Latin American equity markets
Samba vs Ranchero
As stockmarkets go public, Mexico struggles to keep up with Brazil
SINCE the Stockholm Stock Exchange paved the way in 1993, the world of bourses has been swept by a wave of “demutualisation”, in which exchanges have become publicly held corporations. Of the world's five largest stock exchanges, only Tokyo is still owned by its member brokerages. Latin America is the latest region to catch the bug.
The Bolsa Mexicana de Valores (BMV), the Mexican exchange, is planning an initial public offering (IPO) for mid-June, and is hoping to raise something like $200m within Mexico and another $200m or so in America. The IPO will not be a full demutualisation—the 19 partners, including a roster of international banks and Mexican financial firms, that now own the exchange will dilute their holding to just over half.
hese numbers are dwarfed by a pair of listings that took place in Brazil last year. Bovespa, Brazil's main stock exchange, and the Bolsa de Mercadorias & Futuros (BM&F), Brazil's commodities and futures exchange, both went public in 2007. On May 8th they merged to become the second-largest exchange in the Americas. The size of the Brazilian markets has attracted foreign interest: the merged stockmarket has an alliance with the Chicago Mercantile Exchange, which is a big shareholder. The tie-up allows a trader sitting in London to buy and sell Brazilian securities through Chicago's Globex trading system. Conversely, a Brazilian trader wanting to hedge against swings in the price of soya beans, say, can trade in the biggest futures market in the world.
The Mexican market remains much more limited by comparison. Although Brazil's economy is only 45% larger than Mexico's, firms listed on the Bovespa had a total 2007 market capitalisation (on average) of $1.4 trillion, more than three times the BMV's tally. Look at growth (see chart) and the differences become yet more stark. The BMV had four IPOs in 2007; Bovespa had 62. Trading volumes have been growing faster in Brazil, which is also the more alluring destination for foreign capital. BlackRock, a mutual-fund manager, is not unusual in having 70% of its Latin American portfolio invested in the country.
The extent of these disparities looks odd. Mexico's derivatives market has done well, with more peso futures now traded in Mexico than in Chicago. Corporate debt has also grown healthily on Mexican bond markets. Part of the reason for Mexico's relative weakness is technical: although property is one of the country's growth areas, unhelpful tax rules have impeded listed real-estate investment vehicles.
A bigger problem is the power of near-monopoly firms and large family holdings. It is difficult to reach an exact figure, but one Mexican financial analyst reckons that Carlos Slim, by some accounts the world's richest man, controls close to 50% of the value of shares traded on the BMV. “How can you have an active IPO market when you have these big fat companies that dominate everything and stifle the next generation of companies?” he asks.
Salvation may lie abroad. André Cappon of CBM, a consultancy, reckons that the global exchanges business will eventually by dominated by three or four multinational constellations. Gazing up at them from the gutter will be the small national exchanges that are the norm in most of Latin America. In the middle there will be satellites, like Singapore and Brazil. Mexico's best hope for its markets, reckons Mr Cappon, lies north, in a tie-up with one of the exchanges in America.
Not built in a day
What should be under discussion at the Rome food summit
BACK in 1996 and again in 2002, the UN’s Food and Agriculture Organisation arranged summits to reverse the miserable condition of world farming. They failed. This week yet another food summit got under way, in Rome. It takes place when, for the first time in a generation, there is widespread acceptance that something is needed beyond windy promises. But what?
Joachim von Braun, the head of the International Food Policy Research Institute (IFPRI), a Washington, DC, research group financed by governments, sees several things that the world food conference should do.
First, it needs to finance the world’s food-aid shortfall. Earlier this year, the World Food Programme (WFP), the main agency handing out emergency relief, put out an all-points bulletin asking for over $750m to offset the impact of higher cereals prices. Last week, it completed its fund-raising, thanks to an extraordinary gift of $500m from Saudi Arabia. Unlike most offers of “new money”, this turned out not to be old promises repackaged.
Next, the conference could help to rationalise biofuels policy. It probably won’t. Some non-governmental organisations want a moratorium on ethanol production. Even some big food companies would support something milder, such as international restrictions on producing ethanol from maize. In practice, the Rome conference cannot discuss even that. Just before it began, America’s secretary of agriculture, Ed Schafer, claimed that ethanol accounts for only 3%, at most, of the increase in world food prices—a highly contentious view, and one that is likely to leave the summit split and paralysed over biofuels.
