April 20, 2024

You are here: Home / Archives for data provider

Home Prices Up 12.2 Percent in May

July 30, 2013 by

WASHINGTON — U.S. home prices jumped 12.2 percent in May compared with a year ago, the biggest annual gain since March 2006. The increase shows the housing recovery is strengthening.

The Standard Poor’s/Case-Shiller 20-city home price index released Tuesday also surged 2.4 percent in May from April. The month-over-month gain nearly matched the 2.6 percent increase in April from March — the highest on record.

The price increases were widespread. All 20 cities showed gains in May from April and compared with a year ago.

Prices in Dallas and Denver reached the highest level on records dating back to 2000. That marks the first time since the housing bust that any city has reached an all-time high.

Home values are rising as more people are bidding on a scarce supply of houses for sale. Steady price increases, along with stable job gains and historically low mortgage rates, have in turn encouraged more Americans to buy homes.

One concern is that higher mortgage rates could slow home sales. But many economists say rates remain low by historical standards and would need to rise much faster to halt the momentum.

Svenja Gudell, senior economist at Zillow, a home price data provider, said a big reason for the recent price gains is that foreclosed homes make up a smaller proportion of overall sales. Foreclosed homes are usually sold by banks at fire-sale prices.

“Typical home values have appreciated at roughly half this pace for the past several months, which is still very robust,” Gudell said.

Gudell said higher mortgage rates and a likely increase in the number of homes for sale in the coming months should slow the pace of price gains and stabilize the housing market.

The index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The May figures are the latest available. They are not adjusted for seasonal variations, so the monthly gains reflect more buying activity over the summer.

Despite the recent gains, home prices are still about 25 percent below the peaks they reached in July 2006. That’s a key reason the supply of homes for sale remains low, as many homeowners are waiting to recoup their losses before putting their houses on the market.

Dallas and Denver, the two cities that reached record highs, were not hit hard by the housing bust and therefore didn’t experience the sharp price swings like cities in Nevada, Arizona, California and Florida.

In Dallas, prices fell only 11.2 percent from their previous peak in June 2007 through February 2009. That’s far less than Las Vegas, where prices plummeted by more than half. Since bottoming out, home prices in Dallas have increased nearly 14 percent.

In Denver, prices dropped 14.3 percent from August 2006 until they also hit bottom in February 2009. Since then, they have risen 17.3 percent.

The biggest price gains are occurring in many of the states that experienced the worst housing bust.

Prices jumped 24.5 percent in San Francisco in May from a year earlier, the largest increase. Las Vegas reported the next biggest gain at 23.3 percent, followed by Phoenix at 20.6 percent. All three remain well below their peak prices.

The smallest yearly gains were in New York, at 3.3 percent, followed by Cleveland with 3.4 percent and Washington, D.C. at 6.5 percent.

Higher home prices help the economy in several ways. They encourage more sellers to put their homes on the market, boosting supply and sustaining the housing recovery. And they make homeowners feel wealthier, encouraging consumers to spend more. Banks are also more willing to provide mortgage loans when homes are appreciating in value.

Mortgage rates have surged since early May, though the increase would have had little impact on the current report. The average rate on a 30-year fixed mortgage has jumped a full percentage point since early May and reached a two-year high of 4.51 percent in late June.

Mortgage rates jumped after Chairman Ben Bernanke said the Federal Reserve could slow its bond-buying program later this year if the economy continues to improve. The Fed’s bond purchases have kept long-term interest rates low, encouraging more borrowing and spending.

In recent weeks, Bernanke and other Fed members have stressed that any change in the bond-buying program will depend on the economy’s health, not a set calendar date.

Since those comments, interest rates have declined. The average on the 30-year mortgage was 4.31 percent last week.

The Fed begins a two-day policy meeting Tuesday and could clarify its remarks further when the meeting concludes on Wednesday.

Article source: http://www.nytimes.com/aponline/2013/07/30/us/politics/ap-us-home-prices.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

DealBook: Europe Expands Investigation Into Derivatives Market

March 26, 2013 by Leave a Comment

Jose Manuel Barroso, president of the European Commission, which oversees antitrust regulation.Francois Lenoir/ReutersJose Manuel Barroso, president of the European Commission, which oversees antitrust regulation.

