RUMOR out there... what does this mean for china?
MasterFeeds Note: This rumor was subsequently dismissed.
Daniel S. Loeb, the hedge fund manager, was one of Barack Obama’s biggest backers in the 2008 presidential campaign.
A registered Democrat, Mr. Loeb has given and raised hundreds of thousands of dollars for Democrats. Less than a year ago, he was considered to be among the Wall Street elite still close enough to the White House to be invited to a speech in Lower Manhattan, where President Obama outlined the need for a financial regulatory overhaul.
So it came as quite a surprise on Friday, when Mr. Loeb sent a letter to his investors that sounded as if he were preparing to join Glenn Beck in Washington over the weekend.
“As every student of American history knows, this country’s core founding principles included nonpunitive taxation, constitutionally guaranteed protections against persecution of the minority and an inexorable right of self-determination,” he wrote. “Washington has taken actions over the past months, like the Goldman suit that seem designed to fracture the populace by pulling capital and power from the hands of some and putting it in the hands of others.”
Over the weekend, the letter, with quotations from Thomas Jefferson, Ronald Reagan and President Obama, was forwarded around the circles of the moneyed elite, from the Hamptons to Silicon Valley. Mr. Loeb’s jeremiad illustrates how some of the president’s former friends on Wall Street and in business now feel about Washington.
Mr. Loeb isn’t the first Wall Streeter to turn on the president. Steven A. Cohen, founder of the hedge fund SAC Capital Advisors and a supporter of the Obama campaign, recently held a meeting with Republican candidates in his home in Greenwich, Conn., to strategize about the midterm elections, according to Absolute Return magazine.
That the honeymoon between Washington and Wall Street has turned to bitter recriminations is not news, given that the administration had long pledged to revamp Wall Street regulation in the wake of a crisis that rattled the global financial system.
Less than two years ago, Democrats received 70 percent of the donations from Wall Street; since June, when the financial regulation bill was nearing passage, Republicans were receiving 68 percent of the donations, according to an analysis by the Center for Responsive Politics, a nonpartisan research group.
But what is surprising is that some of the president’s biggest supporters have so publicly derided his policies, even at the risk of hurting their ability to influence the party in the future. Issues like the carry-interest tax on private equity or the Volcker Rule have become personal.
Why so personal? The prevailing view is that bankers, hedge fund mangers and traders supported the Obama candidacy because he appealed to their egos.
Mr. Obama was viewed as a member of the elite, an Ivy League graduate (Columbia, class of ’83, the same as Mr. Loeb), president of The Harvard Law Review — he was supposed to be just like them. President Obama was the “intelligent” choice, the same way they felt about themselves. They say that they knew he would seek higher taxes and tighter regulation; that was O.K. What they say they did not realize was that they were going to be painted as villains.
That Wall Street view of itself as a victim has prompted much of the private murmurings and the unfortunate — or worse — outburst from Stephen A. Schwarzman, who likened the administration’s plan for taxes on private equity to “when Hitler invaded Poland in 1939.” Mr. Schwarzman later apologized for the “inappropriate analogy.”
Now Mr. Loeb, who manages about $3.4 billion at his firm, Third Point Partners, has articulated in a more thoughtful way what a lot of others in finance and business are saying.
“We have given a great deal of thought about the impact that public policy has on individual companies, industries and the economy generally,” he said. Third Point has sold its investments in big banks as a result of “regulatory headwinds”; got rid of its stake in Wellpoint, which Mr. Loeb described as “a statistically cheap stock owned by several hedge funds, but which we saw as being overly exposed to unpredictable government regulation”; and taken a short position against for-profit education companies as a result of “the government’s increased willingness to use its regulatory muscle.”
Mr. Loeb’s views, irrespective of their validity, point to a bigger problem for the economy: If business leaders have a such a distrust of government, they won’t invest in the country. And perception is becoming reality.
Just last week, Paul S. Otellini, chief executive of Intel, said at a dinner at the Aspen Forum of the Technology Policy Institute that “the next big thing will not be invented here. Jobs will not be created here.”
