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Month: August 2014

U.S. coal stocks could gain on Russia tension

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NEW YORK (Reuters) – Beaten-down U.S. coal company stocks may receive a lift in coming weeks if deteriorating relations between Russia and the West push President Vladimir Putin to shut off Europe’s natural gas supply.

The crisis in eastern Ukraine has emboldened Europe and the United States to impose broad sanctions on Russia. But Europe finds itself in a precarious position, with almost a third of the natural gas the continent consumed in 2013 flowing from Russia, according to the U.S. Energy Information Administration.

Europe’s heightened concerns about energy security could provide an opportunity for U.S. coal companies, which have been hurt by declining domestic consumption, to step in and fill the gap as winter approaches. More than half of U.S. coal exports already reach Europe.

“Export demand will certainly increase, with the situation in Russia and Ukraine having a big impact on Europe with respect to natural gas,” said Ernie Cecilia, chief investment officer at Bryn Mawr Trust in Bryn Mawr, Pennsylvania.

“In the short term, there’s no question that a rise in export demand will be helpful to coal stocks.”

Yet significant headwinds at home would likely make any comeback in coal companies’ stocks short-lived and hard-fought.

Even as the broader stock market has rebounded from the lows seen during the financial crisis, coal stocks have languished.

Shares of Peabody Energy Corp (BTU.N), the biggest U.S. producer of coal, have declined more than 27 percent since March 9, 2009, when the S&P 500 hit its financial crisis nadir, closing at 676.53 points.

While the S&P has nearly tripled from that day, the Dow Jones U.S. Coal Index (.DJUSCL) has lost 7.7 percent in that time. The last three-plus years have been particularly bad for the coal index, which has lost nearly three-quarters of its value since April 2011.

The index includes just three stocks – Peabody, CONSOL Energy (CNX.N) and Alpha Natural Resources (ANR.N). CONSOL, which is more diversified and derives around a third of its revenue from natural gas, is the only one up on the year so far. It has gained 5.3 percent, but still lags the wider S&P 500 (.SPX), which is up more than 8 percent.

Peabody is down around 20 percent this year, and Alpha Natural has swooned 45 percent.

CONSOL is the only one of the three expected to show a profit in the next two years, according to Thomson Reuters StarMine, which tracks corporate profit estimates.

Competition with natural gas, the emergence of renewable energy technologies and new environmental regulations contributed to a fall in U.S. coal production in 2013 to the lowest levels since 1993, according to the Energy Information Administration.

Domestic coal consumption is slated to decline by 2.7 percent in 2015, as federal standards requiring power plants to reduce air pollution expedites a shuttering of coal power plants. U.S. coal consumption peaked in 2007 and has declined nearly 37 percent since then, EIA data shows.

That may temper any gains in coal stocks, both in scale and duration.

“I just don’t know if any of this – the situation in Russia and Ukraine – would be sufficient enough to overcome significant pressure in the domestic market,” Cecilia said.

Energy stocks have overall remained favorable for investors, but not necessarily those with money in coal. The S&P 500 energy sector (.SPNY) is outperforming the wider index with a 9.3 percent gain so far in 2014.

“We look at the domestic energy landscape, and the abundant supply of natural gas has impacted coal dramatically,” said Timothy Rooney, vice president of product management and research for Nationwide Funds.

“Generally, energy in the U.S. is a good long term investment, but that’s really being driven by oil and natural gas.”

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Fiat-Chrysler sees New York stock market listing on October 13

Fiat Chrysler CEO Marchionne answers questions from the media during the FCA Investors Day in Auburn Hills.

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Fiat Chrysler CEO Sergio Marchionne answers questions from the media during the FCA Investors Day at the Chrysler World Headquarters in Auburn Hills, Michigan May 6, 2014. REUTERS/Rebecca Cook

By Paolo Biondi

RIMINI Italy (Reuters) – Fiat-Chrysler aims to list shares in the newly merged carmaker in New York on Oct. 13, Chief Executive Sergio Marchionne said on Saturday, adding that a decision on any capital increase would be made at the end of that month.

He was speaking a day after the merger between Fiat and its U.S unit Chrysler cleared its last remaining hurdle.

Fiat bought out Chrysler at the start of 2014 and both operate as one firm. Marchionne wants to incorporate the two into Dutch-registered entity Fiat Chrysler Automobiles (FCA), paving the way for the U.S. listing he says is needed to help finance a 48-billion euro ($64 billion) five-year growth plan.

