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Sunday
Jan302011

Massey Energy to Merge With Alpha

Photo Courtesy - Getty Images(RICHMOND, Va.) -- Massey Energy, the company at the center of the April 2010 mine collapse that killed 29 men at the company’s Upper Big Branch Mine in West Virginia, has agreed to be taken over by Abington, Va.-based Alpha Natural Resources.

The combination, valued at $8.5 billion, would award Massey stockholders 1.025 shares of Alpha common stock and $10 for each share of Massey common stock.

Stockholders from both companies still need to approve the deal before it can close.

“This transaction represents a tremendous opportunity for Massey to partner with our Central Appalachian neighbor, Alpha, to create a new industry leader,” said Massey CEO Baxter Phillips, Jr.

“We have always respected Alpha’s passion for this business and we believe this is a natural and logical combination,” Phillips said.

A combined operation would include more than 110 mines and coal reserves of approximately 5 billion tons, according to a joint press release issued Saturday.

If approved, the transaction would be on target to close mid-2011.

Copyright 2011 ABC News Radio

Sunday
Jan302011

New Walmart Stores Face Opposition in Several Large Cities

Photo Courtesy - ROBYN BECK/AFP/Getty Images(NEW YORK) -- Retail giant Walmart has stores all across the country that provide large grocery stores in many markets where few alternatives exist. Now, the superstore chain is trying to move into the nation's biggest markets, where hordes of competition already exist.

In New York City, Walmart has clashed with the City Council, and the company now plans to take its fight to the airwaves by launching radio attack ads, according to a report by the New York Daily News. The paper says Walmart will also be sending mailers to homes that read, "You don't ask the special interests or the political insiders for permission to use the bathroom. So why should they decide where you're allowed to shop?"

The New York City Council, expected to hold another hearing to address the Walmart issue on Thursday, has claimed that the company does not pay workers enough, discriminates against women and gays, and hurts locally-run businesses.

In San Diego, Walmart faces similar opposition. The company announced plans this past week to build 12 new stores in the area, while on Tuesday the city council will consider repealing an ordinance that requires economic impact reports from developers of megastores. Unions had initially voted against allowing stores to be built in the area, but Walmart submitted a petition with over 50,000 signatures to force a special vote.

In larger markets like New York and San Diego, Walmart says it does not intend to build large stores, but rather a smaller version of its brand. In addition to the Supercenters that have replaced grocery stores in many communities, the company has also launched Walmart Neighborhood Market stores, which are about 80 percent smaller than their larger predecessors.

Copyright 2011 ABC News Radio

Saturday
Jan292011

Goldman Sachs CEO Gets Big Pay Raise

Photo Courtesy - Getty Images(NEW YORK) -- The chairman and CEO of Goldman Sachs, Lloyd Blankfein, has received a hefty pay raise.

Blankfein’s salary was increased from $600,000 to $2 million at the beginning of the year, according to company filings. The Goldman Sachs boss has also been awarded $12.6 million in company stock, a 42 percent increase compared to the stock bonus Blankfein received the previous year.

The raise and stock award comes after the company recorded $8.35 billion in profit in 2010, a 38 percent decrease compared to the profit figure recorded in 2009.

The troubled global economy forced banks to cut back on bonuses in 2008 and 2009, but it appears banks aren’t holding back anymore. CEOs at Citigroup, Morgan Stanley and JPMorgan Chase & Co. have all recently received similar pay increases.

Copyright 2011 ABC News Radio

Saturday
Jan292011

Madoff Woes Force Mets Owners To Seek Buyer

Photo Courtesy - Getty Images(NEW YORK) -- The owners of the New York Mets, who are being sued for millions by victims of Ponzi schemer Bernie Madoff, have announced that economic "uncertainty" is forcing them to consider selling a 25 percent interest in the team.

Fred and Jeff Wilpon, who were both investors with Bernie Madoff and friends with the Madoff family, said on a conference call with reporters Friday that they were looking to sell a 20 to 25 percent minority stake in the baseball franchise, which had an estimated worth of $858 million in 2010.

"To address the air of uncertainty created by this lawsuit," said the Wilpons in a letter to Mets fans published Friday, "and to provide additional assurance that the New York Mets will continue to have the necessary resources to fully compete and win, we are looking at a number of potential options including the addition of one or more strategic partners."

On Dec. 7, 2010, the trustee representing Madoff victims filed suit against Sterling Equities, the Wilpons' investment firm, because the company was deemed a "net winner" in Madoff's multi-billion-dollar investment scam. According to trustee Irving Picard's filing, the Wilpons withdrew $48 million more from their Madoff accounts than they invested.

The Madoffs and the Wilpons have been friends for years. Bernie Madoff's son Mark, who recently committed suicide, was friends with Jeff Wilpon when both were growing up in Roslyn, Long Island.

