Country Returns Since The Lehman Collapse


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The S&P 500 is still 20.34% below its level just before the Lehman collapse, and 49 of the 82 countries shown below have done better. Also, 28% (23) of the countries are up since Lehman. As shown, China is up the most since September 12th with a gain of 30.55%, followed by Venezuela (28.35%), Indonesia (26.71%), Turkey (23.57%), Vietnam (15.06%),…


Fed keeping a close eye on its burgeoning balance sheet


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The Federal Open Market Committee released the minutes of its August meeting on Wednesday, and as usual, they make for useful reading. Still, just in case you’d rather not peruse all ten pages of minutes, here’s the (shorter) statement regarding the meeting. Emphasis FT Alphaville’s:
Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out….

“The Decline of Job Loss and Why it Matters”


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In the post

Job Losses are Not the Problem
, I noted that the graph from Andy Harless shows that both the rates of job creation
and job destruction have declined over time, and I invited speculation as to why
that has happened. Steven Davis of the University of Chicago Graduate School of Business sends an email with more than just speculation,
there are links to two of his papers on these issues. The first looks at the
declining rate of job loss and why it matters:


The Decline of Job Loss and Why It Matters, by Steven J. Davis, University of
Chicago, Graduate School of Business, American Economic Review: Papers &
Proceedings 2008, 98:2, 263–267
: [AEA
Papers & Proceedings
]: There is considerable evidence that American workers
face lower risks of job loss in recent years than 10, 20, or 30 years earlier. I
summarize some of the evidence for this claim and explain why the decline of job
loss matters. My attention centers on “unwelcome” job loss: employer-initiated
separations that lead to unemployment, temporary or persistent drops in
earnings, and other significant costs for job losers. Since there is no fully
satisfactory statistic for the incidence of job loss, I consider several
measures and data sources.


I. The Decline of Job Loss The Federal-State Unemployment Insurance Program
provides cash benefits to experienced workers who become unemployed “through no
fault of their own” and who meet other requirements that vary somewhat by state.
Administrative data on new claims for unemployment benefits under this program
provide a useful indicator for cyclical and longer-term movements in job loss
rates. Drawing on these data, Figure 1 shows a dramatic decline in new claims
for unemployment benefits since the 1970s and early 1980s. New claims average
0.24 percent of employment per week from January 2004 to November 2007, slightly
below the 0.26 percent average from January 1996 to December 1999, and well
below any earlier period covered by the data.

Davis

The new claims rate responds to changes over time in eligibility requirements
and takeup rates, as well as in the incidence of job loss. Thus, it is important
to ask how other job loss indicators compare to Figure 1. Davis et al. (2007)
consider the longer-term evolution of monthly unemployment inflow rates, as
measured from Current Population Survey (CPS) data on unemployment by duration.
They report that unemployment inflows fell from about 4 percent of employment
per month in the early 1980s to 2 percent or less by the mid-1990s and
thereafter. Robert Shimer (2007, Figure 4) and Michael Elsby, Ryan Michaels, and
Gary Solon (2007, Figure 2) report a similar result. The downward drift in
monthly unemployment inflows is more gradual than the post-1982 drop in new
claims in Figure 1, but the basic pattern is otherwise similar.

Shigeru Fujita and Garey Ramey (2006) estimate employment-to-unemployment flows
using data on labor force status in short CPS panels, rather than data on
unemployment by duration in CPS cross sections. They also find dramatic declines
in employment-to-unemployment flow rates since the early 1980s. Jay Stewart
(2002) calculates transitions from employment to unemployment using March CPS
data from 1976 to 2001. … Stewart’s approach also yields dramatic declines in
employment-to-unemployment flows since the early 1980s. The declines are
concentrated in the 1990s for men and are relatively uniform throughout the
1980s and 1990s for women.

The Displaced Worker Survey (DWS) provides yet another source of information
about the incidence of job loss. The DWS has been conducted every two years
since 1984 as a supplement to the CPS. It asks about job loss in the previous
three years (five years before 1996) due to plant closure, layoffs, and other
reasons unrelated to the worker’s individual performance. … Figure 10 in
Farber (2007) shows that the three-year job loss rate in the 2003–2005 period is
at or near its lowest level since the inception of the DWS, about one-third
below the 1981–1983 period, and nearly identical to the corresponding rate for
the 1987–1989 and 1997–1999 periods.

