Business this week


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Business this week

  1. 1. Business this week2011~2012 spring semester
  2. 2. Glencore and Xstrata unveiled the details oftheir proposed $90 billion merger, whichwould create a giant in mining and naturalresources. The offer of a share swap wouldresult in Glencore owning 55% of a newlycombined company to be headed by MickDavis, Xstrata’s chief executive. Thecompanies have longstanding business links,but there was some criticism of the deal frominstitutional investors in Xstrata, who worrythat it is a takeover on the cheap.
  3. 3. Glencore International plc is a multinational mining andcommodities trading company headquartered in Baar,Switzerland and with its registered office in Saint Helier,Jersey. It is the worlds largest commodities trading company,with a 2010 global market share of 60 percent in theinternationally tradeable zinc market, 50 percent in theinternationally tradeable copper market, 9 percent in theinternationally tradeable grain market and 3 percent in theinternationally tradeable oil market.Glencore has production facilities around the world andsupplies metals, minerals, crude oil, oil products, coal,natural gas and agricultural products to internationalcustomers in the automotive, power generation, steelproduction and food processing industries. The company wasformed in 1974 by a management buyout of Marc Rich & Co
  4. 4. Glencore listed on the London Stock Exchange in May2011 and is a constituent of the FTSE 100 Index. It has asecondary listing on the Hong Kong Stock Exchange.
  5. 5. Xstrata plc is a global mining company headquartered inZug, Switzerland and with its registered office in London,United Kingdom. It is a major producer of coal (and theworlds largest exporter of thermal coal), copper, nickel,primary vanadium and zinc and the worlds largestproducer of ferrochrome. It has operations in 19 countriesacross Africa, Asia, Australasia, Europe, North America andSouth America.Xstrata has its primary listing on theLondon Stock Exchange and is a constituent of theFTSE 100 Index. It had a market capitalisation ofapproximately £29 billion as of 23 December 2011, makingit the 16th-largest company on the London Stock Exchange.It has a secondary listing on the SIX Swiss Exchange. Itslargest shareholder is Glencore International plc, which hasa stake of approximately 34%.
  6. 6. A stock swap, also known as a share swap, is a businesstakeover or acquisition in which the acquiring company usesits own stock to pay for the acquired company. Eachshareholder of the newly acquired company receives acertain number of shares of the acquiring companys stockfor each share of stock they previously held in the acquiredcompany. Sometimes some shareholders are required towait for an agreed-upon period before they are allowed tosell their new shares of stock.
  7. 7. Rio Tinto announced a record underlyingannual profit of $15.5 billion. But the miningcompany also booked an $8.9 billion chargerelated to the falling value of its aluminiumbusiness.
  8. 8. A term used to describe the actual reflection of acompanys profit. The underlying profit is not therequired accounting profit that is recorded on financialstatements and documents mandatory to follow presetrules and regulations. This number is calculated by thecompany to show what they believe to be an accuratereading of the companys profit position and may excludeone time charges or infrequent events.
  9. 9. Paying dividendsBP posted a 38% jump in quarterly profit, to$7.7 billion, and increased its shareholderdividend for the first time since the 2010disaster at one of its oil wells in the Gulf ofMexico. A trial that will apportion liabilityfor the oil spill among BP and its partners isdue to start in Louisiana on February 27th,unless the company reaches a settlementbefore then.
  10. 10. UBS went further than most other banks andreduced its bonus pool by a comparativelylarge 40% (and by 60% at its investment-banking division), as it reported that net profitin 2011 had fallen by almost half, to SFr4.2billion ($4.6 billion). But the Swiss bank willpay “special” share bonuses to around 5% ofits most senior bankers as it fights to retaintalent amid a downsizing of its investmentbank.
