Today's Headlines

Bloomberg:
- A “huge” oil shale deposit has been found in Egypt, citing an assessment by Centurion Energy Intl.
- The cost of protecting corporate bonds from default fell for a third day after Freddie Mac, the second-largest US mortgage-finance company, posted a loss that was narrower than analysts estimated and raised new capital. The benchmark CDX North America Investment Grade Index fell 5 basis points to 93.5.
- The US dollar will strengthen against most major currencies in the next six months as the Fed stops reducing interest rates, a survey of Bloomberg users showed.
- Securities firms are creating new ABX derivative contracts that will help value their holdings of some AAA rate subprime-mortgage debt. Some holders of subprime-loans bonds have said the existing AAA ABX contracts provide investors with misleading information about the value of their assets. The new contracts may be unlikelier to be used by so-called macro hedge funds to bet against the US housing market because they’re tied to less risky debt. That means they may not face the “selling pressure” that has helped drive down other ABX contracts further than may be justified.
- Collateralized debt obligations, the securities that contributed to $335 billion of bank writedowns, 65,000 job losses and the collapse of Bear Stearns(BSC), may be staggering back to life.
- Pension Funds ‘Diversify’ Into Commodity Bubble. If it's not real demand to heat our homes, power our factories and feed our population, then could it be, might it be, a bubble? And if it is, are the commodity markets looking at the same fate as the Nasdaq Composite Index in 2000-2002 and the housing market at present? Last week, the average daily volume of crude oil contracts on the Nymex was almost eight times daily oil demand. Let's say a pension fund, like the California Public Employees Retirement System, wants to increase its exposure to commodities. Calpers, a speculator according to the CFTC, does a total-return swap with Goldman Sachs Group Inc., a hedger. Goldman promises to pay Calpers the total return on the Goldman Sachs Commodity Index and hedges the swap by buying futures contracts. Calpers's speculative bet on commodities gets recorded as Goldman's hedging in the COT report. In so doing, investors circumvent the position limits on non-commercials.
- Fitch Ratings said global banks have already written down more than 80% of their losses from subprime mortgage assets and added that it estimates total market losses of $400 billion.
- Crude oil fell more than $1 a barrel after an EIA report showed that US supplies of distillate fuels, including diesel, rose more than forecast.
- Wheat prices fell to the lowest price in six months on speculation that importers will delay purchases until farmers in the US begin harvesting a bigger crop next month.
- General Electric(GE) CEO Jeffrey Immelt may be unable to return to the 10% profit expansion analysts forecast for 2009 because of dimming prospects he’ll be able to sell slow-growing financial-services assets.
- Sony Corp.(SNE) the world’s second-largest maker of consumer electronics, forecast operating income will rise 20% this year, beating estimates, as the games division that makes PlayStation 3 consoles turns profitable.
- Macy’s Inc.(M), the second-biggest US dept.-store company, climbed in NY trading after first-quarter sales fell less than analysts estimates and it reiterated annual forecasts.

Wall Street Journal:
- Who Stole the American Spirit? According to the most recent polls, more than 75% of the American public believes the economy is in bad shape. All three remaining candidates for president agree the economic situation is dire. Taking the long view, there is something both startling and disturbing about the gloom that has settled over Wall Street and the country in general. In fact, looking back over the past century, it would be a stretch to rank the current problems as especially notable or dramatic. Something else is going on – namely a cultural rut of pessimism that is draining our collective energy, blinding us to possibilities, and eroding our position in the world. Next time someone compares the present to the Great Depression, stop them. The DJIA fell 89%, unemployment hit 24.9%, 4,000 banks failed in 1933 alone and millions became homeless. Today’s environment doesn’t come close. There is a fine line between self-criticism and self-excoriation. The path to a more balanced view of ourselves is impossible to chart, but the first step is surely to have better perspective on where we are and where we have been. (very good article)
- House Democrats Seek Surtax on the Wealthy.
- Wal-Mart(WMT) Raises Bar on Toy-Safety Standards.

NY Times:
- Oil Refiners See Profits Shrink as Consumption Falls. Consumption of gasoline in the US is falling as a result of slower economic growth and consumer efforts to conserve. The IEA reduced its forecast for global oil demand for this year, as consumption drops by a bigger-than-forecast 300,000 barrels a day in the developed world. US oil consumption fell 3.3% in March from a year earlier. Refiners have cut their production rates to 81.4% versus 90.4% at this time last year. Some consumer advocates say they are suspicious about the behavior of refiners who are sharply cutting production at a time of record gasoline prices. In China oil imports have soared in recent weeks as the government stockpiles oil and diesel in anticipation of the Olympic Games. Beijing, the IEA said, is seeking to avoid a repeat of the embarrassing fuel shortage and power disruptions that plagued the country last year.

NY Examiner:
- Iranian President Mahmoud Ahmadinejad says Israel is dying and that its 60^th anniversary celebrations are an attempt to prevent its annihilation.

USA Today:
- Consumers ditching land-line phones.

Infectious Greed:
- There has been a roughly 50% compound growth rate in the number of commodity hedge funds created per year since 2000. That means everyone on the planet will be running a commodity hedge fund by the year 2050. Check out the following graph.

International Herald Tribune:
- Ken Griffin, founder of Citadel Investment, bashes his hedge fund peers.