Measures of (gross) job destruction by employers also point to declining risks
of job loss for US workers. The job destruction rate is calculated by summing
employment declines over all employer units that shrink or exit during a given
time interval and then dividing by the overall level of employment to obtain a
rate. This measure captures the rate at which employers eliminate employment
positions rather than the rate at which workers lose jobs, but, not
surprisingly, the two are closely linked… See Davis, R. Jason Faberman, and
John Haltiwanger (2006) for evidence.

The Bureau of Labor Statistics (BLS) produces quarterly job destruction
statistics in its program on Business Employment Dynamics (BED). These data show
sizable declines in the rate of private sector job destruction after the
1990–1991 recession and again after the 2001 recession (Faberman 2006 and BLS
data). Private sector job destruction averages about 6.5 percent of employment
per quarter from the first quarter of 2005 to the first quarter of 2007 (BLS
data), lower than any other period back to 1990 (Faberman 2006). Job destruction
measures constructed from the Longitudinal Business Database at the Bureau of
the Census also show a decline in private sector destruction rates after the
early to mid-1980s (Davis et al. 2007). Quarterly data for the manufacturing
sector pieced together from multiple sources suggest that job destruction rates
have trended downward since the early 1960s (Davis, Faberman, and Haltiwanger
2006).

Summing up, a variety of indicators based on household surveys, establishment
surveys, and administrative records show a long-term decline in the risk of job
loss facing US workers. New claims for unemployment benefits and CPS based
measures of employment-to-unemployment flows imply dramatic declines in the risk
of job loss since the 1970s and early 1980s. Job destruction measures from
various sources also point to large declines in the risk of job loss. The DWS is
something of an outlier in suggesting that essentially the entire long-term
decline in the risk of job loss reflects a recovery from the deep recession of
the early 1980s.

This body of evidence is sharply at odds with populist rhetoric about declining
job security for American workers, a view some economists have also espoused. I
refer the reader to Davis (2007) for a detailed critique of claims that American
workers have suffered a long-term decline in job security. Here, I pause only to
highlight a basic, but crucial, distinction between the risk of job loss and the
durability of employment relationships.

Many observers interpret declines in the durability of employment relationships
(e.g., declines in median job tenure) as evidence of an increased risk of
unwelcome job loss and a decline in job security. This interpretation is
unwarranted. Job tenure statistics do not inform us about job security or the
risk of job loss for the simple reason that most employment relationships do not
end with an employer-initiated separation. Indeed, data from the BLS Job
Openings and Labor Turnover Survey imply that layoffs and discharges for cause
account for only 36 percent of worker-employer separations in the 2001 to 2006
period, much lower than the percentage accounted for by workers who quit a job
(Davis 2007). The 36 percent figure may be an understatement, but even if
employers initiate 70 percent of all separations—an extremely dubious
proposition—one cannot form reliable inferences about job security and the risk
of unwelcome job loss from statistics on the durability of employment
relationships.

Moreover, workers are more prone to quit when labor market conditions are tight
and job opportunities are plentiful. In light of this well-documented pattern
and the high share of worker-initiated separations, one might just as well
interpret declines in job tenure as evidence that workers now enjoy a greater
abundance of attractive job opportunities. This interpretation merits just as
much weight—and just as little— as the claim that shorter job tenures imply an
erosion of job security for American workers.

Two points. First, Jacob Hacker has been one of the people leading the effort
to highlight The Great Risk Shift, and I would guess he'd argue, based
upon

past remarks
, that job loss and income volatility is only one part of his argument:

[F]amily income volatility is scarcely the only measure of economic
insecurity or the “risk shift” that I and others have discussed. Only one
chapter in my book is about family income instability. The rest are about
pensions, health care, the decline in traditional job security, the increasing
debt burdens reflected in families’ financial balance sheets—in short, about the
whole range of economic risks that Americans face. Many of these risks, such as
health costs, retirement insecurity, bankruptcy, and mortgage foreclosure,
either do not show up in the incomes of working-age people or show up only
weakly.

As I put it in The Great Risk Shift, “The up-and-down movement of
income among working-age families is a powerful indicator of the economic risks
faced by Americans today. Yet economic insecurity is also driven by the rising
threat to families’ financial well-being posed by budget-busting expenses like
catastrophic medical costs, as well as by the massively increased risk that
retirement has come to represent, as more and more of the responsibility of
planning for the post-work years has shifted onto Americans and their families.
When we take in this larger picture, we see an economy not merely changed by a
matter of degrees, but fundamentally transformed—from an all-in-the-same boat
world of shared risk toward a go-it-alone world of personal responsibility.”

