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RISK OFF: Everything Is Selling Off

Sam Ro — Fri, 10 Feb 2012 10:20:00 -0500

It had been a pretty quiet 2012 with stocks grinding higher on low volatility. Earlier today, BTIG's Dan Greenhaus told us that "of the 27 trading sessions thus far in 2012, 20 of them have seen the S&P 500 move less than 0.50% in either direction including 8 of the last ten."

Yesterday, we got word that Greece and international leaders had come to some sort of agreement on austerity measures.

However, it seems chaos is breaking out in Greece with leaders resigning and citizens rioting.

Stocks and commodities are broadly selling off as investors shift their money into the safest of safe-havens: Treasuries. The 10-year Treasury note is down to 1.99%.

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MISS: Consumer Sentiment Falls To 72.5

Sam Ro — Fri, 10 Feb 2012 09:55:00 -0500

The University of Michigan/Thomson Reuters consumer sentiment reading fell to 72.5.

Economists were expecting the reading to decline modestly to 74.8 from a last month's reading of 75.0.

Stocks, which have already been well in the red, ticked down only slightly.

The Dow is down 115 points.

The S&P is down 12 points.

The Nasdaq is down 24 points.

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If Spencer Bachus Was Insider Trading, He Was Pretty Awful At It

Linette Lopez — Fri, 10 Feb 2012 09:49:00 -0500

When Wall Street does insider trading, they do it big. Think about it: the latest big insider trading scandal involving now defunct hedge funds Level Global, Dell Computers, and Diamondback Capital allegedly netted the funds $57 million.

And then there's Raj Rajaratnam — he may well have become a billionaire on insider trades.

All of that indicates that insider trading, while illegal obviously, can be very lucrative. So today when we read the Washington Post's details about insider trading accusations levied against House Financial Services Committee Chair Spencer Bachus (R-Ala.) we could only reason that IF he did this, he was rotten at it, frankly.

A statement provided by Bachus' broker, Fidelity Investments, shows that he made $30,474 off of short-term options trades during the time in question 2008. Here are the specifics via WaPo:

As President George W. Bush’s stimulus bill was being crafted in summer 2008, Bachus bet Burlington Northern Railroad stock would go up, then he cashed out that July for a $16,588 profit. In August, he made the same bet but lost $2,900.

The day after Bachus participated in a closed-door briefing with former Treasury Secretary Hank Paulson and fed Chair Ben Bernanke in September of 2008, Bachus traded “short” options, betting on a broad decline in the nation’s financial markets, and collected a profit of $5,715. Also that day, he cashed out options in which he had bet that General Electric stock would rise, and collected a $12,713 profit, before GE’s stock price started to tumble...

The following October, Bachus bet the market would go up and lost $21,558.

Now that you know the details, you have to admit that's chump change compared to what goes down on Wall Street.

Bachus admits that he used to trade as a "hobby" back when he was a politician in Alabama but he also says he stopped when he got to Congress in 1995. And, according to his financial disclosures, his own personal wealth declined from up to $2.3 million to up to $1.1 million during that time.

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Presenting The Alternative Energy Matrix

The Oil Drum — Fri, 10 Feb 2012 09:19:00 -0500

LIVE: Violence Breaks Out In Greece, Police Union Threatens To Issue Warrants For EU/IMF Officials

Simone Foxman — Fri, 10 Feb 2012 09:04:00 -0500

Although hopes for a positive outcome in Greece were buoyed by news that Greek politicians had come to an agreement on austerity measures yesterday, that enthusiasm has quickly vanished.

Eurozone finance ministers rejected the deal in its current form, saying that it still didn't go far enough to cutting down Greece's unsustainable public debts.

German Finance Minister Wolfgang Schaeuble estimated that Greece's public debt could remain as high as 136% of GDP in 2020 according to Bloomberg, despite strict stipulations that Greece bring its public debts down to 120% by that year.

Markets are sour, the euro is diving, and suddenly the picture no longer looks rosy in Greece.

We'll keep you up to speed throughout the day right here with all the latest news coming out of Greece. Refresh for updates.