The conference could come also up with some short-term fixes to bring down world prices. The most obvious such fix would be to reduce export bans, imposed by about 40 countries. A study by IFPRI calculates that getting rid of these would reduce world cereals prices by an average of 30%. Here, there is some good news. Vietnam has promised to resume some of its rice exports; Kazakhstan has done the same with wheat; India has said it will restart rice exports to some African countries. Summits have a way of persuading heads of state not to beggar their neighbours, so the Rome one could encourage more such promises.
But as speaker after speaker intoned, short-term measures are just palliative. “The underlying problem,” says Lennart Båge, the head of the UN’s International Fund for Agricultural Development, “is the decline in agricultural productivity growth. Unless we reverse that, we’ll be back in the same situation in a few years' time.”
The last two items on Mr von Braun’s list go beyond the scope of the Rome summit. One is a world trade deal on agriculture. Japan’s prime minister, Yasuo Fukuda, called on everyone to “smooth trade in agricultural products”, which sounds waffly but since any action will have to come at the next meeting of the G8 group of rich countries and since he will chair the meeting, it may count for something.
But most important, the Rome meeting could make a start on the main task of farming: a second green revolution. Ban Ki-moon, the UN secretary-general, suggests that world food production needs to rise by half by 2030 to satisfy growing demand. Behind the scenes, countries are preparing an avalanche of promises to help finance research into new seeds, build irrigation canals and spread fertiliser use (seeds, irrigation and fertilisers were the main components of the first green revolution of the 1960s). These promises could be the main achievements of the Rome summit. But they will be flawed and partial.
Simon Maxwell of Britain’s Overseas Development Institute points out that most of the $1.2 billion of pledges from the World Bank, or the $500m on offer from the Asian and Latin American Development Banks, is not new money. It is diverted from other programmes. If you look just at new money, you find tens of millions of dollars, enough for some seed research but not the billions the UN says are needed for irrigation. At the Rome summit, the second green revolution looks worryingly like the windy promises that achieved so little at earlier gatherings.
Commentary by Margaret Carlson
June 5 (Bloomberg) -- ``What Does Hillary Want?'' Hillary Clinton asked herself on election night. She didn't say. If Freud were answering his own question, he would say ``to be loved,'' which translates, in Clintonland, into winning.
She's not going to get that, yet even after Barack Obama had reached the magic number of delegates needed for the Democratic nomination, Clinton was introduced as ``the next president of the United States.'' She congratulated Obama but not for clinching the nomination. She directed supporters to her Web site, as if there were yet more primaries to contest.
By not making a concession, Clinton diminished Obama's victory. When Matt Lauer held up the New York Times on the ``Today'' show, Clinton campaign Chairman Terry McAuliffe refused to acknowledge it. Within 24 hours, Clinton's most ubiquitous surrogate, former White House counsel Lanny Davis, launched a petition drive to make her the vice presidential nominee.
Clinton dominates the stage now the way an upset toddler about to break into tears holds a room of adults hostage. Obama can't fully engage John McCain until he fully dispenses with Hillary Clinton.
Clinton and the women who love her deserve great respect. If you owe the bank $100, the bank owns you. If you owe the bank a million dollars, you own the bank. Applied to the Democratic primary, the million dollars would translate to almost 18 million votes. That can't be ignored.
Josey Six Pack
The New Clinton could be a big help to Obama. Late in the campaign, she turned from Ivy League feminist lawyer into Josey Six Pack. She found a following among working-class men and older women who know what it's like to have the smooth guy pass you by on the way to the corner office.
Obama hasn't been able to pull off such a transformation. He's too cool, too thin, too unruffled. He's Whole Foods not Safeway, Starbucks not Dunkin' Donuts. You want to yell at him ``Eat the taco! It won't kill you and neither will the funnel cake. Be Bobby Kennedy not Adlai Stevenson.''
On the other hand, Clinton brings problems, not all of which were obvious in the primaries because the words impeachment, Monica, Travelgate, Paula Jones, pardons and multiple grand juries never passed Obama's lips. The past was out of bounds except for her gaining as much experience from being first lady as Al Gore did from being vice president. Will Republicans accept that no-fly zone if she's the veep nominee?
Blowing Her Lead
She also managed to take a seemingly winning hand and blow it. She had the party establishment, the big-name strategists, worldwide recognition by first name only, and a sleek fundraising machine. She had Elvis, who never seemed so devoted.