Second, the graph from Andy Harless in this post shows that the rate of job
creation is falling at the same rate as the rate of job destruction. An
evaluation of the risks faced by workers must also take account of the declining
probability of finding a job after a job loss. If the paper covers this point (and it may have, I read it quickly), I missed it.

Moving on, the second paper examines "the empirical
relationship between the decline in business variability and job destruction and
the decline in unemployment flows." In essence, this paper associates the
changes in the rate of job loss with The Great Moderation. If business volatility is higher after the recession than before, as many expect it will be, it will be interesting to see if the change in the rate of job loss and unemployment flows accords with the predictions of this model (I should note that one of the co-authors is a former graduate student):

Business Volatility, Job Destruction, and Unemployment,
by Steven J. Davis, R. Jason Faberman, John Haltiwanger, Ron
Jarmin, and Javier Miranda, 9 August 2009
: Trends in the volatility of economic activity attract considerable attention.
Many recent studies examine the "great moderation" episode in aggregate U.S.
fluctuations.[1] Another recent
line of research finds a secular decline in the variability of business-level
changes. In this regard, R. Jason Faberman (2008) documents a decline in the
rate at which jobs are reallocated across establishments. Steven J. Davis, John
Haltiwanger, Ron S. Jarmin and Javier Miranda (2006; hereafter DHJM) document a
decline in the cross-sectional dispersion of business growth rates and in the
time-series volatility of business growth rates.[2] The secular decline in business-level variability measures
roughly coincides with a marked decline in the magnitude of unemployment flows.
Inflows, for example, fell from 4 percent of employment per month in the early
1980s to about 2 percent per month by the mid 1990s.

In this paper, we quantify the empirical relationship between the
decline in business variability and job destruction and the decline in
unemployment flows. To do so, we relate industry-level movements in the
incidence and duration of unemployment to industry-level movements in several
indicators of variability and job destruction. …

The industry-level data provide strong evidence that changes in business
volatility, dispersion, job reallocation and job destruction account for big
changes in the incidence of unemployment. This key result holds in the annual
and the quarterly data. We estimate, for example, that a decline of 100 basis
points in an industry’s quarterly job destruction rate lowers its monthly
unemployment inflow rate by 28 basis points with a standard error of 4 basis
points. …

To put the estimate in perspective, the quarterly job destruction
rate for the U.S. private sector fell by 174 basis points from 1990 to 2005.
Multiplying this drop by its estimated effect yields a decline of 48 basis
points in the unemployment inflow rate, which amounts to 55 percent of the drop
in the unemployment inflow rate from 1990 to 2005 and 22 percent of its average
value. Analogous calculations based on our estimates with annual data imply that falling job destruction rates account for 28
percent of the larger drop in unemployment inflow rates from 1982 to 2005. …

An interesting question raised by our results is what drives the secular
declines in business variability, job destruction and unemployment inflows. Our
study does not provide a definitive answer to this question, but we show that
the basic pattern holds across major industries in the U.S. economy. We
interpret this pattern as reflecting a secular decline in the intensity of
idiosyncratic labor demand shocks. … Other interpretations of the same basic
patterns are also possible, as we briefly discuss.

We also develop some implications of our findings for the unemployment rate
and its cyclical behavior. Simple approximations and decompositions along the
lines of those used by Robert Shimer (2007), Michael Elsby, Ryan Michaels and
Gary Solon (2009) and Shigeru Fujita and Garey Ramey (2009) establish three
results. First, the steady state unemployment rate fell by 43 log points from
1976-1985 to 1996-2005. Second, nearly the entirety of this decline reflects a
drop in the unemployment inflow rate. This result, when combined with our
estimates, implies that the secular fall in job destruction accounts for about a
quarter to a half of the long-term decline in the unemployment rate.

Third, while we focus on low frequency behavior, our findings also have
implications for cyclical dynamics. In particular, the big secular decline in
unemployment inflows implies a fall by half in the sensitivity of the
unemployment rate to cyclical movements in the job-finding rate. More generally,
our results highlight the dependence of short run unemployment dynamics on the
background level of business volatility and job destruction. …

In closing, we return to the question of what our findings say about changes
in the underlying structural characteristics of the economy. Secular declines in
unemployment flows, job destruction rates, and business volatility and
dispersion measures are consistent with the predictions of standard search and
matching models when perturbed by a persistent fall in the intensity of
idiosyncratic labor demand shocks. We think this interpretation is a natural
one. However, our empirical evidence does not preclude a major role for other
long-term structural developments with important effects on business
variability, job destruction and unemployment flows. For example, one might
interpret our findings in terms of greater compensation flexibility over time or
increased adjustment costs. Changes of either sort lead to smaller employment
responses to labor demand shocks of given size. A careful assessment of these
alternative interpretations is an important topic for future research.

