DealBook: Bond Traders Shift Bets With Political Wind

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New Minter Ellison Adelaide Hire Causes Political Uproar

Flag of Australia/clipart.com 2012

An Australian politician has come under attack for moonlighting at Minter Ellison.

Patrick Conlon, a Labor Party member of the South Australian Parliament since 1997 and a cabinet minister for many of those years, on Monday joined the Adelaide office of Minter Ellison as a part-time solicitor working three days a week. According to press reports, the firm is paying him roughly $152,000 a year, almost exactly the same as his salary from parliament.

The news has unleashed a firestorm of criticism from opposition politicians and the press, which have variously dubbed Conlon, who represents a suburban Adelaide district called Elder, "Part-time Pat" and the "Member for Minter Ellison."

In a statement, Vickie Chapman, deputy leader of the opposition Liberal Party, called on Conlon to resign immediately from the parliament. "Mr. Conlon should be working for his constituents in Elder, not for a law firm," she said.

The Advertiser of Adelaide said in an editorial that, as long as he is on the public payroll, Conlon "should be focused on one thing only -- his job as the Member for Elder. The decision to take on the Minter Ellison role will be condemned by many voters."

Conlon, who is not planning to seek re-election next year, has pointed out that other members of parliament have also worked on the side.

"What I am doing is no more than people in here have been doing for years," Conlon told The Australian, "and I can think of current Liberal examples who spend time on family farms and businesses."

He also said he believes that, even with his new role, he will be more available to his constituents now than he has been previously.

Minter Ellison said in a statement Conlon's work for the firm would absolutely not interfere with his duties to parliament and his constituents.

"We are pleased that Patrick has joined our talented team and look forward to the benefits this exciting new relationship will bring to Minter Ellison SA/NT," said Adam Bannister, managing partner of Minter Ellison's associated South Australia and New Territories offices.

A Year of Market Gains, Despite Political Turmoil

A year ago, some thought 2012 was destined to be the year that the euro zone — and maybe even the entire European Union — broke up. The banks that supported their governments, and that in turn depended on those same governments for bailouts if they went broke, were deemed to be particularly vulnerable to disaster.

It did not happen, and while the euro zone countries hardly solved their economic problems, the Continent’s stock markets turned out to be good investments in 2012, with bank shares among the best performers. The same could be said about the United States, where the broad stock market posted double-digit gains and Bank of America shares doubled in 2012, albeit from a very depressed level.

Over all, the Standard & Poor’s Euro 350-stock index was up 13 percent for the year, measured in euros, and more than 15 percent measured in dollars. The S.& P. 500 wound up the year with a gain of 13 percent.

It may have been typical of 2012 that it was politicians and central bankers — not economic news or corporate developments — that dominated investor attention. As the year ended, the difference was that it was Washington, not Europe, where the squabbles were taking place.

For much of the year, it appeared that the European squabbles were leading nowhere, and by midsummer, markets were pessimistic about the outcome. Finally, Mario Draghi, the president of the European Central Bank, took decisive action to assure that the banks — and the governments that depended on them — would have access to funds. That did not turn around recessionary conditions in much of the euro zone, but it was enough to turn around financial markets. Prices of government bonds in many of the most troubled countries began to rise. Those who bet that Europe would solve its problems did well in the financial markets.

The accompanying charts show the performance of stocks in 10 economic sectors in both Europe and the United States, both in 2012 and since Oct. 9, 2007, the day that world stock markets peaked before what would turn out to be a world recession and credit crisis.

What stands out is how well financial stocks and consumer discretionary stocks did during 2012. The latter stocks are things purchased by consumers that are likely to do better when the economy is improving. In the United States, the two best such stocks in the S.& P. 500 were PulteGroup, a homebuilder, and Whirlpool, an appliance maker.

But while Europe did better in 2012, it remains much farther from recovering all of the losses experienced since the 2007 peak. The American index is just 9 percent lower than that, while the European index is about a third below where it was then. The only sectors that have completely made up their losses on both sides of the Atlantic are health care and consumer staples. In the United States, the consumer discretionary and information technology sectors have also done so, although the latter sector’s performance is largely because of Apple, whose shares are more than three times as high as they were in 2007.