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Tesla Unveils Its All Electric Model X Crossover

Travis Okulski — Fri, 10 Feb 2012 08:43:00 -0500

Late last night on the East Coast, Tesla held a web event to introduce the world to its first entry into the heavily crowded crossover segment.

We showed you the teaser yesterday, and now we have to see if the fruit was worth the wait.

If it makes it to production, it very well could be.

The prototype that was rolled out last night featured a number of unique features that may or may not make it to the road going version.

The doors are the first thing people will notice. While the front doors are traditional, the rear doors open much like the Mercedes SLS AMG. This is the first time we have seen a gullwing rear door on a car.

There is also normal concept car fare. Instead of rearview mirrors, the car has cameras on the sides.

Tesla is planning rear and all wheel drive variants with different battery sizes. It is anticipated the all wheel drive version with the larger battery will be able to accelerate to 60 in under five seconds.

Range estimates for the battery packs have not been provided; we expect that the all wheel drive system will definitely have an effect. But Tesla is ambitious, so look for some surprising numbers to come out.

For a company that has only built Lotus-based cars thus far, the Model X and Model S are two very ambitious projects.

Tesla is estimating pricing for the Model X will be very similar to the Model S, which is in the $60-80,000 range. Production is expected to begin at the end of 2013, with deliveries to customers starting in 2014.

Tesla is beginning to take reservations for the car online today.

Here's another look at the car:

Now take a look at another alternative energy concept >

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CHART: The Roubini Stock Market Indicator

Sam Ro — Fri, 10 Feb 2012 08:39:00 -0500

Earlier this week, Seabreeze Partners' Doug Kass sent out a blast titled SELL EVERYTHING. Central to the sell call was news that Nouriel Roubini, a.k.a. Dr. Doom, had turned bullish on stocks.

People listen to Doug Kass. A year ago, Kass said said the S&P 500 would end flat in 2011 and it did exactly that. Many also remember March 2009 when Kass called a generational low in the stock market.

Anyways, Barry Ritholtz of The Big Picture just ran a chart. It identifies Nouriel Roubini and Gluskin Sheff's David Rosenberg, another perma-bear, as contrary indicators to the stock market. Just take a look (h/t Doug Kass):

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The Riskiest Countries In The World

Gus Lubin — Fri, 10 Feb 2012 08:38:18 -0500

A quick look at the riskiest and safest sovereign bonds in the world at the end of 2011, from BlackRock's Sovereign Risk Index.

Notable moves in the fourth quarter include France's shift toward risk and Japan's shift toward safety.

PIIGS are all in the bottom nine along with certain unstable emerging markets.

(Via Pragmatic Capitalism.)

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Guess Where The 'World's Dumbest Traders' Worked

Julia La Roche — Fri, 10 Feb 2012 08:35:14 -0500

Bloomberg columnist Jonathan Weil is out with an op-ed dubbing the two former Credit Suisse employees who pleaded guilty last week to conspiracy to falsify books and records and commit wire fraud the "world's dumbest traders." [via HereIsTheCity]

Weil writes:

The guilty pleas last week by two former Credit Suisse Group (CS) traders, on charges of falsifying their company’s asset values, revive an age-old question: How dumb do you have to be to get criminally convicted for a fraud you committed while working at a bank deemed too big to fail?

It’s a shame the television series “America’s Dumbest Criminals” went off the air more than a decade ago, because the cases of Salmaan Siddiqui, 36, and David Higgs, 42, would have provided wonderful fodder as an example of high finance gone feloniously brain-dead. Sure, their stories might not have the same mainstream appeal as, say, the video of a gun-wielding robber at a convenience store who wore a see-through plastic bag over his head as a disguise.

Read the full piece here >>

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December Trade Deficit Widens To $48.8 Billion

Sam Ro — Fri, 10 Feb 2012 08:32:00 -0500

The trade gap widened to $48.8 billion from $47.1 billion a month ago.

This is a six-month high.

Economists were expecting the trade deficit to widen to $48.5 billion.

From the U.S. Census Bureau's announcement:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total December exports of $178.8 billion and imports of $227.6 billion resulted in a goods and services deficit of $48.8 billion, up from $47.1 billion in November, revised. December exports were $1.2 billion more than November exports of $177.5 billion. December imports were $3.0 billion more than November imports of $224.6 billion.

