Global market 5

- Sebagai akibat nya , banyak hedge fund managers melikuidasi posisi mereka di berbagai pasar ( valuta asing, komoditas, saham dsbnya ).

1. INTEREST RATE DIFFERENTIALS

- dengan pelambatan perekonomian secara global atau bahkan resesi , sudah sangat jelas bahwa bank sentral di eropa, inggris, dan Australia harus menurunkan tingkat suku bunga mereka secara agresif

- mengecilnya perbedaan suku antara dolar AS dan mata uang utama dunia lainnya menyebabkan euro ,puand sterling, dan dolar Australia terdepresi.

2. LOSSES from the HOUSING BUBBLE

- sebagian dari investor juga harus membeli dolar AS untuk menutupi kerugian yang mereka derita di mortgage investment dan credit default swaps.

- Sebagian besar dari kontrak derivative di terbitkan dalam dolar AS , jadi ketika pemegangnya ingin menjualnya , penerbitnya harus melunasi nya dalam dolar AS dan kadang kadang menjual investasi dalam mata uang lain untuk mengumpulkan dolar AS –nya.

3. MOMENTUM

- Saham,obligasi, komoditas , atau private equity sama sekali tidak menguntungkan pada sat ini , jadi uang keluar darinya dan mencari tempat lain untuk ditanamkan.

- Sekarang hanya dolar AS yang lagi cemerlang .tentu saja, makin banyak uang yang di investasikan ke dalam dolar AS main baik untuknya, dan semakin dolar AS menguat makin banyak hot money ( seperti hedge funds ) yang mengikutinya.

Global market 4

great depression

The dow mencatat rekor tertingginya di 14,164.53 pada tanggal 9 oktober 2007.Persis satu tahun kemudian, pada hari kamis 9 oktober yg lalu, the dow di tutup dilevel 8,579.19 dengan kata lain, index saham AS turun sebesar 39.4% atau 5,585 poin.

Bursa saham lainpun kena imbasnya , tetapi belum selesai karena pendapatan perusahaan tetap menentukan harga saham.

- dalam sutau perekonomian yang di dasarkan oleh consumer spending atau pengeluaran konsumen 10 bulan dari September 2007 sampai Juli 2008 naik 29.1 milyar dolar AS

- 10 minggu dari agustus 2008 sampai pertengahan oktober 2008 naik 32.3 milyar dolar AS

Denagan kata lain , jumlah pinjaman lewat kartu kredit telah meningkat lebih banyak dalam 10 pekan tersebut dari 10 bulan sebelumnya.

- sungguh aneh tapi nyata ( dan menyedihkan ) , tetapi pedagang terbesar kedua untuk penggunaan kartu kredit sekarang adalah mcdonalds.

- Ini jelas menunjukan bahwa banyak konsumen sedang sengsara kalau sudah harus bayar untuk big mac dan kentang senilai 4 dolar AS dengan kartu kredit.

Beruang kembali berjaya !!!!

- The worst financial crisis since the untuk hampir 75% pengeluaran yang lebih sedikit pasti mengakibatkan suatu RESESI

- dan apabila pendapatan perusahaan yang tercatat di bursa menurun , harga saham mereka tentu akan anjlok.

Mengapa dolar AS begitu perkasa ????

Dalam 3 bulan terkahir ini dolar AS diperdagangkan berdasar ALIRAN DANA , bukan berdasarkan FUNDAMENTAL .

Adapun 5 alasan utama kenapa dolar AS kembali menjadi raja untuk sementara waktu :

1. LIKUIDASI dari CARRY TRADE

- dari tahun 2002 sampai dengan tahun 2007 , banyak investor telah memanfaatkan pinjaman dalam dolar AS dan juga YEN jepang untuk berinvestasi dalam asset dengan yield yang lebih tinggi .

- pada saat ini , menyusul credit crunch, banyak bank tidak mampu atau mau memperpanjang pinjaman tersebut dan investor terpaksa menjual asset untuk melunasinya.

- Penguatan dolar AS maupun Yen jepang dan penurunan mata uang utama lain pada saat yang bersamaan menegaskan perebutan yang sedang berlangsung untuk mengurangi hutang dan deleverage.

2. INVESTOR REDEMPTIONS

- menurut Nouriel Roubini, professor dari new york , ratusan Hedge funds akan tutup sebab investor tidak puas dengan kinerjanya dan minta uang mereka dikembalikan.

Global market 3

menyususul masalah yang berhubungan dengan resesi menjadi makin berat. Oleh karena itu , tingkat pengangguran naik sampai 6,5 % bulan yang lalu.

Kebanyakan ekonom memprediksi makin banyak pemecatan akan terjadi , dan tingkat pengangguran akan meningkat lebih jauh ke 8% atau bahkan lebih tinggi pada tahun 2009.

