Late-Night Headlines
Bloomberg:
Commodities as measured by the S&P GSCI Index surged 41% in the period before slumping 55% since the start of the second half of the year. Commodities forwards and swaps, non-standardized types of derivatives, grew 49% to $7.56 trillion, according to the BIS.
- Barack Obama's transition team named leaders for the groups that will review the Departments of Treasury, State and Defense to give the president-elect guidance on policy, budget and personnel decisions before taking office. Among those named is Tom Donilon, a former executive vice president at Fannie Mae(FNM) who will lead the State Department agency review team. John White, chairman of Harvard University's Kennedy School Middle East Initiative, will lead the Defense Department agency review team. White serves on several boards, including L-3 Communications Holdings Inc.(LLL), which makes intelligence and surveillance equipment and sells systems to the U.S. military. As he did when he set up his transition advisory board, Obama welcomed some of his top fundraisers to the review teams. Donald Gips, co-chairman of the agency review group and a vice president of Broomfield, Colorado-based Level 3 Communications Inc., raised more than $500,000 for Obama's campaign. Tom Wheeler, a managing director of Core Capital Partners, an investment firm, raised between $200,000 and $500,000. Wheeler will help review the science, technology, space and arts agencies. Former Federal Communications Chairman Reed Hundt, named as a member of the team responsible for international trade and economics agencies, raised between $50,000 and $100,000.
- Intel Corp.(INTC), the largest computer- chip maker, lowered its fourth-quarter sales forecast by about $1 billion amid ``significantly weaker'' demand across its entire product line. The shares dropped 6.8 percent in late trading. Revenue will be $9 billion, plus or minus $300 million, and profit margins will be short of projections, Intel said today in a statement. The Santa Clara, California-based company originally predicted sales of between $10.1 billion and $10.9 billion.
- Michigan Representative John Dingell is citing past praise from President-elect Barack Obama in his campaign to retain the chairmanship of the Energy and Commerce Committee against a challenge by California Democrat Henry Waxman. Dingell supporters today sent a letter to House Democrats that included a June 15 comment from Obama saying Dingell ``has done more for working people than just about anybody in the history of the House.'' The letter also noted that in 2005 House Speaker Nancy Pelosi called Dingell ``a leader, fighting for the American values we cherish.''
- Applied Materials Inc.(AMAT), the largest maker of chip-production machinery, reported a 45 percent drop in fourth-quarter profit and said it will cut 1,800 jobs as the financial crisis deepens an industrywide slump in orders.
- China's industrial production grew at the slowest pace in seven years, adding to evidence that the world's fastest-growing major economy risks a deeper slowdown as exports cool. Output rose 8.2 percent in October from a year earlier, the statistics bureau said today, after gaining 11.4 percent in September. None of 18 economists surveyed by Bloomberg News had predicted such a small increase. The economy may expand 5.8 percent this quarter, the weakest pace in at least 15 years, according to Credit Suisse AG. Output of crude steel fell 17 percent from a year earlier. Declines also included: pig iron (16.8 percent), steel products (12.4 percent) and automobiles (0.7 percent). Electricity output slipped 4 percent. Crude-oil production rose 3.9 percent. Cement and raw-coal output grew at a slower pace than in September. ``Industrial-production growth should continue to decline as China's export-oriented industries scale back their operations due to lower demand from the U.S. and Europe,'' said Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co. in Hong Kong.
Wall Street Journal:
Advocates on both sides of the aisle are racing to sway a runoff in Georgia that will help determine whether Democrats gain a supermajority in the Senate. The contest between incumbent Republican Sen. Saxby Chambliss and Democrat Jim Martin -- neither of whom won more than 50% of the vote on Election Day -- is key to Democrats' bid for the 60 votes needed to overcome procedural tactics that could complicate President-elect Barack Obama's legislative agenda. Two other races, in Alaska and Minnesota, also remain undecided. "We are trying to get the message out to Republicans that the difference between a 57-seat majority and a 58-seat majority is huge," said Rebecca Fisher, a spokeswoman for the campaign arm of Senate Republicans. "This needs to be something that not just Georgians pay attention to."
- Treasury Secretary Henry Paulson officially abandoned his original plan to buy troubled assets from financial institutions. While the government will continue to invest in those firms, he said, it would also now focus on the nation's struggling consumers. In detailing the next phase of Treasury's $700 billion Troubled Asset Relief Program, Mr. Paulson indicated the government would continue flooding financial institutions with cash, but would also try to increase the availability of student loans, auto loans and credit cards. He said he's also examining ways to help prevent foreclosures.
- Dubai’s six-year property boom appears to be over, with asking prices for some homes falling as much as 19% in October from the previous month, according to a closely followed survey. The property market here isn't important just to buyers, sellers and lenders. The government, through a handful of big developers, is the largest player in the sector. A sharp slowdown could crimp its financing as worry grows about its ballooning foreign debt.
