Finance and Economic

The aggressive push federal prosecutors are making against potential insider trading is sending investigators into a legal gray area that may redefine insider trading itself.

Mutual fund company Janus Capital Group said Tuesday it was cooperating with an inquiry on insider trading. A day earlier, the FBI searched the offices of three hedge funds in New York, Connecticut and Massachusetts as part of what outside experts say could turn out to be one of the largest probes in Wall Street history.

Investigators are thought to be pursuing suspicions of trading by hedge funds and mutual funds that might have profited illegally using inside information not available to ordinary investors.

But the behavior being targeted by investigations appears more elusive and complex than the common understanding of insider trading _ high-powered executives picking up the phone, whispering secret tips about big deals, and trading stock at an unfair advantage. These were the types of cases that ensnared executives such as Ivan Boesky in the 1980s and Enron’s Jeffrey Skilling more recently.

How the alleged scheme may have worked is unclear. Federal prosecutors declined to comment on Tuesday. But what is clear is that the way information is shuttled around the world of finance today is faster, more complex and more shadowy. It involves an increasingly digitized financial world where networks of insiders can share bits of information with blinding speed.

It can also tap into so-called expert networks of industry analysts, experts and consultants who squirrel details between corporate America and Wall Street about what companies are up to _ potentially giving some investors an unfair edge.

Federal authorities have traditionally pursued high-ranking executives and their confidants in insider-trading cases. Now, they’re increasingly going after the rank and file. In September, for instance, the Securities and Exchange Commission accused a railroad supervisor and a trainman of insider trading after they noticed an “unusual number” of tours of people in “business attire” in a railyard.

The two workers and their relatives then bet in the stock market that the company would soon be taken over and made $1 million when that turned out true, according to the SEC suit.

The federal crackdown on insider trading that burst into view this week is being led by Preet Bharara, the top United States prosecutor in Manhattan. Bharara has called insider trading “rampant” and suggested it is growing.

In a strikingly revealing speech last month to the New York City Bar Association, Bharara said the detection of insider trading has “perhaps never been more difficult to attack through traditional investigative means.”

The explosion of financial information, including blogs, tweets and online newsletters, makes it easier for an accused insider trader to argue that he or she was acting on information “based on some report somewhere,” he said.

Bharara also spoke of the need to target insider trading by using a tool more typically deployed in racketeering cases: wiretaps.

“The question of why we use wiretaps to investigate illegal insider trading is, to my ear, like my asking a defense lawyer, why do you cross-examine the government’s witnesses at trial?” he said. “Court-authorized wiretaps, so long as all the legal requirements can be met, will continue to be in our toolbox in insider trading cases.”

Bharara’s office was already pursuing an insider-trading case against the Galleon Group, a once-powerful hedge fund led by Raj Rajaratnam cashadvance. He was charged last year with conspiring to trade insider information. He has pleaded not guilty.

Monday’s raids targeted three hedge funds: Level Global Investors in New York, Diamondback Capital Management in Stamford, Conn., and an address that matched Loch Capital Management in Boston. Federal law enforcement agencies would not comment other than to confirm an investigation.

Investors can use the expert networks to glean details of what’s occurring within certain industries or particular companies. Someone interested in learning more about fast-food dining in China, for example, might connect with local store managers, suppliers or experts on dining in the region.

The expert networks connect the investor and the source, getting a fee from the investor and then paying the source, who could make $400 to $500 an hour, says Sanford Bragg, CEO of the consulting firm Integrity Research Associates, which connects investors with these research firms.

Hedge funds have been paying people to dig for hard-to-find numbers on companies for years.

Tammer Kamel, president of Iluka Consulting Group Ltd. in Toronto, recalls visiting a Hong Kong fund 10 years ago that wanted to better gauge future sales by a company with factories in China. Its solution: Pay Chinese farmers near a company warehouse to count trucks leaving the site.