The Wilpons and financial advisor Steve Greenberg, managing director of Allen & Company, said that they were exploring many different options, including looking for strategic partners and looking at various banks and insurance companies. They said they had not received any pressure from Major League Baseball to pursue a new partner because of the Madoff lawsuit.

"The Mets have been a major part of our families for more than 30 years and that is not going to change," said the Wilpons in their letter to fans.

On the conference call, the Wilpons and Greenberg declined to discuss any details of the lawsuit or contingent liabilities for a potential buyer.

Copyright 2011 ABC News Radio

Friday
Jan282011

Hedge Fund Manager Takes Home Record $5 Billion in Profits 

Photo Courtesy - Getty Images(NEW YORK) -- A huge Wall Street payday is raising questions as to whether the nation's top earners should benefit from tax breaks while so many unemployed Americans continue to struggle. Hedge fund manager John Paulson made more than $5 billion in personal profits last year, the Wall Street Journal reported Friday. The jaw-dropping figure works out to roughly $159 rolling in every single second.

Industry experts say it could be the largest yearly haul ever for a financial trader, but the stunning income is hardly new for Paulson. He set the previous record of $4 billion in earnings in 2007 by betting against the risky mortgages that brought down the housing market.

Giant paydays may be back for Wall Street's top earners, but across the country the jobs aren't. The newest income record comes as the nation's unemployment remains stuck at more than nine percent. On top of that, a good portion of Paulson's profits are considered long-term capital gains, income that is taxed by the federal government at a rate of 15 percent. Meanwhile, most Americans pay an income tax rate up to 35 percent. The seeming disparity has some lawmakers angrily asking the question, why are hedge fund managers benefitting from tax breaks that the average American family does not receive?

"I think it's outrageous," said Rep. Sander Levin, D-Mich. "He should pay like everybody else does, ordinary income taxes. He's simply managing other peoples' money, not his own."

Levin argued that closing the loophole could bring in $25 billion in taxes over the next decade alone, but the lawmakers will have a tough time changing regulations with a White House focused on strengthening ties to the business community. The Obama administration has sought a fresh start with big business, reaching out to Wall Street and the U.S. Chamber of Commerce.

"The government has tried repeatedly to tax these guys more, and they tend to back away because of lobbying, so I expect they'll continue to make these astronomical sums," said Sebastian Mallaby, the author of More Money Than God.

There are signs that the Obama administration is at least aware of the outrage. On Friday, Commerce Secretary Gary Locke acknowledged to ABC News that Paulson's hedge fund payday is enormous.

"It's really part of the bizarre tax code that we have," Locke said.

Paulson has defended the smaller taxes for elite top earners. At the height of the recession in November 2008, he spoke before the House Committee on Oversight and Government Reform.

"We certainly appreciate your concern for fairness in tax code, but I will say I believe our tax situation is fair," Paulson said.

Copyright 2011 ABC News Radio

Friday
Jan282011

Markets Roiled by Egypt Events

Photo Courtesy - Getty Images(NEW YORK) -- While Egypt is not a significant oil exporter or massive economy (GDP is 40th largest), US markets reacted to the growing unrest in the country.
 
Traders are concerned that the riots on the streets of Cairo might push the region into a period of upheaval that could threaten global energy supplies, especially as the country controls the Suez Canal and the vital trade that flows through it.
 
At the end of the trading day, oil prices had surged more than four percent settling at $89.34 in New York.
 
U.S. stock markets also saw stiff selling, especially as the images from Egypt showed widespread rioting.
 
The Dow Jones Industrial average was off 1.4 percent (-166 points) and the broader S&P 500 was down 1.8 percent (-23 points) at the end of trading.

There’s a widespread anticipation that the unrest in Egypt might spread, destabilizing the entire region.
 
“While we anticipate little direct impact for the global economy from the political unrest in Egypt, the indirect political and economic consequences of regime change in the country (were it to happen) could be consequential, and hard to fully anticipate,” writes Adolfo Laurenti, an economist at Mesirow Financial.
 
All these unknowns are adding a level of risk to the world economy that is pushing concerns on markets everywhere. The VIX -- a widely respected measure of “concern” in the U.S. stock markets -- jumped more than 24 percent Friday as the images in Egypt continued to fill television screens on trading floors.

“We are worried about the developing geopolitical risk in the Middle East and North Africa,” writes David Kotok, an investor who runs Cumberland Advisors. “We do not know where it will spread nor do we know how it will run its course. We also do not know what direction these regimes will take if there is over throw of the existing system in any of these countries. We do know that we see turmoil in Egypt, Tunisia and Yemen.”
 
