rate has fallen for the wrong reason: More than 500,000 Americans have stopped looking for jobs and are no longer counted as unemployed business card. Job growth averaged a healthy 252,000 from December through February. It slowed to 135,000 in March and April.

The question is whether voters will focus more on the falling unemployment rate (good for Obama) or the modest job growth (not so good).

___

A JAB FROM ROMNEY

Mitt Romney seized on the latter. He noted that the declining number of people seeking work explains the drop in the unemployment rate.

“This is way off from what should be happening in a normal recovery,” Romney said on Fox & Friends. “You have more people dropping out of the work force than you have getting jobs.”

“This is not progress,” Romney said.

___

DISAPPEARING WORKERS

The percentage of Americans 16 and older working or looking for work is now 63.6 percent, the lowest since 1981. For men, the so-called “labor force participation rate” is 70 percent. That’s the lowest since the government started keeping records in 1948.

The rate peaked at 67.3 percent in early 2000 as women poured into the workplace. Since then, it’s turned south. Demographic and social trends help explain the drop: Baby boomers are aging and retiring.

And more women, especially in upper-income families, are staying at home. The drop in participation accelerated after the economy slid into recession in late 2007. The tough job market led many to give up looking for work.

___

   SOUR INVESTORS

The stock market didn’t take Friday’s news well.

The Dow Jones industrial average sank 132 points, or 1 percent, in late-morning trading. The broader Standard & Poor’s 500 index fell 1.4 percent.

   Investors were a lot happier earlier this week. They sent the Dow to its highest close since December 2007.

   Technology stocks and banks led the market lower Friday. Utility companies were the only broad category of stock in the S&P 500 index trading higher. They tend to fare well when investors grow nervous about the economy.

___

NO SURPRISE TO BERNANKE

One person not likely surprised by the sluggish hiring in April: Ben Bernanke.

The Federal Reserve chairman has cautioned for months that the spike in hiring at the start of the year didn’t match the economy’s more modest growth.

His Fed colleagues probably agree. Their latest forecasts show that even under a best-case scenario, unemployment will be at least 7.3 percent in late 2013. Historically, a normal rate would range between 5 percent and 6 percent.

Most analysts expect the Fed to keep its key interest rate at a record low near zero well into 2013, if not later. But few think hiring has weakened enough to trigger a third round of bond buying to help lower long-term rates and encourage more lending.

Source

U.K. services, manufacturing and construction probably waned this month as Bank of England policy makers prepare to discuss whether they need to extend stimulus after the economy slipped back into recession.

A gauge of factory activity based on a survey of purchasing managers will fall to 51.5 from 52.1 in March, according to the median estimate of 27 forecasts in a Bloomberg News poll. A reading above 50 indicates expansion. An index of services, the largest part of the economy, will decline to 54.1 from 55.3, while a construction measure will also fall, separate surveys of economists show.

U.K. gross domestic product fell in the first quarter, pushing the economy into its first double-dip recession since the 1970s. While Bank of England officials have said that may hurt confidence, they must balance that risk with the threat from faster-than-targeted inflation at their May 9-10 meeting.

UPDATED throughout at 7 p.m. 

ST. CHARLES • The former president of US Fidelis, once one of the nation’s largest sellers of auto service contracts, admitted in court here Thursday that he bilked consumers and looted his own company of millions of dollars.

Darain Atkinson pleaded guilty to state charges of insurance fraud, stealing and unlawful merchandising practices. It was part of a deal negotiated without the knowledge of his co-defendant and brother, Cory Atkinson, the latter’s lawyers said.

After that agreement in St. Charles County Circuit Court was announced, federal prosecutors in St. Louis unsealed an indictment accusing both men of defrauding consumers, failing to pay taxes and using more than $71 million from the company to fund a lavish lifestyle of luxury boats, cars and mansions here and overseas.

Prosecutors recommended a sentence of eight years for Darain Atkinson on the state charges. Sentencing was set for July 16, but won’t happen until after the federal case is resolved, his attorney, Scott Rosenblum, said in court.

