Important news from Catherina

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US STOCKS-Wall St rallies on Europe, Apple falls late

* Trading volume surges in final hour* Apple shocks investors with earnings miss; shares dip* Banks rally; Bank of America up 10 pct* Indexes up: Dow 1.6 pct, S&P 2 pct, Nasdaq 1.6 pctBy Angela MoonNEW YORK, Oct 18 (Reuters) - U.S. stocks surged late in trading on Tuesday as buyers latched onto another report of agreements to strengthen the euro zone's rescue fund to bid up stocks aggressively.All three major indexes rose sharply after a Britain's Guardian newspaper said France and Germany will increase the euro zone's rescue fund to 2 trillion euros as part of a plan to resolve the sovereign debt crisis.Investors and buyers piled into financial shares, which had started the day weak but gained momentum on the late news. Shares of Bank of America rose 10.1 percent to $6.64 and trading volume for the Direxion Financial Bull 3X ETF jumped to the highest since April 2010.The development from Europe is "really what we had been rallying on for the past two weeks before Germany yesterday signaled that the issue wasn't quite resolved," said Larry Peruzzi, senior equity trader at Cabrera Capital Markets in Boston."But the direction of the market can easily reverse if we get something bad again from Europe."Stocks may also be affected on Wednesday by Tuesday's late news from tech bellwether Apple Inc .Stock index futures sold off after the bell following weak quarterly results from Apple. Its shares lost more than 5 percent to below $400 in extended trade after the company reported a rare miss in quarterly results after sales of its flagship iPhone fell short of Wall Street expectations.The stock had closed up 0.5 percent at $422.24 during the regular session.S&P 500 futures fell 6.3 points while Nasdaq 100 futures lost 18.75 points.Bank of America shares on Tuesday had been lower after it reported a third-quarter profit but showed its main businesses struggled as income from lending and investment banking fell.Goldman Sachs Group Inc added 5.5 percent to $102.25 after reporting a rare loss, but Goldman said it was moving to cut costs, including employee pay.Trading picked up shortly after the Guardian report, with 3 billion shares exchanging hands in the final hour on the New York Stock Exchange, NYSE Amex and Nasdaq. A total of 8.86 billion shares traded for the day, above the year's daily average so far of about 8 billion."Any news out of Europe is a cue for people to jump in or get out of the market. There was a lot of short covering during the final hour," said Stephen Massocca, fund manager at Wedbush Morgan in San Francisco.The Dow Jones industrial average ended up 180.05 points, or 1.58 percent, at 11,577.05. The Standard & Poor's 500 Index was up 24.52 points, or 2.04 percent, at 1,225.38. The Nasdaq Composite Index was up 42.51 points, or 1.63 percent, at 2,657.43.Shares of Yahoo Inc dropped more than 3 percent to $15.96 in extended trading after the company reported its net revenue and profit slipped in the third quarter.But Intel Corp shares rose nearly 5 percent to $24.54 after the company forecast quarterly revenue above Wall Street's expectations, defying concerns that the growing popularity of tablets and a shaky economy are eating into demand for personal computers.The CBOE Volatility Index VIX , Wall Street's "fear gauge," was down nearly 5 percent but still remained elevated above 30.Financial stocks were the top gainers. The KBW bank index advanced 5.6 percent.U.S. homebuilder stocks were helped by strong homebuilder sentiment data, signaling improvement in the housing market.Shares of KB Home rose 11.6 percent to $7.02.

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Risk Management: Did fund managers learn their lesson?