BRUSSELS — European Union antitrust regulators have expanded their investigation into whether a small network of big banks unfairly controls the derivatives market.

The inquiry, which has already ensnared major international giants like Barclays, JPMorgan Chase and Deutsche Bank, has been broadened to include the International Swaps and Derivatives Association, a trade organization for market participants.

The European Commission, which oversees antitrust regulation, had “found preliminary indications that I.S.D.A. may have been involved in a coordinated effort of investment banks to delay or prevent exchanges from entering the credit derivatives business,” European antitrust regulators said in a statement. “Such behavior, if established, would stifle competition in the internal market in breach of E.U. antitrust rules.”

The commission has the power to levy fines as much as 10 percent of a firm’s global annual sales in such cases, although fines rarely, if ever, go that high.

“I.S.D.A. is aware that it has been made subject to these proceedings,” the association said in a statement sent by e-mail. “I.S.D.A. is confident that it has acted properly at all times and has not infringed E.U. competition rules,” the statement said, adding that the association was co-operating fully with regulatory authorities.

The European investigation, like a similar one undertaken earlier by United States Department of Justice, highlights efforts by regulators to address concerns that large banks may be using unfair methods to control highly lucrative corners of finance.

The investigation, which began in April 2011, focuses on whether 16 banks worked with the Markit Group, a data provider, to create pricing procedures and indices related to a type of derivative known as credit default swaps. Authorities are also looking into whether a deal between nine banks and the Intercontinental Exchange might have been unfair to other players in the market.

The commission is using the full arsenal of European Union competition law to investigate the matter, including a statute prohibiting firms from covertly rigging the market and another prohibiting big firms from bullying smaller ones. The commission said on Tuesday that it suspected the banks of acting “through collusion or an abuse of a possible collective dominance.”

Regulators on both sides of the Atlantic have pursued the investigations because the effects could extend well beyond the world of finance into the wider economy. A number of industries, including airlines, energy companies and food manufacturers, rely on the derivatives market to help manage their risk and protect their profits.

Article source: http://dealbook.nytimes.com/2013/03/26/europe-expands-investigation-into-derivatives-market/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Boeing 787 Completes Test Flight

February 9, 2013 by Leave a Comment

The flight was the first since the Federal Aviation Administration gave Boeing permission on Thursday to conduct in-flight tests. Federal investigators and the company are trying to determine what caused one of the new lithium-ion batteries to catch fire and how to fix the problems.

The plane took off from Boeing Field in Seattle heading mostly east and then looped around to the south before flying back past the airport to the west. It covered about 900 miles and landed at 2:51 p.m. Pacific time.

Marc R. Birtel, a Boeing spokesman, said the flight was conducted to monitor the performance of the plane’s batteries. He said the crew, which included 13 pilots and test personnel, said the flight was uneventful.

He said special equipment let the crew check status messages involving the batteries and their chargers, as well as data about battery temperature and voltage.

FlightAware, an aviation data provider, said the jet reached 36,000 feet. Its speed ranged from 435 to 626 miles per hour.

All 50 of the 787s delivered so far were grounded after a battery on one of the jets caught fire at a Boston airport on Jan. 7 and another made an emergency landing in Japan with smoke coming from the battery.

The new 787s are the most technically advanced commercial airplanes, and Boeing has a lot riding on their success. Half of the planes’ structural parts are made of lightweight carbon composites to save fuel.

Boeing also decided to switch from conventional nickel cadmium batteries to the lighter lithium-ion ones. But they are more volatile, and federal investigators said Thursday that Boeing had underestimated the risks.

The F.A.A. has set strict operating conditions on the test flights. The flights are expected to resume early this week, Mr. Birtel said.

Battery experts have said it could take weeks for Boeing to fix the problems.

