Strategies: In Fund Flows, a Caution for Stocks

MUTUAL fund investors have remained skeptical about the stock market rally over the last eight months, holding back on their purchases of domestic equity funds. That isn’t a promising sign for the stock market.

If the money flow isn’t reversed soon, it would suggest that we are witnessing a so-called cyclical rally within a long-term bear market in stocks, not the start of a major bull market.

Investors’ recent behavior has been unusual. They typically add money to stock mutual funds as the market rises and withdraw money as it declines. During the bull market of 2002 to 2007, for example, there was a net inflow of more than $250 billion into domestic equity funds, according to the Investment Company Institute, the mutual fund industry trade group. When stocks fell from October 2007 to March 2009 in a bear market, there was a net outflow of nearly $200 billion.

Over the last eight months, however, investors have veered sharply from this historical pattern. From the market’s March 9 low through the 2009 high on Oct. 19 — while the broad market averages rose by nearly 70 percent — there was a net inflow of just $7.8 billion into domestic equity funds, according to TrimTabs Investment Research of Sausalito, Calif. Conrad Gann, the firm’s president and chief operating officer, said, “If this had been a normal market environment, we would have expected a net inflow of at least $150 billion.”

In fact, as the rally proceeded, investors pulled money out, reducing their holdings of domestic equity funds by $11 billion in September, and an additional $3 billion from Oct. 1 through Oct. 19.

Could this skepticism be a bullish omen, under the contrarian theory that a rising market climbs a so-called wall of worry? In this view, the more negative investors become, the more positive the market’s prospects.

But a close look at these particular numbers shows that they aren’t a good contrarian indicator: a study by the Hulbert Financial Digest shows that the stock market generally has performed better following net inflows.

For short-term market prediction, other sentiment measures — like the level of bullishness among investment advisory newsletters, the put-call ratio for equity options and surveys of the views of individual investors — have a better track record payday advance.

Right now, these indicators generally show that while the market’s wall of worry has deteriorated in recent months, it is still strong enough to support somewhat higher prices. But it’s crucial to note that this contrarian-based optimism is strictly for the short term. Sentiment indicators have their greatest explanatory power at the three-month horizon; they tell us nothing about the longer term.

Might the flow data shed some light on stocks’ longer-term prospects? Ned Davis, president and senior investment strategist at Ned Davis Research, a quantitative research firm that caters to institutional investors, believes that it can. In fact, he said, fund investors’ current skepticism suggests that the stock market faces, at best, several years of backing and filling, and possibly even a prolonged bear market.

Why? He believes that the recent financial shock has given investors such a bad taste for stocks that it will take much lower valuations to whet their appetites again.

ONE possibility is that the market will enter into a several-year trading range that would provide time for corporate earnings to improve and for price-to-earnings ratios to decline. This happened after the bear market of 1973-74. The institute’s figures show that fund investors behaved just as they have over the last couple of months — withdrawing assets, on balance, from stock mutual funds.

A more ominous possibility is a major decline in stock prices, as occurred in Japan during the 1990s, Mr. Davis said.

Over the short term, at least, contrarian analysis suggests that the market outlook is much brighter than this. But the prospects over the next several years would be much more attractive if fund investors returned to stocks in a big way.

Mark Hulbert is editor of The Hulbert Financial Digest, a service of MarketWatch. E-mail: strategy@nytimes.com.

Strategies: In Fund Flows, a Caution for Stocks

Airbus debuts new A330-200 freighter

PARIS, Nov. 5 (Xinhua) — French Airbus company lifted its new A330-200 freighter into first flight-test on Thursday, a stride for more market share.

A330-200 freighter succeed a four hour maiden flight over Toulouse, in southeast France, starting its 180 hour flight-test and certification campaign.

The group said the new plane has greater range and a higher maximum payload with much lower unit cost compared with its closest competitor, which is obviously the American plane maker Boeing.

Specifically speaking, the mid-sized new freighter has two operational configuration and can carry more than 64 metric tones over 7,400 kilometers or more than 69 metric tonnes up to 5,930 kilometers non-stop flight.

“The A330-200F is the right aircraft at the right time high quality business cards. We are at the eve of a market recovery, and now is the time for airlines to prepare for future freight growth,” John Leahy, chief operating officer of Airbus said.

In its news release, Airbus anticipated a demand of over 3,400 freighters in the next 20 years to cater for a 5.2 percent average annual growth rate.

Airbus announced the new freighter has won 67 firm orders with nine customers. The first delivery will be seen in the summer of 2010 to Etihad Crystal Cargo, a division of Etihad Airways, the national airline of United Arab Emirates.

Airbus debuts new A330-200 freighter

Jobs Question Jeopardizes Wind Farm’s Stimulus Deal

News that $450 million in federal stimulus money might go toward installing Chinese-made wind turbines in Texas prompted criticism on Thursday, with Senator Charles E. Schumer, Democrat of New York, calling on the Obama administration to deny federal financing.

According to partners in the deal, the proposed 600-megawatt wind farm, announced late last week, would be built on 36,000 acres in West Texas using 240 wind turbines manufactured by A-Power Energy Generation Systems of Shenyang, China.

Partners in the $1.5 billion deal said that while most of the financing would come from unnamed Chinese banks, they would seek about one-third of the project’s cost — $450 million — from money set aside in the American Recovery and Reinvestment Act, the huge stimulus bill that passed earlier this year.

But that stimulus money, Mr. Schumer said, “is supposed to create jobs in America.”

The Texas project — a joint venture between the American private equity firm U.S. Renewable Energy Group, Cielo Wind Power and A-Power Energy — would create about 300 construction and operational jobs in Texas, according to the partners, but substantially more manufacturing jobs in China.

