Today's Headlines

Bloomberg:
- Goldman Sachs Group Inc.(GS), one of the top five U.S. municipal bond underwriters, is angering politicians and public-finance officials in New Jersey, Wisconsin, California and Florida by recommending that investors purchase credit-default swaps to bet against 11 states’ debt. It’s “disturbing” to advise investors to bet against the financial health of a state whose bonds Goldman helps sell, Assemblyman Gary S. Schaer, a Democrat who chairs the Financial Institutions and Insurance Committee, said last week in a letter to Chief Executive Officer Lloyd C. Blankfein. “New Jersey needs to maximize its presence in the credit markets, not to see its presence undermined.” Schaer wrote.

- Bill Gross, manager of the world’s biggest bond fund, said the U.S. Treasury market is overvalued, with sectors such as bills taking on “bubble” like characteristics. “Treasuries have some bubble characteristics, certainly the Treasury bill does,” Pacific Investment Management Co.’s Gross said in a Bloomberg Television interview from Newport Beach, California. “A Treasury bill at zero percent is overvalued. Who could argue with that in terms of the return relative to the risk? There is no return.”

- Illinois Governor’s Arrest May Hurt Obama Transition.

- East Asian economies will probably expand at the slowest pace in eight years in 2009 as easing export demand and declining investment and consumer spending portend “hard times” for the region, the World Bank said.

- The economy of Russia, the world’s biggest energy exporter, will contract in the first three quarters of next year as oil prices decline and the global credit freeze crimps investment, Barclays Capital said in a report. The economy will grow 0.9 percent overall in 2009, with “negative growth rates” in the first three quarters, the report forecast. Barclays is the first bank to predict that Russia will slide into a recession. The Economy Ministry lowered its forecast for growth to between 6.8 percent and 7 percent on Nov. 24 and the World Bank expects 3 percent.

- Yields on Fannie Mae and Freddie Mac corporate debt fell relative to benchmarks, sending spreads on some maturities to the lowest in almost two months against a measure of expected interbank lending rates. Yields on Fannie’s two-year notes fell to 8.2 basis points below two-year interest-rate swaps, the lowest since Oct. 12, as of 9:30 a.m. in New York, data complied by Bloomberg show. Yields fell below swap rates yesterday for the first time since October, after reaching a record 86.1 basis points on Nov. 20.

- Agrium Inc.(AGU), North America’s third- largest fertilizer producer by market value, will reduce production at plants in North America because of a “significant” increase in inventories. “The late North American harvest, coupled with credit restrictions from international buyers and continued market uncertainties arising from reductions in global crop and nutrient prices, has” reduced nutrient use, Agrium Chief Executive Officer Mike Wilson said in the statement.

- Crude oil climbed more than 2 percent, leading a gain across commodities, on speculation that the economy and energy demand will recover as U.S. lawmakers hammer out a $15 billion bailout of automakers.

Wall Street Journal:

- Governments in the euro area failed to use the recent period of economic growth to clean up their public finances and many of them will post deficits between 5% and 7% of GDP next year, European Central Bank Executive Board member Juergen Stark wrote. Public debt may rise by between 10 and 20 percentage points, he said. European Union rules limit deficits to less than 3% of GDP and set out a target of 60% for the debt-to-GDP ratio.

- Is Walt Disney Co.(DIS) preparing a bid for Electronic Arts Inc.? Disney Chief Financial Officer Tom Staggs appeared to leave the door open Tuesday.

MarketWatch.com:

- For the holiday season through December 7, $15.63 billion has been spent online, essentially the same level compared to the corresponding days last year. During the first week since Cyber Monday (December 1 - December 7), sales totaled $4.45 billion, up 7 percent versus year ago.

Chicago Tribune:

- Barack Obama plans to reach out to Muslim world. Barack Obama says his presidency is an opportunity for the U.S. to renovate its relations with the Muslim world, starting the day of his inauguration and continuing with a speech he plans to deliver in an Islamic capital.

NY Post:

- Though we're only 10 days into the month, sources said a drop in the value of leveraged loans might further pinch Griffin's Chicago-based hedge fund, whose Kensington and Wellington flagships have shed $10 billion year-to-date - nearly half their value.

New York Magazine:

- The Catastrophe Capitalist. In the bleakest stock market of the past 70 years, when hedge funds and 401(k)s alike have cratered, few people are smiling. But short-seller Jim Chanos, whose fund is up 50%, is having the time of his life. He now manages some $7 billion. Trader Monthly estimated his paycheck in 2007 at over $300 million, and he’s on track to earn a similar payout this December. While many Wall Street refugees are liquidating their art collections and listing their trophy houses on the market, Chanos is buying. This summer, he closed on a new $20 million triplex on 75th Street, off Fifth Avenue. He sees China as the next domino to fall in the global meltdown. In recent months, Chanos has loaded up short positions on the infrastructure companies that have rushed to build China’s new highways, bridges, and tunnels. Now he is waiting for their share prices to tank.

MacDailyNews:

- Carton reports, "Overall, one-in-three respondents (33%) plan to buy an Apple laptop over the next 90 days - up 4-pts since September - while 27% plan to buy an Apple desktop, a 1-pt increase." "Moreover, the uptick for Apple is occurring in the context of a rapidly shrinking PC market," Carton reports. "Nonetheless it's not easy to increase market share right during the worst spending environment in years. Thanks to their refreshed line of MacBooks, Apple is doing just that."

Interfax:
- Russia’s inflation rate in the year through Dec. 8 reached 12.7%.

China Daily:

- People from China are visiting the US to buy houses because the mortgage crisis and recession has made real estate cheap, citing specialist Web site Soufun.com.

- China’s port traffic grew at the slowest pace in 10 years in November as the global economic recession curbed trade of consumer goods and commodities, citing the Ministry of Commerce. Traffic expanded .5% from a year earlier to 460 million tons last month. Overseas shipments declined, it said. Imported iron ore fell 21% to 30 million tons.