Article source: http://www.nytimes.com/2013/02/10/business/boeing-787-completes-test-flight.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Wealth Matters: Exchange-Traded Funds Grow in Complexity

February 1, 2013 by Leave a Comment

Its selling point is its simplicity: the shares are liquid, the fees are low and the holdings are easy to see. It and the many exchange-traded funds that followed were the foundation for the movement toward low-cost, passive investing that aims to increase returns by eliminating the inconsistent performance of many active investors: the fund will track whatever index it is following.

At a lunch to observe the anniversary, Jim Ross, a senior managing director at State Street Global Advisors and one of the creators of the Standard Poor’s E.T.F., which trades as SPY, said that the funds would continue over the next 20 years to be vehicles that allow people to invest in increasingly sophisticated ways.

The funds now represent a nearly $2 trillion industry, which promotes itself as easy for the average investor to understand but, as Mr. Ross indicated, is becoming ever more complex.

HISTORY The genesis of SPY was a report on the causes of the 1987 stock market crash that said that a way to trade a marketbasket of stocks would have lessened the impact of the crash. From that, an executive at the American Stock Exchange got the idea to bring together a group of commodity traders, index managers, accountants, economists and a specialist trading firm to work out the logistics of trading an entire index as if it were a single stock.

After State Street created SPY, iShares followed three years later with a host of funds that tracked different indexes in large economies, like Britain, Japan and Australia. State Street countered in 1998 with a series of funds that invested in sectors, like technology and energy, and the race was on.

Today, there are over 1,200 exchange-traded funds in the United States alone, and another 1,700 in Europe, according to ETF Global, a data provider. Many track indexes or baskets of stocks for a particular country or industry.

The funds have allowed clients and advisers to easily take a broad position. Pooneh Baghai, a senior partner at McKinsey Company, said that simplicity had allowed advisers to act more like chief investment officers, focused on asset allocations, and not stock pickers in search of a couple of winning investments.

Like most financial products, exchange-traded funds started out simple and have grown complex. The newest innovations are funds that offer enhanced returns — known as levered, or leveraged, funds — and manage volatility. The E.T.F. label gives the funds the veneer of simplicity but they can produce outcomes that investors did not expect.

One example is a fund that resets its leverage each day. Greg Peterson, director of research at Ballentine Partners, said he showed clients how they could end up losing more money than they expected.

Consider a regular S. P. 500 E.T.F. and an S. P. 500 E.T.F. that doubles the gains or losses. Both have $100 on Day 1. On the second day, the S. P. index drops 25 percent. The regular fund is down to $75; the levered one is down to $50. The following day the S. P. is up 50 percent. The regular fund rises to $112.50, and the levered one is at $100. On the fourth day, the S. P. drops 10 percent. The regular fund is down to $101.25, while the levered one is at $80.

“You’ve got to know what you’re buying,” Mr. Peterson said. “The E.T.F. will do what it says it will do. But people don’t know what to expect.”

ADVANTAGES Low fees and no distribution of taxes are two of the selling points that distinguish exchange-traded funds from mutual funds. But there are caveats.

Exchange-traded funds that allow people to invest in securities that may be less liquid or more complex would be expected to charge higher fees, and they do. The AdvisorShares Active Bear E.T.F., which focuses on betting against securities, charges 1.68 percent of the amount invested, while the average fee for most E.T.F.’s are 0.60 percent, according to ETF Global.

But even funds doing simple things charge differently. Vanguard’s S. P. 500 E.T.F. charges 0.05 percent. The iShares version costs 0.07 percent. But the State Street SPY, which is triple the size of the other two combined, charges the highest fee, 0.0945 percent. (The fee 20 years ago was 0.2 percent.)

Article source: http://www.nytimes.com/2013/02/02/your-money/exchange-traded-funds-grow-in-complexity.html?partner=rss&emc=rss

Filed Under: Your Money Tagged With: , ,

Deal Professor: For CVC Capital, Formula One’s Perils Extend Beyond the Racecourse

December 5, 2012 by Leave a Comment

Harry Campbell

Fasten your seat belts. The deal-making for the $10 billion Formula One auto racing empire has already taken more than a few sharp turns as a result of accusations of bribery, collusion and corruption.