Mr. Schumer pointed to a recent analysis by the Investigative Reporting Workshop, a nonprofit journalism project at American University, which found that 84 percent of the $1.05 billion in “green” stimulus funding distributed since September had gone to foreign companies building renewable energy projects in the United States — mostly wind projects quick pay day loan.

In a letter he sent to Energy Secretary Steven Chu, the senator urged Mr. Chu to “reject any request for stimulus money unless the high-value components, including the wind turbines, are manufactured in the United States.”

But Walt Hornaday, the president of Cielo Wind Power, which is based in Austin and is the largest independently owned wind power developer in the United States, said in a statement that the project would need stimulus money to move forward, and that it was vital to “engineers, contractors and suppliers who will see millions of dollars of work at a time when energy-based jobs are difficult to find.”

China has vexed multinational corporations and American officials by blocking access by foreign companies to its own growing renewable energy market, though the country did ease its local-content requirements for wind turbines in talks with American officials last week.

The Energy Department noted in a statement that money for this type of project was provided as a tax credit, giving the agency little discretion. Stephanie Mueller, a spokeswoman, said that “if a taxpayer meets the eligibility requirements, they receive the tax credit.”

Jobs Question Jeopardizes Wind Farm’s Stimulus Deal

Hot News: October retail sales suggest tepid holiday season

Madoff’s Accountant Pleads Guilty in Scheme

A guilty plea on Tuesday by Bernard L. Madoff’s longtime accountant indicates that the criminal investigation of the Madoff fraud may be heading in a new direction — away from securities fraud and toward criminal tax cases.

The accountant, David G. Friehling, admitted in federal court that he had produced the rubber-stamp audits that allowed Mr. Madoff to conceal his enormous Ponzi scheme from regulators for nearly 20 years.

Mr. Friehling also pleaded guilty to three counts of obstructing the administration of the federal tax laws — charges added within the last five days to the government’s original complaint.

That addition suggested to several legal specialists that the government had recently learned that Mr. Friehling’s cooperation could help it build criminal tax cases against others in the Madoff drama, perhaps Madoff family members.

“It may have just come up during the debriefings that a prosecutor would normally do before a guilty plea,” said Kirby D. Behre, a former prosecutor and a lawyer at Paul Hastings. “But it really tells me that they’re teeing him up to be a witness against those whose taxes he prepared.”

Mr. Friehling acknowledged on Tuesday that he had prepared tax returns for Mr. Madoff and others, but neither he nor the prosecutors would identify those others in open court.

It is “reasonable to assume that they are Madoff family members, because they are the most likely to have used his services,” said Thomas M. Buchanan, a former prosecutor now with the Washington office of Winston & Strawn.

Peter A. Chavkin, a lawyer for Mr. Madoff’s wife, Ruth, declined to comment, as did a spokesman for Mr. Madoff’s sons, Andrew and Mark.

John R. Wing, a lawyer for Peter B. Madoff, Mr. Madoff’s brother, declined to comment. Besides handling Mr. Madoff’s personal tax returns, Mr. Friehling was the independent auditor of the Madoff firm from 1991 until the fraud collapsed last December. He pleaded guilty to nine criminal charges carrying a potential prison term of 114 years.

In essence, he admitted that he had never adequately audited the Madoff operation and, as an investor in the scheme, had never been a truly independent auditor payday advance loans. Nevertheless, he produced the supposedly professional and independent audits that sustained the Madoff fraud year in and year out.

But Mr. Friehling insisted that he had not known about the Ponzi scheme. He had simply trusted Mr. Madoff, taking whatever figures he was given and plugging them into his supposedly independent audits, he explained.

Besides the three tax charges, he pleaded guilty to one count each of securities fraud and investment adviser fraud and four counts of making false filings to the Securities and Exchange Commission.

Mr. Friehling is the third person to plead guilty in the fraud, one of the largest Ponzi schemes in history, with thousands of victims and at least $21.2 billion in cash losses.

In March, Mr. Madoff admitted operating the scheme under the cover of his legitimate Wall Street brokerage business. He was sentenced in June and is serving a 150-year prison term in North Carolina.

In August, Frank DiPascali Jr., a top aide to Mr. Madoff, pleaded guilty to creating the fictitious paper trail of office records and customer accounts that helped deceive investors for decades. He is in jail in Manhattan awaiting sentencing and faces up to 125 years in prison.

Like Mr. DiPascali, Mr. Friehling has agreed to cooperate with prosecutors in hopes of winning leniency.

But unlike Mr. DiPascali, he was allowed to remain free on bail until his sentencing, which Judge Alvin K. Hellerstein of Federal District Court tentatively set for Feb. 26.

A graduate of Cornell and a father of three, Mr. Friehling operated a two-man accounting practice with his father-in-law, Jerome Horowitz, who had worked for Mrs. Madoff’s father.

Although the Madoff firm was one of the biggest wholesale market-makers on Wall Street, Friehling & Horowitz operated from a small storefront office in New City, N.Y., about 30 miles north of Manhattan.

Mr. Horowitz died in March, on the day Mr. Madoff pleaded guilty. Members of his family said he had never suspected a fraud and lost most of the family’s own savings in the Madoff scheme.

Madoff’s Accountant Pleads Guilty in Scheme

Carmakers keen on auto finance arms

BEIJING,Nov. 3– Carol Ma could never imagine that she would own her second car, a BMW 525i, so soon. Only 7 percent of Chinese consumers now apply for loans to purchase cars. (Photo: China Daily)
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“Just after the salesman introduced BMW’s auto financing service to me, I made up my mind straight away at the 4S store, attracted by the easy acquisition process of the car, convenient financing procedure and favorable interest rate,” said Ma, a 31-year-old Beijing lawyer.

