Reynolds in talks for Niconovum

US tobacco giant Reynolds American is in advanced talks to buy Niconovum, a Swedish maker of smoking-cessation products, a move that could signal a profound shift in the global tobacco industry, reports the WSJ. The potential deal, which could be valued at €30m ($44.5m) would mark the most dramatic move by Reynolds into nicotine products that represent alternatives to cigarettes,...

Sands China aims for $3.8bn IPO

Sands China, the Macau unit of Las Vegas Sands, intends to raise up to US $3.83bn in its planned Hong Kong IPO, to repay borrowings and resume construction on hotels and gaming facilities at Macau's Cotai Strip, reports the WSJ. The offering, if successful, would be the second-largest in Hong Kong this year,...

China pledges $10bn to Africa

Wen Jiabao, China’s premier, has pledged $10bn in new low-cost loans to Africa over the next three years and defended China’s engagement against accusations it is “plundering” the continent’s resources. Wen’s pledge at a China-Africa summit in Egypt on Sunday came as he urged the US to keep its deficit at an “appropriate size” to ensure the “basic stability” of the dollar....

FX Positions Via Brown Brothers

CFTC data shows that for the week ended Nov 3, speculative accounts trimmed net longs in most foreign currencies. Net speculative euro longs fell to 22,191 from 32,869 previously.  Net Swiss franc longs rose modestly while sterling net shorts decreased to -18,905 from -31,431 previously.  Net longs fell in the dollar bloc and Mexican peso net longs fell to 59,927 from 66,795 previously.  Net yen longs rose for the first time in 6 weeks to 19,832 from 17,530 previously.  Given recent price action and 90 being tested, we expect net yen longs to again increase next week.


UBS Preview of Monday Data: A Very Quiet Day

(1) Data from the Oct Senior Loan Officer Opinion Survey (SLOOS) were most likely available to the FOMC when they met on Nov 3-4, although results have not been released to the public. Nor has a release date been announced, but Monday is likely. The Oct report will likely show further slowing in the tightening of lending standards, in line with the improvement in financial markets and credit indicators recently. (2) Fed Gov Tarullo will speak (7pm) about financial regulation.


Sunday Evening Links

If the FOMC is looking for a gauge of inflation expectation, then I have a nominee. When was the last time the FT gave prominence to two stories on the same evening which describe the threat of inflation? I do not recall it any time recently.

On the slow motion passing of the baton from US to China: another small marker.

Expect more dollar weakness this week as G 20 meeting is rather innocuous.

Recession lingers in the psyche of frugal consumers.

Bloomberg reports the first increase in home prices in New Zealand in 16 months.

Japanese investors have seen this movie before and they think that they know how it ends. And the ending makes then want to own Treasuries.


China Lifts Fuel Prices; HK Attracts Liquidity

Hong Kong stocks gained as investors pour money into real estate and stocks forcing HKMA to inject liquidity and prevent the HK dollar from rising. China increase fuel prices by as much as 8%. Chinese banks were warned of uncontrolled lending.

Geologists Vote that Peak Oil is a Concern

This year's Petroleum Geology Conference in London included the following item on the agenda:

Peak Oil: Advancing the topical debate over the timing of peak oil & gas

The aim of the Geological Society's Peak Oil evening meeting is to further discuss and debate the timing and impact of Peak Oil & Gas. Have we become so efficient at exploring and producing petroleum resources that we are we already there as Colin Campbell ASPO) would argue? Or will technology solutions and a move to more unconventional deposits save the day as Mike Daly (BP) and Glen Cayley (Shell) would suggest? And let's not forget gas. Malcolm Brown (BG Group) sees a longer future for gas but will the progressive use of gas as a substitute for oil hasten its decline? Lots of questions, but do we really have the answers? Come along to the Geological Society on the evening of Tuesday 15th April and join in the debate. Our four invited speakers will present their case, to be followed by a panel discussion.

The debate took place as planned, but with a change in speakers from the original announcement. BP chief geologist David Jenkins argued for the motion that peak oil is "no longer a concern," and Jeremy Leggett argued against, incorporating the UK Industry Taskforce on Peak Oil and Energy Security conclusions into his case. At the end of the debate, approximately five hundred oil-industry geologists voted. Only about a third voted in favor of the motion "Peak oil is no longer a concern." The debate has been written up in November's issue of Petroleum Review.

