Late-Night Headlines
Bloomberg:
- Investors should avoid industrial commodities through 2010 because the global recession will sap demand for copper and energy, said Tiberius Asset Management. “You don’t want to be invested in anything that has a high correlation with the economy,” Christoph Eibl, who helps manage more than $1 billion of commodity investments at Tiberius Asset Management AG, said today in New York. “I don’t like industrial commodities.” Commodity prices will continue to decline as investors exit the market, Eibl said. As of Dec. 3, open interest in commodity futures tracked by the CRB, excluding aluminum and nickel traded in London, tumbled 25 percent this year, data compiled by Bloomberg show. Open interest, the total number of contracts yet to be closed, liquidated or delivered, is a measure of what direction money is flowing in commodity markets.
- Investors fled from stock and bond mutual funds for the third straight month in November, removing $86.4 billion. Stock and bond mutual funds have lost $270 billion to investor withdrawals since September.
- Codelco, the world’s largest copper miner, will move ahead with “aggressive” expansion plans, even as rivals curb spending, to halt a four-year production decline. The Chilean state-owned company expects to increase output of the metal next year, Jorge Candia, a member of the company’s board, said today in an interview in Santiago. Copper may fall another 25% by June, Juan Carlos Guajardo, executive director of the Chilean Copper and Mining Studies Center, said in an interview.
- Crude oil is set for its biggest weekly decline since March 2003, trading near an almost four- year low. Oil is set for a 19 percent drop this week after the U.S. was declared in a recession on Dec. 1. Oil prices have fallen 70 percent since reaching a record $147.27 on July 11. Crude’s 19 percent weekly drop is the largest since a 24 percent decline during the week ending March 21, 2003.
- The U.S. welcomed Iraq's approval of a security accord that gives American forces three years to leave the country, saying it puts relations between the two countries on a ``strong footing.'' The agreement calls for U.S. troops to pull back from Iraq's towns and cities by the middle of next year and to leave the country by the end of 2011. It also curbs U.S. powers to detain Iraqi citizens and conduct military operations.
- Hong Kong home prices, down almost a quarter from their five-year high in March, may drop further as banks tighten mortgage lending on concern rising unemployment may hurt buyers' ability to repay. Mortgage rates in Hong Kong have climbed even as the de facto central bank has cut benchmark borrowing costs in line with the U.S. Federal Reserve. That's revived memories of the 1997-98 Asian financial crisis, when Hong Kong home prices slumped two- thirds from their peak. HSBC Holdings Plc, the city's biggest bank by branches, lifted mortgage rates as much as 75 basis points this week.
Wall Street Journal:
- Boeing Co.(BA) may further delay first deliveries of its flagship 787 Dreamliner by at least six months to account for the recent strike by union machinists and other snags.
MarketWatch.com: Some of the top hedge-fund firms have taken steps to limit investor withdrawals in recent days, demonstrating how the financial crisis is affecting even the oldest and most respected players. Farallon Capital Management, ranked earlier this year as the second-biggest hedge-fund manager by Alpha Magazine, put up a so-called gate after investors requested redemptions, according to two people familiar with the situation. Gates are imposed if investors ask to withdraw more than a certain quantity of assets from a hedge fund, usually about 20% of assets under management. When these levels are breached, funds can limit total redemptions and investors only get back a portion of the money they've asked for.
CNBC.com: Robert Rubin, the Citigroup Inc.(C) board member and senior counselor, may resign from his positions at the company, CNBC on-air editor Charles Gasparino reported. Rubin is facing pressure to quit from those critical of his oversight of Citigroup while he was chairman of the company. (video)
- Attention Santa Claus: The financial bailout has a new address—It's Main Street, not Wall Street.
BusinessWeek:
- Obama Drops Big Oil Tax as Prices Pluunge. The plan was for a windfall-profits tax on oil over $80 a barrel. But even though oil is under $50 now, some are upset that the issue is being dropped.
- Special Report: Tech Pioneers of 2009 .
CNNMoney.com: Programs quietly easing credit crunch. The government has initiated two corporate debt-purchasing programs that have gotten little attention, but are making a sizable impact in the credit market.
PatriotLedger.com:
- Gulf Oil CEO Joe Petrowski said on Wednesday that the price of oil could sink to $20 per barrel, and there is a chance gasoline prices could drop as low as $1 per gallon by early next year. Speaking at a South Shore Chamber of Commerce breakfast at Lombardo’s in Randolph, the Brockton native said that after speculators drove oil prices up, there is a chance that the market will overshoot on the way back down, resulting in much lower prices at the pump. Petrowski said that policymakers should make low-cost energy a goal by investing in alternative energy sources, increasing domestic oil reserves, and diversifying the foreign origins of oil so as to be less dependent on unfriendly countries. He said that cellulosic ethanol will eventually replace corn-based ethanol, and that he thinks the U.S. should eventually get rid of the import tax on ethanol from places like Brazil.
Reuters:
- There is broad understanding of distress but no consensus yet in Congress to rescue U.S. automakers as industry chiefs hope on Friday to advance their case in a second appearance before lawmakers in two days.
- The year-long U.S. recession has taken a turn for the worse recently, two top Federal Reserve policy-makers said on Thursday, raising expectations for aggressive policy action by the central bank as soon as next week. Separately, Federal Reserve Chairman Ben Bernanke urged more aggressive steps to halt home foreclosures, one of the most visible outcomes of the severe U.S. downturn.
- December is likely to be a bit more cheerful for U.S. retailers and their stocks as lower gasoline prices, a shorter holiday shopping season and pent-up demand help sales, despite the recession.
- Some of the biggest names in hedge funds lost money in November, including Dan Loeb and Kenneth Griffin, but John Paulson was among the few who made money for their investors. Hedge fund investors around the world lost money for the sixth straight month as many in the industry reported steepening declines, investors said on Thursday.
Bild Zeitung:
- Deutsche Bank AG expects Germany Deutsche Bank chief economist Norbert Walter said that Germany Walter forecast the slump because of a deteriorating economic situation in Russia and in the Middle East . Walter is urging Germany
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Earnings of Note
Company/EPS Estimate
- (BF/B)/.93
Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for November is estimated at -333K versus -240K in October.
- The Unemployment Rate for November is estimated at 6.8% versus 6.5% in October.
- Average Hourly Earnings for November are estimated to rise .2% versus a .2% increase in October.
3:00 pm EST
- Consumer Credit for October is estimated to fall to $2.0 billion versus $6.9 billion in September.
Upcoming Splits
Other Potential Market Movers
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and real estate stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.
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