  11. 11. The Bank of England stood poised to launch athird round of expansionary asset purchases,or quantitative easing, to help the ailingBritish economy. The British RetailConsortium reported that shoppers drasticallyreduced spending in January after splashingout at Christmas.completely ready to do something or for something tohappen, when it is likely to happen soonpoised to do something Spain was poised to become the dominant power in Europe
  12. 12. As the world suffers its worst recession since the secondworld war, policy makers are searching for the best tools tolimit the downturn. Central banks have rapidly loweredinterest rates in order to reduce the cost of borrowing. Thehope is to stimulate spending in the economy now.So far, it has been to no avail. Confidence disappeared frombanks, companies and households in the autumn of 2008 andunemployment is rising fast in 2009. Without an obvioussource of fresh demand, central banks are moving to openthe way to more unorthodox approaches to address the crisis.
  13. 13. China’s inflation rate unexpectedly crept up inJanuary, to 4.5% from 4.1% in December,mostly because of higher food prices. Inflation isa headache for the central bank, which onlyrecently started to loosen monetary policy asprices looked to be under control. Adding to themix, the IMF this week urged Beijing to ready astimulus plan in case the global economyworsens. advance stealthily or unnoticed
  14. 14. Ben Bernanke warned that America’s labor marketwas still a “long way” from recovery, despite theunemployment rate falling to 8.3% in January, thelowest for three years.Stock markets had surged in response to theemployment data, with the Dow Jones indexreaching its highest mark since May 2008. But theFed’s chairman reminded Congress that the officialfigure “understates the weakness” of the labor marketas it does not count people who have given up lookingfor work or can find only part-time employment.
  15. 15. The trading of shares in Alibaba wassuspended amid rumors that the Chinese e-commerce firm is to buy back the 40% stakeheld in it by Yahoo! It is thought that Alibabahas obtained loans from a syndicate of banksto buy back some or all of that stake, whichcould be worth $13 billion. Meanwhile,Yahoo! took more steps to restore investorconfidence, as Roy Bostock announced hewas stepping down as chairman.
  16. 16. China barred its airlines from taking part inEurope’s emissions trading scheme (ETS),hardening its opposition to an attempt to getcarriers to pay for carbon emissions on flightsinto and out of the EU. Russia, America andIndia are also opposed to their airlines’inclusion in the ETS.
  17. 17. The EU Emissions Trading System (EU ETS) is a cornerstone of the European Unions policy to combat climate change and its key tool for reducing industrial greenhouse gas emissions cost-effectively. Being the first and biggest international scheme for the trading of greenhouse gas emission allowances, the EU ETS covers some 11,000 power stations and industrial plants in 30 countries.The EU ETS, a system based on the "cap and trade" principleThis means there is a "cap", or limit, on the total amount ofcertain greenhouse gases that can be emitted by thefactories, power plants and other installations in the system.Within this cap, companies receive emission allowanceswhich they can sell to or buy from one another as needed.The limit on the total number of allowances available ensuresthat they have a value.
  18. 18. At the end of each year each company must surrenderenough allowances to cover all its emissions, otherwise heavyfines are imposed. If a company reduces its emissions, it cankeep the spare allowances to cover its future needs or elsesell them to another company that is short of allowances. Theflexibility that trading brings ensures that emissions are cutwhere it costs least to do so.The number of allowances is reduced over time so that totalemissions fall. In 2020 emissions will be 21% lower than in2005.Airlines will join the scheme in 2012.
  19. 19. Air France was forced to cancel about half itslong-haul flights because of a four-day strikeby pilots and crew, who walked out in protestagainst government plans to require them togive at least 48 hours advance notice of strikeaction.
  20. 20. Verizon announced a venture with Coinstar, theowner of the handy Redbox DVD rental kiosks inAmerican supermarkets, in which the pair willcombine forces to challenge Netflix’s dominance inthe business of streaming and renting films online.Coinstar, which also operates in-store coin-sortingmachines, saw its profit surge in the fourth quarter oflast year.