By Detlef Glow, Head of EMEA Research at Lipper. The views expressed are his own. In the last decade investors and fund managers faced two major crises in the stock markets, the popping of the technology bubble in 2001 and financial crisis starting in 2006. Portfolio managers suffered average losses of about 50 percent in the wake of both crises, leading investors to question what their fund managers learned. A Lipper and Avana Invest study on the maximum drawdown of actively managed funds found that those fund managers must have introduced new risk management tools after the bust of the technology bubble. Still, they failed to meet investor expectations on managing risk. The changes led to smaller tracking errors, but the funds suffered nearly the same losses shown in their respective markets during the 2006-2010 financial crisis. The study by Lipper and Avana, a German asset management boutique firm, found that portfolio managers started a risk management system that measured relative risk compared to their benchmarks instead of measuring absolute risk in terms of losses. The new management guidelines did not meet the expectations of private investors and led to the following conclusions:  Relative risk management systems are penalizing fund managers if their risk compared to the benchmark moved above a defined level. The study found that a fund manager was not allowed to hold a high percentage of his portfolio in cash or decrease the weighting of a specific industry to zero, as this would increase the risk of the portfolio relative to the benchmark. As a result, managers moved their allocations closer to the benchmarks in market downturns to avoid penalties. Conversely, if a fund lost 45 percent, while the respective benchmark had lost 50 percent, for example, the fund manager could be rewarded for his outperformance, even as he lost money for investors. The study — which covered the 2001-2005 tech bubble and the 2006-2010 financial crisis for all active managed funds registered for sale in Germany in the equity peer groups Asia/Pacific, Europe, North America and global — showed that the markets, measured by the movements of the broad market indices, exhibited similar drawdown losses in the different regions during both periods. The maximum drawdown measures the loss in percent for an investor, who bought a fund at the highest price and sold it later at the lowest price during the evaluation period. This result was not surprising, since risky assets tend to narrow their correlations and therefore move in the same direction during such periods. Opposite of the markets, the analyzed funds showed a different behavior over the periods. Since the general results in different regions showed the same picture, a look at European stocks offer insight into what was happening in the other regions. For this reason all of the mentioned results are based on the peer group Equity Europe. During the tech bubble, a number of actively managed funds in the Equity Europe category showed much smaller losses than the markets did, but because other funds showed much higher losses than the markets, the average return of the analyzed funds was below the market average. The analyzed funds showed much lower variation compared to the market benchmark during the 2006-2010 financial crisis. These findings lead to the assumption that the asset managers tightened the risk budgets of the funds and gave the fund managers stricter guidelines in terms of acceptable risks they could use to outperform the benchmarks. As a result of these new paradigms, fund managers started to track their benchmarks even more closely during downturns. What does this mean for investors? Investors should only buy funds that suit their needs in terms of risk adjusted returns and the capability to preserve capital. The asset management industry needs to regain investors’ confidence by following the demands of the investors for risk management in absolute instead of relative terms. This means fund managers should start to hold cash or other risk free assets during downturns. Otherwise, investors may start to allocate even more money to pure-beta instruments such as exchange-traded funds. Second, fund managers can find superior returns by using multiple asset classes or alternative strategies like covered call writing for their allocations. Finally, in times of crisis and market downturns, fund managers should become more active instead of passively tracking their benchmarks.

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DIARY- Spain corporate events

Spain main eventsEuropean corporate eventsDate GMT Company Name RIC Event------------------------------------------------21/10 Bankinter Q325/10 Enagas Q325/10 Enagas CONFCALL26/10 BBVA Q326/10 BBVA CONFCALL26/10 Ebro Foods Q326/10 Mapfre Q326/10 Mapfre CONFCALL27/10 Abertis Q327/10 Abertis CONFCALL27/10 Acerinox Q327/10 Banco Sabadell Q327/10 Banco Santander Q327/10 Banco Santander CONFCALL27/10 Ferrovial Q327/10 Iberdrola Q328/10 Banco Popular Q304/11 IAG Q304/11 IAG TRAFFIC08/11 Gas Natural Q310/11 Gamesa Q310/11 Indra Q310/11 Repsol Q310/11 Telefonica Q3------------------------------------------------Event types:Full Year = Full year resultsQ1, Q2, Q3, Q4 = Quarterly resultsANALYSTS = Analysts' meetingsAVCG = Asset value and capital gain figuresNEWSCONF = News conferenceSHAREHOLDER = Shareholder meetingCONFCALL = Conference callTRAFFIC = Traffic figuresBOARD = Board meeting

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Lehman loses first broker bonus case

