Facebook stock up as lock-up expires on largest block of shares

SAN FRANCISCO (Reuters) – Shares of Facebook Inc jumped 10 percent in early trading on Wednesday, even as the biggest block of shares held by insiders became eligible for sale for the first time since the social media company’s disappointing debut in May.

In heavy morning trading, Facebook gained $ 2.02 to $ 21.89.

“While the lock-up is expiring, there is nothing requiring anybody to sell,” said Tim Ghriskey, chief investment officer at Solaris Group in Bedford Hills, New York. “Given the low price, these long-term holders are deciding to hold the stock and that is lifting it here as the fear of the expiration subsides.”

Roughly 800 million Facebook shares could begin trading on Wednesday after restrictions on insider selling were lifted on the biggest block of shares since the May initial public offering.

The lock-up expiration greatly expanded the 921 million-share “float” available for trading on the market until now.

Facebook, the world’s No. 1 online social network, became the only U.S. company to debut with a market value of more than $ 100 billion. But its value has dropped nearly 50 percent since the IPO on concerns about its long-term money-making prospects.

Insider trading lock-up provisions started to expire in August, and the rolling expirations have added to the pressure on Facebook’s stock.

Pivotal Research Group analyst Brian Wieser said he didn’t expect Facebook insiders to sell all of their shares as the lock-ups expired.

“I would expect heavy volumes over the next few weeks, but not undigestible volumes,” said Wieser. By his estimates, roughly 486 million of the nearly 800 million newly freed Facebook shares will be sold.

There is some evidence that the heavy interest in shorting the stock was dissipating, given the poor performance since it first sold shares in May.

According to Markit’s Data Explorers, about 28 percent of the shares available for short-selling were being borrowed for that purpose, down from a high of more than 80 percent in early August.

Similarly, SunGard’s Astec Analytics, which also tracks interest in shorting, noted in a comment on Tuesday that the cost of borrowing Facebook shares is down more than 50 percent since the beginning of the month.

“Everything would seem to indicate the market is losing its appetite to short Facebook,” wrote Karl Loomes, market analyst at Astec.

Several members of Facebook’s senior management have sold millions of dollars worth of shares in recent weeks through pre-arranged stock trading plans as lock-up restrictions expired.

Chief Operating Officer Sheryl Sandberg has sold roughly 530 million shares this month, netting just over $ 11 million, though she still owns roughly 20 million vested shares in Facebook.

In August, Facebook board member Peter Thiel sold roughly $ 400 million worth of Facebook stock, the majority of his stake, when an earlier phase of lock-up restrictions expired.

Facebook’s 28-year-old chief executive, Mark Zuckerberg, has committed to not sell any shares before September 2013.

(Reporting by Alexei Oreskovic; Editing by Jeffrey Benkoe)

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Actor Channing Tatum dubbed People’s sexiest man alive

NEW YORK (Reuters) – Actor Channing Tatum, who set female hearts fluttering in the summer movie hit “Magic Mike”, was named the sexiest man alive by People magazine on Wednesday.

“My first thought was, ‘Y’all are messing with me,” Tatum told the magazine after hearing the news.

The 32-year-old actor, who is married to actress Jenna Dewan-Tatum, is training to play an Olympic athlete in his upcoming film, “Foxcatcher”.

The couple, who have been married since 2009, are ready to start a family, according to People.

“The first number that pops into my head is three, but I just want one to be healthy and then we’ll see where we go after that,” he told the magazine.

Tatum joins a long list of Hollywood heartthrobs who also have also received the “sexiest man” title from the magazine including Brad Pitt, Johnny Depp, Ryan Reynolds, George Clooney and Matt Damon.

(Reporting by Patricia Reaney; Editing by Maureen Bavdek)

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New Hope For ‘Man on Fire Syndrome’

Pamela Costa has never known a day without agonizing pain in her legs and feet.

At age 11, the Seattle native was diagnosed with inherited erythromelalgia, a genetic condition that causes such severe pain and redness some call it “Man on Fire Syndrome.”

“Think of the feeling that you get when you come in from the cold and your hands and feet are rewarming too fast,” said Costa, 47. “I have that feeling all of the time.”

