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Ackman’s Pershing Square trims holdings of Beam

BOSTON (Reuters) – Hedge fund manager William Ackman sold 7.3 million shares in Beam Inc this week, according to a regulatory filing on Friday, trimming his holdings three weeks after the share price spiked on news of a planned takeover by Japanese whiskey maker Suntory Beverage Food Ltd

Ackman’s $12 billion Pershing Square Capital Management sold 6 million shares of common stock at $83.28 on Thursday and sold 1.3 million shares of common stock at $83.36 on Friday, according to a filing made with the Securities and Exchange Commission late on Friday.

Pershing Square had been the single largest holder in Beam, the liquor unit spun out of Fortune Brands in 2011, owning 20.8 million shares at the end of the third quarter.

The share price spiked 25 percent on January 13 when Suntory offered to pay $13.6 billion in cash for the maker of Jim Beam and Maker’s Mark.

After this week’s sales, Pershing Square owns 8.3 percent of Beam’s outstanding shares, down from 12.7 percent previously.

Ackman saw his 3-1/2 year old investment in Beam pay off big this month when he and his investors earned roughly $375 million in one day after the acquisition news.

As an activist investor, Ackman invests in no more than one dozen companies at a time and often starts pulling his money out after certain targets are reached. Last year, he began paring his position in Canadian Pacific Railway, a big gainer in his portfolio.

(Reporting by Svea Herbst-Bayliss; Editing by David Gregorio)

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Chevron opts to keep massive budget in bid to boost output

(Reuters) – Chevron Corp (CVX.N) plans to keep spending roughly $40 billion per year for the next several years on new oil and natural gas projects in a bid to lift production that is on track to be flat for the third straight year.

That stay-the-course approach, announced on Friday after the second-largest U.S. oil company said its quarterly profit dropped 32 percent, spooked investors and prompted the stock to fall 3.5 percent, the most of any large energy producer this quarter.

Like Exxon Mobil Corp (XOM.N), Royal Dutch Shell (RDSa.L) and other international energy companies, Chevron has tried to offset declining production at its existing oil and natural gas wells by spending massively on new exploration projects.

But Shell announced earlier this week that it would focus more on energy projects that have the best chance of success, cutting spending and also selling underperforming assets. The news boosted Shell’s stock.

Chevron has taken the opposite approach and plans to keep the cash flowing. It spent $41.9 billion last year on energy projects, a 23 percent increase from 2012. Chevron Chief Executive John Watson said he expects capital spending to be in the $40 billion range for the next few years.

Chevron is betting that its relatively high dividend yield for the energy industry and its large stock buyback program will appease investors until five of its major projects, including two massive liquefied natural gas projects in Australia and deepwater wells in the U.S. Gulf of Mexico, are online.

“Basically it’s a treadmill,” said Oppenheimer Co analyst Fadel Gheit. “Yes, all these new projects will add oil. But guess what, until they hit that goal, their base line production is declining.”

Chevron’s oil and natural gas production fell 3.4 percent in the fourth quarter to 2.6 million barrels of oil equivalent per day (boed).

Rising production in the United States and Nigeria wasn’t enough to offset declining production at legacy fields around the world, which typically see production slip 4 percent annually, Chevron said.

For 2014, Chevron expects total production of 2.6 million boed, up only 0.5 percent from 2013 levels. The estimate missed Wall Street’s expectations and disappointed investors, who had hoped 2014 would be a “positive transition year” toward 2017 when new projects come online, Credit Suisse analyst Edward Westlake said in a note.

Even if Chevron hits its 2014 production goal, it would only be on par with 2012 levels.

Looking forward, Chevron said it has made significant progress on its five main growth projects. In total, the five new protects will add 500,000 boed in production, the company estimates, once fully online.

“We are in a depleting resource business, and you do need to add to the portfolio,” Watson said on a conference call with investors.

Last year the company said by 2017 it expects daily production to be 3.3 million boed.

The company reported net income of $4.93 billion, or $2.57 per share, compared with $7.25 billion, or $3.70 per share, in the year-ago period.

The quarterly profit met expectations of Wall Street analysts, according to Thomson Reuters I/B/E/S.

The results were not a total surprise to Wall Street, as Chevron hinted earlier this month that its fourth-quarter profit would be “comparable” with third-quarter results, when it posted net income of $4.95 billion.

In refining, profit plunged 58 percent due to shrinking margins, largely due to price differentials between different types of crude oil.

Refiners make more money when the price difference between various types of crude oil is wide. When the gap narrows in the price differences, costs tend to rise. Exxon on Thursday posted weakness in its own refining unit.