In December, the goods deficit increased $1.8 billion from November to $64.3 billion, and the services surplus was virtually unchanged from November at $15.5 billion. Exports of goods increased $0.9 billion to $127.1 billion, and imports of goods increased $2.7 billion to $191.4 billion. Exports of services increased $0.3 billion to $51.7 billion, and imports of services increased $0.3 billion to $36.2 billion.

The goods and services deficit increased $8.3 billion from December 2010 to December 2011. Exports were up $14.8 billion, or 9.0 percent, and imports were up $23.1 billion, or 11.3 percent.

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Nat Rothschild Loses 'Puppet Master' Libel Suit

Ben Walsh — Fri, 10 Feb 2012 08:31:00 -0500

Nathaniel 'Nat' Rothschild has lost his libel suit against the Daily Mail, The Telegraph reports. The judge in the case found the paper's allegations to be "substantially true."

Rothschild sought damages from the British paper after it accused him of acting as a "puppet master" for his role in bringing the former EU trade commissioner with him on a Siberian trip to visit a Russian oligarch.

Rothschild sued the Daily Mail over a report in the paper that he arranged for Lord Mandelson, the former EU trade commissioner, to meet with Russian billionaire Oleg Deripaska in order to gain assurances that EU aluminum tariffs would not rise. This information was reported to be crucial in paving the way for a £500 million deal involving Deripaska's aluminum smelter.

The judge in the case rejected Rothschild's argument that denied that the purpose of the trip, or Lord Mandelson's presence, were "purely recreational", The Telegraph writes:

"In my judgment that conduct foreseeably brought Lord Mandelson's public office and personal integrity into disrepute and exposed him to accusations of conflict of interest, and it gave rise to the reasonable grounds to suspect that Lord Mandelson had engaged in improper discussions with Mr Deripaska about aluminium..."

..."Mr Rothschild states that he took Lord Mandelson on the trip as a friend and not for any other business reason. I cannot accept that the position was as simple as that."

"I accept that Lord Mandelson had no role in the joint venture, which is what the trip was arranged to promote. But I do not accept that there is a clear line between the business and the personal sides of Mr Rothschild's relationship with Mr Deripaska. They have very extensive business relationships."

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Thanks To Jim Cramer, The World Now Has A 'Sexy' Video Montage Of Warren Buffett And A LMFAO Song

Lisa Du — Fri, 10 Feb 2012 08:01:00 -0500

Mad Money's Jim Cramer knows no limits. On his show last night, Cramer played this video montage of Warren Buffett, interlaced with LMFAO's "Sexy And I Know It," to introduce a question from a caller about the pros and cons of investing in Berkshire Hathaway.

Yeah. That happened.

Check out the video below:

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Hey Rich Guys: These Are The Mansions You Could Be Living In If You Hadn't Torn Them Down

Rob Bear — Fri, 10 Feb 2012 08:00:00 -0500

This post originally appeared at Curbed.

Before the limestone towers of Fifth and Park Avenues completed their social ascendance, the mansion was the only acceptable way for the extravagantly wealthy to live in the city. While many hunkered down in what we know today as townhouses, other, more, er, vulgar types, could only settle for the most enormous, obscenely well equipped versions, many with sprawling lawns, all built in an unabashedly ornate style.

Only a handful of these mansions remain, the most prominent survivor being the Fifth Avenue spread of steel baron Henry Clay Frick,, today a museum housing his private collection of art, which occupies the entire block between 70th and 71st Streets. What now seems like an anomaly was in fact the standard, before developers discovered that rich people were perfectly willing to live stacked on top of one another.

William Andrews Clark Mansion

Perhaps the most over-the-top Fifth Avenue mansion of all time was the childhood home of Huguette Clark, built in 1907 by her father, the silver king and Senator William Andrews Clark, at the corner of 77th and Fifth. The elaborate townhouse, designed in the height of Beaux Arts style, boasted "121 rooms, 31 baths, four art galleries, a swimming pool, a concealed garage," and a private underground rail line to bring in coal for heat. It cost Clark $7M—that's $162M in today's dollars—to build, but stood for only 20 years, bought by a developer after Clark's death for less than half the construction cost and demolished to make way for 960 Fifth Avenue.

