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Hedge Fund Billions:
The Wall Street Journal
reports today that hedge-fund manager John Paulson personally netted more
than $5bn in profits in 2010 - - likely the largest one-year haul in investing
history, trumping the nearly $4bn he made with his “short” bets against
subprime mortgages in 2007.
Paulson’s take, described by investors and
people close to investment firm Paulson & Co., shows how profits continue to
pile up for elite hedge-fund managers.
The Journal says the performance last year,
nevertheless, paled in comparison to his 2007 returns, when Mr. Paulson made a
huge wager against subprime mortgages and his funds scored gains of as much as
Microsoft on Thursday
announced record second-quarter revenue of $19.95bn for the quarter ended
Dec. 31, 2010. Operating income, net income and diluted earnings per share for
the quarter were $8.17bn, $6.63bn - - slightly down on the same quarter last
year - - and $0.77 per share, respectively.
Sales were boosted by strong demand for Kinect controllers for Xbox 360
reported net sales increased 36% to $12.95bn in the fourth quarter, compared
with $9.52bn in fourth quarter 2009. Excluding the $139m unfavorable impact from
year-over-year changes in foreign exchange rates throughout the quarter, net
sales would have grown 37% compared with fourth quarter 2009.
Operating income was $474m in the fourth quarter, compared with $476m in fourth
quarter 2009. The unfavorable impact from year-over-year changes in foreign
exchange rates throughout the quarter on operating income was $18m.
Net income increased 8% to $416m in the fourth quarter, or $0.91 per diluted
share, compared with net income of $384m, or $0.85 per diluted share, in fourth
Health Insurance: Aviva this morning confirmed it will increase health
insurance premiums by 14% from March 1st.
It said it has to increase the premium prices because of the rise in the
cost of private beds in public hospitals, medical inflation of 9% and the
health insurance levy.
It also said that if the health insurance levy was removed, it would be
able to reduce its prices by up to 30% overnight.
The planned increase will result in Aviva's most popular plan rising in
cost from €848 a year to €967 a year. Families with two adults and two
children will typically see their bill rise by €356 a year to €2,900.
Earlier in January, VHI announced premium rises of an average of 15% and
up to 45% in some cases.
The cost of Quinn Healthcare plans will rise from next Tuesday, when
premiums will increase by 8%, with some policies seeing increases of up to
Bill Cllinton discusses his plans to improve employment, with CNBC's Maria Bartiromo:
Davos 2011: Addressing the participants of the World Economic
Forum Annual Meeting 2011 on Thursday, Nicolas Sarkozy,
President of France, framed his vision for the Group
of 20 nations
by noting that, "We are 11 years into the 21st
century, yet we are still functioning with the rules
of the 20th Century." We have entered an age
where it is ever more important to talk and listen
to each other, to identify the collective common
interest, and find news ways of thinking to help us
build the future.
Over the past 18 months, at the brink of the
precipice, there was little choice behind the decisions made by the G-20; it is now time to keep
cool heads as the decisions get tougher. The G-20
must be productive, and its agenda will focus on
three major risks: sovereign debt, monetary and
financial imbalance, and the impact of inflation on
growth and the soaring price of commodities.
When asked by Klaus Schwab, Founder and Executive
Chairman of the World Economic Forum, whether the
euro has the capacity to survive, he said that, for
the 17 member countries, the euro is a magnificent
symbol of lasting peace. There is a need to deepen
and integrate the defence of the euro and never turn
away from it.
President Sarkozy said that France and Germany would never
allow the euro to collapse and warned
currency operators that they would be taking
huge risks if they speculated against it.
In an address to global business, financial
and political leaders at the World Economic
Forum Annual Meeting in Davos, he said the
euro was an integral part of the European
identity and of the drive to unity and
cooperation on the continent that had
ensured peace and turned old enemies into
“Never, listen to me carefully, never
will we turn our backs on the euro, never
will we drop the euro,” declared President Sarkozy, saying that he was speaking also
for Chancellor Angela Merkel of Germany,
“The euro is Europe,”
he said. “We will
never let the euro be destroyed … It is not
simply a monetary or an economic issue. It
has to do with our identity as Europeans.”
