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Yahoo! Finance - Yahoo Finance
CHICAGO (AP) -- Hoping to get in on Facebook's hotly anticipated public stock offering? You'll need Facebook friends at very high levels — or a lot of money.
Most people who like the idea of owning Facebook's stock will have difficulty getting it at the offer price, currently expected at $28 to $35 a share. Unless you know the right people at Facebook, you'll likely need to have a large, active account with one of the big banks or brokerage firms directly involved in the stock sale.
Otherwise, you can take your chances by buying shares after the initial public offering is completed, when Facebook begins trading on the Nasdaq Stock Market under the ticker symbol "FB." That's likely to happen Friday.
Doing it that way typically means paying much more for the stock, however. And heavy demand skews the early stock price, leaving an investor vulnerable to the risk of a big drop.
Jerome Cleary isn't deterred. One of a legion of Facebook fans, he has never wanted to own a stock as much as he wants to buy this one. Cleary, a standup comedian in Los Angeles, says he has already signed up for an account with a discount online brokerage so he'll be ready.
"I know you should buy stock in what you know and like," Cleary says. "I feel that because they have an incredible mass of wealth and such growing popularity, the stock really may pay off."
Facebook Inc.'s IPO is expected to be the largest ever for an Internet company. It's expected to raise as much as $11.8 billion for Facebook and its early investors — far more than the $1.67 billion raised in Google Inc.'s 2004 IPO.
Analysts say there's so much interest in Facebook's stock that some underwriters are closing their books as early as Tuesday. This means they won't be taking any more orders from potential buyers. The IPO is expected to be completed late Thursday, with shares available for trading Friday.
Scott Sweet, the owner of advisory firm IPOBoutique, says the high demand also means that Facebook might raise the per-share price above $35, the high end of the range Facebook currently expects. Facebook and the IPO's lead underwriter, Morgan Stanley, declined to comment.
If you're thinking of investing in Facebook, here are some things to consider.
— IPO SHARES
Facebook and its early investors are selling more than 337 million shares, but those shares are parceled out very carefully, away from the public's eyes.
Typically individuals get to buy no more than 10 percent to 20 percent of shares sold at an IPO's offering price. The vast majority will go to company insiders, institutional investors, the underwriters selected by the company to handle the process and preferred clients of all of them.
Morgan Stanley leads the team of 33 underwriters selected for the Facebook offering, followed by JPMorgan Chase and Goldman Sachs.
The inclusion of online broker E-Trade Financial Corp. as an underwriter was seen as a glimmer of hope that Facebook might make more shares available than usual for retail investors through discount brokerages. But chances of getting any are very slim regardless.
— ELIGIBILITY
The big online brokerages have been taking formal requests from customers for Facebook's IPO. They anticipate they'll get their own allocations from one source or another, such as one of the underwriters. E-Trade, Fidelity Investments, Charles Schwab and TD Ameritrade, among others, have been fielding abundant queries.
But the requirements they set on who gets them eliminate most small investors.
Fidelity, which will be getting an undetermined number of shares from underwriter Deutsche Bank, says customers should have $500,000 in their accounts and have made 36 trades in the past year to be eligible. Ameritrade's account requirements are at least $250,000 and 30 trades in three months. Schwab's are a minimum $100,000 or 36 trades in the past year, but the firm says it also has other requirements.
Even meeting the requirements is no guarantee of getting shares.
Joshua Freeman, an information technology professional in New York, knows investing in Facebook is risky. But he believes "it's got a pretty good shot to make some money."
He has been investing with E-Trade since the mid-1990s and has about $200,000 in his account. But he's pessimistic about his request for 100 Facebook shares at the IPO price, given the frenzy over the offering.
"I'm hoping to get some but I'm guessing that I won't," Freeman says. "I'm hoping it follows the trend and goes crazy and then dips a little bit. If it does that, I may buy some on the open market."
— OPEN MARKET
If you strike out as an insider, it will still be easy, but expensive, to buy shares on the open market. Open and fund an account with a brokerage. Then for a transaction fee of as little as $7, you can buy Facebook stock at whatever price the market demand has driven it.
Be aware that the price could jump significantly by the time you place your order. Among last year's hottest IPOs, Groupon Inc. soared in the opening minutes and gained 31 percent on the first day of trading. Zillow Inc. jumped 79 percent and LinkedIn Corp. more than doubled.
