Today's Headlines

Bloomberg:

- The U.S. government’s Aaa credit rating is stable “even with a significant deterioration” in the nation’s debt, Moody’s Investors Service said, signaling confidence in a rebound from the recession. The U.S. rating is supported by “a diverse and resilient economy, strong government institutions, high per-capita income, and a central position in the global economy,” New York-based Moody’s said in a statement.

- The Standard & Poor’s 500 Index rebounded to close above its average price from the past month yesterday, signaling the steepest rally since the 1930s may resume, according to Schaeffer’s Investment Research. “It shows that the trend line that has held since the March low continues to be a support for the S&P 500,” said Richard Sparks, senior equity options trader at Schaeffer’s in Cincinnati. “The short-term uptrend is still in place.”

- The U.S. recession will probably end in the third quarter, a survey of business economists showed, even as rising joblessness indicates the recovery will be weaker than previously estimated. The world’s largest economy will begin to expand next quarter, according to 74 percent of economists in a National Association for Business Economics survey. Compared with NABE’s February poll, growth will be slower and unemployment will be higher in the second half of this year and through 2010.

- The S&P 500’s Index will rally through the start of November after the latest jump in US consumer confidence, if history is any guide. Between 1974 and 2004 the US Consumer Confidence Index rose at least 20% on seven occasions. Following all but one of those surges, the S&P 500 was higher six months later, according to Bloomberg and Bespoke Investment Group LLC. The sentiment index rose 35% to 54.9 in May, the Conference Board said yesterday.

- Exxon Mobil Corp.(XOM), the largest U.S. oil company, said shareholders rejected proposals to prohibit its chief executive officer from serving as chairman and to boost spending on renewable fuel sources. A resolution to separate the CEO and chairman’s roles was supported by 29.5 percent of votes cast at the company’s annual meeting today in Dallas, less than the 50 percent required to force directors to reconsider their opposition. Initiatives to develop low-carbon alternatives to gasoline, adopt pollution- reduction goals and allow non-binding shareholder votes on executive pay also failed.

- President Barack Obama’s plans to cap greenhouse-gas emissions and raise taxes on companies may cause factory owners to hold back on investments, delaying economic recovery, the top lobbyist for U.S. manufacturers said today.

- North Korea threatened a military response to South Korean participation in a U.S.-led program to seize weapons of mass destruction, and said it will no longer abide by the 1953 armistice that ended the Korean War. “The Korean People’s Army will not be bound to the Armistice Agreement any longer,” the official Korean Central News Agency said in a statement today. Any attempt to inspect North Korean vessels will be countered with “prompt and strong military strikes.” South Korea’s military said it will “deal sternly with any provocation” from the North.

- China’s provincial authorities may slow the central government’s attempts to consolidate the auto industry and create a giant automaker to rival Toyota Motor Corp. and Volkswagen AG in the world’s fastest growing car market.

- Malaysia’s economy contracted for the first time since 2001 last quarter as exports slumped, pushing the nation toward its first recession in a decade. Southeast Asia’s third-largest economy shrank 6.2 percent in the first quarter from a year earlier, after a 0.1 percent gain in the previous three months, the central bank said in a statement in Kuala Lumpur yesterday. Economists were expecting a 3.9 percent decline.

- OPEC doesn’t need to cut oil production more because there are signs of recovering demand, Saudi Arabian Oil Minister Ali al-Naimi said. OPEC should meet existing cutbacks to boost prices, Angola’s minister said. Asked whether prices will fall this quarter, al-Naimi replied: “Anything can happen. The reason we don’t want to do anything now is that supply and demand is so out of balance. Making another cut now would not help stabilize the market.” U.S. crude oil inventories rose to the highest level in two decades earlier this month, while the International Energy Agency says global demand is falling the most since 1981. OPEC members would like to see industry-held stockpiles in developed nations fall to the equivalent of about 52 to 54 days worth of consumption from about 62 days now, al-Naimi said. “Lagging quota compliance by the non-Gulf Arab states -- hovering around 50 percent - has hamstrung any real discussion of a potential cut to accelerate the drawdown of the glut,” according to a PFC Energy report provided today by analyst David Kirsch, who is in Vienna.

- Treasuries fell for a fourth day amid concern that record U.S. debt sales will overwhelm investor demand as the economy begins to show signs of stability. Government debt declined even as today’s auction of a record-tying $35 billion in five-year notes drew the most demand from a group of investors that includes foreign central banks in three months. The Treasury will sell $26 billion in seven-year notes tomorrow, the third auction this week. “We continue to see more supply,” said Brian Edmond, head of interest rates in New York at Cantor Fitzgerald LP, one of 16 primary dealers that trade with the Federal Reserve. “There are always concerns about auctions when we have one more to go. It’s tricky because it’s the last supply we have until month-end.”

