4 cheap newspaper stocks that could rebound

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Business Week | By James K. Glassman, Kiplinger's

To say the industry is struggling is an understatement. But revolutionary management could transform some of these discounted businesses into worthy investments.

Few sectors have performed worse over the past decade than daily newspapers, which were once lauded as can't-miss "franchise" investments -- local monopolies that could raise prices practically at will.

In 2004, for example, Gannett (GCI), the nation's largest newspaper chain, earned $1.3 billion, or nearly $5 per share, on revenues of $7.4 billion, and its stock reached $91. Its papers were money machines, with profit margins resembling those of software companies. Today, Gannett's revenues are down by one-third and its profits by two-thirds, and the stock trades at $30. Gannett's market capitalization is $6.7 billion, or about one-sixth that of Yahoo (YHOO).

Gannett's decline would be even steeper if it were a pure play on daily newspapers. In addition to 82 dailies, the company owns dozens of small-town weeklies, which have weathered the media storm much better than dailies; trade magazines with well-protected niches; 23 television stations, which remain nicely profitable; and most of CareerBuilder.com, a job-search website.

For daily newspapers, the Internet has so far proved to be an almost insurmountable challenge. Even counting sales from company websites, advertising revenue has plummeted, from $49 billion in 2006 to $22 billion in 2012.

The devastation is broad and deep. Can newspapers come back, the way railroads have? Or are they the buggy-whip manufacturers of our time?

After years of ignoring the threat of new technology, publishers are finally trying to engage it, but success has been limited. One big problem has been integrating newsprint and digital delivery. Readers are used to getting information free on the Web, and so far only the New York Times and the Wall Street Journal, which is more a trade publication than a conventional daily, have achieved significant gains in paid Internet subscriptions. After much trial and error, the Times now has 727,000 paying online subscribers. But that has not translated into improved advertising revenues, which dropped 2 percent in the third quarter from the same period a year earlier.

With solutions elusive, the industry's main response has been to rush for the exits. Last year, the New York Times Co. (NYT) sold the Boston Globe, the dominant paper in New England, for a mere $70 million to the principal owner of the Boston Red Sox, financier John Henry. The company had bought the Globe in 1993 for $1.3 billion. Around the same time, the Washington Post Co. sold its eponymous crown jewel to Jeff Bezos, founder of Amazon.com (AMZN), for a paltry $250 million. The move came after the paper recorded three straight years of losses and a drop in daily circulation from a peak of 832,000 in 1993 to just 480,000.

For investors, these changes are encouraging. Although no one has yet figured out how to earn robust profits with newspapers, someone almost certainly will. Smart people are concentrating on the problem, and in business, revolutions come from without -- from a Henry or a Bezos.

Or from John Georges, who bought the Baton Rouge Advocate and has started a New Orleans edition to take on the Times-Picayune, which went to three-times-a-week publication in late 2012. Or from Aaron Kushner, who acquired Freedom Communications, owner of the Orange County Register, among other papers, in 2012. He now says he will launch a new daily to compete with the dominant but struggling Los Angeles Times, part of the Tribune Co. chain, which emerged from bankruptcy reorganization in 2012.

What the business emphatically does not need is the complacency and arrogance that characterized newspapers in the second half of the last century. Not long ago, Warren Buffett touted the big-city news­paper as an "economic franchise" that can "regularly price its product or service aggressively and thereby . . . earn high rates of return on capital. ...Moreover, franchises can tolerate mismanagement. Inept managers may diminish a franchise's profitability, but they cannot inflict mortal damage."

The truth is that unimaginative managers -- not just competition from the likes of Craigslist, Facebook (FB) and CNN -- have inflicted near-mortal damage on newspapers. If newspapers ever were franchises, they aren't today.

The problem is that you can't invest with potential revolutionaries such as Georges and Bezos (who owns the Post personally, not through Amazon). And although Berkshire Hathaway (BRK.A), the company Buffett heads, bought 25 dailies from Media General (MEG), they account -- along with a handful of other dailies, such as the Buffalo Evening News -- for a minuscule proportion of Berkshire's revenues.

But you can buy shares in a few newspaper companies at depressed prices in hopes that revolutionaries may eventually take them over, either through buyouts or management changes.

The McClatchy Co. (MNI) owns some excellent brands. The Charlotte Observer, Miami Herald, Kansas City Star and Sacramento Bee are among its 30 dailies. The stock, which traded at $76 a share in 2005, is now $4. The balance sheet, quite frankly, stinks, and few analysts cover the company. But if an entrepreneur wants to get into the newspaper business, this is a way to do it cheaply. McClatchy generates annual revenues of $1.3 billion, but the stock's market cap is a mere $353 million. (Share prices are as of Feb. 10.)

Lee Enterprises (LEE) owns 50 dailies and 300 weeklies in the West and Midwest. Once among the most respected chains, its shares have dropped more than 90 percent since 2004, to $4. Revenues are declining, and profits are nonexistent. Lee is also heavily indebted and cheap, with a market cap of $212 million and a price-to-sales ratio of just 0.31 (compared with 1.2 for the New York Times Co.).

A.H. Belo (AHC), with a stock price of $8 and a market cap of $175 million, has been selling off its newspapers piecemeal (it just put the Providence Journal up for sale) but still owns the Dallas Morning News and a few others. But unlike McClatchy and Lee, Belo has no debt. (A separate TV company, Belo Corp., was recently sold to Gannett.)

For a different reason -- my faith in the genius of Rupert Murdoch -- I like News Corp. (NWS). The company last year split itself in two. One reason was the phone-hacking scandal that led to prosecutions of editors and the shuttering of the London-based News of the World. But the company was also trying to attract investors to the more profitable part of the business (TV and film) consolidated in a spinoff called 21st Century Fox (FOXA), one of my 10 stocks for 2014. The newspapers, including powerful brands such as the Wall Street Journal and the Times (U.K.), remained with News Corp. With its stock at $17, News Corp.'s market cap is one-seventh that of Fox, and it appears undervalued.

The New York Times may be the best newspaper in the world, but it still hasn't found a viable business model, and I worry about its hidebound family ownership. I would stay away from Gannett as well; its exposure to TV means the stock is not cheap enough for my taste.

The four newspaper stocks I recommend are all risky. The best approach is to buy them all and hang on for what will certainly be a wild ride. But if the revolutionaries prevail, it should be a profitable one.

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That Christmas gift could be taxable

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| By Eric Reed, MainStreet

If you luck out and receive more than $14,000 in gifts, you better let Uncle Sam know. Gifts from employers often need to be reported, too.