“The most likely date for the listing in the U.S. is October 13,” he told reporters on the sidelines of a meeting in Rimini.

Marchionne is counting on the merger and the listing to help pay for a relaunch of its Alfa Romeo and Maserati brands, export Jeeps globally, and take all three to fast-growing Asian markets, where the group is currently weak.

Marchionne said the five-year business plan for the world’s No. 7 auto group presented in May did not envisage a cash call.

“But all decision on any capital increase will be taken by the board of FCA at the end of October,” he said. He also confirmed the group’s full-year guidance for 2014, adding the U.S. market was going “incredibly well.”

Targets to grow net profit five-fold and sales by 60 percent within five years look ambitious, some analysts say, arguing that the company will have to raise capital to achieve them.

Fiat had 18.5 billion euros of cash at end-June, but almost 32 billion in debt. Its financing costs are high and margins are weakening.

Fiat had so far ruled out asset sales and a share issue, but may go for a mandatory convertible bond. Marchionne had previously said any decision on financing would only be taken after FCA was created.

The merger plan could have failed if the carmaker had been asked to pay more than 500 million euros ($658 million) to dissenting investors who tendered their shares, exercising a legal right triggered by Fiat’s decision to move its registered offices away from Italy.

Fiat said on Friday it was finishing a count of shares for which cash exit rights had been validly exercised, but it could already say that the 500 million euro limit would not be exceeded, based on data calculated so far.

It plans to publish the final count by Sept. 4.

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People Are Quitting Their Jobs. That’s Good News

Want to make Janet Yellen happy? Quit your job.

The Federal Reserve Board Chair watches a lot of economic data as she and her colleagues on the Federal Open Market Committee make their decisions about setting interest rates and winding down the current economic stimulus program. One of the data points that Yellen has said she pays attention to is the rate at which workers quit their jobs.

It may seem counterintuitive, but in the Fed’s view, it’s a good sign when an increasing number of people voluntarily leave their jobs. The thinking is that when jobs are scarce and people are worried about finding work, they are less willing to abandon an existing employment arrangement.

Related: Why We’re So Down in the Dumps About the Economy

In the depths of the Great Recession, that seems to have held true. On Thursday, the Federal Reserve Bank of St. Louis’s venerable FRED Blog posted a graph illustrating the change in worker quit rates during the recession and recovery.

In the years before the recession, the monthly quits rate among non-farm laborers was consistently above 2 percent, but during the recession, it plunged to a 10-year low of 1.3 percent. Even after the recession officially ended, with job growth remaining slow, the quits rate remained low for years. However, in the past two years, the monthly quits rate has been edging slowly upward, hitting 1.8 percent in June.

Speaking at the annual Fed conference in Jackson Hole, Wyoming, last week, Yellen said, “The quits rate has tended to be pro-cyclical, since more workers voluntarily quit their jobs when they are more confident about their ability to find new ones and when firms are competing more actively for new hires. Indeed, the quits rate has picked up with improvements in the labor market over the past year, but it still remains somewhat depressed relative to its level before the recession.”

Related: 30 Percent of ‘Retirees’ Would Return to Labor Force

Yellen said that while the signs are encouraging, she remains unconvinced that the labor market has completed its recovery from the recession.

“[T]he balance of evidence leads me to conclude that weak aggregate demand has contributed significantly to the depressed levels of quits and hires during the recession and in the recovery.”

Translation: Things are improving, but Yellen still wants to see more people walking into the boss’s office and giving their notice.

Top Reads from The Fiscal Times:

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Buffett backs Burger King deal with $3 billion

Jeff Macke

Yahoo Finance

Warren Buffett has been a vocal supporter of higher tax rates for the wealthy but when push comes to shove the Oracle is all about the bottom line. As you know yesterday Burger King (BKW) shares soared when word leaked of a potential tax inversion – inspired bid for Canadian donut shop Tim Horton’s (THI). Now it’s being reported that the deal will be funded in part by Buffett’s Berkshire Hathaway (BRK-A, BRK-B).

The Wall Street Journal says Berkshire will put $3 billion into the $10 billion bid for Tim Horton, likely in the form of a purchase of preferred shares.