Responding to a question on the future of
the currency, he said he had
been reading wild predictions that the
currency would collapse for several months,
but noted that they were now dying down.
“For those who would like to speculate
on the euro, I say: Be careful,” President Sarkozy, current
chairman of the G-20, told participants. The European
Union has set up a mechanism that would back
up the currency in any crisis. “The euro is
of such overwhelming importance that we will
be there whenever it needs to be defended.”
The results of a collapse “would be so
cataclysmic that we cannot even think of it,
nor even play around at thinking about it,”
Insight on where the tech giant's revenue is coming from, with Ted Moore, Fifth Third Asset Management and CNBC's Jon Fortt:
UK Consumer Confidence: The GfK NOP Consumer Confidence Index has
dropped eight points this month to -29, the lowest figure since March 2009, when
it was -30. January saw decreases across all five measures; the most notable
being in the "major purchase” index, which dropped 21 points.
Nick Moon, MD of GfK NOP Social Research, comments: "January’s eight point
drop represents an astonishing collapse in consumer confidence. In the 35 years
since the Index began, confidence has only slumped this much in a single month
on six occasions, the last being November to December 1994.
"The VAT increase is the first of the government’s austerity measures that
has had a widespread impact on consumers, and it seems to have hit people's
economic confidence hard, especially as the biggest drop was in consumers'
appetite for major purchases. With inflation on the up and the full force of the
cuts yet to hit, these figures could be the beginning of a very painful period.
"There is a chance that these figures represent a post-Christmas blip, but
even if there is a rally in February it is extremely unlikely that it will
reverse this massive drop. Today's figures, when combined with the bleak
economic forecast, will make talk of a double dip recession unavoidable."
Irish Housing: The EBS / DKM Affordability Index released today shows
that the average first time buyer (FTB) working couple is paying 12.6% of their
joint disposable income to fund their mortgage. This means that, according to
the index, housing is more affordable today than at any time in the past twenty
Based on quarterly figures derived by DKM for the period 1988 to 2004, the
average working couple is paying slightly less today than at the lowest points
in previous housing affordability cycles i.e. in Q2 1988 and Q1 1995. Despite
average house prices today being 2.1 to 3.2 times their average levels in Q1
1995 and Q2 1988 respectively, the proportion of net income required to fund a
mortgage has reached its lowest point in twenty five years: December 2010 12.6%;
versus 13.4% in Q2 1988 or 13.8% in Q1 1995.
This significant shift in affordability is particularly evident when the cost
of servicing a mortgage today is compared with the same cost at the height of
the boom: in December 2006, monthly mortgage repayments for the average first
time buyer couple were €1,323 or 26.4% of their net income, this has more than
halved to monthly repayments of €639 or 12.6% of a couple’s net income.
Stock markets look to US Q4 GDP release today: Davy economist, Conall Mac
Coille, comments - -"Today stock markets will focus on the long-awaited
US Q4 GDP numbers. The monthly data for consumer spending, industrial
production, business investment and other indicators suggest that Q4 should have
been a very strong quarter for the US economy. The market expects that growth in
Q4 was 3.5% on an annualised basis, up from 2.6% in the third quarter. However,
it appears that the risk around this expectation probably lies on the upside.
Consumer spending is set to post its strongest quarter in five years. In
addition, the net trade contribution is likely to be positive after negative
contributions in Q2 and Q3.
It is clear though that the US will have recorded very strong growth in
the fourth quarter. In recent days, sentiment towards the US economy has been
very positive following improving housing market data and the Federal Reserve's
Open Market Committee statement indicating that a change in monetary policy was
unlikely given recent positive macroeconomic data and the upward pressure on
inflation from higher commodity prices. A surprisingly strong GDP number could
be positive for stock prices but may already be largely priced in.