Microsoft Battles Google by Hiring Political Brawler Mark Penn

SEATTLE — Mark Penn made a name for himself in Washington by bulldozing enemies of the Clintons. Now he spends his days trying to do the same to Google, on behalf of its archrival Microsoft.

Since Mr. Penn was put in charge of “strategic and special projects” at Microsoft in August, much of his job has involved efforts to trip up Google, which Microsoft has failed to dislodge from its perch atop the lucrative Internet search market.

Drawing on his background in polling, data crunching and campaigning, Mr. Penn created a holiday commercial that has been running during Monday Night Football and other shows, in which Microsoft criticizes Google for polluting the quality of its shopping search results with advertisements. “Don’t get scroogled,” it warns. His other projects include a blind taste test, Coke-versus-Pepsi style, of search results from Google and Microsoft’s Bing.

The campaigns by Mr. Penn, 58, a longtime political operative known for his brusque personality and scorched-earth tactics, are part of a broader effort at Microsoft to give its marketing the nimbleness of a political campaign, where a candidate can turn an opponent’s gaffe into a damaging commercial within hours. They are also a sign of the company’s mounting frustration with Google after losing billions of dollars a year on its search efforts, while losing ground to Google in the browser and smartphones markets and other areas.

Microsoft has long attacked Google from the shadows, whispering to regulators, journalists and anyone else who would listen that Google was a privacy-violating, anticompetitive bully. The fruits of its recent work in this area could come next week, when the Federal Trade Commission is expected to announce the results of its antitrust investigation of Google, a case that echoes Microsoft’s own antitrust suit in the 1990s. A similar investigation by the European Union is also wrapping up. A bad outcome for Google in either one would be a victory for Microsoft.

But Microsoft, based in Redmond, Wash., has realized that it cannot rely only on regulators to scrutinize Google — which is where Mr. Penn comes in. He is increasing the urgency of Microsoft’s efforts and focusing on their more public side.

In an interview, Mr. Penn said companies underestimated the importance of policy issues like privacy to consumers, as opposed to politicians and regulators. “It’s not about whether they can get them through Washington,” he said. “It’s whether they can get them through Main Street.”

Jill Hazelbaker, a Google spokeswoman, declined to comment on Microsoft’s actions specifically, but said that while Google also employed lobbyists and marketers, “our focus is on Google and the positive impact our industry has on society, not the competition.”

In Washington, Mr. Penn is a lightning rod. He developed a relationship with the Clintons as a pollster during President Bill Clinton’s 1996 re-election campaign, when he helped identify the value of “soccer moms” and other niche voter groups.

As chief strategist for Hillary Clinton’s unsuccessful 2008 campaign for president, he conceived the “3 a.m.” commercial that raised doubts about whether Barack Obama, then a senator, was ready for the Oval Office. Mr. Penn argued in an essay he wrote for Time magazine in May that “negative ads are, by and large, good for our democracy.”

But his approach has ended up souring many of his professional relationships. He left Mrs. Clinton’s campaign after an uproar about his consulting work for the government of Colombia, which was seeking the passage of a trade treaty with the United States that Mrs. Clinton, then a senator, opposed.

“Google should be prepared for everything but the kitchen sink thrown at them,” said a former colleague who worked closely with Mr. Penn in politics and spoke on condition of anonymity. “Actually, they should be prepared for the kitchen sink to be thrown at them, too.”

Hiring Mr. Penn demonstrates how seriously Microsoft is taking this fight, said Michael A. Cusumano, a business professor at M.I.T. who co-wrote a book about Microsoft’s browser war.

“They’re pulling out all the stops to do whatever they can to halt Google’s advance, just as their competition did to them,” Professor Cusumano said. “I suppose that if Microsoft can actually put a doubt in people’s mind that Google isn’t unbiased and has become some kind of evil empire, they might very well get results.”