Related: Buffett’s advice leads to $5.5 billion pop in this index fund

So what’s in this for Warren? Billions. This isn’t about taxes, but endorsements and relationships. Burger King’s majority owner is 3G, a Brazilian PE firm led by 74 year old billionaire Jorge Paulo Lemann. Last year 3G and Berkshire partnered to buy Heinz. Berkshire laid out $8 billion for preferred shares that will pay back $1 billion a year and another $4.25 billion for Heinz common stock. There aren’t any terms being leaked on this BK deal yet but Buffett has never been shy about demanding a premium. Expect Berkshire to get at least 10% on the $2.5 billion investment.

Still this is small potatoes for Berkshire which is sitting on more than $55 billion in cash at last count. The real reason Buffett has to be involved is to protect Berkshire’s 9.1% ownership interest in Coke (KO). Burger King is married to Heinz but its drink business is up for grabs. 3G has already pushed for a switch to Pepsi (PEP) in Latin American markets. With earnings flat since 2011 Coke can little afford to lose soda market share, let alone miss growth opportunities for Coke’s non-carbonated products. Right now BK sells Nestle’s bottled water. While a switch to Coke’s Dasani probably won’t be explicitly part of this financing package let’s just say Berkshire’s involvement doesn’t hurt.

Related: 4 lessons from Warren Buffett’s biggest quarter ever

As a kid Warren Buffett bought six packs of Coke for a quarter then sold them to his friends for a nickel apiece. He now owns 9% of Coke, half of Heinz and seemingly all of the U.S. financial system. Buffett is the American Dream. He’s a modern day Ben Franklin and he’s not going to give up billions just because the President calls him names. Does that make Buffett a craven sell-out or does it validate U.S. corporate tax avoidance? Maybe a little bit of both. Ultimately it’ll be consumers and voters who decide. As it stands, Buffett is much more popular than Congress or the President.

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S&P 500 at 2,000, Burger King surges, GrubHub delivers more shares

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S&P 500 sets record high but fails to hold 2,000 mark

 Traders work on the floor of the New York Stock Exchange (NYSE)

Traders work on the floor of the New York Stock Exchange (NYSE) February 10, 2014. REUTERS/Brendan McDermid

By Chuck Mikolajczak

NEW YORK (Reuters) – The S&P 500 was unable to hold the 2,000 mark after moving above the milestone level for the first time on Monday, but still managed to close at a record high, buoyed by financials and biotechnology stocks.

The significance of the milestone was more psychological than fundamental, and it represents the high point of a nearly six-year rally that has boosted retirement accounts for Americans from Wall Street to Main Street, though the gains have largely benefited wealthier Americans. On a total-return basis the S&P 500 has more than tripled from its 2009 low hit during the financial crisis.

The day’s gains were broad, with each of the 10 primary sectors on the benchmark S&P index advancing.

“Psychologically it is somewhat important to close above 2,000 but it only becomes of increasing importance if we see the markets vacillate around this number for an extended period,” said Sean Lynch, managing director of global equity strategy for Wells Fargo Private Bank in Omaha, Nebraska.

“(Investors) are going back to the fundamentals and the strong earnings season we saw in the U.S. in the second quarter and an improving economy.”

The index has managed to climb despite cautious signals investors, including a reduction in stimulus from the Federal Reserve and a simmering conflict between Ukraine and Russia. In the latest economic data, reads on both the U.S. services sector and the housing market came in below forecasts but indicated the economy remains on a solid growth path.

Biotech stocks, which have recovered from a sharp drop earlier this year to become a primary driver of recent equity gains, continued to outperform on Monday. The Nasdaq Biotech index rose 2.4 percent and is up 8.6 percent for the month.

InterMune shares surged 35.4 percent to $72.85 to help lift the sector after it agreed to be acquired by Roche Holding AG for $8.3 billion in cash, the latest vote of confidence in a sector that many, including Federal Reserve Chair Janet Yellen, worry is overvalued.

The Dow Jones industrial average rose 75.65 points or 0.44 percent, to 17,076.87, the S&P 500 gained 9.52 points or 0.48 percent, to 1,997.92 and the Nasdaq Composite added 18.80 points or 0.41 percent, to 4,557.35.

Financial shares were among the strongest of the day, rising on expectations Europe may see more aggressive monetary stimulus. Morgan Stanley, which has heavy exposure to Europe, rose 2.2 percent to $34.20 while Goldman Sachs Group Inc, a Dow component, was up 1.4 percent at $177.87. The S&P financial sector gained 0.8 percent.