Inherited erythromelalgia is a disease of small nerves and blood vessels that causes severe pain in response to heat, pressure, exertion or stress.

“These people feel excruciating, scalding pain while putting on shoes or putting on a sweater,” said Dr. Stephen Waxman, a neuroscientist at Yale University and the West Haven Veterans Affairs Hospital. “They will keep their feet on ice to the point of getting gangrene, just to relieve the sensation.”

When Costa was growing up, playing outside would trigger the unbearable burning sensation.

“I used to come in from recess and just hold my hands on the cool metal of my school desk,” said Costa, who has more than two dozen relatives with the same affliction. “I have had cousins suffer devastating injuries from over-cooling themselves.”

Although the disease is rare, researchers are searching for clues to its cause with hopes of uncovering treatments for chronic pain of all kinds. The story starts at the molecular level within tiny nerves that conduct pain signals.

An Overactive Channel Protein

Pain comes in different forms, depending on the type of nerve that senses it. And for chronic pain patients, the pain is not quick and specific, but instead slow and sharp.

This slow pain is transmitted from the limbs and body to the brain along small nerves in the spinal cord called C-fibers. Messages move along these nerve fibers due to the action of special proteins in their membranes called channels. One specific type of channel is the Nav1.7 sodium channel, which is present in great numbers in the C-fibers of the spinal cord.

Work by Waxman and others has shown that patients with inherited erythromelalgia have a defect in their Nav1.7 channels that allows too many sodium ions to enter the C-fibers, causing an increase in the sensitivity of the nerves.

The specific atomic structure of the Nav1.7 channel has been modeled by Waxman’s lab, and the results are detailed in the current issue of Nature Communications. Armed with this new model of the Nav1.7 channel, the lab has been able to show why some patients with inherited erythromelalgia respond well to an anti-epileptic drug called Carbamazepine.

Furthermore, in studying the channel structure in many different people, Waxman and colleagues have found variations in the channel from person to person. These variations may cause some people to be more likely to experience chronic pain than others.

A New Drug Target

Patients with a completely defective Nav1.7 suffer from the opposite condition, known as congenital indifference to pain. These people do not experience pain at all, with case reports of being able to walk on hot coals without pain.

As the role of Nav1.7 in the mechanism for pain sensation becomes clearer, biotechnology and pharmaceutical companies will likely take notice, according to Waxman.

“I anticipate a race to develop Nav1.7 specific blockers,” he said.

Current drug therapies for pain include medicines like morphine, as well as aspirin and ibuprofen. While all of these decrease the sensation of pain, they also interact with other tissues such as the brain, heart and stomach, causing side effects.

Nav1.7 does not appear to be present in large quantities outside of the C-fibers of the spinal cord. As such, new drugs targeting this protein could herald a new class of pain treatments with many fewer side effects than our current drugs for pain.

Costa said she hopes to see a day where such a medicine would be available to her, providing her with full relief for the first time in her life.

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UK inflation rate rises to 2.7%

13 November 2012 Last updated at 06:29 ET

Phil Gooding, Office for National Statistics: “There are two main drivers behind the event, that comes from education and food”

The UK’s inflation rate rose sharply last month following an increase in tuition fees and food prices.

The Office for National Statistics (ONS) said the rate of Consumer Prices Index (CPI) inflation rose to 2.7% in October, up from 2.2% the month before.

The ONS said education costs rose by 19.1% last month after the government lifted the cap on university fees.

Food prices, especially vegetables, also rose after record wet weather earlier this year affected crop yields.

Confectionery prices also increased. The ONS said this was because a number of confectionery products had been reduced in size.

It said it treated this as a price increase in the inflation measures, as consumers were getting less for their money.

The Retail Prices Index (RPI) measure of inflation – which includes housing costs – rose to 3.2% from 2.6%.

The Treasury said the figures were “disappointing”.

Labour’s Shadow Treasury minister, Catherine McKinnell, said the increase was “worrying”.

Continue reading the main story

When the Bank of England decided last week not to create more money to support the recovery, some of us wondered why they didn’t offer an explanation”

End Quote

The ONS also announced it would be introducing a new way of measuring inflation next March, the CPIH, which will include housing costs, something that is not reflected significantly in the currently favoured measure.