Investors buying on the open market miss much or perhaps all of any first-day "pop."
The first-day market price of newly issued stocks during the past decade has been an average 11 percent higher than the offer price, according to University of Florida finance professor Jay Ritter.
For investors buying at the offer price, Facebook is likely to produce a gain on the first day, he says. But once it starts trading, investors should think of it as just another stock that's as likely to go down as up.
Consider this: Groupon, which went public at an IPO price of $20 six months ago, soared as high as $31.14 on the first day. It closed Monday at $11.73, 41 percent below the offer price.
As for the idea of buying the stock at a low point a few months from now, Ritter says that has not worked historically as a reliable strategy with IPOs. And this one's starting at a very high price, he emphasizes, with optimistic expectations of future growth built into it.
The only sure winners, he says, will be Facebook employees and venture capitalists who invested in the company when it was private.
James Breyer and his Accel Partners firm, investors since 2005, stand to make up to $1.34 billion from the 38.2 million shares they are offering. Zynga Inc. CEO Mark Pincus, a Facebook investor since 2004, stands to make up to $35 million on 1 million shares.
"The time to buy Facebook was five years ago," Ritter says.
EU finance ministers haggle over bank rules - Yahoo Finance
BRUSSELS (AP) -- European Union finance ministers are to meet in in Brussels Tuesday to hammer out an agreement over how high banks should build their defenses against future financial shocks, with the U.K. running the risk of being isolated over who should set the height.
The EU's 27 members agree on the need to increase capital reserves of banks, following an international agreement called Basel III, which was negotiated by the world's largest economies to avoid another financial meltdown such as the one brought on by the collapse of U.S. investment bank Lehman Brothers in 2008.
But the U.K. wants national regulators to be able to set requirements significantly higher than those of the EU — a position opposed by almost all other EU members, who fear investors might then prefer UK banks and flee from those in other countries.
On his way into the meeting Tuesday morning, George Osborne, the British chancellor of the exchequer, was non-committal about the possibility of reaching an agreement.
"This is a time of considerable uncertainty in the eurozone economies," he said, referring to the 17 countries — the U.K. not among them — that use the euro currency. "And that uncertainty is undermining the entire European recovery. And I think we're reaching a point where we've got to make a decision to see the eurozone stand behind their currency. A very important part of that, of course, is strengthening the entire European banking system. And that is what we intend to do today."
Once enacted, Basel III would require lenders to increase their highest-quality capital — such as equity and cash reserves — gradually from 2 percent of the risky assets they hold to 7 percent by 2019. An additional 2.5 percent would have to be built up during good times. All members of the G-20 have agreed to implement Basel III; if the European Union succeeds, it would become the first entity to institute the new requirements.
The U.K. is arguing that, because national taxpayers have to bail out banks when they fail, national authorities should be able to set more stringent requirements to guard against such failures. A compromise proposal offered by the Danes, who hold the rotating presidency of the European Union, would allow national authorities some leeway to increase requirements beyond those called for in the Basel III agreement. That proposal has broad support — except, so far, from the U.K.
The finance ministers can approve the compromise proposal without British support, through what is known as qualified majority voting, in which member countries have different numbers of votes according to their populations. However, there is a tradition in the EU that changes that would affect an industry in a particular country — such as the banking sector in the U.K. — are not forced into effect over the objections of that country, and consensus is sought.
"I think there should be a unanimous decision on such an important issue," Swedish Finance Minister Anders Borg said on his way into the meeting.
G7 finance ministers prepare for emergency talks today - Sydney Morning Herald
Finance chiefs of the Group of Seven leading industrialized powers will hold emergency talks on the euro zone debt crisis on Tuesday in a sign of heightened global alarm about strains in the 17-nation European currency area.
With Greece, Ireland and Portugal all under international bailout programmes, financial markets are anxious about the risks from a seething Spanish banking crisis and a June 17 Greek general election that may lead to Athens leaving the euro zone.
Canadian Finance Minister Jim Flaherty said ministers and central bankers of the United States, Canada, Japan, Britain, Germany, France and Italy would hold a special conference call, raising pressure on the Europeans to act.
"The real concern right now is Europe of course - the weakness in some of the banks in Europe, the fact they're undercapitalised, the fact the other European countries in the euro zone have not taken sufficient action yet to address those issues of undercapitalisation of banks and building an adequate firewall," Flaherty told reporters.