Mr. Otellini has overseen two big acquisitions in the last two weeks — the $7.7 billion takeover of the security software maker McAfee and the $1.4 billion deal for the wireless chip unit of Infineon Technologies. If he is true to his word, those deals will most likely lead to job cuts in the United States, not job creation.
Mr. Loeb declined to comment.
But it seems clear that he wrote the letter because so much of his fund’s investments were being driven by the impact of politics. It appears he is no longer betting that a chief executive will make his numbers; he’s betting on what legislation Congress will pass next.
Mr. Loeb, whose poison pen is legendary, usually targets obstinate corporate managers or rivals. In one such note to the chief executive of Star Gas Partners, Mr. Loeb wrote: “It is time for you to step down from your role as C.E.O. and director so that you can do what you do best: retreat to your waterfront mansion in the Hamptons where you can play tennis and hobnob with your fellow socialites.”
In his letter to investors, he took issue with a number of Washington initiatives, including the Credit Card Act of 2009 and a proposed “enterprise tax” that would be levied on hedge fund managers who sell their firms.
“So long as our leaders tell us that we must trust them to regulate and redistribute our way back to prosperity, we will not break out of this economic quagmire,” Mr. Loeb wrote.
“Perhaps our leaders will awaken to the fact that free market capitalism is the best system to allocate resources and create innovation, growth and jobs,” he continued. “Perhaps too, a cloven-hoofed, bristly haired mammal will become airborne and the rosette-like marking of a certain breed of ferocious feline will become altered. In other words, we are not holding our breath.”
Critics of Wall Street will rightfully complain that it was the actions of free market capitalists that prompted a push for regulation. On that point, Mr. Loeb does not entirely disagree.
“Many people see the collapse of the subprime markets, along with the failure and subsequent rescue of many banks, as failures of capitalism rather than a result of a vile stew of inept management, unaccountable boards of directors and overmatched regulators not just asleep, but comatose, at the proverbial switch,” he wrote. “It is easy to see why so many people have concluded that the entire system is rigged.”
The latest news on mergers and acquisitions can be found at nytimes.com/dealbook.
|Palestinian Authority security personnel used force to prevent two prominent Hamas figures from delivering sermons during Friday prayers, triggering clashes with worshipers.|
The violence erupted after dozens of PA policemen raided two mosques in the Hebron area where Hamas legislators Nayef Rajoub and Muhammad Abu Jhaisheh were supposed to deliver the Friday khutba (sermon).
The clashes prompted the PA to close down the mosques, forcing enraged worshipers to search for alternative prayer sites.
Rajoub, who was minister for Wakf affairs in the Hamas-led unity government with Fatah more than three years ago, said that policemen in plain clothes approached him soon after he entered a mosque in his home village of Dura and warned him not to deliver the sermon.
“When I asked them for a written order, they assaulted me,” he said. “When some of the people inside the mosque tried to intervene, the policemen also beat them, and arrested some of them.”
Rajoub, who was released from an Israeli prison on June 20 after serving a 50-month sentence, accused the PA of waging a “war against mosques and Islam in collusion with Israel.”
Rajoub said that he has been serving as a preacher for nearly 30 years. He added that despite the ban, he would continue to lead Friday prayers and deliver sermons.
“Jewish settlers are torching mosques, the Israeli army is demolishing mosques and the Palestinian Authority is expelling preachers,” he said.
Nayef Rajoub is the brother of Jibril Rajoub, a former PA security commander and one of the prominent leaders of Fatah in the West Bank, who was one of the first to conduct security coordination with Israel. The former security commander is known for his ruthless crackdown on Hamas in the West Bank.
The second incident took place in the village of Idna, also in the Hebron area.
Eyewitnesses said that Palestinian security agents stopped Abu Jhaisheh shortly after he entered a mosque and demanded that he refrain from delivering the sermon.
Last week, Hamas accused the PA of “waging war on Islam and Allah” by arresting and firing hundreds of preachers and imams, closing down mosques and Islamic religious centers and imposing restrictions on religious figures suspected of being affiliated with Hamas.