For a possible investment in a casino, another fund paid people to stand outside the casino and count visitors walking in, Kamel says. Then the fund multiplied that number by average losses per visitor to get a better sense of the casino’s daily take.

“The managers were openly discussing technique,” Kamel said. “They clearly thought it was just smart data gathering.”

This week, retailer Big Lots filed a lawsuit accusing a research firm of having “wrongfully induced” stores managers to disclose “trade secrets” about the chain’s inventory levels, sales and strategy. A report on those figures subsequently sent to clients “caused” Big Lots’ stock to drop 6 percent, the suit alleges.

When Bharara announced arrests in the largest hedge fund insider trading case in history a year ago, targeting the head of the Galleon Group hedge fund, he said law enforcement for the first time had made extensive use of wiretaps, just like in drug cases.

Stephen A. Miller, a longtime federal prosecutor before becoming a criminal defense lawyer at Cozen O’Connor in Philadelphia several months ago, said Bharara seemed to be packaging insider trading cases for “dramatic effect” to send a message of deterrence to the industry.

Miller said Monday’s raids might have been a reaction to the leak of the investigation in published reports over the weekend. He said it would be difficult to pinpoint when arrests might result, though he said he thought hundreds of people could be potentially subject to charges given the size of the net that’s been cast.

Miller added: “I think it’s wrong when you think of these arrests to demonize the entire hedge fund industry. There are a lot of really honorable people working at hedge funds making good smart investment decisions and not doing anything wrong.”

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Steps by the Federal Reserve to pump more money into the U.S. economy through government bond purchases could stoke inflation, even though growth will remain moderate through 2011, a survey showed on Monday.

The National Association for Business Economics (NABE) said its 51-member forecasting panel continued to rank inflation as a bigger worry than deflation. The survey was conducted between October 21 and November 4.

The Fed’s November 3 decision to buy an additional $600 billion worth of government bonds to stimulate the economy and prevent prices for spiraling lower has been criticized both at home and abroad.

About a third of NABE panelists view the Fed’s second asset purchasing program as somewhat lessening the risks of deflation, while another 33 percent saw the step as risking inflation.

Still, they forecast the Fed’s preferred measure of consumer inflation — the personal consumption expenditures price index excluding food and energy — to rise to 1.5 percent by the end of 2011 from a projected 1.0 percent this year.

That is below the Fed’s considered comfort zone between 1.7 percent and 2.0 percent. Inflation remains subdued as the economy slowly recovers from the worst recession since the 1930s. Core consumer prices rose 0.6 percent in October from a year ago, the smallest increase since records started in 1957.

NABE panelists tweaked the gross domestic product (GDP) growth forecast for 2010 and kept the estimate for 2011 unchanged at an annual rate of 2.6 percent.

The economy is now seen expanding at a 2.7 percent rate instead of 2.6 percent this year, still below the 3.5 percent many analysts say is needed to start lowering unemployment.

“Projections for real GDP growth remain sub-par through the first quarter of 2011, but accelerate gradually through the forecast period,” said NABE President Richard Wobbekind, associate dean of the Leeds School of Business at the University of Colorado.

“For next year as a whole, GDP growth is expected to be moderate. Factors restraining growth going forward include ongoing balance-sheet restructuring by consumers and businesses, and a diminished contribution to GDP growth from inventory restocking and government stimulus.”

The panelists predicted a gradual improvement in the labor market, with monthly payroll gains forecast to average less than 150,000 until the latter half of 2011. The unemployment rate was seen above 9.5 percent through the first quarter of 2011, dipping to 9.2 percent by year-end.

A tepid housing market recovery was forecast, with prices rising somewhat in 2011.

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Australian credit unions and building societies can be a “strong competitive force” against banks, helping to cut borrowing costs, Treasurer Wayne Swan said in his weekly economic note.

