Investors pulled the most money from global stock funds since 2008 in the past week as the Standard & Poor’s downgrade of Treasuries and the deepening European debt crisis prompted a flight into cash and gold.
Funds that buy global equities suffered $3.5 billion in net withdrawals in the week ended Aug. 10, the most since the second week of October 2008, according to Cameron Brandt, director of research at EPFR Global of Cambridge, Mass.
Investors removed $11.7 billion from funds that invest in U.S. equities, the most since May 2010, following a one-day market plunge that erased $862 billion in U.S. stock values.
“This week had a feeling of capitulation as we saw investors running for cover,” Brandt said in a telephone interview.
“The last time we saw this kind of flight to safety” was in 2008, he said.
Investors have rushed into money-market funds and gold as global equity markets lost $6.8 trillion in value since July 26.
On Aug. 5, S&P downgraded U.S. debt for the first time, sending the benchmark Standard & Poor’s 500 index down by 6.7 percent on the first trading session after the move. In Europe, riots swept across Britain and the sovereign-debt crisis deepened.
U.S. money funds attracted $61 billion in the week ended Aug. 9, according to data from iMoneyNet in Westborough, Mass.
Gold and precious metals funds drew $2.1 billion in the past week, EPFR said.
Shares of Nintendo Co. shed a fifth of their value Friday after the Japanese video game giant posted a deep loss in the latest quarter, cut its full-year forecasts and slashed prices on its new 3DS handheld device.
The sell-off sent the stock down more than 20 percent to 11,190 yen as investors rushed to unload a company struggling to regain momentum. It opened the trading day ask-only, meaning the market was overwhelmed with investors wanting to sell.
Nintendo on Thursday posted a net loss of 25.5 billion yen ($324 million) in the April-June period, worse than the 25.2 billion yen loss a year earlier. For the fiscal year through March 2012, Nintendo expects net profit of 20 billion yen, down 82 percent from its previous outlook, on sales of 900 billion yen.
The Kyoto-based company blamed its lackluster sales on a dearth of hit titles for the Wii and 3DS, as well as a strong yen.
To fuel momentum, Nintendo decided it needed to dramatically drop prices just five months after it launched the 3-D version of its DS handheld device to high hopes. The move underscores how quickly the company’s fortunes have turned since the Wii revolutionized the industry and flew off store shelves.
The 3DS will cost 15,000 yen in Japan starting Aug. 11, down from 25,000 yen. In the U.S., the price drops to $169.99 from $249.99 on Aug. 12. Nintendo does not set suggested retail prices for Europe but said it would lower wholesale prices by about a third.
“For anyone who was on the fence about buying a Nintendo 3DS, this is a huge motivation to buy now,” Nintendo of America President Reggie Fils-Aime said in a statement.
The 3DS got off to a solid start when it launched but has since lost momentum. Analysts cite a lack of compelling content for the device and say consumers may now be waiting for Sony Corp.’s upcoming release of the new PlayStation Vita handheld, which will sell for $299 in the U.S.
Such a big price cut so soon after a product’s launch is unprecedented for Nintendo, and it’s likely to annoy the loyal fans who have already bought the device, said Eiji Maeda, an analyst at SMBC Nikko Securities in Tokyo.
It took almost three years for the company to lower the price on the Wii for the first time, and that was by $50 savings account payday advance.
“This shows that Nintendo feels it really needs to lift up the 3DS,” Maeda said.
The Kyoto-based company also faces increased competition from smartphones and games on social networks, particularly among the casual gamers it targeted with the Wii. At a recent general shareholders meeting, President Satoru Iwata told investors Nintendo would not compete directly with smartphones by adding extra functions to the 3DS.
A strong yen hasn’t made things any easier. About 80 percent of Nintendo’s sales are from outside of Japan, making it vulnerable to currency fluctuations.
Sales during the quarter slumped more than 50 percent to 93.93 billion yen, leading to an operating loss of 37.71 billion yen.