In this post, I ask Jeremy Leggett a few questions about how he interprets his experience.

Q: Were you expecting to win this debate?

No way! I thought I’d be lucky to get 10% of the vote. I expected it to the one of those masochistic experiences I put my hand up for, from time to time, in the possibly misguided feeling that it is better to preach to the unconverted than the converted. And I don’t kid myself that ten minutes of woffly rhetoric from me changed any minds, or that David’s arguments were so poor that he converted people for me. This was a pre-formed group opinion.

Q: What do you think the result means?

The result seems to suggest that the rank-and-file practitioners hold a very different view of peak oil from the BP/Shell/Exxon etc. top tables. In this, the forthcoming energy crunch seems very different from the run up to the credit crunch. Presented with the motion that "major downside risk in derivatives is no longer a concern,” a hall full of investment bankers would no doubt have been near unanimous in support of the motion.

I increasingly think there are worthwhile comparisons between the financial crunch and the coming oil crunch. Before the financial crunch, only a few maverick economists and financial journalists were blowing whistles. Ahead of the oil crunch, many people in and around the oil industry are busy sounding off. So are some companies spanning a wide spectrum of petroleum-user industries, and so is the IEA – the equivalent of the World Bank warning of a financial crash several years ahead of the reality.

Q: If it is true that the footsoldiers don't buy into the top tables' analysis, why don't they speak out more?

If I knew the answer, I’d be a better campaigner than I am. Pensions? School fees? Some misplaced sense of brotherhood? An oil company geologist told me once that it is viewed almost as an unspoken act of treason to voice doubts about the industry’s ability to meet projected demand. Perhaps that explains why so many geologists wait until retirement before speaking out.

Q: When was your own realisation that peak oil might be a problem with peak oil?

This is a shocking story, and I hold my hand up with an appropriate amount of shame and embarrassment, to help make an important point. It was March 2004, and Shell dropped a bombshell. We are sorry, dear financial regulators, but we don’t seem to have as much oil as, er, we said we have. Our CEO and head of exploration have been telling the board, well …. lies, we fear. The biggest scandal in British corporate history duly unfolds. Why, I ask myself? I had always assumed there would be enough oil for decades to come, but maybe not: not if other companies are in anything like the mess Shell seems to be in.

I knew that a few geologists had been saying, since the mid 1990s, that the peak of production would come all too soon. The dean of the early peak oil camp is Colin Campbell, a geologist like me trained by legendary stratigrapher Stuart McKerrow at Oxford. I always assumed – simply assumed, I’m ashamed to say – that Colin was wrong. My response, I now see, was a cultural knee-jerk. So I checked out what was going on. I finally did some homework. And so my peak oil moment came, belatedly.

I think there is an important lesson here. Cultures have all sorts of dysfunctional ways of protecting themselves: the “social silences,” the unspoken erection of information screens and the like. Since joining Association for the Study of Peak Oil, of course, I have met some of the psychologists at work on this kind of thing. None of this will be surprising to them.

Q: How do you think the peak oil drama is going to play out?

We will find out who is right about peak oil before the decade is out – earlier, rather than later. The discontinuities will be seismic. My preferred scenario is this one. Within just a couple of decades, the world will be floating on a sea of cleantech energy technologies, and enjoying a renaissance built around the many social value-adders inherent in those technologies. Oil shocks, oil wars, and all the other dismal paraphernalia of the hydrocarbon age will seem so very ….twentieth century. I elaborate in my books “Half Gone”, and “The Solar Century.” Of course, there are other scenarios.

Q: You're known as a climate-change campaigner as much as a peak-oil whistleblower. How do you think these two issues are related?

Peak panic will prompt a race to mobilise oil-replacement technologies. If cleantech wins out, we win, and renaissance beckons. If coal-to-liquids and tar sands win out, we lose, and we are on a road to hell. We start destroying wealth faster than we create it well before the mid point of the century. Again, I elaborate in my books, and keep the drama updated on my Triple Crunch Log website, www.jeremyleggett.net.