We all remember how Charles Dickens ended "A Christmas Carol," with a reformed Ebenezer Scrooge memorably showing up at Bob Cratchit's house to save Christmas. It was a heartwarming moment, but if Dickens wrote today, the story would need a different ending: Scrooge's audit for failing to reflect the gifts on Cratchit's W-2 forms.

Yes, under the right circumstances Christmas presents count as taxable income. The holidays are still a wonderful time of the year, but 30 percent of that magic of the season might belong to Uncle Sam. The line where gifts become income, especially from an employer, can get confusing.

Especially for employers, a steady drip-drip of Christmas presents adds up. The IRS will neither notice nor care about an unreported $100 gift card, but if you hand out 100 of them per year for 10 years running, it adds up to 100,000 unreported dollars. Now you'll get the tax man's attention. For everyone who wants to avoid that, here are a few pointers.

Buckle up folks, this is about to get dry.

Good news first; unless you're shopping at the local Maserati dealership, don't worry about interpersonal Christmas presents. Anything counts as a gift for tax purposes, including property and the use of property, as long as it's given "while receiving nothing, or less than full value, in return." According to San Diego tax attorney Dean Sage, however, the IRS doesn't tax gifts up to the annual limit, $14,000 for 2013.

So the value of holiday presents freely given, and worth less than a combined $14,000, doesn't have to be reported. On the other hand, if Daddy Warbucks gives you a car, it belongs on next year's returns. The good news is, they belong on his returns, because the donor files gift taxes. This is aggregate, so if you give $200 worth of presents, plus another $13,900 in Sizzler gift cards to one lucky cousin, it's time to file. Anything else, don't worry about it.

Holiday gifts from an employer raise more complicated issues. People want to be able to give presents to their employees as a gesture of goodwill, but without oversight, anyone could just call their income a "gift" and avoid all taxation. According to Sage, to prevent this, the IRS generally treats any payment or transfer of property from an employer to an employee as taxable income to the employee.

This particularly counts for holiday bonuses and gift cards. "Cash gifts are almost always taxable to the employee," Sage said. "This includes gift cards and other forms of gifts that can be easily converted to cash. Employers must increase employees' W-2 earnings and employees must recognize the gift as taxable income for any cash gift that is not a reimbursement for a legitimate business expense."

The IRS considers anything cash or cash-like as part of the employee's income, regardless of when an employer gives it or why, even if it comes at the holiday party. A good rule of thumb is to obey the but-for rule. If you would not have gotten the gift but for your employment (for example, an Amazon gift card handed out to all staff) it counts as income.

Unfortunately, this also counts for in-kind gifts (anything that's not cash or cash-like). If you receive actual an actual present from your employer, its value counts as income. So, for example, some lucky reader whose boss hands out iPads for the holidays has made $800 extra for this year's W-2. The same for anyone who wins that iPad at a company raffle.

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Shutdown could bruise housing recovery

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| By Morgan Brennan, Forbes

One of the biggest questions regarding the shutdown and how it will affect housing has revolved around the mortgage market, specifically prospective buyers' access to new home loans.

The government shutdown is here. Whether it's not being able to get a new Social Security card or visit a national park, Americans will immediately feel the effects. But there's one bright spot of the economy that stands to be affected as well: housing.

One of the biggest questions regarding the shutdown and how it will affect housing has revolved around the mortgage market, specifically prospective buyers' access to new home loans. After all, more than 90% of all loan activity is underwritten, insured, or owned by the government and its affiliated entities.

Initially at least, the mortgage market is likely to be only minimally impacted. New loans will continue to push through most government agency pipelines. What will change is how long the process takes, as many agencies expect to experience delays.

Mortgages purchased and securitized by Fannie Mae Fannie Mae and Freddie Mac Freddie Mac will be unaffected because their operations are paid for by fees charged to lenders. And the Department of Veterans Affairs will continue to guarantee mortgages for Americans that have served in the military since these loans are funded by user fees as well.

But if the government shutdown of 1995-1996 is any indicator, the process will take longer than usual. "Loan Guaranty certificates of eligibility and certificates of reasonable value were delayed," the VA warned in its September 25th contingency plan.

Where there has been mounting concern is the Federal Housing Administration, which currently endorses about 15% of the entire single-family mortgage market. Several media outlets recently reported that the FHA would be unable to endorse any single-family loans and that no staff would be available underwrite and approve new loans.

That prospect would be somewhat worrisome -- if it were actually true. The FHA's Office of Single Family Housing will indeed remain open for business, albeit with a smaller staff. "FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans," the report now states. In other words, other lenders' loans will continue to be insured and some in-house lending will continue to take place at a reduced rate.

The reason for that mix-up: the initial draft of the U.S. Department of Housing and Urban Development's contingency plan mistakenly stated that single-family loan operations would cease. The report was amended over the weekend.

The FHA's single-family loan operations are funded through multi-year appropriations, meaning their budget is not tied to the government's standoff over funding for the new fiscal year that starts in October. On the other hand, what will be more affected is the agency's Multifamily Housing Office, which is funded through yearly appropriations.

"Because we are able to endorse loans, we don't expect the impact on the housing market to be significant, as long as the shutdown is brief," continues the HUD report. "If the shutdown lasts and our commitment authority runs out, we do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market."

One government lender that will indeed suspend its home loan activity, however, is the Department of Agriculture. The USDA says that no new housing loans or guarantees will be issued through its Rural Development programs in a shutdown. The department also warns that such a scenario could cause "a setback in construction start-up," and if the shutdown lasts for an extended period, "a substantial reduction in housing available in rural areas relative to population."

"The government doesn't generally approve loans, they basically just insure them," says Don Frommeyer, president of the National Association of Mortgage Brokers and a vice president at Amtrust Mortgage Funding. "For the most part you aren't going to see much of a hit in the mortgage market unless it goes for a long period of time."

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13 ways a government shutdown could hurt you

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| By Maureen Mackey, The Fiscal Times

If a shutdown does occur this time around, it would inconvenience the public in ways large and small. Consider the impacts of the shutdown in 1995.

As the possibility of a government shutdown moves into sharper focus with each passing hour, all eyes are on the ways it could hurt everyday Americans.

Back in 1995, when funding for the government expired, non-essential services came to a halt. National parks and museums were closed; passport processing was delayed. Even the National Weather Service cut back on its regular reports.

But in coordination with the Office of Management and Budget, the president has broad discretion over what departments and agencies should be kept open, making it difficult to quantify exactly how much it would cost the government -- and how it would affect the public -- if a shutdown were to happen.

