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Crossing over
Photos by Frank van der Sman
Crossing over: Some things I've learnt about cyclocross
Your legs are no longer your own. They belong to your bike and subsequent bruising will happen accordingly. It was around my fifth attempt to unclip my right foot when I suddenly remembered what it felt like to not know how to ride a bicycle. The handlebars spun around and I could feel my centre of gravity shift uncomfortably underneath me, the grass rising to meet my elbow in slow motion.
Eight of us gathered last week on a North London playing field to master some of the basics of cyclocross. More like a primary school P.E. obstacle course than a bike race, cross seems to bring together all those bizarre and wonderful aspects of a day in a park that just shouldn't go together. But for some reason it works. Cones to turn around, logs to jump over, bits to run, and a lot to ride.
Until recently, cyclocross was a bit of a mystery to me. A myth propagated by the wise and witty words of awesome girl racers like Heidi Swift and Claire Beaumont, it seemed like the holy grail of cycling: mud, speed, laughter, beer and frites - all with drop bars and skinsuits. I needed to know more.
The new darling of the cycling world, cross enjoys a new-found popularity among women that road racing can only sit back and enviously watch. You want to hate her (all that mud! all that cleaning!), but you can't help but feel a little seduced. There's just something about riding around a field at breakneck pace that makes you feel like a kid again.
Our first step was learning to dismount the bike at pace, and without losing speed, take a flying-leap and pray to land back on the saddle with feet in the right place to start pedalling again. The experts make it look so easy: Their right foot swings back over the rear wheel, and like ballet, the left foot magically unclips as the ground skips past underneath them. No slowing. No clumsy bike tackle falling down upon them. No cursing/swearing.
Unlike me.
Whilst all the other girls were off spinning around the obstacle course, I was learning to unclip my right foot. But with constant encouragement and advice from our instructors, it didn't take long to feel at home on knobbly tyres. So I thought I'd share what I learnt, beginner style:
1. The ground is soft. You might bruise, but the absurdity of falling in a field of cones and logs adds a dimension of absurdity which makes the minor pain not only tolerable but hilarious.
2. Be forceful when you go to unclip your left foot. It's just a pedal. It's made for unclipping.
3. Don't dramatically brake when you go to dismount, just slow down. I tried braking. A lot. Braking pitches you forward and just makes it all the more challenging to take your feet out.
4. When you jump on the saddle to remount, you WILL land on the saddle, so just go for it.
5. Watch your toe placement when you corner. If you corner with one foot forward, you'll clip your wheel and the grass will jump up to bite you.
6. When hopping over a log, you don't actually have to lift your bike much higher than your feet. If your feet make it over, the bike will too.
7. Cross is designed to be done in the company of friends.
8. It's a lot more work than I could have ever imagined. Dress appropriately.
9. It's a lot more fun on your second night out.
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paul goulden
29th September 2011 12:53pm
Let's hear it for #7!
jj buchma
29th September 2011 08:01pm
I think I know how you feel, I'm planning to go to windermere for the first cross race that Raph is putting on. And lets just say I'm a bit scared. I to have been trying all the things you talk about in your blog……but I have been doing the training in the woods so no one see's me make a fool of myself.
Konrad Manning
29th September 2011 08:11pm
Don't get too worried about your first race : )
Cyclo-crossers are a relaxed and friendly bunch.
There is only a short, wooded bank that you will probably have to get off and push up and two very small barriers you can lift the bike over at Brockhole! We'll have a little preview of the courses up on the website and Rapha Super Cross facebook page very soon.
See you by the banks of Windermere!
Samuel Klontz
29th September 2011 09:50pm
Nice write up. I too had an apprehensive approach to cross. After 2 years shunning it as a basterd sport I now have to repeatedly wash the taste of my feet out of my mouth!
John Armstrong
29th September 2011 10:34pm
Having completed my first cross race a couple of weeks ago at the Hoggenburg course at hog hill, finishing 3rd from last I can safely say it's tough. I finished the etape this year on Alpe D'Huez and thought an hour of bumbling round on my cx bike would be a breeze in comparison. But looking forward to Rapha Super Cross.
Konrad Manning
30th September 2011 11:08am
It's very easy to get hooked (or seduced as Collyn writes) by 'cross. Hope to see you all at Rapha Super Cross : )
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- RT @rapharacing: A Rapha travel set is up for grabs in Alpe D'Quiz today, featuring a luxurious Rapha Skincare bundle and Wash Bag. → http:…
- Somewhat late to the party, but be sure to check out the film to the recent Gentlemen's Race in… http://t.co/RMZUDuxWRc
- A Rapha travel set is up for grabs in Alpe D'Quiz today, featuring a luxurious Rapha Skincare bundle and Wash Bag. → http://t.co/3n8XlqiNYq
- Cool to see our friends @chriskingbuzz representing in the mix of the elite men's race. #mycielo Parbo! http://t.co/L8g8gNofyR
- The masked man on the cyclocross course today was @jeremypowers. It was that cold. http://t.co/KztIjCYu4O
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- They reopened the ice covered fly-over here in Bend. http://t.co/6xOs5BSd0W
- River City Bicycles racer Ryan (Dream) Weaver 2_wicked_awesome powered his way to a chilly 2nd in the… http://t.co/HDDjDnS99w
- Meanwhile over in Bend, Oregon it is a bright, crisp day for cyclocross racing. http://t.co/6lcDQK5UNX


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Lets see those costumes! Best one wins a bottle of GF-T21, no logging required but would be appreciated or a final review.
atleast 18 and a US resident
Lets see those costumes! Best one wins a bottle of GF-T21, no logging required but would be appreciated or a final review.
atleast 18 and a US resident
Well this was me about 6 years ago. Big fan of the Blade movies.
I wanted to go as Leonidas from 300 this year but I'm not looking good enough yet. So it will be big upgrade of Blade from 6 years ago. Will do the crazy fades on the side of the hair as well this year.
And last year I was working at a Mercedes Benz dealership in Long Island, I have no idea where the idea came from but I went as a terrorist. Not cool I know but to my surprise everyone at work was cracking up and had a great laugh since I can do the Borat voice and I would mix in Arnold's voice in as well.
Maybe next year if I win this the mass gains and bigger muscles will come and I will finally be able to pull of the Leonidas look
Vanilla Dream ISOTEAN http://anabolicminds.com/forum/supplement-reviews-logs/233323-isotean-vanilla-dream.html
I was a vampire from twilight last year.
Wow, this product looks pretty sick. IDK how I haven't seen it yet!
This was my Native American costume from both my freshman and sophomore years of college. A bunch of friends and I all did this. I didn't wear it last year and probably won't again this year (senior in college now). I'll definitely bring it back one year though for sure, possibly next year (in a six-year PT program). YES, we just wore whitey tighteys and homemade loin cloths.... that's it. Well, shoes also. Definitely was a lot of fun tho, but I remember those being some coldddddd nights!
Haha just being a goof in that last shot... and thankfully I can say I have gained a lot of muscle since those days... Take notice of the accessories and tattoos! The tats weren't that great the first night (last picture), but the second night, this chick gave us all some pretty intense tattoos (as you can see in the first three photos). Definitely a fun Halloweekend. I still can't believe I didn't manage to pull any chicks either night that year!
Oh and I'm gunna be honest, if selected, I wouldn't have time to give a full log but definitely could give a review following my run with GF-T21. Something tells me I would wanna buy a second bottle to run back-to-back! Looks pretty darn legit.
heres my costume for this year, Man of steel aka superman haha, and last night i had the batman underwear
in to see these submissions, lol. nice promo HVAC
Formutech Nutrition Rep----------------
This isnt a Halloween costume, its their job? lol
Best costume ever?
a faster, funnier costume
Its just a comparison I know its not a costume. This will run until halloween night
Here's one just for fun. Old school army guy. I always likes the ones with the rocket launcher the best though!
Formutech Nutrition Rep----------------
Princess Leia, my vampire wife, and myself... some vampire teeth, fake blood, and eye shadow. Easy enough!
Myself as a beer keg. Drink up. That helmet actually worked too. I had a beer in there and would dispense myself drinks throughout the night!
great pics everyone! look out for another fahrenheit halloween promo real soon.
Cool promo, hvac. I may toss something up, later.
I take my costumes pretty seriously and I'm still hammering down what I'm doing, this year.
Psalm 34:10 - "The lions may grow weak and hungry, but those who seek the Lord lack no good thing."