U.S. stocks have been strong of late. The Dow and S&P have notched gains in seven of the last 10 sessions while the Nasdaq has climbed in eight of the last 10 trading days.

Burger King is in talks to acquire Canadian coffee and doughnut chain Tim Hortons Inc in a deal that would be structured as a so-called tax inversion transaction to move Burger King’s domicile to Canada, which has lower overall corporate taxes. Shares of Burger King jumped 19.5 percent to $32.40 while U.S. shares of Tim Hortons shot up 18.9 percent to $74.72.

Volume was light, with about 4.07 billion shares traded on U.S. exchanges, well below the 5.51 billion average so far this month, according to data from BATS Global Markets.

 

Advancing stocks outnumbered declining ones on the NYSE by 1,858 to 1,172, while on the Nasdaq, advancers beat decliners 1,573 to 1,131.

 

 

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IDC says that software-defined networking could bring in $8 billion in 2018

  

      

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August 22, 2014

Market research firm IDC suggests that software-defined networking (SDN) could generate $8 billion in revenue in 2018, an increase over the $960 million it will account for this year. IDC says the $8 billion will come as businesses buy more converged infrastructure.

To be sure, selling $8 billion of anything is impressive, but as SDN is potentially destructive it is worth exploring what that big pile of cash will mean in the context of the wider networking market.

IDC has put its name to a $50.15 billion number for networking equipment sales in 2018, taking into account ethernet switches, routers, WLAN, WAN, enterprise video and telepresence systems, plus fibre channel and InfiniBand technology.

Sales of those categories of equipment will increase from $42.5 billion in 2014, so will actually grow faster than SDN in dollar terms but much slower in terms of annual growth rates.

Get all the details here.

It’s harder to say if networking gear are less of a thing any more, because sales in the years leading up to 2013 weren’t exactly buoyant due bleak global economic conditions.

In other IT news

SanDisk said this morning that it is launching a new Ultra II solid state drive (SSD) for retrofitting to PCs that uses lower cost 3-bits-per-cell NAND technology.

TLC or 3 bits per cell flash stores 50 percent more data in each cell than MLC (2 bits per cell) and is cheaper to make on a cost/bit basis.

However, the number of times TLC flash can be rewritten and the P/E cycle count is lower than MLC, typically being measured in the hundreds of cycles instead of thousands.

Of course, that has restricted its use in business flash applications, up until today. The Ultra II is an update on SanDisk’s Ultra product, which was first announced in July 2011, and radically increases the performance and capacity.

The original product had 60 GB, 120 GB and 240 GB capacity points, whereas the new one starts at 120 GB and passes through 240 GB and 480 GB models, up to a 960 GB high point.

The original device did sequential reads up to 280 MB per second and sequential writes up to 270MB per second. Ultra II blows these numbers away with reads up to 550 MB/sec and writes to 500 MB/sec.

Random performance is up to 99,000 read IOPS and 83,000 write IOPS. It’s helped by the so-called nCache 2.0, which sets aside a portion of the flash to run in faster SLC mode and so speed things up even more.

The interface has been speeded up too, from 3 Gbit/s SATA to 6 Gbit/s. SanDisk appears to have been able to lengthen this TLC product’s endurance because it is offering a three-year warranty.

There is a 1.75 million hour MTBF rating on the new products but no number for total TB written or full drive writes over the life of the drive, and this leads us to think that the endurance may be inferior to MLC SSDs, although we could not confirm this.

The new drives have shock resistance features SanDisk says, making them more physically robust.

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It’s instructive to compare this SSD to AMD’s Radeon R7 SSD announced yesterday, which is also aimed at the PC/notebook disk drive replacement market and has Acronis True Image cloning software in it.

That device tops out at 480 GB, has the same sequential read/write numbers but slightly better random IOPS with 100,000 to 90,000 read/write IOPS.

It also features a four-year warranty and a 42.7 TB written endurance rating from its 19 nm Toshiba MLC NAND and OCZ Barefoot controller.

Both SanDisk and Toshiba are flash foundry partners, so the 19 nm flash used in these two SSDs are related.

AMD Radeon R7 pricing is $100 for a 120 GB entry-level R7, $164 for 240 GB and $299 for a 480 GB drive.