  21. 21. Verizon Communications Inc. is a global broadband andtelecommunications company and a component of theDow Jones Industrial Average. It started in 1983 as BellAtlantic (based in Philadelphia) with a footprint covering NewJersey to Virginia and emerged as part of the 1984AT&T breakup into seven "Baby Bells." In 1997, Bell Atlanticmerged with another Regional Bell Operating Company,NYNEX, based in New York City with a footprint spanningfrom New York to Maine. The combined company kept theBell Atlantic name. In 2000, Bell Atlantic acquired formerindependent phone company GTE, and adopted the name"Verizon. The companys headquarters are located in theVerizon Building at 140 West Street in Lower Manhattan,New York City.
  22. 22. Coinstar, Inc. is an American company. The firms originalfocus was the conversion of loose change intopaper currency, donations or gift cards via coin counterkiosks. Coinstar deducts a fee for conversion of coins tobanknotes and charitable donations, but not for gift cards.The company has more than 60,000 locations including avariety of services in the US, UK, Ireland, Canada,Puerto Rico and Mexico.Coinstar aims to create a presence in the front end ofstores (between the cash registers and the exit/entrance).The foremost example is their ownership of the RedboxDVD rental service. The company also produces machinesthat provide prepaid credit cards and cellular phone cardsas well as e-payment kiosks.
  23. 23. Groupon released its first set of earnings sincegoing public in a much ballyhooed initialpublic offering. Although revenue at the onlinediscount site almost trebled in the final quarterof 2011 it made an unexpected net loss of$43m. Its share price sank. advertize noisily
  24. 24. Groupon is a deal-of-the-day website that featuresdiscounted gift certificates usable at local or nationalcompanies. Groupon was launched in November 2008, andthe first market for Groupon was Chicago, followed soonthereafter by Boston, New York City, and Toronto. As ofOctober 2010, Groupon serves more than 150 markets inNorth America and 100 markets in Europe, Asia and SouthAmerica and has amassed 35 million registered users.The idea for Groupon was created by now-CEO and Pittsburghnative Andrew Mason. The idea subsequently gained the attentionof his former employer, Eric Lefkofsky, who provided $1million in "seed money" to develop the idea. In April 2010,the company was valued at $1.35 billion.
  25. 25. According to a December 2010 report conducted byGroupons marketing association and reported inForbes Magazine and the Wall Street Journal, Grouponwas "projecting that the company is on pace to make $1billion in sales faster than any other business, ever".However, a report from Forrester Research in October2011 suggested that the Groupon business model was a"disaster", and that the firm had become an example of"how fast an Internet darling can fall."In its first earnings release as a public company, Grouponreported a fourth-quarter loss of $9.8 million on anadjusted basis, disappointing investors.
  26. 26. Caesars Entertainment, which owns CaesarsPalace and other glitzy places where people canlose money, floated a small amount of shares inan IPO. The debt-laden company’s casinos are inAmerica and Europe, rather than fast-growingAsia. It abandoned a more ambitious flotation in2010, but this week’s gamble paid off: its shareprice rose by 71% on the first day of issue on the stock market in order to raise money, as stocks orbonds.
  27. 27. As the process of finalizing a second bail-outfor Greece continued to grind on, official datarecorded a contraction in the euro zone’seconomy for the first time since mid-2009.Belgium, Greece, Italy, the Netherlands andPortugal are now all in recession, defined astwo consecutive quarters of negative growth.
  28. 28. Moody’s cut the credit ratings of Italy, Portugaland Spain, and also put Austria, Britain andFrance on negative outlook, a warning thattheir triple-A ratings could be downgraded by theagency. Moody’s said that although Britainwas not in the euro zone the crisis was “exertingnegative pressure” on its economy, and thatthe government may thus find it a “challenge” toreduce Britain’s heavy public debt.
  29. 29. In an unexpected move the Bank of Japanincreased its bond-buying programme by ¥10trillion ($130 billion) in an effort to boostJapan’s struggling economy. After years ofdeflation the central bank also refined its policyon prices, saying it hoped the annual inflationrate wouldincrease to hit a “goal” of 1% “for the timebeing”. Japan’s GDP shrank by 2.3% in thefourthquarter.
