Ohio PERS Names Interim Investment Chief

Richard Shafer has been named interim chief investment officer of the The Ohio Public Employees Retirement System (OPERS), nearly two months after fulltime CIO Jenny Hom stepped down. Shafer joined OPERS in May, after having served as director of investments for the New Hampshire Retirement System and, before that, was chief investment officer of the Alaska Permanent Fund.

PRESS RELEASE

The Ohio Public Employees Retirement System (OPERS) today announced that Richard D. Shafer, OPERS’ deputy director of investments, has been appointed interim chief investment officer (CIO).

As interim CIO, Shafer will work closely with OPERS Chief Executive Officer Chris DeRose and the investment division’s senior leaders in executing the investment plan.

Shafer brings 30 years of collective investment experience gained in the insurance industry and with pension plans. He joined OPERS on May 27, 2009 as deputy director of investments for external management with primary responsibility for the development and execution of the investment strategies for private equity, real estate and the utilization of external public managers to meet OPERS’ investment goals and objectives.

Prior to joining OPERS, Shafer was the director of investments for the New Hampshire Retirement System and the CIO of Alaska Permanent Fund Corporation. He obtained a Bachelor of Arts degree from Dartmouth College and holds the Chartered Financial Analyst (CFA) designation.

OPERS’ former chief investment officer, Jennifer C. Hom, resigned on June 4, 2009 for personal reasons.

With assets of $60.5 billion, OPERS is the largest public pension fund in Ohio and the 12th largest public pension fund in the U.S. In operation since 1935, OPERS provides retirement, disability and survivor benefits for public employees throughout the state and serves nearly 936,000 members, including more than 166,500 retirees and beneficiaries.

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Before the bell: Stock futures rise on CIT deal report

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U.S. stock futures advanced Monday after it was reported Sunday CIT Group may get a private sector emergency financing. News about problems at CIT and its potential demise kept dominating the news last week, marring what a decent showing from companies reporting earnings. Investors await another week of heavy earnings results starting Monday with the likes of Texas Instruments (NYSE: TXN) and Boston Scientific (NYSE: BSX).

According to the New York Times, CIT Group Inc.'s (NYSE: CIT) board approved a deal late Sunday with major bondholders -- including bond manager Pimco -- to keep the company out of bankruptcy with a $3 billion rescue loan. The deal will buy CIT some time to restructure and reduce its debt load, after it failed to get help from the federal government.

Continue reading Before the bell: Stock futures rise on CIT deal report

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Ladder Capital Files for $400 Million IPO

Ladder Capital Finance, a New York-based specialty finance company focused on the commercial real estate industry, has filed for a $400 million IPO. Ladder Capital was formed last last year with approximately $1 billion in equity and debt capital, co-led by GI Partners and Towerbrook Capital Partners. It plans to trade on the NYSE under ticker symbol LCG, with JPMorgan and Wells Fargo serving as co-lead underwriters. www.laddercapital.com

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The Morning Leverage: Brought To You By The Letter ‘C’

In this morning’s media roundup:

News: CIT Group Inc.’s bondholders - including a number of private equity firms - are stepping up to keep the struggling lender out of bankruptcy court with $3 billion in rescue financing. According to the Wall Street Journal, the deal isn’t a long-term fix, but gives CIT time to fix its balance sheet and minimizes bondholder losses.

After long having a reputation for being the silent, mostly powerless partner in the private equity partnership, LPs may be developing a spine. The departure of Citigroup’s infrastructure investing co-head Juan Bejar appears to have triggered a key-man provision at Citi’s $3.4 billion infrastructure fund, allowing investors to exercise their right to stop the fund from making new investments for now, our colleagues at WSJ report. Meantime, something similar has happened at Germany-based Nordwind Capital, where investors representing some 10% of the fund apparently defaulted on a capital call for a planned investment in a company called Global Fertility. According to the Financial Times, they justified the default by saying the deal was “too American;” Nordwind chose not to take action against the defaulting investors.

China Investment Corp., the big sovereign wealth fund, hasn’t done so well with its Blackstone Group investment. But that isn’t stopping it from dipping into private equity again - this time a little closer to home, by taking a 40% stake in Citic Capital Holdings. The WSJ story is here.