When those advantages didn't play out, she blamed everyone but herself. It was the calendar. It was party rules, even though the Clintons ran the party for eight years. It was the failure to count her wins in Michigan and Florida, even though Clinton had originally agreed they wouldn't count. It was the media being captivated by the new, new thing. It was sexism from which she's benefited as much as she's suffered.
Representative Charlie Rangel, the dean of the New York delegation who was on her side, said yesterday he was unable to explain the behavior of the ``favorite daughter.'' Until now, he believed she was just playing out the primaries to, as she said, give everyone a chance to vote. Now he wonders.
Search for Meaning
``What does it mean when you say that you are not endorsing?'' Rangel asked. ``It's inconsistent with wanting a Democratic victory and not endorsing the Democratic candidate.''
If Clinton were just any candidate with a passionate constituency, putting her on the ticket would be a one-step unity event. But she's complicated that by letting her desires be known, as does husband Bill. There was always an unknown that doesn't have to be confronted now about what it would be like to have an ex-president a pillow away from the president. What about an ex-president and vice president a few miles and a heartbeat away?
Just this week, Bill upstaged any dignified exit by his wife when he announced he was making his last campaign appearance. He then outdid himself for finger-waving anger by calling Todd Purdum, the husband of his former press secretary Dee Dee Myers, a slimy, sleazy, scumbag for a story in Vanity Fair magazine.
The Clintons may be so angry they aren't thinking clearly. They didn't realize they had stretched to the breaking point the patience of their followers for putting their own well-being above that of the party.
Debts Owed, Paid
Saying she had a ``decision'' to make rather than endorse the winner was one bridge too far. As senators and congressmen peeled away yesterday, Clinton spokesman Howard Wolfson said that Clinton will host an event in Washington later this week ``to thank her supporters and express her support for Senator Obama and party unity.''
No one who hasn't lost something they desperately wanted, who worked for it for as long as three decades, who knows almost no other life than a public one can know what it's like to be Clinton now. Wolfson's announcement came as she was throwing an 89th birthday party for her mother at her Embassy Row house. You can see Dick Cheney's place from her back lawn.
With those candles blown out, the best thing Clinton could do for herself is let the world know she doesn't feel she's owed anything. The biggest favor Obama could do for himself is to recognize that she is.
By Shobhana Chandra
June 5 (Bloomberg) -- The number of Americans filing first- time jobless claims unexpectedly fell last week, possibly reflecting the closure of government offices for the Memorial Day holiday.
Initial jobless claims decreased by 18,000 to 357,000 in the week that ended May 31, the lowest level in more than a month, the Labor Department said today in Washington. While the figures are adjusted for seasonal variations, holidays make it more difficult for Labor to estimate the changes.
The level of claims indicates the job market is weakening without collapsing as deteriorating demand has led employers to pull back on hiring rather than carry out mass firings of the scale seen in past recessions. Rising joblessness, falling home values and higher fuel costs raise the risk that consumer spending will falter.
``Because the week included a holiday, there is always the possibility of seasonal-adjustment problems,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. ``It still looks consistent with outright declines in payrolls.''
Treasuries fell, pushing yields higher. The benchmark 10- year note yielded 4.02 percent as of 9:42 a.m. in New York, up from 3.98 percent late yesterday. Stocks were higher.
Payroll Report
Today's figures come a day before the government's payroll report, which may show the economy lost 60,000 jobs in May, a fifth straight decline, according to the median forecast in a Bloomberg survey. The jobless rate is forecast to rise to 5.1 percent from 5 percent in April.
Claims in the prior week were revised up to 375,000 from a previously estimated 372,000. The median projection of 39 economists in a Bloomberg News survey called for a rise in applications last week to 375,000. Estimates ranged from 365,000 to 380,000.
During the last recession in 2001, about 415,000 workers on average filed jobless claims per week.
The four-week moving average, a less volatile measure, fell to 368,500 from 371,250, today's report showed.
Continuing Claims
The number of people continuing to collect jobless benefits decreased to 3.093 million in the week ended May 24, from 3.109 million the prior week that was the highest in more than four years. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 2.3 percent. These data are reported with a one-week lag.
Twenty-two states and territories reported an increase in new claims, while 31 reported a decrease.
Initial jobless claims reflect weekly firings and tend to rise as job growth -- measured by the monthly non-farm payrolls report -- slows.