German luxury carmaker BMW was the first among 10 auto-financing companies to initiate the “zero interest rate” promotion campaign in China in September 2008.

After paying just 30 to 40 percent of the total, customers could drive their BMW car away and pay the rest without any interest in the following months.

BMW’s rival Mercedes-Benz also provides similar financing with zero lending rates to customers who have made a down payment of 30 percent.

“Small- and medium-sized enterprise owners like me don’t have enough cash flow and even face difficulties in financing. Auto financing provides opportunities for us to buy cars during tough times, especially luxury brands, which are necessary for our business,” said He Minghua, owner of a small packaging enterprise in Zhejiang province.

Although the auto financing service has been available since a pilot was run by State-owned banks in May 1996, the sector still lacks depth.

In October 1998, the People’s Bank of China authorized the four largest State-owned banks to undertake auto financing. However, under this plan, individual purchasers had to deposit the full purchase price of a car in a bank while paying off the loan.

In August 2004, the first auto financing company, GMAC-SAIC Automotive Finance Co Ltd, established by General Motors Acceptance Corp and Shanghai Automotive Group Finance Corp, began operations in China.

The company has provided financial services to more than 225,000 consumers in China for purchasing GM vehicles.

This year, Chery Automobile, China’s fourth-largest carmaker, invested $72.7 million in an auto financing joint venture in cooperation with local Huishang Bank, the first domestic carmaker to participate in the sector.

“From August, Chery’s auto financing arm has launched auto financing services for individuals in four major cities, including Beijing. We believe that the auto financing service can boost our domestic sales,” said Jin Yibo, Chery’s spokesman. “And, we hope the financing arm can contribute half of our total business profit in future.”

However, after five years, there are only 10 such auto financing companies providing services in the country, and currently, according to Donghai Securities, only 6.6 to 7 percent of the Chinese consumers apply for loans from financial institutions to purchase cars, a figure far lower than the global average.

In Western countries, auto financing accounts for 60 to 80 percent of vehicle sales payday advance low fees.

A Beijing newspaper reported last week that Guangzhou Automobile Industry Group Co has received regulatory approval to set up an auto financing arm, providing financing services to its own brand as well its ventures with Toyota, Honda and Fiat.

Seeing the profit potential in the auto financing sector, China’s automakers, including FAW Group, Chang’an Automobile Group Co, Brilliance Auto and Jianghuai Auto, are awaiting government approval to set up their own financing arms.

On Aug 31, China’s banking regulator and the central bank issued rules to allow auto financing and financial leasing companies to raise money by issuing bonds, a move to boost auto sales and develop the auto financing industry.

The rules will enable financial leasing companies to enlarge their capital and help small- and medium-sized enterprises to expand, the People’s Bank of China said in a statement on its website. Auto financing companies will be able to increase loans and spur demand for cars, it said

According to the central bank, by the end of July, China’s 12 financial leasing companies had total assets of 108.1 billion yuan and the 10 auto financing companies had total assets of 37.8 billion yuan.

“The financing channel has been the bottleneck for China’s auto financing companies for a long time. Permission for them to issue bonds will spur the development of the segment and accordingly drive sales in the domestic auto industry,” said Jia Xinguang, chief analyst with the Chinese National Automotive Industry Consulting and Development Corp.

“The auto financing service can also bring profits to auto companies and the necessary diversification will orient new businesses and realize economies of scale for the automakers,” said China Jianyin Investment Securities in a report.

“With the support of the government and the development of the market, we predict that after 10 years, the percentage of Chinese buying cars through mortgages will increase to between 40 and 50 percent,” said Lang Xuehong, chief auto industry analyst at Sinotrust.

“China’s auto financing market may touch 550 billion yuan by 2025.”

However, Jia said the government should ease regulations on auto financing channels to boost the industry’s development.

“The current rules on bonds issue are still restrictive and limited, and are not applicable to most of the auto financing companies,” said Jia.

To qualify for issuing bonds, companies will be required to have three consecutive years of profit and profit in the third year must be no less than the industry average. The companies also must have stable earnings prospects and their net assets must be at least the same as the industry average, the banking regulator said.

(Source: China Daily) Special Report: Global Financial Crisis

Carmakers keen on auto finance arms

Hot News: Stocks Pull Back After Early Surge

Driven to Distraction: Britain Sets Tough Laws for Texting While Driving

OXFORD, England — Inside the imposing British Crown Court here, Phillipa Curtis, 22, and her parents cried as she was remanded for 21 months to a high-security women’s prison, for killing someone much like herself. The victim was Victoria McBryde, an up-and-coming university-trained fashion designer.

Ms. Curtis had plowed her Peugeot into the rear end of Ms. McBryde’s neon yellow Fiat, which had broken down on the A40 Motorway, killing Ms. McBryde, 24, instantly.

The crash might once have been written off as a tragic accident. Ms. Curtis’s alcohol level was zero. But her phone, which had flown onto the road and was handed to the police by a witness, told a story that — under new British sentencing guidelines — would send its owner to jail.

In the hour before the crash, she had exchanged nearly two dozen messages with at least five friends, most concerning her encounter with a celebrity singer she had served at the restaurant where she worked.

They are filled with the mangled spellings and abbreviations that typify the new lingua franca of the young. “LOL did you sing to her?” a friend asks. Ms. Curtis replies by typing in an expletive and adding, “I sang the wrong song.” A last incoming message, never opened, came in seconds before the accident.

With that as evidence, Ms. Curtis was sentenced in February under 2008 British government directives that regard prolonged texting as a serious aggravating factor in “death by dangerous driving” — just like drinking — and generally recommend four to seven years in prison.