The government wants a “new pillar,” in the industry, Swan said earlier in an interview yesterday with Channel Nine. Commonwealth Bank of Australia, Westpac Banking Corp., Australia & New Zealand Banking Group Ltd., and National Australia Bank Ltd., dubbed the four pillars after a law preventing takeovers among them, accounted for 87 percent of the home lending market in September, up from 76 percent three years ago.

“We know there is more work to be done to build up competition, and we are determined to do that,” Swan wrote in his note yesterday. “I’m also a really big believer in the capacity of our mutual credit unions and building societies to be a strong competitive force in the banking sector.”

Australia’s biggest banks have been criticized for raising borrowing costs by more than the central bank same day pay day loan. Swan said his government’s package to encourage competition will be released next month. Opposition Shadow Treasurer Joe Hockey will call for a review of the banking industry today, he said in an interview with the Australian Broadcasting Corp yesterday.

The Greens Party on Nov. 15 introduced draft laws to place restraints on the ability of the big banks to increase mortgage rates. The proposals in the lower house of parliament would give the Australian Prudential Regulatory Authority powers to prevent banks from raising mortgage fees above their funding costs.

‘Silver Bullet’

Finance Minister Penny Wong ruled out regulation and said the government will instead focus on supporting competition, according to the transcript of a Sky News interview.

“We’re not pretending that there’s a silver bullet,” Wong said. “We’re not going to re-introduce regulatory regimes, which historically we know have made things worse for Australian consumers and people trying to get home loans.”

Swan urged borrowers to seek loans from credit unions, building societies and smaller banks, which offer more competitive rates. He said the nation’s biggest banks act in an “arrogant way.”

“The government is determined to see a new pillar in the banking system, particularly based on the mutual sector, particularly based on our credit unions and our building societies,” Swan told Channel Nine yesterday. “They are safe and they’re very competitive.”

Competitive Forces

The government has invested A$16 billion ($15.8 billion) in Triple-A rated residential mortgage-backed securities to support smaller lenders and lower the cost of funding, Swan said in his economic note.

Commonwealth Bank reported on Nov. 15 a first-quarter unaudited cash profit of about A$1.6 billion. Westpac, Australia’s second-largest bank, earlier this month posted second-half profit that almost tripled from a year earlier, while ANZ Bank said a week earlier that earnings in the period surged 69 percent to a record 24 hour payday loans. National Australia, the biggest lender to companies, posted a cash profit gain of 32 percent in the second half.

All four raised their standard variable mortgage rates by more than the Nov. 2 quarter-percentage point move by the central bank.

Australia’s Senate voted last month to hold an inquiry into competition in the banking industry, including the fees they charge.

ANZ Chief Executive Officer Mike Smith said Oct. 31 that any attempt by lawmakers to control banks’ interest rates will take Australia back to an era “long since gone.”

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China’s plans to attack inflation with subsidies, sales of food reserves and the threat of price controls are likely to prove insufficient, and the central bank will have to raise interest rates further, economists said.

Analysts at nine banks surveyed this week by Bloomberg News predict the People’s Bank of China will add to last month’s rate rise, the first since 2007, by the end of December. Concern that rising consumer prices, which surged the most in two years in October, will undermine the economy spurred Premier Wen Jiabao to hold a cabinet meeting on the issue this week.

The measures contemplated by the State Council, ranging from a crackdown on speculation in agriculture goods to the imposition of price caps on “daily necessities” if needed, do nothing to address China’s credit growth. China’s benchmark stock index has had its biggest two-week sell-off since May amid concern that monetary tightening will hamper spending in the world’s fastest-growing major economy.

“Price intervention could be counter-productive because it may cause panic and worsen inflation expectations,” said Liu Li-Gang, a Hong Kong-based economist at Australia and New Zealand Banking Group Ltd. who previously worked at the Hong Kong Monetary Authority and World Bank. The steps announced this week “may not be sufficient to bring down inflation quickly.”