"Although a government shutdown would be disruptive, the impact will depend on the duration and the degree, on how tight or loose the exceptions are," Patrick O'Keefe, director of economic research at J. H. Cohn and a former Deputy Assistant Secretary in the U.S. Department of Labor, said in 2011, when another shutdown loomed. "But the bigger impact is its demonstration of political impasse regarding the country's unsustainable fiscal posture... The financial market implications of such an impasse should not be underestimated."

"I don't think there is a full appreciation of the impact of a shutdown on the bottom line of government," said Max Stier, president and CEO at the Partnership for Public Service, a nonpartisan think tank. "Most agencies are ill prepared for the disruption."

A significant majority of Washington budget and policy experts surveyed by The Fiscal Times in 2011 said they expected a government shutdown of at least a few days after the latest stop-gap spending measure expires. (A shutdown was narrowly avoided that year.)

If a shutdown does occur this time around, it would inconvenience the public in ways large and small. Consider some of the impacts of the three-week shutdown back in 1995-1996 -- all of which could be repeated this time around:

1. New patients were no longer accepted into clinical research at the National Institutes of Health. In addition, NIH disease hotlines and CDC disease surveillance were stopped.

2. Work on more than 3,500 bankruptcy cases in the federal court system was suspended.

3. Hundreds of thousands of "non-essential" federal workers were furloughed for three weeks, from mid-December 1995 to early January of 1996. (Some of those workers eventually received back pay for their missed days.)

4. Of $18 billion in Washington, D.C., area federal contracts, $3.7 billion (over 20%) were affected adversely by the funding lapse.

5. Some 368 National Park Service sites closed -- a loss of 7 million visitors. The National Park Service administers 84.4 million acres of federal land in 49 states and other federal territories.

6. National museums and monuments closed, including the Smithsonian and other government buildings, with an estimated loss of about 2 million visitors.

7. Over 600 toxic waste dump sites went untended and uncleaned during the last shutdown. Some 2,400 Superfund employees did not work.

8. The recruiting and testing of new law enforcement officials -- including 400 Border Patrol agents -- were suspended.

9. During the last shutdown, 20,000 to 30,000 applications for visas by foreigners went unprocessed each day, along with 200,000 applications for U.S. passports. Airlines also suffered: Many prospective travelers were unable to fly.

10. The Department of Veterans Affairs had to cut many of its services, including health care, welfare, travel, and finance; the department could not process compensation claims.

11. The shutdown in 1995 meant a delay in processing alcohol, tobacco, firearms, and explosives applications by the Bureau of Alcohol, Tobacco, and Firearms (ATF).

12. The National Weather Service did not produce its regular reports during the 1995-1996 shutdown.

13. New Social Security claims were not processed because the agency furloughed over 61,000 employees. As the shutdown continued, the agency regrouped, recalling workers to start processing new claims again.

It's clear that government shutdowns can be nasty business: They've required the cessation or the reduction of government activities and affected all sectors of the economy, according to a report by the Congressional Research Service.

Former House Speaker Newt Gingrich was one of the architects of the 1995 government shutdown which lasted 21 days. It was settled when President Clinton submitted a budget that proposed to eliminate the federal deficit in seven years, according to Time magazine.

The issues that were presented then and ultimately triggered the 1995 shutdown were the same as in 2011 and eerily similar to 2013 as well. June O'Neill, who was CBO director in 1995, says that Congress couldn't agree on a budget resolution for the coming year and was haggling over whether to raise the debt ceiling in 2011. The economy was also recovering from the 1991 recession and growth was sluggish, which is also similar to today. "There was a great deal of posturing then as there is now," O'Neill recalled in 2011. "The world would come to an end if the debt ceiling wasn't raised."

But in 1995, it was more about Gingrich proving he was just as powerful as the Clinton administration, she said.

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Could you pass a driver's test?

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| By Mark Vallet, CarInsurance.com

Have you forgotten all those road rules you learned back when you got your first driver's license? It may be time for a refresher course.

The next time you're stopped in traffic, look to your right. And then to your left.

At least one of you could not pass a written driver's test.

Nearly half of the 500 drivers who took a quiz of 20 driver's test questions failed to get a passing score of 80%, according to results released last March by CarInsurance.com.

The questions, drawn from state practice tests, covered basics such as signs and rights of way. The questions missed most often involved when to stop for school buses and pedestrians. (You can take the Driver's License Quiz for yourself to see how you compare.)

Women averaged a score of 78%, compared with 71% for men. And experience seems to help: Drivers under age 40 scored an average of 67% correct, and those over 40 scored an average of 79%.

Only three drivers had perfect scores: two women and one man.

The driver's license is almost as old as the car itself.

It is widely accepted that Karl Benz, of Mercedes-Benz fame and the man credited with inventing the modern automobile, was issued the first driver's license in 1888 in Mannheim, Germany.

In the United States, the first driver's licenses were simple identification cards. A license could be had for 25 cents, and in many states drivers could send away for one by mail. There were no required skills or knowledge tests. (Here's a look at Henry Ford's driver's license, circa 1919.)

According to the Federal Highway Administration, Missouri and Massachusetts issued the first driver's licenses in 1903 but didn't start testing drivers' skills until years later. Massachusetts waited until 1920 and Missouri started testing in 1952.

South Dakota was the last holdout, waiting until 1954 to require drivers to have licenses. It introduced testing in 1959.

In the last decade, graduated driver licensing systems have changed the process of getting a license for every teen driver in the country, but the test itself has basically stayed the same.

A 2011 National Highway Traffic Safety Administration (NHTSA) report declares the overall testing process "weak," especially compared with that in other nations.

On average, the knowledge portion of a state test is 25 questions long and takes about 25 minutes to complete. Minimum passing requirements range from 70% to 85% correct with the average being 79%.

Despite the relatively simple tests, U.S. failure rates are eye-opening. (Only 13 states were able to provide actual numbers to the NHTSA, while the rest were estimated by DMV officials.)

Missouri recorded a whopping 61.4% failure rate on the written portion of its test. Mississippi was a close second at an even 60%, and Florida rounded out the top three with a failure rate of 58.1%. Most states allow a driver who fails the written test to retake it after a one-day wait; the wait to retake a failed road test could be anywhere from one day to 30 days.