Pemandangan ekonomi dunia suram

- inilah krisis keuangan yang paling buruk di AS, eropa , dan sekarang juga di pasar berkembang yang kita alami dalam 40 tahun.

- Jadi situasi akan cenderung lebih buruk sebelum menjadi lebih baik .justru keadaan tidak menyenangkan akan dapat berlanjut.

- Bahkan baru saja ada peringatan dari IMF bahwa perekonomian dari Negara maju secara keseluruhan akan menciut 0.3% tahun depan. Itu senadainya menandai kontraksi pertama secara bersamaan pada Negara maju sejak perang dunia II.

- Menurut the survey of business confidence of the world yang dilakukan oleh Moody’s Economy , sentiment bisnis anjlok pecan yang lalu ke rekor terendah barunya.

- Sentimen pada saat ini luar biasa negative di Amerika Utara maupun Ropa dan mulai melemah dengan cepat di Asia maupun Amerika latin . Panik keunagan yang berawal di bulan September telah memberikan pukulan kepada kepercayaan bisnis dan dengan demikian perekonomian dunia menurut penelitian itu dalam resesi.

Dan perekomian dunia yang parah juga tergambar dalam harga komoditas yang semakin lebih rendah.

Konsumen AS bukan Superman !!!!

Konsumen amerika yang hebat sudah meninggal, semoga ia dapat beristirahat dengan tenang.

- Prekomian AS sangat tergantung kepada konsumsi yang tiada hentinya,tentu saja, apabila konsumen ingin berbelanja , mereka perlu uang. Tetapi itulah masalah yang menjengkelkan , mereka tidak punya uang lagi sama sekali.Mereka tidak punya simpanan.Pemberian kredit mulai diperketat. Dan sekarang…pekerjaan pun sulit diperoleh.

- Sebagai hasilnya , pengeluatan konsumen AS tidak hanya turun tapi runtuh total : pengeluaran konsumen dalam kuartal ketiga turun 3.1% yg merupakan penurunan pertama dalam 17 tahun yg terbesar dalam 28 tahun , pengeluaran untuk Nondurable goods atau barang yang tidak tahan lama turun 6.4% inilah penurunan yang terbesar dalam 58 tahun , penjualan mobil yang sedikit dalam 17 tahun, dan memperparah situasinya penghasilan oaring yg telah di sesuaikan dengan inflasi dan pajak anjlok 8.7% yang merupakan penurunan kuartalan terbesar sejak 1947 !!!

Penjualan toko dalam kuartal ketiga paling lemah dalam hampir 3 tahun DEKADE

Tidak bias pinjam terhadap kenaikan harga rumah??? Coba saja Kartu Kredit !!!!

Global market 2

- Tetapi perusahaan keuangan juga telah banyak berinvestasi dalam derivatif, yang oleh warren Buffet disebut “ financial weapon of mass destruction “ atau senjata pemusnah masal pada tahun 2002.

Selama 6 tahun berikutnya , jumlah derivative ini bertambah sebesar 500 persen menjadi lebih dari 500 milyar dolaar AS. Ukuran sebesar inilah yang menaikan probabilitas atau resiko untuk menjadi suatu bencana.

Terutama pasar CDS ( credit default swap) sebesar 50 triliyun dolar AS yang membahayakan dunia keuangan. Sebagai contohnya , AIG adalah salah satu penjual terbesar CDS dan kita sudah tahu nasibnya, bukankah begitu?

Perekonomian Amerika tenggelam seperti titanic

Perolehan kredit mulai sulit

- karena Bank menderita banyak kerugian , mereka terpaksa mengurangi pemberian kredit.

- Sampai dengan bulan September , jumlah pinjaman telah turun sebesar 154.3 milyar dolar AS, yang merupakan salah satu kontraksi kredit terbesar secara nominal dalam beberapa decade terkahir ini.

- Dengan demikian , uptrend yang bertahan sejak awal tahun 1995 telah pecah !!!!

- Perekonomian yang sehat mempunyai kredit bank yang meningkat, yang merupakan salah satu sumber ekspansi .Ketika bank harus mengurangi pemberian pinjaman , pertumbuhan ekonomi berkurang dan bahkan dapat mengakibatkan suatu resesi

- Penurunan jumlah kredit ( deleveraging) kemungkinan besar akan berlanjut terus sampai tahun 2013 !!!! , deleveraging ini jelas akan menekan pertumbuhan ekonomi dan bursa saham beberapa tahun kedepan.

- Pemerintah boleh saja memompa uang dalam sisitem perbankan tetapi tidak akan ada dampak sama sekali, seperti pepatah lama mengatakan “ Anda dapat menuntun kuda ke air tapi tidak bias membuatnya minum “.