Kohlberg Kravis Roberts & Co. gave us a preview into its latest quarterly numbers this morning, the first time we can recall the firm giving an outlook. Relative to full-year 2008, the economic net income number looks pretty solid, but the fee income looks low. Our take is here.

Our colleagues at Barron’s have an interview with John Castle, chairman of Castle Harlan Inc. He explains why the firm invests in the mid-market and says its fourth fund finished 2008 up 3%, pretty remarkable considering,

Fortress Investment Group is getting a new CEO. Daniel Mudd will replace Wesley Edens, so that Eden can “focus on the firm’s weakened portfolio and future investments,” the WSJ reports.

Analysis: Megan McArdle, on why blithely declaring equity to be more expensive than debt is dangerous.

Just for fun: The backlash to the backlash from that Matt Taibbi article on Goldman Sach: “Real vampire squid are harmless to humans.”

Addus Homecare Files for IPO

Addus Homecare Corp., a Palatine, Ill.-based provider of social and medical services in the home, has filed for a $69 million IPO. It plans to trade on the Nasdaq under ticker symbol ADUS, with Robert W. Baird and Jefferies & Co. serving as co-underwriters. Eos Partners is the company’s majority shareholder. www.addus.com

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New Zealand

It has been a while since posting anything about New Zealand as an investment destination. I used to write a lot more about the country. The economy is much different than that of the US except for maybe the deficits. NZ is a much simpler economy with dairy and other farm products being a big part of what goes on. It has been several years now since I sold New Zealand Telecom (NZT) and as I said then I'm sure I will be back but I don't know when and I still don't know.

The chart below captures some of what I think of WRT to NZ in that the decline was shallower than in the US but it did start to rollover sooner than the US did. Not captured in the two year chart is that the US and NZ correlated very closely in the middle of the bull market but before that NZ outperformed significantly with the occasional run of negative correlation to the US. It is probably not accurate to think that NZ was a great place to hide out during the bear market.

Alan Bollard (RBNZ chief) said last week that New Zealand would be early to come out of the recession. This was almost simultaneous with Fitch lowering its outlook on the country to negative (the outlook not the rating). FWIW an analyst named Brian Redican from Macquarie said on Squawk Australia this morning that Fitch was late and that his firm tended to think Bollard was closer to right on New Zealand's relatively early recovery.


A good way to research what stocks are available is to go to the NZX website and just look around. There are plenty of stocks that have five letter US designators including a couple of ports, one airport, several farming related stocks and a couple of consumer names. While many of them can probably be accessed they may be difficult to find deep enough markets to get trades done. Many of the stocks have very low share prices so even a small position could be several thousand shares which could mean higher commission and your broker having difficulty finding shares. I have faith that this will become easier in the next couple of years but that remains to be seen.

The catalyst for this post was this article about Fonterra, the big NZ dairy co-op. Fonterra is not publicly traded but there is a small chance that it could have a public listing soon. It stands to reason that a publicly traded Fonterra could be a reasonable proxy for the country. A big road block, as I understand it, is that the farmers who belong to the co-op believe their dividend pool would be reduced with a public listing. In addition to selling milk in the region there is also a business where they offer consulting-like services for dairy management.

In the context of yesterday's post I think New Zealand would be in the 2-3% portfolio weight category. I also think that at some point down the road there could be a little room for owning the currency or a little short term debt (but not both).

Canadian National, Texas Instruments Net Drop

Canadian National Railway Company second quarter revenues fell 14.3% to C$1.8 billion and net income fell 15.7% to C$387 million or 82 cents a share. Texas Instruments Incorporated second quarter revenues fell 27% to $2.46 billion and net income fell 56% to $260 million or 20 cents a share.

Quantum Immunologics Raises $2.2 Million

Quantum Immunologics Inc., a Tampa, Fla.-based developer of cancer immunotherpeutics, has raised $2.2 million in VC funding from Mentor Capital.

PRESS RELEASE

Quantum Immunologics, Inc. (QI), a Tampa, Florida company focusing on the research and development of cancer immunotherapies, is pleased to announce that it is receiving equity funding from Mentor Capital, Inc. (MNTR) to support its FDA authorized Phase I/II trials on metastatic breast cancer, which are now underway (NCT00879489).