Investors had already punished Nintendo’s stock price this year, reflecting their anxiety about the company’s health. But with Friday’s tumble, Nintendo’s stock price has fallen more than 50 percent this year compared with a relatively flat performance by the benchmark Nikkei 225 stock average.
Macquarie Capital Securities downgraded its rating on the issue one notch to “Neutral” earlier this month. The 3DS has not lived up to expectations, and Nintendo’s next major launch _ the Wii U _ won’t arrive until mid-2012, analyst David Gibson said in his report.
“We believe the company’s focus on doing both hardware/software, while noble, will ultimately limit their ability to be relevant in a ’smartphone in every pocket’ world,” he said.
Gibson suggests Nintendo needs to take “radical” steps, such as buying U.S. video game publisher TakeTwo Interactive Software and making its hit game “Grand Theft Auto” exclusive to the Wii U, which would attract core gamers to the platform.
For now, Nintendo is banking on the cheaper 3DS and new games to lure shoppers during the critical year-end shopping season. “Super Mario 3D Land” goes on sale in November, and “Mario Kart 7″ hits stores in December.
The company bases its earnings on Japanese accounting standards.
Its new earnings projection is based on a revised exchange rate assumption of 80 yen to the dollar.
With their former boss under arrest, tabloid reporters are beginning to reveal secrets of what it was like to work in Rebekah Brooks’ newsrooms.
Disguises, bullying, lies dropped into copy _ all were part of the pressure-cooker atmosphere that prevailed, according to former journalists who spoke to The Associated Press.
Michael Taggart, who worked at The Sun in 2003, said the paper under Brooks was marked by “ruthlessness and misogyny.”
“The reporters who were prepared to subject themselves and others to the most ridicule were the ones earmarked for success,” said Taggart, who now works as a consultant for London-based MRM.
Insiders say the whatever-it-takes mantra was common across the tabloid world. But the pressure at News International _ publisher of the Sun and the News of the World, the defunct paper at the center of the phone hacking scandal _ was particularly intense.
Taggart described routinely participating in overnight stakeouts while at the Sun, something he said was rare at other papers he had worked for. The News of the World famously employed Mazhar Mahmood, who dressed as a hidden camera-wielding Middle Eastern potentate dubbed the “Fake Sheik” to trick scores of prominent figures into embarrassing indiscretions.
Taggart said other tabloids were just as hungry for scandal and celebrity, but they tended to rely on “great contacts, rather than covert operations.”
At Rupert Murdoch’s tabloids, refusing to play ball meant being pushed to the sidelines. One reporter who said he went through that was Charles Begley, News of the World’s Harry Potter correspondent in 2001 when Brooks was its editor.
The then 29-year-old reporter said he wore a Harry Potter costume to work and officially changed his name to that of the fictional boy wizard, all part of the paper’s attempt to tap into the Pottermania sweeping both sides of the Atlantic.
On Sept. 11, hours after the fall of the twin towers, Begley was stunned to be chewed out by News of the World management for not wearing his costume. He said he was then ordered to attend the next news meeting in full Potter regalia.
Shaken by the demand, Begley never showed up, and soon afterward parted ways with the paper.
Brooks spokesman David Wilson said the former editor was “not going to answer specific allegations like this at this time,” but described many of the stories being circulated as ridiculous.
Another reporter who spent seven years with the News of The World said the humiliation described by Begley was routine.
“It was very hierarchical,” the former reporter said, speaking on condition of anonymity because he still works in the media industry. “If your immediate boss told you to drive to Norfolk and stand in a field … that’s what you were expected to do.”
Attitudes toward women _ never thought of as particularly enlightened at The Sun, a paper still famous for its topless page 3 models _ did not improve under Brooks, Taggart said.
“We were regularly encouraged to refer to women with misogynistic names like ‘tarts,’ ’slappers’ or ‘hookers’ in our copy if there was conceivably any question mark over their sexual proclivities,” he said.
“We were expected to childishly objectify women. So blonde-haired women were described as ‘beauties’ and generously chested women ‘looked swell’, whether they’d wanted the attention or not.”