Open Thread


This post is by from Across the Curve


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I will be traveling the remainder of today and for a bit tomorrow.

I am not writing a closing post and I am not sure how much I will be blogging Thursday and Friday.

We are heading down to Richmond and Charlottesville, Virginia to see our daughter.

Comment away in my absence. If you are a first time commenter it may take some time to get up there as I will not be checking on a constant basis as I normally do.

And enjoy the weekend.

JJJ



Tibco/SAP Rumors Resurface


This post is by from BARRONS.com: Tech Trader Daily


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Tibco (TIBX) shares have been juiced today by a revival of rumors that the company might be a target for SAP (SAP). This rumors crops up periodically; in August, a German magazine reported that talks between the two companies were engaged in “very advanced talks.”

In a research note last week, Jefferies analyst Katherine Egbert noted that she has heard “conflicting reports” about a potential partnership between the two companies. She wrote that Tibco management “seems eager to establish a relationship with the ERP giant,” which she says has had an “uneven” middleware strategy. On the one hand, partnering with SAP could give Tibco access to a larger installed base; on the other hand, she writes, a deal could “rob” the company of some future revenue growth opportunities.

A partnership between the two, she adds, would not necessarily be good for the stock, since it would imply that an acquisition of Tibco by SAP isn’t happening. Egbert wrote that her checks found that there are no active discussions between Tibco and any strategic or financial buyer. She added that the company could be worth $10-$15 a share in a takeout – but stressed that “we don’t see Tibco as a target at the current time.”

TIBX today is up 30 cents, or 3.5%, to $8.97.

AT&T Won’t Buy LEAP, Either


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While we’re on the subject of companies AT&T (T) isn’t going to buy, I would remiss not to mention Leap Wireless (LEAP), which is getting a boost today from rumors that it might be acquired by Ma Bell. The theory, I suppose, is that buying LEAP would give AT&T Wireless a boost in the growing market for pre-paid mobile plans. But the combination is not likely to happen.

Soleil analyst Michael Nelson notes that given increased scrutiny of the wireless industry by the current administration in Washington, and the fact that AT&T already controls about 30% of the U.S. wireless market, a deal with LEAP “would face significant regulatory hurdles.” He also notes that the company’s use different technologies: LEAP operates a CDMA network; AT&T uses GSM. (Although both are migrating to the LTE standard.)

A more logical combination, Nelson contends, would be Leap and Metro PCS (PCS), another big player in the pre-paid mobile phone segment. He thinks a recent pick-up in competition in pre-paid plans could spur talks between the two. A LEAP/PCS combo, he writes, would create a company with licenses covering most of the top 200 U.S. markets, and provider a more effective rival to Sprint (S) and American Movil’s (AMX) Tracfone unit. Nelson notes that PCS had proposed a stock-for-stock merger with LEAP in 2007, but the approach was rebuffed.

LEAP today is up $1.12, or 6.8%, to $17.60.

PE Pro Faces New Fundraising Fraud Allegations


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NEW YORK (Reuters) – A fund-raiser for Barack Obama, Hillary Clinton and other Democrats who was charged last week with defrauding Citigroup Inc (C.N) also defrauded other banks, U.S. prosecutors said.

The allegations against fund-raiser Hassan Nemazee — arrested last week on a bank fraud charge and released on $25 million bail — were not formal charges but were in a letter dated Tuesday from prosecutors to a Manhattan federal court magistrate judge handling the case.

Nemazee, 59, head of a private equity firm, was accused on Aug. 25 of one count of bank fraud for seeking a fraudulent $74 million loan from Citigroup’s banking unit. He said after his arrest that he had repaid the loan.

“Nemazee repaid his fraudulent loan from Citibank with approximately $74 million that he obtained by defrauding yet another bank,” the letter by U.S. Attorney Preet Bharara said. “Furthermore, the Government learned last week that the defendant had defrauded yet another financial institution (Bank No. 3) by obtaining multiple lines of credit on the basis of similar false and fraudulent information.”

The letter did not identify the second and third banks and said Nemazee’s total outstanding loans to the third bank exceed $100 million.

Nemazee’s lawyer could not immediately be reached for comment.

