Unstructured Finance

Chavez puts a damper on U.S. earnings season

CHAVEZVenezuela President Hugo Chavez has rained on the U.S. consumer goods parade.

His government’s decision this month to devalue the Venezuela bolivar promises to hurt the profits of many leading U.S. consumer products makers this year even as they seem to be turning a corner.

On Friday, Newell Rubbermaid said the devaluation – which basically creates a two-tiered system that sells U.S. dollars for 4.3 bolivars in one market, and a separate parallel market where the greenback is going for about 6 bolivars- would shave 4-5 cents per share off of its 2010 earnings, sending its shares down.

The news follows Colgate-Palmolive and Procter & Gamble also saying on Thursday that Hugo’s tinkering with exchange rates would hit their 2010 profits, putting a little damper on the news that both companies had done better than expected last quarter.

More bad news may be on the way as we make our way through earnings season: companies exposed to Venezuela could feel an average earnings hit of about 2 percent from translating business from that country into U.S. dollars, Bill Pecoriello of Consumer Edge Research warned us earlier this month.

(Reuters photo)

The best deal on Wall Street?

Investors who don’t want to pay hedge funds’ high minimums can still get a taste of top managers’ best ideas at an exclusive conference in New York next week.

For as little as $1,000 — a tiny fraction of the $1 million many hedges demand as a minimum investment — guests can listen to activist hedge fund managers William Ackman and Nelson Peltz plus five other prominent investors talk trends and investment ideas.

Considering that Ackman’s flagship portfolio at Pershing Square Capital Management returned over 50 percent last year, this might be the best deal on Wall Street next month, several analysts quipped about the event.

ICICI Bank rises

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Shares in ICICI Bank rose over 5 percent on Friday after the Reserve bank of India left its short-term interest rates unchanged and only hiked banks’ CRR by 75 bps.

The counter ended 5.3 percent higher at 830 rupees with volumes of over 2.5 million shares.

Peer banks such as Canara Bank rose 4.6 percent, Allahabad Bank ended 4.3 percent higher, and SBI closed 2.7 percent up.

Check Out Line: Holiday cheer in Barbie land

BARBIE/ANNIVERSARYCheck out more Barbie dolls making an appearance under the Christmas tree.

Mattel, the world’s largest toy maker, posted higher than expected profit for its quarter that included the holiday season, boosted by strong demand for its Fashionista Barbie dolls and Hot Wheels cars.

The company was also helped by tight cost controls and a weak U.S. dollar.

Mattel said worldwide gross sales for Barbie rose 12 percent, while Hot Wheels jumped 16 percent.

But at American Girl, sales were flat.

Could it be that while consumers might be feeling a little bit more confident, they are more comfortable paying $10 for a Barbie doll than $95 for an American Girl doll?

Milan’s deserted depots point to double dip

 Travelling towards Italy’s major financial centre Milan last Sunday on my way back to Zurich, I spotted something out of the window that had little effect on my fellow train passengers but made my blood run cold.

 The massive storage depot just outside the city was practically devoid of goods containers.

    These containers are usually stacked four high in periods of normal economic activity, although their number fell noticeably during the recession from which we have now supposedly emerged.

DealZone Daily

ING Group completed the sale of its Asian private banking unit to Singapore’s OCBC, the biggest deal in the private banking sector since the financial crisis. Netherlands-based ING said the sale is in line with its strategy to focus on fewer franchises and reduces the group’s complexity.  Read the Reuters story here.

Spain’s Ferrovial has no plans to tap equity markets in 2010, though its British airport operator BAA will continue to raise cash through bond issuance, chairman Rafael del Pino told Reuters on the sidelines of the World Economic Forum.

And in other news:

Bank of New York Mellon Corp is in late-stage talks to buy a PNC Financial Services Group business for about $2.5 billion, the Wall Street Journal reported, citing people familiar with the matter. Pittsburgh-based PNC has been shopping its PNC Global Investment Servicing business and a deal could come as soon as next week, says the report.

Morning line-up

News and views on the hedge fund sector from Reuters and elsewhere:

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 Ex New Castle exec pleads guilty to insider trading - Reuters

BNY Mellon in talks for PNC unit – Bloomberg

Vanguard moves closer to offering hedge fund – Morningstar

How US universities became hedge funds -  Huffington Post

Why retailers are avoiding bankruptcy (or lessons from Circuit City)

Struggling retailers are staying as far away from bankruptcy courts as possible this year after being traumatized by a slew of liquidations in 2008 and having a general feeling that the bankruptcy code is unfair to them.

While the most recent holiday shopping season was better than 2008, some retailers whose holiday was only so-so, could benefit from being able to reduce their size or get out of onerous leases in bankruptcy.

But retailers are increasingly viewing filing for bankruptcy as the beginning of the end, and are increasingly wary that they could turn out to be the next Circuit City.

Tata Steel rises after results

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Shares in Tata Steel, the world’s No.8 steelmaker by output, soared over 5 percent in intra-day trade and ended 4.8 percent higher at 585.55 rupees.

The stock, valued at $11.7 billion, nearly trebled last year, easily beating an 81 percent gain on the main index.

The company declared its quarterly results, registering profit for its India operations. Sales jumped 49 percent while net profit rose to 11.92 billion rupees from 4.66 billion rupees a year ago.

Check Out Line: The slow return of the splurge

Check out signs that consumers are getting more comfortable with spending and, at times, even splurging.

Estee Lauder reported a far better-than-expected 62 percent jump in quarterly profit and boosted its full-year forecast as consumers began to splurge on cosmetics after a year-long slide in sales. Results were helped by strong growth in Asia, new products, and a better-than-expected performance in airport stores and in the United States.

pgUnder Armour, the maker of athletic clothing and footwear, reported an 83 percent rise in its holiday-quarter profit helped by gains in its apparel business. It said it now expects 2010 revenue and earnings to grow 10 percent to 12 percent, up from its prior range that called for a rise in the high-single to low-double-digits.

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