The disclosure of the normally confidential teleconference came as European Union paymaster Germany said it was up to Spain, the latest euro zone country in the markets' firing line, to decide if it needed financial assistance, after media reports that Berlin was pressing Madrid to request aid.
German Chancellor Angela Merkel and leaders of her centre-right coalition said in a joint statement: "All the instruments are available to guarantee the safety of banks in the euro zone."
They effectively ruled out Spanish calls to allow euro zone rescue funds to lend money directly to recapitalise Spanish banks, which are weighed down with bad property debts, without the government having to take a bailout programme.
Berlin is pressing reluctant euro zone partners, including close ally France, to agree to give up more fiscal sovereignty as part of a closer European fiscal union.
A G7 source, speaking on condition of anonymity because of the sensitivity of the issue, said there were concerns about the risk of a bank run in Spain, which is struggling to recapitalise nationalised lender Bankia and smaller banks stricken by the collapse of a property bubble.
"There's a heightened sense of alarm over developments in Europe, particularly in Spain," the source told Reuters. "There is concern on whether there will be a bank run in Spain that could have repercussions beyond the euro zone."
Spain test
Spain's borrowing costs have soared to around 6.6 per cent for 10-year bonds with the risk premium over safe haven German Bunds reaching a euro era record. Madrid plans to issue 1-2 billion euros in 10-year debt on Thursday in a key market test.
The G7 source said the United States, the current G7 chair, was unwilling to allow International Monetary Fund money to be used to support the euro zone, so there was little prospect of the global community acting as one to contain the crisis.
A senior Brazilian government official said the euro zone crisis would also be a central focus of this month's G20 summit in Los Cabos, Mexico.
"We insist in our position that European countries with enough space to stimulate the economy, even via fiscal stimulus (not many that can do that), should do it now," said the official, referring mostly to Germany.
The euro climbed and safe haven US and German bonds eased off last week's record low yields as speculation mounted that authorities will act to keep the euro zone intact and overcome the debt crisis.
EU leaders hold their next regular summit on June 28-29 and their chairman, Herman Van Rompuy, said on Monday he would put forward a roadmap to design a plan for closer economic union in the euro area by the end of this year.
He said he would present "the main building blocks for this deepened economic and monetary union" at the summit, including banking integration involving proposals on "supervision, on deposit insurance and on resolution".
Germany, keen to limit liabilities for its taxpayers as the biggest contributor to euro zone rescue funds, has so far rejected proposals for a banking union with a joint deposit guarantee and a common resolution fund for failing banks.
Officials say such measures can come only at the end of a drive to closer fiscal union.
Greek exit eyed
China, another major G20 power, has instructed key agencies including the central bank to come up with plans to deal with potential economic risks of a Greek withdrawal from the euro zone, three sources with knowledge of the matter told Reuters.
"It's very urgent," one source said. "The government has asked every department to analyse measures to cope with a Greek exit from the euro zone and make their own suggestions as soon as possible."
The plans may include measures to keep the yuan currency stable, increase checks on cross-border capital flows and stepping up policies to stabilise the domestic economy, the sources said.
Euro zone officials have sought to persuade Beijing, which has vast foreign currency reserves mostly in US Treasury bonds, to back the euro zone, its main trading partner, by buying troubled countries' bonds or investing in a proposed trust fund. But Chinese officials have been reticent, concerned at the risks and mindful of Chinese public criticism.
In one ray of light for the euro zone, Portugal's international lenders said on Monday its year-old bailout programme was on track, offering strong support for Lisbon as it seeks to avoid following Greece into a second rescue package.
Finance Minister Vitor Gaspar said he would stick to the programme after getting a thumbs-up in the latest inspection review by the European Union and IMF, and that the lenders would recommend payment of the next 4.1 billion euro ($4.9 billion) tranche from the rescue fund.
Three leading Portuguese banks said they would draw on funds provided under the country's 78 billion euro ($93 billion) bailout to meet tough new capital requirements as they struggle with the country's debt crisis.