The case reveals the tensions that arise when law enforcement and the courts begin to crack down on a dangerous habit that has become widespread and socially acceptable. Is texting while driving bad judgment, or a heinous crime? And what is the appropriate punishment?

Upon hearing the sentence, prosecutors — backed by the police and Ms. McBryde’s mother — quickly appealed to Britain’s highest court for a longer prison term, calling 21 months “unduly lenient.”

“She came across as a lovely young girl, and I’m sure it wasn’t a nice feeling for the judge to send someone like this to prison — but someone is dead because of a text message,” said Bill Sykes, the officer who responded to the crash and led the subsequent investigation.

But many young people, among them the dead woman’s own siblings and friends, disagreed, sympathizing also with Phillipa Curtis. “I think Phillipa’s sentence was long enough, as she seemed like such a normal girl,” said Gemma Pancoust, the victim’s cousin and close friend, with whom she liked to sing karaoke to Dolly Parton’s “9 to 5.” “Until Tory’s death I texted while driving, as have most people. I don’t think she realized the danger she was causing.”

Indeed, the victim herself had sent a text message and talked on her cellphone (using the speaker function) while driving before her car broke down, according to the testimony of a friend with whom she had the 20-minute phone conversation. It is illegal in Britain to use a hand-held phone while driving, and drivers using hands-free phones may be fined if they are deemed not in control of the vehicle.

Although most European countries and a minority of American states now ban the use of hand-held cellphones while driving, Britain has become one of the more aggressive countries in attacking the problem, according to Ellen Townsend, policy director for the European Transit Safety Council, which advises the European Commission.

Britain’s new guidelines state that using a hand-held phone when causing a death will “always make the offense more serious” in terms of punishment and lead to prison time. Texting is given special treatment.

Ms. Curtis was found guilty and sent to prison even though she was not texting at the time of the accident, because the new guidelines regard “reading or composing text messages over a period of time” as “a gross avoidable distraction.” Its effect, British judges have ruled, may go beyond the moment of composing a message. Such behavior is categorized the same as driving while drunk or high on drugs, as well as racing another driver.

On the night of Nov empire payday loans. 20, 2007, the victim, Ms. McBryde, was on her way to visit a friend when she got a flat tire at night on the highway.

She pulled to the edge of the road, two lanes in each direction, but because there was no shoulder where her car broke down, part of the vehicle extended into the outer lane. When the towing service she called could not respond, she was frightened and called her mother, Jennifer Ford, who said she would call the Automobile Club again.

In the meantime, Ms. Ford told her daughter to make sure the flashers were on and that she was pulled off the road. “She was like, ‘Mom, of course I did these things,’ ” Ms. Ford recalled in an interview.

When she called her daughter back 20 minutes later, no one answered. By that time Victoria McBryde was dead.

Police photos show an impossibly crumpled car. The belongings of its owner, a pet lover who designed wild outfits and paraphernalia for pets, were strewn about: bright pink scarves, a brown shearling coat, red gloves, a tangle of leopard skin print.

In court, the case centered on the fact that Ms. Curtis had made no effort to brake or swerve to avoid the disabled Fiat. She testified that she had never seen the other car, though road studies performed by the police demonstrated that it should have been visible from about 300 yards back on the highway.

Ms. Curtis said she believed she could drive and text at the same time, saying that she did not have to look at the keyboard or the screen to have a conversation. Like many phones, hers had predictive text — the phone would fix spelling and find the right word if she typed in a rough approximation.

“I don’t think I should be chatting away while maneuvering roundabouts,” she said in testimony, adding that she would probably have slowed down while composing messages and that texting while driving might be safe “in the right conditions.”

The police disagreed. “How could she not see it, given that the night was clear and the car’s lights were on?” Mr. Sykes said. “She was clearly distracted.”

During the trial, the lawyer who defended Ms. Curtis, Richard Latham, proved that Ms. Curtis was not sending a message in the moments before the crash. But a new text message had arrived just seconds before she plowed into the Fiat. And prosecutors contended that, in light of the long preceding text message conversation, the ping of the incoming message distracted her so that she did not notice Ms. McBryde’s disabled car.

Although cellphone records showed that the message was never opened, prosecutors said she was unable to resist trying to do so. “Since she had read all messages before, she was probably looking to read this one, too,” Mr. Sykes said.

The jury deliberated only 50 minutes before returning a guilty verdict. Ms. Curtis and her family did not respond to requests for an interview through her lawyer.

The lord chief justice of England and Wales, Lloyd Jones, heard the appeal to extend the 21-month prison term. While concluding that the punishment was “lenient” and “arguably it was unduly so,” he declined.

He cited Ms. Curtis’s “positive good character” as well as her “genuine remorse” over the collision. Equally important, he said, she had already been assigned a release date from prison, making an extension cruel. But in an impassioned decision he also made it clear that the courts are now poised to take this crime seriously.

Victoria McBryde’s family, which used to celebrate holidays in their rural home with huge meals and Christmas trees they had cut themselves, has struggled. Her mother, who moved out of the family house, now lives in a shared home in Northampton and from a nearby Internet cafe wages a campaign for tougher laws.

Ms. Pancoust still posts loving messages to her dead cousin on her Facebook page. But she no longer sends texts while driving. By e-mail message, she added: “It’s sad as you have people out there who think they are invincible and things like that don’t happen to them. But it does.”

Driven to Distraction: Britain Sets Tough Laws for Texting While Driving

SEC in settlement talks with BofA, UBS: report

NEW YORK (Reuters) – The Securities and Exchange Commission is in settlement talks with several large financial institutions to resolve investigations into the awarding of municipal investment contracts, the Wall Street Journal reported on Saturday.