EvoMuse Rep | This is what we've been workin on... | Inspire to Evolve
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Team EBF Elite http://enhancedbodyformulations.com/


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text: For those who still insist on using the prohormones, I bet this would be a GREAT addition for PCT with its strong anti-e properties. RPM would keep your strength and energy up as well during PCT. Now why anyone would want to use a prohormone after trying RPM is beyond me, but for those who will this would be a great addition! Dirk, what do you think?


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Chaudhry Javed Iqbal Enterprise
Head, Digital Performance and Governance at British Council
16 June 2008 13:52pm
Hello all!
We use http://usablenet.com/usablenet_assistive.html to render a text only version of our site (www.britishcouncil.org) . In our redesign I am looking at implications of not offering this service and would welcome any feedback, comments or advice.
Best wishes,
Chaudhry Javed Iqbal
e-Strategy ManagerBritish Council
Denis Kondopoulos
Technical Project Manager (MBA, MBCS, CITP, CEng) at Naxtech.com
22 June 2008 00:26am
Hi Javed,
I believe there is a better solution which will eliminate the issue of having or not having a text version of the site. My recommendation is that you redesign the website so that it meets Web Accessibility standards. This will eliminate the issue and will also offer some modernisation of your website. Can also provide further info on this if you need.
www.naxtech.com -
Hi Javed
It is relevant and only going to get more relevant as the web becomes mainstream and we have to support an entire population's access to it.The only way to ensure that a website is usable by everybody is through user testing. Using an automated add on to try to include accessibility as an after-thought is the wrong way to think about it. You are not trying to tick compliancy boxes "such as ADA, Section 508, W3C, etc", you are trying to make sure that the website works for real people.
If you are building a new website, and writing modern, standards-compliant HTML, CSS and JavaScript, then there is definitely no need to use that kind of service. Designing the site to be accessible from the beginning, instead of trying to add accessibility once it is complete, means that everybody can benefit from a better website.
Examples of how good HTML, etc. solves the same problems.
Using descriptive alt text where appropriate means that the meaning of images can be conveyed to people using screen reading technologies.
Layout, colour, and typography are provided using CSS, which can be overwritten using people's own customised styles sheets or through the browser. If required we could include ready-made alternative stylesheets which people can access through the browser.
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Sears Point International Raceway
I had planned to get the Phantom Nascar2 conversion updated with some usable pitstalls and a competitive ai...
I got carried away.
This is the best I could come up with using the limited information, graphics, ability, and time I had. It's far from completely accurate and it represents no particular time period, other than something from before 1995 ( not including the garage area, which didn't really have anything there, and a pit exit lane I added for ai control ).
I hope you find it okay.
Download: SearsPoint IR
Sears Point IR
Started by
, Mar 31 2008 - 01:12 AM
4 replies to this topic
Posted Mar 31 2008 - 01:12 AM
Posted Mar 31 2008 - 10:37 AM
Great work on that track Fortine !!!
Thanks a lot
Thanks a lot
No Games but Racing Sims !!!
Posted Apr 02 2008 - 08:13 PM
fortine_oo, on Mar 31 2008, 01:12 AM, said:
I hope you find it okay.
Uhmm, a little better than that. Ok, fortine_oo is a friend (and mentor) but that's a bit modest. Having watched the track progression I have a pretty good idea of the work that went into it. I have no idea what it drove like at the time but it provides plenty of challenge for me now! Thanks fortine_oo for another nr2k3 landmark.
Posted Apr 04 2008 - 04:00 AM
I have great memories of old Sears Point in N2, N1 and ICR2.
Thank you for bringing it to Nr2k3.
Thank you for bringing it to Nr2k3.
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By Abheek Bhattacharya
In the rush by foreign airlines to get a piece of India's airspace, domestic firm SpiceJet looks like an unwanted orphan.
New Delhi's move a year ago to let foreign airlines own up to 49% of local carriers has opened up the biggest new market for the global industry. India is set to be world's third-largest aviation market by 2020, according to analysts at CAPA-Centre for Aviation.
Abu Dhabi's flagship Etihad Airways tied up with India's Jet Airways earlier this year. Malaysian low-fare giant AirAsia and full-service Singapore Airlines announced separate ventures with Tata Group, the conglomerate that owned Air India before the state seized it in the 1950s. These firms have deep pockets and operational expertise to fight it out in India's tantalizing yet regulation-heavy airspace.
There are three major domestic airlines that haven't tied up with foreigners. Market leader IndiGo is closely held and considered the strongest of the bunch. State-owned Air India constantly turns to taxpayers for bailouts and isn't under the same commercial pressure.
That leaves budget airline SpiceJet, which carries one in five Indian fliers, all alone. Based in Chennai in southern India, it will go head-to-head with the Air Asia-Tata low-fare venture, which also plans to set up its hub there.
Investors are increasingly worried about SpiceJet's financial position, with the stock down 61% this year. Debt on its books has risen to the point that its liabilities were nearly $100 million more than its assets as of Sep. 30, implying its net worth is negative.
Loans of $40 million are due in 12 months and the company certainly isn't generating the needed funds. Its losses before interest, tax, depreciation and amortization widened to about $80 million in the latest quarter, almost four times the loss a year earlier. Ebitda will be positive only by the year that ends March 2015, forecasts IIFL Capital, an Indian brokerage. SpiceJet's majority shareholder, south Indian media baron Kalanithi Maran, injected $8.7 million on Nov. 30, but that isn't enough. The airline needs around $300 million over the next three years, says CAPA analyst Kapil Kaul.
A foreign suitor would be a natural fit to swoop in on SpiceJet. But a year after New Delhi's liberalization, that flight has yet to arrive.
Write to Abheek Bhattacharya at email@example.com
BEIJING—China took another long-expected step toward interest-rate liberalization on Sunday, giving banks the freedom to issue large-denomination negotiable certificates of deposit.
The interest rate on the new instruments will be determined by the market, unlike ordinary bank deposits, which are subject to an interest-rate cap in China. Initially they will be available to fund managers and participants in the interbank market, but not issued directly to individuals or nonfinancial enterprises.
Banks will be allowed to issue the new instruments from Monday, the People's Bank of China said in a statement on its website. The minimum amount for a single CD is to be 50 million yuan ($8.2 million), according to the statement. They can also be traded on the secondary market.
China's road to financial liberalization follows a path taken by other countries, including the U.S., which phased out controls on interest rates via CDs. The next logical step will be to make CDs available to the public, offering higher interest rates to individual savers than they would get from an ordinary deposit.
The move is the latest step toward a fully market-based system of interest rates. China scrapped controls on interest rates for most loans in July, but deposit rates are still subject to a ceiling.
Regulators have signaled their intention to gradually phase out the interest-rate ceiling, which acts as an implicit tax on savers and a subsidy to borrowers.
By forcing banks to negotiate the cost of lending between themselves, CDs will provide a clearer picture of the cost of capital in a market-driven environment.
The new instruments also offer banks a way to manage their liquidity at a time when financing conditions are becoming tighter. An unexpected cash crunch in June briefly sent overnight interest rates to more than 30%, raising fears that some banks have become dependent on fickle short-term funding.
CDs would offer a source of funding which is locked in for a minimum of a month and a maximum of three years, according to the PBOC's guidelines. The central bank envisions two types of CD, fixed rate and floating rate, based on Shibor, the benchmark interbank rate.
The PBOC is eager to secure a good level of disclosure from the banks. Banks have to announce their planned annual issuance to the central bank before they start issuing CDs and can't exceed that quota, the PBOC said.
–Richard Silk and Grace Zhu contributed to this article.
By Sital Patel
Entrance to the Butner Federal Correctional Complex in Butner, N.C.
"I will be pleased to have you visit," read the email that landed in my inbox this spring. It was signed, "Bernard Madoff."
That exchange led to a two-hour meeting in May with the most notorious fraudster on Wall Street, during which Mr. Madoff pointed fingers at others and said his decadeslong Ponzi scheme wasn't really his fault. He was dismissive of regulators and whistleblowers, calling Harry Markopolos—a fraud investigator who warned the Securities and Exchange Commission about Mr. Madoff—an "idiot."
The federal prison in Butner, N.C., looks more like a small college campus than a penitentiary. The low buildings, surrounded by barbed-wire fences, are on sparse grounds set back from the road.
Once past security at the front desk, I was greeted by the prison's public-information officer, Angela Langley. We were buzzed through a set of three metal doors, the final coming after a walk down a long, cold corridor with neutral colors.
The officer then directed me to a large room that Ms. Langley said was for "recreation" and which contained vending machines, books and magazines. Mr. Madoff entered and we shook hands.