QI’s clinical trial is designed around the use of QI’s proprietary dendritic cell therapy, which employs oncofetal antigen (“OFA”) to recruit the patient’s own immune system to target and attack the cancer cells with the intent to improve patient survivability and quality of life. Each patient will receive three monthly injections of the patient’s own dendritic cells that have been sensitized to OFA. It is anticipated that once the sensitized cells are injected back into the patient, the patient’s T-cells will locate the OFA found on the patient’s cancer cells, thereby generating an immune response with the goal of killing the cancer cells and preventing further spread of the disease.

In addition to providing $2.2 Million in funding to help support the FDA trials through approximately February 2010, Mentor Capital has agreed to assist QI in funding future strategic stock or cash acquisitions. Mentor will also stand by as a preferred funding source for QI during later stage or additional trials.

Comprehensive information on Mentor Capital, including capital structure detail, can be found at: www.MentorCapital.com.

About Quantum Immunologics
Quantum Immunologics, Inc. (“QI”) is a research-driven biotechnology company that is pioneering discoveries in immunotherapy science. QI is dedicated to the research, development and production of technologies that focus on the treatments and diagnoses of cancer and other diseases related to the immune system. Leveraging an expansive pipeline of biopharmaceutical innovations, QI remains committed to advancing medicine with the ultimate goal of dramatically improving lives.

For more information about QI and its FDA-authorized trials, please visit www.quantumimmunologics.com, or contact Investor Relations at (813) 849-7859.

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HP Agrees To Acquire Ibrix

Hewlett-Packard has agreed to acquire Ibrix, a Billerica, Mass.-based provider of enterprise-class file serving software. No financial terms were disclosed. Ibrix has raised around $45 million in VC funding since 2003, from firms like JT Venture Partners and Credit Suisse.

PRESS RELEASE
HP and IBRIX today announced a definitive agreement for HP to acquire IBRIX, a leading provider of enterprise-class file serving software that includes data protection, high-availability features and data management services for extreme scale-out, cloud and high-performance computing deployments.

Customers with large-scale, data-intensive application environments find that storage performance often becomes a bottleneck for their workflows. IBRIX’s solutions allow enterprises to easily and cost-effectively store massive amounts of user-generated data.

With scalability to tens of petabytes, customers can gain control of exploding data growth and address application performance challenges in the most demanding environments. The advanced data management capability of IBRIX’s Fusion software suite also allows customers to seamlessly add capacity as their data or performance needs grow.

Founded in 2000, and an HP partner for three years, IBRIX is privately held and headquartered in Billerica, Mass. It has 53 employees and more than 175 enterprise customers spanning the communications, media, entertainment, Internet, oil and gas, healthcare, life sciences, and financial services markets. The value of the transaction is not disclosed.

Adding IBRIX’s software to HP’s portfolio further solidifies the company’s leadership in the emerging market of scale-out and high-performance computing storage, cloud storage, and fixed content archiving. This market is growing at a compound annual growth rate of 20 percent per year,(1) which is faster than both the network-attached storage and total external storage markets.(2)

“Customers need highly scalable storage solutions that efficiently and cost-effectively manage massive amounts of information,” said Jeff Hausman, vice president of Unified Storage, StorageWorks Division, HP. “This acquisition expands our portfolio to better support the needs of this market segment. In addition, IBRIX’s highly scalable software leverages industry-standard hardware allowing customers to fully maximize their existing investments.”

IBRIX’s software is currently available with HP StorageWorks storage area networks (SANs), HP ProLiant servers, HP BladeSystem, and HP ProCurve Ethernet switches and management software. The combination of IBRIX’s storage software with HP’s business technology portfolio offers customers a full suite of products and services from design, transformation and management of corporate data centers to the most extreme scale-out environments.

“Joining forces with HP is a natural fit for our customers, resulting in an enhanced storage solution that scales to meet their data growth,” said Milan Shetti, chief executive officer, IBRIX. “The unique combination of IBRIX’s file serving solutions with HP’s portfolio of products and services enables customers to lower the cost of scale-out architectures while easing the process of storing, accessing and moving critical data.”