Nemazee is listed as having been among the top “bundlers” of contributions to Obama’s presidential campaign, according to OpenSecrets.org, a website maintained by a nonpartisan research group, the Center for Responsive Politics.

He was a national finance chairman of Hillary Clinton’s 2008 presidential campaign, and a supporter of Sen. John Kerry’s run for the White House in 2004.

The prosecutor’s letter was in response to a written request from Nemazee’s lawyer Marc Mukasey for a hearing to address a freezing of funds of Nemazee and his family held in Bank of America Corp (BAC.N) and in other accounts.

“With his accounts secretly and summarily frozen, and no access to his office, he is unable to retrieve personal information such as phone numbers, account numbers and addresses,” Mukasey’s letter said. It said these were critical to meet the needs of of his family and to hire defense counsel and Nemazee’s constitutional rights were in danger of being violated.

Nemazee typically donates more than $100,000 annually to Democratic political candidates, including Senate Majority Leader Harry Reid and Sen. Charles Schumer, and sits on the board of the Iranian American Political Action Committee.

Nemazee faces up to 30 years in prison and a fine that could reach $1 million or more on the one charge.

U.S. v. Nemazee, 09-mj-1927 in U.S. District Court for the Southern District of New York (Manhattan).

(Reporting by Grant McCool, editing by Gerald E. McCormick)

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Sarkozy gets tough on bank bonuses and presses the G20 to follow suit


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President Nicolas Sarkozy of France imposed tough curbs on bank bonuses. He ruled that brokers and traders defer their bonuses over three years and be paid only on performance.

Later this month, the G20 nations meet in Pittsburgh. Sarkozy wants his proposal for bank bonuses on the agenda. France wants three options debated:

  • A maximum ratio of a bank’s gross operating income to be earmarked for variable pay.
  • A special tax on the financial sector whose revenues could be channeled into national schemes for insuring retail bank deposits.
  • A straightforward limit to bonuses in terms of value.

Continue reading Sarkozy gets tough on bank bonuses and presses the G20 to follow suit

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Blaming the Wrong Group

Dan Gross is one of America’s best financial journalists, but that doesn’t mean he always gets it right (He did, after all, publish a book in the spring of 2007, just before the financial world fell apart, which claimed that “bubbles are great for the economy”).

In his latest column for Newsweek, “The Failure Caucus,” Gross maintains that those who are skeptical about the near term prospects for a sustainable recovery have a vested interest in a different kind of outcome — they want to see the U.S. economy fail.

Most Americans have a lot riding on the success of the government’s efforts to pull the U.S. economy out of its ditch: individual investors, bankers, Federal Reserve Chairman Ben Bernanke, Democratic politicians, and taxpayers. A somewhat smaller group has a lot riding on the failure of these efforts. I’m not simply talking about investors who are betting against the markets and who believe the recent stock-market rally is overdone. I’m talking about the Failure Caucus, a group spanning the political spectrum that has invested reputations, egos, and, in some instances, their political futures on the notion that we’re in for several more years of economic trauma.

Unfortunately, Gross relies on the old propagandist’s trick of lumping fools and crazies together with rational observers who have legitimate cause for concern, in a way that discredits them all.

Worse, he fails to see the irony of his position: it’s actually the permabull posse of policymakers and financial leaders — not to mention the cheerleaders in the media  – who failed to see the disaster coming, and who now argue that a debt-and-speculation-fueled overdose can only be cured with more of the same, who are the ones betting on failure.

In fact, the real risk right now, to paraphrase Michael Darda, an optimistic economist cited by Gross, is in being too positive.

 

Source:
The Failure Caucus
Daniel Gross
Newsweek, September 02, 2009 11:47 AM ET
http://www.newsweek.com/id/214765


Flextronics Executives Reboot as PE Firm


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Michael Marks made the business of manufacture and supply-chain outsourcing safe for Silicon Valley to embrace, by building Singapore-based Flextronics into a global giant. During Marks’ reign, Flextronics made products as diverse as Legos to Microsoft Zune to XBox, and few people know more about how technology goes from concept to product.

Now he’s turned his substantial expertise, and that of his Flextronics CFO and CTO, toward private equity. Marks is a founder of Riverwood Capital, a Menlo Park, Calif.-based firm that last year began raising its debut fund with a $1.25 billion target.

Marks opened his own shop after a stint with Kohlberg Kravis Roberts & Co. While at KKR, the firm bought Flextronics Software (now Aricent) along with Sequoia Capital for a deal that valued the programming subsidiary at $900 million; it invested $700 million in Sun Microsystems; and bought South Korean semiconductor-maker Yageo for $230 million, records show.