The NHTSA report found that driving tests are quite similar in most states, but a few were deemed easier or harder than the norm, based on failure rates for written and road tests and a survey of drivers in each state who had just taken the examinations. If you are looking for an easier test, head to Arkansas, Iowa, Kansas or West Virginia. If you like a challenge, Connecticut, Minnesota, Rhode Island and Tennessee are where you want to be.

Experts point to poor preparation and overconfidence as the culprits behind failure.

Rajendra Hariprashad, owner of Ena's Driving School in New York City, says poor study habits will often lead to a failed written test. He advises reading the state's road rules manual cover to cover and taking numerous practice tests. (Check your state's DMV.) Take time to learn the material -- and wait until you are prepared before scheduling a test.

If you've left the DMV disappointed, consider that:

Cha Sa-soon, 69, took South Korea's written driving test 960 times before she finally passed and was given her license. She holds the world record for most attempts at a driving test.You've got your whole life to pass. Edythe Kirchmaier recently passed her driving test, making her the oldest driver in California at age 105.And you can be a success without a license. NASCAR star Kyle Busch competed while his license was suspended for doing 128 mph in a 45 mph zone.
Once you've got that laminated piece of plastic in your wallet, you're in. A failed driving test will not show up on your driving record, so your car insurance company has no way of knowing that you were clueless about parallel parking.

Failure itself could become a thing of the past because future drivers may never take a DMV test. Many experts believe that autonomous cars (driverless vehicles) will rule the roads in the future. Do you need a driver's license when the car drives itself?

Futurist Thomas Frey, executive director at the DaVinci Institute, predicts that while the driver's license will survive in a different form, written and practical driving tests will disappear.

"Today's driver's license will morph into a national ID, which you will use to access driverless vehicles, and other services," Frey says. "You may have to swipe it to prove your identity to the robot delivery driver before they will release your package; it could be used for medical identification and to pay for items."

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5 Bubble that could pop soon

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| By Jeff Reeves, MarketWatch

Emerging markets are just a few of the investment areas that look excessive now Bitcoins and junk bonds. You can not explode, but investors should be cautious.

We are as the Federal Reserve tightened cools politics and emerging markets demand, many unsustainable growth models look not up to expectations from Wall Street and at the seams slowly apart.

Or do you prefer more panic parlance of the blogosphere... some bubbles are getting too crazy.

Not all of these bubbles bursts of course quick or dramatic manner. Sometimes bubbles just vent, steady or slowly, until the air in the inner path, and only the remains of food.

But regardless of the pace is the threat posed by these five bubbles quite clear - and investors should prepare accordingly.

1 Emerging markets

Thailand, Indonesia and the Philippines saw large contractions in their stock markets in June. Was the story that investors were withdrawing money back in the United States to deploy, but now has turned the story into a history of China's slow-down. As evidenced by recent weak manufacturing data, China is growth potential to see serious challenges, and hurt in these markets by proxy.

In other areas you have once elastic regions such as Brazil and Turkey identity crisis with political unrest, rattles stocks in these areas also.

The results have been really ugly. Consider the iShares MSCI Brazil Index ETF (EWZ)-a massive fund with $5.6 billion of assets and the top operated, the mega Caps Petrobras (PBR) and Vale (VALE) included. This ETF Brazil has lost about 25% in just two months.

It's tempting to excuses to make short-term political movements or the long-term potential of the emerging middle class in these markets. But messed up shows that emerging economies in all corners of the world are facing serious challenges.

(2) Junk bonds

Junk bonds had added paired a phenomenal run in recent years as low-interest rate environment, with a hunger for yield among investors, insatiable demand.

But now the winds change. Junk-bond yields a low hit by less than 5% in may, there was just nowhere to go but up, thanks mainly to talk about tighter regulation at the Federal Reserve left. Junk-e-bond yields have already a 2013 high over 6.3% short high-yield bond investment as the collected order with related SPDR Barclays Capital high yield Bond ETF (JNK) waiver to over 5%... even if the market has gathered since mid-May. Subsequent increases in the income move prices further down.

And large Nations and companies dependent on the emerging markets and the afore-mentioned under anderem-- easy money have to find out, a way to the borrow with much higher rates and interest payments. That could mess with the markets in many places across the Board.

Last but not least, if investors simply are looking for a modest return of 5% but starting, instruments such as investment-grade corporate bonds in an environment with higher interest rates there well much safer, big sucking sound are all the air move deflating from the junk bond bubble like people their money for other investments, to deliver the yield with minimal risk.

3Rd flip House

I am still convinced, roughly speaking, housing is in a sustainable recovery. But I can't help but observe the return of the House reflect seminars, commandments, wars, and the idea that a home is an investment that can make a quick profit with minimal risk.

Keep the House Journal reflect in California on a level by 2005, according to a recent report in the Wall Street. Not good.

Thanks to the very tight supply and seller have the momentum weak demand-for the time being heavily favored. This has allowed speculators to infiltrate and start treating real estate as a short-term investment again.

Real estate in the United States are very different, and each area has its own challenges and opportunities. But it is increasingly clear that from the housing downturn in the most affected areas could be ground zero for an other bubble throwing clubs should the towel. View that more than 50% of the real estate transactions in Las Vegas, including the all bar purchases, and an amazing 1 in 10 sales to foreign investors.

Regions, which have stabilized organic demand and economy thanks to a slow improvement is one thing. But House Club in speculative markets better watch out.

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JPMorgan's trading loss could hit $9 billion — report

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Yuri Gripas / REUTERS

JPMorgan Chase's CEO Jamie Dimon testifies before lawmakers.

The loss from JP Morgan’s botched trade could total as much as $9 billion, far higher than the original estimates of the shortfall, according to a report in The New York Times.

JP Morgan’s CEO Jamie Dimon estimated in May that the bank’s losses from the trade, which came as a result of a bad bet on credit derivatives, would be $2 billion, and might double within the next few quarters.

The Times’ story cites an internal report that JPMorgan made in April that showed the losses could reach $8 billion to $9 billion, in a worst-case scenario. But the newspaper also noted that because JPMorgan has already been unwinding its positions, some expect that the losses will not be more than $6 billion to $7 billion.

The newspaper also said the bank’s exit from its money-losing trade is happening faster than many expected. JP Morgan had previously said it hoped to clear its position by early next year, the Times said.

Dimon has appeared before lawmakers on Capitol Hill in recent weeks to explain the origin of the multibillion-dollar trading loss.

Lawmakers peppered him with questions about regulation and risky practices at the bank, but did not press him to give an update on the estimated trading loss.

Reuters contributed to this report.

CNBC's Kate Kelly reports that JPMorgan's trading loss is likely to be less than $9 billion.