Energy prices

September’s CPI inflation rate was the lowest for almost three years, and was significant as it is the month on which rises in many benefits is based.

However, inflation had been expected to pick up from that point, partly because of a recently announced round of energy price rises that are expected to affect inflation figures in the coming months.

The ONS said SSE’s price rise of about 9%, which came into effect last month, was not included in the October inflation figures.

Ross Walker, UK economist at RBS, said the latest figures were slightly worse than predicted.

“They are a little bit disappointing, higher than expected, above the range,” he said. “Ironically, we had the tuition fee increases that are roughly what we expected and the surprise for us was the extent of the food price increase.”

The cap on charges for tuition fees was raised by the government from £3,375 to £9,000 a year.

The Bank of England is charged with keeping inflation close to 2%, something it has struggled to do in recent years, as the standard way of suppressing prices is to raise interest rates, which it does not want to risk during this period of weak economic activity.

Alan Clarke, economist at Scotia Bank, said that target remained elusive: “Where do we go from here? Onwards and upwards. Utility bill increases are on their way. We’ve also got the effect of the US drought and increased food prices to factor in.

“I don’t think we’re going to get anything like the 2% inflation target.”

The Bank of England’s quarterly inflation report will be published on Wednesday.

The rise in inflation may make it less likely that the Bank will provide further stimulus to the economy in the form of quantitative easing.

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New Lumia phones seen winning Nokia more time

HELSINKI (Reuters) – Nokia‘s new Lumia smartphones are trickling into the market and early signs suggest they may sell well enough to give the handset maker more time in its fight against industry leaders Samsung and Apple.

But investors shouldn’t expect a quick turnaround for the struggling Finnish cellphone maker, with rival gadgets like mini tablet computers vying for consumers’ attention, analysts said.

“Positive reviews are a great start but as we have seen many times before these won’t deliver strong sales volumes on their own,” said Pete Cunningham, an analyst at research firm Canalys.

Successful sales of the latest Lumia 920 and 820 models are crucial for Nokia’s survival. The former market leader is burning through cash while it loses share in both high-end smartphones and cheaper handsets.

FIM Securities analyst Michael Schroder forecast Nokia will sell 1-3 million of the new models this quarter. It sold 2.9 million older Lumia models in the third quarter, compared to Apple’s sales of around 26.6 million iPhones in the same period.

“In any case the uptake will not be massive,” he predicted.

Lumia’s sales could serve a verdict on Chief Executive Stephen Elop‘s decision in February 2011 to partner with Microsoft instead of using Google‘s Android or continuing to develop Nokia’s own operating system.

Investors had feared poor reviews and weak sales could bring an end to the company’s smartphone business early next year.

So far, consumer reviews seem to favor the feel and look of the new models, which include high-definition cameras and the latest Microsoft Windows Phone 8 software.

“It (the Lumia 920) is very similar in appearance to the Lumia 900, but has curved glass, rounded edges, and curved back so it feels great in your hand. It is a dense device, but if you look at all the pros and cons the heft is worth it,” said a reviewer for tech website ZDNet.

That’s an improvement from the market’s reaction when the new model was first unveiled. The shares slumped 13 percent that day with investors citing a lack of a “wow” factor.

MAKE OR BREAK

Nokia is taking a gradual approach to launching the phones, and availability is expected to vary by market for the next few weeks, compared with Apple’s iPhone models which usually go on sale on the same day to global fanfare.

“While we are very impressed with the hardware features of the Lumia 920 and the improved software functionality of Windows Phone 8, we believe a focused launch to drive steady sales growth is necessary,” said Canaccord Genuity analyst Michael Walkley.

In Canada, one of the earliest launch markets, carrier Rogers Communications has trained its sales staff more to sell the latest Lumias than the previous models, said John Boynton, Rogers’ executive vice president of marketing.

He predicted the phones would be popular with first-time smartphone users, thanks to homescreens with tile-like icons designed to help users navigate applications and functions.

“They’re a little nervous at some of the more complex smartphones that are out there,” he said. “The tile format is a really, really simplified way for people to get comfortable using smartphones.”

In France, retail staff have become more confident in explaining Windows Phones to their customers, according to Laurent Lame, devices marketing chief at SFR which is the country’s second-biggest mobile operator.

