CNBC.com Article: Wall Street Insiders Want Out, Selling $100 Million in Stock

In a move that may reflect a growing unwillingness to tie their personal fortunes to those of their companies, Wall Street insiders this year have undertaken more than five times the number of stock sales of their corporate shares as they have purchases.

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Stocks Fall on Income Data; Treasuries Gain, Yen Strengthens

Aug. 30 (Bloomberg) -- U.S. stocks fell, erasing most of the previous day's gain, and Treasuries rallied as a slower- than-estimated increase in American personal incomes fueled concern the economic rebound is slowing. The yen strengthened against all 16 major peers after policy makers stopped short of direct steps to halt the currency's recent gains.

The Standard & Poor's 500 Index dropped 1.5 percent to 1,048.92 at 4 p.m. in New York. Treasury 10-year note yields slid 12 basis points to 2.53 percent. The yen appreciated 0.8 percent to 84.56 versus the dollar, heading for a fourth straight monthly advance. Oil declined below $75 a barrel, while copper rose to a fourth-month high.

Benchmark equity indexes extended three weeks of losses as the 0.2 percent growth in U.S. personal incomes spurred concern that an improvement in consumer spending won't last. The retreat trimmed a 1.7 percent rally in the S&P 500 triggered on Aug. 27, when Federal Reserve Chairman Ben S. Bernanke pledged the central bank will provide more stimulus if necessary to revive the economy.

"Personal income is important here because the average consumer is really struggling with a lot of debt," said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co., which oversees more than $85 billion. "The pessimism in the market has gotten pretty acute."

The S&P 500's decline was led by financial and consumer discretionary stocks, with gauges of both industries falling at least 1.7 percent. Bank of America Corp. and Intel Corp. slid more than 2.2 percent to help pace losses in the Dow Jones Industrial Average. Citigroup Inc. fell 2.4 percent after Credit Agricole Securities' Mike Mayo, one of three analysts with a "sell" rating on the stock, said he had doubts about the bank's trustworthiness because senior management hadn't met with him in almost two years.

Income, Spending Data

Commerce Department data also showed that disposable incomes, or the money left over after taxes, dropped for the first time since January after adjusting for inflation, showing how the lack of jobs may prevent consumer spending from strengthening further after purchases rose 0.4 percent in July, the most since March.

The data overshadowed a continuing increase in takeovers. Announced global mergers and acquisitions have totaled $1.34 trillion so far this year, 25 percent more than during the same period last year, according to data compiled by Bloomberg.

Intel, the world's biggest chipmaker, slumped after agreeing to buy Infineon Technologies AG's wireless unit for about $1.4 billion. Sanofi-Aventis SA opened the door to a hostile bid for Genzyme Corp. after going public with an $18.5 billion cash offer for the U.S. company. Posco, the third- biggest steelmaker, agreed to acquire South Korean trader Daewoo International Corp. for 3.37 trillion won ($2.8 billion) to expand raw material resources.

European Stocks

The Stoxx Europe 600 Index slipped less than 0.1 percent after rising as much as 1.2 percent earlier. U.K. markets were closed for a holiday. Zodiac Aerospace SA jumped 10 percent in France after La Tribune reported that Safran SA is preparing another bid for Europe's biggest maker of airplane seats. Safran fell 2.3 percent.

U.S. Treasuries headed for a fifth monthly gain amid mounting concern the economic rebound is faltering. Morgan Stanley revised its forecast for second-half growth to a range of 2 percent to 2.5 percent, down from an earlier estimate of 3 percent to 3.5 percent.

German bonds are headed for their best monthly returns in almost two years. The yield on the 10-year bund slipped 7 basis points to 2.14 percent, near a record low of 2.09 percent reached on Aug. 25.

Yen's Strength

The yen's advance today came amid speculation the Bank of Japan's decision to increase credit-easing measures won't be enough to weaken the currency as it heads for a fourth straight monthly advance versus the dollar. Prime Minister Naoto Kan said the nation is preparing a 920 billion yen ($10.8 billion) stimulus plan and the central bank added 10 trillion yen in liquidity injections.

The Japanese currency strengthened to a 15-year high of 83.60 per dollar last week and has rallied 11 percent since the beginning of May as investors seek assets considered the most safe and unwind bets made with borrowed yen amid concern the global economic recovery will falter. The dollar gained 0.7 percent against the euro to $1.2673 after Bernanke pledged Aug. 27 to safeguard the recovery.

Emerging Markets

The MSCI Asia Pacific Index climbed 1.3 percent, the most since Aug. 2. The MSCI Emerging Markets Index rose 0.2 percent, with benchmark gauges in China, South Korea and South Africa climbing more than 1.5 percent.

Copper for delivery in December climbed as much as 2.2 percent to $3.46 a pound on the New York Mercantile Exchange, the highest since April 27. Oil fell 0.6 percent to $74.70 a barrel in New York, after rallying 2.5 percent on Aug. 27 when Bernanke made his statements.

