Late-Night Headlines
Bloomberg:
Highbridge Capital Management LLC, the $20 billion investment firm run by Glenn Dubin and Henry Swieca, is limiting client withdrawal requests to avoid selling assets at distressed prices, according to a person familiar with the matter. Investors who submit withdrawal requests to the $1.9 billion Asia Opportunities Fund this quarter will get half their money by the end of January, said the person, who asked not to be identified because the information is private. The fund, which lost 32 percent this year through October, will return the rest within 12 to 18 months.
- Investment banks may reduce compensation for commodity traders as much as 75 percent as prices of oil and copper fall the most in at least two decades. The best paid metals and energy traders may earn $1 million to $1.5 million in salary, bonus and related pay this year, down from $5 million to $8 million in 2007, according to estimates by London- based recruitment company Kennedy Associates. Bonuses at Goldman Sachs Group Inc. and Morgan Stanley, the biggest oil-trading banks on Wall Street, may fall 60 percent, according to Armstrong International, another London-based recruiter. Banks and hedge funds that piled into raw materials as crude, copper and gold rallied for seven straight years, cut jobs during the second half as the Reuters/Jefferies CRB Index tracking prices of grains, fuels and metals declined, heading for its biggest annual drop ever. Goldman Sachs dismissed 10 percent of its employees in November, including cuts in commodities. Zurich-based UBS AG, Switzerland’s biggest bank, said in October it will end over-the-counter trading in industrial metals and energy. “The manic scramble in commodities in 2007 and early 2008 has calmed down,” said Shaun Springer, 52, chief executive officer of Napier Scott Executive Search Ltd., which has recruited for banks since 1992. “It has moved from a frenzy to nigh on dormant.” Banks, brokerages, trading companies and hedge funds have about 5,000 employees in commodities and energy, according to Kennedy Associates.
- The Markit iTraxx Japan index of credit-default swaps rose 42 basis points to 377 as of 9:29 a.m. in Tokyo, according to Credit Suisse Group AG. The iTraxx Australia index advanced 35 basis points to 375 in Sydney, Citigroup Inc. prices show.
- California Governor Arnold Schwarzenegger, saying his state is going broke, declared a fiscal emergency and ordered the incoming class of lawmakers into a special session to fix a widening $11 billion deficit.
- Palm Inc.(PALM), the maker of the Treo and Centro mobile phones, missed analysts’ sales estimates and announced plans to cut jobs after the economic slump curbed consumer spending on handsets. Sales in the quarter ended Nov. 28 dropped as low as $190 million, Palm said today in a statement. That trailed the $331.8 average of estimates compiled by Bloomberg.
- Platinum is trading at its lowest price relative to gold in about 11 years, signaling investors should buy the silver metal and sell the yellow one, according to Dresdner Bank AG. “It is a very rare event for platinum to trade this close to or below gold,” Bayram Dincer, and analyst at Dresdner in Zurich “You surely have to buy platinum and sell gold. The downside risk is very limited.”
- Australia’s central bank cut its benchmark interest-rate by one percentage point, extending the biggest round of reductions since a recession in 1991. Governor Glenn Stevens lowered the overnight cash rate target to a six-year low of 4.25 percent in Melbourne today, the fourth reduction in as many months.
Wall Street Journal:
- Ford Motor Co.(F) plans to tell Congress it is retooling itself to build small fuel-efficient cars and break from the past strategy of focusing mainly on large pick up trucks and sport-utility vehicles, and will cut the compensation package of Chief Executive Alan Mulally, as part of its bid to win support for a federal bail out of the Big Three auto makers, a person familiar with the matter said.
- As many of the biggest U.S. banks continue to pare back their mortgage lending, some financial institutions see global financial turmoil as an opportunity to pick up market share.
- Russian Actions Provoked War, Georgia President Writes
- China Fears Restive Migrants As Jobs Disappear in Cities
- Georgia voters on Tuesday are set to resolve one of the final elections of the 2008 campaign, but some of the most active groups seeking to shape the outcome of the Senate race here won't be heading to the polls. With Democrats inching toward a 60-seat, filibuster-proof majority in the Senate, dozens of out-of-state interest groups on both sides of the aisle have flooded the state with political advertisements and manpower in an effort to influence the race.
MarketWatch.com: Treasury Secretary Henry Paulson indicated Monday that he might support a new approach to slowing foreclosures, but he didn't go so far as to back a proposal introduced last month by Federal Deposit Insurance Corp. chief Sheila Bair.
Bair is seeking $24.4 billion of the federal government's $700 billion Troubled Asset Relief Program to modify mortgages. She expects such a package will be approved by the Obama administration and could avert 1.5 million foreclosures while encouraging more lending.