The transaction is subject to certain closing conditions and is expected to be completed within the next 30 days. Following completion, the business will be integrated into the StorageWorks division in HP’s Technology Solutions Group.

More information about HP StorageWorks is available at www.hp.com/go/storage.

About IBRIX

IBRIX® develops, markets and sells scale-out NAS products and solutions that help global enterprises to gain unprecedented control of unstructured data growth and application performance challenges. IBRIX’s purpose-built scale-out NAS platform, IBRIX Fusion™, dramatically scales performance, capacity and manageability to deliver significant storage cost savings, application performance improvement, non-disruptive growth and infinite scalability. For more information, visit http://www.ibrix.com.

About HP

HP, the world’s largest technology company, simplifies the technology experience for consumers and businesses with a portfolio that spans printing, personal computing, software, services and IT infrastructure. More information about HP (NYSE: HPQ) is available at http://www.hp.com/.

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BiancaMed Raises €6 Million

BiancaMed, a Dublin, Ireland-based developer of sleep monitoring technology for conditions like sleep apnea, has raised €6 million in second-round funding. Seventure Partners led the round, and was joined by return backers ePlanet, Enterprise Ireland and ResMed. Go4Ventures served as placement agent.

PRESS RELEASE

BiancaMed announced today that it has received an additional €6 million funding.

This new capital will allow the company to expand its core team, accelerate the launch of several innovative consumer products with existing ‘go-to-market’ partners targeting the wellness space, and continue the development of clinical products targeting unmet needs in areas, such as sleep apnoea screening and disease management.

This second round funding was led by pan-European venture capital firm Seventure Partners. This is the first time that Seventure has invested outside of continental Europe. Three of BiancaMed’s existing investors ePlanet, Enterprise Ireland and ResMed also participated in this round. Go4Venture advised the company in its fund-raising process.

BiancaMed co-founder and CEO Conor Hanley said “With this new financing we will be able to accelerate the commercial development of our proprietary non contact sleep monitoring technology. It is a strong validation of our firm’s technology and strategy that we have secured investment from a new value-add investor such as Seventure and the continued support of our existing investors. We look forward to working with our investors and BiancaMed will undoubtedly benefit from the wealth of healthcare experience that non-executive board members bring to the table.”

Donald Fitzmaurice, BiancaMed’s Chairman and a Partner with ePlanet commented: “We have been strong supporters of BiancaMed since our initial investment in the company in 2005 and we have been impressed with the progress the team has been able to make from a technology and business perspective in the past three years. Sleep is increasingly recognised as a major component of health and wellness, alongside diet and exercise. We expect the market for sleep monitoring products to grow strongly in the coming years and BiancaMed is very well positioned to benefit from this growth. The company is at an exciting point in its commercial development.”

Mark Payne, Director of ResMed’s Sleep Business Unit in Europe said “Too many patients suffer unnecessarily from sleep-disordered breathing and related co-morbidities. This step toward full commercialisation of BiancaMed’s unique contactless technologies will provide hope to many patients and clinicians searching for easier access to novel, accurate, and innovative SDB screening solutions.”

Seventure General Partner, Isabelle de Cremoux said “BiancaMed is a unique company with a breakthrough technology in the massive, $20 billion global sleep market. With technology and market potential already validated through partnership agreements with leading corporations and an impressive product pipeline in new areas such as heart failure monitoring, BiancaMed offers a  compelling investment opportunity for us in the Life Sciences area. BiancaMed is Seventure’s first investment outside of continental Europe and we look forward to working with Conor and other members of this entrepreneurial executive team.”

Iain Wilcock of Seventure will join BiancaMed’s Board of Directors. Wilcock comes to BiancaMed with extensive experience of Healthcare investing. He has previously served as a non-executive director of a number of companies, including Avidex, Oxxon Therapeutics, Xention, and Vivacta.

About BiancaMed Ltd
Founded in 2003, BiancaMed is a medical technology company based in Dublin, and Sunnyvale, California. BiancaMed has developed and is commercialising SleepMinder; a contactless, accurate device for the measurement of sleep and breathing in the home setting. Major shareholders include Enterprise Ireland, DFJ ePlanetVentures, ResMed and now Seventure.