Profit also fell in Chevron’s smallest unit, the power generation and mining unit.

Chevron shares fell $4.02, or 3.5 percent, to $112.40 in afternoon trading. The stock is down about 2.4 percent over the past 52 weeks.

(Reporting by Ernest Scheyder; Editing by Jeffrey Benkoe, Sofina Mirza-Reid and Meredith Mazzilli)

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Silicon Valley VCs Are More Confident Than They’ve Been in Years

Silicon Valley venture capital investors are as confident as they were before the Great Recession and are looking forward to an active 2014.

The latest reading of the Silicon Valley Venture Capital Confidence Index, released this week, came in at 3.94 on a 5-point scale. That’s the highest level of confidence since the third quarter of 2007, just before the economic downturn.

The index, which has been produced quarterly for the last decade, was based on a survey of 32 venture capitalists in the San Francisco area.

Confidence levels have been trending higher for the past year and a half. “The steady rise in confidence suggests that a stabilizing macro environment is providing a firmer foundation for positive momentum in venture investing in 2014,” writes Mark Cannice, author of the report and professor with the University of San Francisco School of Management.

Related: Another Score for Crowdfunding: Indiegogo Raises $40 Million

In particular, Silicon Valley venture capitalists said they are feeling good about increased exit opportunities in the public markets, namely in terms of initial public offerings.

“I sense venture confidence is heightened, with plenty of startup capital available

and flowing again,” said Igor Sill of Geneva Venture Management, in a comment, in the report. “And, the IPO market has finally returned. I’m very excited about what 2014 holds in store for venture investors. My only concern is whether there will be enough good deals out there for us to put all this money to work rationally.”

Another venture capitalist echoed this enthusiasm, saying that the recent large tech IPOs are a harbinger of healthy exit activity for smaller tech companies. “Good performing tech IPOs brighten the prospects for all young tech companies, and I am optimistic that 2014 will be a strong year,” said Sandy Miller of Institutional Venture Partners. “There’s never been a moment in history when there are so many private venture-backed technology companies with real scale and rapid growth.”

Related: What Industries Venture Capitalists Are Hot For

Other VCs raised concern that the industry’s confidence is a bit of a red flag. Younger companies ought to be aware of “valuation inflation” and “over investment in ‘hot categories,’” said John Malloy of BlueRun Ventures.

In particular, social media and social commerce are two areas that are in the “risk of overheating,” says Robert Ackerman of Allegis Capital. If a venture capital market accelerates too much too quickly, then the market may get ahead of itself and trip itself up. “The success of recent IPOs has also spawned an unusually high level of interest in later stage companies approaching the IPO market, potentially distorting the historic relationship between valuation and business fundamentals. This ‘distortion’ portends a speed bump ahead in segments of the innovation economy,” Ackerman says.

Related: San Francisco to Tax Google, Facebook for Using City Bus Stops

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Fiat to present small Jeep SUV in March, 500X in October: union

MILAN (Reuters) – Italian carmaker Fiat (FIA.MI) will present a Jeep-branded small sports utility vehicle (SUV) at the Geneva car show in March while its 500X crossover vehicle will be presented at the Paris show in October, an Italian trade union official said.

Both cars will be produced at the Melfi plant in the southern Italian region of Basilicata, which currently manufactures the Grande Punto.

In a statement on Friday, Ugl trade union official Pino Giordano said work to adapt the production line at Melfi to produce the two new models was underway.

Fiat, which completed a merger with its U.S. arm Chrysler last week, will present a new industrial plan, outlining new investments and models, in early May.

(Reporting by Stefano Rebaudo, writing by Danilo Masoni; Editing by Peter Galloway)

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Fed draws criticism from abroad as emerging markets still reeling

MUMBAI/NEW YORK (Reuters) – The Federal Reserve’s decision to keep trimming its economic stimulus drew fire on Friday as India’s central bank chief said Americans should be more attuned to the global impact of their policies, and the IMF called for vigilance given strains in financial markets.

The push-back came on Fed Chairman Ben Bernanke’s last day on the job and two days after the U.S. central bank reduced the pace of its huge asset purchase program. The Fed made the move on Wednesday despite a bruising selloff in emerging markets that was prompted in part by the prospect of less U.S. monetary support.

With the turmoil in currencies and stocks spreading into more emerging markets on Friday, Fed officials, addressing the rout for the first time, offered no hint the sell-off would influence their policy stance unless the U.S. economy were threatened.

But in Mumbai, Reserve Bank of India Governor Raghuram Rajan said the United States “should worry about the effects of its policies on the rest of the world.”