MarketWatch.com: Russia's financial crisis is looking bleaker every day. As if tumbling oil and equity prices, capital flight, bank troubles and political risk weren't enough, the Russian markets now face the increasing risk of large ruble devaluation. In Moscow on Wednesday, dollar-denominated equities extended their precipitous slide, falling 12.5% and forcing the RTS stock exchange to halt trading once again. Over the last two days, the RTS index has plunged 22%. It is down a whopping 72% year-to-date, making it the worst performer among major global emerging markets.
NY Times:
Hedge fund managers usually shun the spotlight. But five of them, billionaires all, are about to come under the glare on Capitol Hill. The money managers — Philip Falcone, Kenneth C. Griffin, John Paulson, James Simons and George Soros — have been called by a House panel to discuss some of their trade secrets at a hearing on Thursday. The topics are likely to range from the managers’ use of leverage — the borrowed money that fuels investment returns on the way up but can be devastating on the way down; their funds’ bets in the markets; and the managers’ pay.
- Google(GOOG) announced on Wednesday that it would begin selling space on YouTube search-results pages to advertisers, part of its effort to turn its expensive acquisition into a major revenue producer.
- Momentum is building in Washington for a rescue package for the auto industry to head off a possible bankruptcy filing by General Motors(GM), which is rapidly running low on cash. But not everyone agrees that a Chapter 11 filing by G.M. would be the disaster that many fear. Some experts note that while bankruptcy would be painful, it may be preferable to a government bailout that may only delay, at considerable cost, the wrenching but necessary steps G.M. needs to take to become a stronger, leaner company.
- Michelle Rhee, the hard-charging chancellor of the Washington public schools, thinks teacher tenure may be great for adults, those who go into teaching to get summer vacations and great health insurance, for instance. But it hurts children, she says, by making incompetent instructors harder to fire. So Ms. Rhee has proposed spectacular raises of as much as $40,000, financed by private foundations, for teachers willing to give up tenure. Policy makers and educators nationwide are watching to see what happens to Ms. Rhee’s bold proposal. The 4,000-member Washington Teachers’ Union has divided over whether to embrace it, with many union members calling tenure a crucial protection against arbitrary firing.
CNNMoney.com: Billionaire oilman T. Boone Pickens is delaying his massive Texas wind project, citing a drop in natural gas prices and the tightening credit market. "With natural gas prices where they are, you can't kick off a wind project, you're not economical." Pickens said Tuesday at a news conference in Arizona.
USA Today.com:
- Delta Air Lines, (DAL) whose merger with Northwest Airlines closed two weeks ago, will soon become the USA's No. 1 airline between the East Coast and Asia. Delta said Wednesday that next summer it will add three new non-stop flights from the U.S. to Tokyo's Narita airport, Northwest's Asia hub, from which Northwest flies to 13 other Asian cities.
- Gasoline is expected to remain a relative bargain through 2009, with prices averaging $2.37 a gallon, and home heating costs will likely be flat this winter under sharply lower U.S. forecasts released Wednesday. The brutal economy will push down total U.S. petroleum demand this year by 1.1 million barrels a day, or 5.4%, the first time since 1980 that total consumption is expected to fall by more than 1 million barrels a day. "World demand growth may be negative for the first time in years, which is a shock to a lot of the bulls who never thought this could happen," says Phil Flynn, oil analyst at Alaron Trading.
Financial Times: Blackstone's(BX) GSO Capital Partners and GoldenTree Asset Management, two of the biggest hedge funds investing in debt, have turned to investors for more capital in the face of markdowns on their holdings and margin calls from their lenders. GSO, which manages $24.6bn, solidified its role as a leading force in the lending markets in recent months when it bought loans with a face value of $12bn that had been used to finance private equity deals.
China Daily:
- Premier Wen Joabao said that the effect of the global economic crisis on China The report didn’t elaborate.
Late Buy/Sell Recommendations
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Economic Releases
8:30 am EST
- The Trade Deficit for September is estimated to shrink to -$57.0 billion versus -$59.1 billion in August.
- Initial Jobless Claims for last week are estimated to fall to 480K versus 481K the prior week.
- Continuing Claims are estimated to fall to 3825K versus 3843K prior.
11:00 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory build of 1,000,000 barrels versus a 1,787,000 barrel increase the prior week. Gasoline supplies are expected to rise by 100,000 barrels versus a 1,123,000 barrel increase the prior week. Distillate inventories are expected to rise by 900,000 barrels versus a 1,206,000 barrel increase the prior week. Finally, Refinery Utilization is expected to rise by .2% versus a -.06% decline the prior week.
2:00 pm EST
- The monthly budget deficit for October is estimated to widen to -$200.0 billion versus -$456.8 billion in September.
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BOTTOM LINE: Asian indices are sharply lower, weighed down by commodity and financial stocks in the region. I expect US
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