Nick Wingfield reported from Seattle and Claire Cain Miller from San Francisco.

Microsoft Battles Google by Hiring Political Brawler Mark Penn

SEATTLE — Mark Penn made a name for himself in Washington by bulldozing enemies of the Clintons. Now he spends his days trying to do the same to Google, on behalf of its archrival Microsoft.

Since Mr. Penn was put in charge of “strategic and special projects” at Microsoft in August, much of his job has involved efforts to trip up Google, which Microsoft has failed to dislodge from its perch atop the lucrative Internet search market.

Drawing on his background in polling, data crunching and campaigning, Mr. Penn created a holiday commercial that has been running during Monday Night Football and other shows, in which Microsoft criticizes Google for polluting the quality of its shopping search results with advertisements. “Don’t get scroogled,” it warns. His other projects include a blind taste test, Coke-versus-Pepsi style, of search results from Google and Microsoft’s Bing.

The campaigns by Mr. Penn, 58, a longtime political operative known for his brusque personality and scorched-earth tactics, are part of a broader effort at Microsoft to give its marketing the nimbleness of a political campaign, where a candidate can turn an opponent’s gaffe into a damaging commercial within hours. They are also a sign of the company’s mounting frustration with Google after losing billions of dollars a year on its search efforts, while losing ground to Google in the browser and smartphones markets and other areas.

Microsoft has long attacked Google from the shadows, whispering to regulators, journalists and anyone else who would listen that Google was a privacy-violating, anticompetitive bully. The fruits of its recent work in this area could come next week, when the Federal Trade Commission is expected to announce the results of its antitrust investigation of Google, a case that echoes Microsoft’s own antitrust suit in the 1990s. A similar investigation by the European Union is also wrapping up. A bad outcome for Google in either one would be a victory for Microsoft.

But Microsoft, based in Redmond, Wash., has realized that it cannot rely only on regulators to scrutinize Google — which is where Mr. Penn comes in. He is increasing the urgency of Microsoft’s efforts and focusing on their more public side.

In an interview, Mr. Penn said companies underestimated the importance of policy issues like privacy to consumers, as opposed to politicians and regulators. “It’s not about whether they can get them through Washington,” he said. “It’s whether they can get them through Main Street.”

Jill Hazelbaker, a Google spokeswoman, declined to comment on Microsoft’s actions specifically, but said that while Google also employed lobbyists and marketers, “our focus is on Google and the positive impact our industry has on society, not the competition.”

In Washington, Mr. Penn is a lightning rod. He developed a relationship with the Clintons as a pollster during President Bill Clinton’s 1996 re-election campaign, when he helped identify the value of “soccer moms” and other niche voter groups.

As chief strategist for Hillary Clinton’s unsuccessful 2008 campaign for president, he conceived the “3 a.m.” commercial that raised doubts about whether Barack Obama, then a senator, was ready for the Oval Office. Mr. Penn argued in an essay he wrote for Time magazine in May that “negative ads are, by and large, good for our democracy.”

But his approach has ended up souring many of his professional relationships. He left Mrs. Clinton’s campaign after an uproar about his consulting work for the government of Colombia, which was seeking the passage of a trade treaty with the United States that Mrs. Clinton, then a senator, opposed.

“Google should be prepared for everything but the kitchen sink thrown at them,” said a former colleague who worked closely with Mr. Penn in politics and spoke on condition of anonymity. “Actually, they should be prepared for the kitchen sink to be thrown at them, too.”

Hiring Mr. Penn demonstrates how seriously Microsoft is taking this fight, said Michael A. Cusumano, a business professor at M.I.T. who co-wrote a book about Microsoft’s browser war.

“They’re pulling out all the stops to do whatever they can to halt Google’s advance, just as their competition did to them,” Professor Cusumano said. “I suppose that if Microsoft can actually put a doubt in people’s mind that Google isn’t unbiased and has become some kind of evil empire, they might very well get results.”

Nick Wingfield reported from Seattle and Claire Cain Miller from San Francisco.