“We would like to live in a world where countries take into account the effect of their policies on other countries and do what is right, rather than what is just right given the circumstances of their own country,” he said at an event on organized by The Times of India newspaper.

Financial markets in India, Turkey, Argentina and elsewhere have boomed in recent years as the Fed’s measures to bolster economic growth at home – including asset purchases and ultra-low interest rates – encouraged investors to seek higher returns in emerging economies.

As the Fed began to talk of unwinding its policy last year, the money began to flow back out, a trend that ramped up again in the last two weeks on signs that China’s economy is slowing.

Rajan, a former chief economist at the International Monetary Fund, is well respected by central bankers globally as being among the few who spoke out about signs of trouble in markets well before the 2007-09 financial crisis set off the Great Recession.

His comments were echoed by the IMF, which on Friday called on central banks to ensure that a financial market rout in the developing world does not lead to an international funding crunch.

“The turbulence also underscores the need for vigilance among central banks over liquidity conditions in international capital markets,” an IMF spokesman said.


The pressure, however, is unlikely to dissuade the Fed from ramping down its asset purchases by later this year unless the turbulence starts to derail recent momentum in the U.S. economy. Fed policymakers did not mention emerging markets in a statement on Wednesday, when they unanimously decided to trim bond-buying by another $10 billion per month.

Indeed, all 70 economists polled by Reuters expect the central bank to keep paring the purchases at that rate at subsequent meetings, shuttering the program before year-end.

“So far I don’t see anything that’s happened in the last month around markets as fundamentally shifting an improving outlook for the U.S. economy and improving labor markets,” San Francisco Fed President John Williams said Friday on Fox Business television.

Williams, a centrist, said fellow policymakers discussed emerging markets at their meeting this week, but added the Fed should not focus too much on “short-term developments.

Speaking in South Africa, one of the countries hit by the recent turmoil, Kansas City Fed President Esther George backed the withdrawal of accommodation and warned that easy U.S. policies will only work to distort exchange rates, capital flows, and other international connections.

Richard Fisher of the Dallas Fed went even further, saying countries like Poland and Mexico that used the influx of funds to restructure their economies will do well as the Fed reduces accommodation. Others, such as Brazil, will have a hard time, he said in Fort Worth, Texas.

The debate, which amplified a day before Fed Vice Chair Janet Yellen is to succeed Bernanke, highlights how central banks and governments can get whip-sawed by the trillions of dollars of investment seeking easy returns. In the so-called cross-border currency trade, investors borrow in countries with lower yields and invest in those with higher yields.

The IMF spokesman said some emerging market countries need to take urgent action to improve their economies.

Turkey and South Africa, two of the hardest-hit in recent days, responded by raising interest rates this week to help support their currencies. The Reserve Bank of India also tightened monetary policy, saying the action was aimed at pushing down high consumer inflation.

Rajan, who took charge at the Reserve Bank of India last September during the country’s worst financial crisis since 1991, complained on Thursday that global monetary policy coordination had broken down.

“Industrial countries have to play a part in restoring that, and they cannot at this point wash their hands off and say: ‘We will do what we need to, and you do the adjustment you need to,'” he said on Bloomberg India TV.

(Additional reporting by Rafael Nam and Subhadip Sircar in Mumbai, Ann Saphir in Fort Worth, Texas, and Anna Yukhananov and Jason Lange in Washington; Writing by Jonathan Spicer; Editing by Meredith Mazzilli)

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Polar vortex chills January U.S. auto sales

DETROIT (Reuters) – Snow and bone-chilling weather likely hurt U.S. auto sales in January but should not prevent the industry from continuing its rebound, analysts said.

The bad weather in large parts of the country, including the East Coast and Midwest, was a repeat of what happened in December, when industry sales fell short of expectations.

Economists polled by Thomson Reuters expect the industry’s annual selling rate in January to finish at 15.65 million vehicles when automakers report their results on Monday. However, the inclement weather led Buckingham Research analyst Joseph Amaturo to predict a rate of 15.3 million vehicles.

In January 2013, the industry’s annual sales rate was 15.23 million vehicles.

“It’s the winter blues really,” said Jeff Schuster, senior vice president of forecasting at research firm LMC Automotive. “The country has been hit by bad weather and in January we saw it at the beginning of the month and now we’re closing with weather issues.”

The bad weather’s impact was illustrated by the changing outlook at LMC. The research firm initially forecast a sales increase in January of 1.2 percent and an annual sales rate of 15.9 million vehicles, but later cut that to a decline of almost 1 percent and an annual rate of 15.5 million.

Most analysts who closely follow the industry expect January sales on a percentage basis to finish close to flat compared with last year, with some seeing a slight increase and others a small decline.