- UK’s woes, German caution expose Europe’s age-old leadership gap
NY Times: As policy makers push banks to help struggling homeowners, some angry investors are pushing back. On Monday, a hedge fund sued the Countrywide Financial Corporation, the giant mortgage lender, demanding that Countrywide compensate holders of some securities backed by mortgages if the lender changes the terms of the loans. The fund, Greenwich Financial Services, said it and other investors stood to lose money if Countrywide, now part of Bank of America, modified loans under a settlement that it reached with 11 state attorneys general in October.
- In the much praised career of Eric H. Holder Jr., President-elect Barack Obama’s choice to be attorney general, there is one notable blemish: Mr. Holder’s complicated role in the 2001 pardon of Marc Rich, a billionaire financier who had fled the country rather than face federal tax evasion charges. Mr. Holder’s supporters portray him as having been a relatively uninvolved bystander caught in a Clinton-era controversy, the remarkable granting of a last-minute pardon by President Bill Clinton to a fugitive from justice. But interviews and an examination of Congressional records show that Mr. Holder, who at the time of the pardon was the deputy attorney general, was more deeply involved in the Rich pardon than his supporters acknowledge.
CNNMoney.com: The United States warned the Indian government about a potential maritime attack against Mumbai at least a month before last week's massacre left 179 dead, a U.S. counterterrorism official told CNN.
Philadelphia Business Journal:
- Three New Jersey assemblymen announced the introduction of legislation Monday that would prohibit the state from doing business with companies that move work from the United States to other countries. The bill would also make such firms ineligible for state grants and would bar state investment in them.
USA Today.com:
- By 10 a.m. ET Monday, online visits to Web tracker Akamai Technologies' approximately 280 retail customer sites topped last Cyber Monday's peak of 4.6 million visitors per minute. By 3 p.m. Akamai's global retail customers — which include Best Buy and Victoria's Secret — were experiencing 6.7 million online visitors per minute — the most Akamai has seen since it started collecting the data in 2005. David Fry, whose e-commerce company operates the sites for several major retail chains, says that "things are better than expected." His clients reported traffic increases of 30% to 60% compared with last year and revenue up 10% to 20%.
Reuters:
- MySpace, the online social network owned by News Corp (NWS/A), can grow advertising revenue in 2009, its chief executive said on Monday, even as the economic crisis erodes big media companies' bottom lines. "Our revenue and profits are significant and they continue to grow in spite of the poor economy," MySpace CEO Chris DeWolfe told the Reuters Media Summit.
- European carmakers must cut global-warming gases from new vehicles by 18 percent within the next six years, the EU agreed on Monday, after a long battle between environmentalists and an industry facing tough times.
- Amazon.com Inc (AMZN) may outperform other Web retailers this holiday season as its scale, flexibility and popularity help it stand out in an online price war.
Financial Times:
Homes and businesses will have pay higher energy bills if Britain is to meet the estimated £15bn-a-year cost of its climate change commitments, the government was told on Monday. Household electricity costs could go up more than 25 per cent by 2020 if greenhouse gas emissions are to be cut by a third from 1990 levels, said Lord Turner, chairman of the climate change committee. Lord Turner warned that the extra costs for the new technologies needed could push 1.7m people into fuel poverty unless the government took steps, such as "social tariffs" on fuel use, to protect low-income groups. But he said: "The cost of not achieving the reductions . . . will be far greater [because of the threat posed by global warming]." The proposed changes mean that, by the end of the next decade, most people buying new cars can expect them to be electric. Inefficient electrical appliances will be phased out and new houses will be "zero-carbon". In addition, thousands of new onshore wind turbines and a massive expansion of offshore wind farms will be required and new nuclear power stations will be built. Lord Turner talked of the almost complete "decarbonisation" of the power sector by 2030, achieved through renewables and carbon capture and storage. Many businesses would face higher costs from having to buy carbon permits, predicted to reach £40 a ton by 2020, from about £14 today.
- General Electric(GE) aims to shore up confidence in its financial arm on Tuesday during a conference call with investors, some of whom fear the forum might also be used to temper expectations for next year's earnings. The conglomerate's shares fell 9.7 per cent on Monday amid concern that the overview, which was announced less than a week ago, will suggest GE Capital will become a bigger-than-expected drag on overall results
TimesOnline: Tudor restructuring shocks hedge fund market
China Daily:
- China exported 1,036 tons of dairy products in October, 92% lower than a year earlier, because of the tainted-milk scandal, citing the General Administration of Customs.
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Afternoon:
- Total Vehicle Sales for November are estimated to fall to 10.5M versus 10.6M in October.
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BOTTOM LINE: Asian indices are sharply lower, weighed down by commodity and automaker stocks in the region. I expect US
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