UBS (UBSN.VX) and Bank of America Corp (BAC.N) are among a few firms negotiating settlements with the SEC, the Journal said, citing people familiar with the matter.

The report comes after the three-year investigation led to indictments on Thursday against CDR Financial Products Inc and some of its current and former executives, for bid-rigging and fraud related to municipal bond contracts.

The charges were the first to be filed in the U.S. Justice Department's ongoing investigation into bid-rigging in the municipal bond industry payday loans for self employed.

The SEC had no immediate comment on Saturday. Officials at the Justice Department, Bank of America and UBS could not immediately be reached for comment.

Bank of America entered into a leniency agreement with the Justice Department in connection with a probe into bidding practices, the bank said in February 2007. In a leniency agreement, the Justice Department promises not to bring criminal charges in exchange for the company's information about wrongdoing.

(Reporting by Tiffany Wu and Rachelle Younglai; Editing by Eric Beech)

SEC in settlement talks with BofA, UBS: report

In China, Objections To Google’s Book Scans

BEIJING — A long-running dispute over Google’s efforts to digitize books has spread this month to China, where authors have banded together to demand that their works be protected from what they call unauthorized copying.

Two Chinese writers’ groups claim that Google has scanned Chinese works into an electronic database in violation of international copyright standards. The organizations are urging China’s authors to step forward and defend their rights.

“Google has seriously violated the copyrights of Chinese authors. That is an undeniable fact,” Chen Qirong, a spokesman for the China Writers’ Association, said by telephone. The group says it represents nearly 9,000 writers.

Google has sent a representative to Beijing to meet on Monday with officials of the China Written Works Copyright Society, which manages Chinese copyrights. The company insists it has fully complied with copyright protections.

Google’s ambitions to digitize millions of books, in most cases without first seeking permission from publishers or authors, has been contentious in the United States and elsewhere for more than four years.

But most Chinese authors learned of Google’s efforts only this month, after writers’ groups were notified of a potential class-action settlement between Google and American authors and publishers. Some Chinese authors discovered that Google had obtained their works from libraries in the United States and scanned them into its database.

The settlement would allow Google to create a vast library and bookstore where the full text of the digitized books would be available in the United States. For now, the books appear only in the company’s Book Search service, which allows people to read short snippets of copyrighted texts or, if the company has obtained permission, longer excerpts.

“We take the view, backed up by international copyright law, that no copyright is violated in this process since the amount of text displayed is so small and it’s purely for information,” said Courtney Hohne, a Google spokeswoman, in an phone interview from Singapore. “In fact, it’s comparable to a quotation from a book in a review or our Web search results, both of which are perfectly legal cheap pay day loans.”

Ms. Hohne said it was virtually impossible for Google to discover who holds the rights to all of the millions of books on library shelves. Waiting for copyright holders to surface would doom any effort to create a comprehensive electronic index, she said. If a copyright holder does object, Google removes the snippets or even all reference to the book from the search engine, she said.

The Chinese groups see it differently. “It is as if you have something nice in your living room and Google takes it and puts it in its living room,” said Zhang Hongbo, deputy director general of the Chinese copyright society. “We are definitely opposed to using our works without our permission.”

The class-action settlement, if approved, would create a registry of copyright holders and allow them to share in revenue generated through online book purchases or subscriptions to the database.

Mr. Zhang said Chinese authors didn’t like the proposed settlement either. “We think that reconciliation is extremely unfair,” he said. “We don’t accept it.”

The settlement is currently being rewritten, in part because of opposition from the Justice Department.

Marybeth Peters, the top copyright official in the United States, told Congress in September that the settlement could put “diplomatic stress” on the government because it would affect foreign authors whose rights were protected by international treaties. The governments of France and Germany oppose the deal.

A few Chinese authors have suggested that Google has not only scanned in their works, it has published selections of them online without obtaining permission. No such cases could be immediately confirmed, and at least a few authors appeared to be mistaken about whether their books could be viewed.

Ms. Hohne said more than 50 Chinese publishers had allowed parts of 60,000 books to be read online at books.google.cn. Typically, publishers have agreed to allow Google to show about 20 percent of the book and link to sites where readers can buy it, she said.

In China, Objections To Google’s Book Scans

Samsung Q3 profit trebles on memory chips, LCD

SEOUL (Reuters) – Samsung Electronics (005930.KS), the world's top maker of memory chips and LCD screens, reported on Friday record quarterly net profit on a resurgent memory sector and brisk sales of flat screens and mobile phones.

Samsung's July-September net profit rose to 3.72 trillion won ($3.14 billion) from 1.22 trillion won a year ago, beating an average forecast for 3.34 trillion won from Thomson Reuters I/B/E/S.

Consolidated quarterly operating profit was 4.23 trillion won, better than a forecast for 3 cheapest personal loan rates.92 trillion won.

The results underscore a V-shape recovery by Samsung, which suffered its first quarterly loss in the fourth quarter last year during the global recession.

But the South Korean technology giant may be hit by a recovery in the won and rising competition.

(Reporting by Marie-France Han and Rhee So-eui; Editing by Jonathan Hopfner and Anshuman Daga)

Samsung Q3 profit trebles on memory chips, LCD

Pay czar Feinberg increased base pay at U.S. firms: report

(Reuters) – Kenneth Feinberg, the Treasury bailout program's special master for compensation, who cut total compensation for top earners at seven bailed-out firms last week, increased base salaries at the companies, the Wall Street Journal said, citing its own analysis of Treasury data.