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Facebook investors could recoup losses in court

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CNBC's Jane Wells talks to people in Silicon Valley to get their take on Facebook's IPO and its impact on future IPOs.

Retail investors with dreams of instant wealth who bought Facebook shares on opening day may have been disappointed, but they could still wind up with a windfall if lawyers seeking class-action status for lawsuits against the company and its IPO underwriters get their way.

A pair of lawsuits filed in New York and California allege that retail investors were harmed when material information about the company's finances weren't disclosed to them.

Experts in securities law have said whether or not plaintiffs will be able to recoup their trading floor losses in a courtroom will depend on the fine print of securities regulations. What Facebook and its underwriters, including primary underwriter Morgan Stanley, which declined to comment on the suits, knew, and when and to whom they provided information, are the issues on which both lawyers and regulators are focusing.

"It sounds like this is where that case is going to be one of the battlefields," said David Buckner, a partner at law firm Grossman Roth P.A., whose expertise is in class action suits and securities litigation. "Who has an obligation to speak to who — that's something that will end up being important."

Following a Congressional hearing on Tuesday, Securities and Exchange Commission chair Mary Schapiro said, "I think there is a lot of reason to have confidence in our markets and in the integrity of how they operate, but there are issues that we need to look at specifically with respect to Facebook."

Facebook did warn would-be investors of potential challenges to its revenue stream triggered by an increase in mobile users and Facebook's still-poor ability to monetize its mobile base. In an uncharacteristic amendment to its S.E.C. filing just over a week before its IPO, the company warned that these factors had the ability to hurt profits.

Investors who feel burned and are pursuing legal action contend that the company's cautionary statements weren't specific enough, that Facebook knew that this issue was having more of a negative impact than it let on in the filing, and it tipped its hand only to its underwriters and a handful of analysts.

"The real issue is how adequate a warning was the May 9 registration statement language," said Merritt B. Fox, law professor at Columbia University. "Without knowing the facts, it's hard to know if what the analysts were doing was simply interpreting information that was in the May 9 statement or whether they had additional information to suggest that things were worse."

The Wall Street Journal cited unnamed sources saying Facebook executives contacted nearly two dozen analysts following that amendment and let them ask questions about it. The lawsuits assert that this communication amounted to material information which Facebook, which has said it will defend itself "vigorously," was legally obligated to share with all investors.

"It wasn't the prospect" of future losses, said David Rosenfeld, an attorney at Robbins Geller Rudman & Dowd, a law firm representing plaintiffs in a suit filed in U.S. District Court in Manhattan on Wednesday. "They already knew… and they told their underwriters," he said.

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Barron's: Facebook shares could fall below IPO price

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Shares of, social media company Facebook Inc. could fall below the IPO price of $38, Barron's wrote in its may issue.

Facebook saw their stocks rise a little 0.6 per cent to $38.23 on Friday in the first day of trade.

The camp remained on the $38 IPO price, supported in the market by offering underwriters. But Barron said the "big question" this week will be whether they continue to do.

Its shares still look expensive as compared with rivals such as Google Inc, and all the more so given Facebook's challenges in the creation of revenue from mobile users, wrote that financial per week.

Facebook shares face also the view to pressure from heavy selling shares by the end of 2012, when the early and inward investors to get rid of the shares before a possible increase in the capital gains tax, according to Barron's.

Below, Andrew Rachleff Wealthfront President & CEO, and David Callahan demos, discuss Facebook's effects on the economy on CNBC.

Copyright 2011 Thomson Reuters.

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Mr. IPO: Facebook could be a dangerous bet

6:00 AM could, dangerous, Facebook No Comments

Jay Ritter, University of Florida professor, discusses whether Facebook's IPO is overpriced and what kind of returns investors could expect from the upcoming stock.

When a world-renowned expert on initial public offerings has reservations about the upcoming Facebook IPO, it’s worth sitting up and taking notice.

Jay Ritter, Cordell Professor of Finance at the College of Business Administration at the University of Florida, appeared on CNBC Thursday morning to discuss his views on Friday’s much-anticipated stock offering from the social network.

“My concern with Facebook is that at the valuation that public market investors are going to be buying in at there’s very little upside potential left,” he told CNBC.

But, he added, it doesn’t necessarily follow that Facebook is overvalued.

“The bullish case for Facebook is, as Google has demonstrated, targeted search can be an extremely profitable business, and Facebook has that franchise with social networks and it’s a very defensible business model,” Ritter said.

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Gas prices could head lower for summer

12:10 PM could, lower, prices, summer No Comments

Gene J. Puskar / AP

Gas prices are posted at a gas station in Breezewood, Pa., Gas prices may peak in May and then ease during the summer months.

By John W. Schoen, Senior Producer

The recent run-up in oil and gasoline prices may have run its course - for now.

Thanks to easing demand from a slowing global economy and increased production from Saudi Arabia, the oil market is coming off a two-year cycle of tightening supply, according to the International Energy Agency. That's helped snap a 13 percent surge in oil prices since the start of the year.

Much of that run-up was fueled by fears of a cutoff in supplies from Iran, which is the target of U.S. and European sanctions aimed at curbing its nuclear weapons program. Those sanctions have been applied in stages since the start of the year.

But traders may have overreacted to the potential impact of those sanctions, according to Julian Jessop, chief global economist at Capital Economics.

"We expect any remaining Iran premium in prices to evaporate soon," he said. "Even if sanctions continue to tighten there is ample evidence that the countries most affected have already been able to find alternative supplies, while Iran is actually having to cut prices in order to sell its oil elsewhere."

There is also a good chance Iran will make the concessions needed to end the standoff, said Jessop.

In the meantime, Saudi Arabian oil officials are striving to make up any supply shortfall. On Friday, oil minister Ali al-Naimi said the kingdom is working with other OPEC members to boost output and keep prices from rising.

"We are seeing a prolonged period of high oil prices," Naimi said in a statement during a visit to Seoul. "We are not happy about it. (Saudi Arabia) is determined to see a lower price and is working towards that goal."

American consumers aren't happy about the run-up in gasoline prices either. Pump prices have shot up 70 cents a gallon on average since bottoming in December. They hit $4 a gallon this month. A 1.7 percent increase in March alone was the biggest driver of a 2.7 percent bump in the consumer price index, compared to last March.

But those higher gasoline prices have been offset by warmer-than-normal weather, which has helped household save on the heating bills. Falling natural gas prices have also helped cut the price of electricity, further easing the strain on household budgets.