Mansion of Charles M. Schwab

The West Side was not without its fabulously wealthy fans, like Charles M. Schwab, who built an ornate mansion on an entire city block on Riverside Drive between 73rd and 74th Streets. In 1901, Schwab, a partner in the United States Steel Corporation, spent the unheard of sum of $865K—that's more than $22M in today's dollars—on the building lot alone, then had French architect Maurice Hebert design an absurdly elaborate residence for the park-like grounds.

Construction lasted six years, in part because of the sheer complexity of the building, which incorporated a four-car garage, a service tunnel beneath the garden, an indoor swimming pool, belfry with chimes, roof garden, and private chapel. Though the completion of this massive home, which replaced a decrepit orphanage, sparked a new wave of building on Riverside Drive, it is that newfound desirability that doomed the place to demolition. It survived until 1939, when Schwab shuttered the 50,000-square-foot, 75-room spread, disbanded his staff of 20, and unsuccessfully attempted to sell to the city as a mayoral residence. It was finally knocked down in 1948 and replaced with the Schwab Apartments.

Mansion of Isaac Vail Brokaw

Few of these grand mansions survived into the latter half of the 20th century, but the home of Isaac Vail Brokaw, completed in 1890 on the corner of 79th and Fifth, lasted until 1965, when it was demolished to make way for one of the Avenue's least architecturally worthy apartment houses. The blue-blooded Brokaw, who earned his fortune as a clothing merchant, built this formally subdued home for himself, along with a pair of more ornate townhouses to the north for his two sons and one just to the east for his daughter, as a wedding present. By the time the Brokaw houses met their end in the '60s, New Yorkers were beginning to lament the destruction of such historic structures. Developers prevailed in this case, but the public outcry provided the support for the Landmarks Law of 1965.

See the rest of the story at Business Insider

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Meet Wall Street's Hottest Power Couples (GS, MS, JPM)

Abby Rogers, Julia La Roche and Linette Lopez — Fri, 10 Feb 2012 07:44:00 -0500

Sure, Wall Streeters spend more time in their offices than anywhere else.

But they must have a little block of time to find love.

And, more often than not, they inter-date on the Street.

In honor of Valentine's Day, we've found the financial industry's biggest power couples.

From hedge funders to a New York City mayor, these twosomes run the gamut of successful financiers.

Katya Wachtel contributed to this post.

Michael Bloomberg and Diana Taylor

Bloomberg, the wealthiest man in the city, is also the mayor. He graduated from Harvard with an MBA and went on to found the predecessor of financial news network Bloomberg. Bloomberg now owns about 85% of his namesake company.

Taylor earned her MBA from Columbia and began her finance career at Smith Barney. She then went on to become the CFO of Long Island Power Authority, and eventually became New York State's Superintendent of Banks.

Kelly Granat and Susan Boland

Hedge fund power couple Kelly Granat, a managing director at Lone Pine Capital and Harvard MBA, and Susan Boland, a senior marketing exec whose clients include Citi and Marriott.

They bought Richard Gere's 1.2 accres Hamptons home for $5.9 million back in '09. The property is called Too Many Maples as it has several large maple trees throughout the property. They also purchased a $2.8 million pad on Fifth Avenue last November.

Louis Moore Bacon and Gabrielle Sacconaghi

Bacon is the chairman and principal investment manager of Moore Capital Management. In August, he and other prominent hedge funders were rumored to have partied with GOP presidential hopeful Mitt Romney.

Sacconaghi earned a Master's degree in International Relations from Cambridge University. She previously worked at Sotheby's and currently works as an art consultant in New York.

See the rest of the story at Business Insider

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10 Things You Need To Know This Morning (LNKD, RBS, BCS, NYX)

Eric Platt — Fri, 10 Feb 2012 07:27:00 -0500

Good morning. Here's what you need to know.