The 75-year-old, dressed in beige polyester pants and shirt with a matching canvas belt, showed no signs of stress. He told the occasional joke and said he was lucky to be in Butner, as it had a reputation of being "very laid back" and is kind of like a "camp."
"This is as good as it gets," said Mr. Madoff. He explained that the Federal Bureau of Prisons "put you where you will survive."
As a reporter for MarketWatch, I initially contacted Mr. Madoff for a story about transparency on Wall Street and fairness for investors, and I reflected on the conversation recently as the five-year anniversary of his fraud's discovery approached.
But—discussions of transparency and fairness aside—it was clear from the outset that he wanted to justify the actions that resulted in his 150-year prison term. He said he felt "trapped" into the con by other people and always thought he would be able to get himself out of it.
His investors, he said, were "sophisticated people" and should have known better.
"People asked me all the time, how did I do it. And I refused to tell them, and they still invested," he said. "Things have to make sense to you. You should ask good questions."
He insisted banks knew about his fraud and were complicit in the scheme for years. At one point, when I didn't follow his logic about the banks, he snatched the notepad from my hand and wrote out what he meant.
One factor that allowed the Ponzi scheme to continue for so many years, he said, was that he had a lot of credibility in the industry. He dropped names and talked a lot about the old days, when he was among Wall Street's trading elite, sitting on industry committees and hobnobbing with a financial-services Who's Who.
Mr. Madoff played down the possibility that regulators could have caught him earlier if they had listened to the warnings from Mr. Markopolos, saying he was "an idiot" who gave the SEC bad leads.
His fraud persisted for so long, he said, because auditors didn't verify his firm's assets at depository trusts.
"If they had checked me, I would have been found out," he said.
After he got caught, Mr. Madoff told me, he wrote apology letters to former SEC chairmen Arthur Levitt and Mary Schapiro.
But he also insisted that none of his employees, with the exception of Frank DiPascali Jr., knew that he was involved in a Ponzi scheme. They falsified records, but they didn't know about the fraud, said Mr. Madoff. Mr. DiPascali has pleaded guilty and his testimony is continuing this coming week in the trial of five other Madoff employees. All of them have pleaded not guilty to participating in the fraud.
Mr. Madoff recalled one of the first moments he sensed that economic conditions in 2008 could be fragile. He was at the Palm Beach Country Club in Florida, he said, and he had "a young black kid" for a caddy, and the caddy was buying and selling homes.
"He said he didn't need credit. He would buy homes and flip them for a profit," Mr. Madoff recalled. "I told my wife, 'This is the end.' "
The end of the housing boom would be a contributing factor in the collapse of his fraud, as many investors began seeking to cash out as the economy stalled and financial assets sank in value.
At other times, he wanted to talk more broadly about the markets. He said that, if he had money, he wouldn't put it in the markets, because they are no longer about raising capital. Instead, he said, they simply shuffle money among investors. He also criticized the Federal Reserve's stimulus program as the "greatest manipulation" he had ever seen.
Mr. Madoff said inmates and prison guards constantly ask him for investment advice. Prisoners at one point wanted him to teach a course on how to invest, but he said the prison wouldn't allow it.
For most of our chat, he was in good spirits. He joked that his brother Peter's prison in South Carolina was a "camp" and much nicer than Butner. Peter Madoff, who was sentenced to 10 years in prison for his role in the fraud, refuses to speak to him.
No one in his immediate family talks to him, not even his wife, he said, adding that this was the worst consequence of his conviction.
His son Andrew Madoff refuses to talk to him and won't allow his wife to speak to him either, he told me. Mr. Madoff briefly brought up his other son, Mark, who committed suicide following the revelations of his father's Ponzi scheme. Mr. Madoff said he regretted that happened but showed little emotion.
The only family members who visit Madoff are the daughters of his wife's niece, who attend a college nearby, he said.
While prisoners can use the phone for 15 minutes at a time and have up to 300 minutes a month, Mr. Madoff says he doesn't use his allocation because he doesn't "have anyone to talk to."
By Takashi Nakamichi
Bank of Japan Governor Haruhiko Kuroda at a news conference in Tokyo August 8.
For Bank of Japan Gov. Haruhiko Kuroda, sending out a clear message is important. The bank has set a target of achieving 2% inflation in two years through doubling of asset purchases to double the money it pumps into the economy.
"The days of 'constructive ambiguity' is over," he told students at his alma mater on Saturday, eight months after he led the BOJ to introduce the drastic easing policy which the bank has dubbed as "quantitative and qualitative easing (QQE)."
"The 'QQE' has been producing the anticipated results and Japan's economy has been following the path toward achieving the 2% price stability target, as expected," Mr. Kuroda proudly told the audience gathered at the University of Tokyo, where he graduated from in 1967.
But when it comes to the issue of exiting ultra-loose monetary policy—a challenge facing the U.S. Federal Reserve that has shaken global markets–Mr. Kuroda appears to have no intention of shedding vagueness.
"Experiences of, for instance, the Federal Reserve, the Bank of England or the European Central Bank show that if forward guidance is extremely complicated, that may have unintended results," Mr. Kuroda said.
"Transparency is important," the governor said, but added: "too complicated forward guidance or too complicated communication could–I don't say 'backfire'—be less efficient and sometimes even disruptive."
To be sure, with Japan's consumer prices rising at a rate far below the BOJ's 2% target, Mr. Kuroda is under little pressure to worry about communicating exit policies.
Since implementing its aggressive easing policy in April, the BOJ has taken pains in emphasizing the potential effects of its measures while avoiding debate on how it planned to withdraw from the policy in the future.
BOJ officials appear to believe that they need to keep saying positive things about the economy if they are to change the deflationary mindset that has set in over the last 15 years of deflation. If people begin to believe that prices will rise, that will become a self-fulfilling prophecy, they hope.
The recent rise in Japan's consumer prices is a sign such sentiment is finally changing, and the worst thing to do now, they say, is to talk publicly about exit policies. That would raise speculation that the BOJ may end its easing sooner rather than later, possibly letting Japan's economy sink back into deflation.
"The bank will continue with the QQE, aiming to achieve that target, as long as it is necessary for maintaining it in a stable manner," Mr. Kuroda reiterated on Saturday.
Yet, with the BOJ now buying a whopping 70% of newly issued government bonds—far more aggressive than the bank's first quantitative easing in the 2000s—some Japanese lawmakers are worried that it may produce unintended side effects, such as asset-price bubbles. Mr. Kuroda has recently been grilled in parliament on how he intends to pull out of the policy without causing such trouble.
Mr. Kuroda on Saturday acknowledged that the task was challenging, given that major central banks have had little experience in terminating easing policies of the current size.
"We central bankers, as well as market participants, may be less certain about what kind of impact exiting from QEs could have on the markets and economies."
By Erica E. Phillips
LOS ANGELES—The city of Los Angeles added Bank of America Corp. to a group of banks it is suing for alleged discriminatory lending practices that it says led to a crippling wave of foreclosures.
The filing in federal court Friday followed two lawsuits the city brought Thursday against Wells Fargo & Co. and Citigroup Inc.
In much the same language used in the earlier suits, Los Angeles called Bank of America's loan terms "predatory," saying the bank engaged in "a widespread practice of discrimination" against minority borrowers in primarily minority neighborhoods. Those practices "led to a wave of foreclosures that continues to diminish the City's property-tax revenues and increase the need for, and the costs of, City services," according to a city attorney's office statement announcing the new lawsuit.
Bank of America said the city had "no basis" for its claims. "We responded with urgency to rising mortgage defaults that resulted from the country's severe economic downturn and the personal financial hardships…that resulted for so many Americans," the bank said in a statement Friday evening.
The lawsuit asked that the bank be enjoined from discriminatory practices. It also asked that Bank of America compensate the city for lost tax revenues and other financial "injuries" and that punitive damages be assessed for "willful, wanton, and reckless conduct."
On Thursday, Citibank called the lawsuit "without merit," and Wells Fargo also called the lawsuit "meritless."
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By Robin Sidel, Chao Deng
Bitcoin prices tumbled almost 13% Friday after an affiliate of China's biggest Internet search company stopped accepting payment in the virtual currency following a warning by China's central bank.
"Due to the recent fluctuations in the price of bitcoin, the interests of users cannot be protected," said a statement dated Friday on the website of Baidu Jiasule, an affiliate of Baidu Inc. that sells Internet-related protection services.
"In response to the government's stance to control bitcoin's risks, Baidu Jiasule has decided to stop taking bitcoins for its services starting today," it said.
A spokesman for Baidu declined to comment on the move, saying the company has only a minority stake in Jiasule. Phones at Jiasule weren't being answered on Saturday.
