市場憂慮西班牙和葡萄牙陷入債務危機

今次觸發環球股市急挫，是市場憂慮歐元區內財赤嚴重的西班牙和葡萄牙會步希臘後塵陷入債務危機，拖垮歐元區經濟甚至觸發新一輪全球金融危機。

Bilibala => the financial situation in Europe is worse than in North America, not because of economy. USA debt to GDP ratio is just as high as countries in Europe. It is the regulation set up in Europe, instead of a united nation, Europian countries form a Union. In order the regulate such Union, it sets up certain the financial regulations which do not have flexibility like USA. If Europe willing to turn on its presss to print money out, the problem will solve right away.

繼希臘後，歐元區內經濟比重較大的西班牙和葡萄牙亦可能爆出財政問題，兩國政府最新拍賣的一批債券反應遠遠不及預期。如果想增加債券吸引力，西班牙和葡萄牙就要提高債券息率，但這樣做會令借貸成本增加，等同增加政府的財政赤字。

歐盟最新估計葡萄牙、希臘和西班牙的財赤原本已經很嚴重，去年的財赤佔國內生產總值接近甚至超過百分之十，如果再惡化，市場恐怕三個國家無力還債，後果可以很嚴重，最壞的情況是西班牙和葡萄牙一旦爆煲，會牽連整個歐洲甚至令歐元區瓦解，引發另一場全球金融危機。

可否避過這個最壞情況，保住西班牙是關鍵，因為西班牙的經濟規模相當大，在歐元區排第四大，差不多等如希臘、葡萄牙和愛爾蘭加起來的兩倍，但現時西班牙的失業人口高達四百萬，過去可以靠低利率去撐經濟，但金融海嘯後國家稅收減少，又不可以透過貨幣貶值去應付今次危機，如果連低息這武器都失去，的確有機會步希臘後塵爆發信貸危機。

面對種種危機，西班牙政府對國家財政和經濟復蘇仍然樂觀，聲稱有一系列政策去降低財赤。人稱「末日博士」的魯賓尼早前在達沃斯世界經濟論壇上曾經表示，一旦西班牙倒下，恐怕會對歐元區釀成災難。

而金融界對葡萄牙、愛爾蘭、希臘和西班牙四個歐元區內高負債率的計時炸彈，用她們國家英文名字頭開了個玩笑叫做PIGS，這四國曾被寄望是歐元區經濟發展的新引擎，但自金融海嘯後已變成歐洲經濟復蘇絆腳石。

Yes, cuz can't use printing press.

Disney 1Q EPS down

Bilibala: it is possible Disney's EPS will go down cuz advertising contact was signed in 2009 when the economy is under recession. To me, I think the EPS will be the same as last year.

LOS ANGELES (AP) - Family entertainment giant The Walt Disney Co., which just absorbed Marvel Entertainment Inc., reports earnings for its fiscal first quarter after the market closes Tuesday.

WHAT TO WATCH FOR: The advertising recovery will likely help Disney's ABC and ESPN television networks, but the question is by how much.

Disney's movie studio, which has been faltering lately, will likely cause a drag on earnings. The company overhauled management at the department in October and recently closed offices at niche label Miramax Films, which some competitors are interested in buying.

Consumer sentiment should be reflected in the performance of the company's theme parks. It is unclear how soon Disney will be able to wean itself off discounting to keep attendance up.

Also, Disney executives may discuss the possibility of entering into a deal to provide movies and TV shows to Apple Inc.'s iPad, which may help studio earnings down the road. Apple CEO Steve Jobs remains Disney's largest shareholder since the entertainment company bought Pixar in 2006.

WHY IT MATTERS: Disney is closely tethered to consumer psychology because the brand is well known around the world. It sells products ranging from movies and books to clothes and toys. A good quarter could bolster confidence in the broader economy.

WHAT'S EXPECTED: Analysts surveyed by Thomson Reuters expect Disney to post 39 cents of adjusted earnings per share on sales of $9.62 billion.