Pump prices also look like they've peaked for the season, much as they did last May before falling through the summer months. In its latest forecast, issued this week, the Energy Information Administration said it expects the retail prices of a gallon of regular gasoline to peak in May at $4.01 and then ease to an average of $3.95 a gallon through the summer.

Gasoline prices could fall even further if crude prices continue to ease. Analysts say the outlook for crude prices depends heavily on how much further the global economy slows this year.

The IEA is predicting global oil demand will reach nearly 90 million barrels per day this year, just 800,000 barrels per day more than 2011, based on its prediction that global gross domestic product will rise by 3.3. percent this year.

Some private economist think that growth forecast may be too optimistic, given the ongoing economic slowdown in Europe and recent signs that China's rapid growth continues to slow.

U.S. gasoline demand is also easing as the domestic auto industry enjoys a rebound driven by brisk sales of new models offering higher fuel efficiency. 

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Airlines could lose $8 billion from euro crisis

9:08 PM Airlines, billion, could, crisis No Comments

GENEVA — Airlines worldwide face over $8 billion in losses next year if Europe's politicians fail to get to grips with the region's debt crisis, the industry's leading trade group warned on Wednesday.

A collapse of efforts to shore up the euro and prevent a new shock to the global banking system would hit air transport across the globe and cripple the Asian profit machine which has led the industry's recovery since 2009, Geneva-based IATA said.

"The biggest risk facing airline profitability over the next year is the economic turmoil that would result from a failure of governments to resolve the eurozone sovereign debt crisis," said Tony Tyler, Director General of the International Air Transport Association.

"Such an outcome could lead to losses of over $8 billion, the largest since the 2008 financial crisis," he added.

Even in the best-case scenario, Europe's airlines face losses in 2012 and the gap between the industry's haves and have-nots is expected to widen.

Asian carriers are seen soaking up new demand and North American airlines should gain as capacity cuts allow them to raise prices, but European airlines will lose out -- especially in a worst case scenario for the euro.

IATA, which represents 240 of the best-known airlines carrying 84 percent of global traffic, cut its central forecast for 2012 industry profits to $3.5 billion from $4.9 billion.

Its 2011 profit outlook was unchanged at $6.9 billion.

Until now, aviation has been relatively optimistic about its prospects as Europe teeters on the edge of recession, with rising demand in Asia and capacity restraint in North America seen boosting profits and driving talk of a two-speed market.

Few industry leaders have been willing to contemplate a meltdown, with Airbus and Boeing cranking up production to record levels to meet demand for fuel-efficient jets given the continued strength of oil prices.

But IATA said it could not ignore growing economic risks.

"There remains a very significant risk that the sovereign debt crisis in the eurozone could spiral out of control, generating a banking crisis and more widespread economic weakness," it said in a new market forecast issued on Wednesday.

IATA's worst-case scenario draws on a risk assessment on the European debt crisis carried out by the Organization for Economic Co-operation and Development.

The exercise takes account of the possibility of a full-blown banking crisis marked by deep European recession, with the fall-out felt globally. IATA adopted the OECD's downside forecast that the global economy would grow by 0.8 percent next year.

"In this scenario, airlines would see growth in passenger demand grind to a halt and a 4.7 percent contraction in cargo markets," IATA said. Asian carriers would sink from a $3.3 billion profit in 2011 to a $1.1 billion loss.

Trade slowdown
Freight markets are already falling in a sign of declining business confidence and weakening global trade, though the passenger business of many airlines is performing better than expected. Freight traffic shrank 5 percent between May and October.

"International trade has pretty much ground to a halt and we are likely to see a slowdown in business and personal travel as a result," said IATA Chief Economist Brian Pearce.

The signs available to airlines, whose networks capture day-to-day signals about the economy and broadly track business and consumer confidence, already suggest Europe is unlikely to muddle through its debt problems without some type of recession.

"Even if government intervention averts a banking crisis it is unlikely that Europe will avoid a brief recession. Business and consumer confidence has already fallen too far," IATA said.

Tyler, who until recently headed Hong Kong-based airline Cathay Pacific, also expressed concerns about the availability of financing needed to help Airbus and Boeing maintain their high levels of production.

"I think there is more than a possibility that financing will be much more difficult next year than it has been hitherto and certainly more expensive," he told reporters.

"From my conversations with lessors, there is no doubt that it is tightening up and that is more likely to be the constraint in the immediate short-term," he said at IATA's annual briefing.

His comments appeared less positive than a forecast on Tuesday from leading manufacturer Boeing and recent bullish statements from European planemaker Airbus.

Boeing said it expected a 23 percent rise in global aircraft deliveries by value to $95 billion in 2012 and said capital markets would help fill a gap left by nervous European banks.

IATA groups most of the world's flag carriers and network airlines such as United Airlines, Lufthansa and Singapore Airlines. Its membership excludes most low-cost carriers which have generated much of the industry's traffic growth, but its market forecasts do include them.

Shares in Lufthansa and the parent of British Airways fell around one percent on Wednesday.

Under the central forecast of $3.5 billion global airline profits, regional differences are expected to widen in 2012 as European carriers slip into a combined loss of $0.6 billion and Asian airlines pull in profits of $2.1 billion helped by China.

North American carriers are looking at combined 2012 profits of $1.7 billion due to recent cost cuts and capacity restraint but IATA says the recent bankruptcy filing of American Airlines is a reminder of the chill spreading through the sector.

Copyright 2011 Thomson Reuters.

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Euro zone inflation stays at 3 percent, could delay rate cut

6:01 AM could, delay, inflation, percent, stays No Comments

AppId is over the quota
AppId is over the quota
BRUSSELS — Euro zone inflation was surprisingly high at 3.0 percent for a second straight month in October, the EU announced on Monday, prompting economists to postpone their bets for a central bank rate cut until December.

With Europe's economy cooling, economists had forecast consumer price inflation would fall after reaching a three-year high in September. But high food and oil prices and tax hikes in Italy kept it at the same level.

"It looks a bit like stagflation with negative growth and high inflation," said Peter Vanden Houte, an economist at ING. "That's not positive news."

In a first reading of inflation for the month, the European Union's statistics agency Eurostat said inflation was 3.0 percent in October, compared to a 2.9 percent forecast by a Reuters poll of economists.

Economists had expected the European Central Bank to raise rates as soon as this week to support Europe's economy, as evidence mounts that the region's debt crisis is sapping business confidence and raising the specter of recession.

The Organization for Economic Cooperation and Development slashed its 2012 growth forecast for the euro area to 0.3 percent from 2.0 percent in May.