The People's Bank of China on Thursday said financial institutions shouldn't take deposits from bitcoin-related businesses or provide them insurance or custody services, though it said individuals could continue to buy and sell bitcoin. The central bank also warned of risks from speculative trading and money laundering associated with bitcoin.
The Chinese government's concerns about bitcoin are a blow to the fledgling currency, which has been surging for weeks partly due to growing interest from China.
The price of a bitcoin stood at $909.71 on Friday based on the CoinDesk index of three popular bitcoin exchanges.
The line is "blurring" for what is and isn't considered a financial institution in China, said Zennon Kapron, founder of Shanghai-based financial consulting Kapronasia, who says he is also a small bitcoin investor. Internet companies such as Baidu and Alibaba Group Holding Ltd. are increasingly moving into finance-related services in order to tap the growing ranks of online Chinese.
Baidu's statement is likely "precautionary," he adds. Most regulations that come out in China are "vague when they first come out," he said.
Baidu started accepting bitcoin as a payment method for its online security and firewall services in mid-October, although it isn't known how many transactions took place.
A growing number of venture capitalists have been investing in bitcoin-related companies, but widespread volatility about the unregulated currency has created uncertainty about its ultimate value. Bitcoin isn't backed by a central bank and is created through a computer process called mining.
Bitcoin prices started the year at less than $20, but have surged above $1,000 in recent weeks.
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By Al Yoon
U.S. municipalities are rushing to borrow money in the bond markets by the end of the year, aiming to get cash in hand while interest rates remain low.
Municipalities have teed up about $10 billion of new debt sales for the coming week, including large offerings from the New York State Thruway Authority and toll-road finance entities in Kentucky and California.
The surge helps close a rocky year for the $3.7 trillion municipal-bond market. The debt issued by cities, schools and public authorities has been buffeted since May by rising long-term interest rates, Detroit's bankruptcy filing and lingering fears about defaults and fiscal headwinds for issuers such as Illinois and Puerto Rico.
This year's $293.7 billion of new issuance is nearly 20% below 2012′s tally, and the smallest since 2011, according to Thomson Reuters. Investors in muni debt, year to date, have lost 2.7%—on track for the worst performance since 1994, according to Barclays.
Investors say they expect the offerings will draw relatively high yields, amid a rise in U.S. Treasury-debt rates this month in expectation that the Federal Reserve could cut back its $85 billion monthly bond-buying program. The deals also come as some investors already have slowed buying in anticipation of a larger slate of new issues in the new year, one dealer said.
"The deals will have to be priced to go," said Peter Hayes, head of the municipal-bonds group at BlackRock Inc., meaning issuers will have to offer higher rates to entice buyers as retail investors continue to pull out of the market.
Fearing tougher times for bonds and some municipalities as interest rates push higher, investors have pulled a record $52 billion from muni funds this year, including the past 28 weeks, according to data tracker Lipper.
A summer selloff hurt municipal bonds more than other types of debt, attracting value-seeking investors who don't usually buy for the tax-exempt status. The fresh buying has reduced municipal-bond yields to 96% of Treasury rates, compared with 108% in July, according to Thomson Reuters Municipal Market Data.
"We're literally buying tax-exempt bonds for our taxable accounts," said Scott Minerd, chief investment officer of Guggenheim Partners, which manages about $190 billion.
Toll-road deals in New York, Kentucky and California comprise $4.6 billion of the coming week's slate and put the sector on track to sell its most debt since 2010. But the deals come as the toll roads have faced slow growth since the recession and have taken on additional debt as states shifted some transportation costs to toll roads.
The New York State Thruway Authority is raising money to build a replacement for the Tappan Zee Bridge by issuing $1.6 billion in debt, which would be retired by a federal loan in 2019, according to ratings firms. The three-miles-long bridge spanning the Hudson River north of New York City opened in 1955, according to the Thruway's website.
Credit raters recently cut the authority's senior-debt ratings as it is expected to borrow up to $4.5 billion for the new bridge. Ratings firms also cited concerns the authority hasn't yet planned toll increases needed to pay for the bridge and that traffic volume could fall once prices are raised. The authority's debt is vulnerable to construction delays and cost overruns, Moody's Investors Service said as it downgraded the authority's debt one notch last month to A2. A special floating crane is being shipped from the West Coast, it said.
Even so, some investors said they have preferred the debt of toll roads and other revenue bonds, whose payments are tied to specific income streams rather than being general obligations of the state or municipality.
Investors became more skeptical of general-obligation debt after Detroit's emergency manager Kevyn Orr said he would treat it as unsecured debt and said it was unlikely to raise taxes to protect investors from losses.
Revenue bonds are preferable right now, said Mark Paris, a portfolio manager with Invesco, which oversees $764 billion in assets. Investors "like that they can touch and smell what's going on."
California's Foothill/Eastern Transportation Corridor Agency is expected to sell $2.2 billion of refinance debt and push out its repayment by 13 years to 2053. The toll road has been dogged by declines in traffic due to the economic downturn and several toll increases, said Fitch Ratings.
In a third offering, Kentucky Public Transportation Infrastructure Authority plans to sell about $750 million for its Downtown Crossing Project, which includes a new toll bridge across the Ohio River in Louisville.
–Mike Cherney contributed to this article.
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By Jason Zweig
So far this year, only 11 companies in the S&P 500 index have "split" their shares—the fourth-lowest number on record and down from an average of nearly 65 a year in the 1990s, according to Howard Silverblatt, a senior analyst at S&P Dow Jones Indices. In a stock split, a company increases the number of shares you hold while lowering the price accordingly. A 2-for-1 split, for instance, would turn one share of a $100 stock into two shares worth $50 apiece.
If you are thinking that two nickels wouldn't make you any richer than one dime, you are right. But investors don't always think so clearly, and the decline of splits could be a sign that the markets haven't gone as gaga as some skeptics fear.
Years ago, near the peak of the Internet bubble, just the announcement of a split could send a stock into orbit. On Jan. 25, 1999, Xerox shot up 10.4% when the company said it would split 2-for-1. The next day, eBay went one better with a 3-for-1 announcement that sent its stock up 37.4%.
Back then, active retail traders paid up to $1,000 a year for pager services that would beep them with news of upcoming splits. In 2000, one investor emailed me: "I own Intel and need two more splits after the one in July to retire." (I never heard from him again; Intel hasn't split since.) Some research has showed stocks that split have better long-term returns than those that don't, perhaps because investors believe splits signal corporate health. But those findings have been contested, and investors who think that splits are a reliable way to beat the market are asking for heartbreak.
Traditionally, companies appear to have targeted their share prices to a level they believed would appeal to the individual investors who then dominated the markets. Cornell University finance professor Roni Michaely and his colleagues have found that between 1933 and 2007 the average share price of major U.S. stocks remained remarkably constant, rarely straying far from $25 to $35. Anytime a stock went much higher, the company chopped it back down with a stock split. (Warren Buffett's Berkshire Hathaway, whose A shares have never split and trade above $174,000, was long the glaring exception.)
A few companies, including Cabot Oil & Gas, Colgate-Palmolive and Lorillard, have split this year. But Netflix, which last split in February 2004 when it passed $70, has stayed whole, lately soaring above $355 a share. Amazon.com split twice in 1999—but never since, even with the shares nearing $400. Netflix didn't respond to a request for comment; Amazon.com declined to comment.
Mr. Silverblatt of S&P Dow Jones Indices calculates that the average stock price in the S&P 500 is up 29% this year, to an all-time high of $75.83. At the end of 2011 only 33 companies in the S&P 500 had share prices over $100. This week, 78 did. Six are over $500 a share; two (Priceline.com and Google) top $1,000. At the end of 2011, Google was the only S&P 500 stock trading above $500.
Why have splits dwindled?
Splitting a stock costs a company at least a few hundred thousand dollars, say industry experts. And "as long as we're in this economic malaise, a lot of [companies] are going to hold their cards and just wait," says David DeSonier, head of investor relations at Leggett & Platt, a manufacturer based in Carthage, Mo., whose stock hasn't split since 1998.
The high-frequency trading firms that hold shares for less than one day at a time earn tiny profits per share, making it more profitable for them to trade stocks with lower prices, trading experts say. "A lot of companies do think they become high-frequency prey at a lower share price," says Ana Avramovic, a trading strategist at Credit Suisse in New York. Therefore, they may be avoiding splits in an attempt to shelter their stock from churning and volatility.
John Linehan, head of U.S. equity at T. Rowe Price in Baltimore, says that the success of companies like Google, Apple and Priceline has made it "a badge of honor to be able to say that your stock is at $500 or $600 a share or more."