Morgan Stanley analyst Adam Jonas’s uncle, an auto dealer in Ohio, bemoaned the weather’s detrimental effect. “Maybe people want to buy cars, but they don’t want to lose their fingers to frostbite for the privilege,” the uncle said, according to a recent Jonas research note.

Monthly sales are regarded as an early indicator of the U.S. economy’s health. The industry has held up better than the broader economy because of easier access to credit and consumers’ need to replace aging vehicles, which now average more than 11 years.

However, January plays a smaller role in how the year plays out, analysts and industry officials said.

In 19 of the last 20 years, industry sales in January have been the lowest of the year. Because of that, even slight movements versus expectations can have a magnified effect on the annual sales rate, analysts said.

Fleet sales in January are expected to fall due to the decline in tax incentives available to commercial buyers. Barclays analyst Brian Johnson said one automaker told him it expects sales to retail customers to make up 90 percent of the total in January, compared with 77 percent a year ago.

Some analysts have voiced concern about rising incentives biting into companies’ profit margins. However, research firm estimated the industry’s average incentive spending in January fell 3 percent from last year to $2,452 per vehicle, with cuts made by Fiat’s (FIA.MI) Chrysler Group and GM.

That discipline on pricing may not hold. “Incentives and fleet will quickly become attractive levers to pull if (automakers) realize they’ve overreached on their sales goals,” TrueCar Executive Vice President Larry Dominique said.

January sales are expected to fall at GM, Ford Motor Co (F.N) and Toyota Motor Corp (7203.T), but rise at Chrysler, Honda Motor Co (7267.T) and Nissan Motor Co (7201.T), according to a poll of analysts.

Despite the expected January chill, most industry executives still expect sales for the year to finish in the range of 16 million to 16.5 million light vehicles. Last year, industry sales rose 7.6 percent to 15.6 million vehicles, hitting a six-year high.

That optimism was reflected in comments made by David Kelleher, whose dealership had its best sales in January since opening in 2005 despite more than 22 inches of snow through three storms in the month. He said that shows that the industry’s fundamentals remain strong.

“Business is vibrant,” said the owner of a Chrysler-Jeep-Dodge-Ram dealer outside Philadelphia. “I have to assume there’s still a lot of pent-up demand in the market that’s going to come out when the weather is more favorable.”

(Reporting by Ben Klayman in Detroit; editing by Andrew Hay)

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Keystone pipeline will not affect Canada oil sands growth: U.S. report

WASHINGTON (Reuters) – The proposed Keystone XL oil pipeline is unlikely to increase the pace of Canadian oil sands development, a U.S. State Department study said on Friday, raising pressure on President Barack Obama to approve a project environmentalists see as a major climate change problem.

The massive 11-volume environmental impact study released on Friday did not recommend whether President Barack Obama should grant or deny an application by TransCanada Corp (TRP.TO) to build the $5.4 billion line, which would transport crude from Alberta’s oil sands to U.S. refineries.

But a State Department official who briefed reporters ahead of the report’s release said that blocking Keystone – or any pipeline – would do little to slow the expansion of Canada’s vast oil patch, maintaining the central finding of the State Department’s preliminary study issued last year.

The report’s publication opened a new and potentially final stage of an approval process that has dragged for more than five years, taking on enormous symbolic political significance, potentially helping define Obama’s legacy.

With another three-month review process ahead and no firm deadline for a decision on the 1,179-mile line, the issue threatens to drag into the 2014 congressional elections in November. Obama is under pressure from several vulnerable Democratic senators who favor the pipeline and face re-election at a time when Democrats are scrambling to hang on to control of the U.S. Senate.

The report reaffirmed the idea that Canada’s heavy, bituminous oil sands reserves require more energy to produce and process – and therefore result in higher greenhouse gas emissions – than conventional oil fields.

But after extensive economic modeling, it also found that the line itself would not slow or accelerate the development of billions of barrels of reserves that environmentalists say would exacerbate global warming. That finding is largely in line with what oil industry executives have long argued.

“The approval or denial of any single project is unlikely to significantly affect the rate of extraction of the oil and the oil sands, or the refining of heavy crude on the U.S. Gulf Coast,” a State official told reporters ahead of the release.

Secretary of State John Kerry will consult with eight government agencies over the next three months about the broader national security, economic and environmental impacts of the project before deciding whether he thinks it should go ahead. There is no deadline, and the report does not seek to address some of the larger strategic questions involved.

“While we have a lot of deeper and broader analysis in this supplemental (report), it does not answer the broader question about how a decision on this potential pipeline fits in with broader national and international efforts to address climate change,” the State official said.