Laporan BNP yang menakutkan

Perekonomian terbesar di dunia melemah dengan 0.3% dalam bisnis tahunan di kuartal ketiga. Inilah kontraksi yang paling tajam di AS dalam 7 tahun terkahir.

Tetapi mulai bulan September perekonomian jatuh ke jurang , dengan BNP yang kemungkinan berkontraksi sekitar 3% dalam kuartal ke empat. Apabila penurunan sebesar ini terjadi, berarti itu akan menjadi kuartal terburuk sejak 1982.

Sektor manufaktur maupun sector jasa terkontaksi

Index manufaktur dari ISM turun 4.6 poin ke 38.9 pada bulan oktober , yang merupakan level terendah sejak September 1982.

Sementara index jasa terjun ke 44. 4 dibulan oktober dari 50.2 pada bulan sebelumnya.level tersebut adalah yang terendah dalam sejarah dr index ini.

Angka pengangguran yang mengejutkan

Perusahaan telah mmemangkas 1.2 juta pekerja dalam 10 bulan pertama tahun ini, dengan lebih dari setengahnya kehilangan dari pekerjaan tersebut dalam 3 bulan terakhir

Global market 1

Global market

Sedikit ttg fundamental agar dapat mendukung teknikal

Fundamental ini kami dapatkan pada tgl 28 september 2008 pada saat pertemuan antara kami dengan mr. Nico Omer Jonkheere di Hotel merdeka madiun dalam rangka mendukung promotion. Mr. Niko berasal dari swedia dan jabatannya adalah sebagai vice President Research & analysis.

Dalam pertemuan itu kami membahas berbagai macam hal dan juga bagaimana us kedepan.

Mengapa AS masuk resesi?

Spekulasi di pasar perumahan telah usai

Untuk membangun kembali kesehatan ekonomi di Amerika Serikat,di butuhkan suatu resesi hebat yang berlangsung beberapa tahun “ menurut marc faber “

Pasiennya yang menjadi melalui pertumbuhan kredit harus masuk rehabilitasi .

Memberikan lebih banyak alcohol , seperti yang dilakukan the fed dan the treasury pada saat ini, adalah obat yang salah.

Harga rumah secara nasional telah menurun sebesar 22% dari harga tertingginya yang tercapai pada tahun 2006.

- banyak orang yang sebetulnya tidak layak mendapatkan KPR diberikan pinjaman tanpa dokumentasi yang lengkap ( subprime mortgage ).

- Satu dari setiap lima rumah di AS telah turun begitu banyak sampai nilai KPR-nya lebih besar dari pada nilai rumah itu sendiri.Oleh karena itu , jumlah foreclosures atau penyitaan rumah kini 71% dibandingkan satu tahun lalu.

Harga rumah di AS kemunngkinan masih akan turun 10% lagi dalam beberapa kuartal berikutnya sebelum mulai stabil tahun 2010.

Petumbuhan ekonomi yang semu.

- sekitar 2% dan bahkan kadang-kadang lebih dari 3% dari pertumbuhan BNP di tahun2002 sampai tahun 2006 merupakan dari hasil kenaikan harga rumah.

- Jadi penyehatan dari resesi pada awal decade ini di dorong oleh mortgage equity withdrawal , yang mengijinkan konsumen menggunakan rumahnya sebagai mesin ATM dan pinjam uang terhadap apresiasi rumah mereka.

Baik pada 2005 dan 2006 terjadi penarikan KPR sebesar hampir 700 milyar dolar AS, yang meningkatkan consumer spending dan menambah 3% ke BNP.

Tetapi tahun 2007 , MEW sudah turun ke 470 milyar dolar AS, dan tahun ini kecil sekali.

Produk derivatif mengancam system keuangan

- Bank telah kehilangan lebih dari 680 milyar dolar AS selama 2 tahun terakhir setelah housing bubble pecah.

disiplin

sebenarnya kalau kita mau di siplin kita bisa untuk mendapatkan profit yang konsisten juga

very bad - weekend

Minggu ini emang cukup susah , hanya bisa capai 50% dalam waktu 3 hari.....semoga minggu depan akan lebih baik.

G20 Leaders at economic summit eye detection plan

WASHINGTON – World leaders at an emergency economic summit are moving to sharpen detection of risky investing and regulatory weak spots, hoping to avoid future financial meltdowns like the one now threatening the global economy.

In the largest gathering of its kind here in nearly a decade, President George W. Bush and some two dozen foreign leaders were to meet Saturday behind closed doors as they prepared to adopt an action plan for more openness in financial markets and an early warning system for problems like the speculation frenzy that fed the U.S. housing bubble.