“They know the product better after six months of good sales of the Lumia 610,” Lame said, adding he was now more optimistic about the Nokia-Microsoft partnership. “For once, with Windows 8, we are not starting from zero.”

Telefonica Deutschland Chief Executive Rene Schuster said he was “very, very pleased” with the early progress of Lumia sales.

Some retailers were more cautious, however, and in some cities there were no demonstration models for customers to test.

A salesman in an O2 store at the Zeil, Frankfurt’s busiest shopping area, said the store could take orders for the phone but could not show it. Demand was “okay, but not huge,” he said.

Analysts also expect tough competition during the pre-Christmas shopping season from the likes of Samsung’s Galaxy S III and Apple’s iPhone 5. Taiwan’s HTC has also introduced smartphones running Windows Phone 8 software.

Other rival gadgets include Apple’s iPad mini as well as cheaper tablets from Google and Amazon.

The stakes could not be higher for Nokia’s Elop, who said in February 2011 the company’s transition would take two years.

“This is absolutely a make-or-break phone for the Windows Phone strategy,” FIM Securities’ Schroder said. “If it fails, they have to take a whole new course.” (Additional reporting by Allison Martell in Toronto, Leila Abboud in Paris, Harro Ten Wolde in Frankfurt and Tarmo Virki in Helsinki; Editing by Mark Potter)

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Day-Lewis heeded inner ear to find Lincoln’s voice

LOS ANGELES (AP) — A towering figure such as Abraham Lincoln, who stood 6 feet 4 and was one of history’s master orators, must have had a booming voice to match, right? Not in Daniel Day-Lewis‘ interpretation.

Day-Lewis, who plays the 16th president in Steven Spielberg‘s epic film biography “Lincoln,” which goes into wide release this weekend, settled on a higher, softer voice, saying it’s more true to descriptions of how the man actually spoke.

“There are numerous accounts, contemporary accounts, of his speaking voice. They tend to imply that it was fairly high, in a high register, which I believe allowed him to reach greater numbers of people when he was speaking publicly,” Day-Lewis said in an interview. “Because the higher registers tend to reach farther than the lower tones, so that would have been useful to him.”

“Lincoln” is just the fifth film in the last 15 years for Day-Lewis, a two-time Academy Award winner for best actor (“My Left Foot” and “There Will Be Blood”). Much of his pickiness stems from a need to understand characters intimately enough to feel that he’s actually living out their experiences.

The soft, reedy voice of his Lincoln grew out of that preparation.

“I don’t separate vocal work, and I don’t dismember a character into its component parts and then kind of bolt it all together, and off you go,” Day-Lewis said. “I tend to try and allow things to happen slowly, over a long period of time. As I feel I’m growing into a sense of that life, if I’m lucky, I begin to hear a voice.

“And I don’t mean in a supernatural sense. I begin to hear the sound of a voice, and if I like the sound of that, I live with that for a while in my mind’s ear, whatever one might call it, my inner ear, and then I set about trying to reproduce that.”

Lincoln himself likely learned to use his voice to his advantage depending on the situation, Day-Lewis said.

“He was a supreme politician. I’ve no doubt in my mind that when you think of all the influences in his life, from his childhood in Kentucky and Indiana and a good part of his younger life in southern Illinois, that the sounds of all those regions would have come together in him somehow.

“And I feel that he probably learned how to play with his voice in public and use it in certain ways in certain places and in certain other ways in other places. Especially in the manner in which he expressed himself. I think, I’ve no doubt that he was conscious enough of his image.”

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War uproots 2.5 million Syrians, aid groups say

GENEVA (Reuters) – At least 2.5 million Syrians are believed to have fled their homes because of civil war, aid groups said on Tuesday, more than double previous estimates.

The figure comes from the Syrian Arab Red Crescent, whose volunteers are on the frontlines of the 20-month conflict, delivering aid supplies and evacuating wounded.

“The figure they are using is 2.5 million. If anything, they believe it could be more, that this is a very conservative estimate,” Melissa Fleming, chief spokeswoman of the U.N. High Commissioner for Refugees (UNHCR), told a news briefing.

“So people are moving, people are really on the run, hiding. They are difficult to count and to access,” she said.