LAST YEAR'S QUARTER: Disney reported an adjusted profit of 41 cents per share on revenue of $9.60 billion.

Buffett Loses Last AAA Rating as S&P Cuts Berkshire

Bilibala: now day, holding an AAA credit rating means nothing. With such low interest rate, if cash flow is not an issue, why not borrow and invest? This hold true to corporation and so to individual.

http://www.businessweek.com/news/2010-02-04/buffett-loses-last-aaa-rating-as-s-p-cuts-berkshire-update1-.html
(Adds shares in sixth paragraph, S&P comment in 11th.)
By Andrew Frye

Feb. 4 (Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc. was stripped of its last AAA credit rating by Standard & Poor’s after the billionaire investor agreed to buy railroad Burlington Northern Santa Fe Corp.

Berkshire, which is taking on debt to fund the $26 billion takeover, was cut one level to AA+ from S&P’s highest grade, the ratings firm said today in a statement. The downgrade comes the same day Berkshire filed to sell $8 billion of notes to fund the Burlington Northern purchase, and concludes a review that S&P announced on Nov. 4, the day after Berkshire disclosed the deal.
“The railroad acquisition will reduce what historically has been extremely strong capital adequacy and liquidity,” S&P said. “Risk tolerances appear to have increased.”

Buffett, 79, has called the railroad takeover an “all-in wager” on the U.S. economy. Berkshire lost its top credit grades at Fitch Ratings in March and at Moody’s Investors Service in April amid a slump in the firm’s manufacturing, retail and travel units. The earlier downgrades were on concern about Buffett’s successor and the firm’s derivative bets.

The ratings firms “are hedging their bets in the event of another economic downturn,” said Michael Yoshikami, chief investment strategist at Berkshire shareholder YCMNet Advisors. Buffett’s firm is “expanding in economically sensitive businesses, like the railroads,” he said.
Berkshire’s Class A shares fell $3,250, or 2.9 percent, to $108,450 at 2:07 p.m. in New York Stock Exchange composite trading. Buffett didn’t respond to a request for comment left with an assistant.

Wounded Pride
General Electric Co. and drugmaker Pfizer Inc. are among companies that lost their top credit grades from S&P in the past year. Berkshire, which Buffett built into a $170 billion company over four decades, was raised to AAA at S&P in 1989.

Berkshire reported its first loss since 2001 in the first quarter of 2009 as Buffett’s stock bets soured. The firm returned to profit in the second and third quarters as equity indexes advanced. Still, losses at Berkshire’s NetJets subsidiary and earnings declines at Clayton Homes contributed to a pretax profit plunge of more than half at Berkshire’s manufacturing, service and retailing units in the first nine months of 2009.

Spending the Stockpile
Buffett, the second-richest American, positioned Berkshire to weather a contraction in the U.S. economy by stockpiling $44 billion in cash. Starting in 2008, when corporate borrowing costs surged, he drew on that hoard to finance Goldman Sachs Group Inc., GE, Swiss Reinsurance Co. and the Mars Inc. takeover of chewing-gum maker Wm. Wrigley Jr. Co. Berkshire had about $26.9 billion of cash as of Sept. 30.

“Albeit weakened, we view the company’s liquidity position and balance sheet as still very strong.,” S&P said.

Berkshire is using $8 billion of the cash stockpile on the purchase of Forth Worth, Texas-based Burlington Northern, and said in the debt prospectus today it plans to sell $8 billion of senior unsecured notes. The notes may be sold as soon as today, according to a person familiar with the offering. The railroad deal is expected to be completed this quarter.

Buffett, Berkshire’s chairman and chief executive officer, said in May that the loss of top credit grades from Fitch and Moody’s had “no economic impact” on Berkshire. “My pride may be wounded just a bit,” he said in a Bloomberg Television interview.

Bond Yields
Corporate debt with an AA rating yields an average of 3.72 percent, or 12 basis points more than AAA bonds, according to Bank of America Merrill Lynch data as of yesterday. That means companies ranked AA pay an average of $1.2 million a year in extra interest costs on $1 billion of debt. The spread between AAA debt and AA bonds has tightened about 59 basis points since the beginning of 2009.