  30. 30. American regulators were bombarded withcomplaints from banks about forthcomingrestrictions on proprietary trading (in which theyuse their own money to take risky bets), ahead ofa deadline for public comment. The banks worrythat without revisions the “Volcker rule”, which isincluded in the Dodd-Frank reforms and is dueto come into force in July, will restrict otherkinds of trading and hurt the wider financialsystem. But in a rebuttal to those arguments PaulVolcker, who proposed the rule, said lessspeculative trading would mean more security forinvestors.
  31. 31. The Volcker Rule is a specific section of theDodd–Frank Wall Street Reform and Consumer Protectio originally proposed by American economist andformer United States Federal Reserve ChairmanPaul Volcker to restrict United States banks frommaking certain kinds of speculative investments thatdo not benefit their customers. Volcker argued thatsuch speculative activity played a key role in thefinancial crisis of 2007–2010. The rule is oftenreferred to as a ban on proprietary trading bycommercial banks, whereby deposits are used totrade on the banks personal accounts, although anumber of exceptions to this ban were included in theDodd-Frank law.The rules provisions are scheduledto be implemented as a part of Dodd-Frank on July21, 2012
  32. 32. Proprietary trading (also "prop trading" or PPT)occurs when a firm trades stocks, bonds, currencies,commodities, their derivatives, or other financialinstruments, with the firms own money as opposedto its customers money, so as to make a profit foritself. They may use a variety of strategies much likea hedge fund. Many reporters and analysts believethat large banks purposely leave ambiguous theamount of non-proprietary trading they do versus theamount of proprietary trading they do, because it isfelt that proprietary trading is riskier and results inmore volatile profits.
  33. 33. A six-month ban expired on the short-selling ofshares in France’s biggest banks. The ban wasput in place last August, when financial marketswere plunging in a particularly acute bout ofanxiety over the euro-zone crisis. BNP Paribasand Société Générale reported a sharp fall inprofits this week, as they took more write-downs on their holdings of Greek sovereigndebt.
  34. 34. The selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short.Barclays also reported a poor set of earnings, asrevenue from its investment-banking businessplunged. The unit’s annual pre-tax profit wasdown by 32%; Barclays reduced the bonus poolfor bankers by a similar amount.
  35. 35. Robert Zoellick confirmed that he would stepdown as president of the World Bank when hisfive-year term ends in June. One questionregarding a successor is how much Americawants to hang on to the job, given its oft-repeatedcall for candidates from emerging markets to beconsidered to run the World Bank and the IMF.The Europeans clung on to the IMF’s top job lastyear, with the appointment of Christine Lagardefrom France as managing director.
  36. 36. The family holding company that owns theEmpire State Building outlined its plan tolaunch an IPO as a real-estate investment truston the New York Stock Exchange, in which ithopes to raise $1 billion. Malkin Holdings boughtcontrol of the iconic skyscraper in 2002 fromDonald Trump.
  37. 37. The first arrests were made in relation to anaccounting scandal at Olympus that hasrocked Japan’s corporate world. The company’sformer chairman, his deputy and the corporateauditor, who all left last year after the companyadmitted to wrongdoing, were among thosearrested.
  38. 38. Apple’s stock rose to over $500 a share forthe first time. Its share price has jumped by25% since the start of the year. But Apple,already under attack for the working conditionsat factories that assemble the iPad in China,suffered a new setback there when ProviewTechnology, a local firm that claims it has theChinese trademark for “iPad”, persuaded somecities to remove the devices from shopshelves. Its lawyers have requested customsofficials tohalt exports; if they agree, the financial blow toApple would be severe.
  39. 39. Kellogg’s offered to buy Pringles for $2.7billion. The popular potato-snack business isowned by Procter & Gamble, which had plannedto sell it to Diamond Foods, until the deal wasblown off course by an accounting scandalinvolving payments to Californian walnut farmers.The scandal caused Diamond to restate itsearnings for two years.