The Shanghai Composite Index closed 0.8 percent higher today, after swinging between gains and losses at least 10 times, paring this week’s decline to 3.2 percent. The benchmark fell 4.6 percent last week.

Rate Forecasts

Standard Chartered Plc, HSBC Holdings Plc, BNP Paribas SA, Citigroup Inc., Credit Suisse Group AG, Mizuho Securities Asia Ltd., Royal Bank of Canada, UBS AG, and ANZ predict the central bank will add to the quarter-point increases that took the benchmark one-year lending rate to 5.56 percent and the one-year deposit rate to 2.5 percent.

“Every Friday there is always a chance that China is going to do something,” Qu Hongbin, co-head of Asian economic research at HSBC in Hong Kong, told Bloomberg Television, indicating a PBOC announcement can’t be ruled out for today. At the same time, given this month’s increase in banks’ reserve requirement ratios and the steps taken this week, a boost to borrowing costs is more likely next month, he said.

The so-called supply-side measures may help damp price pressures, along with a slowing pace of economic growth, Qu said.

Threat to Poor

China’s inflation rate reached 4.4 percent in October, exceeding economists’ forecasts. Standard Chartered analysts yesterday lifted their projection for the consumer price index for next year to an average of 5.5 percent, from about 3.2 percent for 2010.

The State Council’s meeting came amid rising concern at the threat that increased food costs pose to the poorest people in the world’s most populous nation. More than 81 million people in China will need food rations to survive the winter and spring after natural disasters, the official Xinhua News Agency reported, citing the Ministry of Civil Affairs.

“Inflation is showing up in food most obviously, but also in rents, service sector wages, and non-food commodities,” analysts including Stephen Green, head of research for Greater China at Standard Chartered, wrote in a report today. The bank anticipates a rate increase by Dec. 31 and three more by June 30.

Inflows of money from the trade surplus, foreign direct investment, and investors betting on gains by the yuan threaten to propel consumer prices after unprecedented lending by banks flooded the economy with cash from late 2008.

‘Root’ of Problem

Across Asia, China’s inflation compares with deflation in Japan and, at the other extreme, a 9.8 percent rate in India. In the U.S., consumer prices rose 1.2 percent last month from a year earlier. China’s inflation has mostly been driven by food costs.

Excess liquidity is the “root of the problem,” Tao Dong, a Credit Suisse Group AG economist in Hong Kong said this week.

At Societe Generale, Hong Kong-based economist Yao Wei said that China’s “old-fashioned price stabilization policies” will not be enough to reduce the case for monetary tightening. The possibility of “more interest-rate hikes by the year-end remains relatively high,” she said.

The central bank has raised lenders’ reserve requirements to drain cash from the financial system four times this year and last month raised rates for the first time since 2007.

–Li Yanping, Sophie Leung. With assistance from Susan Li in Hong Kong. Editors: Paul Panckhurst, Chris Anstey

To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net

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Laclede Group Inc., the owner of Missouri’s largest natural gas utility, on Friday said its board raised the company’s quarterly dividend 3 percent.

The dividend was increased to 40.5 cents a share from 39.5 cents, the St. Louis-based company said in a statement.

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Ireland was in talks over a financial rescue as European Union leaders battled to shield Portugal from the resurgent debt crisis and doubts surfaced over Greece’s economic health.

“We are in a survival crisis,” EU President Herman Van Rompuy said at the European Policy Centre in Brussels today. “If we don’t survive with the euro zone we will not survive with the European Union.”

Public clashes among EU officials over how to defuse Europe’s debt bomb marked a new stage in the crisis triggered by Greece’s near-default in May that forced the EU to set up a 750 billion-euro ($1 trillion) rescue fund to keep the euro intact. A European Central Bank official threatened to end economy- boosting measures.

Irish bonds fell, reversing a two-day rally, on concern European finance ministers would fail to strike a deal at a meeting in Brussels that started at 5 p.m. The euro slid 0.7 percent to $1.3495, down 5 percent since Nov. 4.