Adnan Damiri, spokesman for the Fatah-dominated security forces in the West Bank, confirmed that his men had entered the mosques to prevent Rajoub and Abu Jhaisheh from addressing worshipers.
“These mosques don’t belong to Hamas,” he said, denying that the police had beaten anyone.
He also denied that the two mosques had been closed down.
Damiri said that the move against the mosques was taken in light of information suggesting that Hamas was preparing to export its “coup” to the West Bank.
“They are operating on instructions from [Hamas leader] Khaled Mashaal,” he said. “They want to create chaos that would start in the mosques. Their goal is to take over the West Bank.”
World Gold Council Report ( WGC)
WGC- China's gold investment demand grew by 121% in 2Q- Central Banks buy more gold-
CONCLUSION: the WGC just reported its 2Q report ( see attached). Three key things:
1- ONE OF THE KEY NEW TRENDS IS CHINA WHERE RETAIL INVESTMENT DEMAND JUMPED BY 121% ( SEE PAGE 11). We continue to believe that deregulation of the gold market in China could OPEN a major new market for gold.
2- ANOTHER INTERESTING TREND IS THAT INDUSTRIAL DEMAND FOR GOLD CONTINUED TO IMPROVE BY 14% MAINLY DRIVEN BY ELECTRONICS UP 25% ( see page 10).
3- CENTRAL BANKS WERE NET PURCHASERS OF 7 TONNES OF GOLD DESPITE THE IMF SALE OF 47 TONNES DURING THE QUARTER. RUSSIA WAS AMONG THE LARGEST BUYERS ( 34 TONNES). The philippines also bought more gold.
Gold Demand Trends for Q2 2010 out (see Enclosed file), and WGC press release below>
INVESTMENT DEMAND WILL CONTINUE TO SUPPORT ROBUST GOLD MARKET DURING 2010
Demand for gold will remain robust during 2010 as a result of accelerating demand from India and China, as well as increasing global investment demand driven by continuing uncertainty over public debt and economic recovery, the World Gold Council ("WGC") said.
According to the WGC's Gold Demand Trends report for Q2 2010, published today, demand for gold for the rest of 2010 will be underpinned by the following market forces:
* India and China will continue to provide the main thrust of overall growth in demand, particularly for gold jewellery, for the remainder of 2010.
* Retail investment will continue to be a substantial source of gold demand in Europe.
* Over the longer-term, demand for gold in China is expected to grow considerably. A report recently published by The People's Bank of China and five other organisations to foster the development of the domestic gold market will add impetus to the growth in gold ownership among Chinese consumers.
* Electronics demand is likely to return to higher historic levels after the sector exhibited further signs of recovery, especially in the US and Japan.
Marcus Grubb, Managing Director, Investment at the WGC commented:
"Economic uncertainties and the ongoing search for less volatile and more diversified assets such as gold will underpin investment demand for gold in the immediate future. Further, in light of lingering concerns over public debt levels and the euro, European retail investor demand has increased significantly.
"Over the past quarter, demand for gold jewellery in key Asian markets has been challenged by rising local prices. Nevertheless, we are seeing a deceleration in the pace of decline in demand, providing a strong outlook for ongoing recovery in this crucial market segment."
GLOBAL DEMAND STATISTICS FOR Q2 2010
* Total gold demand1 in Q2 2010 rose by 36% to 1,050 tonnes, largely reflecting strong gold investment demand compared to the second quarter of 2009. In US$ value terms, demand increased 77% to $40.4 billion.
* Investment demand2 was the strongest performing segment during the second quarter, posting a rise of 118% to 534.4 tonnes compared with 245.4 tonnes in Q2 2009.
* The largest contribution to this rise came from the ETF segment of investment demand, which grew by 414% to 291.3 tonnes, the second highest quarter on * Physical gold bar demand, which largely covers the non-western markets, rose 29% from Q2 2009 to 96.3 tonnes.