On balance, the decline of splits is probably healthy.
Individual investors can trade shares priced at hundreds of dollars apiece—or even a few thousand dollars—just as economically as those priced at $10 or $20, says Joe Saluzzi, partner at Themis Trading, an institutional brokerage firm in Chatham, N.J.
Companies appear to care less today about catering to the delusion that anyone can get rich quick off stock splits. Now if only investors would learn that the value of a business matters more than the price of its stock, we could all split and go home.
By Tony C. Dreibus
Farmers spread corn to dry on a road in the outskirts of Beijing. Imports of the grain have risen thanks to lower international prices.
CHICAGO—U.S. corn futures fell Friday amid concerns that export demand will suffer because China—a key buyer—has been rejecting U.S. grain containing an unapproved genetically modified strain.
China's General Administration of Quality Supervision, Inspection and Quarantine said this week it had rejected more than 120,000 metric tons in five separate shipments of U.S. corn after inspectors in Fujian, Shenzhen and Shandong provinces found the genetically engineered insect-resistant MIR 162 strain. Shenzhen regulators also rejected U.S. grain for the same reason last month, it added, without providing any details.
Traders worry the actions could herald a period of reduced shipments to China from the U.S., the world's biggest corn producer and exporter.
"Six or seven cargoes is small, but the market obviously took it into account as a negative factor, and we're still going to keep watching it," said David Fiala, the president at risk management and brokerage firm FuturesOne in Lincoln, Neb.
Corn for December delivery fell 1.25 cents, or 0.3%, to $4.215 a bushel at the Chicago Board of Trade. Corn futures have tumbled 40% this year amid expectations for a record U.S. crop. Export demand, however, has been relatively strong, keeping prices from falling further.
China, which mainly imports corn from the U.S., is expected to take in 7 million metric tons of corn in the crop year that began Oct. 1, more than triple the amount last year, according to the U.S. Department of Agriculture. A decade ago, the Asian country imported 2,000 tons of the grain, which it mostly uses in animal feed.
"We're likely to see fewer shipments [from the U.S.] in the next few months, as China seems to be stepping up scrutiny on GMO imports," said Zhang Yan, an analyst at Shanghai JCI, an industry consultancy.
Analysts are concerned that China is seeking to protect domestic producers of the grain.
"If the [Chinese] government wants to pick on U.S. corn imports, then I suspect more rejections will come along" in the coming weeks, said a Beijing-based trader at a foreign commodity house.
China has started to allow some genetically modified corn shipments, with authorities having approved 60,000 tons of biotech Argentinean corn for import this summer, the Ministry of Agriculture said in August.
Meanwhile, the government is reviewing an application to import the MIR 162 strain, the official Xinhua news agency reported Friday, citing the agriculture ministry. According to Xinhua, Swiss biotech company Syngenta AG last month resubmitted an application for the strain to be allowed in China after an earlier application was rejected as it was incomplete.
–Yue Li in Shanghai contributed to this article.
By Francesca Freeman
Tin ingots in a warehouse in Indonesia, which will ban mineral-ore exports.
Tin prices rose to a nearly five-week high on the London Metal Exchange, after Indonesia said it would indeed tighten control of its rich natural-resources sector.
Exports of mineral ores will be banned, starting in January. The southeast Asian country is a major supplier of tin, nickel ore and bauxite, which is the feedstock of aluminum smelters.
Despite the ban being proposed in 2009, Indonesia's announcement Thursday came as a surprise.
"The market up until now had been pretty complacent about the ban," said Gayle Berry, a base metals analyst at Barclays. "A lot of people were of the view that in the past the Indonesians haven't gone ahead with regulation and bans that they'd spoken about, so [they] didn't believe that it would happen."
The LME's three-month tin contract rose to $23,250 a metric ton—its highest price since Oct. 30—at its peak Friday but finished the day's trade up just 0.9% at $23,150. Aluminum gained 1.1% to $1,778 a ton, and nickel ended 0.1% higher at $13,760 a ton.
While Indonesia's tin exports are primarily in a refined, ingot form, the ban raised concerns over the country's protectionist stance toward its natural resources.
In May 2012, Indonesia imposed a 20% export tax on raw minerals. In August this year, it outlawed the export of tin ingots not traded on the country's commodities exchange, and the government also has limited foreign ownership of mines. The moves are part of a government effort to add value to Indonesia's exports, develop metal production and increase its control of supplies.
"Protectionist is an understatement," said Charles Swindon, managing director of London metals-trading firm RJH Trading. "The ambition for control of the metals markets from the part of the Indonesian government is stronger and more robust than ever."
Despite tin's gains Friday, analysts expect nickel prices to benefit the most from the Indonesian move.
Indonesia is the world's No. 2 exporter of nickel ore, which feeds China's nickel-pig-iron industry. Nickel pig iron is a lower-quality, less expensive alternative to pure nickel that can be used in stainless-steel production.
Reduced supplies of nickel ore to the pig iron industry would raise demand, and prices, for nickel, analysts said.
In addition, the nickel market is extremely short at present, as bets on falling prices have been building in recent months, said Standard Bank analyst Leon Westgate.
It wouldn't take much to push traders to cover those bets, sending nickel prices higher, Mr. Westgate said. " The question is whether this ore-export ban provides the trigger."
–Linda Silaen and Andreas Ismar contributed to this article.
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By Dan Fitzpatrick, Michael Rothfeld
J.P. Morgan Chase & Co.'s alleged failure to file a key federal document more than five years ago is emerging as a critical component of a Justice Department investigation into whether the bank provided adequate warnings about the fraud of Bernard L. Madoff, people close to the probe said.
Manhattan U.S. Attorney Preet Bharara's office is examining why J.P. Morgan didn't provide U.S. regulators with a formal "suspicious activity report" raising concerns about Mr. Madoff—despite having done so with a U.K. agency more than a month before Mr. Madoff's arrest, said the people close to the probe. Mr. Madoff had a two-decade-long banking relationship with J.P. Morgan before his arrest in December 2008.
J.P. Morgan is negotiating a settlement with the U.S. attorney's office that will likely include a deferred-prosecution agreement and a fine relating to alleged inadequate warnings about Mr. Madoff, these people said. Prosecutors and the Federal Bureau of Investigation have been looking for a larger pattern of control failures inside J.P. Morgan and examining whether the bank allegedly failed to alert regulators despite numerous red flags, said the people close to the case.
It is possible a deferred-prosecution agreement with the U.S. attorney's office could be announced in the coming weeks, although that date also could slide to the beginning of 2014, these people added. A deferred-prosecution agreement is a pact under which a company pays a penalty and prosecutors file charges that are dismissed after a set period if the company lives up to certain conditions. Typically, the parties agree on a statement of facts about what occurred.
Mr. Madoff pleaded guilty to charges he ran a decadeslong Ponzi scheme that bilked investors out of billions of dollars, and the five-year anniversary of the fraud's unraveling is this coming week. Mr. Madoff is serving a 150-year prison term. J.P. Morgan has said it didn't know about or participate in the fraud.
A possible Madoff settlement is the latest attempt by the largest U.S. bank by assets to put as many legal woes behind it as possible. In recent months, J.P. Morgan has agreed to pay nearly $20 billion to settle an array of lawsuits and investigations, and it still faces scrutiny from regulators on areas ranging from trading to overseas hiring practices. It set aside legal reserves of $9 billion in the third quarter, bringing to $23 billion the amount held to absorb future settlements and lawsuits.
Federal law requires banks to file a suspicious-activity report, or SAR, when they "detect certain known or suspected violations of federal law or suspicious transactions."
There were roughly 1.3 million such reports filed in 2008 and roughly 1.6 million in 2012, according to federal data. J.P. Morgan alone typically files 150,000 to 200,000 such reports a year.
It isn't known why J.P. Morgan wouldn't have provided a formal warning to U.S. regulators prior to Mr. Madoff's arrest. But it did with U.K. regulators. On Oct. 28, 2008, the bank filed a document with Britain's Serious Organised Crime Agency listing several "concerns" about Bernard L. Madoff Investment Securities LLC, including investment returns that "appear too good to be true." The filing said "as a result" of the bank's Madoff concerns, J.P. Morgan sent out redemption notices to one Madoff-related fund and was preparing similar notices for two other such funds.
The document was reviewed by The Wall Street Journal and also was cited in a separate 2010 lawsuit brought by a trustee seeking to recover money for Mr. Madoff's victims. It was submitted by Rebecca Smith, a J.P. Morgan employee who was listed as the bank's vice president for the U.K. Through a bank spokesman, Ms. Smith declined to comment.