Berkshire’s AA+ ranking is between S&P’s AAA and AA ratings. The company’s 4 percent notes due in 2012 fell 0.13 cents on the dollar to 105.5 cents to yield 1.42 percent, or a spread of 60 basis points more than similar-maturity Treasuries, as of 10:34 a.m. New York time, according to Trace, the bond- price reporting system of the Financial Industry Regulatory Authority. A basis point is 0.01 percentage point.

S&P joins Fitch in citing concern about Buffett’s eventual departure from the company. Buffett has said he’ll be replaced by three or more people: a CEO from a list he and the board of directors keep, at least one person to manage investments and his son Howard Buffett, who has been picked to be the next chairman to carry on Berkshire’s corporate culture.

‘Ongoing Concern’
“Uncertainty surrounding management succession and management structure, corporate culture, and business strategy following an eventual transition of the company’s leadership from current CEO Warren Buffett is an ongoing concern,” S&P said. “This, in our view, is only partially mitigated by a board-approved succession plan.”

Mohnish Pabrai, the founder of Irvine, California-based Pabrai Investment Funds and a Berkshire shareholder, said the ratings company cut the grade because it “doesn’t like the uncertainty.”

“There is a very clear-cut succession plan, but he hasn’t shared it with Mr. S and Mr. P,” Pabrai said. Berkshire has “a very deep bench” of potential replacements.

The ratings company lowered Berkshire’s long-term counterparty credit rating and the financial strength ratings on the company’s main insurance operations to AA+ from AAA.

Berkshire and its subsidiaries cut about 3,000 jobs since December and now employ about 222,000 people, the company said in the debt prospectus today. That’s 1.3 percent less than the figure the company reported six weeks ago, and almost 10 percent below the 246,083 disclosed in the company’s 2008 annual report.

--With assistance from John Detrixhe in New York. Editors: Erik Holm, Dan Kraut
To contact the reporter on this story: Andrew Frye in New York at +1-212-617-1869 or afrye@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at +1-212-617-2432 or dkraut2@bloomberg.net

Bilibala Finance Portfolio - Jan 10

Top 10 Holdings @ Jan 31, 10

1. China Life (10.0%) M/M
2. China Mobile 1.1% M/M
3. Google (14.5%) M/M
4. Wells Fargo 5.3% M/M
5. China Cons Bank (10.3%) M/M
6. Manulife 1.1% M/M
7. Berkshire Hathaway 16.3% M/M
8. Imperial Oil / Exxon Mobil (5.5%) M/M
9. General Electric 6.3% M/M
10. HSBC (6.3%) M/M

Top 5 Sectors in Holdings @ Jan 31, 10

1. Insurance 34.0%
2. Telecom 25.8%
3. Banking 13.4%
4. Info Tech 7.8%
5. Conglomerate 6.1%

Top 5 subtotal to 87.2%

Performance & Market Stat @ Jan 31, 10

• Toronto down 5.5% in Jan, 05-10 average return 3.7%
• S&P500 down 3.7% in Jan, 05-10 average return (2.4%)
• Hong Kong down 8.0% in Jan, 05-10 average return 7.1%
• Shanghai down 8.8% in Jan, 05-10 average return 18.4%
• Bilibala Finance down 5.4% in Jan, 05-10 average return 24.1%

Google & GooJJe

http://www.reuters.com/article/idUSTRE60Q1ZC20100127?type=technologyNews?feedType=nl&feedName=ustechnology

BEIJING (Reuters) - A Google knock-off has surfaced in China to compete with the world's largest search engine, while at the same time pleading with it to stay in the country despite censorship and hacking allegations.

=> an interesting news, how creative & smart to build up a search website (not search engine) call "GooJJe".

Adding to China's reputation for copies of items such as designer clothes, coffee chains and DVDs, "Goojje" began vying with Google on January 14, the Henan Business Daily reported.