Ultra II MSRP pricing is $79.99 for 120 GB, $114.99 for 240 GB, $219.99 for 480 GB and $429.99 for 960 GB. That’s cheaper than AMD’s Radeon but with Radeon you get a 4-year warranty and encryption built-in.

SanDisk’s new SSD will be available through SanDisk’s sales channels sometime in September. We’ll keep you posted.

In other IT news

Postgre SQL vendor EnterpriseDB has launched a turnkey development environment designed to make it easier for coders to build applications using Postgre’s NoSQL capabilities.

The new tool is free. The open source PostgreSQL project has been adding NoSQL-like features for the past couple of versions, most notably support for the JavaScript-friendly JSON data format and the JSONB binary storage format.

With its new Postgres Extended Datatype Developer Kit (PGXDK), EnterpriseDB aims to provide developers with a complete, cloud-hosted coding environment with all of the key components required to use PostgreSQL’s NoSQL tools already enabled and configured.

“Application developers and programmers need solutions that help them work faster and this Amazon AMI-based environment means that they get up and running faster and have a much more powerful foundation to work on,” said Marc Linster, EnterpriseDB’s vice president of products and services.

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PGXDK is available as a free instance on Amazon Web Services (AWS) and it bundles PostgreSQL 9.4 beta, a webserver, and preinstalled versions of Ruby, Ruby on Rails, Node.js, and Python to make it easy to get developers building web apps using PostgreSQL and a variety of other popular tools.

According to EnterpriseDB, PostgreSQL is often a superior choice for businesses than so-called pure NoSQL products like MongoDB or CouchBase because it offers greater flexibility in the kind of workloads it supports, while also allowing organizations to practice the kind of conventional data management they’re accustomed to using with SQL databases.

The company cites research from Gartner indicating that by 2017, half of all data stored in pure NoSQL databases will be damaging to the business due to a lack of applied information governance policies and programs.

That opinion should come as no surprise, since PostgreSQL is EnterpriseDB’s bread and butter. The company’s flagship product, Postgres Plus Advanced Server, is an enterprise-tuned distribution of PostgreSQL with an additional, proprietary layer that provides Oracle compatibility, among other features.

EnterpriseDB also provides commercial consulting, installation support, training, and other services around PostgreSQL and products derived from it.

From where EnterpriseDB sits right now, the more people using PostgreSQL – developers and companies – the better.

The company says it plans its next major update to PGXDK to come in the fall, when it will release a version with integrated support for PL/V8, which allows developers to write database queries in JavaScript.

In other IT news

Violin Memory said today that it has repaired a hole in its data management feature set by adding deduplication and compression features to its Concerto memory array controller application.

The fix will enable it to offer lower effective cost per gigabyte than before and will also strengthen its competitive advantage against other all-flash array vendors such as EMX XtremIO, IBM FlashSystem and Pure Storage.

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Overall, the Concerto 2200 Data Reduction appliance is a solution that enhances the Violin 6000 or 7000 all-flash arrays to support NFS environments.

The 2200 is a high-availability dual-controller system connecting to Violin’s all-flash arrays by Fibre Channel and to hosts by Ethernet.

It can enhance up to four LUNs on existing or new Violin All Flash Arrays with data reduction technology to improve economics in NFS environments.

Inline deduplication and compression are available on the Concerto 2200 and provide up to 672 TB of usable storage at a data reduction rate of 6 to 1.

And deduplication can be easily controlled, not needing to be always-on. Eric Herzog, Violin’s CMO said– “We see rivals who offer always on deduplication and compression, but we know that, depending on the customers’ workloads, performance may suffer as a result of the ‘always on’ approach.”

Always-on deduplication and compression services can lower Violin flash arrays’ performance.

The Concerto 2200 array delivers granular inline deduplication and compression with NFS ingest capabilities and is initially targeted at Virtual Desktop (VDI) and Virtual Server (VSI) infrastructure.

A dashboard provides information on data reduction rates in order that customers can see the effective rate of deduplication on their workload, and use that information to remove shares from deduplication, or add additional similar workloads that will benefit from data reduction.

We now have the Concerto 7000 management appliance for Violin’s all-flash arrays and this additional Concerto 2200 dedupe system for NFS file dedupe and compression.

Source: IDC Market Research.