Aid agencies had previously thought there were around 1.2 million internally displaced Syrians.

Only 5 percent of the 2.5 million are believed to be living in public facilities, including warehouses and schools, said Fleming. The rest are staying with host families, making it more difficult to count them.

In recent days, air strikes on the town of Ras al-Ain near the Turkish border have caused some of the biggest refugee movements of the conflict.

The United Nations said on Friday that up to 4 million people inside Syria will need humanitarian aid by early next year when the country is in the grip of winter, up from 2.5 million now whose needs are not fully met.

For now, the U.N. World Food Programme (WFP) says its food rations are reaching some 1.5 million. The UNHCR aims to provide assistance to 500,000 in Syria by the end of the year, mainly blankets, clothing, cooking kits and jerry cans, Fleming said.

“Unfortunately the recent deliveries have been very difficult, marred by violence and insecurity also spreading to parts of the country that used to be relatively calm,” she said.

A Syrian Arab Red Crescent warehouse in Aleppo was apparently hit by a shell, burning 13,000 blankets, she said. Unknown armed men hijacked a truck carrying 600 blankets on its way to Adra, outside Damascus.

The UNHCR has temporarily withdrawn about half of its 12 staff from north-eastern Hassaka province due to fierce fighting and insecurity, Fleming said.

“We see corresponding movement of populations there, Syrian Kurds for the most part, across the border into Iraq,” she said.

More than 407,000 Syrian refugees have registered or await registration in the surrounding region – Lebanon, Turkey, Jordan and Iraq – and more are fleeing every day, according to UNHCR.

(Editing by Tom Pfeiffer)

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In This Junkyard, It Seems, There Are No Dogs

It’s kind of Orwellian that anyone would rapaciously buy an ETF with the ticker JNK—branding shorthand for “junk,” Wall Street’s sobriquet for high-yield, the riskiest layer of corporate bonds.

Nevertheless, JNK, the SPDR Barclays Capital High Yield Bond ETF, and competitor offerings are a hot destination in these yield-famished days. The appeal is irrefutable: You’ll get precious little income from Treasuries and muni bonds. Creditworthy corporations are borrowing at record lows. Why not then pile into riskier, higher-yielding debt, especially if you can do so via one tidy, exchange-traded ticker? (No need to ring Michael Milken.) What’s more, Moody’s sees the global default rate for “speculative-grade” debt ending the year at 2.8 percent, compared with an average of 4.8 percent since 1983. Yields have fallen 1.65 percentage points this year, to 7.05 percent on Nov. 1, according to Bank of America Merrill Lynch data.

What’s not to love?

An overcrowded trade marked by 2007-like issuer complacency—that’s what. More companies are demanding and getting easy terms on their junk issues. The most popular junk ETFs are going deeper into credit risk to scrape for yield. The sluicing of retail money into these ETFs is perpetuating what has historically proved to be a vicious trend. “Signs of over-exuberance are creeping into the corporate credit market,” wrote Michael Lewitt, a hedge fund manager who publishes the Credit Strategist. “In the past, rising issuance of these types of low-quality bonds has been a warning that a market rally is coming to an end … Today’s new issues will be the troubled credits of tomorrow.”

On Nov. 7, Standard & Poor’s warned of the unprecedented dangers of a brave, new junk bond world. Wrote credit analysts Diane Vazza and Evan Gunter:

“The ease with which investors can enter and exit ETF investments creates new and risky dynamics in the speculative-grade market with the potential flow of ‘hot money.’ Speculative-grade companies have a higher default risk than investment-grade companies. Therefore, when the credit cycle turns against investors, losses from defaults can quickly outstrip the additional interest payments that high-yield investors receive. Since we are entering the stage of declining credit quality in the current credit cycle, the credit quality of an issuer or a portfolio has become paramount.”

Vazza and Gunter looked under the hoods of JNK and its rival, HYG, the iShares iBoxx $ High Yield Corporate Bond Fund. They found that both ETFs owned a higher proportion of the riskiest junk debt versus the overall high-yield market. While they estimated that the broad universe of high yield includes 7.9 percent of bonds rated CCC+ and lower, their share in HYG’s portfolio is at 11.0 percent and in JNK just under 10 percent. While higher risk juices returns in a favorable environment like the present one, the analysts explained, they take outsized losses once the credit cycle turns.