Reuters
Forex Flash: Today's strategy for EUR/USD – Commerzbank, Danske Bank and UBS - FXStreet.com
Forex: USD/CHF testing 0.9600 - NASDAQ
FXstreet.com (Barcelona) - The greenback has been retreating from the fifteen-month highs recorded last week and is now losing 0.65% versus the Swiss franc. The drop comes after the announcement of economic indicators in the US. April factory orders in the US came disappointingly below forecasts, falling by 0.6% instead of growing by 0.3% and from a previous 2.1% contraction. Last week, the unemployment rate rose to 8.2% while it seems that there is an overall slowdown in the strength of the recovery.
The pair is currently trading at 0.9610, facing resistance at 0.9742, before 0.9824 and 0.9875, according to Fxstreet.com pivot points on technical tools. On the downside, there is support at 0.9609, ahead of 0.9558 and 0.9476.
The Forex Trading Week Ahead - Moneyshow.com
The outcome of important central bank policy meetings in the Eurozone, the UK, and Australia will be among the primary drivers of world currency markets this week, writes Kathleen Brooks of FOREX.com.
The Eurozone crisis continued to deteriorate last week with fears about the economic effects of the crisis taking center stage. Eurozone unemployment reached 11%, the highest since the euro came into circulation, and the latest manufacturing surveys for March were weak for Europe, China, the UK, and even the US.
The severity with which investors have ditched risky assets and moved into bunds, Treasuries, and gilts suggests that the markets are now pricing in the potential for a global recession. Without official action it’s hard to see how we can break out of this cycle of risk aversion, and this week, there are three pivotal central bank meetings including the Reserve Bank of Australia (RBA), the European Central Bank (ECB), and the Bank of England (BOE).
No Fireworks from the ECB
At the end of last week, rumors that the ECB was buying Spanish sovereign debt helped to boost risk assets. EUR/USD closed the European session just below 1.24 after falling as low as 1.2280 after the non-farm payrolls (NFP) release, and Spanish bond yields closed at 6.53%, 17 basis points lower than the peak they reached earlier in the week. This highlights two important things: 1) the markets are deeply oversold, especially risky FX and European equities; and 2) if there is remedial action by the ECB or other European authorities, then there could a powerful relief rally.
This Wednesday’s ECB meeting will be the most important event in the currency bloc for the coming week, though we don’t think the ECB will be too radical.
ECB head Mario Draghi was speaking last week and reiterated that governments should do more to stem the crisis. He also added that conditions in the markets are not as stressed as they were in November prior to the Bank’s LTRO auctions. This is true to an extent.
While Spain has come under intense pressure along with Italy, the core European nations like France, Netherlands, Belgium, Austria, etc., have not seen their bond yields come under selling pressure from the markets. In fact, the French-German ten-year bond spread has actually been narrowing, suggesting that there is demand for French bonds even after the Socialist victory in the Presidential election.
The ECB is likely to say that it will offer support to Europe’s banks to prevent them from going under, but Draghi and company are likely to stop short of offering a more sustainable solution to this crisis.
Of course, the Bank could also cut interest rates, which currently stand at 1%, a record low for the currency bloc. The manufacturing sector PMI remained in deep contraction territory in May, and the unemployment rate surged to a record high of 11% in April. Added to that, the flash estimate for May CPI fell to 2.4% from 2.6% in April, which could give the ECB more room to cut rates. However, the Bundesbank is still a powerful hawkish element in the central bank, and it is likely to resist such a move until the situation deteriorates even further.
This is bad news for the periphery, which needs lower interest rates. However, the lack of action from the authorities is likely to weigh on the euro, which could benefit their export markets (if they manage to stay in the currency bloc, that is).
There were signs last week that Germany might be willing to adjust fiscal targets after an official in Berlin said that Spain is unlikely to meet next year’s 3% fiscal deficit target. But the radical action that some expect, including Eurobonds or using ESM funds to re-capitalize Spanish banks, don’t appear to have made much traction in Brussels.
If the ECB is fairly muted in its response to the crisis this week, then the baton is passed to the EU leaders when they meet at the end of June for the next EU summit. So, the markets are left waiting for political action, and Europe’s politicians don’t walk to the market’s beat. This combined with the Greek elections on June 17 are likely to keep uncertainty high and leave risk assets vulnerable to more downside.
There is a pre-election poll blackout in Greece from this weekend in the two weeks leading up to the elections, which only adds to the uncertainty and increases the chance of a selloff. Added to that, Spain issues 2014, 2016, and 2022 bonds this week. Any signs of weak demand for its debt could cause a fresh bout of risk aversion.