For those interested, this is a link to the Petroleum Review article.

Australian Index Up 1.8%; AXA, AMP Proposal

Stocks in Australia surged in a rally in Asian markets after the release of G-20 statement on Sunday. Australian home loan approvals rise 5.9% in September. Australia job adverts drop 1.7% in October. AXA Asia Pacific Holdings rejects A$11.04 billion bid from AMP.

Insurers Lead Tokyo Gainers; Aioi Surges

Japan foreign currency reserves rise to $1.05 trillion in October. Property and casualty insurance stocks rise after Mitsui Sumitomo and Aioi Insurance lift annual earnings outlook. Softbank Mobile leads the industry with net new subscribers of 97,500. JAL executives to forgo December pay.

U.S. Extends World Rally; Treasury Auction

U.S market indexes gained 2% after commodities gained and investor bid up industrial and technology stocks. The statement from G-20 nation reassured markets that stimulus will stay in place. U.S. Treasury starts weekly bond auction for $81 billion. Sprint Nextel surges 20%.

Romulus Capital Closes Small Seed Fund

Romulus Capital, a seed-stage investment firm focused on student-run startups in the Boston area, has closed its debut fund, according to its website. No financial information was disclosed, although a recent regulatory filing indicated that Romulus was seeking up to $1.2 million. www.romuluscap.com

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Las Vegas Sands, Wynn, East West Banc Rise

RadioShack Corporation led gainers in the S&P 500 index with a rise of 12.9% after it began the selling of iPhone at select stores. Las Vegas Sands advanced after it arranged bank commitment of $1.45 billion for Macau casino. Wynn Resorts gained on $4 special dividend. East West Bank surged 51%.

European Indexes Rise 2%; Allianz, Puma Up

European markets closed higher after G-20 meeting. Investors bid up stocks and commodities in Europe on the expectations that the current stimulus will remain in place. Allianz reported sharply higher earnings as markers rebound.

Sunday Funnies: Barron’s predicting profits?

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In this week's (November 9) Preview Section of Barron's (subscription required) I was surprised to find that on Wednesday (11/9) it is noted that Computer Sciences (CSC), Applied Materials (AMAT), and Macy's (M) reported "profits." How do they know this?

On other days they refer to the "earnings" of various companies reporting. Perhaps I am splitting hairs, perhaps it is editorial haste (like you might find on our site), or perhaps there is no difference in some people's minds? From my perspective there is a difference between earnings and profits. Every quarter, public companies report their earnings. They do not always report a profit.

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Sunday Funnies: Barron's predicting profits? originally appeared on BloggingStocks on Sun, 08 Nov 2009 18:40:00 EST. Please see our terms for use of feeds.

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Supreme Court To Hear Biz Method Patent Case

WASHINGTON (Reuters) - Software, biotech firms and others who develop new ways to do business will be watching closely on Monday as the U.S. Supreme Court hears a case that could determine if such innovations can win patent protection.

The case itself involves a small Pittsburgh company called WeatherWise, founded by Bernard Bilski and Rand Warsaw, to sell services based on hedging methods that allow users to make fixed energy payments even if usage or energy prices vary.

But when they tried to patent the hedging method, the U.S. patent office rejected it in 2000. The patent board upheld the rejection in 2006.

The battle continued up to the U.S. Court of Appeals for the Federal Circuit, which in 1998 had broadened the definition of what was patentable to anything except laws of nature and abstract ideas.

But, after hearing the Bilski case, the court, which specializes in patent appeals, sought to set limits. It ruled that the hedging method could not be patented because it was not tied to a machine and did not result in a transformation.

The Federal Circuit decision threw doubt on tens of thousands of business method patents, like software patents and medical diagnostic patents. One of the best-known examples of a business method patent is Amazon.com Inc’s (AMZN.O) one-click process to buy goods on the Internet.

“I did some math this morning and the market cap of the companies that filed (friend of the court) briefs is $1.2 trillion,” said Marc Pernick, a patent attorney with law firm Morrison Foerster.

Some, like software and biotechnology companies, want the definition of what can be patented to be as broad as possible because they license out those processes. Others, like some financial institutions, want business method patents to be restricted to avoid getting sued.