  40. 40. The improper practices at a British newspaperowned by News Corporation returned to thefront pages, after five journalists were arrestedat the Sun in connection with an investigationinto alleged payments to police and defenceofficials. The Sun is Rupert Murdoch’s biggest-selling daily. Last year the media mogul shutdown its sister paper, the News of the World,amid a furore in Britain over phone hacking.
  41. 41. The European Central Bank disbursed €530billion ($712 billion) in a second round ofthree-year loans to banks at a super-low currentinterest rate of 1%. The first round of lending inthe ECBs Long-Term Refinancing Operation lastDecember provided much-needed liquidity toEuropean banks that were struggling torefinance their debt in the credit markets.expend
  42. 42. Greece launched its debt-swap offer to privatecreditors, who might see the value of theirbonds reduced by as much as 75%. Manyinvestors continued to question whetherthe arrangement, which was agreed to inBrussels as part of the latest rescue packagefor Greece, constitutes a default, therebyactivating default insurance payments.Standard & Poors meanwhile downgradedthe countrys credit rating to "selective default".选择性违约
  43. 43. The "troika" overseeing euro-zone bail-outs saidthat Portugals government is making "steadyprogress" towards meeting its fiscal targets for2012. But yields on its debt continued to rise.The general meaning of the Slavic word troika isthree of a kind, a collection of three or simply thenumber three.
  44. 44. Americas GDP growth rate was revised upwardsto 3% for the last three months of 2011 from afirst estimate of 2.8%. Banks in Americaexpanded their lending by $130 billion in theperiod, the biggest quarterly increase in fouryears, while losses from loans fell to theirlowest since the start of 2008.The data were taken as more evidence that theAmerican economy is on the rebound, thoughthat was tempered by news that S&P/Case-Shillers home-price indices fell to newlows in December.
  45. 45. Stockmarkets rose. The Dow Jones IndustrialAverage closed above 13,000 for the first timesince May 2008; the NASDAQ reached a newyear high (pushed up by Apple, which is nowworth $500 billion, enough to pay a quarter of thedebts Uncle Sam racked up in 2o11). HongKongs Hang Seng index continued along itsupward trajectory. It has risen by 17% since thestart of the year.ACCUMULATE
  46. 46. Indias economy grew by 6.1% in the last quarterof 2011. It was the slowest rate of growth inthree years and put more pressure on thecentral bank to reduce interest rates, aftermore than a dozen rate rises over the past twoyears.
  47. 47. HSBC posted an annual net profit of $16.8 billion,buoyed by a record year at its commercialbanking division and an accounting gain on thedebt it holds. But the banks costs rose by 10%,mostly because of higher wages in Asia andotheremerging markets, despite a cost-cutting strategystarted by Stuart Gulliver, HSBCs chiefexecutive.Standard Chartered, HSBCs smaller rival, madeanother record profit last year, of $4.8 billion.The bank conducts much of its business in HongKong and Singapore.
  48. 48. Boeing put the general manager of its successful777 airliner project in charge of its delayed 787 Dream liner, as it ramps up production of the new jet to fill a backlog of orders from angry airlines.Volkswagen reported a bumper annual net profitof €15.4 billion ($21.4 billion), driven in part bythe success of its Audi brand and option gainsfrom Porsche. The German carmaker sold 8.3mcarsworldwide last year, second only to GeneralMotors 9m.
  49. 49. America issued a new warning about statins, amedicine that lowers cholesterol and is takenby millions of people to fend off heart disease.Drug labels must now state that statins may raisethe risk of memory loss and diabetes. It will havelittle effect on most big drugmakers, as manystatins have already lost patent protection.
  50. 50. Warren Buffetts annual letter to shareholdersanswered some questions about who wouldeventually succeed him as boss of BerkshireHathaway. The 81-year-old suggested thata successor has been chosen, as the investmentcompanys board was "enthusiastic“ about "anindividual to whom they have had a great deal ofexposure". But he didnt name the person, whichkept people guessing about the candidates.