The U.K. filing came after a London J.P. Morgan employee was threatened while trying to redeem the bank's money from a fund that channeled cash to Madoff, according to court documents. "We know where to find you," this employee was told, according to those documents. That episode was cited in the 2010 trustee lawsuit. A portion of the suit was dismissed in 2011 by a federal judge. The trustee, Irving Picard, has said he plans to appeal that decision.
An SAR filing in the U.S. is required if a bank suspects a transaction of $5,000 or more could involve money laundering or terrorist financing. The definition of suspicious activity is vague and forces banks to use discretion in filing the reports, said Brandon Garrett, a professor at the University of Virginia School of Law. But a company also can be prosecuted for not having an effective anti-money-laundering program in place, he added.
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By Julie Steinberg
A federal judge in New York blasted the culture of Wall Street and the regulators that police it during the sentencing of a former Goldman Sachs Group Inc. trader.
U.S. District Judge William Pauley said that the case of Matthew Taylor, who in 2007 conducted an $8.3 billion unauthorized trade at Goldman and concealed it, "presents a paradigm of everything that is wrong with Wall Street and the regulators that are charged with protecting the public."
Judge Pauley sentenced Mr. Taylor to nine months in prison and three years of supervised release. He also ordered him to begin paying back the $118 million in losses Goldman incurred as a result of the trade after the prison term ends. Judge Pauley also ordered Mr. Taylor to perform 400 hours of community service, teaching mathematics to underprivileged children.
"Mr. Taylor accepts the judgments of the court," said his lawyer, Thomas Rotko, after the sentencing. "We are pleased the judge saw this matter as we did, as an indictment in part of the regulatory system itself." Mr. Taylor's lawyers had asked the judge not to impose any prison time.
Mr. Rotko added after the sentencing: "Any time anybody is sentenced it's not a happy event. It's a tragic event."
During the sentencing the judge said he disagreed with the government's sentencing guidelines, which are predicated on Mr. Taylor's salary and not on the losses Goldman incurred. Still, he said he thought the government's guidelines were too harsh.
Mr. Taylor, who according to his lawyer now works as a swimming-pool cleaner in Florida, pleaded guilty to a count of wire fraud in April. Prosecutors had recommended a range of two years and nine months to three years and five months in prison. That range was based on Mr. Taylor's compensation for 2007—$150,000 in salary and an expected $1.6 million bonus.
Mr. Taylor's conduct was "aberrant behavior," the judge said, and nine months would serve as a deterrent to both Mr. Taylor and others in his field who might be tempted by similar activity.
The judge was also critical of Goldman Sachs. He said that "though Goldman terminated Taylor, it was seemingly unconcerned about his conduct." On the form Goldman filed to regulators about the dismissal, the firm was "silent about his lies to supervisors," the judge said, and "watched Morgan [Stanley] re-hire him."
A person familiar with the matter said Goldman filed the form, known as a U-5, in a matter of days with the Financial Industry Regulatory Authority, Wall Street's self-regulator, and also informed the CFTC about the situation.
"So much for Goldman's concern about the integrity of the financial markets," the judge said.
"We were clear in Taylor's U5 that he was fired for misconduct related to 'inappropriately large proprietary futures positions in a firm trading account,'" a Goldman spokesman said in an emailed statement.
The judge had harsh words for regulators, too, chastising the Commodity Futures Trading Commission for waiting five years to bring a civil action against Mr. Taylor. The CFTC sued Mr. Taylor in 2012. A CFTC spokesperson didn't respond to a request for comment.
It was "inexcusable" for the government to fail "to get its act together" when Mr. Taylor had confessed his crime to Goldman, the judge said. He lamented the "press releases" that regulators put out that "praise their own efforts" in combating financial malfeasance.
After leaving Goldman, Mr. Taylor was hired by Morgan Stanley, his former employer, as a trader. He left the firm over a year ago, said a person familiar with the case. Morgan Stanley declined to comment.
Mr. Taylor spoke briefly before the judge delivered the sentence, saying he and his family were trying to build a life away from Wall Street. He apologized to the court, to his family and to Goldman for his actions.
Prosecutor Steve Lee said Mr. Taylor had been motivated by "greed and pride."
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By Doug Cameron
CHICAGO–A senior Federal Reserve policy maker said Friday that he was becoming skeptical that the drop in inflation was transitory, though would retain an "open mind" about starting to reel back its bond-buying program at the Fed's upcoming meeting.
Federal Reserve Bank of Chicago President Charles Evans also said the latest dip in the unemployment rate probably overstates the improvement in the U.S. economy, and backed continuing its accommodative monetary policy.
Mr. Evans has long been a strong supporter of the Fed taking aggressive actions to aid the economy, notably to improve the labor market and bring down unemployment.
He told reporters after a speech here that the drop in the jobless rate had been surprising given the sluggish expansion of the economy.
However, while the jobless rate has fallen to 7% from 7.2% between September and November, most of this reflects people leaving the workforce.
Mr. Evans described the November employment report as "good," but said he'd like to see a couple of more months of similar data for assurance that the improvement was sustainable.
The drop in inflation was another key reason to maintain an accommodative monetary policy, he said.
"It's a really big puzzle," he said of the latest dip in inflation, noting that a phenomenon described by some observers as transitory had continued for some time.
Mr. Evans said it was tough to determine while the rate of price increases remained so moderate, though pointed to potential "drift" from accommodative policies throughout the global economy.
He said the Fed had to be prepared to defend the target from above and below.
The November jobs report reinforces the message from other recent U.S. economic data – such as the initial jobless claims, the Chicago PMI and auto sales – that all beat consensus forecast and signaled improvement from the sluggish summer performance.
"The unemployment rate [drop] probably overstates the improvement in the economy," Mr. Evans.
Fed officials are likely to debate at their Dec. 17-18 meeting whether to go ahead and reduce the scale of the $85 billion a month bond-buying program then or wait until the Jan. 28-29 meeting, Ben Bernanke's last as the central bank's chairman.
Mr. Evans, who expects U.S. GDP to grow by about 2.5% to 3% next year, said intense market speculation about a winding down of the bond-buying program made him open to improving the Fed's forward guidance.
Mr. Evans said he had "no strong preference" about whether the Fed winds down its $85 billion-a-month bond-buying program by gradually reducing the size of monthly purchases or by setting a time limit to the current program that would result with same total amount of bond purchases.
The official said the Fed obviously had to reset its guidance that it would likely end the bond-buying program by the time unemployment reaches 7%.
"I'm fairly certain we'll end [bond purchases] before hitting the 6.5% [unemployment] threshold," he told reporters.
By Shayndi Raice
A federal judge gave final approval Friday for a $500 million class action settlement between Bank of America Corp. and pension funds.
Bank of America has said that after this pact, it will have resolved as much as 75% of its exposure to residential mortgage-backed securities claims stemming from its 2008 acquisition of Countrywide Financial Corp.
The deal wraps up several separate lawsuits against Countrywide that alleged the firm misrepresented the quality of 429 mortgage-backed securities sold between 2004-07. The parties, which included plaintiffs in three separate cases, agreed to settle all claims for $500 million in April. In August, the court granted preliminary approval of the deal.
Pension funds involved in the class actions include the Maine State Retirement System, Iowa Public Employees System and the Western Conference of Teamsters Pension Trust Fund.
Thirty-seven entities objected to the deal, including the Federal Deposit Insurance Corp. The FDIC argued in October that the deal wasn't fair and adequate.
Judge Mariana Pfaelzer of the U.S. District Court for the Central District of California said in an opinion Friday that the deal was "fair, reasonable, and adequate."
The parties struck the deal through rigorous negotiations, obtained sufficient discovery and only a few class members opposed the deal, she said.
"We're pleased to resolve this matter," said a Bank of America spokesman.
An attorney for the FDIC didn't immediately respond to a request for comment.
Bank of America is waiting on court approval of an $8.5 billion settlement struck in 2011 with private investors in mortgage-backed securities.
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By Rob Copeland
John Paulson's hedge funds posted November performance gains that, for one of the funds, marked its best month in three years, according to an investor update.
The $2.4 billion Paulson Recovery Ltd. fund, established in 2008 to take advantage of the U.S. economic recovery, had its strongest month since December 2010, returning 9.9% in November, the firm wrote in a monthly update.
The fund is up 57.6% for the year through the end of last month. The firm credited investments in banking, asset management, insurance and other financial companies for the performance.
Other parts of the firm also performed well. Paulson's $3.2 billion Advantage Ltd. fund rose 7.8%, buoyed by gains in health care and defaulted-securities portfolios, according to the update.