Later, Rosenblum said the prison term and any penalty in the federal case likely would run concurrently, resulting in no more than eight years total.

It marked one more step in a dramatic fall for the Atkinsons. Just three years ago, the brothers were self-made millionaires with palatial homes, fleets of exotic cars and more than 1,100 employees working at the Wentzville headquarters of the auto service contract company they founded.

Bill Margulis, one of the lawyers representing Cory Atkinson, the former company vice president, reacted to the plea agreement by saying, “Whatever allegations in there pertain to Cory, Cory denies.” Margulis declined to comment on the tax charges, saying another lawyer was handling those.

Asked about Darain Atkinson’s motivation to plead guilty, Margulis responded, “I can only speculate that he made a decision … that eight years was a lot better than whatever the alternative might be.”

Lawyers on both sides said that Darain Atkinson did not agree to testify against his brother or provide information against him.

Cory Atkinson’s state case is pending, with a trial set for September.

Darain Atkinson has prior convictions — in 1986 for theft, burglary and forgery, and in 1987 for making counterfeit federal reserve notes. Cory Atkinson has a 1987 felony conviction for trespassing.

As part of Thursday’s plea, 11 state charges against Darain Atkinson were dropped.

“He’s done everything he can not only to accept his responsibility, he’s surrendered everything he’s owned to make things good,” said Rosenblum.

Appearing in court in a black suit, blue shirt and striped tie, Darain Atkinson provided polite and brief answers Thursday to questions from Circuit Judge Jon Cunningham and attorneys. He remained free on bail and walked away from the courthouse without speaking to reporters.

The federal indictment makes many of the same allegations outlined in Darain Atkinson’s plea, using similar language.

It also accuses both brothers of failing to declare or pay taxes on more than $40 million received from the company for the tax years 2006 and 2007. On his 2007 tax return, Darain Atkinson reported $73,378 in taxable income when he’d received $8.1 million from Fidelis, the indictment says. That return was the only one for those years on which either brother reported a positive taxable income, it says.

The federal charges also say the brothers’ lavish spending drained an escrow account that was supposed to pay taxes.

Fidelis was a broker for service contracts that promised financial protection for drivers after their vehicles’ original warranties expired. It also sold product warranties, coverage conditioned upon the purchase and use of certain auto additives.

In his plea, Darain Atkins admitted that the profit was often more than $1,200 on a contract typically priced at more than $2,000.

The company used deceptive and misleading direct mail and telemarketing campaigns designed to fool consumers into thinking they were talking to dealers or auto manufacturers, and portrayed service contracts as more comprehensive than they actually were, the plea says.

Unhappy customers canceled, sometimes at a rate as high as 60 percent.

When they did, Darain Atkinson told Fidelis staffers to arbitrarily withhold 10 to 40 percent of their money — and Cory Atkinson knew the full amounts of refunds were not being returned, the plea says.

The Atkinsons funneled millions of dollars into multi-million dollar homes in St. Charles County and elsewhere in Missouri as well as Lake Tahoe and the Cayman Islands.

Although it is not mentioned in the plea, the company paid almost $27 million to buy land and build Darain Atkinson’s Lake Saint Louis home, which featured a observation tower, bowling alley, beauty salon, a two-story walk-in closet, safe rooms, and secret doors and passageways.

Cory Atkinson’s Wentzville manse was valued at $10 million.

The founders’ spending and the customer cancellations put a strain on the company’s cash flow, and Fidelis was forced to rely on cash from new sales, the plea says. The company collapsed in 2009.

Last month, in a proposed settlement filed in bankruptcy court in St. Louis, the company agreed to pay $1.45 million to 556 former employees.

Missouri Attorney General Chris Koster, who represented the state in Thursday’s case, said after the hearing that since the Atkinson indictment in June, his office has received fewer complaints about other vehicle service contract providers.

“I think the indictment of US Fidelis sent a shock wave through this industry,” he said.