Base salaries at the companies on average rose 14 percent to $437,896 a year, the paper said, adding that 89 of the 136 employees under the pay czar's review got a raise in base salary.

The paper added that Feinberg agreed to more than double cash salaries for 13 of 21 Citigroup Inc employees.

Government officials told the paper they agreed to increase some base salaries in the wake of some companies expressing concern that the pay czar was planning to lock up too much employees' compensation for the long term low interest personal loan.

Last week, Feinberg slashed overall pay by more than half for top earners at seven companies that received massive taxpayer bailouts, and ordered that most of their salaries be paid in the form of long-term company stock.

(Reporting by Ajay Kamalakaran in Bangalore, Editing by Ian Geoghegan)

Pay czar Feinberg increased base pay at U.S. firms: report

Asian Shares Slide, Aussie Dollar Hit by Rate Talk

Filed at 2:41 a.m. ET

HONG KONG (Reuters) – Asian shares fell on Wednesday after a dip in U.S. consumer confidence revived worries about the pace of economic recovery, while the Australian dollar hit a two-week low as inflation data pared bets on an aggressive rate rise.

U.S. equity futures were down 0.1 percent and European shares were also set to dip, with financial spreadbetters expecting markets in London, Frankfurt and Paris to open between 0.3 and 0.6 percent lower

The Conference Board’s weaker-than-expected U.S. consumer confidence index for October raised concern about the U.S. earnings potential of Asian companies, driving shares lower across the region.

“The U.S. consumer confidence news highlighted worries about the U.S. economic recovery in the coming months,” a dealer at a Japanese bank in Tokyo, said. “With this view, investors are prone to cut their bets on assets such as stocks, commodities and high-yielding currencies.”

Japan’s Nikkei index fell 1.4 percent as a government official warned the economy must try to avoid hitting a second bottom and Japanese retail sales in September fell for a 13th month.

Shares in Honda Motor Co, however, surged 3.3 percent after the world’s seventh-biggest carmaker surprised by nearly tripling its annual profit forecasts on Tuesday.

The Australian dollar first edged up, but later retreated, after last quarter’s inflation topped forecasts, yet was not seen as alarming enough to warrant a 50 basis point rate rise at a central bank meeting on November 3.

“This number’s just not bad enough to trigger anything other than a quarter point rate rise,” said Stephen Walters, chief economist at JP Morgan in Australia.

The Australian dollar rose to as high as $0.9208 immediately after the inflation data but then fell to a two-week low of $0.9072.

SHIPBUILDERS HIT

Worries about U.S. consumer confidence encouraged a shift out of riskier currencies including the Korean won. It hit a one-month low at 1,195.5 per dollar, brushing off news that South Korea’s balance of payments surplus in September soared nearly 60 percent to a near five-year high.

Indonesia’s central bank intervened to prop up the rupiah as it hit a one-month low at 9,650 to the dollar get a free credit report.

The head of China’s national pension fund said on Wednesday that the dollar-dominated global monetary system would gradually shift to a system led by the dollar, euro and Asian currencies including the Chinese yuan.

The MSCI index of Asia Pacific stocks traded outside Japan was down 2 percent while the Thomson Reuters index of regional shares was 1.4 percent lower.

Shares in Korea slumped 2.4 percent as investors became nervous ahead of key earnings and economic data this week.

Samsung Electronics, the world’s biggest memory chip maker, issued a strong mid-term outlook but its shares fell 3 percent in the market slide.

Shipbuilders also suffered after the Financial Times reported that leading German container shipper Peter Dohle Schiffahrts was seeking aid from the German government. That sent shares in Hyundai Heavy Industries, the world’s biggest shipbuilder, down 4.5 percent.

Investor sentiment across Asia was cautious amid concern about the pace of recovery in the United States although a survey by The Nielsen Company on Wednesday showed U.S. consumer confidence has improved for the first time since early 2007.

U.S. durable goods data, due later on Wednesday, will give further clues on the state of U.S. consumption.

In Hong Kong, shares of casino operator Wynn Macau plunged 8.3 percent, tracking a 10 percent dive in shares of its U.S. parent Wynn Resorts in U.S. trade, after a downbeat outlook from the company.

The oil price stabilized at around $79.40 a barrel after rising overnight on industry data showing a large draw-down in U.S. crude inventories last week.

Japanese government bonds inched up with futures coming off a two-month low after strong demand for new U.S. two-year notes lifted U.S. Treasuries.

December JGB 10-year futures climbed 0.04 point to 137.90 after hitting a two-month low of 138.82 on Tuesday.

(Additional reporting by Kaori Kaneko in TOKYO and the SYDNEY newsroom; editing by Tomasz Janowski)

Asian Shares Slide, Aussie Dollar Hit by Rate Talk

Breakingviews.com: A High Price for Ancestry.com

Ancestry.com wants to put down some roots. The genealogy Web site hopes investors will provide $100 million in an initial public offering, valuing the whole thing at $572 million. That seems too high for Ancestry to cement a happy legacy with investors.

The firm, which bills itself as the world’s largest online collection of family history resources, made headlines by linking actor Brad Pitt and President Obama in 2007. But its greatest attribute is its ability to get investors to pay for content.

The site had 1.03 million paying customers at the end of September. Each, on average, produced $16.50 a month in revenue in the first nine months of this year. So far so good. But about 4 percent of subscribers cancel every month, meaning roughly half the customer base turns over every year.

That is not the only alarm bell. As recently as June, the company, for option grant purposes, valued its own shares at $8.54 apiece, against $13.50 at the middle of the indicated I.P.O. range. The Nasdaq stock index is up more than 15 percent since then. But that would account for only a fraction of the difference, and I.P.O.’s are usually priced at a discount.

