Business News Blog: December 2004

Falling American Dollar

Looks like the dollar will continue to fall if participants in a recent poll are correct. Investors agree that the Bush administration havn't got much interest in turning the dollar around in 2005 as it helps to narrow the all time high US trade deficit.
Dollar Heads for Worst Quarter Versus Euro in More Than 2 Years
"The dollar is heading for the biggest quarterly decline against the euro in more than two years and may weaken versus the yen on speculation U.S. officials will allow a prolonged slide into 2005, according to a survey by Bloomberg News of 58 traders and strategists from Tokyo to New York." bloomberg

Great Philanthropists - BusinessWeek

The big boys are giving away some of their excess dollars in larger and larger amounts. It's now almost considered cool to give away millions every year, which is the way it should be. Business week has put together a list of 50 top philanthropists (pdf file).
"On average, the nation's richest 1%, who own two-fifths of U.S. wealth, donate just 2% of their incomes each year"
Bill Gates comes in at number 1 (and so he should!).
Top 10 Philanthropists
1. Bill and Melinda Gates - Microsoft
2. Gordon and Betty Moore - Intel
3. Warren Buffett - Berkshire Hathaway
4. George Soros - Investor
5. James and Virginia Stowers - American Century founder
6. Eli and Edythe Broad - Sun America, KB Home founder
7. Michael and Susan Dell - Dell Computers
8. Alfred Mann - Medical devices
9. Paul Allen - Microsoft
10. Walton Family - Wal-Mart

Read a guide to giving at Yahoo Business News

Yukos and Russian Government

Big business in Russia loses out to the Russian government with the giant oil company Yukos being sold off. The main oil producing unit of Yukos (Yuganskneftegaz) was sold to an unknown company Baikal Finance Group for $9 billion.
Yukos head man Mikhail Khodorkovsky remains in prison with a $27 billion tax bill that the Russian government plans to take by selling off the oil giant's assets. It is said that the government retaliated after Khodorkovsky became too critical of President Vladimir Putin. Now Russia's richest man and the head of it largest oil producing company looks set to lose it all.
See reuters and the times uk for more

Rupert Murdoch Apartment Offer

The Australian born American media mogul Rupert Murdoch has agreed to pay $44 million for a 3 floor apartment in Manhattan. It will make it the most expensive apartment ever sold in Manhattan if the sale goes ahead. The luxury residence is located on 5th avenue, opposite the Central Park Zoo and was last owned by the Rockefeller family. The current record price for an apartment is $42.5 million.

Interest Rate Rise

Interest rates have risen for the 5th time this year, with another one quarter percentage point rise earlier today. Interest rates are now at 2.25%, up from 2%.
The Fed stated that the economy "appears to be growing at a moderate pace", hence the increase.
Record low rates are slowly becoming a thing of the past. The low rates would eventually cause inflation, but the Fed stated that "inflation and longer-term inflation expectations remain well contained.".

The Dollar to Rebound

Talk of cheap dollars that should turn around in time and British investors snapping them up while they can.
Why the buck will rebound
"In the past week, the value of the pound has risen to almost $2, the first time that sterling has been anywhere near this level since just before Black Wednesday in September 1992. The euro has been hitting record highs against the dollar almost daily. And everyone from Alan Greenspan, the Chairman of the Federal Reserve Board, to the humblest foreign exchange clerk, seems convinced that the dollar is bound to keep falling.
Does this mean that British businesses and investors should prepare themselves for a pound worth more than $2, a level never breached since 1981? Or is this a once-in-a-lifetime opportunity for British savers to buy dollars at a bargain price?" anatole kaletsky

Dollar on the Way Up?

This week has been better for the American dollar, particularly against the Japanese Yen with a 3.9 percent surge. It also rose against most other major currencies, including the Euro.
Dollar Heads for Biggest Weekly Gain Against Yen Since 1999
"The dollar headed for its biggest weekly gain against the yen in almost six years on signs Japan's economy is stalling as economists raise estimates for U.S. growth. The dollar also rallied this week against the euro and 14 other major currencies." - bloomberg

Home Equity into the Stock Market

Brokerage regulator NASD warns against plowing home equity into the stock market. Home owners are being encouraged by brokers to use the equity in their home to play the market. NASD has reminded brokers that they have a responsibility to investors, to advise them not to put their savings into unsustainable investments.
US regulator warns of risky home-equity investing
"Brokers should make sure investors understand that they could lose their homes if investment returns will not cover new mortgage or line of credit obligations, NASD said.
Further, investors need to know that brokers earn fees and commissions by getting clients to invest in the market with money from refinancings or home equity lines of credit." reuters

Hot Stocks Bubbling Over

Herb Greenberg of CBS Market Watch talks of stocks that go up really quickly, and stocks that could also come down really quickly. Hot stocks like Travelzoo (NasdaqNM:TZOO ), Overstock.com (NasdaqNM:OSTK ), Taser (NasdaqNM:TASR ) and even OmniVision (NasdaqNM:OVTI ) are showing signs of heating up too quickly for no good reason.
Have investors learned nothing?
"It's human nature to want stocks to rise, but too often they rise merely because of nothing more than unsustainable momentum. Unfortunately, that momentum lulls investors and even company executives into thinking they're smart, when they're really just parading around the chairs while the music is playing." yahoo - cbs

Virgin in China

Richard Branson's Virgin Group plans to move into the Chinese mobile market, teaming up with a Chinese company in a $300 million deal.
Virgin plans China mobile expansion
"We are in the early stages of discussion - I suspect the whole thing would take 12 to 18 months before we'll launch," Mr Branson said. "The Chinese market is obviously the fastest growing market in the world. Virgin will be foolish if it is not a player in the market." guardian