"The stakes are indeed high," Bush said Friday. "Billions of hardworking people are counting on us to strengthen the financial system for the long term."

Behind the urgent rhetoric, the steps taking shape were modest.

The action plan would include measures aimed at making the global financial system more accountable to investors and more transparent to regulators, diplomatic officials said.

It also would improve international monitoring of markets and bolster rules governing how companies value their assets, a current weakness seen as partly responsible for the financial crisis at hand. The officials spoke on condition of anonymity because leaders had yet to agree on their final communique.

While the emerging plan would boost oversight of fragile financial markets, it fell short of the sweeping set of tough new regulations some Europeans want.

The summit, meant to be the first in a series, has a two-pronged agenda: reviving the ailing global economy, which has pushed up unemployment and shrunk people's savings, and exploring options for overhauling the global financial system to prevent similar financial crises in the future.

A follow-up summit is envisioned for the spring, after Barack Obama becomes president.

A new "college of supervisors," made up of financial regulators from many nations, was among the ideas likely to be included in the leaders' final communique issued expected at the summit's conclusion late Saturday.

Heads of major industrialized powers, including Britain, Germany, France and Japan, are attending the summit as are developing countries such as China, India and Brazil.

As leaders descended on Washington Friday, Bush warned for a second day of the dangers — in his view — of too much government intervention. Strict new regulation of financial firms or products, such as some European leaders have advocated, would crush the global economy instead of protect it, he said.

While striking a similar note of caution, British Prime Minister Gordon Brown also underscored the need for leaders to forge agreements to safeguard against future problems. "Instead of just muddling through dealing with the crisis, we have to show how we are making the adjustments in the proper way to this global age," Brown said.

Brown has been among the leaders pushing for a global coordination of country-by-country stimulus spending packages to combat the economic hard times that are straining millions of families and businesses.

The Bush administration, however, has been cool to the idea of another stimulus package and opposes a bailout of the teetering U.S. auto industry. Democrats are pushing for aid to Detroit automakers amid reports that the largest of them, General Motors Corp., could be forced into bankruptcy by the end of next month.

Critics blame lax oversight and failures by U.S. and other regulators to detect problems as prime reasons for the financial crisis.

The crisis, which erupted in the United States around August of last year as mortgage investments soured with the housing market's collapse, quickly spread to other countries. Banks and other financial companies suffered huge losses and foreclosures skyrocketed. Troubles then snowballed to other areas, crimping auto and student loans and locking up lending for many consumers and businesses worldwide. The root causes of the crisis also was being discussed by the leaders.

Although Obama is staying away from this summit, he has designated high-level representatives — former Secretary of State Madeleine Albright and former Republican Rep. Jim Leach of Iowa — to meet with leaders on the sidelines.

Mexican President Felipe Calderon met Albright and Leach, and stressed that a return to protectionism would only complicate economic recovery efforts, according to the Mexican leader's office. Albright and Leach also saw the leaders of Argentina and South Korea on Friday and had talks scheduled with lower-level representatives from other nations Saturday.

Europeans had hoped the summit would produce stronger measures to close loopholes that allow some financial institutions to evade regulation. They also called for government supervision for all major financial players, including credit ratings agencies or funds carrying high amounts of debt.

Resesi hantui pertemuan G20

Angka resmi yang akan dikeluarkan Uni Eropa diperkirakan akan menunjukkan fakta bahwa wilayah Eropa telah memasuki resesi.

Para pengamat memperkirakan perekonomian wilayah yang berisi 15 negara anggota Uni Eropa akan menurun dalam kuartal ketiga tahun ini, mengikuti penurunan 0,2 persen kuartal sebelumnya.

Hari Kamis kemarin pemerintah Jerman memperlihatkan data yang membenarkan negara mereka telah memasuki resesi.

Sementara Prancis masih mengalami pertumbuhan perekonomian walau dengan sangat tipis, 0,1 persen.

Namun demikian perekonomian Prancis mengalami penurunan 0'3 persen di kuartal kedua tahun ini.

Eropa yang suram

Italia sementara itu sudah menyusul Jerman. Perekonomian negara itu terus menyusut. Dikuartal kedua penyusutan terjadi lebih besar dari perkiraan, 0,5 persen menyusul penyusutan 0,4 persen tiga periode tiga bulan sebelumnya.

Di Spanyol penyusutan ekonomi terjadi untuk pertama kalinya sejak tahun 1993.

Selama tiga bulan menjelang September, perekonomian terbesar ketiga di wilayah Eropa itu menurun 0,2 persen.

Pengamat mengatakan resesi di Spanyol sekarang tidak terhindarkan, didorong oleh hancurnya pasar properti di negeri itu.

Wartawan BBC Ben Shore mengatakan perkembangan ini membuat masa depan 320 juta tenaga kerja di Eropa menjadi suram.