And the race is not over. A private equity firm is now challenging Formula One’s 2005 sale in a lawsuit filed in New York.

Formula One has long been identified with Bernie Ecclestone, an 82-year-old Englishman referred to in the British tabloids as “F-1 Supremo.” He built the business, starting as a trader of motorcycle parts. Yet the controlling stake in the Formula One companies had been held by the German media magnate Leo Kirch.

Deal Professor
View all posts


In 2002, Mr. Kirch defaulted on loans secured by the stake, and three banks — JPMorgan Chase, Lehman Brothers and BayernLB, a bank controlled by the German state of Bavaria — became the owners of Formula One.

Not equipped to run a racing empire, the banks probably just wished to sell the stake at a face-saving price. But as long as they owned it, they needed Mr. Ecclestone to operate the business. And Mr. Ecclestone just wanted to be in control.

A standoff existed until 2005, when CVC Capital Partners, a British private equity firm, announced that it had acquired the banks’ stakes for $1.25 billion. For good measure, CVC also paid hundreds of millions of dollars to acquire part of the Formula One interest held by a Liechtenstein trust named Bambino, which had been set up to benefit the Ecclestone family.

The Formula One investment has proved spectacularly successful. Since its purchase, CVC has paid itself $2 billion in dividends, sold part of Formula One in May for $2.5 billion and, according to the data provider Standard Poor’s Capital IQ, still owns a 42.4 percent stake. This year, Formula One filed for an initial public offering on the Singapore stock exchange, with an intended valuation of as much as $10 billion. Mr. Ecclestone’s net worth is estimated at $2.4 billion.

But this enormously rewarding investment may now be in jeopardy.

In 2011, the German media reported accusations that the deputy chief of BayernLB, Gerhard Gribkowsky, had taken a $44 million bribe from Mr. Ecclestone in connection with the sale of Formula One. Mr. Gribkowsky was responsible for the disposition of the bank’s 47.4 percent interest in Formula One.

Mr. Gribkowsky was charged with bribery, embezzlement and tax evasion. At the banker’s trial in Munich last year, Mr. Ecclestone testified that Mr. Gribkowsky was “shaking him down,” and that the payment was made to prevent Mr. Gribkowsky from claiming to the British tax authorities that Mr. Ecclestone controlled the Bambino trust, something that would invalidate the ability of the trust to hold the Formula One stake tax-free.

Mr. Ecclestone denied that he controlled the trust, but said he and the trust made the payment to ensure the banker’s silence. Mr. Gribkowsky was convicted on charges of tax evasion, bribery and embezzlement this year and sentenced to eight and a half years in prison. But that was not the end of the legal mess.

Last month, Bluewaters Communications Holdings, which in 2005 was a competing bidder for Formula One, sued Mr. Ecclestone, CVC and BayernLB in New York State Supreme Court.

Bluewaters claims that Mr. Ecclestone’s payment was made in order to have Mr. Gribkowsky steer the sale of Formula One to CVC, Mr. Ecclestone’s favored buyer. Bluewaters was backed in its bid by $1 billion in financing from Apollo Global Management and King Street Capital Management.

Bluewaters contends that it bid $1 billion for the stakes held by three banks, less than what CVC paid. Yet the firm says it also offered to pay “10 percent more” than any other bona fide offer. In other words, Bluewaters agreed to outbid the highest bidder. It was a crazy, aggressive strategy that few bidders would even dare to undertake, and it might be that Mr. Gribkowsky and the other banks simply did not take the bid seriously.

But in its complaint, Bluewaters said its offer had been ignored because Mr. Ecclestone did not trust Apollo, which he viewed as being too hard to work for, and because of his preference for CVC’s bid. Moreover, Bluewaters claimed BayernLB had paid Mr. Ecclestone $41.4 million from the funds it received from CVC in order to then pay Mr. Gribkowsky to steer the bid to CVC.

A representative for CVC did not respond to requests for comment. But Mr. Ecclestone has told Pitpass, a racing news Web site, that the money was paid to him for an indemnity from him for any mistakes in Formula One’s financial records, not as a payment for Mr. Gribkowsky.