So far this year, weekly claims have averaged 358,000 compared with an average 321,000 in 2007, when the economy generated 91,000 new jobs on average each month.
Federal Reserve Chairman Ben S. Bernanke this week said financial-market conditions ``remain strained,'' and consumers face ``significant headwinds'' from declining home prices, a weaker labor market, stricter lending standards and higher energy costs.
The second quarter is ``likely to be relatively weak,'' Bernanke said in his address to the International Monetary Conference in Barcelona, Spain. The second half of this year may have ``somewhat better economic conditions,'' he said.
Housing-Related Companies
Housing-related companies continue to trim staff. First American Corp., the largest U.S. title insurer, said yesterday it cut 200 jobs in May and expects a ``challenging'' market through the end of the year.
Interest rates are ``stubbornly high'' and are preventing a rebound in home sales and title orders, Chief Operating Officer Dennis Gilmore said at a conference. ``I can't predict when that market will turn.''
Continental Airlines Inc. said today it will cut 3,000 jobs and shrink its fleet by 67 planes because of record fuel expenses. The cuts go beyond an April reduction and follow fare increases that failed to cover rising prices.
June 5 (Bloomberg) -- Brazil's oil discoveries, including the Western Hemisphere's largest in three decades, may cost $100 billion more to develop than the industry's most costly field.
The Tupi deposit and nearby offshore prospects probably will cost $240 billion to exploit, said Peter Wells, director of U.K. research firm Neftex Petroleum Consultants Ltd. and a former Royal Dutch Shell Plc exploration manager. The total exceeds the $136 billion estimate for Kazakhstan's Kashagan field, led by Eni SpA, and would be enough to fund the U.S. space program for 14 years.
Brazil's state-controlled Petroleo Brasileiro SA will need to enlist international producers such as Exxon Mobil Corp. to raise financing for the platforms and pipelines required to reach crude trapped beneath six miles (10 kilometers) of water and rock, Wells said in a telephone interview. The prospects may hold $6 trillion of petroleum and make Brazil one of the world's 10 largest oil producers.
``This oil is going to be difficult to get out of the ground and it will cost a lot,'' said Wells, who also was a chief negotiator for BP Plc in Azerbaijan. Petroleo Brasileiro ``will need the capital expertise only found with the world's largest, most experienced oil companies.''
Tupi, the biggest discovery in the Americas since 1976, will start pumping in April 2009, Chief Executive Officer Jose Sergio Gabrielli said in an interview last month. Gabrielli declined to estimate development costs for Tupi and adjacent fields, and a spokesman said yesterday that the company wouldn't comment on Wells's projection.
Tupi and Friends
The $240 billion estimate assumes there are four to seven similar prospects nearby and includes costs to drill wells, lay pipelines and build production platforms over a period of about 20 years, Wells said.
Tupi alone could cost $100 billion, said Wells, part of a Neftex team doing a six-year study to map all of the world's petroleum basins.
Cambridge Energy Research Associates, the Cambridge, Massachusetts-based consulting firm headed by Daniel Yergin, said the Tupi-area fields will cost $200 billion to $240 billion. Costs are rising as producers compete for labor and equipment with oil prices above $120 a barrel. Deepwater drilling rigs are renting for more than $600,000 a day in some cases.
The Brazil fields may hold as much as 50 billion barrels of crude, Wells said. That's more than the reserves of Libya.
Petrobras preferred shares rose 0.8 percent to 45.62 reais in Sao Paulo trading. The stock has gained 30 percent since Nov. 8, when the company announced the size of the Tupi find. Exxon Mobil Corp.'s shares were little changed in the same period.
Petrobras's market cap of about $269 billion makes it the world's seventh-largest company by market value, according to data compiled by Bloomberg.
Rigs Ordered
Petrobras, as Rio de Janeiro-based Petroleo Brasileiro is known, already has leased about 80 percent of the world's deepest-drilling offshore rigs and plans to hire 14,000 engineers, geologists and drillers within the next three years, Gabrielli said.
The company announced plans last month to place orders with shipbuilders for 40 new drilling rigs and production platforms that will cost about $30 billion.
``Petrobras will probably face stiff challenges in this endeavor, as there are significant hurdles to overcome in terms of acquiring basic materials, people and rig equipment,'' said Stephen Ellis, an analyst at Morningstar Inc. in Chicago.