  51. 51. James Murdoch stepped down as chairman ofNews International, News CorporationsBritish newspaper division, which has had awretched few months. Lurid allegations of phonehacking and payments to police have generatedthe wrong sort of headlines for the group. JamesMurdoch, son of Rupert, will now focus histalents on News Corps television interests inAsia and Europe.
  52. 52. China-watchers pored over the government’spronouncement that it will aim for an economicgrowth rate of 7.5% this year, the first time ineight years that the official target has beenunder 8%. Some wonder if Beijing’s resignationto slower growth will hurt the region andcommodity-rich countries, such as Australia, thatfeed China’s mighty appetite for rawmaterials. But the government’s new focus ondomestic demand as a driver of the economywas welcomed by those who think it should domore to reduce global trade imbalances.
  53. 53. Spain’s long-term borrowing costs rose abovethose of Italy for the first time in eight months,after Mariano Rajoy, the Spanish prime minister,admitted that Spain’s deficit this year would beabove that agreed with the EU. Meanwhile,Greece hastened efforts to convince more privatecreditors to sign up to a restructuring of theGreeksovereign debt they hold, which is a condition ofGreece’s recent bailout package.
  54. 54. Oil prices remained high, despite news ofa push by the West to open fresh talkswith Iran over its nuclear programme.Brent crude fetched more than $125 abarrel; the price has risen by around 15%since the start of the year.
  55. 55. BP reached a deal with some of the parties bringing acivil suit against it over the oil spill caused by anexplosion at a rig in the Gulf of Mexico in 2010. Theenergy giant is to pay out around $7.8 billion tofishermen and other businesses from a fund earmarkedfor those affected by the disaster. A trial that was set tostart on February 27th, but was delayed whennegotiators said they were close to a settlement, willnow be put off indefinitely. BP still has to settle withthe federal government, and unless it does so the trialwill go ahead. Either way it faces a big payout.
  56. 56. India imposed an immediate ban on cotton exports forthe second time in two years. Although it is the world’ssecond-biggest producer of the fibre (after America), theIndian government wants to increase its domestic supplyof the stuff to help textile companies battling high cottonprices. But its decision to halt exports did little for itsreputation in international markets.
  57. 57. A jury in Texas found Allen Stanford guilty ofoperating a $7 billion Ponzi scheme, one of thebiggest frauds in history. Mr Stanford, a formerbanker who based part of his business inAntigua and used his riches to sponsor his owncricket tournament in the West Indies, wasarrested in 2009. He will be sentenced later thisyear and faces decades in prison.
  58. 58. Lehman Brothers officially emerged from itscourt-protected bankruptcy after three-and-a-halfyears. Lehman exists as a holding company now,with the sole task of distributing to creditorsthe $65 billion in assets they are expecting to get.The first payments are expected in April.Meanwhile American International Group, anotherfamous casualty of the crisis but one partly owned by theTreasury, raised $5.6 billion by selling half of itsremaining stake in AIA, an Asian insurance businesswhich it listed in Hong Kong in 2010. AIG will use themoney from the sale to repay some of the cash it owes.The Treasury announced that it would sell up to $6.9billion of AIG stock it holds.
  59. 59. The European Commission began a consultation periodwith companies about appointing more women to theboardroom. Last year the commission encouragedcompanies to pledge to raise the number of women ontheir boards to 40% by 2020; 24 firms have made thatcommitment. Businesses are insisting that any changeshould be voluntary and not, as has been mooted,imposed through legislation.
  60. 60. Peugeot-Citroen launched its €1 billion ($1.3billion) share issue, through which GeneralMotors is taking a 7% stake in the company aspart of their recently announced alliance. Theprice of the shares in the offer were discountedby a hefty 42%. The debt-laden Frenchcarmaker said it might like to buy a reciprocalstake in GM in the future, but not now.