“We are discussing with both the ECB and the IMF and of course the Irish,” EU Economic and Monetary Affairs Commissioner Olli Rehn said on his way into the meeting. “The real problems are in the banking sector,” not with the government, “but these are connected.”

Ireland is negotiating with the EU and International Monetary Fund about aid to shore up the state’s finances, furnish capital for the country’s banks and spare it from tapping the bond market for an extended period, the European official said on condition of anonymity. Spokesmen for the Irish central bank and Finance Ministry declined to comment.

Irish Yields Rise

The aid package may total about 80 billion euros, according to Barclays Capital. Prime Minister Brian Cowen told Parliament in Dublin tonight that Ireland hasn’t lodged an aid request and the goal is “a credible, efficient and above all workable solution that will provide assurance to the markets.”

The yield on Ireland’s 10-year bond rose 28 basis points to 8.44 percent. The extra yield over German bunds rose to 561 basis points from 540 basis points yesterday. The spread, a measure of the risk of investing in Ireland, peaked at 646 basis points on Nov. 11.

“Once the bond spreads started to spike, whatever avenue looked at, it was very difficult to see how we were going to avoid a bailout,” NCB Stockbrokers Chief Economist Brian Devine said. “We probably could have handled a budgetary fiscal crisis on its own, but not a fiscal and banking crisis.”

Stark’s Threat

ECB Executive Board member Juergen Stark upped the stakes today, saying in Frankfurt that the ECB will continue to scale back stimulus “notwithstanding the most recent tensions in some segments of the European sovereign debt market.”

Stark’s views are “unhelpful to say the least,” said Jacques Cailloux, chief European economist at Royal Bank of Scotland Plc in London. “It’s a bold call to make when you have three countries in your region effectively cut off from the markets.”

A split on the ECB council has added to market tensions, with President Jean-Claude Trichet’s program of buying bonds of deficit-hit states lacking the support of Axel Weber, head of Germany’s central bank payday lenders. Another ECB council member, Spain’s Miguel Angel Fernandez Ordonez, yesterday blamed Ireland for equivocating over EU aid.

As Ireland’s fate took center stage, concern mounted that Portugal would be next in the crossfire and that Spain, the euro region’s fourth-largest economy, might come under speculative pressure. Cyprus, which adopted the euro in 2008, had its long- term sovereign credit rating lowered to A from A+ by Standard & Poor’s Ratings Services today.

‘Risk of Contagion’

“There is a risk of contagion,” Portuguese Finance Minister Fernando Teixeira dos Santos said in an interview yesterday. “But there’s a big difference between saying there is a risk of contagion and saying help is imminent or that we are going to ask for help.”

The latest leg in the debt crisis began Oct. 29 when EU leaders agreed to consider German Chancellor Angela Merkel’s demand for the setup of a permanent crisis-resolution mechanism that forces bondholders to share the cost of future bailouts.

That pledge triggered 13 straight days of losses in the Irish bond market and dragged down Portuguese, Greek and Spanish securities. To stem the damage, Merkel on Nov. 12 signed up to a five-country declaration that exempts bonds now on the market from a restructuring that could be imposed under a permanent system to be created by 2013.

Papandreou’s Criticism

Merkel wants to penalize bondholders for betting against fiscally unsound governments after the EU’s temporary rescue fund runs out in 2013. In Paris yesterday, Greek Prime Minister George Papandreou blamed the her proposal for creating a “self- fulfilling prophecy” that hurt peripheral countries.

The Greek criticism drew a German rebuke today. “When I heard the comments by the Greek prime minister I thought, with all due respect, that Greece has enjoyed a lot of European and German solidarity,” German Finance Minister Wolfgang Schaeuble said before the Brussels meeting. “But solidarity is not a one- way street. That shouldn’t be forgotten in Greece.”