Faking facts was also part of tabloid life under Brooks, reporters said.
A third News of The World reporter, who spoke to the AP on condition of anonymity because he too is still working in the media industry, said some editors at the News of the World deliberately inserted bogus details to sensationalize copy.
In 2006, it apologized after an England soccer star was wrongly alleged to have participated in a “gay sex romp.” More recently, the paper was forced to pay damages after wrongly alleging that motor racing boss Max Mosley had participated in a Nazi-themed orgy. Mosley acknowledged the orgy, but denied any Nazi theme.
Protesting was not an option, according to the reporter who worked at the tabloid for seven years. He said the paper “was no place to question what you were being asked to do, the answer was always the same mantra: Do what you have to do to get a result.”
“Anyone mentioning ethics or refusing to be cooperative with dubious practices would have been effectively exiled by the news desk and labeled as ‘flaky.’”
QUESTION
China’s premier says the government will keep controls on property deals in place to help fend off a speculative bubble, reflecting top-level unease over limited progress in cooling the overheated market.
Wen Jiabao urged local governments to abide by efforts to cool the property market and to meet targets for building more affordable public housing. Such housing is meant to accommodate ordinary families unable to afford commercial property due to surging prices.
“Pressure on housing prices in some cities is still strong, and in some places controls have been relaxed,” a government statement cited Wen as telling a Cabinet meeting Thursday. “The current real estate market is at a critical period. We must unswervingly stick to controlling the trends,” it said.
As of the end of June, construction had begun on more than 5 million units of public housing, more than half the annual target, the statement said.
State media say more than 30 million people are having trouble finding affordable housing, and developers have been lukewarm on investing in the relatively unprofitable part of the market.
Noting uneven progress and low use rates in some areas, Wen called for fair and equitable distribution of such housing and curbs on surging rents no fax cash advances.
Investment in property rose by nearly a third over a year earlier in the first half of this year to 2.63 trillion yuan ($404.6 billion), according to data released Wednesday.
Despite 15 months of efforts to cool the housing market, prices remain firm, according to a recent report by Standard Chartered Bank, which surveyed the situation in both large cities and in smaller provincial cities.
The government has raised interest rates and bank reserve requirements, repeatedly. Some cities have also hiked the amount of money needed for downpayments and imposed restrictions on families’ purchases of second and third properties. But prices are still rising, though at a slower pace.
China’s economic growth slowed to a still-robust 9.5 percent in April-June, giving Beijing room to tighten controls to fight surging inflation, which hit a three-year high of 6.4 percent in June as food prices raced higher.
Such increases worry China’s communist leaders as they erode public trust in their ability to continue deliver improving living standards.
Stocks are closing lower after Moody’s knocked Ireland’s bond rating to junk, saying the country would likely need another rescue. Moody’s already has junk ratings on Greece and Portugal.
Ireland is again the focus of investor fears that a heavily-indebted European country will default. That could cause disruptions on financial markets and a slowdown in lending.
The Dow Jones industrial average lost 59 points, or 0.5 percent, to close at 12,446 Tuesday free instant credit score. The Standard & Poor’s 500 index is down 6 points, or 0.4 percent, to 1,314. The Nasdaq composite is down 21, or 0.7 percent, at 2,782.
About three stocks fell for every one that rose on the New York Stock Exchange. Volume was lighter than average at 3.7 billion shares.
WASHINGTON
Demand by institutional and asset management firms for exchange-traded funds has climbed as investors use the products more for “active” investing strategies, Greenwich Associates said.
About 48 percent of asset management firms and one-third of institutional funds plan to increase their allocations to ETFs in the next two years, according to a report published Friday by Greenwich. That compares with another study by the Stamford, Conn.-based firm in late 2010, which found that 15 percent of U.S. institutional funds used ETFs. No asset managers said they expect to cut their ETF allocation by 2013, the study said.