More recently, Marks did a stint as interim CEO of Tesla Motors and sat on the board of Zappos, prior to its sale.

At Riverwood, the former Flextronics team is working to make venture growth-style investments that sit between venture capital and leveraged buyouts. It’s not afraid to put on leverage but says it won’t rely on debt to make deals work.

A perfect example of the firm’s dealmaking came along earlier this week in the form of Calix. The communications equipment supplier raised $50 million in equity from its existing VC investors and $50 million in debt from Silicon Valley Bank. Riverwood joined the cabal as a new investor and Marks took a seat on the board. He did not return request for comment on the deal.

Calix had raised more than $220 million from VCs before its latest round but may find itself at an inflection point if it can cash in on any of the government’s $7.2 billion U.S. Broadband Stimulus Program.

Other Riverwood investments include several off-shore technology companies such as fables semiconductor makers Montage Technology, Teralane Semiconductor and Arkmicro, which are all based in China.

The firm has also been active in Latin America, backing Cordoba, Argentina-based BPO shop Allus, Buenos Aires-based IT services company Globant and Montevideo, Uruguay-based airline Pluna.

If you don’t want to give up equity but still want the value of the former Flextronics team’s advice, you might consider employing Riverwood Solutions, the consulting arm of the firm.

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On track with Burlington Northern (BNI) and CN Rail (CNI)


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“We rate both Burlington Northern Santa Fe (NYSE: BNI) and Canada’s CN Rail (NYSE: CNI) as buys,” says analyst Tom Slee.

The contributing editor to Gordon Pape’s Internet Wealth Builder suggetss, “Burlington Northern remains my number one pick in the sector but CN is excellent value at these levels.” Here’s his bullish review.

“Burlington Northern Santa Fe had a relatively good second quarter, posting earnings of $1.18 a share. This is down from $1.34 in 2008 but beat the consensus estimate of $1.01.

“Year-over-year revenues fell 26% although this was offset by a 33% reduction in costs as a result of tighter controls and lower energy prices.

Continue reading On track with Burlington Northern (BNI) and CN Rail (CNI)

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Sun Capital Loses Another New York Pro


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Need a desk in New York City? Check out the 100 Park Avenue offices of Sun Capital Partners, which are beginning to look like the bleachers at a Tampa Bay Rays game.

The latest to leave is Kevin Feinblum, a principal who had been with the firm since 1993. He previously had been with Lehman Brothers. No official word yet on Feinblum’s destination, but multiple sources tell peHUB that he has agreed to join Advent International (presumably in Boston, since Advent doesn’t have a New York office).

Feinblum’s departure comes just a month after fellow New York principal David Blechman quit to join Tower Three Partners, and within the same year that Sun canned half of its New York staff as part of firm-wide layoffs. That’s quite a lot of empty seats, particularly for a firm that still has not cut its bloated fund size (as of last check).

I’m told that Sun does not plan to specifically replace Feinblum, although the firm is known for promoting from within. Also worth noting that Sun is currently seeking to hire six new associates and a VP of operations.

I asked an Advent International spokeswoman about Feinblum, and will update this post if/when I hear back.

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Info from the Bollinger Band Scan


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Stockcharts.com provides a number of pre-defined scans using classic indicators. In particular, I always keep an eye on the Bollinger Band scan that shows stocks moving above their upper band and stocks moving below their lower band. Selling pressure is picking up as many more stocks moved below their lower band on Tuesday, September 1st.

090902scanbb

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The Bright Side of an M&A Bottom: Fees Can Only Go Up, Right?


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Wall Street certainly should hope the M&A market has bottomed out.

Fees have dwindled for the investment banks that are paid for advising companies on transactions as the M&A market cratered in the past 12 months. M&A advisers globally collected just $551 million in fees in August, the lowest total since March 1997. It was worse in U.S. market, where the figure was just $115 million, the lowest since March 1995, according to Dealogic.

For the tear to date, fees are at 2003 levels world-wide and at 1995 levels in the U.S., according to the data.

Alas, it might be awhile before fees bounce back. August might mark the bottom of the M&A market, but it still is doubtful that M&A will come roaring back this year. Some M&A professionals peg 2010 as the earliest for an M&A recovery.

Below is a chart of the monthly M&A advisory fess since 2007.


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Below is chart of the advisory fees at the top six banks compared to the same period last year.


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