The German demands reflected a revolt by taxpayers in richer EU countries against underwriting fiscally unsound governments at a time of 10.1 percent euro-area unemployment. Finland’s Jyrki Katainen said today that Ireland be forced to put up collateral for any aid.

Austrian Finance Minister Josef Proell said he was considering withholding the country’s share of the next part of Greece’s 110-billion euro rescue, saying the Athens government missed a revenue-raising target.

That disclosure triggered losses in Greek bonds, pushing the extra yield over 10-year German bonds up by 12 basis points to 898 basis points.

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General Motors is expanding its initial public offering of common shares by 31 percent, a sign of stronger than expected demand for a stake in the revitalized automaker that is just 16 months out of bankruptcy protection.

GM said in a statement on Wednesday that it would increase the planned offering of common stock to 478 million shares from the previously expected 365 million shares.

The move, coupled with an expected stock price of up to $33 per share, would bring the U.S. government closer to getting back the $50 billion it spent bailing out GM last year.

It could also make GM’s IPO the largest in history for a U.S.-based company.

GM plans to finalize the IPO share price on Wednesday. The share price is targeted at $32 to $33 per share.

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The ability of credit card holders to pay off debt has shown sustained improvement this year and on Monday the top U.S. credit card issuers said that trend continued in October.

Statistics posted by five of the six biggest card companies mainly showed fewer balances being written off as uncollectible, and fewer card customers falling behind on their payments. Four of the six biggest issuers, included the largest, JPMorgan Chase & Co., reported their lowest levels of bad debt and late payments this year.

Only Bank of America reported an uptick in loans it gave up trying to collect, to 10.15 percent of balances from 9.98 percent in September. That’s still well below the peak charge-off rate of 13.53 percent the Charlotte, N.C., bank reported in December. Bank of America also said late payments dipped to 5.6 percent, from 5.71 percent the month before.

Bank of America is the second-largest issuer by outstanding balances, according to The Nilson Report, an industry newsletter.

The largest drop in charge-offs was reported by Capital One Financial Corp., which said it wrote off 7.26 percent of balances, down from 8.38 percent the prior month. Chase and Discover Financial Services Inc. posted more modest improvements. The charge-off rate at American Express Co. was flat at 4.7 percent, the lowest among the six largest card companies.

Citibank, the third-largest issuer, is due to report its performance for October later Monday.

Both charge-offs and delinquencies have been steadily falling throughout the year, with occasional upticks at certain banks.

Mike Dean, a managing director at Fitch Ratings, said the numbers show the bad debt situation for card companies is stabilizing. That’s partly because card companies have already written off billions of dollars of unpaid debt in the past few years. That leaves the banks with a better portfolio of open accounts, he said. “A lot of poor performing consumers have been written off.”

Industrywide charge-offs peaked at 10.66 percent in the second quarter, according to the Federal Reserve, and while the numbers have gotten better, Dean points out that they have yet to return to a normal range.

The historical average for charge-offs is just over 6 percent.

“We still have a ways to go,” Dean said.

And it may be some time before that point is reached.

Unemployment is one of the biggest factors in payment rates. The rate for initial filings for unemployment claims has ticked down a bit, and that correlated with the reduction in late payments and charge-offs, Dean said.

But the unemployment rate has remained stubbornly around 10 percent. The norm is between 5.5 percent and 6 percent.

And a recent AP survey of economists found that some do not believe the U.S. will return to that range of unemployment until at least 2018.

Credit card companies can expect higher delinquency rates and write-downs until that rate normalizes.

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In the world of new stock offerings, everything about next week is big: The number of deals, the amount of money expected to be raised and the profiles of the companies going public.

The action is likely to draw a wide range of investors into the U.S. stock markets. If investors snap up stock of companies such as General Motors Co. and casino operator Caesars Entertainment Corp., that could win over skittish traders who have taken refuge in the relative safety of bonds.