Wall Street Journal:

- Some banks are prodding the government to let them use public money to help buy troubled assets from the banks themselves. Banking trade groups are lobbying the Federal Deposit Insurance Corp. for permission to bid on the same assets that the banks would put up for sale as part of the government's Public Private Investment Program. PPIP was hatched by the Obama administration as a way for banks to sell hard-to-value loans and securities to private investors, who would get financial aid as an enticement to help them unclog bank balance sheets.

- Wall Street burned thousands of investors with so-called structured products that were supposed to provide healthy profits and limit losses. Brokers, hoping investors' memories are short, are pushing these high-fee products again with safety as the big selling point. Overall, investors purchased $5.9 billion of structured products in last year's fourth quarter, down 75% from 2008's first quarter, according to data provider mtn-i. Sales have started to nudge upward, rising 7% compared to the fourth quarter, though they are still way down from a year ago.

- Commercial airlines are beginning to find new bank financing for aircraft, as credit markets have loosened up "even in the past three weeks," Walt Skowronski, president of Boeing Capital Corp., the finance unit of aircraft manufacturer Boeing Co. (BA), said in an interview Tuesday.

- Apple(AAPL) co-founder Steve Wozniak said Steve Jobs sounds “healthy, energetic” a month before the CEO is expected to return to the company. On the sidelines of the All Things D conference, Mr. Wozniak said Mr. Jobs “doesn’t sound like he’s sick,” nor did he seem to be in a health crisis.

CNBC:

- Big U.S. banks are “definitely out of the woods” after last year's credit crisis, but smaller community banks are still facing difficulty, banking analyst Dick Bove told CNBC. “The big banks do not need the FDIC guarantees any longer,” Bove said in a live interview. “The markets have changed dramatically in a positive fashion.”

NY Times:

- President Obama’s campaign to cut health costs by $2 trillion over the next decade, announced with fanfare two weeks ago, may have hit another snag: the nation’s antitrust laws. Antitrust lawyers say doctors, hospitals, insurance companies and drug makers will be running huge legal risks if they get together and agree on a strategy to hold down prices and reduce the growth of health spending. Robert F. Leibenluft, a former official at the Federal Trade Commission, said, “Any agreement among competitors with regard to prices or price increases — even if they set a maximum — would raise legal concerns.”

- LEVI’S is getting in the spirit of the season by dressing its storefront mannequins in white. In Levi’s-owned stores in New York, Los Angeles, Chicago and San Francisco, that means more than just marking the passing of Memorial Day, the traditional date to begin wearing white: in 20 stores, the mannequins’ white Levi’s jeans and shirts are adorned with White Knots, a symbol of solidarity with the same-sex marriage movement.

- Timothy F. Geithner, who before to his confirmation as Treasury secretary unintentionally charged that China was “manipulating” its currency, will make his first trip to that country and meet with its leaders next week amid rising concern about China’s willingness to continue buying United States debt.

MarketWatch:
- JPMorgan’s(JPM) Dimon also told investors later Wednesday morning that he expects his company to generate combined pre-provision net revenue of $80 billion for this year and next. J.P. Morgan Chase had come through the stress tests conducted by the Treasury Department and the Federal Reserve better than its big bank competitors, but its own revenue assumptions exceed the government's by $7.6 billion, according to presentation materials accompanying Dimon's remarks.

- General Motors Corp. said Wednesday its offer to swap about $27 billion in debt for equity has expired without enough takers, leaving the company few options ahead of a June 1 bankruptcy deadline.

- The U.S. dollar gained Wednesday, aided by a report that showed existing home sales rose more than expected last month. The U.S. currency was also up versus the euro after a European Central Bank policy maker indicated that the door remained open to a further cut in official interest rates, pressuring the region's shared currency.

TheStreet.com:

- Who Profits From Derivatives Changes?

Washington Post:

- The United States and Canada would own nearly three-quarters of a restructured General Motors, effectively nationalizing the border-straddling industrial colossus as part of an overhaul plan that would put most of the rest of the company in the hands of a union trust fund. Sources said the plan, a bankruptcy reorganization proposal being drafted by the Obama administration, would require the U.S. government to lend GM about $30 billion on top of the $19.4 billion already invested, giving it the majority stake. Canada is preparing to lend about $9 billion for a smaller interest, the sources said. These figures would total nearly $60 billion, making the GM bailout one of the largest corporate rescues since the current economic crisis began last year and one of the largest reorganizations in history. The sources cautioned that the negotiations are continuing and the totals could change.