Petrobras will revise its $22.5 billion-a-year capital budget because it was drafted before engineers realized the size of Tupi's recoverable reserves, which may be equivalent to 8 billion barrels of oil, Gabrielli said. At $240 billion, the price tag would be more than the annual economic output of Thailand, Ireland and Malaysia.
20% Gas
The Brazilian discoveries contain about twice as much natural gas in each barrel of crude as reservoirs in the Gulf of Mexico and West Africa, increasing the complexity and expense of the projects, Wells said.
Tupi is about 80 percent crude and 20 percent gas, said Wells, a University of Exeter-trained geologist. For each barrel of oil, there's 700 to 1,000 cubic feet of gas.
``Gas is an important cost consideration because they have to decide whether to reinject it back into the reservoir or construct a rather large pipeline to take it to another destination where it can be used,'' said Candida Scott, a senior director at Cambridge Energy Research Associates.
The high wax content of Tupi's crude and the presence of carbon dioxide, which can damage pipes, also may raise costs, Wells said.
BG Group
Reading, U.K.-based BG Group Plc, which owns 25 percent stakes in Tupi and an offshore field known as Parati, and 30 percent of Carioca, hasn't provided cost projections. Carioca, which neighbors Tupi, may hold 33 billion barrels of crude, a Brazilian oil regulator said in April.
``It's really simply too early to make an estimate of costs,'' BG spokeswoman Jo Thethi said.
Irving, Texas-based Exxon Mobil plans to begin drilling its first exploratory well off Brazil's coast in the third quarter.
``It's a very large area, very difficult to image and it's going to cost a lot of money to develop,'' Chief Executive Officer Rex Tillerson told reporters after the company's May 28 shareholders meeting in Dallas.
June 5 (Bloomberg) -- Democratic presidential nominee Barack Obama will seek out voters in small groups to discuss the economy as he tries to address resistance to his candidacy in geographic areas where Democrats don't usually win, two campaign advisers said.
``That's a big part of what you are going to see him do over the course of the next five months,'' Tom Daschle, a former South Dakota senator, said in an interview yesterday.
``You will see a different balance of talking and listening,'' said another top aide, former Fannie Mae Chief Executive Officer James Johnson. The two advisers, who made the comments during a lunch at Bloomberg News in Washington, both said Obama is in good shape for the general election after clinching the nomination this week. Neither would comment on his vice-presidential selection.
Johnson, 64, is part of a three-person team with Caroline Kennedy and former Deputy U.S. Attorney General Eric Holder who were tapped yesterday to help vet prospective running mates for Obama, an Illinois senator.
On June 3, Obama, 46, passed the threshold of 2,118 delegates needed for the nomination and now must unite a party in flux after the longest, most contested primary season in 36 years. The campaign of his Democratic rival, Senator Hillary Clinton of New York, announced yesterday that she would end her bid and endorse Obama on June 7. She has told lawmakers that she is open to a vice-presidential nomination.
Vice-Presidential Push
One of her most prominent black supporters, RLJ Cos. Chairman Robert L. Johnson, sent a letter to House Majority Whip James Clyburn yesterday, calling on the South Carolina lawmaker to ``encourage the Congressional Black Caucus to urge'' Obama to select Clinton for the sake of party unity. He later told the Washington Post that Clinton gave him permission to make the request.
Another supporter, Lanny Davis, special counsel under President Bill Clinton, made a similar appeal.
Obama and Clinton, 60, spoke briefly by phone on June 3 and plan to meet in coming days, Obama spokesman Robert Gibbs said. At a meeting in Washington yesterday of the American Israel Public Affairs Committee, the nation's largest pro-Israel lobby, Clinton reached out to Obama, telling the crowd that he ``will be a good friend to Israel.''
Popular Vote
On June 3, Clinton repeated her claim that she won the popular vote. The only way that statement is accurate, however, is if the tally includes votes from the Jan. 15 primary in Michigan, a state where Obama wasn't on the ballot, neither candidate campaigned, and that Clinton had earlier dismissed as invalid.
Nonetheless, Obama has work to do in winning over blue- collar workers, Latinos, older women and other groups he struggled to attract during the primaries and that he will need to beat the presumptive Republican nominee, Arizona Senator John McCain, in November.
He will campaign today in Bristol, Virginia, in one of the most Republican-leaning parts of the state.
``We are going to be competing in states you haven't seen Democrats compete in for a long period of time,'' said Daschle, 60, listing North Dakota, Montana, Georgia and North Carolina.