That was the best performance since July, when it rose 9.35%. For the year, Advantage is now up 22.7%, more than double the 11% mark for the HFRI Event Driven Index, which measures Paulson's hedge fund peers.
The distressed-focused $5.5 billion Paulson Credit Opportunities Ltd. Fund returned 4%, and is up 21.3% for the year. Post-reorganization equities and defaulted securities in the portfolio contributed to the gains.
All three also benefited from the initial public offering of Extended Stay America Inc. (STAY) last month, the update said. Extended Stay conducted the IPO in mid-November at $20 per share. The stock finished Friday trading at $25.10.
The firm's $6.4 billion in merger arbitrage funds saw more muted results. Paulson International Ltd. rose 1.6% on the month, and is up 14.1% for the year. A leveraged version of the same strategy, Paulson Enhanced Ltd. returned 3.2%, and is up 29.9% year-to-date.
Performance for the much smaller Paulson PFR Gold fund, which was down 63% for the year through the end of October, wasn't listed in the November report.
The overall broad gains in 2013 have helped Paulson regain some cash after his event-driven funds were publicly hammered by poor bets in areas like banks, gold-mining stocks and the Chinese timber company Sino-Forest over the prior two years.
Money had fled the firm, leaving it with assets under management of $17.8 billion at the start of the year, from $36 billion in the start of 2011. Paulson & Co. now manages approximately $20 billion, all in hedge funds, as of the end of November, according to a person familiar with the firm.
By Kaitlyn Kiernan
The rapid rise in shares was likely driven in part by the broker on the other side of that bullish trade buying shares to hedge his short position, according to Henry Schwartz, president at Trade Alert. Later, rumors began to swirl that the options trade was linked to takeover speculation, leading other investors to buy shares and options on the soup maker.
A spokesperson for Campbell says the company does not comment on market pricing or rumors.
The unusually heavy trade also led the price of the options contracts higher as the shares gained. After first trading at 15 cents a share, at the end of the day, the December $43 call contracts were trading for as much as 80 cents a share. December options expire in two weeks.
With selling activity late in the session, Mr. Schwartz said it is possible that the initial trader exited part of his position at a hefty profit. That would allow him or her to maintain the bullish trade, but with no money on the line.
The investor "could have flipped out of half the position, still own the other half for a credit, and if the initial thesis pans out with the stock rising above $43 he is still happy," Mr. Schwartz said.
The picture will be clearer on Monday, when the industry clearing house releases data on how many new contracts were open at the end of the trading session Friday, he said. Before Friday's activity, the December option had a total of just 1,019 contracts outstanding.
Campbell shares tumbled 6.2 % in mid-November to a nine-month low after Campbell's fiscal first-quarter earnings fell 30% from a year ago. Retailers reduced inventories, particularly hurting the U.S. soup business, and the company boosted spending to market new products.
By Nick Timiraos
The Federal Housing Administration will drop the maximum size of home-mortgage loans that it will guarantee beginning next month in nearly 650 counties, the agency said Friday.
The maximum for single-family homes in certain "high-cost" housing markets including Los Angeles, San Francisco and New York will fall to $625,500, from the current level of $729,750.
The FHA doesn't make mortgages but instead insures lenders against defaults on loans that meet its standards. It allows borrowers to make down payments of just 3.5% and has played an outsized role backstopping mortgages in the aftermath of the housing bust.
Congress temporarily increased the FHA's maximum loan limits in 2008 as the downturn worsened. Before the increase, the FHA couldn't guarantee loans that exceeded $367,000.
Congress extended the more generous loan limits repeatedly, most recently in 2011. Those higher limits were set to expire at the end of this year. The most recent extension has allowed the FHA to guarantee loans in many parts of the country that were larger than those eligible for backing by Fannie Mae and Freddie Mac.
The FHA's loan limits vary by county and are calculated using certain formulas that are pegged to local median home values. Loan limits are as low as $271,050 in the nation's least expensive housing markets and as high as $625,500 in the most expensive ones. The FHA hadn't yet issued more details on where loan limits would fall for individual counties that are in between those boundaries.
Previously, the FHA could back mortgages up to 125% of the median home price for a given county. Beginning next year, the FHA will only back loans up to 115% of the area median price. That will take the loan limit for San Bernardino, Calif., for example, to $355,350 next year from $500,000 on a single-family home. Limits in Chicago will fall to $365,700 from $410,000.
The FHA has experienced heavy losses as a result of loans it guaranteed as the housing downturn deepened, and earlier this year it received a $1.7 billion infusion from the U.S. Treasury, the first in the agency's 79-year history. Officials have repeatedly boosted insurance fees charged to borrowers in a bid to replenish reserves. Fee increases have made private-mortgage insurance options more competitive, and the FHA has witnessed volumes decline this year.
Officials said Friday that the loan limit declines, which had been largely anticipated, would help the agency reduce its role in the market.
"As the housing market continues its recovery, it is important for FHA to evaluate the role we need to play," said FHA Commissioner Carol Galante. "Implementing lower loan limits is an important and appropriate step as private capital returns to portions of the market and enables FHA to concentrate on those borrowers that are still underserved."
The FHA limits are separate from those used by Fannie and Freddie, which have a national loan limit of $417,000 but will buy loans as large as $625,500 in more expensive housing markets. The regulator of the two mortgage-finance giants had said earlier this year that it might drop both the national limit and the high-cost limit, but said last week that it wouldn't proceed with those declines for now.
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By Deborah Solomon
WASHINGTON–A key provision of the Volcker rule will give banks flexibility to buy and sell securities on behalf of clients by giving firms–and regulators–discretion in deciding whether activity is permissible market-making or a risky bet designed to make a profit, according to government officials.
The rule, which regulators are expected to finalize next week, will include narrow boundaries that restrict banks from taking positions clearly designed to realize profits for the firm, the officials said. Egregious behavior will be clearly banned by the rule, according to a Treasury official, but the regulation will also leave some question about what's appropriate, requiring supervisors and banks to make that determination.
Under the Volcker rule, banks are prevented from making investments with their own money for profit but are allowed to engage in market making, in which they buy and hold securities for clients and often hedge against the risk from holding the inventory. Regulators have struggled for more than two years to determine what is permissible market making and what is pure proprietary trading, in which a bank is simply buying, selling or hedging investments for its own profit.
Banks will be expected to use their judgment in determining whether an investment that may skate along the line of being a risky bet is a proprietary trade or true market making, these officials said. Regulators, including the Securities and Exchange Commission and the Office of the Comptroller of the Currency, will enforce the rule and ensure banks are complying with the rule's intent.
On Thursday, Treasury Secretary Jacob Lew nodded to the fine line regulators have landed on, saying in a speech that the rule "prohibits risky proprietary trading while protecting economically essential activities like market making, such as when a firm facilitates selling bonds for a mutual fund."
Banks have complained defining market-making too tightly would hinder their ability to serve clients and negatively impact financial markets. Bank lawyers said giving firms discretion and leaving much of the judgment up to regulators would help alleviate those concerns.
Regulators are expected to vote Tuesday to approve the rule.
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By Dan Strumpf
Stocks surged after a better-than-expected report on the U.S. jobs market left investors feeling better about the economy and more comfortable with a potential pullback in the Federal Reserve's easing efforts in coming months.
The rally snapped a five-day losing streak and returns stocks to within striking distance of their all-time highs, with big gains going into the year-end. With the possibility that the Fed could curb its easing program sooner rather than later, investors' focus now shifts squarely on the central bank's policy meeting Dec. 17-18.
The Dow Jones Industrial Average advanced 199 points, or 1.3%, to 16020, its biggest one-day percentage gain since Oct. 16. All 30 Dow components notched gains for the day. The blue-chip index has now gained 22% this year.
The S&P 500 added 20 points, or 1.1%, to 1805, recouping nearly its entire loss for the week and placing it 0.1% shy of last week's record. Despite the gains, both the Dow and the S&P 500 ended with their first weekly declines in nine weeks.
The Nasdaq Composite Index advanced 29 points, 0.7%, to 4063.
The U.S. economy added 203,000 jobs in November, the Labor Department said, while the unemployment rate fell to a five-year low of 7.0%. Economists had expected the report to show the economy had added 180,000 jobs and the unemployment rate dropped to 7.2%.
Treasury yields edged higher, erasing an intraday decline, while gold fell. Although the number of jobs created beat Wall Street expectations, investors say the figure wasn't the glowing reading that would have intensified fears that the Fed would scale back, or taper, its $85-billion-a-month bond-purchase program at its meeting later this month.