Kotok’s words are powerful -- but his actions even more so. He said his firm is going into the weekend with all those questions and with its highest cash reserve since the height of the financial crisis in 2008.

Copyright 2011 ABC News Radio

Friday
Jan282011

Hoarders Say Gold Is Last 'Safe' Investment

Photo Courtesy - Getty Images(CINCINNATI, Ohio) -- The price of gold may be trading at a three-month low, but that is not stopping people from hoarding the precious metal in their homes, bank vaults or even in hiding places.

For some, fears of the country's growing levels of debt and inflation make currency seem less dependable, and gold and other precious metals seem rock solid.

Pete Sorrentino, vice president of Huntington Asset advisors in Cincinnati, has investments in gold bars and bullion coins and manages a $95 million fund for his clients, 2.6 percent of which is actual gold held in a depository. He said the low price of gold makes it an ideal time to buy it as global financial markets fare well.

"This is an ideal time for anyone who has missed out and want participation in gold, as long as the attention is focused on problems in Europe, and we tend to get fairly good reports in earnings season," said Sorrentino. "You'll see people continuing to favor financial assets over the precious metals."

He said he prefers coins over bars because the assay, or examination process, is easier. He said coins are more difficult to counterfeit and manipulate than gold bars. But with the lower price of gold these days, he prefers silver coins.

"I tend to give them out as gifts," said Sorrentino, claiming he is not a vast hoarder. "The people to whom I gave them a couple years [ago] were quite happy later."

Gold was trading at a record high at the end of 2010, with its contracts trading at a peak of $1,430 in December.

On Thursday, it was trading at $1,318.40 on the Comex division of the New York Mercantile Exchange, its lowest level since Oct. 4, according to Dow Jones.

Copyright 2011 ABC News Radio 

Friday
Jan282011

Vice President Biden to Unemployed Americans: "Hang in There" 

Photo Courtesy - ABC News(WASHINGTON) -- Vice President Joe Biden said in an interview with Yahoo! News that while the economy is starting to grow he understands it is still painful for the millions of Americans looking for work.

“The message is hang in there,” he said. “Things are coming back.”

Asked in a user-submitted question what the best “nonpolitical” thing someone can do to help turn around the economy, the vice president noted that Americans can be more conscious about their energy consumption, but then said they can also be more aware of their own physical health and well being.

“One of the major drivers of the deficit and the cost are health care costs, particularly as it relates to Medicare and Medicaid,” he said. “So one of the ways to impact…on the federal debt, on economic growth, on the cost of maintaining health care in America is don't smoke, eat healthy, do not consume junk foods.”

Copyright 2011 ABC News Radio

Friday
Jan282011

Chamber of Commerce ‘Joined’ with WH on Economic Priorities

Photo Courtesy - Getty Images(WASHINGTON) -- After a testy two year relationship between President Obama and big business, the White House is hoping for a fresh start with the president making a series of pro-business moves as he gets set to address the Chamber of Commerce next month.

In an interview with ABC News Friday, Commerce Secretary Gary Locke said that reports of tension have always overlooked the “coordination and cooperation” with the business community since the president first took office.

“More recently that engagement has been amplified, and look at the great success the that president has had with the business community,” Locke said. “We're really seeing that the president [is] amplifying and focusing on a priority from day one, which is getting our economy moving again and that really involves selling more of ‘Made in USA’ goods and services.”

“Actually there’s been a lot of areas in which the administration and the Chamber of Commerce and the Business Roundtable and business community have joined together,” Locked added. “So we're really looking at the programs and policies where we can join together to help move the economy along. Because, obviously, over nine percent unemployment is unacceptable, and the president has said that as long as a person is still looking for a job, our work in the administration is not done.”

Despite tensions -- the Chamber opposed the health care law and financial regulatory reform, among other Obama initiatives -- “there really is a lot of common agreement between the Chamber and the administration,” Locke said.

Copyright 2011 ABC News Radio

Friday
Jan282011

Ford Announces Best Profit in Over 10 Years

Photo Courtesy - Getty Images(DEARBORN, Mich.) -- Ford Motor Company announced Friday that 2010 was the company’s highest-earning year in more than 10 years.

The company reported a $6.6 billion net income for the year, nearly $3 billion more than it earned in 2009.

Ford was also the top-selling brand in the U.S. in 2010, as an improving economy helped send sales up by 20 percent.

“We are the most preferred brand,” Ford CEO Alan Mulally told ABC News affiliate WJR. “We're the one that's being considered the most of any brand.”

The jump in sales was due in large part to increased demand for Ford's F-Series pickup trucks.

The company’s fourth quarter earnings were down year-over-year in 2010. The company pulled in a net $190 million, a decrease of $696 million from the fourth quarter of 2009.

Copyright 2011 ABC News Radio







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