Stocks lose early traction
NEW YORK, Aug. 21 (UPI) -- Stock gains faded in early afternoon trading, as Wall Street failed to follow upswings in Asia and Europe.
The Dow Jones industrial average gave up 25.68 points, 0.19 percent, to 13,345.96. The tech-heavy Nasdaq Composite index shed 5.96 points, 0.19 percent, to 3,070.25. The Standard and Poor's 500 lost 1.31 points or 0.09 percent, to 1,416.82.
The benchmark 10-year treasury fell 5/32, yielding 1.831 percent.
The euro rose to $1.2476 from Monday's $1.2345. Against the yen, the dollar fell to 79.30 yen from 79.43 yen.
In Tokyo, the Nikkei 255 index fell to 9,156.92, dropping 14.24 points, or 0.16 percent.
In London, the FTSE 100 index added 0.57 percent, 33.15, to 5,857.52.
Municipal bond market Buffett-ed
NEW YORK, Aug. 21 (UPI) -- Market analysts said Berkshire Hathaway's early exit on a portion of its municipal bond market holdings could be a signal market risk is rising.
The Wall Street Journal reported Tuesday the investment firm run by billionaire investor Warren Buffett has terminated its bets on $8.5 billion in municipal debt.
In a deal with Lehman Bros., the firm bet the municipalities involved would not default on their bond obligations, as Berkshire Hathaway would have had to pay the difference if they had.
Buffett most likely "doesn't want this exposure anymore and is getting out while he can," Jeff Matthews, a hedge-fund manager who owns Berkshire Hathaway stock, told the Journal.
Another stockholder, David Kass, a professor at the University of Maryland's Robert H. Smith School of Business, also said Buffett may believe the risks of insuring municipal debt have risen.
On the other hand, Buffett is a shrewd investor well versed in strategies of when to buy and when to sell.
Demand for municipal bonds is strong. California sold $10 billion in short-term bonds last Thursday, which sent yields down to 0.33 percent and 0.43 percent on one-year bonds.
Still, three cities in California have filed for Chapter 9 bankruptcy protection, and other large cities, including Detroit, are in dire financial straits.
"There is a need for concern. Many of these municipal leaders appear ready to sacrifice bondholders on the altar of the taxpayers rather than the other way around, which has historically been the case," said Bill Brandt, chairman of the Illinois Finance Authority and chief executive officer of Development Specialists Inc., a consulting firm specializing in municipal finances.
Arrest of tycoon reverberates in Vietnam
HANOI, Vietnam, Aug. 21 (UPI) -- Vietnam's Asia Commercial Bank played down the arrest of its founder and former officer, saying Nguyen Duc Kien's troubles were not connected to the bank.
In a statement, ACB Vice Chairman Trinh Kim Quang said Kien's arrest was "personal."
The government said Kien, 48, was arrested on suspicion of carrying out "illegal business," The Financial Times reported Tuesday.
The country's central bank reacted to the arrest, as well, issuing a statement that said, "The State Bank of Vietnam is closely monitoring developments in the money market. If necessary, the State Bank of Vietnam is willing to offer liquidity support to ensure the stability and safety of the system."
The VN-Index of the Ho Chi Minh Stock Exchange fell nearly 4 percent, while the HNX-Index of the Hanoi Stock Exchange fell nearly 5 percent after the arrest. Financial stocks fell sharply, the Times said.
Kien is one of the country's most successful businessmen. He no longer holds a position at ACB, but he is chairman of the popular Hanoi Football Club and the majority stockholder in several banks, including ACB and Kien Long Bank, Vietnam.net Bridge reported.
CEO says Citigroup is going back to basics
NEW YORK, Aug. 21 (UPI) -- Citigroup Chief Executive Officer Vikram Pandit said emerging markets, including business in China, would be the focus of the bank's growth.
Despite the recent economic slowdown in China, Citigroup is "banking on the fact that the growth story is intact" for the emerging markets, Pandit said.
The bank's profits in Asia in the second quarter outpaced global earnings at Goldman Sachs and Morgan Stanley, which are investment banks, The Financial Times reported.
Citigroup, which set the pace for mergers before the financial crisis of 2008, has sold most of the businesses it picked up when it merged with Travelers in 1998, Pandit pointed out.
While that meant Citigroup could concentrate on its core retail banking business, it did not mean Pandit endorsed the concept of breaking up the corporation into separate investing and retail banking, the Times said.
Former Citigroup CEO Sandy Weill recently said banks should separate the two businesses due to the risk of leaving banks too big to fail.
Pandit said Citigroup had learned that lesson on its own.
"What's left here is essentially the old Citicorp. That's a tried and proven strategy. Why did it work? Because it was a strategy based upon operating the business and serving clients and not a strategy based on deal making. That's the fundamental difference," Pandit said.
"When you look at our business, the biggest growth trend is in our ability and our requirement to serve those emerging-market multinationals in the way we used to serve and continue to serve some of the developed-market multinationals," he said.
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