Buffett's Berkshire to buy railroad
Warren Buffett is getting into the railway business with his biggest takeover ever. Mr. Buffett's Berkshire Hathaway Inc. struck a $34-billion (U.S.) deal today to acquire Burlington Northern Santa Fe Corp., offering $100 a share in cash and stock for the almost 80 per cent of the railroad it does not already own. It's a big bet on the future of the American economy, given that Burlington Northern, the second-biggest U.S. railway, hauls everything from corn to coal and is thus an indicator of the country's health. Analysts said Mr. Buffett is seeking an investment that will bring rewards for years, and that he's not as concerned about immediate returns. He is, said one analyst “buying at the trough – things aren't going to get much worse.” Mr. Buffett said more people will move more goods over the next three decades, and he sees the U.S. prospering. Mr. Buffett, known as the Oracle of Omaha, described the deal as an “all-in wager of the economic future of the United States. I love these bets.” Read the story
www.theglobeandmail.com/globe-investor/buffetts-berkshire-to-buy-railroad/article1349275/
How investors can buy in to Buffett
Small investors are about to get their best chance yet to buy into Mr. Buffett's wisdom. To accommodate the railway deal, under which Burlington shareholders can opt for Berkshire shares, his company will split its Class B shares 50-to-1. That means holders of the Berkshire Bs will get 50 new shares for each they now own. These shares are known as “baby Bs” because of their lower trading price compared with Berkshire A shares. Of course, even the babies are worth several thousand dollars. With the upcoming split, they will be worth far less individually. As yet, there's no timetable for the split. Read the story
www.theglobeandmail.com/globe-investor/how-to-buy-in-to-warren-buffett/article1349567/
Gold jumps to fresh record as India buys bullion
Gold prices jumped to a record after India's central bank bought 200 tonnes of bullion from the International Monetary Fund. The $6.7-billion (U.S.) sale to the Reserve Bank of India was half of the IMF's long-planned bullion sale. Analysts said the deal will relieve the gold market of some uncertainty about how and when the IMF would sell about one-eighth of its total gold stock, and the deal fuelled speculation that other central banks, possibly China's, may also be ready to diversify their reserves. Traders said the IMF sale could help support bullion prices. “Gold was kept off the market and sold directly to central banks so potential sales on market are limited by this,” said one analyst. Read the story
www.theglobeandmail.com/globe-investor/gold-surges-to-new-record/article1349836/
Related: The IMF sale to India
www.theglobeandmail.com/globe-investor/investment-ideas/will-imf-gold-sale-boost-bullion-price/article1349432/
Britain shakes up its banking industry
Britain's two largest retail banks secured another £31-billion ($50.5-billion U.S.) from the government Tuesday and agreed to sell branches and key businesses to appease EU competition concerns about state aid. Royal Bank of Scotland and Lloyds Banking Group also accepted drastic caps on bankers' bonuses in deals that pave the way for Britain to begin selling the bank stakes it bought during the crisis, a crucial source of money as the country struggles with a ballooning budget deficit. Lloyds also freed itself from a government insurance scheme for bad debts by raising £13.5-billion in the world's largest-ever rights issue. That left RBS, already Britain's whipping boy in the banking crisis blame game, as the only bank taking up the government's Asset Protection Scheme and accepting the most punitive disposals. Read the story
www.theglobeandmail.com/globe-investor/britain-shakes-up-its-banks/article1349193/
GM edges out Toyota in Canadian sales
General Motors of Canada Ltd. edged out Toyota Canada Inc. for top spot in October vehicle sales rankings. Ford finished a close third. For Toyota, it was the best October on record. Read the story
www.theglobeandmail.com/report-on-business/gm-canada-tops-in-october-sales/article1349808/
Australia hikes interest rates again
The Reserve Bank of Australia boosted interest rates by a quarter of a percentage point for the second month in a row, but was careful not to fuel expectations for another rate hike next month. Australia, whose central bank's benchmark rate now stands at 3.5 per cent, escaped a recession during the global meltdown and its fortunes have far exceeded those of other countries. The move will not likely spur other major banks to follow suit. The Federal Reserve, which began a two-day meeting today, is not expected to change interest rates when it announces its decision Wednesday afternoon. Nor are the European Central Bank and Bank of England when they meet Thursday. Currency traders have also speculated that the Bank of Canada could follow Australia given the similarities of the two economies – speculation that tends to boost the Canadian dollar – but economists have also ruled that out. Rather, Bank of Canada Governor Mark Carney is seen sticking to his pledge to keep rates at historic lows well into next year. Read the story
www.theglobeandmail.com/report-on-business/australia-hikes-interest-rates-again/article1349022/
Market Blog: Loonie taking an Aussie tone again?