Asian markets headed lower overnight, with Hong Kong's Hang Seng off 1.1 percent. European shares are following that trend lower, and U.S. futures are pointing to a negative open.
Greek workers went on strike today as they prepared to stomach new austerity measures. Athen's transit system was brought to a standstill while the country's ships stopped moving. The new 48-hour general strike follows a similar one brought just last Tuesday. Here's who gets clobbered if Greece defaults.
U.K. output prices rose by 0.5 percent as raw material pricing increased by the same figure, 40 basis points above expectations, the country's statistics office said this morning. Core producer prices grew by 2.4 percent for the year following a 0.3 percent gain in January, the slowest jump in more than a year.
French industrial production fell greater than forecast in January, down 1.4 percent for the month, against an expected declined of 0.8 percent. That's the worst reading since September. Meanwhile, Italian production jumped 1.4 percent during the month, a surprise gain and well above expectations for a -0.5 percent reading. Growth in capital goods orders accounted for a majority of the gain.
Barclays, the first of Britain's main investment banks to report earnings this season, announced that it missed consensus estimates as revenue tumbled 48 percent in the fourth quarter. The bank posted net income for the full year of 3 billion pounds. Barclays also capped the portion of bonuses made in cash to £65,000. Take a look at cuts seen peers Morgan Stanley and Citigroup.
RBS has dismissed at least four employees involved in the ongoing investigation into the tampering of LIBOR by financial institutions, Bloomberg's Lindsay Fortado and Gavin Finch report. Sources told the pair that Citi and Deutsche Bank have also fired employees in the matter, which impacted rates tied to securities in excess of $350 trillion. Here's your quick guide to the LIBOR investigation.
U.S. economic announcements kick off at 8:30 a.m. EST with the country's trade balance, which is forecast to increase to -$48.5 billion in December. At 9:55 a.m. EST, the University of Michigan consumer confidence reading will be released. Economists see the important metric declining in February to 74.8 from January's final reading of 75.
Global demand for diamonds is expected to fall in 2012, De Beers said this morning when it announced quarterly results. The company, the world's largest producer of rough diamonds, said that the pace of purchases has slowed from the first half of 2011, mainly on weakness in Europe.
LinkedIn announced that revenues doubled during its fourth quarter, while net income rose to $6.9 million, or $0.12 per share. That was above analyst forecasts for a $0.07 quarter. The social network also announced it now had more than 150 million active users.
The pace of earnings announcements slows considerably on Friday, with NYSE Euronext the main reporter. Analysts are looking for earnings per share of $0.49 and the conference call will likely focus on the company's plans now that it has dropped its proposal to merge with the Deustche Boerse. Here's what we've already learned this earnings season.

Bonus: Vanessa Hudgens stayed at a homeless shelter for two weeks to prepare for an upcoming film.

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White House To Announce 'Accommodation' On Birth Control Rule

Gus Lubin and Michael Brendan Dougherty — Fri, 10 Feb 2012 07:12:00 -0500

It looks like Obama will partially cave on his stand against the Catholic Church.

ABC's Jake Tapper reports the White House will likely announce an attempt to accommodate religious groups on mandatory contraceptive coverage later today.

Tapper reports that the compromise does not go as far as a law in Hawaii that allows religiously affiliated institutions to opt out so long as they inform employees where they can attain coverage elsewhere.

The White House could try to eliminate the requirement for sterilization coverage, along with co-pay-free "morning after" pills like "ella," to try and really isolate the Church where its position is least popular.

But, Richard Doerflinger of the U.S. Conference of Catholic Bishops, has said this week that even the Hawaii-model would not resolve the conflict, a claim that Cardinal Wuerl, Archbishop of Washington, repeated on "Morning Joe" this morning.

The battle between the Catholic Church and the Obama administration is entering a new phase. But Obama is the first to blink.

As Obama's war with the Catholic Church heated up, we've published popular op-eds in favor of and against the Church's stand on birth control.

We'll continue to update as details become available.

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Reagan's Speechwriter Explains Why No One Likes Mitt Romney

Henry Blodget — Fri, 10 Feb 2012 07:03:00 -0500

In her Wall Street Journal column, Peggy Noonan explains why America just can't seem to get behind the Republican front-runner and presumed nominee.