It’s hard to see what else could have changed so drastically. The company increased subscribers by a net 15 percent in the year to September. And the company’s operating margin increased to 14 percent in the first nine months of this year, against 8 percent in 2008. But that must have been predictable back in June, too.

Ancestry.com has other businesses that could power sales, like its Family Tree Maker software. And the retirements of the baby boomers could bring new subscribers. But even these new historians may not prove very loyal. And on the downside, selling by existing shareholders and outstanding in-the-money options will dilute investors in the I.P.O., too.

Ancestry.com leads in its niche. But pricing its I.P.O. at what looks like an aristocratic premium isn’t the best way to preserve its reputation.

A Lesson in Bonds

Don’t cry for investors with short memories. Bondholders who rejected Argentina’s efforts in 2005 to renegotiate the terms of $23 billion in outstanding debt now look set to roll over. With a credible new finance minister in Amado Boudou and a liquid market, the country may get a new debt deal done by the end of the year equifax free credit report. Investors should remain wary, however; they’ve been here before.

True, Mr. Boudou is moderating the market-hostile policies of his predecessors. He intends to restore the credibility of official inflation statistics, which many economists suspect of seriously understating inflation since early 2007. September’s inflation was reported as 0.7 percent, the second successive relatively high official number.

He also wants to recover Argentina’s ability to borrow internationally. To do so, he must reach a plausible settlement with most holders of the debt who rejected the settlement imposed in 2005. The new terms proposed by Barclays, Citigroup and Deutsche Bank are hardly generous. The package is expected to result in a lower recovery value than the 30 percent in the last deal, and to require institutional debt holders to subscribe for $1 billion in new financing.

However, with the sponsoring banks controlling about 40 percent of the holdout debt, Mr. Boudou’s expectation of 60 percent acceptances may be low. While some investors might be tempted to await a more market-friendly government, President Cristina Kirchner’s term of office lasts until December 2011 and there’s no certainty that a friendlier government would replace her. Holding out on principle would risk being stuck with an illiquid asset for several years.

Argentina’s 2001 default was its fourth, after defaults in 1828, 1890 and 1982 and several near misses. Thus, investors in new Argentine bonds may be exhibiting unwarranted optimism about getting repaid. The paperwork for any registration with the Securities and Exchange Commission will also raise questions about official Argentine statistics.

In these liquid markets, however, the chances are that investors will subscribe enthusiastically if the yield is juicy. Either Argentina will show that it has learned its lesson and will honor its commitments, or investors will show again that they have not.

For more independent financial commentary and analysis, visit www.breakingviews.com.

Breakingviews.com: A High Price for Ancestry.com

Closure of 106 banks in U.S. is highest in nearly 20 years

BEIJING,Oct. 26– The number of United States banks that have failed so far this year topped 100 last Friday – hitting 106 by the end of the day – the most in nearly two decades. But the trouble in the banking system from bad loans and the recession goes even deeper.

Dozens, perhaps hundreds, of other banks remain open even though they are as weak as many that have been shuttered. Regulators are seizing banks slowly and selectively – partly to avoid inciting panic and partly because buyers for bad banks are hard to find.

Going slow buys time. An economic recovery could save some banks that would otherwise go under. But if the recovery is slow and smaller banks’ finances get even worse, it could wind up costing even more.

This year’s 106 bank failures are the most in any year since 181 collapsed in 1992 at the end of the savings-and-loan crisis. Last Friday, regulators took over three small Florida banks – Partners Bank and Hillcrest Bank Florida, both of Naples, and Flagship National Bank in Bradenton – along with four elsewhere: American United Bank of Lawrenceville, Georgia, Bank of Elmwood in Racine, Wisconsin, Riverview Community Bank in Otsego, Minnesota, and First Dupage Bank in Westmont, Illinois auto loan.

When a bank fails, the Federal Deposit Insurance Corp swoops in, usually on a Friday afternoon. It tries to sell off the bank’s assets to buyers and cover its liabilities, primarily customer deposits. It taps the insurance fund to cover the rest.

Bank failures have cost the FDIC’s fund that insures deposits an estimated 25 billion U.S. dollarsthis year and are expected to cost 100 billion dollarsthrough 2013. To replenish the fund, the agency wants banks to pay in advance 45 billion in premiums that would have been due over the next three years.

The FDIC won’t say how deep a hole its deposit insurance fund is in. It can tap a credit line from the Treasury of up to a half-trillion dollars to cover the gap.

The list of banks in trouble is getting longer. At the end of June, the FDIC had flagged 416 as being at risk of failure, up from 305 at the end of March and 252 at the beginning of the year.

(Source: Shanghai Daily) Special Report: Global Financial Crisis

Closure of 106 banks in U.S. is highest in nearly 20 years

Land deal advisor resigns from Calpers

LOS ANGELES (Reuters) – The real estate investment manager who led the California Public Employees' Retirement System, the nation's largest pension fund, into a money-losing land venture has resigned as an adviser to the fund, a spokeswoman for MacFarlane Partners said on Saturday.

Victor MacFarlane, chief executive of MacFarlane Partners, terminated his relationship with the $200 billion pension fund, spokeswoman Julie Chase said via email.

"I can confirm MacFarlane Partners, on its own initiative, resigned as manager of California Urban Investment Partners, LLC, for reasons agreed to and accepted by Calpers," Chase said.

California Urban Partners was set up in 1995 as an investment vehicle for Calpers, former basketball star Earvin "Magic" Johnson and MacFarlane to acquire and develop retail properties in urban markets in California, most with high concentrations of minority residents, a Calpers news release said.