Former New York-based broker Jennifer Mitchell does not have to pay back the bonus she received when she joined Lehman three years before the investment bank filed for bankruptcy in September 2008, said a Financial Industry Regulatory Authority arbitration panel.Lehman has said it is pursuing roughly 50 former brokers, some of who were hired less than a year before the bankruptcy filing, to return portions of bonuses they received when hired. The firm has won four cases and has been awarded nearly $4 million from the four brokers.The payments, often referred to as 'employee forgivable loans,' are paid up-front and structured as loans forgiven over time, typically a seven-year period. Brokers who leave the firm, or whose employment is terminated, before the loan term is over must return part of the payment."They're really golden handcuffs," Mitchell's lawyer, David Robbins, said. "Even if you die or become disabled, you owe the balance."In the case of Lehman brokers, their employment ended when the company filed for bankruptcy and Barclays PLC (BARC.L) bought its U.S. brokerage arm.SURPRISE VICTORYRobbins, who has worked as a lawyer in the securities industry for 35 years, said the decision came as a surprise. Firms prevail in roughly 95 percent of all such cases, he said."I really feel like this one was different," he said.Robbins said he could not specifically elaborate on the panel's decision and FINRA documents did not disclose the details of the arbitration panel's decision.In Mitchell's case, Lehman first requested compensatory damages totaling $176,000 in interest, costs and attorney's fees. The firm later amended the amount to $258,084.12 at the close of the hearing.New York-based attorney Neil Sussman, a former in-house attorney at Lehman, represented the firm in the Mitchell case and in the other four broker bonus cases.Robbins said he found out about the ruling from Sussman."I was sitting at my desk and he sent me an e-mail congratulating me," Robbins said.Lehman declined to comment about the case.

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Lehman loses first broker bonus case

Former New York-based broker Jennifer Mitchell does not have to pay back the bonus she received when she joined Lehman three years before the investment bank filed for bankruptcy in September 2008, said a Financial Industry Regulatory Authority arbitration panel.Lehman has said it is pursuing roughly 50 former brokers, some of who were hired less than a year before the bankruptcy filing, to return portions of bonuses they received when hired. The firm has won four cases and has been awarded nearly $4 million from the four brokers.The payments, often referred to as 'employee forgivable loans,' are paid up-front and structured as loans forgiven over time, typically a seven-year period. Brokers who leave the firm, or whose employment is terminated, before the loan term is over must return part of the payment."They're really golden handcuffs," Mitchell's lawyer, David Robbins, said. "Even if you die or become disabled, you owe the balance."In the case of Lehman brokers, their employment ended when the company filed for bankruptcy and Barclays PLC (BARC.L) bought its U.S. brokerage arm.SURPRISE VICTORYRobbins, who has worked as a lawyer in the securities industry for 35 years, said the decision came as a surprise. Firms prevail in roughly 95 percent of all such cases, he said."I really feel like this one was different," he said.Robbins said he could not specifically elaborate on the panel's decision and FINRA documents did not disclose the details of the arbitration panel's decision.In Mitchell's case, Lehman first requested compensatory damages totaling $176,000 in interest, costs and attorney's fees. The firm later amended the amount to $258,084.12 at the close of the hearing.New York-based attorney Neil Sussman, a former in-house attorney at Lehman, represented the firm in the Mitchell case and in the other four broker bonus cases.Robbins said he found out about the ruling from Sussman."I was sitting at my desk and he sent me an e-mail congratulating me," Robbins said.Lehman declined to comment about the case.

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UPDATE 1-Power-One slashes Q3 outlook

Oct 11 (Reuters) - Power-One Inc , the world's second-biggest maker of inverters for the solar power market, lowered its revenue outlook for the third quarter in response to slower than anticipated demand.Power-One cut its third-quarter revenue forecast to a range of $240 million to $245 million from $265 million to $280 million.Analysts on average expect the company to report $272.8 million in third-quarter revenue, according to Thomson Reuters I/B/E/S.The company said power conversion revenue dropped 10 percent from the previous quarter while renewable energy revenue "was modestly lower."Italy, which accounted for about half of Power-One's sales in 2010, pared back its solar subsidies earlier this year -- cutting demand in that market.Power-One shares closed at $5.04 on Nasdaq on Tuesday.

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M & A wrap: Has Buffett run out of things to buy?

Warren Buffett’s conglomerate Berkshire Hathaway said it will launch a share buyback program, an extremely rare move from Buffett that comes after months of investor complaints that the stock was undervalued. The London Metal Exchange has thrown open its doors to a potential $1.5 billion takeover and is considering a sale that might end the independence its chief executive previously said was not negotiable. A move by Sinohydro, China’s largest builder of dams, to cut the size of an initial public offering in Shanghai bodes ill for other mainland IPOs in the pipeline as a deepening debt crisis in Europe rattles global markets. “Netflix’s biggest slump in seven years is making the mail-order and streaming movie service a 57 percent cheaper takeover target for companies from Amazon.com to Google,” reports Bloomberg. Daily deal website Groupon is committed to launching an initial public offering but the exact timing remains uncertain, the WSJ reported.