The pipeline has been in political limbo during the review, a long-stalled process that complicated relations with allies in Ottawa and annoyed advocates on both sides of the issue. The line would carry as much as 830,000 barrels of crude per day from Hardisty, Alberta, to Steele City, Nebraska, where it would meet the project’s already complete southern leg to take the crude to the refining hub on the Texas Gulf coast.

Polls show a majority of Americans support the project, although environmentalists have fiercely opposed it.

Republicans, supported by business leaders and the Canadian government, want Obama to approve the project because of its potential to create jobs and boost U.S. energy security.

The State Department’s study found that oil from the Canadian oil sands is about 17 percent more “greenhouse gas intensive” than average oil used in the United States because of the energy required to extract and process it, the State Department official said. It is 2 to 10 percent more greenhouse gas intensive than the heavy grades of oil it replaces.

But the study found oil sands development could be curbed in

a scenario where pipeline capacity was constrained, oil prices were low, and rail shipping costs soared, the official said, noting the uncertainty involved in modeling the impacts.

The study also examines data from a 2010 pipeline spill in Michigan, where more than 20,000 barrels gushed into the Kalamazoo River system. Pipeline operator Enbridge Energy Partners was ordered last summer to do more to dredge up oil from the bottom of the river.

TransCanada (TRP.TO) shares rose more than 1 percent on Friday as previous reports suggested a favorable review.


Eight other government agencies ranging from the Pentagon to the Energy Department to the Environmental Protection Agency will now have the opportunity to weigh in on the pipeline during the next 90 days, and the public will have 30 days to comment, beginning next week.

A previous comment period in March yielded more than 1.5 million comments.

The White House will be kept informed about the process, but does not have a formal role within the government’s process for reviewing pipelines, unless departments cannot agree on whether the project should go ahead, the State official said.

“I can’t project into the future,” the official said when asked whether Obama would have input.

Obama signaled in a major climate speech in June that he was closely watching the review, and said that he believed the pipeline should go ahead “only if this project does not significantly exacerbate the problem of carbon pollution.”

(Editing by Peter Henderson and Grant McCool)

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Nasdaq briefly turns up; Dow, S&P 500 cut losses

NEW YORK (Reuters) – The Nasdaq briefly turned positive in afternoon trading on Friday, while the Dow and SP 500 sharply cut losses, helped by gains in shares of Google and as bargain hunters stepped in following recent heavy selling.

Google shares (GOOG.O) gained 4.3 percent to $1,184.08 after reporting stronger-than-expected quarterly revenue after the bell on Thursday.

The Dow Jones industrial average .DJI fell 73.35 points or 0.46 percent, to 15,775.26, the SP 500 .SPX lost 3.03 points or 0.17 percent, to 1,791.16 and the Nasdaq Composite .IXIC dropped 4.72 points or 0.11 percent, to 4,118.405.

(Reporting by Caroline Valetkevitch; Editing by Nick Zieminski)

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Panama Canal says extends talks with consortium to February 4

PANAMA CITY (Reuters) – The Panama Canal Authority said on Friday it had extended a window for talks with a Spanish-led consortium expanding the waterway aimed at ensuring work continues on the project, which faces huge cost overruns.

The authority said it had agreed to continue talks until February 4 with the consortium, which had threatened to stop work on the project unless the canal foots the bill for $1.6 billion in unforeseen additional costs.

Earlier this month, the consortium, which is led by Spanish builder Sacyr (SCYR.MC), announced it could stop work by January 20. But it later said it would not call a halt on the project before at least the end of January.

“The parties agreed to continue meeting over the weekend to further evaluate the options aimed at reaching an agreement,” the Canal Authority said in a statement.

Italy and Spain are both committed to finding a rapid solution to the dispute, Italian Prime Minister Enrico Letta and his Spanish counterpart Mariano Rajoy said on Monday.

The consortium also includes Italian builder Salini Impregilo (SALI.MI), Belgium’s Jan De Nul and Panama’s Constructora Urbana.

Halting construction on the expansion would be a setback for companies eager to move larger ships through the century-old waterway, such as liquefied natural gas (LNG) producers who want to ship exports from the U.S. Gulf coast to Asian markets.

The canal and the consortium have traded proposals and counter-proposals to find ways to raise financing to keep work going while they deal with the cost overruns via arbitration.

The project was originally expected to cost about $5.25 billion, but the overruns could raise the cost to near $7 billion.

Work began on the expansion in 2007. The project, which is some 72 percent complete, will create a new lane of traffic along the canal and double its capacity.

(Editing by Simon Gardner and Meredith Mazzilli)

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