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Russian Deputy PM says no plans to ban McDonald’s: Itar-Tass

 The walls and towers of the Kremlin are reflected in a window of a closed McDonald's restaurant, one of four temporarily closed by the state food safety watchdog, in Moscow

The walls and towers of the Kremlin are reflected in a window of a closed McDonald’s restaurant, one of four temporarily closed by the state food safety watchdog, in Moscow, August 21, 2014. REUTERS/Maxim Zmeyev

MOSCOW (Reuters) – Russian authorities are not planning to close the McDonald’s chain in the country, Deputy Prime Minister Arkady Dvorkovich was quoted saying on Saturday, after inspectors visited a number of restaurants run by the fast-food company.

“No one is talking about it at all (a ban on McDonald’s in Russia),” Dvorkovich was quoted saying by Itar-Tass news agency,

in what could be a reprieve for the food chain, which considers Russia as one of its top markets.

Russia’s food safety watchdog has launched inspections of McDonald’s restaurants across the country against the backdrop of a standoff with the West over the Ukraine crisis and has closed three of its outlets in Moscow, citing breaches of sanitary regulations.

The outlets were closed as Russia introduced a one-year embargo on meat, fish, dairy, fruit and vegetables from the United States, the EU, Canada, Australia and Norway, in retaliation for Western economic sanctions over Moscow’s involvement in the Ukraine conflict.

A symbol of U.S. capitalism, McDonald’s operates 440 restaurants in Russia and considers the country one of its top seven markets outside the United States and Canada, according to its 2013 annual report.

It opened its first restaurant in Russia, on a main Moscow thoroughfare, in 1990, just before the collapse of the Soviet Union. The outlet was one of the three restaurants that were closed by the authorities earlier this week.

The food safety watchdog has made coordinated inspections of McDonald’s restaurants in many Russian regions, including in central Russia, Moscow and the Urals.

“It has just happened that the inspections were completed at the same time,” Dvorkovich said, according to the report.

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Goldman Sachs, U.S. agency in mortgage settlement worth $1.2 billion

2014-08-22T223327Z_4_LYNXMPEA7L0SD_RTROPTP_3_USA_original

A Goldman Sachs sign is seen above the floor of the New York Stock Exchange shortly after the opening bell in the Manhattan borough of New York January 24, 2014. REUTERS/Lucas Jackson

(Reuters) – Goldman Sachs Group Inc has agreed to a settlement worth $1.2 billion to resolve a U.S. regulator’s claims the bank sold Fannie Mae and Freddie Mac faulty mortgage bonds, the regulator announced Friday.

Under the settlement with the Federal Housing Finance Agency, the conservator for the two government-controlled mortgage finance companies, Goldman Sachs said it agreed to pay $3.15 billion to repurchase mortgage-backed securities from Fannie and Freddie.

The FHFA, which valued the settlement at $1.2 billion, said the accord “effectively makes Fannie Mae and Freddie Mac whole on their investments in the securities at issue.”

The $1.2 billion reflects the amount that Goldman will pay, minus the estimated current value of the securities being bought back from Fannie and Freddie.

The deal averts a Sept. 29 trial in a pair of lawsuits against Goldman that the FHFA filed in 2011 as it sought to recover damages from various financial institutions behind some $200 billion in mortgage bonds bought by Fannie and Freddie that later went sour.

To date, the FHFA has resolved all but three of the 18 lawsuits it filed, recovering $17.3 billion through cases against banks including Bank of America Corp, Deutsche Bank AG and Morgan Stanley.

The FHFA’s primary case against Goldman Sachs accused the bank of misleading the two mortgage finance giants in the sale of over $11.1 billion in mortgage-backed securities sold to Fannie and Freddie from 2005 to 2007.

Goldman Sachs denied the allegations, and in the settlement did not admit wrongdoing. Under the settlement, Goldman Sachs will pay about $1 billion to Fannie Mae and $2.15 billion to Freddie Mac, the FHFA said.

Goldman Sachs in a statement said the costs of the deal were substantially covered by its litigation reserves as of the second quarter of this year.

“We are pleased to have resolved these matters,” Gregory Palm, Goldman’s general counsel, said in a statement.

The deal tops a $550 million settlement that Goldman Sachs reached with the U.S. Securities and Exchange Commission to resolve charges over how it marketed a subprime mortgage product in 2010.

The U.S. Department of Justice continues to investigate Goldman Sachs over its marketing of mortgage-backed securities. The Justice Department on Thursday announced a $16.65 billion settlement with Bank of America over mortgage securities.