Underscoring that, Eurostat said the jobless rate in the euro zone rose slightly to 10.2 percent in September from a revised 10.1 percent in August, nudged up by Spain, where unemployment reached 22.6 percent.

But stubbornly high inflation, above the Frankfurt-based central bank's target of close to, but under, 2 percent, is making a rate cut call much more difficult.

"We think interest rates will be on hold this week but we're expecting a rate reduction in December," said Nick Kounis, an economist at ABN AMRO.

Crude oil prices in euro terms were still around a third higher than in the same month last year. ING forecasts that if they continue at current levels, their impact on inflation will not dissipate until March.

MARIO'S MOMENT?

Adding to the cloudy outlook, Mario Draghi takes over as ECB president on Tuesday and may not feel comfortable lowering rates at his first meeting on Thursday, particularly with inflation more than a percentage point above target.

As an Italian at the helm of the ECB, Draghi will arguably be under more scrutiny from skeptical investors worried that a southern European might be less disciplined.

Last week Draghi warned of "a further weakening in growth prospects" but German members of the ECB's Governing Council remain focused on fighting inflation, partly driven by German folk memories of the hyperinflation the 1920s.

German council member Juergen Stark said on October 26 that interest rates at their current level were "adequate."

"The latest euro zone inflation and unemployment data might leave the hawks at the ECB concerned about underlying price pressures," said Jennifer McKeown, an economist at Capital Economics. "The rate has now been above the ECB's 2 percent price stability ceiling for 11 months running, perhaps suggesting that high inflation is becoming entrenched."

Copyright 2011 Thomson Reuters. Click for restrictions.

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Italy's woes could be contagious, even for us.

1:43 AM contagious, could, Italys No Comments

The debt crisis in Europe may seem like a sea of the political Donnybrook on which to play U.S. budget. Europe suffer can soon much closer hit home, though, cost-cutting measures more cold water throw it on the global economy.

Foreign trade is one of the last bright spots left for the US economy. Euro zone countries since fighting their budgets slash and reduce borrowing, those issues are concerned the lower line of the American company cuts.

The latest reading on US exports, who reported, came Tuesday from the US Department of Commerce, that the increase in oil prices since 2008 the trade deficit to its highest sent. But the export side of the Sachkontosalden is good in your hand to relative, according to Paul Dales, senior U.S. economist at capital of economics.

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He said "Net trade decent made positive to real GDP growth in the second quarter". "Without that the economy can have full halted ground."

But the demand for U.S. slash were in Europe already as the weaker economies of the region to try spending, worsening debt crisis overcome slows down. $27.5 Billion were U.S. exports in the European Union in may - almost 20 percent of total exports. This is down from a record high of $30.3 billion in March.

Europe's debt crisis could the US economy hurt in several ways. As debt flooded streamline spending Governments, some of those cuts export American firms will hurt products and services in the euro zone.

Italy is the new "I" in pigs

As worry about the Greek debt crisis spread have, investors have pulled money from other weak European economies down pressure on the euro and this strengthening of the dollar. A stronger dollar helps keep interest rates in the United States, but it also makes it harder to keep their prices competitive, if they sell in the European markets for American companies.

Only this week was the hope that steep spending cuts on Greece, would, was limited by a budget crisis to the next for over a year stumble. But the debt contagion seems the spread.

This week escape began Italian bonds of investors who would like to make a possible downgrade of the Italian government debt. In response, the Government in Rome, to a $68 billion encrypted-savings package for the budget balance assemble until 2014. But investors remain skeptical about whether these cuts Europe's third largest economy can right.

Compensation of the Italian budget be a. The Government currently has a debt burden of about 125 of gross domestic product, which grew by only 0.1 per cent in the last two quarters. Compared the Federal is U.S. approximately 70 percent of GDP until end of the year, according to a recent report from the Congressional reach budget Office debt.

Much like Greece its economy in the face of severe spending cuts Treaty has seen, is Italy the prospect to a nasty recession, as it moves to balance to its budget.

This slowdown is probably distributed to other European countries, if the debt crisis continues to expand. Capital economics estimates that Italy's debt to the average of the euro zone would cut nearly 10 percent from euro shave zone GDP.

Italian as investors bonds flee, increasing the cost of financing Italian debt and cut the value of their bonds of Italian banks held. Its shares have hammered this week on fears that the banks may have insufficient capital of their bonds of contributions.

The larger concern is that the European authorities already at odds over whether continue to rescue operations for Greece, can resist taking on even more bailouts, when Ireland, Spain or Portugal come to summon help. Critics of the European Central Bank say, that if the debt crisis that spreads ECB, may soon have too many fires put out.

"they are fiddling not even while ROM Burns;" "You even a violin at this point does not have," said Citigroup Chief Economist Willem Buiter. "The financial resources available are insufficient with Spain or Italy address separately, let alone than together." "So we need an immediate increase in the size of the resources available."

The dissemination of Europe's debt crisis after Italy has also the dispute about the U.S. debt ceiling in sales efforts Washington brought. For now, investors apparently believe a default value from the Treasury is impossible. But the Italy crisis is a reminder that investors bets that a standard will - happen, so-called "bond vigilantes"-can strike without warning.

Investment Manager "(Italy) is the first G7 country to where the bond vigil successfully in this cycle have taken," said Subodh Kumar, analyst independent financial market. "So it's no stretch to say, ' why that happened to Washington should not, if no action on the budget deficit is?'"

© 2011 msnbc.com reprints

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Japan quake cleanup could swamp with debt

5:16 AM cleanup, could, Japan, Quake, swamp No Comments

It at the beginning of reconstruction of the worst natural disaster in the history of Japan's economy is a greater threat than the destruction of a relatively small portion of its industrial production: debt.

To pay for the reconstruction, billions of dollars in fresh borrowing of a debt, the Japanese Government must pile, which already is one of the largest in the world.

Last week devastating 9.0 earthquake and the resulting 30-foot tsunami only was to latest blow to an economy that has fought, again on its feet two decades after the collapse of a large financial bubble.

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"Japan have a terrible set of problems, which it now were fighting for more than 20 years has", said Steven Roach, non - Executive Chairman of Morgan Stanley Asia. "she have to rebuild the financial system." And they have the most powerful demographic headwinds of each economy in the world: their population is not only aging, it goes back. "

These two "lost decades" four recessions and links with growth virtually flat lining, growing GDP, on average, less than 1 percent per year. Long before the earthquake struck, the Japanese economy had expected forecasters continue to customer in the next few quarters.