Bluewaters is claiming at least $650 million in damages, the lost profit it would have earned had it bought Formula One. And there are others who appear to believe the payment to Mr. Gribkowsky was for more than silence.

At Mr. Gribkowsky’s sentencing, the judge stated that “in this process we assume the driving force was Mr. Ecclestone,” a sentiment also expressed during trial by the prosecutor, who asserted that Mr. Ecclestone was an “accomplice in an act of bribery.”

On the heels of Mr. Gribkowsky’s conviction, BayernLB has demanded that Mr. Ecclestone pay it hundreds of millions of dollars to reimburse it for its losses related to the payment.

German authorities and British tax officials are reportedly investigating, though Mr. Ecclestone has not been accused of any wrongdoing in Germany or Britain.

In response to a request to Mr. Ecclestone for comment, his office said he was traveling and could not be reached before deadline.

Mr. Ecclestone, an outsize personality, built the Formula One franchise over decades. It is hard to envision any situation in which he would willingly give up control of his baby.

Still, the accusations show that something went terribly awry in the sale of Formula One.

As the investigations gather steam, it is unclear what will happen to the company. In large measure, Formula One is Mr. Ecclestone. It is a league dependent on race organizers, many of whom are Mr. Ecclestone’s friends and peers. If he is not involved to orchestrate the league, there is no clear successor to manage these relationships.

Formula One acknowledged in its Singapore I.P.O. prospectus that was highly dependent on Mr. Ecclestone. Market turmoil in June led Formula One to abandon its initial offering. And Mr. Ecclestone is still intimately involved: the Bambino trust holds 8.5 percent of Formula One, and he owns 5.3 percent.

Formula One, with more than 30 subsidiaries and intricate relationships with race sponsors, has been criticized for its complex ownership structure. Now it is the ownership itself that is coming under attack.

This is a troubled time for CVC and Formula One. They risk losing Mr. Ecclestone as they become embroiled in multiple investigations. And it will certainly be much harder to take the company public or sell it.

Ultimately, though, this is a lesson in deal-making and how the machinations surrounding any sale can lead those involved to extreme measures, even possibly illegal ones. And when the deal-making is in the billions and all dependent on one man, there is even more room for foolhardy errors, a pile-up that can only come back to haunt those involved, as CVC may be finding out.

Article source: http://dealbook.nytimes.com/2012/12/04/hazards-of-formula-one-extend-beyond-the-racecourse/?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

DealBook: Silver Lake and Partners Group to Buy Global Blue for $1.25 Billion

May 24, 2012 by Leave a Comment

LONDON — The private equity firm Silver Lake and the investment management company Partners Group agreed on Thursday to buy Global Blue, a tax-free shopping business, for 1 billion euros.

The deal, valued at about $1.25 billion, is one of the largest private-equity-backed leveraged buyouts in Europe this year. Private equity firms have completed debt-funded European acquisitions worth a combined $15.3 billion in 2012, a 35.5 percent decline from the period a year earlier, according to the data provider Dealogic.

Silver Lake and Partners Group are buying Global Blue from the private equity firm Equistone, which paid 360 billion euros for the company in 2007. Equistone previously was called Barclays Private Equity until it was acquired by its management team in 2011.

The deal will give the new owners of Global Blue access to the increasingly important luxury traveler market, as wealthy individuals from emerging markets and developed countries continue to spend despite the global financial crisis.

Global Blue, based in Nyon, Switzerland, has operations in more than 41 countries and works with about 270,000 retailers, according to the company’s Web site. Its businesses include tax-free shopping as well as financial transactions and foreign exchange services.

“Silver Lake and Partners Group’s impressive Asian footprints will also bolster Global Blue’s expansion initiatives in that important region,” Silver Lake’s managing director, Christian Lucas, said in a statement.

Article source: http://dealbook.nytimes.com/2012/05/24/silver-lake-and-partners-group-to-buy-global-blue-for-1-25-billion/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,