The core of its proprietary technology is a sensitive radio frequency motion sensor that can detect respiration and movement without being connected to the human body. The sensor incorporates sophisticated biometric software that converts the motion data into a measurement of sleep. BiancaMed is working with several major corporations to launch a range of consumer products in 2010. In addition, BiancaMed is developing a sleep apnoea diagnostic product and the company has launched a sleep monitoring service. http://www.biancamed.com
About ePlanetVentures
ePlanetVentures is a leading global venture capital firm headquartered in Silicon Valley, with offices in London, New Delhi, Bangalore, Singapore, Shanghai, and Beijing, as well as a presence in Hong Kong, Seoul and Tokyo.

ePlanetVentures has invested in over 80 innovative high-growth companies world-wide, resulting in a number of landmark exits including Baidu (NASDAQ listing in August 2005, presently circa. $12b market cap), Skype (sold to eBay for approx. $3b in 2005), and Focus Media (NASDAQ listing 2005, presently circa. $6b market cap).

ePlanetVentures is one of the leaders in promoting the cross-border migration of technological innovation, business models and entrepreneurship. The Fund invests in sectors such as the Internet (consumer Internet, Internet services and applications), wireless communications and applications, VoIP and other broadband services, entertainment, semiconductor design, medical technology and other emerging services sectors. ePlanet also seeks to make investments in traditional, established industries where business-model improvements have the power to create category-dominant companies in the world’s fastest growing markets.

ePlanetVentures won the China Venture Capital Association Exit of the Year 2005 for Baidu, and the European Venture Capital Association Deal of the Year 2005 Award for Skype, and has been profiled in FORBES Feb 2008 amongst the Top 10 global venture capital investors.  www.eplanetventures.com
About Seventure Partners
As one of the leading venture capital firms in Europe, Seventure manages €500m and has being investing since 1997 in innovative businesses with high growth potential in Information and Communication Technologies and in Life Sciences. The Life Sciences team invests all over Europe. Its four preferred sectors are Biotech & Pharmaceuticals, Medtech, Industrial Biotech & Cleantech, and Lifestyle Healthcare & nutrition. A typical investment ranges from €500k to €10m per round, up to €20m per company, from early to later stage. Seventure is a subsidiary of Natixis Private Equity, the asset management company of Natixis, with over €4.2b in private equity investments. www.seventure.fr

About ResMed
ResMed is a leading developer, manufacturer, and distributor of medical equipment for treating, diagnosing, and managing sleep-disordered breathing and other respiratory disorders. We are dedicated to developing innovative products to improve the lives of those who suffer from these conditions and to increasing awareness among patients and healthcare professionals of the potentially serious health consequences of untreated sleep-disordered breathing. www.resmed.com.

About Go4Venture
Go4Venture is an investment bank specialising in advising on and executing growth strategies for fast-growing innovative companies and their shareholders, including capital raising, M&A and valuation services. Bringing together an international team of seasoned professionals that combines investment banking, venture capital and technology industry expertise, Go4Venture has become particularly well-known for its international equity private placements services, where it has reached a position of leadership. For the past 10 years, Go4Venture has advised leaders in all areas of telecoms (www.blyk.com), media (www.carpo.com) technology (www.aldebaran-robotics.com), internet (www.webjam.com) and clean technology (www.electrops.it). Go4Venture Advisers LLP is authorised and regulated by the Financial Services Authority. www.go4venture.com.

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Intent Media Raises $9 Million

Intent Media, a New York-based online advertising startup launched by the founding team of Site59, has raised $9 million in Series A funding led by Matrix Partners, according to a regulatory filing. The round closed in Q1. According to its website, Intent Media “sits at the intersection of online retail and advertising, and aims to unlock the vast media value that exists inside of e-commerce sites.” www.intentmedia.com

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Sticky inflation, redux

Last week UK inflation fell below the Bank of England's target for the first time since September 2007, meaning it has taken almost two years of financial crisis to bring inflation back below 2 per cent. Sticky meet UK inflation. UK inflation meet sticky. UK inflation is a bit sticky relative to its CPI peers as well....