Google Inc had said two days earlier that it may close its Chinese Google.cn portal and pull out of China.

The name chosen by the newcomer is a play on words. The final syllable "jje" sounds like the Chinese word "older sister," while the "gle" syllable of "Google" is pronounced like the Chinese word for "older brother."

Goojje (www.goojje.com) has a search engine and provides social networking services. Its home page bears a Google-styled logo that combines hallmarks from the "older brother" and China's top home-grown search engine, Baidu Inc.

"Sister was very happy when brother gave up the thought of leaving and stayed for sister," the website says, in an apparent call for Google to stay in China.

Google was not immediately available for comment about the Goojje site.
Earlier this month, U.S.-based Google complained of censorship and a sophisticated hacking attack from within the country.

Keyword search results in Goojje give slightly different results than Google or Baidu but appear to be similarly filtered to avoid content China deems sensitive.

The Henan Business Daily said Goojje was founded by a female college student in the southern Chinese province of Guangdong. Contacted by Reuters, Goojje's web host declined to give details on the site's owner.
(Reporting by Yu Le and Ralph Jennings; Editing by Alex Richardson)

Berkshire surges after being chosen for S&P 500

http://www.reuters.com/article/idUSTRE60Q43G20100127?feedType=nl&feedName=usdai

NEW YORK (Reuters) - Shares of Berkshire Hathaway Inc surged on Wednesday after Standard & Poor's said it will add the company run by billionaire Warren Buffett to its S&P 500 stock index.

=> Berkshire Hathaway finally in S&P, this is a good news to lots of investors. On the other hand, stock price in long run in line with its earning performance (EPS) instead of whether it is in or out of an index. Therefore, this short term new is irrelevant to Bilibala's fair value on Berkshire Hathaway calculation. I personally think Berkshire Hathaway (class B share) worth US$120.

Berkshire's Class B shares rose $3.20, or 4.7 percent, to $71.20 in morning trading. The Omaha, Nebraska-based company's Class A shares rose $5,064, or 5 percent, to $106,815.

"Many Berkshire shares are in the hands of investors, including Buffett, who are unlikely to sell," said James Armstrong, president of Henry H. Armstrong Associates in Pittsburgh. "That could produce a larger than normal spike in the stock price because it is being added to the index."

S&P late Tuesday said Berkshire will replace Burlington Northern Santa Fe Corp in the S&P 500, and the S&P 100 index of big blue-chip companies, on a date to be announced.

Berkshire is buying Burlington, the second-largest U.S. railroad company, in a roughly $26.4 billion stock-and-cash transaction expected to close as soon as next month.

Buffett, the world's second-richest person, will still own about one-fourth of Berkshire's stock after the merger closes.

The addition of Berkshire to the S&P 500 follows the Omaha, Nebraska-based company's 50-for-1 split last week of its B shares to make it easier for Burlington investors to swap their shares for Berkshire shares in a tax-free way.

Adding Berkshire to the S&P 500 also forces the portfolio managers who track the index to buy its shares. They may have to pay up because most Berkshire investors consider the stock a long-term investment.

"The split made it easier for small investors to buy, and when index investors have to buy the stock, that increases demand even more," said Vahan Janjigian, author of "Even Buffett Isn't Perfect: What You Can -- and Can't -- Learn from the World's Greatest Investor."

Despite its $158 billion market value, Berkshire was long excluded from the S&P 500 because its shares were not liquid enough. It is the largest publicly-traded U.S. company not in the index.
The company had no comment on the S&P announcement.

Berkshire operates roughly 80 businesses including Geico insurance, Dairy Queen ice cream and Fruit of the Loom undergarments. It also has tens of billions of dollars of stock and bond investments.

Last week Buffett told CNBC television the stock split could give Berkshire about 700,000 investors.