  61. 61. General Motors suspended production of itsChevrolet Volt hybrid electric car for five weeksbecause sales of the vehicle are below target.The Volt has won some big awards, including“European Car of the Year” recently and “GreenCar of the Year” in 2011. But only around 7,700were sold in America last year and stock hasbeen building up. GM has set itself an ambitiousgoal to sell 45,000 Volts in 2012.
  62. 62. Apple unveiled its latest iPad tablet computer(which is simply called “iPad”, rather than iPad3). It has a zippier processor and a“resolutionary” new screen. Tim Cook, Apple’sboss, said the device would become the “posterchild of the post-PC world”.
  63. 63. China reported a trade deficit of $31.5 billion forFebruary, the largest in at least a decade, as importsgrew at twice the rate of exports. Factories were closedduring the Chinese new-year celebrations, which may beone factor behind the slacker exports. But with globaldemand fragile and separate data showing a slowdownin Chinese car sales and industrial production, manyobservers are now betting that the central bank will domore to boost the economy.
  64. 64. America (and others) took a "first step" in bringinga dispute with China over restrictions on exportsof rare-earth minerals to the WTO. China says itlimits exports because of concerns over theindustrys environmental impact, but Americaargues that the controls create "massivedistortions“ in the market. China rejected thatclaim as groundless, and warned America totread cautiously when handling trade disputes.
  65. 65. Airbus suggested that a row between Europe andChina about the forced participation of its airlinesin the European emissions-trading scheme couldlead to "suspensions, cancellations and punitiveactions" in retaliation. China is the most vocalopponent of the policy and is withholding finalapproval on orders for dozens of Airbus aircraft.Meanwhile, 26 American economists, includingfive Nobel laureates, endorsed Europesemissions-trading scheme as an "innovative"effort to price carbon. a noisy dispute or quarrel
  66. 66. The Federal Reserve released the results of thelatest "stress tests" of Americas big banks,which have to prove that they can withstand anumber of economic shocks, such as theunemployment rate reaching 13%. Fifteen of the19 banks under review passed the tests,but four did not, including Citigroup.
  67. 67. Goldman Sachs faced more negative publicityafter the colorful resignation of an executive.After 12 years at Goldman, Greg Smith decidedto quit because he overheard several colleaguesdescribe clients as "muppets". He condemnedthe firms recent business practices in an articlein the New York Times. The criticism will stingGoldman, which prides itself on its reputationand care for clients. a stupid person
  68. 68. Markets reacted calmly to Greeces debt swap, whichwas accepted by 86% of holders of Greek bonds. Theremainder were forced to sign up when the Greekgovernment enforced a collective-action clause, which inturn led the International Swaps and DerivativesAssociation to declare this a "credit event", determiningthat insurance against a default should be paid out. Thedeal will cut Greeces debt pile by €100 billion ($130billion).
  69. 69. The London Stock Exchange announced that itwas acquiring a 6o% stake in LCH.Clearnetin a deal that values the London-based clearinghouse at €813m ($1.1 billion). Clearing is seen asa lucrative area thanks to regulatory reforms.
  70. 70. Yahoo! filed a lawsuit against Face book foralleged infringements on ten patents it owns.Yahoo!, which is seeking to halt its decline underthe new leadership of Scott Thompson, claimsthat the patents have been essential to themarket share that the social network now enjoys.Face book has come under increasing scrutinysince it unveiled a $5 billion IPO in February. a breach or infraction, as of a law, right, or obligation; violation; transgression.
  71. 71. Indias patent office ordered Bayer, a Germandrug maker, to license a cheaper version ofNexavar, an anti-cancer drug. Compulsorylicensing is permitted under WTO rules butrarely used; an Indian generic drugs company willsell its version at a 97% discount to Bayers andhand over 6% of the revenues as royalties.Bayer is planning to appeal. The decision willheighten drug makers concerns about investingin India, which is involved in other patent rows.
  72. 72. There was confusion over Indias recent ban oncotton exports when officials appeared to reversethe decision, but then said it would apply to newbales of the fiber. Local farmers- and theChinese- are furious at the ban, which thegovernment thinks will help the countrys cottonmills.