Today also sees the release of the Michigan measure of consumer confidence
for January which is expected to only post a small rise. Given the sharp
improvement in the Conference Board measure last week, the risk again lies on
the upside for the Michigan measure relative to the market's expectation. If
both GDP and consumer confidence beat expectations they may coalesce into even
more positive sentiment towards the US economy."
Insight on Japan's debt threat, with Michael Pento, Euro Pacific Capital and David Goldman, First Things Magazine:
Economic View: More than just weather affecting Irish consumers
- - Goodbody chief economist, Dermot O’Leary, comments - -
"With a record cold snap and unprecedented economic uncertainty surrounding the
IMF/EU programme, it came as no surprise to learn that Irish retail sales were
weak in December.
On an annual basis, retail sales volumes fell by 3% in
December (+0.5% in November), while the pace of decline in core sales
accelerated to -4% (from -1% in November). It is impossible to disentangle the
two major influences on consumers in December, but there is no doubt that both
impacted negatively. While most categories continue to show continuing weakness,
there are some that are seeing gains.
The best performing is department stores,
where sales volumes were up 5% yoy in December. Unsurprisingly, price discounts
have to be used to increase demand, but even allowing for that, the value of
sales in department stores grew by 1% yoy. Although deflation pressures overall
seem to be easing (deflator at lowest level since Q4 2008), it continues to be a
problem for retailers who are struggling with fixed, and sometimes rising,
Trends at the start of 2011 will determine whether the political
and economic uncertainty is having more lasting impacts. However, underlying
trends in disposable income are likely to have the most important impact.
We know that will be impacted by higher income tax rates and lower employment.
Unless we see a significant drop in the savings ratio, another fall in consumer
spending is in prospect in 2011."
In New York
Thursday, the Dow dipped 4 points or 0.04% to 11,990.
The S&P 500
added 0.22% and the Nasdaq rose 0.58%.
MSCI Asia Pacific fell 0.6% Friday.
Japan's Nikkei 225 dropped 1.10%; China's Shanghai Composite rose 1.49%;
Australia's S&P/ASX 200 Index slid 0.04% and India's Sensex slipped 0.85%.
BDI closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009. The index
averaged 59% lower in 2009 than a year earlier.
Thursday, July 15, 2010, the index fell for the 35th straight session, by 9
points, or 0.537%, to 1,700 points,
On Friday July16th, the BDI rose 20
points or 1.12% to 1,700 to break the 35-session losing streak.
Thursday this week, the BDI fell 48 points or 3.90% to 1,186.
The Financial Times reported
last Thursday week, that Australia’s flooding and fears of ship oversupply has
pushed down a gauge of the cost of hiring ships to carry coal, iron ore and
other dry bulk by nearly half since October to the lowest level since the
aftermath of the financial crisis. The Baltic Dry index, the widely watched
measure of dry bulk charter rates, fell to 1,453, nearly half the 2,784 peak
reached on October 27, 2010.
spot price of an oz of gold is trading in New York at $1,313.90, down $1.00 from
Irish Financials: Euro bank lending
survey; Goodbody's Eamonn Hughes commented - -
"The Irish contribution to the Euro Area Lending Survey was published yesterday.
At this stage, Irish bank equity investors will be less interested in the survey
results which focus predominantly on the asset side of the balance sheet.
the record, the survey results show little change from the last survey in
October. However, we note the results from the ad hoc question on funding. The
first one relates to market access for wholesale funding. It will be no surprise
to you that the results vary from Deteriorated Considerably to Deteriorated
Somewhat over the past 3 months across a range of short and long dated wholesale
Interestingly, in the expectations component for the next 3 months,
the January readings are lower in 6 of the 7 categories, showing further
anticipated weakness in this area. In addition, the financial crisis and its
impact on capital has weakened their ability to lend and they expect this to
continue to weaken in the coming 3 months. The results of the survey continue to
highlight the precarious position of our domestic banks and highlight a need to
move quickly to recapitalise and restructure, notwithstanding the resultant
dilution for existing shareholders."