The FHFA continues to litigate against three other banks: HSBC Holdings Plc, Nomura Holdings Inc and Royal Bank of Scotland Group Plc.

HSBC continues to face its own trial Sept. 29, while Nomura’s case would go to a jury Jan. 26.

The case is Federal Housing Finance Agency v. Goldman, Sachs & Co. et al, U.S. District Court, Southern District of New York, No. 11-06198.

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Market leaders seen taking S&P 500 to 2,000

A Wall Street sign is pictured in the rain outside the New York Stock Exchange

A Wall Street sign is pictured in the rain outside the New York Stock Exchange in New York June 9, 2014. REUTERS/Carlo Allegri/Files

NEW YORK (Reuters) – U.S. stocks have been on a roll of late, with the S&P 500 hitting the latest in a series of records on Thursday, and investors expect the index’s momentum to soon carry it to – if not far past – the 2,000 milestone.

The S&P is about 10 points, or 0.4 percent, from that landmark, which analysts expected would be reached toward the end of the year, according to the most recent Reuters poll. Reaching it ahead of schedule is the latest affirmation that stocks are widely preferred to bonds, even with further upside seen as limited as the Federal Reserve remains on track to end its bond-buying stimulus program in October..

The level has more psychological than fundamental significance, and it could prompt market participants to consider whether their holdings have become stretched.

The “2,000 (level) has no fundamental significance outside of suggesting that stocks are fully valued and getting more so all the time,” said David Joy, chief market strategist at Ameriprise Financial in Boston. “We should see some weakness as Fed policy winds down, but I’d still rather own stocks than bonds, as in the long run they’ll continue to expand.”

The S&P is up 7.8 percent this year, outpacing overseas indexes and shrugging off headwinds such as a weather-depressed first quarter and political unrest abroad. Both defensive and cyclical stocks have led at times, but traders expect technology and healthcare names, the market’s current leaders, to drive it over 2,000.

“Now is not the time to seek out value over growth,” said Jeff Mortimer, director of investment strategy for BNY Mellon Wealth Management in Boston. “Price momentum tends to have stickiness in this kind of market.”

Every S&P sector is positive year-to-date, with tech and healthcare both up about 13 percent, eclipsing the 11 percent rise of utilities, the previous leader.

Despite record levels and the lack of any sustained pullback since 2012, investors are finding reasons to buy, with U.S. stock funds getting $9.9 billion in inflows last week, according to Thomson Reuters’ Lipper service.

Only two of the 27 industry groups that Wells Fargo monitors are down from 12 months ago, a breadth that leads to year-over-year gains 90 percent of the time, the firm wrote, with the S&P rising an average of 12.7 percent.

Optimism about near-term market direction hit a nine-month high in the latest AAII Sentiment Survey, with 46.1 percent of respondents expecting gains over the next six month.

“There’s a good underlying tone in the market and we still have plenty of prospects for more gains,” said Michael Mullaney, chief investment officer at Fiduciary Trust Co in Boston.

He added that he would not be concerned about valuation until the S&P’s forward price-to-earnings ratio was 17 and its trailing P/E was 20. Those metrics currently stand at 15.7 and 17.4, respectively.

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JC Penney Shares Surging As Sales Rebound

JC Penney just reported a second quarter loss per share of $0.56, less than the $0.90 per share loss expected by analysts.

Same-store sales at the retailer rose 6%, more than the 5.8% that was expected.

Gross margin in the second quarter was 36%, up from 29.6% in the same quarter last year. Inventory was also down 9.7% compared to last year.

The company also reported free cash flow was $76 million, a $1.2 billion improve from last year. Revenue in the second quarter also beat expectations, coming in at $2.8 billion, better than the $2.78 billion that was expected.

In the third quarter, the company expects same-store sales to increase by mid-single digits, and Penney also sees this increase holding for the fiscal-year 2014.

JC Penney CEO Mike Ullman said, “Our turnaround initiatives continue to produce improved financial results. In the second quarter, we gained additional market share while significantly increasing gross margin in a highly competitive promotional environment.”

The company’s same-store sales beat marks the third straight quarter of beats following nine quarters of declines, according to data from Bloomberg. And analysts at Deutsche Bank said ahead of the report that Penney is currently the, “furthest from what former CEO Ron Johnson had envisioned.”

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