S&P is a unit of McGraw-Hill Cos.
(Reporting by Jonathan Stempel. Editing by Robert MacMillan)

Shares of Toyota fall on suspend

Shares of Toyota Motor Co., along with parts makers and retailers with exposure to the Japanese auto maker, dropped after the company suspended sales of eight models in the U.S. and Canada in response to growing concerns about sticky accelerator pedals.

=> Bilibala think this will only have short term impact to sales and profit and don't think it will harm the brand name too seriously, assume this only last for 1 week.

The halt—which includes the Camry and Corolla sedans, two of the biggest sellers in North America—follows two major safety recalls in the last five months over sudden unintended acceleration concerns. The first recall, the company's biggest ever, at 4.2 million vehicles, was caused by improperly installed floor mats, according to Toyota. It recalled an additional 2.3 million vehicles, though most of the vehicles in the second recall, about 1.7 million, were part of the earlier action.

Toyota shares were recently down 7.6%.
Toyota said it will stop producing the affected vehicles at several North American plants for one week starting Feb. 1.

The news weighed on American depositary shares of Toyota, which were recently down 7.6% to $80.19. Fellow Japanese auto maker Honda Motor Co. Ltd. slid 1.6% to $33.95, though analysts said the company could benefit from Toyota's problems.

Toyota, which last year surpassed General Motors Co. to become the world's largest auto maker by sales, has long been viewed as a leader in automotive quality, and the sales halt raises some concerns about whether the auto company has sacrificed quality in its quest to capture global market share.

"We believe the company's once pristine 'quality' reputation is tarnished and will likely result in market share loss over next one to two years," Buckingham Research analyst Joseph C. Amaturo said in a note. "Historically, quality issues have had a profound impact on sales, especially when incidents resulted in media-publicized personal fatality."

Wall Street Strategies analyst David Silver said the impact on Toyota depends on how long the sales are halted. The eight models represented 57% of Toyota's 2009 U.S. sales.
"If it's a week [halt], then we'll see muted impact for the whole year," Silver said. "But even if this lasts two days, January sales are going to be down dramatically."

He said that could be good news for Ford Motor Co. and other auto makers as consumers wanting to buy cars look at their offerings. Ford shares recently gained 1.9% to $11.40.
"If someone was going to buy a Corolla or a Camry, if they need the car now, they're not going to wait," Silver said. "If they're not set on a Camry, they might go look at the other auto makers. It brings in more competition."

Auto parts makers declined on the news, with Buckingham's Amaturo noting the companies will likely be hurt by near-term production halts, as well as longer-term market share loss.
CTS Corp., which supplies the part believed to have caused the problem for Toyotas, fell 7.2% to $8.01. Gentex Corp., which Amaturo said derives about 13% of its sales from Toyota, slipped 13 cents to $17.30, while BorgWarner Inc. declined 3.1% to $35.10. Autoliv Inc. slid 1.2% to $41.02.
Meanwhile, auto retailers with significant Toyota/Lexus exposure also dropped, includingGroup 1 Automotive Inc., which fell 7.6% to $29.07, and Penske Automotive Group Inc., which lost 4.4% to $14.18. AutoNation Inc. slipped 2.2% to $18.14.

Analysts said nearly 40% of Group 1's new units are from Toyota, while about 20% of Penske's cars are from the Japanese auto maker. Amaturo said the companies' service and parts businesses could benefit from the recall, though long-term negatives will likely outweigh short-term benefits.

Wells Fargo Securities analyst Matt Nemer estimates that each week of suspended sales leads to a loss of about $850,000 to $1.5 million in gross profit and a loss of 1 cent to 2 cents in earnings a week for the public dealers. He said new vehicle sales generate about 30% of gross profit.
"However, the impact of new vehicle sales to the bottom line is likely lower given the high expense of running the business including sales commissions, advertising and inventory financing," Mr. Nemer noted, adding that the sales stoppage also affects used vehicles for the models.

He said he would encourage long-term investors to add to positions on any severe weakness as checks indicate the issue could be resolved relatively quickly and service and parts revenue related to the recalls "creates a significant opportunity, which potentially overshadows a few weeks of lost unit sales."