Late-Night Headlines
Bloomberg:
AIG, Financials Have Biggest Short-Selling Increase at NYSE. American International Group Inc.(AIG), the insurer bailed out by the government, had the biggest jump in shares sold short among NYSE companies in the second half of October. AIG short-selling increased by 42 million shares, or 45%, to 135.7 million shares from Oct. 16 through Oct. 31 compared with two weeks earlier, according to Bloomberg. Short-selling of Citigroup Inc.(C) rose 21.3 million shares, the second biggest increase among NYSE companies. Morgan Stanley(MS), the US investment bank that converted to a bank holding company in September, had borrowed shares increase the third most, by 20.2 million shares. Borrowing of Wells Fargo(WFC) rose by 19.3 million shares, the fourth-largest increase.
- Stephen Schork, president of the Schork Report, says crude oil may fall below $50 a barrel.
- China The demand slump will show up in import figures in the next two months. Imports dropped 22% in October to 30.6 million tons from the previous month, China
- BlackRock Inc.(BLK) Chief Executive Officer Laurence Fink said he's seeing signs of ``capitulation'' in financial markets, a broad selloff that usually precedes the end of a bear market. ``A year ago, I said we won't see a bottom until we see a capitulation,'' he said at an investment conference in New York today. ``We are seeing a capitulation,'' and financial markets may begin to recover by mid-2009, said Fink, 56, whose company is the largest publicly traded asset manager in the U.S.
- Google Inc.(GOOG), the most popular Internet search engine, is adding videoconferencing features to its Gmail e-mail service to lure users from Yahoo! Inc. and Microsoft Corp. Users can chat for free using Gmail by installing a small add-on program to their browser, Google said today in a statement. Those without a Webcam can use an audio chat option.
- Goldman Sachs Group Inc.(GS), which converted into a bank holding company in September, doesn't expect the financial crisis to change the firm's strategy, Chief Executive Officer Lloyd Blankfein said.
- Money-market rates extended declines as central banks injected cash into the financial system to counter a collapse in lending. The rate New Zealand banks charge each other for three- month loans fell 20 basis points, the most in three weeks, to 6.39 percent as of the 10:42 a.m. fixing in Wellington, as the country's central bank pumped NZ$500 million ($285 million) into money markets in the first of a new weekly term auction facility. The comparable rate Australian banks charge each other for three-month loans fell 8 basis points to 4.84 percent.
Wall Street Journal: After years of small-scale experiments in using so-called emissions trading to reduce pollution, China is taking steps to set up a nationwide system. In recent months, three cities -- Shanghai, Beijing and Tianjin -- have begun creating emissions exchanges modeled after a system pioneered in the U.S. to reduce emissions that caused acid rain. Known as cap-and-trade, this system sets an overall limit, or cap, on how much an industry can pollute.
- AIG’s(AIG) Revamped Rescue to Benefit Goldman Sachs(GS), Banks
- Apple Inc.'s(AAPL) iPhone has shaken up the cellphone business. Its next target: Nintendo Co. and Sony Corp. The iPhone and its sister device the iPod touch, which feature big screens and powerful graphics, are emerging as serious competitors to Nintendo's DS handheld and Sony's PlayStation Portable.
- While China is making a big bet that infrastructure spending will prop up its economy, India is finding it hard to follow suit: The global economic slowdown could sink its ambitious plans, and some current projects are struggling. The credit crisis is delaying building by crimping the flow of cash for roads, ports and power plants. Billions of dollars in infrastructure projects could be in jeopardy, builders say, threatening one of the world's largest programs. Interest rates on project financing have soared, banks are reluctant to lend, and investors are sitting on their cash.
MarketWatch.com: British Prime Minister Gordon Brown on Tuesday urged a worldwide round of tax cuts in order to stave off a deep global recession. "This is a chance for the world to work together so that a fiscal stimulus in one country can benefit from fiscal stimuluses that are taking place in other countries as well," Brown said during a news conference.
CNBC.com: Tontine Partners, one of the largest and most successful hedge fund families, is now liquidating two of its major funds, Tontine Capital and Tontine Partners, CNBC has learned.