Source

For the past two years, Muddy Waters has been the ultimate whistle blower of questionable accounting practices by Chinese companies trading on U.S. and Canadian stock exchanges. Now, the research firm says investors need to beware of Chinese companies trading in Hong Kong.

"There was a propensity for fraudulent Chinese companies to list their shares in the West, but I think that trend has slowed down quite a bit ever since short sellers like Muddy Waters have come onto the scene," Muddy Waters founder Carson Block told CNNMoney during an interview at the Council of Institutional Investors spring conference in Washington, D.C.

"Now we’re starting to hear rumblings out of Hong Kong," Block said. "Could Hong Kong be the next bastion of fraudulent revelations? It’s difficult to say. But investors need to be wary."

He noted that in the last month, Deloitte — one of the Big Four accounting firms — quit as auditor of two Hong Kong-listed Chinese companies.

Boshiwa International, a maker of children’s clothing, and milk formula producer Daqing Dairy Holdings both announced Deloitte’s resignations and said they are looking for replacement firms. Both companies’ shares have been suspended from trading in Hong Kong since mid March, when the accounting firm stepped down.

Deloitte China confirmed it resigned from both firms, but declined further comment.

Sino-Forest sues Muddy Waters for defamation

Meanwhile, Moody’s Investor Services withdrew its rating on Daqing Dairy last week, and issued a negative outlook amid concerns about the company’s financial reporting after Deloitte’s resignation paydayloans.

Block told CNNMoney that his firm will issue a report and a "sell rating" on a Chinese company within a few weeks, but declined to disclose any further details.

Block also said that Muddy Waters has been probing companies "outside the China realm" and will likely take a short position on a non-Chinese company sometime this year. A short position is essentially a bet that a stock will decline.

Muddy Waters made a name for itself last year, after the company accused Chinese timber company Sino-Forest of fraud. The scathing report triggered a massive sell-off in shares of Toronto-listed Sino-Forest before they were eventually suspended, and forced hedge fund high roller John Paulson to book deep losses.

Reports out of Muddy Waters have brought down several other companies including Rino International () and China MediaExpress ().

Muddy Waters’ most recent fraud allegations against Chinese digital market firm Focus Media () initially sparked a sharp sell of in the company’s stock. But shares of Focus Media have recovered since the November report.  

Source

Illumina urged its shareholders Monday to reject a sweetened buyout offer from the Swiss drugmaker Roche, saying that the $6.5 billion deal still undervalues the California maker of genetic analysis instruments.

Roche raised its proposed price for Illumina last week, but Illumina CEO Jay Flatley says the offer is still not good enough. He calls the deal “opportunistic” and says his San Diego-based company is poised to deliver better returns through higher sales and profits.

Roche Holding AG did not immediately provide comment on Illumina’s statement.

Illumina shares fell 88 cents, or 1.7 percent, to $51.73 after word of the latest rejection.

Swiss drug company Roche Holding AG proposed to buy Illumina in January for $44.50 per share, or about $5.7 billion. Roche said the deal would strengthen Roche’s position in life sciences diagnostics because its technologies are complementary with Illumina’s.

Illumina’s board unanimously turned down Roche’s offer, saying it was “grossly inadequate” and that shareholders should not tender their stock to Roche.

Last week, Roche raised its offer to $51 per share, or about $6.5 billion, an increase of almost 15 percent.

Earlier Monday, Illumina said that its first-quarter revenue will be about $270 million on strong demand for its research instruments. The estimate tops current Wall Street expectations.

The company also said that it expects its adjusted earnings for the quarter will match of beat current Wall Street expectations. Analysts expect earnings of 31 cents per share on revenue of $258 million, according to a survey by FactSet.

Illumina said the numbers could change by the time it reports its final earnings results later this month.

Illumina makes equipment that biotechnology researchers can use to sequence genes or do other tasks.

Flatley said that during the first quarter, the company’s “book-to-bill” ratio showed that customer orders were outpacing deliveries for the third consecutive quarter. He said more customers are “getting back to work,” and boosting demand.