P2i Labs Raises £4.1 Million

P2i Ltd., a UK-based developer of liquid-repellent nano-coating technology, has raised £4.1 million in Series C funding. Swarraton Partners led the round, and was joined by Naxos Capital Partners and return backer Unilever Ventures. P2i was advised on the deal by ICON Corporate Finance. www.p2ilabs.com

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American Industrial Completes Fleetwood Biz Buyout

American Industrial Partners has completed its buyout of the motor home business of Fleetwood Enterprises Inc. (OTC BB: FLTWQ). The deal was valued at $33.2 million, including certain assumed liabilities. Greenhill & Co. ran the sale process. Fleetwood shareholders include Tennenbaum Capital Partners. Concurrent with the close, Fleetwood laid off 700 employees, but said that American Industrial is expected to make 650 hires over the next few weeks.

PRESS RELEASE

Fleetwood Enterprises, Inc. (OTC Bulletin Board: FLTWQ), a leading producer of motorized recreational vehicles and manufactured homes, today announced the closing of the previously announced sale of its motor home assets to American Industrial Partners Capital Fund IV, L.P. (AIP). The purchase price of $33.2 million is inclusive of certain assumed liabilities and is subject to customary post-closing adjustments.

Concurrently, Fleetwood terminated approximately 700 employees associated with this portion of its business. Affected employees were notified earlier this week. The new owners are expecting to hire approximately 650 employees over the next several weeks. Fleetwood continues to own two idled motor home plants in Pennsylvania and California, although the Riverside, Calif. plant will be operated temporarily by AIP under license.

The sale includes two motor home manufacturing facilities, two motor home service facilities, and Fleetwood’s Gold Shield supply subsidiary, all presently located in Decatur, Indiana. It also includes the intellectual property for Fleetwood’s existing motor home brands and certain machinery and equipment in Riverside, California.

Additional information about Fleetwood’s reorganization may be found online in the news section of www.fleetwood.com or at www.kccllc.net/fleetwood.

About AIP

American Industrial Partners was founded in 1989 and is a leading US based private equity firm that makes control equity investments, in partnership with management, in well positioned US headquartered industrial companies with leading market shares that can benefit from the firm’s systematic approach to implementing strategic and operational improvements. It is investing its fourth fund which recently closed with $405.5 million of committed capital. For more information, visit www.aipartners.com or American Industrial Partners can be reached at 212-627-2360.

About Fleetwood Enterprises, Inc.

Following the sale of its motorized recreational vehicle business, Fleetwood Enterprises, Inc. and its various subsidiaries continue to produce, distribute, and service manufactured housing. The company is dedicated to providing high-quality, innovative products that offer exceptional value to its customers. Fleetwood continues to employ approximately 1,100 people in 11 plants located in nine states. Fleetwood’s products are primarily marketed through an extensive dealer network throughout the United States and Canada. The company is headquartered in Riverside, Calif.

This press release contains certain forward-looking statements and information based on the beliefs of Fleetwood’s management as well as assumptions made by, and information currently available to, Fleetwood’s management. Such statements reflect the current views of Fleetwood with respect to future events and are subject to certain risks, uncertainties, and assumptions, including risk factors identified in Fleetwood’s most recent 10-K, 10-Q and other SEC filings.

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Superman doesn’t have to be a public sector bureaucrat

While it’s not official yet, a private sector rescue of CIT is welcome news to many small businesses, especially many retailers and their vendors weeks before the back to school season begins. Also, many take cues from the trends in BTS in planning their year end holiday season and having CIT’s factoring business alive to fight another day hopefully provides a stable background for planning. The sigh of relief is evident in the rally in global equities, the rise in bond yields, the 7 week low in the $ index and subsequent rise in commodity prices. With the economic calendar light this week, attention will remain on both earnings and revenue season. Also this week, Bernanke gives his semi annual testimony on the economy and monetary policy in front of Congressional members. While the recent discussion on the Fed has been on QE and exit strategies, the fed funds rate at essentially zero and for how long is another dilemma for them.


Timber!

Friday's much better than expected US housing start figures are still feeding through into positive sentiment this Monday. At 582,000, the number reported by the Commerce Department beat analyst expectations of 530,000 by one of the widest margins yet since the crisis. But just how significant a turnaround is this? Well,...

Secondary Sources: House Prices, Fed, California vs. Ireland, Stiglitz

A roundup of economic news from around the Web.