Namun apa yang terjadi di Eropa ini akan mendorong para pemimpin negara-negara maju anggota G20 dan negara berkembang yang akan bertemu akhir pekan ini di Washington untuk lebih memusatkan perhatian mereka.

Pertemuan puncak ekonomi

Kelompok yang merupakan perwakilan dari 85 persen perekonomian dunia serta dua pertiga penduduk dunia, berkumpul untuk membicarakan cara mengatasi krisis keuangan dan melakukan reformasi perekonomian untuk mengurangi kemungkinan krisis.

Menjelang pertemuan, PM Inggris Gordon Brown, menyerukan pemotongan pajak di seluruh dunia dan meningkatkan pembelanjaan untuk mencegah resesi global.

''Kita perlu menyepakati pentingnya koordinasi kebijakan keuangan dan fiskal,'' kata Brown.

''Sangat diperlukan kesegeraan. Dengan bertindak sekarang, kita bisa mendorong pertumbuhan ekonomi. kalau kita tidak melakukan apapun, ongkosnya terlalu mahal.''

Presiden Bush sementara itu menekankan bahwa krisis keuangan kali ini bukanlah disebabkan oleh kegagalan pasar bebas dalam sistem kapitalismne.

Berbicara di New York ia mengatakan cara terbaik untuk menjaga pertumbuhan ekonomi adalah bukan membuat sistem baru tetapi memperbaikinya.

''Jawabannya..... kita harus mencari jalan keluar dari persoalan yang kita hadapi, melakukan reformasi, dan bergerak maju dengan prinsip pasar bebas yang telah memberi kemakmuran dan harapan bagi semua orang di seluruh dunia,'' katanya.

Pengritik Bush mengatakan ucapan itu tak akan mampu meyakinkan mereka yang melihat kejatuhan perekonomian Amerika sebagai akibat dari kebijakan perekonomiannya.

Data terbaru menunjukkan tunjangan pengangguran Amerika menyentuh yang tertinggi selama 25 tahun terakhir diangka 3,9 juta.

Stocks stage huge rebound; Dow jumps 553 points

Thursday November 13, 6:25 pm ET
By Madlen Read and Joe Bel Bruno, AP Business Writer

Wall Street rebounds from selloff, sending major indexes up over 6 pct ahead of G-20 meeting NEW YORK (AP) -- Investors did an abrupt turnaround on Wall Street Thursday, muscling the Dow Jones industrial average up more than 550 points after driving it down near its lows for the year on a stream of negative economic and corporate news.

After three days of selling that wiped out about $1 trillion in shareholder value, many investors, though nervous about a prolonged economic downturn, appeared convinced the market had priced in enough bad news. So when the Standard & Poor's 500 index -- the indicator most watched by traders -- managed to recover from multiyear trading lows, buyers swarmed back in.

It's "a herd mentality," said Ryan Larson, senior equity trader at Voyageur Asset Management. "We started going higher -- and you don't want to be the last one on the boat."

The market was following in dramatic fashion its pattern of huge price reversals, one that was set early in the now 15-month-old credit crisis and that has become almost the norm on Wall Street.

Some analysts said investors were positioning themselves ahead of a meeting of Group of 20 leaders in Washington. The meeting could bring decisions on mending the troubled global financial system. The G-20 includes the U.S., Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.

There was "some anticipation that we'll hear some good news from that meeting," said Jack A. Ablin, chief investment officer at Harris Private Bank. Thursday's rally was "part hopeful, part technical. But certainly welcome."

As stocks rallied, so did oil prices, sending shares of energy companies higher. The biggest gainer among the 30 Dow companies was Chevron Corp., which rose $8.43, or 12.5 percent, to $75.71. Another big gainer was Exxon Mobil Corp., which climbed $6.48, or 9.4 percent, to $75.41; these two energy stocks represented one-fifth of the Dow's point gain Thursday.

The price of a barrel of light, sweet crude rose $2.08 to $58.24 on the New York Mercantile Exchange, after falling to the lowest levels since January 2007. Oil has been falling for the same reason as stocks -- the fear of a deep global recession.

Stocks sold off early after the Labor Department said the number of newly laid-off individuals seeking unemployment benefits jumped last week to the highest level since right after the Sept. 11, 2001 terrorist attacks. There was also more evidence of a severe pullback in consumer spending -- a worsening trend that had pummeled stocks earlier in the week. Wal-Mart Stores Inc. trimmed expectations for full-year earnings, and Intel Corp. late Wednesday cut more than $1 billion from its sales forecast.