"The real story is the economy is really good, so what we saw was a buying opportunity," said Sam Wardwell, investment strategist at Pioneer Investments, which manages about $225 billion. "It's powered through a whole bunch of fiscal headwinds—not just psychological headwinds—and it's gaining strength."
Investors had been closely focused on the monthly jobs data after a series of readings on the U.S. economy this past week pointed to improving conditions in the labor market and the manufacturing sector. Those strong readings kindled concerns of a more imminent pullback in the Fed's stimulus and spurred a five-session losing streak that chipped 1.2% off the record reached by the S&P 500 last week.
But some investors say they were soothed by Friday's report. John Briggs, head of cross-asset strategy at investment bank RBS, said he was impressed with the jobs reading but said it wasn't strong enough to shake his prediction that the Fed would begin tapering in March.
"In my opinion, you've taken December tapering more off the table," he said, adding that a mixed reading on U.S. personal income helped rule out the measure. "This number is good, but not good enough to move the timing up."
Others aren't willing to rule out a December pullback by the Fed. Eric Stein, a portfolio manager at Eaton Vance, which oversees $281 billion, said the fund he oversees has been paring back on risky assets, including longer-dated Treasurys, because of the prospect of tapering in the months ahead.
"If you put a gun to my head, I'd still say January, but December tapering is still a possibility," he said. "We're having a more cautious approach."
The yield on the 10-year Treasury note rose to 2.881%, erasing an earlier loss after reaching a nearly three-month high of 2.863% late Thursday. Bond yields rise when prices fall.
December gold edged lower by $2.90, or 0.2%, to $1230.30 an ounce after settling at its lowest close for the year on Thursday.
The dollar fell against the euro but climbed against the yen.
The highly anticipated report came amid a busy economic calendar Friday. Other data showed U.S. consumer spending rose modestly in October, but personal income ticked lower. A reading on consumers' view of the economy, the Thomson-Reuters/University of Michigan preliminary December sentiment index, rose to its highest level since July.
"Economic data is getting better, which provides a sweet spot into year-end," said Doug Crofton, head of U.S. cash equity trading with Bank of America Merrill Lynch
Mr. Crofton said that stock-trading volume saw a bigger jump than even a typical day with a jobs report. Investors had been hanging back after the week's better-than-expected reports, traders said, fearing that the jobs data would be a blowout and speed up the Fed's timeline to start paring back its easy-money policies.
"There was a lot of money waiting on the sidelines," said Mr. Crofton. "Now [investors] can focus on the fact that economic numbers are looking better, and employment is looking better."
European markets extended their gains after the data. The Stoxx Europe 600 rose 0.7% after closing Thursday at the lowest level since Oct. 14.
Germany's DAX 30 index tacked on 1%, as investors shrugged off data showing German manufacturing orders fell more than expected in October. The U.K.'s FTSE 100 gained 0.8%, and France's CAC 40 climbed 0.7%.
Asian markets were mostly lower. China's Shanghai Composite slipped 0.4%. Japan's Nikkei Stock Average bucked the regional trend, bouncing 0.8% after falling 3.6% over the previous two sessions.
January crude-oil futures settled 27 cents, or 0.3%, higher at $97.65 a barrel, the highest price since Oct. 29.
In corporate news, J.C. Penney slid after the retailer disclosed in a filing late Thursday that the Securities and Exchange Commission was looking into the company's $800 million stock offering announced this fall, as well as details of its liquidity, cash position and debt and equity financing.
Sears Holdings sank, reversing an earlier gain, following an announcement that it filed a registration statement to spin off its Lands' End business. The company said in October that it was considering the move.
–Tomi Kilgore and Alexandra Scaggs contributed to this article.
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By Paul Vigna
Bitcoin's wild 2013 ride is not over.
The price of bitcoin plunged on Friday, dropping more than 20%, after word that Chinese website Baidu suspended payments in bitcoin. (Here's the notice in the original Chinese Han.) While our Chinese language skills are a bit rusty, the gist of it is this: Because of the extreme volatility in the virtual currency, the site was suspending payments in bitcoin for its music service.
China has been behind the surge in bitcoin over the past month, as traders started pouring in from the Middle Kingdom, and it appears to be behind the recent swan dive as well. Just on Thursday, the People's Bank of China issued a warning about bitcoin, barring the country's banks from using it for payments and warning of the risks of using it in general. France's central bank issued a similar warning.
Bitcoin was recently trading around $853, on the Mt. Gox exchange. The currency was trading over the $1,200 mark on Thursday morning, but the Chinese headlines both sparked bouts of selling since then.
Bitcoin has had an absolutely wild ride this year, rising from under $20 to more than $1,200, driven almost as much by hype as anything else. In absolute terms, it remains a minor, minor currency and payments system. Yes, an auto dealership in California yesterday announced that it accepted bitcoin as payment for a Tesla Model S (an electric car bought with electric money). But, for all the attention, bitcoin's value by trading volume, on a good day, puts it in the range of the Hungarian forint, one of the smaller currencies traded. It is absolutely nowhere near trillion-dollar market for the U.S. dollar.
The more substantial stories surrounding bitcoin won't be the sexy trading stories, or the spectacular crime stories, but the relatively staid, mundane stories about who's accepting bitcoin, and who's using it. To that end, we got a press release from the University of Nicosia, which we profiled last month for becoming the first school to accept bitcoin. The university announced that it received its first tuition payment in bitcoin from a South African student, who is enrolled in the school's online MBA program.
Screaming headlines are fun, but if the currency is going to have lasting value – no pun intended – it's going to be because people find it useful in their daily lives.


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By Venita Jenkins Staff writer
Holden Thorp called on a little girl who sat quietly near the front of the multipurpose room at St. Patrick Catholic School.
"Do you think I will ever go to UNC?" she asked the UNC chancellor in a soft voice.
Thorp smiled and responded, "If you study hard and do a good job, I bet you will have a really good chance to go."
Thorp, the 10th chancellor of UNC-Chapel Hill, spoke Wednesday at his alma mater to a room full of students, parents and faculty as part of the private school's 75th anniversary. He spent the day visiting classrooms, eating lunch with students and serving as judge for a door-decorating contest.
The visit, he said, was as emotional as his previous visits to high school alma mater, Terry Sanford, and the opportunity to lead his university alma mater. Wednesday's visit was tied to St. Pat's Catholic Schools Week, part of a nationwide celebration.
"It is an honor and a thrill to be a part of the 75th anniversary," he said. "I think what St. Pat's has done for 75 years for the kids of Fayetteville is really significant."
Thorp, 48, graduated from the school's freshman class in 1979. He had the choice of going to Terry Sanford High School his freshman year or staying at St. Patrick. He picked St. Patrick because of the love and support at the school, he said.
"I couldn't have done all of the things that I have done in my life, if it hadn't been for the nuns who taught me at St. Pat's," he said. "They were really patient with me."
Dr. Eric Westley, the school principal, gave students an overview of Thorp's career from chemistry professor, inventor and entrepreneur to chancellor of the University of North Carolina at Chapel Hill.
"It's wonderful for us to have him," Westley said. "He is a perfect example for our students when we tell them about working hard, studying and using the talents that God gave them."
Thorp was named chancellor in 2008. He plans to step down from that post on June 30. He will return to the faculty of UNC's chemistry department.
"He is still a young man, and there are still things he has yet to accomplish," Westley said.
For nearly 40 minutes, Thorp shared life lessons and his memories of St. Patrick with students. Many doors have opened for Thorp as a result of his good education, he said during his remarks.
"In addition to being able to teach lots of college students about chemistry, I have been able to learn new things about chemistry that have never been discovered," he told the students. "I also helped find two molecules that are going to be medicines one day."
During a question and answer session, Thorp, showed his lighter side by demonstrating his Rubik's Cube skills. The students clapped in thunderous applause as Thorp showed them the solved puzzle within a few minutes.
"I used to never talk about this Rubik's Cube thing," he said. "I was trying to move past all that."
However, some UNC students found a YouTube video of Thorp's appearance as a Rubik's Cube champion on "That's Incredible," he said.
"There is no way I can pretend that I wasn't a Rubik's Cube champion in the 1980s," he joked.
Thorp encouraged students to go to a four-year college and said it would open doors for them.
"One of the things that you will learn is that there are a lot of different things you can do in the world that you may not be exposed to here," Thorp said.
The 75th anniversary celebration at St. Patrick will continue with visits from other alumni, including Chip Beck, class of 1971, of PGA golf fame; and Lt. Gen. Patricia D. Horoho, class of 1974, the Army Surgeon General in April and a gala in May.
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