  • House Prices Ready to Rise?: Writing for voxeu, William C. Wheaton says house prices are ready to bottom out. “During the last decade, net new household formation averaged approximately 1.4 million per year. Last year, the Census reported that the U.S. added only 544,000 new households – during severe contractions the young stay at home, singles “double up”, and household formation (normally) slows. Even with declining demographics, however, most analysts foresee new household growth resuming to a level of at least 1 million by 2010 and beyond. If we conservatively add 200,000 demolitions per year, the US economy will “need” at least 1.25 million new units yearly in the near future. With today’s currently depressed construction, this generates a yearly deficit of 750,000 units. At that rate, the current excess inventory of units for sale or rent will be back below normal by 2011. Prices historically have a strong relationship with sales “duration” – the ratio of inventory-to-sales. Hence under reasonable conditions, in two years we will have to increase construction considerably and prices will have to justify the cost of that construction.”
  • Fed and Bear Stearns: On his Maverecon blog, Willem Buiter looks at the Fed’s holdings from the rescue of Bear Stearns. “By any measure, the Fed is in the hole with all three SPVs. Its own estimates are that the amount by which the fair value of the net portfolio assets of each vehicle falls short of the outstanding balance of the loans extended to each of these vehicles (including accrued interest) is US$ 3.77 billion for Maiden Lane I, US$ 1.97 billion for Maiden Lane II and US$ 2.82 billion for Maiden Lane III. This is likely to be an underestimate of the true loss, because the reported fair value of the assets in the Maiden Lane vehicles is likely to overstate the present value of their held-to-maturity net cash flows. Much of the assets is illiquid, especially those in the AIG-related SPVs, Maiden Lane II and III.”
  • Ireland and California: Writing for Credit Writedowns, Edward Harrison sees similarities between Ireland and California. “For quite some time now I have been of the view that there are a number of striking similarities between the goings on in Ireland and those in California, none of them good. Both locations have seen extraordinary rises in home prices turn to massive busts. As a result, both locales have seen depression-like collapses in consumer demand and the local economy. Unemployment and government deficits are surging in both California and Ireland. But, both California and Ireland have zero control over monetary policy and this is the crucial connection.”
  • Stiglitz: Michael Hirsh of Newsweek laments Joseph Stiglitz’s outsider status in Washington. “Despite the Obama team’s occasional efforts to reach out to him, Stiglitz remains deeply unhappy about the administration’s approach to the financial crisis. Rather than breaking up or restructuring the big banks that failed, “the Obama administration has actually expanded the notion of ‘too big to fail,’ ” he says. In a veiled poke at his dubious standing in Washington, Stiglitz adds: “In Britain there is a more open discussion of these issues.” A senior White House official, responding to this critique, says that the Obama administration is most often criticized these days for intervening too much in the economy, not too little.”

Compiled by Phil Izzo


TowerBrook Seeks Bankruptcy for GTCR-Backed Wilton Holdings

WILMINGTON, Del (Reuters) - Creditors of Wilton Holdings Inc, one of largest makers of equipment for decorating food, asked a court to put the company in Chapter 11 bankruptcy due to $208 million in debts, according to court documents.

A New York affiliate of private equity firm TowerBrook Capital Partners filed the involuntary bankruptcy petition against Wilton, which is owned by private equity firm GTCR Golder Rauner LLC of Chicago.

The affiliate, JGF Credit LLC, said in the court documents filed on Friday that it recently acquired $104.3 million of unsecured claims against Wilton.

Deutsche Bank Trust Co Americas of New York, acting as administrative agent for an additional $104.3 million claim, also joined the petition.

Wilton of Woodridge, Illinois, is one of the leading makers of products for decorating cakes and cookies and employs 1,200.

Rating agency Standard & Poor’s cuts Wilton’s debt rating to CCC+ in April, which was withdrawn at Wilton’s request. S&P warned late last year that Wilton was highly leveraged, vulnerable to fads and a slowing economy and was behind on a plan to cut costs.

Wilton and TowerBrook could not be reached for comment.

The case is In re Wilton Holdings Inc, U.S. Bankruptcy District of Delaware, No. 09-12563. (Reporting by Tom Hals; Editing by Muralikumar Anantharaman)

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