Focus Group
Democratic strategist and pollster Peter Hart, who is unaligned, conducted a focus group last month showing that independent voters in Virginia knew almost nothing about Obama except his ties to his former pastor, Jeremiah Wright, who stirred a national controversy with remarks saying the U.S. government was partly responsible for the Sept. 11 attacks. Obama has condemned the comments and said last week that he was leaving the church.
Johnson said Obama planned to shift his campaign to address the findings of Hart's study.
``Over the next month, you will see a style of campaigning and a scheduling-choice matrix about what he's doing and where's he doing it and how he's doing it which is extremely responsive to the substance of what came out of Peter's work,'' he said.
Daschle said the candidate is ``very cognizant about the need to connect with independent and moderate swing voters.''
Obama aides said he already is having more one-on-one encounters with voters, including meetings in people's homes.
Housing Crisis
In Las Vegas last month, he focused on the housing foreclosure crisis, sitting around the kitchen table with a Latino family in danger of losing their home because they can't meet their mortgage payments.
Such events will become more common as Obama swings into general-election mode, according to his advisers.
Harold Ford Jr., writing in the June 2 issue of Newsweek, urged Obama to campaign aggressively in largely blue-collar, ``red'' states such as West Virginia -- which Clinton won -- and show voters that he's not elitist.
Daschle said Obama may have an advantage in courting rural voters because McCain has opposed legislation that contains subsidies for farmers.
``McCain and rural America don't really have much chemistry,'' Daschle said. ``That puts some of these states in play.''
Meanwhile, the Obama campaign is privately making clear that the process of picking a running mate wouldn't be short- circuited or rushed by those pushing him to chose Clinton.
June 5 (Bloomberg) -- New York Senator Hillary Clinton said she will end a race that brought her closer than any woman in history to the U.S. presidency and in two days announce her endorsement of Illinois Senator Barack Obama.
``I have said throughout the campaign that I would strongly support Senator Obama if he were the Democratic Party's nominee, and I intend to deliver on that promise,'' Clinton, 60, said in an e-mail to supporters early this morning.
The announcement came two days after Obama, 46, clinched the nomination by amassing the required number of delegates to the Democratic National Convention in August. Clinton said she will help ``rally the party'' behind Obama in his campaign against presumptive Republican nominee John McCain.
``The stakes are too high and the task before us too important to do otherwise,'' Clinton said.
Obama was asked about Clinton's withdrawal while attending a $28,500-a-plate fundraiser in New York last night.
``Truth is, I haven't had time to think about it,'' he said outside the event at 820 Park Avenue in Manhattan. ``This weekend, I'm going home, talk it over with Michelle and we're going on a date,'' he said, referring to his wife.
`Interfamily Squabble'
Inside the event, held at the apartment of Jane Hartley and Ralph Schlosstein, co-founder of the asset manager BlackRock Inc., Obama told about 100 guests that ``now that the interfamily squabble is done,'' Democrats could ``focus on what needs to be done in November.''
Obama overcame the many advantages Clinton had when she entered the race in January 2007. She had one of the best-known names in Democratic politics because of the popularity of her husband, former President Bill Clinton, as well as a deep well of fundraisers and supporters throughout the country.
Obama racked up victories in caucus states by energizing hundreds of volunteer activists. Clinton hardly contested many of the caucus states and as a result fell well behind in the delegate count.
Even so, Clinton kept coming back, winning primaries in Texas, Ohio, Pennsylvania and West Virginia, among others. She built a strong base of support among blue-collar workers, women and older voters that she argued would be needed to take on McCain, 71, an Arizona senator.
Vice President?
Clinton's strengths in parts of the Democratic electorate have led many supporters to push for a joint ticket. Robert Johnson, the founder of Black Entertainment Television and a longtime Clinton backer, this week sent a letter to House Majority Whip James Clyburn asking him to urge the Congressional Black Caucus to push Obama to pick Clinton as a running mate.
``Why take a risk?'' Johnson said in an interview with Bloomberg Television today. ``Senator Clinton delivered voters that Senator Obama did not.''
Johnson said he has spoken with Clinton and said she ``definitely would like to be vice president if invited.''
Clinton has stayed away from speaking publicly about a potential spot on the ticket, though she has indicated to colleagues she would be interested. In recent weeks, she told reporters she was only focused on winning the nomination.