RULING EXPECTED IN 2010

The Supreme Court justices are scheduled to hear oral arguments in the case on Monday, beginning at 1 p.m. EST. A decision is expected by the end of June.

Patent experts agree that, however the court rules, it will not simply affirm the Federal Circuit decision.

“The track record is that when the Supreme Court takes a case from the Federal Circuit that they see something they want to change,” said Pavan Agarwal, a patent attorney with law firm Foley and Lardner.

When the court has ruled on patent cases recently, it has tended to rule unanimously or nearly unanimously.

The high court ruled unanimously in 2008 in Quanta v. LG Electronics that patent rights were exhausted once a product was sold. A company could not sue a downstream purchaser for infringement.

In 2007, in KSR v. Teleflex, the court unanimously made it easier to show that an innovation was an obvious improvement on existing technology and, thus, should not have been patented.

In MedImmune v. Genentech, the court ruled in 2007 that a patent licensee need not stop paying royalties or otherwise breach a licensing agreement before challenging the validity of a patent. Justice Clarence Thomas dissented.

A 2006 Supreme Court ruling, eBay v. MercExchange, made it harder to win an injunction in the case of infringement.

WeatherWise co-founder Rand Warsaw estimated losses to his small company, because it could not patent the hedging method, at about $5 million a year.

“This lack of patent protection has given rise to competitors and given rise to companies who have taken our intellectual property. For other small companies this could have been a death blow,” he said.

Warsaw said the future of biotech medical processes could depend on what the Supreme Court decided.

“Processes are cheap to replicate,” he said, arguing that it could hypothetically cost $1 billion to develop a biotech medical process to prevent a birth defect but just $1 million to set up a competitor who stole the idea.

“If I were a big biotech company or Harvard Medical School, somebody who does fundamental research, (I’d say) ‘Why am I putting hundreds of millions of dollars into something that I’m going to lose?’” said Warsaw.

(Reporting by Diane Bartz; Editing by Tim Dobbyn)

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KKR, General Atlantic Buying TASC for $1.65 Billion

NEW YORK, Nov 8 (Reuters) - Defense contractor Northrop Grumman (NOC.N) has agreed to sell its TASC consulting unit to two buyout firms, General Atlantic and Kohlberg Kravis Roberts & Co., for $1.65 billion, the companies said on Sunday.

The deal is the latest in a spate of buyouts, as the financing markets improve. On Thursday, the biggest leveraged buyout of the year was signed, when private equity firm TPG and the Canada Pension Plan struck a $4 billion deal to buy IMS Health Inc (RX.N).

Northrop hired investment banks to sell the unit, which advises government military agencies, a few months ago, drawing interest from a number of private equity firms.

Sources told Reuters in September that a sale, originally expected to fetch about $2 billion, would more likely be around $1.5 billion.

The deal is expected to be completed in the fourth quarter.

Financing commitments for the acquisition are comprised of senior secured credit facilities and senior subordinated notes, the companies said in a press release.

The credit facilities will be provided by Barclays Capital, Deutsche Bank (DBKGn.DE), RBC Capital Markets and CPPIB Credit Investments.

KKR’s Capital Markets unit arranged the senior subordinated notes with Highbridge Mezzanine Partners as the lead investor.

Barclays Capital, Deutsche Bank and RBC Capital Markets advised General Atlantic and KKR.

By Megan Davies

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Entrepreneur’s Journal: Putting together a solid sales contract

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It's never easy to acquire a customer. Yet, when it happens, it's tempting to become lax when it comes to the legal details. And it's true that many contracts do not necessarily need to be in writing.

However, this is no excuse. Having a prepared contract shows your professionalism and seriousness. It's also a way to gain leverage. Keep in mind that the drafter of a contract usually has an edge.

So, when putting together a sales contract, here are some things to keep in mind:

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UK Shares Rally; Cadbury Rejects Kraft Bid

UK stocks rallied after markets around the world and commodities prices gained. The statement from the G-20 nations reassured investors that the current economic stimulus will stay in place. Cadbury Plc rejected unsolicited Kraft Foods bid that valued the company at £9.8 billon.