Story: Decisions company wrestling with evacuation

Japanese Government to try to revive growth, issues were strong, but with little lasting impact, except to build a mountain of loans which are repaid. At approximately double its annual GDP has Japan of one of the world's highest public debt, second only to the Zimbabwe, according to the CIA factbook. On the other hand, is the United States to place 36, with a public debt of around 60 percent of GDP.

Now that it is a big relief for you and reconstruction efforts, Japan more to cover the costs, emissions must the provisional estimates place about 200 billion dollars. The risk is that how it on more debt piles, the Japanese Government to higher interest rates to investors continue to demand for these new bonds pay.

"Printing they all this money to out of this mess and eventually interest with all will increase this pressure", said Lawrence McDonald, President of McDonald's Advisory Group, an investment firm management. "A single % increase in interest rates is equivalent to 25 per cent which is their tax revenues."

Higher also makes it more expensive for businesses and consumers to borrow, it a damper on spending and investment and create a further headwind for the Japanese economy.

It is unclear how much money of the Government will have to borrow. The reconstruction to cover costs is expected to only a relatively small part of private insurance. This is because Japan has a comprehensive, Government-backed earthquake insurance program, which covers some individual owners and backstops insurance companies of large losses. First estimates put total losses covered by private insurance companies to not more than $35 billion, or about 6 percent from the estimate of overall loss.

This means that some of the cut the cost of reconstruction out of the Pocket, back in profits and consumer spending have to pay are companies and consumers.

Japan's economy takes a hit from the industrial production of damage Quake to factories closed. There were imminent for parts and components, especially for the electronics and auto isolated reports of shortages.

But Japan is a large diversified economy and the disaster area is a relatively small portion of the country's GDP. Economists also note that the devastating loss of any major natural disaster, especially in a developed country such as Japan, usually heavy expenditure and investment in the reconstruction, all follows that helps to promote growth.

"I not attempts to say, there are no problems," said Steven Wieting, Citigroup Director of the economic and market analysis. "But also radiological disaster, Chernobyl, three mile Iceland, what happened with the deepwater horizon in the last year, it is a lot of emotion and concern." "But none of the events, including the earthquake in Kobe, all these natural disasters not long-term, lasting economic impact."

As for the global economy, despite isolated parts lack of Japanese suppliers the Japan earthquake is "Not likely to global trade be significant" and the impact on the Japanese economy will likely "be, localized" according to FedEx CEO fed Smith.

"" You put this way: If we unfortunately one terrific tragedy in Arizona "or saying"Oregon art on the periphery of the country had, it would be terrible,".""But the rest of the United States in all probability would continue operation."

Yen rises
The value of the yen is a potentially larger problem of the recent increase in Japan. The quake induced surge is the result of the various forces, according to currency market observers. Japanese insurance companies and other companies and investors are believed, have sold other currencies loud, cash back home to increase on foreign assets. The scramble to buy Yen has forced its value.

Forex traders have increased movement, by you betting on the rise. That a coordinated effort, the first since the year prompted the central banks of the seven largest industrial countries Thursday, 2000, to agree to hold to the value of the yen in check.

A rising Yen could be with a larger problem than what the Japanese Government may be relatively small damage to its industrial base. Verteuert pay a higher Yen Japan products for everyone in the rest of the world for them with a different currency. That makes Japan's exports less competitive in the global market and offers international companies one more reason to look for other suppliers.

The latest round of government borrowing presents a conundrum for Japan's central bankers, who have fought for years to keep economy with a policy (also more recently by the US Federal Reserve) called "quantitative easing." low interest rates the policy to by dramatically expand the money supply, Keeping interest rates low to stimulate borrowing and revive growth.

It did not work in Japan. Now, as the Japanese Government market with new debt floods, the Central Bank must continue to purchase the bonds if private investors on the plate and help finance of the country's reconstruction efforts intensify not.

Japan's malaise could be eerily familiar in some US officials. The Fed is in his second over, about $600 billion buy bond in June, a response to the collapse of the much younger American financial bubble. As now with its large debt burden Japan, could learn U.S. policy makers from Japan's experience, according to Roach, much.

"Twenty years later, the post-bubble experience the Japan all must give US pause to think, above all those of us in the United States, who believe that it could never happen us", he said. "These are very devastating events and there are lessons in Japan, I think, many of us have not learn."

© 2011 msnbc.com reprints

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Company says Japan insured losses $35 (b) could meet

5:00 AM Company, could, insured, Japan, losses No Comments

NEW YORK/LONDON - this week in Japan earthquake on insured losses of nearly $35 billion, could risk modeling firm AIR worldwide said, making it one of the most expensive disasters in history.

This number is almost as much as the entire global catastrophe loss of the global insurance industry in the year 2010, and could be the triggering event, the higher prices in the insurance market after years forcing falling.

AIR said its loss estimate offer $14.5 billion on 34.6 billion $ was. Which is based on a number of 1.2 trillion yen to 2.8 trillion yen, converted with 81.85 yen per dollar.

The company shows show the estimate was preliminary, and it was said that his models to do not factor in the impact of the tsunami, the earthquake or potential loss of nuclear damage followed.

AIR pointed out that, in some cases, buildings are by the 8, 9-earthquake damage and were swept then by the flood then precise count difficult make.

There are also questions about the leaks to the nuclear reactors Fukushima stay cost of clean-Up and long-term monitoring explosions and radiation. Such reactors in the General insurance policy which excludes earthquake damage, and many Japanese House and apartment owners have nuclear exclusions in their own policy.

This is probably a liability of the operator and the Government and minimizing the impact on the insurance industry itself.

At the top of the range, this Temblor will go down as the most expensive earthquake in modern history of insured losses, exceeds the roughly 15 billion dollars by far losses of the 1994 Northridge earthquake in California.

All disasters since 1970 it would USD as the second most expensive behind Hurricane Katrina rank.

Also, it may be enough to, for years, price declines in the global insurance and reinsurance intermediaries real estate markets, are that awash are disasters in excess capital after a lack of major hurricane in recent times.

This year said, analysts and brokers that it would take $50 billion to reduce the price declines in the market for a year an event.

Since January 1 has the industry at least $10 billion losses from an earthquake in New Zealand, still-untold losses from Australian floods and an estimated $ 8 billion to $10 billion faced losses of unrest in the Middle East.

Cumulatively, may be some such as standard & poor's losses believe enough to trigger long-awaited "hard market" in which insurers again have pricing power.

Copyright 2011 Thomson Reuters.

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