``This has been a long and hard-fought campaign, but as I have always said, my differences with Senator Obama are small compared to the differences we have with Senator McCain and the Republicans,'' Clinton said in the e-mail to supporters today.
The beginning of the end for Clinton's campaign came on May 6, when Clinton barely eked out a victory in Indiana and lost North Carolina to Obama by 14 percentage points, leaving her far behind in delegates with only a handful of primaries remaining.
As the voting wrapped up on June 3, Clinton had kind words for her adversary even as she put off a concession.
``It has been an honor to contest these primaries with him, just as it is an honor to call him my friend,'' she said.
By John Fraher
June 5 (Bloomberg) -- European Central Bank President Jean- Claude Trichet said officials may raise interest rates next month to combat the fastest inflation in 16 years, sparking a surge in the euro and pushing bond yields to the highest level since 2001.
``It's not excluded that, after having carefully examined the situation, that we could decide to move our rates by a small amount at our next meeting,'' said Trichet at a press conference in Frankfurt after the ECB left its benchmark rate at 4 percent. ``I don't say it's certain. I said it's possible.''
Trichet's remarks, coming two days after Federal Reserve Chairman Ben S. Bernanke stepped up his own inflation-fighting rhetoric, suggested central bankers are now more worried about spiraling prices than faltering economic growth. Euro-region inflation, which the ECB aims to keep below 2 percent, accelerated to 3.6 percent in May and Trichet said policy makers are watching it with ``heightened alertness.''
``This is the clearest signal we're going to get'' from the ECB, said Dario Perkins, an economist at ABN Amro Holding NV in London. ``It looks like an interest-rate hike is imminent. We're now looking for data to prevent a rate hike rather than for something that would allow them to raise rates.''
The euro, which was down about 0.5 percent before Trichet's comments, jumped almost two cents to $1.5544. The yield on the German two-year bond rose 28 basis points to 4.62 percent by 3:09 p.m. in London, the highest since May 2001. The Dow Jones Stoxx 600 Index had shed 0.4 percent to 315.89 as of 2:05 p.m. in London, reversing earlier gains of as much as 0.5 percent.
``I'm quite shocked,'' said Steven Bell, chief economist at hedge fund GLC Ltd. in London and a former U.K. Treasury official.
Inflation Threat
Policy makers ``noted that risks to price stability over the medium term have increased further,'' Trichet said.
Central banks have spent the past nine months combating a global credit squeeze that still threatens to push the U.S. economy into a recession. The Bank of England, which reduced borrowing costs three times since December, today kept its main rate at 5 percent for a second month.
The ECB abandoned a planned rate increase in the third quarter and the Fed has slashed its benchmark rate by 3.25 percentage points since September, taking it to 2 percent.
Now they're shifting their stance as demand from China and other emerging economies drive oil and food prices higher. Bernanke said June 3 that policy makers are ``attentive'' to the impact of the falling dollar on inflation expectations. Bank of England Governor Mervyn King on May 14 said policy makers' priority must be to get inflation back under control.
The ECB predicted prices would rise by about 3.4 percent this year and 2.4 percent in 2009. The previous estimates, published in March, were for 2.9 percent and 2.1 percent.
By Michael Patterson
June 5 (Bloomberg) -- U.S. stocks rose for the first time this week as May sales at Wal-Mart Stores Inc. and Costco Wholesale Corp. beat analysts' estimates and jobless claims fell, bolstering expectations consumer spending will boost profits.
Wal-Mart climbed to a four-year high, while Costco posted its biggest gain in three weeks. Lehman Brothers Holdings Inc., the Wall Street firm that lost more than 30 percent of its market value in the past month, advanced on a ``buy'' recommendation from Deutsche Bank AG. Verizon Communications Inc. rallied the most in five years after agreeing to buy Alltel Corp. for $28.1 billion to become the biggest U.S. mobile-phone company.
The Standard & Poor's 500 Index added 14.26, or 1 percent, to 1,391.46 at 10:24 a.m. in New York. The Dow Jones Industrial Average increased 116.51, or 0.9 percent, to 12,506.99. The Nasdaq Composite Index rose 30.91, or 1.2 percent, to 2,534.05. More than five stocks rose for each that fell on the New York Stock Exchange.
``We are having data that appears to be better than expectations,'' on the economy, Thomas Sowanick, who helps oversee about $10 billion as chief investment officer of Clearbrook Financial LLC in Princeton, New Jersey, said in an interview on Bloomberg Television. ``I think the second half of the year is going to be great for the financials.''