- The push for an auto industry bailout gained momentum as House Speaker Nancy Pelosi said she would bring the House back in session next week to approve "emergency and limited financial assistance" for the battered industry.
CNNMoney.com: As soaring oil prices enriched the Persian Gulf region in recent years, the United Arab Emirate of Dubai became the embodiment of global exuberance. Now even this boomtown has fallen prey to the credit crisis.
- The head of the federal agency that oversees commodities trading wants to replace it and the Securities and Exchange Commission with three new regulators to better deal with an increasingly complex financial system.
USA Today.com:
- The nationwide average price of a gallon of regular gasoline slipped another 2 cents Tuesday to $2.22 a gallon, AAA says. Gas prices have tumbled 46% since peaking at $4.11 in July. In Kansas City, Mo., average prices were $1.80 a gallon.
Reuters:
- General Motors Corp's (GM) extremely distressed debt is an attractive investment as the automaker has several options to improve its liquidity and survive the economic downturn, according to credit analysts at JPMorgan.
- The regulator for the two largest U.S. mortgage finance companies on Tuesday unveiled a plan that could cut payments for hundreds of thousands of struggling homeowners to help reverse a wave of defaults threatening to swamp the economy.
Financial Times:
Hedge fund managers who earned more than $1bn last year, including George Soros and Philip Falcone, are being summoned to Capitol Hill on Thursday to testify under oath about the potential risks their firms pose to the broader economy. The hearing before the House oversight committee, headed by Democrat Henry Waxman, marks one of the few instances in which the largely unregulated hedge fund industry will be subject to a barrage of questions by lawmakers. Mr Soros, an important donor to Democratic causes, and Mr Falcone will appear alongside John Paulson of Paulson & Co, James Simons of Renaissance Technologies and Kenneth Griffin of Citadel Investment Group. Hedge funds have been blamed for short selling the stocks of troubled financial firms and thus deepening their woes. The liberal Democrat challenged his colleague, John Dingell of Michigan, for the chairmanship of the House energy committee, a move that riled the Democratic ranks and created an uncomfortable fissure just one day after the Democratic presidential and congressional victories in last week's election.
- Toscafund Asset Management issued an unusually impassioned plea to its investors to stick with its core hedge fund after a 20 per cent drop in performance during October pushed its fall so far this year to 66 per cent. Martin Hughes, the former star banks analyst who founded the hedge fund eight years ago, suggested in a monthly review that its Tosca portfolio had been the victim of a campaign by other market participants to drive down the value of its holdings.
- Russia's central bank signaled on Tuesday it was prepared to allow a sharp depreciation of the rouble as it lowered the floor at which it would defend the struggling currency, while capital outflows from the country took their toll on foreign exchange reserves. The central bank faces the danger that, by signaling a devaluation may be on the cards, it may spark a run on the rouble.
- General Motors(GM) plans to suspend production at its factories in South Korea for about two weeks starting next month in one of the strongest signs yet that the crisis in carmaking has spread to Asia. The shutdown will take effect from late December and affect all five of GM's Korean plants formerly owned by Daewoo, which form one of the lossmaking US carmaker's best-performing business units. "The economic crisis is truly global," Jay Cooney, GM Daewoo's vice-president, said. "What we're beginning to see here in Asia is no different from what is going on in Europe and what has already happened in the US."
The Standard:
- Hong Kong investors were “robbed” by foreign funds and speculators who drove the city’s benchmark stock index down by betting on further declines, billionaire Joseph Lau said. Foreign institutions have “hoodwinked Hong Kong investors” and the city government should have followed other countries in banning short-selling, Lau, chairman of developer Chinese Estates Holdings Ltd., said. Speculators will return to attack the city’s stocks again and investors should remain “very cautious,” Lau said.
Apple Daily:
- China The agency is China
Late Buy/Sell Recommendations
Citigroup:
- Added (PLCE) to Top Picks Live list, target $34.
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BOTTOM LINE: Asian indices are lower, weighed down by commodity and financial stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing higher. The Portfolio is 75% net long heading into the day.
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