But then the S&P lifted above its Oct. 10 trading lows, and a Treasury auction of 30-year bonds got lower than average but still decent demand from both domestic and foreign buyers, said Arthur Hogan, chief market analyst at Jefferies & Co. The auction results alleviated some fears about the government having a hard time financing its costly bailout.

Many analysts had predicted the stock market would retest the multiyear lows it reached last month. They also still forecast volatility for some time to come, as Wall Street tries to rebuild from October's devastating losses and gauge the severity of the economy's downturn. During past recoveries from bear markets, a great deal of turbulence in the market became commonplace -- so it's possible that Thursday's gains will get erased if more gloomy reports pour in.

But Hogan called the market's resiliency a "great sign."

The Dow rose 552.59, or 6.67 percent, to 8,835.25, after falling as low as 7,965.42 and rising as high as 8,876.59. That's a trading range of 911 points. The Dow did not sink below its Oct. 10 trading low of 7,882.51.

The Dow's nearly 553-point gain was the third-largest single-session point gain on record, following the 889-point rise on Oct. 28 and the 936-point surge on Oct. 13.

The Standard & Poor's 500 index rose 58.99, or 6.92 percent, to 911.29, after dropping to 818.69 -- well below its previous intraday low of 839.80 set Oct. 10.

The Nasdaq composite index rose 97.49, or 6.50 percent, to 1,596.70.

The Russell 2000 index of smaller companies rose 38.43, or 8.5 percent, to 491.23.

The stock market gained back $700 billion Thursday, after losing about $1 trillion during the first three days of the week, according to the Dow Jones Wilshire 5000 index, which reflects the value of nearly all U.S. stocks. At its lowest trading level Thursday, the market value of the Wilshire index fell below $10 trillion for the first time since April 2003.

Advancing issues outpaced decliners by nearly 3 to 1 on the New York Stock Exchange, where consolidated volume came to 7.67 billion shares, up from 5.67 billion shares Wednesday.

Government bond prices fell as investors fled back into stocks. The three-month Treasury bill's yield rose to 0.20 percent from 0.13 percent late Wednesday, and the yield on the benchmark 10-year Treasury note rose to 3.85 percent from 3.67 percent late Wednesday. Higher yields indicate lower demand.

Wal-Mart shares rebounded $2.31, or 4.4 percent, to $54.93. The discount retailer's shares had traded lower in earlier trading after it cut its profit outlook because of the flagging global economy and renewed strength of the dollar. Wal-Mart is the only company among the Dow industrials that is up for the year.

Intel also slashed its outlook, initially driving down shares on concerns that consumers are shying away from big purchases like computers. But its shares recovered to trade up 91 cents, or 6.7 percent, at $14.43.

General Motors shares, however, remained weak as the nation's automakers wait for President-elect Obama to push Congress to approve a bailout of the struggling industry. There are also reports that Obama will move to appoint a czar or board to oversee the companies. GM dropped 13 cents, or 4.2 percent, to $2.95. Ford shares rose 6 cents, or 3.3 percent, to $1.90.

The dollar was mixed against other major currencies. Gold prices rose.

Overseas, Japan's Nikkei closed down 5.25 percent and Hong Kong Hang Seng fell 5.15 percent. In European trading, Britain's FTSE 100 was down 0.31 percent, Germany's DAX rose 0.62 percent, and France's CAC-40 added 1.10 percent.

Soros, Falcone Defend Hedge Funds at House Hearing

By Katherine Burton and Lorraine Woellert

Nov. 13 (Bloomberg) -- George Soros and Philip Falcone, in a rare appearance by hedge-fund managers before Congress, defended their industry's practices and profits while splitting over whether more government regulation is needed.

``This is not a case where management takes huge bonuses or stock options while the company is failing,'' Falcone, senior managing director of New York-based Harbinger Capital Partners, said in written testimony to the House Committee on Oversight and Government Reform.

Falcone urged Congress to oversee the industry and require more disclosure of investments, while Soros, founder of Soros Fund Management LLC in New York, cautioned Congress against ``ill-considered'' regulations because the managers are reeling from market losses and client defections.

Soros, Falcone, Paulson & Co.'s John Paulson, James Simons of Renaissance Technologies LLC and Kenneth Griffin of Citadel Investment Group LLC, who are among the world's richest hedge- fund managers, were called to testify today as part of a congressional investigation into the credit crunch that has slowed the global economy.

Committee Chairman Henry Waxman began questioning the men today about their bets against subprime mortgages and whether their industry is a risk to the financial system. Waxman's hearing is one of many Democrats are convening to explore the causes of the global financial crisis. They are examining issues such as regulation, disclosure and compensation.

`Unimaginable Success'

Hedge-fund managers have had ``unimaginable success'' and, while being ``virtually unregulated,'' many enjoy special tax breaks, Waxman said. Today's witnesses, he said, earned on average more than $1 billion last year, profits they were able in many cases to treat as capital gains rather than as ordinary income, which is taxed at a higher rate.