Noonan:

The Romney campaign is better at dismantling than mantling. They're better at taking opponents apart than building a compelling candidate of their own. They do not seem capable of deepening his meaning, making his stands and statements more textured and interesting. He comes across like a businessman who studied the data and came up with the formula that will make the deal.

A particular problem is that he betrays little indignation at any of our problems and their causes. He's always sunny, pleasant, untouched by anger. This leaves people thinking, "Excuse me, but we are in crisis. Financially and culturally we fear our country is going down the drain. This guy doesn't seem to be feeling it. So why's he running? Maybe he thinks it's his personal destiny to be president. But if the animating passion of his candidacy is about him, not us, who needs him?"

Mitt Romney's aides are making the classic mistake of thinking the voters want maturity, serenity and a jolly spirit. What they want is a man who knows what time it is, who has a passion to reform our country, and who yet holds these qualities within a temperament that is mature, serene and jolly. Newt Gingrich has half the package: He has a passion to reform, but it exists inside a crazy suit. Mitt has no particular passion within an obviously sane suit.

Read the whole thing >

By the way, we also finally have video of Romney tying his dog to the roof of his car.

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Two Of The Architects Of Ford's Turnaround Are Retiring

AP — Fri, 10 Feb 2012 06:46:00 -0500

DETROIT (AP) — Two of the architects behind Ford's remarkable turnaround are retiring, and their departures have intensified the guessing game over who will become the next CEO.

For now, Chief Executive Alan Mulally isn't going anywhere. The energetic, 66-year-old Kansan is considered a hero for bringing the company back from financial disaster. He insisted on Thursday that he'll continue to lead Ford.

But the retirements of two top lieutenants — CFO Lewis Booth and Product Development Chief Derrick Kuzak — on April 1 remove two of the five inside contenders for the CEO job. Their departures have renewed water cooler talk about who takes over for superstar Mulally.

Both men helped turn the company around after it borrowed billions in 2006 to stay in business. Kuzak, 60, got Ford to shift from being primarily a truck company to making more cars. Booth, 63, led the company's financial operations through the banking crisis.

On Thursday, Mulally named their replacements and promised that Ford's success will continue as it follows the plan that led it to prosperity.

"Nothing's changing about the way we operate," said Mulally, whose company last month reported its third-straight annual profit.

Company insiders say the leading candidates to succeed Mulally are now Americas President Mark Fields, Asia Pacific and Africa President Joe Hinrichs and Ford of Europe CEO Stephen Odell. There's a slim chance Ford would look outside, but Executive Chairman Bill Ford Jr., whose family controls the company, has repeatedly pointed to a strong bench.

President and Controller Bob Shanks, 59, will become CFO. Vice President of Engineering and Product Development Raj Nair, 47, will replace Kuzak. Mulally said the promotions were part of the company's succession plan for every top management position, including his own.

At least one of the appointments seemed to point to Fields as the next CEO.

Shanks is a close ally of Fields. He has worked with him since the early 2000s at Mazda, which Ford once ran, and at Ford's European division. When Fields became president of the Americas in 2005, Shanks became the region's controller. He also worked on the restructuring plans that eventually saved the company.

Investors shouldn't be concerned about the retirements or the fact that Mulally hasn't announced when he'll leave, said James Schrager, a professor at the University of Chicago Graduate School of Business.

Mullally would risk being a lame duck if he announced a date. "He's got to maintain very firm control of the business," Schrager said.

He could stay for four or more years, as long as the company continues to perform well, he said. "I think that investors today understand that it's about performance," Schrager said.

Most analysts say Ford's renaissance should continue despite the retirements of Booth and Kuzak. Mulally is still in charge and is following his "One Ford" plan that turned the company around.

"We don't think that these changes in any way alter the financial or operational strategy that's been in place," said Bruce Clark, senior vice president of Moody's Investors Service.

Under the "One Ford" plan, the automaker rolled out new products, matched production to demand, paid down debt and cut engineering and design costs.

Thursday's news had little impact on Ford's stock price, which closed down 1 percent at $12.69. The broader market rose just 0.5 percent.

But the strong corporate strategy might not be able to overcome all the executive changes.