Stock in the week’s biggest deal, General Motors, already may be scare. Investment bankers handling the GM sale have more orders than stock for both the 365 million common shares and 60 million preferred shares that will be sold on next week, a person briefed on the sale said Friday.

Orders for preferred stock amount to more than twice the number of shares, while orders for common stock are four to five times the number available, said the person, who spoke on condition of anonymity because he is not authorized to speak publicly about the sale.

The market for initial public stock offerings has been heating up and providing good returns. The FTSE Renaissance Composite IPO index, which tracks the performance of stocks that had IPOs in the past two years, is up nearly 13 percent this year. By comparison, the broad Standard & Poor’s 500 index has gained 9 percent in that period. Large institutional investors have snapped up most of the shares from new stock offerings.

The General Motors IPO could change that, said Kathleen Smith, an IPO expert and founder of the investment advisor Renaissance Capital LLC. Most recent IPO investments have come from funds that specialize in initial public offerings of stocks, she said. After next week, Smith said, managers of smaller portfolios and non-specialists are likely to take an interest.

“This is going to be a consciousness-raising IPO for a broader group of investors who have not been particularly interested in the IPO market,” Smith said.

But it could prove frustrating for retail investors who want to get in on the deal. The U.S. government has said that smaller investors will be able to participate in the offering of General Motors, which was rescued from near-collapse by taxpayer bailouts worth a combined $51 billion, but brokerages that sell to smaller investors including Charles Schwab and Scottrade aren’t taking part in the offering.

Fidelity has an agreement with GM underwriter Deutsche Bank to sell shares to retail investors, said spokesman Steve Austin. But to place an order, investors must have at least $500,000 in assets with Fidelity, make 36 trades a year or be a premium investor, which normally is for high net-worth clients, Austin said.

Treasury spokesman Mark Paustenbach would not comment on small investors’ access to the GM sale.

Besides General Motors and Caesars, next week’s big IPOs include management consultant Booz Allen Hamilton Inc., the massive broker-dealer LPL Investment Holdings Inc. and electronics maker Aeroflex Holding Corp.

With 10 deals expected to come to market next week, it will be the most active period for IPOs since 2007, according to Renaissance data.

The offerings could raise about $12.5 million. That’s the biggest week since March 2008, when nearly $18 billion was raised through IPOs with Visa Inc.’s deal raising $17.86 billion of that.

The IPO market has improved steadily since August 2009. The sector had been almost frozen for nearly a year after massive losses on mortgage bonds upended global credit markets.

Chinese listings have fared especially well. Of the 10 2010 IPO stocks that have more than doubled from their offering prices, half are Chinese. Yet Chinese companies represent only one-fifth of the total IPOs, said David Menlow of the research firm IPOfinancial.com.

He said marquee names like General Motors and Booz Allen Hamilton will remind investors that some U.S. companies are poised for growth.

“There’s significant cash on the sidelines that’s now being redeployed,” Menlow said. “We’re seeing higher levels of confidence on the part of the investors and in the larger quantity of deals coming to market,” he said.

Low bond yields also play a role. The Federal Reserve announced last week a plan to buy $600 billion in long-term Treasurys over the next eight months. By creating that extra demand, the Fed action drives down interest rates, making bonds less attractive to investors.

Still, many companies have postponed plans to go public, leading to an enormous backlog. Many were delayed because the companies had unrealistically high expectations for what their stock should fetch. If next week’s deals take off, more of those companies will go public in the coming quarters, analysts said.

Analysts don’t expect a boom like the tech bubble of the late 1990s, when 100 deals or more came to market in some weeks.

But if the coming IPO wave draws attention and cash to U.S. companies, analysts said, that could spur more reinvestment in the nation’s economy and into stocks of U.S. companies.

“If (GM) does well next week,” said John Fitzgibbon, founder of research firm IPOScoop.com, “well _ it’s like honey attracts flies,”

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AP Automotive writer Tom Krisher in Detroit contributed to this report.