``That means at least some portions of their earnings could be taxed at rates as low as 15 percent,'' Waxman said. ``That's a lower tax rate than many school teachers, firefighters, or plumbers pay.''

Waxman and Representative Thomas Davis of Virginia, the panel's top Republican, suggested the need for more oversight of the industry.

``Greater standardization, registration, disclosure and some regulatory limitations could help the industry mature and survive,'' Davis said.

Main Street Impact

He said there are as many as 8,000 funds managing as much as $1.5 trillion and could account for up to 30 percent of trading volume in U.S. stocks.

``This isn't just about sophisticated, high-stakes investors anymore,'' Davis said. ``Institutional funds and public pensions now have a huge stake in hedge funds' promises of steady, above-market returns. That means public employees and middle-income senior citizens, not just Tom Wolfe's Masters of the Universe, lose money when hedge funds decline or collapse.''

Falcone said he supported more public disclosure and transparency. Investors ``have a right to know what assets companies have an interest in -- whether on or off their balance sheets -- and what those assets are really worth,'' he said.

Soros, in written testimony, warned the committee against ``going overboard with regulation.''

``Excessive deregulation has inflicted enormous losses on the general public and there is a real danger that the pendulum will swing too far the other way,'' especially while the sector is in decline, Soros said.

``The bubble has now burst and hedge funds will be decimated. I would guess that the amount of money they manage will shrink by between 50 and 75 percent. It would be a grave mistake to add to the forced liquidation currently dislocating markets by ill-considered or punitive regulations,'' Soros said.

Earning Salaries

In their written statements delivered to the committee, the hedge-fund managers also defended their multimillion-dollar salaries, saying they earned money only when their investors did.

``In our business, one of the most fundamental principles is alignment of our interests with those of our clients,'' Paulson said. His fund shares profits with its investors, taking 20 percent. ``All of our funds have a 'high-water mark', which means that if we lose money for our investors, we have to earn it back before we share in future profits.''

Waxman, who last month grilled Richard Fuld, chief executive officer of Lehman Brothers Holdings Inc., about the bank's demise, doesn't have jurisdiction over securities- industry legislation. Even so, his interest suggests the $1.7 trillion industry faces increased scrutiny and regulation next year after President-elect Barack Obama takes office.

Regulator Actions

``In an attempt to respond to public outcry and political demand, the industry expects lawmakers to implement new rules that will limit leverage, restrict the ability to short securities and increase taxes on the wealthy,'' said Ron Geffner, a lawyer at New York-based Sadis & Goldberg LLP, which represents hedge funds.

Regulators have already taken some steps. In September, the U.S. Securities and Exchange Commission temporarily banned the short sale of some stocks. The agency now requires funds to disclose the shares they are wagering will tumble, though those reports won't be made public. In a short sale, a trader borrows shares and then sells them immediately in the hopes they can be bought back later at a cheaper price.

The witnesses, all longtime fund managers, earned more than $1 billion last year according to a list compiled by Institutional Investor's Alpha Magazine.

Waxman asked the managers to provide documents, including e-mails, that discussed the likelihood that their own, or other, hedge funds would collapse and the risk to the financial system if they did.

Borrowing

He also asked for their levels of borrowing and their investments in mortgage-backed securities, collateralized debt obligations and credit-default swaps going back to the beginning of 2005. Some managers used these securities to wager on subprime mortgages and on the credit-worthiness of investment banks.

Soros, 78, is the chairman of $19 billion Soros Fund Management. He has called credit-default swaps the next crisis area because the market is unregulated, and he has recommended the creation of an exchange where these contracts could be traded.

Paulson, 52, runs a New York-based fund that manages about $36 billion. His Credit Opportunities Fund soared almost sixfold in 2007, primarily on wagers that subprime mortgages would tumble. Paulson's Advantage Plus fund has climbed 29 percent this year through October while many managers are enduring the worst year of their careers.

Griffin Struggles

Hedge funds lost an average of 15.5 percent this year through Oct. 31, according to data compiled by Chicago-based Hedge Fund Research Inc.

Falcone, 46, also profited from a drop in subprime mortgages last year, when his fund, now about $20 billion, doubled. This year the fund was up 42 percent at the end of June and has since tumbled to a loss of about 13 percent.

Simons, 70, runs his $29 billion fund out of East Setauket, New York. The former academic makes money by using computer models to trade. His Medallion Fund, made up of his own money and that of his employees, is up more than 50 percent this year.

Griffin, 40, runs the $16 billion Citadel Investment Group LLC in Chicago, and has faced the toughest year out of the five billionaire managers. His funds dropped 38 percent this year through Nov. 4.