The euro had a dreadful May versus the dollar, having fallen 6%. It is now looking very oversold from a technical basis. However, the fundamental picture remains bleak, and the euro is still sensitive to headline risk, both positive and negative.
If it can make its way back to 1.2510, then we may see a deeper pullback towards 1.2710. However, below 1.2350 opens the way to retest 1.2290, then 1.2150, and eventually 1.20. Without remedial action from the ECB or EU authorities, it is hard to see how this pair can resist further downward pressure.
BOE: Increased Chances for More QE
The extremely weak PMI data at the end of last week, which showed the manufacturing index plunge to its lowest level for three years along with the escalation of the Eurozone crisis, has increased the chances that the Bank of England will expand its QE program when it meets on Thursday.
We believe that the Bank will do more QE in the coming months, and the sharp deterioration in the manufacturing PMI could be enough to prod the Bank into doing more this week, which is not the market’s central scenario.
The minutes from the May meeting suggested that the decision to remain on hold was finely balanced, and even Adam Posen, who recently moved to the neutral camp after having consistently voted for more stimulus, said that his decision was tough.
The inflation report was also more dovish than some expected, with growth for 2012 revised lower. Although inflation is expected to remain higher than the 2% target this year, the Bank sets policy with a two-year time frame and expects inflation to fall below target in the coming years. Thus, with the much-worse-than-expected PMI number, it could shift some members to take action now to prevent deflation later.
The British pound (GBP) followed the euro lower last week, but managed to stage a recovery on Friday after falling below 1.5300 against the dollar. We believe that a breach of this important support zone would be a very bearish development for this cross, and may open the way to 1.50 and then potentially to the 1.45 lows from 2010. However, this pair is starting to look oversold, so any remedial action from the European authorities to sort out the sovereign debt crisis could boost sterling and negate any of the negative impact from more QE from the BOE.
Finance ministry mulls hike in excise duty on diesel vehicles - Economic Times
"The proposal is there and that is being examined by finance minister (Pranab Mukherjee). Consultations are being held and an appropriate decision will be taken by the government in due course," the Central Board of Excise and Customs (CBEC) Chairman S K Goel told reporters here.
The proposal had been mooted by the petroleum and natural gas ministry ahead of the budget but the finance ministry opted for an across-the-board increase of 2% in excise duty to 12% instead.
The petroleum ministry has for long argued that the rich should not get subsidised fuel. According to ministry estimates, 15% of diesel consumption is accounted for by personal cars and SUVs. Petrol cars of engine capacity under 1,200 cc and diesel cars under 1,500 cc attract an excise duty of 12%.
The duty on such cars with length exceeding four metres is 24%. Petrol and diesel driven vehicles having length exceeding four metres and engine capacity of over 1,200 cc and 1,500 cc, respectively, attract an ad valorem duty of 27% and a specific duty of 15,000.
Equitable duty makes diesel cars a preferred option as diesel is a subsidised fuel and shielded from regular increase in prices.
Car buyers have been making a beeline for diesel cars and there exists a waiting period of 2-3 months for most diesel models. The government, facing flak for increase in petrol prices, has been unable to muster political courage to deregulate diesel prices to contain its subsidy bill.
The finance ministry meets about half of the revenue that state-owned oil firms lose on selling diesel, domestic LPG and kerosene at government-controlled rates.
Even after the recent sharp drop in international crude prices, oil companies claim they lose more than nearly 13 per litre on diesel for selling it at government-controlled prices. The government has provided 43,580 as fuel subsidy in the current financial year but it is already exhausted in clearing last financial year's dues.
How it manages the oil subsidy is crucial to its plan to lower the fiscal deficit to 5.1% of GDP from 5.76% in the last fiscal and contain total subsidies to 2% of GDP. Imposition of duties on diesel cars would not the hurt common man, making it a politically feasible decision. An increase in excise duty would give a leg -up to indirect tax revenues that grew by 10% at 33,045 crore in April, 2012.
On Monday, finance minister Pranab Mukherjee told the annual conference of excise and customs officials to attempt to exceed FY13 budget target of 5.05 lakh crore. "I am confident that the department would leave no stone unturned in ensuring that the targets for the current year are not only met but handsomely exceeded," Mukherjee said.
Forex: GBP/CHF in 5-week lows - FXStreet.com
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