All 24 industry groups in the S&P 500 advanced, led by retailers, after the Labor Department said initial jobless claims decreased by 18,000 to 357,000 in the week that ended May 31, the lowest level in more than a month. The median projection of 39 economists in a Bloomberg News survey called for a rise in applications last week to 375,000.
Cyclicals Gain
The Morgan Stanley Cyclical Index, a gauge of companies that rely the most on economic expansion to boost profits, advanced 0.5 percent as 23 of its 30 companies gained. U.S. Steel Corp. led the group's gain after rival Nucor Corp. said it will earn more in the second quarter than it previously forecast.
Wal-Mart added $1.60, or 2.8 percent, to $59.28, its highest level since March 2004. Grocery and medicine discounts helped the company post a 3.9 percent gain in May sales. Wal-Mart had forecast sales at stores open more than a year would rise as much as 2 percent in the month. U.S. comparable-store sales may increase 2 percent to 4 percent in June, helped by tax rebates, the Bentonville, Arkansas-based retailer said today.
Costco Rallies
Costco said net sales for the four-week period ended June 1 increased to $5.77 billion. Same-store sales gained 7 percent in the U.S. and 15 percent at international locations. The 9 percent gain for the whole company beat the 7 percent average estimate of 16 analysts, based on figures provided by Retail Metrics LLC. The shares rose $2.07, or 2.9 percent, to $72.88.
The S&P 500 Consumer Discretionary Index advanced 0.7 percent today. Companies in the index posted first-quarter profits that topped analysts' estimates by the widest margin among 10 industries in the S&P 500, according to data compiled by Bloomberg. The group has climbed 9.4 percent since dropping to its lowest in more than three years on March 17
Lehman gained 83 cents to $32.23. The stock is poised to rise as it already reflects ``worst-case scenarios'' for the fourth-biggest U.S. securities firm, said Deutsche Bank analyst Mike Mayo. Lehman shares tumbled during the past month on speculation the company will seek outside funding as losses increase.
Sanford C. Bernstein & Co.'s Brad Hintz reiterated his ``market perform'' rating today on Lehman. While the company won't face ``a life-threatening funding run,'' investors should ``remain on the sidelines until the firm demonstrates a reduction in leverage and lowers its exposures to troubled asset classes,'' he wrote in a report.
Verizon Deal
Verizon added $2, or 5.4 percent, to $38.98 for the top gain in the Dow average. The mobile-phone company said it agreed to acquire Alltel from TPG Inc. and Goldman Sachs Group Inc. for $28.1 billion in cash and debt. The deal is worth 2.1 percent more than the $27.5 billion TPG Inc. and Goldman Sachs Group Inc. paid last year to take Alltel private. The acquisition includes about $5.9 billion in cash and $22.2 billion in debt.
Energy shares advanced as crude oil rose more than $1 a barrel on a decline in the U.S. currency. Exxon Mobil Corp., the biggest U.S. oil company, climbed 60 cents to $86.35. Chevron Corp., the second-largest, increased 85 cents to $96.89.
UAL Corp. added 56 cents to $9.70. Lehman analysts raised their recommendation to ``overweight'' from ``equal weight'' and Credit Suisse upgraded the stock to ``outperform'' from ``neutral.''
Northwest Airlines Corp. gained after Lehman Brothers lifted its recommendation on the shares to ``overweight'' from ``equal weight.'' The brokerage also raised its stance on the industry. Northwest shares added 63 cents to $7.64.
`Revisit the Airline Space'
``It is time for investors to revisit the airline space,'' New York-based analyst Gary Chase wrote in a note to clients today.
Continental Airlines Inc. added 60 cents to $15.10. The carrier said it will cut 3,000 jobs and shrink its fleet by 67 planes because of record fuel expenses.
Pfizer Inc., the world's biggest drugmaker, fell 25 cents to $18.55 after Goldman Sachs Group Inc. cut its recommendation on the stock to ``neutral'' from ``buy,'' saying the company faces growth challenges.
European shares fell after Jean-Claude Trichet, president of the region's central bank, said he may raise rates next month. Asian stocks retreated, led by banks and commodity producers.
Europe's Dow Jones Stoxx 600 Index dropped 0.5 percent after Trichet, president of the European Central Bank, said policy makers may raise interest rates as soon as July after increasing the inflation forecast for this year and next.
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