  73. 73. Americas employment situation continued toimprove, as 227,000 jobs were added to thepayrolls in February and the figures wererevised upwards for December and January.The unemployment rate was unchanged at8.3%.
  74. 74. In a move hailed as a triumph by the digerati butdeplored by bibliophiles, the publishers of"Encyclopaedia Britannica“ decided todiscontinue the printed edition of the 32-volumetome in order to focus on the online and digitalversions. The encyclopedia contains 40m words,is in its 15th edition and was first published inEdinburgh in 1768 but has been based inAmerica since 1901 (according to Wikipedia).to cheer, salute, or greet; welcomepeople skilled with or knowledgeable about digitaltechnologies, especially computers and the Internet.
  75. 75. Congress approved the JOBS Act, in a rarespirit of bipartisan agreement. The legislationwill make it easier for some firms to go public,addressing concerns that America’s recenttougher financial regulatory requirements arehindering initial public offerings. The act will allowfirms to waive certain listings regulations for up tofive years and raise money from investors online.
  76. 76. It emerged that Facebook is ending the tradingof its privately held shares on the secondarymarket as it prepares to go public, which manypeople now expect to happen in May. Privatesecondary markets will see a big drop in theirtrading volumes with the departure of Facebook.
  77. 77. Ben Bernanke, the chairman of the Federal Reserve,warned that despite the improvement in America’s jobssituation over the past few months the labour marketwas “out of sync with the overall pace of economicexpansion” and still “far from normal”. But investorsresponded positively when Mr. Bernanke implied that“accommodative monetary policies” would continue,ending speculation that the Fed was backing away fromits commitment to hold interest rates near zero until late2014.
  78. 78. America’s nomination of Jim Yong Kim to leadthe World Bank drew fire. Mr. Kim currentlyrunsDartmouth College and is an expert on publichealth, but he has scant experience ineconomics.In 2000 he published a book arguing that growthdoes little for the poor. Tradition demands thatan American always head the World Bank, butsome say it is time to break that tradition andpick Ngozi Okonjo-Iweala, Nigeria’s financeminister.
  79. 79. Consumer confidence in France rose sharply,baffling analysts. A drumbeat of grim economicnews had prompted them to expect otherwise. InGermany consumer confidence fell.Lloyd’s reported its first pre-tax annual lossfor six years. Thanks to Japan’s tsunami-induced nuclear disaster and big floods inThailand, last year was the second mostexpensive on record (after 2005) for totalcatastrophe claims, which are estimated at up to$116 billion. Richard Ward, the chief executive ofLloyd’s, said he was “disappointed” thatinsurance rates had not risen more.
  80. 80. The European Commission launched aninvestigation into United Technologies’ $16.5billion proposed takeover of Goodrich, which wasannounced last year. Both companies areAmerican. The commission wants to know if adeal would hurt competition in specific areas ofthe aircraft components industry.
  81. 81. Sharp, a Japanese electronics company, solda 10% stake in its business to Hon Hai, aTaiwanese contract manufacturer that assemblesa wide range of electronic products, includingthe iPhone, at its factories in China, where it isknown as Foxconn. The investment underscoresthe waning of Japan’s once-mighty consumer-electronics industry. Much of Sharp’s business isin televisions and LCD screens, which are mademore cheaply in Taiwan and South Korea.
  82. 82. Tim Cook, Apple’s boss, travelled to China tomeet a number of officials, including LiKeqiang, a deputy prime minister. A court inGuangdong will decide soon whether Apple hasrights to the “iPad” name, which is claimed by arival company in China. Mr Cook also visitedFoxconn’s new factory in Zhengzhou, where theiPhone is made.
  83. 83. The Harry Potter books were released indigital form for the first time. J.K. Rowling, theworld’s most successful author, has set up herown website, Pottermore, as the exclusive sellerof the digital books, bypassing Amazon and otheronline retailers. Consumers searching for thebooks on other sites will be magically transportedto Pottermore.