“The perception of ETFs as a retail product is clearly out of date,” the report said. “They are currently being used in institutional portfolios for a variety of strategic and tactical purposes and as a means of obtaining both passive and tactical active exposures instant payday loan.”
Global ETF assets surged to $1.37 trillion as of February, from $74.3 billion in 2000, according to BlackRock Inc. The Greenwich study is based on interviews with 45 institutional funds, including pensions, endowments and foundations, as well as 25 U.S. asset management firms.
Many respondents said they use ETFs for “active” purposes to implement investment strategies, according to Greenwich. ETFs, which trade like stocks, originally were conceived to mimic gauges such as the S&P’s 500 index. Because ETFs usually track an index, they are typically considered passive investments.
U.S. home prices dropped 5.5 percent in the first quarter from a year earlier, the biggest decline in almost two years, as sales of discounted foreclosures undermined real estate values.
Prices fell 2.5 percent from the fourth quarter, the Washington-based Federal Housing Finance Agency said today in a report. Economists projected a 1.2 percent drop from the previous three months, according to the median of five estimates in a Bloomberg survey.
The FHFA’s measure, based on properties with loans backed by mortgage financiers Fannie Mae or Freddie Mac, has fallen for 15 straight quarters as lenders seize homes and sell them at cut-rate prices that drag down overall values. Foreclosures and short sales, in which banks agree to let properties sell for less than their loan balances, have accounted for about 38 percent of transactions this year, based on the monthly average of data from the National Association of Realtors.
“Dumping foreclosures on the market and selling them at distressed prices affects the whole real estate market,” said Richard DeKaser, an economist at Parthenon Group in Boston. “It puts downward pressure on prices, even for homes that aren’t in foreclosure.”
Foreclosure Discounts
Foreclosures typically sell at a 28 percent discount to non-distressed properties, according to Zillow Inc., a Seattle- based real estate company.
Idaho had the biggest drop in prices during the first quarter from a year earlier, at 16 percent, the FHFA said. Arizona prices tumbled 12 percent, and Oregon and Georgia were down 10 percent.
New Jersey home prices decreased 5.1 percent from a year earlier, and New York’s fell 3.1 percent. Massachusetts and Connecticut had 4 percent declines.
Only three states had price gains, led by Alaska, at 2.7 percent. West Virginia followed, at 2.2 percent, and prices in North Dakota were up 1.1 percent, according to the report.
Fannie, Freddie Loans
The FHFA measures changes in home values using repeat-sales data on single-family properties with loans backed by Fannie Mae or Freddie Mac. The report leaves out properties sold in all- cash transactions that are common in foreclosure deals, though it does register the erosion of home values in the general market caused by foreclosure discounts.
About 6.4 million mortgages were either delinquent or in foreclosure in April, according to Lender Processing Services Inc., a Jacksonville, Florida-based mortgage-transaction and data firm. Sales of previously owned homes fell 0.8 percent to a 5.05 million annual pace in April, the National Association of Realtors said last week.
Today’s FHFA report doesn’t include a dollar value for homes. The U.S. median price for a single-family home was $158,700 in the first quarter, according to the Realtors.
Under pressure from protesters and regional allies, Yemen’s president said Saturday he will sign a deal to step down after 32 years in power. Still, he condemned the proposal as “a coup” and warned the U.S. and Europe that his departure will open the door for al-Qaida to seize control of the fragile nation on the edge of Arabia.
The mixed signals from Yemen’s embattled president, Ali Abdullah Saleh, followed two earlier promises by him to sign the proposal. Both times he backed away at the last minute, adding to the opposition’s deep mistrust of a leader known for the adept political maneuvering that has kept in power for decades.
In a sign that he may be ready to sign this time, the coalition of opposition political parties involved in the talks with Gulf Arab mediators was persuaded to sign the deal on Saturday, a day ahead of Saleh, based on what it said were guarantees that the president would follow through.
“We accept the initiative to stop bloodshed,” Saleh said in a televised speech, and an official statement earlier in the day said he would sign the deal on Sunday.