LA Times:

- The Pentagon is prepared to leave fighting forces in Iraq for as long as a decade despite an agreement between the United States and Iraq that would bring all American troops home by 2012, the top U.S. Army officer said Tuesday.

The Detroit News:

- Nearly 50,000 jobs could be lost in the auto sector as a result of President Barack Obama's decision to approve fuel efficiency requirements for the nation's cars and trucks, according to government documents and a former presidential adviser. At the same time, the increased fuel rules could cause full-size truck sales to fall significantly without government help, a Wall Street analyst said.

WWDRetail:

- Retailers are keeping cool when it comes to markdown madness. Even this past Memorial Day weekend, the traditional trigger for major spring clearances, stores appeared to take a more measured approach to markdowns than that seen last holiday season and earlier this year. And it may stay that way for the summer. “Promotions through Memorial Day weekend appeared to be ‘deals not steals’ geared at specific categories,” Todd Slater, managing director and specialty retail, apparel and footwear analyst at Lazard Capital Markets, wrote in a research report Tuesday. “Fewer promotions indicate May is on track.”

Reuters:
- Intel’s(INTC) Stacy Smith, finance chief of the world's biggest chipmaker, said notebooks would be Intel's main growth driver for years to come, propelled by a continuing trend towards mobility. Morales reiterated that inventories, which had been built up by electronics makers and retailers who had underestimated the impact of the recession, were now seen in balance with demand. "From an inventory standpoint, we think it is really optimized for current levels of business," he said. "Supply-chain confidence is much higher."

- The European Union and Iraq expect to clinch a broad trade and political pact by the end of the year that will forge deeper energy ties between the two, sources said after negotiations on Wednesday. The 27-nation bloc wants to wean itself off its dependence on Russian oil and gas, and sees Iraq as a long-term alternative energy supplier.

- The global financial crisis has tarnished the dollar and will prompt reserve managers to diversify, but the U.S. currency will retain its dominant international role, a senior Chinese official said in remarks published on Wednesday.

Financial Times:
- City finance professionals are so worried about the future that nearly 30 per cent are planning to leave London, according to a survey by eFinancialCareers, a jobs website. Many have taken tangible steps towards moving, such as sending their CVs to overseas companies, and in some cases discussing internal transfers with their employers. Their most desirable destinations are Zurich and New York, followed by Singapore, Geneva and Hong Kong. Fifty-seven per cent believe more City redundancies are “probable” or “definite” in the next six months, the online survey of more than 400 London-based financial professionals found. It comes at a sensitive time for the City. The Centre for Economic and Business Research forecast that 29,000 wholesale finance jobs would be lost this year, after 28,000 were shed last year. That would leave 295,000 City finance jobs. Many observers believe employment in the City will recover gradually from next year and hope London can hang on to its position as a leading financial centre if the regulatory response to the crisis is not too heavy-handed. Of those surveyed, 45 per cent thought London’s leading position was under threat, while a third felt it was not. Increased taxes were seen as the main threat, followed by the potential impact of heavier European regulation. “Concerns about the relative competitiveness of the City in the face of impending changes to the regulatory framework coupled to upheavals in the tax system are having an immediate impact on the desirability of London as a location in which to work,” said John Benson, chief executive of eFinancialCareers.

The Guardian:

- IBM(IBM)earmarked $3 billion to finance so-called smart infrastructure projects in Europe and Asia likely to receive government stimulus support.

The move, announced on Wednesday, follows a similar announcement of $2 billion the computer consulting and technology company is making available in the United States as it seeks to win business for which government funds may not immediately be forthcoming.

Globe and Mail:

- A steady 15-year decline in the U.S. death rate from cancer translates to about 650,000 lives over that time, the American Cancer Society said on Wednesday. But cancer will kill 1,500 Americans every day on average – with 1.47 million cases diagnosed and 562,000 deaths in 2009, the group said in its annual report on cancer statistics. Cancer, which causes one in four deaths in the United States, is the No. 2 killer after heart disease.

Vedomosti:

- Moscow apartment prices have slumped by as much as 50% for elite building in rubles terms and by 33% for less expensive housing since autumn, citing research by Russia’s Regional Development Ministry.

Oriental Morning Post:

- China may spend $659 billion on renewable-energy projects over 10 years, 50% more than previously planned, citing an industry official. Wind-power capacity will rise to about 150,000 megawatts by 2020 from 10,000 megawatts in 2008. Solar-power capacity will rise to 20,000 megawatts from 100 megawatts and nuclear-power capacity will jump to 80,000 megawatts from 10,000 megawatts.