Sales of junk debt in the U.S. have come in at $ 294 billion so far this year, the fastest pace on record. It’s in that booming backdrop that private equity-owned companies have paid out $ 34.1 billion in dividends this year, according to Standard & Poor’s Capital IQ Leveraged Commentary & Data. That’s north of 2010’s total of $ 31.5 billion and the $ 23.8 billion paid out in 2007, when the leveraged buyout market peaked. By comparison: Some $ 1.2 billion in dividends were issued in 2008 and $ 440 million in 2009.

This boom has prompted an echo-boom in payment-in-kind transactions, or PIK toggles, which let companies pay interest in debt rather than cash, essentially deferring payments to their investors. That tactic was a hallmark of the private equity bubble of five years ago. According to Moody’s, as of mid-October two of the third quarter’s 14 dividend financings enjoyed PIK toggle structures, including Emergency Medical Services’ $ 450 million of notes to pay a dividend to Clayton, Dubilier & Rice and IDQ Holdings’ $ 45 million deal supporting a payout to Castle Harlan. Last month, Petco also got in on the PIK toggle boom.

Caveat junktor. Moody’s calculates that the default rate for companies that sold PIK-toggle bonds was 13 percent from 2006 to 2010, twice the rate for similarly rated issuers that didn’t use the tactic.

“Low yields are driving more and more investors into really strange territory,” says Lee Pacchia, a Bloomberg Law analyst who follows corporate bankruptcies. “They need to take on risk. While the market forces driving this trend could go on for a while, lowering standards could end badly. It’s called ‘junk’ for a reason.”

The institutional smart money is increasingly taking the other side of that trade. According to Bloomberg data, the number of bearish options on HYG are at an all-time high: The number of outstanding puts on HYG has almost doubled since Oct. 19, to a record of 118,444 at the end of last month. Hedge funds seeking that bet on both gains and losses in credit attracted $ 12.6 billion of deposits in the three months ended Sept. 30, the most since the last quarter of 2007, according to HFR.

It all makes you wonder how quickly people may have forgotten the lessons of the credit bubble, or what one hedgie has called the era of promiscuous lending. Will today’s junk boom end so differently?

“The history of money is a sad state of affairs,” wrote Prudent Bear’s Doug Noland in his recent post, titled “The Myth of Deleveraging.” “Failing to learn from a litany of previous monetary fiascoes, ‘money’ is these days being abusively over-issued.”

Farzad is a Bloomberg Businessweek contributor.

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Microsoft’s Surface tablet has “modest” start: Ballmer

PARIS (Reuters) – Microsoft Corp‘s new Surface tablet – its challenger to Apple‘s iPad – had a “modest” start to sales because of limited availability, Microsoft Chief Executive Steve Ballmer told French daily Le Parisien.

The world’s largest software company put the Surface tablet center stage at its Windows 8 launch event last month in its fightback against Apple and Google in the exploding mobile computing market.

“We’ve had a modest start because Surface is only available on our online retail sites and a few Microsoft stores in the United States,” Ballmer was quoted as saying.

Meanwhile, 4 million upgrades to Windows 8 were sold in the three days following the system’s launch, Ballmer added. (Reporting by Lionel Laurent; Editing by David Cowell)

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Hathaway says ‘Les Mis’ made her feel deprived

NEW YORK (AP) — Anne Hathaway credits her new husband Adam Schulman for helping her get through the grueling filming of the screen adaptation of “Les Miserables.”

In “Les Mis,” the 30-year-old actress plays Fantine, a struggling, sickly mother forced into prostitution in 1800s Paris.

Hathaway lost 25 pounds and cut her hair for the role. She tells the December issue of Vogue, the part left her in a “state of deprivation, physical and emotional.” She felt easily overwhelmed and says Shulman was understanding and supportive.

The couple wed in September in Big Sur, Calif. Hathaway wore a custom gown by Valentino whom she collaborated with on the design. Working with the designer is a memory she says she will “treasure forever.”

The December issue of Vogue hits stores Nov. 20.

___

Online:

http://www.vogue.com/

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