The proposal, mediated by a six-nation regional bloc called the Gulf Cooperation Council, grants him immunity from prosecution if he leaves office within 30 days. It is far from certain, however, whether it would satisfy all of the many different groups protesting his rule in the streets.
Saleh has managed to cling to power in the face of near daily protests by hundreds of thousands of Yemenis fed up with corruption and poverty. Like other anti-government movements sweeping the Arab world, they took inspiration from the popular uprisings in Tunisia and Egypt.
The president has swung between offering concessions, taking them back and executing a violent crackdown that has killed more than 150 people, according to the opposition, which says it compiled the tally from lists of the dead at hospitals around the nation.
The bloodshed triggered a wave of defections by ruling party members, lawmakers, Cabinet ministers and senior diplomats. Saleh’s own tribe has joined those demanding his ouster. Most importantly, several top army commanders, including a longtime confidant who heads a powerful armored division, joined the opposition and deployed their tanks in the streets of the capital, Sanaa, to protect the protesters.
Saleh has been able to survive thanks to the loyalty of Yemen’s most highly trained and best-equipped military units, which are led by close family members.
That has raised concerns the political crisis could turn into an armed clash between the rival military forces if a deal is further delayed.
Seeking to win some support in the West for his continued rule, Saleh has warned several times that without him, al-Qaida would take control of the country.
“To the Americans and Europeans, al-Qaida is coming and it will take control,” he said Saturday in his televised address to members of the security forces. “The future will be worse than the present.”
The United States, which had supported Saleh with financial aid and military equipment to fight the country’s dangerous al-Qaida branch, has backed away from the embattled leader.
Secretary of State Hillary Rodham Clinton said Saturday Yemenis have been suppressed throughout the country and innocent civilians have died.
“President Saleh needs to follow through on his commitment to transfer power,” she said in a statement. “The government of Yemen must address the legitimate will of the people.”
Al-Qaida in the Arabian Peninsula has an estimated 300 fighters in Yemen and has been behind several nearly successful attacks on U.S. targets, including one in which they got a would-be suicide bomber on board a Detroit-bound flight in December 2009. The explosive device, sewn into his underwear, failed to detonate properly.
Opposition member Mohammed Ghalib Ahmed dismissed the president’s warnings about al-Qaida.
“He is terrorizing the Americans and the West,” Ahmed said.
The proposal _ first put forward in March by Saudi Arabia, Qatar, Kuwait, Oman, Bahrain and the United Arab Emirates _ gives a clear timetable for a transfer of power.
One week after Saleh signs, the opposition takes leadership of a national unity government that will include representatives of Saleh’s party. Parliament will then pass a law granting him legal immunity and a day later _ 30 days after the deal is signed _ he is to step down and transfer power to his deputy.
A month after that, presidential elections are to be held.
A Foreign Ministry official said representatives of the opposition signed the agreement Saturday in the presence of U.S. and European Union ambassadors, along with the chief mediator, the Gulf council’s secretary-general, Abdullatif bin Rashid al-Zayani. The official spoke on condition of anonymity because he wasn’t authorized to speak to the press.
Mohammed al-Sabri, the opposition coalition spokesman, said they received assurances from Gulf and Western countries that Saleh would also sign.
In an indication of the lingering mistrust, the opposition refrained from making an official announcement until he does so.
A big question hanging over the proposal is whether it would end the street protests by youth movements and others who say the opposition parties taking part in the talks to end the crisis do not represent them.
They object to Saleh being shielded from prosecution and want to see him brought to trial on charges of corruption and ordering the killings of demonstrators.
They also want more sweeping changes to upend Yemen’s political scene, said Abdel Hadi al-Azazi, one of the protest organizers in the capital.
“We will keep on escalating our protests to topple the regime,” he said. “The initiative doesn’t mean anything to us. We can’t comment on it because we have nothing to do with the signing or the initiative.”
“Transfer of power, for us, doesn’t only mean exclusion of the head of the regime but it means toppling the regime and all centers of power and its tools.”
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