Gerald Meyers, a University of Michigan business professor and former chairman and CEO of American Motors Corp., said it will be hard to replace Kuzak, the architect of Ford's highly successful car and truck lineup.

Kuzak only recently changed Ford's dysfunctional product development culture, and there's a risk of it returning to old ways, Meyers said. He shifted Ford from being primarily a truck company to making fuel-efficient cars when gas prices were rising. He also saved the company billions by developing cars that are sold across the globe.

The key to Ford's rebirth, Meyers said, is that the company has been able to fetch high prices for its smaller vehicles, making up for profits lost when truck and SUV sales fell. But Mulally may have to adjust if fuel prices stay relatively low or younger people stop buying expensive options that drive up small-car prices, Meyers said.

"That's where the treachery is," he said.

Meyers and others say the results at Ford have been dramatic since Bill Ford fired himself as CEO and hired Mulally in 2006, a year in which Ford lost a staggering $12.6 billion. Ford restructured, using a $23.5 billion loan from mortgaging its factories and other assets to close plants, shed brands and cut its global work force by more than a third.

Ford has now reported billions in profits for three straight years. It will resume paying a dividend next month for the first time since September 2006.

Still, Kuzak and Booth, leave some unfinished business.

Kuzak's revamp of the flagging Lincoln luxury brand has just begun, and Booth is leaving before the ratings agencies return the company to investment-grade status. Ford was downgraded to junk status in 2005.

Booth led Ford Motor Co.'s financial operations through the banking crisis in 2008. As the company returned to profitability, he pushed to repay the money it borrowed to survive. At the end of last year, Ford had cut its debt to $13.1 billion.

Shanks, Booth's replacement, began his career with Ford in 1977, serving in finance and strategy positions across the world.

Nair, who will replace Kuzak, joined Ford as an engineer in 1987 and has held leadership posts in the U.S., Europe, and Asia. He currently heads Ford's global engineering operations.

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10% Of Trades On The NYSE Involve A Single Notorious Company

AP — Fri, 10 Feb 2012 06:43:08 -0500

NEW YORK (AP) — On a normal day, 4 billion shares of stock change hands on the New York Stock Exchange. One in 10 belongs to a single company. It's not McDonald's or IBM, both of which have been on a tear.

It's Bank of America — bailed out by the government three years ago, reviled for being part of the mortgage frenzy that helped wreck the economy and selling for not much more than an ATM fee.

When the market goes up because of positive news about the economy, Bank of America stock shoots up past the stocks of other big banks. When traders get worried about Greek debt, Bank of America takes the biggest plunge.

The big swings are not driven by a fundamental bet that the bank will be more profitable because the economy is getting better or a real concern that it will lose more money than others if there is a default in Greece.

Instead, Bank of America is the stock of the moment for high-frequency trading, the supercomputer-driven buying and selling that barely existed a few years ago and now accounts for as much as two-thirds of U.S. trading.

The bank's single-digit stock price and flood of shares on the market — three times as many as its nearest big-bank competitor — make it an attractive target for hedge funds and banks that employ high-powered, computerized trading.

"The movement of Bank of America stock on most days has nothing to do with Bank of America," says Joseph Saluzzi, co-founder of brokerage firm Themis Trading.

In other words, the stock moves because it moves. Bank of America stock has risen or fallen 1 percent or more on 20 days this year. The Standard & Poor's 500 index has only done it three times.

For the year, Bank of America is up 46 percent, best of the 30 stocks that make up the Dow Jones industrial average. Big banks collectively are up 15 percent.

In high-frequency trading, investors use computer algorithms to exploit small changes in a stock's price. If a computer can seize on a stock like Bank of America a fraction of a second faster than the rest of the market, it can book a tiny profit.

Those pennies add up over tens of millions of shares a day to produce big gains. And when computers rush to buy or sell a stock like Bank of America, it can result in accelerated moves in the stock price. Buying leads to more buying, selling to more selling.

Bank of America is part of the Standard & Poor's 500, and therefore held in mutual funds in the retirement accounts of millions of Americans. And mutual fund managers hate high-frequency trading.

Not only does it make the stocks in their portfolios more volatile, but fund managers fume that high-frequency computers can detect their stock orders, step in to change the price of a stock slightly and pocket a small profit.