MacFarlane Partners Inc is a real estate investment management firm in San Francisco that manages $10 billion in assets for some of the world's largest pension plans and institutions, according to its website.

The firm came under fire for a $970 million investment it managed for Calpers into LandSource Communities Development LLC, the Wall Street Journal reported on Saturday bad credit car loans.

LandSource filed for bankruptcy in 2008, about 18 months after Calpers had bought into company, whose primary investment was a 15,000-acre (6100-hectare) tract of undeveloped land outside Los Angeles.

Calpers had invested in the development through its investment partner, MW Housing Partners, which was jointly managed by MacFarlane Housing and Weyerhaeuser Realty Investors, Calpers said in a 2008 press release said.

MW Housing held a 68 percent interest in LandSource, whose holdings were hit hard by the California real estate bust, it said.

The separation comes as Calpers examines its relationships with private equity firm Apollo Global Management and other outside money managers.

Calpers said earlier this month that its probe centers on around $50 million in payments that outside managers made over a five-year period to ARVCO Financial Ventures LLC, a firm headed by former Calpers board member Al Villalobos, to win the pension fund's business.

A Calpers representative could not be reached for comment on Saturday.

Land deal advisor resigns from Calpers

China hopes for early normalization of Sino-U.S. poultry trade

BEIJING, Oct. 23 (Xinhua) — China hopes the United States can take active steps to eliminate discriminatory measures towards Chinese poultry products, said Yao Jian, spokesman of China’s Ministry of Commerce, on Friday.

Yao made the remarks in a comment on the ministry’s official website on the 2010 Agriculture Appropriations Bill, which has modified the stance towards Chinese poultry imports, compared to that in the Omnibus Appropriations Act 2009.

“We welcome the changes,” Yao said.

He pointed out, however, there are still restrictions against Chinese poultry products in the new bill.

“China is evaluating whether the restrictions are totally in line with the non-discrimination principle of the World Trade Organization and other relevant regulations,” Yao said.

“China’s poultry products are safe and reliable… We hope the United States can stand on the footing of maintaining mutual benefit in China-U.S. trade and take active steps to eliminate discriminatory measures and normalize bilateral poultry trade at an early date,” Yao said.

Yao hoped that the U.S. could modify relevant regulations to resume poultry imports from China.

The U.S. House of Representatives passed the 410-billion-U.S.-dollar Omnibus Appropriations Act 2009 in February, which said “none of the funds made available in this Actmay be used to establish or implement a rule allowing poultry products to be imported into the United States from the People’s Republic of China.” Ministry urges impartiality in China-U.S. poultry dispute probe BEIJING, July 31 (Xinhua) — China hoped experts of the World Trade Organization (WTO) would be “impartial” and “just” in handling the Sino-U.S. poultry trade dispute, Ministry of Commerce spokesperson Yao Jian said Friday. Yao’s comment in a statement came after the WTO decided Friday to convene an expert panel, at China’s request, to investigate and rule whether a U.S. ban on Chinese poultry imports violated WTO regulations. Full story WTO panel to probe U.S. ban on Chinese poultry imports

GENEVA, July 31 (Xinhua) — The World Trade Organization (WTO) decided on Friday to establish an expert panel to investigate and rule whether a U.S. ban on Chinese poultry imports violates WTO regulations. The decision was made at a meeting of the WTO’s Dispute Settlement Body, and upon a second request by the Chinese delegation.Full story
China requests WTO panel to probe U.S. poultry import ban

GENEVA, July 20 (Xinhua) — China on Monday formally requested the World Trade Organization (WTO) to set up an expert panel to investigate and rule whether a U low rates payday advance.S. ban on Chinese poultry imports violates WTO regulations.

The request was made at a meeting of the WTO’s Dispute Settlement Body, but it was rejected by the United States according to relevant procedures. Full story

China hopes to resolve Sino-U.S. poultry import ban dispute under WTO

BEIJING, June 24 (Xinhua) — China hopes the United States can give importance to China’s strong concern over a poultry import ban dispute and resolve it by World Trade Organization (WTO) procedures, Ministry of Commerce spokesman Yao Jian said in a statement Wednesday. The U.S. measure banning poultry imports from China violated WTO rules, Yao said. “The measure is obviously discriminatory,” disrupted the normal poultry meat trade between China and the United States and harmed the due interests of the Chinese poultry industry. Full story

WTO chief warns of rising protectionism

GENEVA, March 26 (Xinhua) — The head of the World Trade Organization (WTO) on Thursday warned of increasing trade restrictive measures which could undermine efforts to recover the global economy.

There is now a danger of “an incremental buildup of restrictions that could slowly strangle international trade and undercut the effectiveness of policies to boost aggregate demand and restore sustained growth globally,” Pascal Lamy said in a report circulated to WTO members.Full story

China: Protectionism only makes world economy worse

BEIJING, March 24 (Xinhuanet) — “Trade protectionism will only make the already ailing world economy even worse,” said Chinese Commerce Minister Chen Deming at thejust concludedChina Development Forum in Beijing.

Amid global economic recession, Chen expressed Sunday his strong opposition to the spreading trade protectionism and hoped “the international community could intensify cooperation in the fight against sweeping financial crisis.” Full story

China protests U.S. measure blocking poultry imports

GENEVA, March 11 (Xinhua) — China on Wednesday made a strong protest against a U.S. act on poultry, saying the measure seriously violates basic World Trade Organization (WTO) rules and affects normal trade between the two countries. The Omnibus Appropriation Act of 2009, approved by the U.S. Senate on Tuesday, includes a section which bans any fund from being used to “establish or implement a rule” allowing the import of poultry products from China.Full story

China hopes for early normalization of Sino-U.S. poultry trade