www.theglobeandmail.com/blogs/markets/loonie-taking-an-aussie-tone-again/article1349688/
Lookahead: The Federal Reserve makes its policy announcement at 2:15 p.m. ET.
Johnson & Johnson slashes work force
Johnson & Johnson its trimming the ranks of its management, cutting thousands of jobs and planning other restructuring moves in a bid to save up to $900-million (U.S.) next year. The health products manufacturer said the cuts will affect 6 or 7 per cent of its global work force, or more than 8,000 jobs. The layoffs will cost the company a restructuring charge of up to $1.3-billion pretax in the fourth quarter. Chief executive officer William C. Weldon said the restructuring is based on a broad, global view of the changing health care industry. Read the story
www.theglobeandmail.com/report-on-business/johnson-johnson-cuts-work-force/article1349276/
Investing: What is RIM stock worth?
Analysts are looking at the same numbers, but drawing vastly different conclusions about the future of Research In Motion Ltd.. In the latest flurry of analysis of the BlackBerry maker, two investment firms today published research notes, one rating RIM a $50 (U.S.) stock and a “sell,” and the other deeming it at $100 stock and a “buy.” Both bulls and bears on the company agree that a wave of new competition is about to hit the wireless handset market, but they differ in the assessment of how RIM will weather it. Read the story
www.theglobeandmail.com/globe-investor/is-rim-worth-50-or-100/article1349633/
Space hotel: The final frontier
A company behind plans to open the first hotel in space says it is on target to accept its first paying guests in 2012 despite critics questioning the investment and time frame for the multibillion-dollar project. The Barcelona-based architects of the Galactic Suite Space Resort say it will cost €3-million ($4.4 million U.S.) for a three-night stay at the hotel, with this price including an eight-week training course on a tropical island. During their stay, guests would see the sun rise 15 times a day and travel around the world every 80 minutes. They would wear Velcro suits so they could crawl around their pod rooms, sticking themselves to the walls like Spiderman. A nascent space tourism industry is beginning to take shape with construction under way in New Mexico of Spaceport America, the world's first facility built specifically for space-bound commercial customers and fee-paying passengers. British tycoon Richard Branson's space tours firm, Virgin Galactic, will use the facility to propel tourists into suborbital space at a cost of $200,000 a ride. More than 200 people have expressed an interest in travelling to the space hotel and at least 43 people have reserved.
Coming Wednesday
The Federal Reserve makes its policy announcement at 2:15 p.m. ET.
Fiat chief Sergio Marchionne unveils a five-year plan for Chrysler Group LLC.
The Institute for Supply Management releases its non-manufacturing index at 10 a.m. ET.
Among corporate reports expected are Molson Coors Brewing Co., Time Warner Inc., Torstar Corp., Goldcorp Inc., TransCanada Corp., WestJet Airlines Ltd. and Yellow Pages Income Fund.
From today's Report on Business
Our 11th annual online broker survey
www.theglobeandmail.com/report-on-business/online-broker-rankings/the-11th-annual-online-broker-survey/article1348448/
CanWest-Goldman battle erupts
www.theglobeandmail.com/globe-investor/canwest-goldman-battle-erupts/article1348821/
Manufacturing on the upswing globally
www.theglobeandmail.com/report-on-business/crash-and-recovery/manufacturing-on-the-upswing-globally/article1348829/
U.S. slump batters auto making in Canada
www.theglobeandmail.com/report-on-business/us-slump-batters-auto-making-in-canada/article1348825/
H1N1 could hamper Canada's economic recovery
www.theglobeandmail.com/report-on-business/h1n1-could-hamper-canadas-economic-recovery/article1348843/
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