"It has nothing to do with the fundamentals," says Leon Cooperman, a billionaire investor, chairman of hedge fund Omega Advisors and former CEO of Goldman Sachs Asset Management.

For computers to move in and out quickly, there must be enough shares available to trade. Bank of America has a truckload — 10.5 billion shares outstanding, compared with 3.8 billion for JPMorgan Chase and 2.9 billion for Citigroup.

The stock traded as high as $15.31 last year. Then investors, worried about how deep the bank's mortgage problems might be, drove it below $10 in July. High-frequency traders pounced, and Bank of America's volume exploded. It was 147 million shares last summer. On Thursday, 477 million shares changed hands.

The low price put it in the sweet spot for high-frequency trading. If a high-frequency operation is trading blocks of 100 shares at a time to capitalize on a 1-cent change, there's a lot less risk working with a $5 stock than a $500 one.

It makes Bank of America "a juicy trade at very little risk," says Adam Sussman, director of research at Tabb Group, a markets advisory firm.

In 2009 and 2010, Citigroup, then part-owned by the government, was in the same spot. Its price was in single digits, and it seesawed day to day. It was often the highest-volume stock — as many as 500 million shares changing hands in one day.

Last year, Citi reduced the number of shares by exchanging one share for every 10. That brought its stock price up — $33 on Wednesday — and high-frequency traders stopped flocking to it. Volume on a normal day has dropped to 50 million.

Bank of America went the opposite way in November and December and sold 400 million more shares to the market to raise $3.5 billion and improve its financial stability.

Today, some investors — the human ones — are buying Bank of America because they like CEO Brian Moynihan's efforts to shore up the company's finances. Other investors won't touch it because they are afraid of the billions Bank of America is still spending to fight mortgage lawsuits. Charles Bobrinskoy, director of research at Ariel Investments, even calls the company "unanalyzable."

But none of those groups is driving the stock. Some days, it moves with little or no tangible reason.

On Jan. 5, the stock jumped 8 percent with no explanation. The Wall Street Journal blogged that the stock was rising on "reports/rumors/blind hopes" about President Barack Obama appointing a new head to the federal housing agency.

On Jan. 10, a Barclays bank analyst lowered his price target on Bank of America stock and Morgan Stanley and Zacks Investment Research downgraded the stock. The stock didn't fall — it popped up 6 percent more.

Analysts say high-frequency trading is partly responsible for the huge daily swings in the market in 2010 and 2011. The technique gained notoriety after May 6, 2010, the day of Wall Street's "flash crash." The Dow fell almost 1,000 points in minutes, bewildering traders and inciting panic. The market recovered to close down 348 points.

High-frequency trading was blamed and attracted scrutiny from regulators. The Securities and Exchange Commission didn't ultimately blame high-frequency trading for the crash, but said it exacerbated the decline. Regulators haven't done anything to curb it.

Sometimes high-frequency traders don't even profit from the trade itself. They buy and sell shares at the same price and make money by sending large orders through the exchanges.

NYSE, Nasdaq and others want to attract the most traders. So they offer rebates of 20 to 32 cents per 100 shares to traders who send in large orders. On the electronic exchange NYSE Arca, traders who can move 35 million shares pocket a quick $112,000.

"Rebates will be the same no matter what the price, so the computers keep trading all day long," says Keith Bliss, senior vice president at brokerage firm Cuttone & Co.

Bank of America says it has no position on high-frequency trading. At some point it could reduce its shares, as Citi did. But the bank is focused on strengthening its finances, the reason it sold more shares in November and December.

Bank of America's chief financial officer, Bruce Thompson, told reporters in January that the bank isn't likely to buy back stock this year. So for now, those human investors will have to buckle up for the ride.

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This Could Be The Worst Day All Year

Joe Weisenthal — Fri, 10 Feb 2012 06:21:00 -0500

A little perspective. In the pre-market right now, S&P futures are pointing to a decline of 0.6%.

If that were to be the end-of-day close, that would be close to the worst day all year.

There's only been one day of a decline of 0.5% or more this year, and we haven't had a decline of 1% since late December.

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