German Economy Enters Worst Recession in 12 Years

Nov. 13 (Bloomberg) -- The German economy, Europe's largest, contracted more than economists expected in the third quarter, pushing the nation into the worst recession in at least 12 years.

Gross domestic product dropped a seasonally adjusted 0.5 percent from the second quarter, when it fell 0.4 percent, the Federal Statistics Office in Wiesbaden said today. Economists expected a 0.2 percent decline, the median of 40 forecasts in a Bloomberg News survey showed. The economy last contracted this much over two consecutive quarters -- the technical definition of a recession -- in 1996.

German companies are scaling back production as slower global growth erodes export demand. Siemens AG, Europe's largest engineering company, reported a profit decline today and plans to cut 16,750 jobs by 2010. Germany's benchmark DAX Index has tumbled more than 40 percent this year, business confidence fell to a five-year low last month and manufacturing orders plunged in September.

``The German recession has begun in earnest and it's very serious,'' said Holger Schmieding, chief European economist at Bank of America Corp. in London. ``It raises the risk of a German contraction of more than 1 percent next year and we will have to revise down our forecast for the euro area as well.''

Eurostat, the European Union's statistics arm, will publish third-quarter growth data for the euro region tomorrow.

Exports Hurt

The euro dropped more than a cent to $1.2388 after the German report. European notes rose, pushing the yield on the two-year security down 5 basis points to 2.22 percent, the lowest level in three years.

In the year, the economy grew 0.8 percent when adjusted for the number of working days, the statistics office said. The third- quarter slowdown was led by trade as exports weakened and imports rose. Consumer and government spending improved ``slightly.''

The Organization for Economic Cooperation and Development today joined the International Monetary Fund in predicting advanced economies including the U.S. and euro area will contract simultaneously next year for the first time since World War II.

Federal Reserve Chairman Ben S. Bernanke, Bank of England Governor Mervyn King and European Central Bank President Jean- Claude Trichet have all signaled they're ready to cut interest rates further to stem the deepening economic slump.

The European Commission said on Nov. 3 that the 15-nation euro region is probably already in a recession. Just over 40 percent of German exports go to other euro-area nations.

`Shock Waves'

Households may spend less and save more as companies retrench. Continental AG, which makes auto parts, plans to jettison 5,000 temporary workers and extend holiday production breaks. General Motors Corp.'s Adam Opel brand closed plants in Eisenach and Bochum for three and two weeks respectively to reduce production, forcing workers to take a vacation.

``The shock waves pushed out by the financial crisis have hit Germany full on, if later'' than other countries, the government's five independent economic advisers said yesterday. They called on Chancellor Angela Merkel to expand a 50 billion-euro ($63 billion) fiscal stimulus package to help revive growth.

Siemens Chief Executive Officer Peter Loescher today said next year's profit goals have become ``more ambitious'' after the company reported a bigger decline in fourth-quarter earnings than analysts had expected.

Deutsche Lufthansa AG, Europe's second-biggest airline, said it filled fewer seats on its aircraft last month as the cooling economy deterred business and leisure travel.

`Final Push'

Ralph Solveen, an economist at Commerzbank AG in Frankfurt, expects a ``marginal'' recovery in the second half of next year.

``The German economy would have cooled regardless of the financial crisis, which just gave it the final push into recession,'' he said. ``The factors that slowed German growth earlier this year such as high inflation, a strong euro and tight monetary policy are all disappearing, which should feed through to the economy next year.''

The statistics office revised first-quarter growth to 1.4 percent from 1.3 percent and raised its second-quarter estimate from a 0.5 percent decline. It will publish a detailed breakdown for the third quarter on Nov. 25.

The turmoil that began with the U.S. housing slump drove Lehman Brothers Holdings Inc. into bankruptcy in September and caused the biggest global stock sell-off in 70 years. The world's largest financial companies have posted almost $1 trillion in writedowns since the start of last year, when the collapse of the U.S. subprime mortgage market triggered a credit shortage.

ECB Rates

With growth slowing around the world, oil prices have collapsed to $56 a barrel yesterday from a peak of $147 in July, easing inflation pressure and giving central banks from Washington to Beijing room to slash interest rates. The euro has dropped 20 percent against the dollar in the past four months.

Investors expect the European Central Bank to lower its benchmark rate by at least half a percentage point at its next meeting on Dec. 4, Eonia forward contracts show. That would be the sharpest rate reduction in the bank's 10-year history after its two half-point cuts in the past month to 3.25 percent.

Germany still faces ``a long, drawn-out recession,'' said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt, who forecasts the economy will shrink 1.5 percent next year. ``Unfortunately, we don't see any respite any time soon. Where should the growth come from?''