Bernanke last week said the central bank "will do all that it can" to ensure a continuation of the economic recovery, and outlined steps it might take if growth slows.

"Consumer spending may continue to grow relatively slowly in the near term," he said Aug. 27 at the Kansas City Fed's annual monetary policy symposium in Jackson Hole, Wyoming.

The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, climbed 1.9 basis points to a mid-price of 112.91 basis points. The index typically rises as investor confidence deteriorates and declines as it improves. Swaps on 3M Co. and Rio Tinto Group rose.

Wheat for December delivery advanced 1.4 percent to $7.045 a bushel on the Chicago Board of Trade, paring an earlier gain of as much as 4.9 percent, as Russia's export ban for the grain and rain that hurt the quality of crops in Germany boosted demand for U.S. supplies. Corn for delivery the same month rose 1.3 percent to a 14-month high of $4.415 a bushel as dry U.S. weather threatens to reduce yields in the world's biggest grower of the grain.

To contact the reporters on this story: Kelly Bit in New York at kbit@bloomberg.net Stephen Kirkland in London at skirkland@bloomberg.net

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CNBC.com Article: Death of the 'McMansion': Era of Huge Homes Is Over

"McMansions just look and feel out of place today, given the more cautious environment everyone's living in," said one real estate expert.

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MBIA Unit Asks Judge to Make Bankrupt Vallejo Use Fees for Debt

Aug. 12 (Bloomberg) -- MBIA Inc.'s municipal-bond insurance unit is asking a bankruptcy court judge to order Vallejo, California, to make good on promises to pay investors in case of default by using money from vehicle registrations.

Debtor protection doesn't pre-empt a state law that requires the use of the license fees to pay off city debts, National Public Finance Guarantee Corp. said in a motion filed Aug. 10 with U.S. Bankruptcy Judge Michael McManus. The income derived from the registration payments was used as a type of secondary pledge to back a $4.8 million bond issue in 1999.

The community of 115,000 on the northern edge of San Francisco Bay sought Chapter 9 bankruptcy protection in May 2008 after it failed to convince labor unions to accept salary concessions as the recession began cutting into municipal tax collections nationwide. Chapter 9 of the U.S. Bankruptcy Code lets cities and towns reorganize rather than liquidate.

State law "was specifically designed to protect debt holders in the event a municipal issuer fails to pay for any reason, by using vehicle-license fees," Kevin Brown, a spokesman for the Armonk, New York-based insurer, said yesterday by e-mail. "National's motion simply asks the court to ensure that investors receive what was promised when the bonds were issued."

In September 2008, McManus ruled from his Sacramento, California, court that the city was insolvent because it couldn't pay its bills. In March 2009, he ruled that the city can nullify contracts with police and firefighter unions.

Financed Fire Station

The city sold $4.8 million of "certificates of participation" in 1999 to build a fire station and finance improvements on six others. In May last year, the city stopped making payments to bondholders, a default allowed under bankruptcy protection. National said it has paid more than $200,000 in resulting claims filed by investors.

Under a proposed workout plan approved by the City Council in March, holders of the 1999 bonds are expected to forgo the vehicle fees and four years of interest, and to defer payments of principal for three years so that other creditors and union members can be paid, National said in the court filing.

California collects a registration fee of 0.65 percent of the value of a vehicle and each month doles out most of that money to cities and counties. Local governments are allowed to use that revenue as a form of additional backup security on municipal debt. At least six other cities and counties in the state sold bonds with the additional backup security, according to a 2010 Standard & Poor's report included in court papers.

Fee Mandates

Under California law, if there is a default on bonds backed by the fees, the state controller must turn the city's portion of the money over to investors through a trustee. Vallejo contends that while in bankruptcy, it doesn't have to make payments to bondholders or divert the funds.

"We have been discussing the matter with National Public's counsel for some time and we disagree with National Public as to its rights to these funds," said Marc Levinson, the city's bankruptcy lawyer in a telephone interview yesterday. He works for Sacramento-based Orrick, Herrington & Sutcliffe LLP.

The insurer's lawyers said in the court filing that "the city's bankruptcy does not change or interfere with the 1999 trustee's right to receive" the fees. "Thus any attempt to collect such amount should not be subject to the automatic stay or any other provision of the bankruptcy code."

A call to Robert Adams, Vallejo's city manager, wasn't returned yesterday.

Ratings Cut

Standard & Poor's in March lowered its rating on the debt to C, the second-lowest level, from B, the fifth step below investment grade. In December, the city had about $51.6 million in debt payable directly from its general fund.

Before Vallejo, the last California city to seek protection from creditors was Desert Hot Springs in 2001. The town of 20,000 near Palm Springs was hit by a legal verdict it couldn't afford. Orange County filed the biggest municipal bankruptcy in U.S. history in 1994, after some investments soured.

The Vallejo case is In re City of Vallejo, 08-26813, U.S. Bankruptcy Court, Eastern District of California (Sacramento).

To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net

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