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Before heading to Seoul, U.S. Trade Representative Ron Kirk was warned by Senator Max Baucus that “no deal is better than a bad deal” when it came to negotiating changes in a free-trade agreement with South Korea.

The announcement by the U.S. and Korean presidents yesterday that they failed to agree on changes to beef and auto provisions may make “no deal” the reality for U.S. trade accords across Asia and the world.

“It’s very disappointing: If they can’t deliver under these circumstances, you have to wonder,” former U.S. Trade Representative Susan Schwab said in a Bloomberg Radio interview yesterday. “If you can’t re-close a deal when both leaders say they want it done by a certain time, then you have got some serious problems.”

President Barack Obama’s pledge to rework the agreement and submit it to Congress was being watched as a signal of the administration’s ability to get any trade deals approved by lawmakers, William Reinsch, president of the National Foreign Trade Council in Washington, said last week.

“I want to make sure this deal is balanced,” Obama told reporters at the Group of 20 summit in Seoul today. “I want trade agreements that work for the other side, but my main job is to look out for the American people, American workers and American businesses,”

Doubling Exports

With almost $68 billion in trade between the nations, the deal would be the U.S.’s largest since the North American Free Trade Agreement in 1994 and would help President Barack Obama meet his goal of doubling American exports in five years. The accord, signed in 2007 by negotiators for President George W. Bush, has languished in Washington as lawmakers complained about Korean barriers to exports of U.S. autos and beef. Ford Motor Co. and the United Auto Workers opposed the agreement and sought changes.

Obama and South Korean President Lee Myung Bak said they will seek to resolve differences in coming weeks.

“I think that we can find a sweet spot that works both for Korea and the United States,” Obama said.

His decision to walk away from a deal in Seoul was praised by critics such as Baucus, a Montana Democrat, Representative Sander Levin, a Michigan Democrat and chairman of the House Ways and Means Committee, and Representative Dave Camp, a Michigan Republican who is in line to be the next chairman of that panel no fax cash loans. That may make it easier to win approval, if a deal is reached later.

High Stakes

“This is far too important to the bilateral relationship to blow up over these incremental changes,” Jeffrey Schott, a fellow at the Peterson Institute for International Economics in Washington, said in an interview yesterday.

The stakes go well beyond this deal, according to analysts such as Schwab, who spoke on the “Bloomberg on the Economy” program. Schwab signed the Korea agreement as Bush’s trade representative.

Without a Korea deal, other nations “won’t believe the United States has the political will to complete and pass an agreement,” Ernest Bower, director of the Center for Strategic and International Studies’ Southeast Asia Program, wrote in a note yesterday. It’s “the acid test for whether the United States can return to a leadership position on trade.”

Aid For Doha

Progress on the agreements may help kick-start the stalled Doha round of global trade talks at the World Trade Organization, William Toppeta, president of MetLife Inc.’s international business, said yesterday in Seoul.

During Obama’s first two years in office, he didn’t attempt to push through Congress trade pacts approved by Bush with South Korea, Colombia and Panama amid high unemployment and opposition from some fellow Democrats and organized labor.

Trade agreements are becoming unpopular among voters, with 44 percent of Americans saying deals such as Nafta are bad for the U.S., up from 32 percent a year ago, according to a poll released this week by the Pew Research Center for the People & the Press. Trade with China and South Korea were the least popular among a list of eight U.S. partners, according to the poll of 1,255 adults conducted Nov. 4 to 7.

“Beef was not the only issue that was of concern,” Obama said in Seoul. “We’ve got about 400,000 Korean autos in the United States and a few thousand American cars here in Korea. People are concerned about non-tariff barriers.”

Companies such as Citigroup Inc., United Parcel Service Inc. and Ace Ltd. say an agreement would help open the Korean market to more U.S. exports and foreign investment in financial services.

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