Illumina’s shares rose sharply after Roche made its initial offer for the company, and the stock is up about 65 percent for the year.

Source

They are sentries at the stock market’s wall of worry, warning investors to prepare for another epic crash for debt-laden economies.

But with U.S. equity markets on a tear since early October, hitting levels not touched in several years, most of Wall Street isn’t seeing much cause for alarm.

Instead, increasingly optimistic buyers have pushed the Dow Jones industrial average above 13,000; the Nasdaq composite index over 3,000, and the Standard & Poor’s 500 index past 1,400.

The gains extend beyond stocks. Gold may be off its September 2011 high of $1,907 an ounce, but is still in the respectable mid $1,600s, and oil remains above $100 a barrel. Meanwhile, yields on both the 10-year Treasury note and the 30-year bond are around a percentage point lower from a year ago, boosting bond values.

Also, the greenback is rising. The U.S. Dollar Index, a measure of the dollar against six other major currencies, is up sharply over the past 12 months.

It’s enough to make a confirmed pessimist downright gloomy.

After all, what’s a doomsayer to do when it seems everything — even Europe — is rallying? Do you stand your ground in cash, or join the crowd and closely eye the exit?

Of the five market skeptics interviewed for this article, four are reluctantly going along for the ride.

The consensus among this group is that the rally is not sustainable — just another big party before an even bigger hangover. They see stock prices as being artificially inflated by Federal Reserve policies of quantitative easing and low interest rates, and that to put out the fires in Europe, the European Central Bank has gotten in on the act.

But, these strategists say, while these monetary drugs are palliative to markets, they require bigger doses for progressively dwindling results and will eventually fail.

FIVE SHADES OF GRAY

1. Peter Schiff • Peter Schiff, chief executive of Euro Pacific Capital, said the worst investment now is bonds, because it’s the one asset that hasn’t been crushed. The second-worst is cash, because the Fed insists inflation isn’t a threat, he said.

Schiff said the Fed can be in denial about inflation for only so long and eventually will have to raise interest rates.

“They’ll keep (rates) low until the market forces them,” Schiff said guaranteed pay day loans. “It’s like trying to hide it when you’re pregnant, you can only do it for so long.”

2. Harry Dent Jr. • Harry Dent Jr., head of research and forecasting firm HS Dent, said the recovery is “artificial” in that it’s being fueled by quantitative easing measures in the U.S. and Europe.

Aging baby boomers are no longer fueling U.S. economic growth, he said, and younger generations can’t keep the momentum going. “The government and most economists are in denial when the largest generation is spending less and paying down their debt,” he said.

3. A. Gary Shilling • Economic consultant A. Gary Shilling said stocks are vulnerable because the consumer is worn out, and that puts businesses, and the broader economy, on weak footing.

Shilling has long predicted that Fed measures to stimulate the economy will fall short and believes the global economy is in a long period of deleveraging marked by anemic growth.

“If the consumer pulls back, there’s nothing else in the economy that can sustain growth, and if the consumer retrenches, we have a recession,” Shilling said.

4. Charles Biderman • Charles Biderman, who heads TrimTabs Investment Research, said he’s bullish on stocks given that the Fed’s cheap money is levitating prices. But, he added, at some point stocks are going to drop.

A day will come, Biderman said, when the Fed will pull the plug on cheap money. Then he sees the Dow tumbling to financial crisis lows in the 6,000 range. For clues, watch what companies are doing with their cash, he said. “If buybacks slow,” he said, “that would be the time to start getting out.”

5. Robert Prechter • Robert Prechter, head of market forecasting firm Elliott Wave International and the most bearish of the five, said investors should shun every asset class popular now, including stocks, commodities, metals and bonds.

“Hold cash, and keep it safe,” Prechter said. “There will be another buying opportunity, probably about four years from now.”

He added: “When investors are afraid again, and when stocks are cheap again, that will be the time to buy.”

Source

Hungary