Thursday, June 18, 2009

Today's Headlines


- Fixed U.S. mortgage rates fell for the first time in four weeks, easing concern higher borrowing costs would discourage refinancing and deepen the housing slump.The average 30-year rate dropped to 5.38 percent from 5.59 percent a week earlier, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement.

- Real yields are the highest since 1994 after a government report showed consumer prices over the last 12 months fell the most in 60 years. The real yield approached 5% yesterday, the most since it was above 5% in December 1994, signaling bond investors concerned about inflation have pushed yields too high too quickly, according to Michael Shaoul, CEO at NY-based institutional brokerage Oscar Gruss & Son Inc. “We continue to believe that long-term Treasury yields have marked their high point for the current phase,” he said.

- North Korea may have deployed more than 600 Scud and other short-range missile aimed at South Korea and up to 320 medium-range Rodong missiles targeting Japan, the International Crisis Group said in a report today. The communist nation, which tested its second nuclear bomb last month, has between six and 12 nuclear weapons, “or at least explosive devices,” the Brussels-based organization said in an e-mailed statement today.

- India’s wholesale prices fell for the first time in three decades, giving the government scope to spend more in next month’s budget to spur economic growth. The benchmark wholesale-price inflation index declined 1.61 percent in the week to June 6 from a year earlier after gaining 0.13 percent in the previous week, the government said today. That’s the first drop since December 1978, according to the central bank’s monthly data.

- WebMD Health Corp.(WBMD), a provider of online health information, agreed to buy parent Hlth Corp.(HLTH) in an all-stock deal valued at $1.29 billion. It’s the second time the interlocked companies have tried to merge in 16 months.

- Apple Inc.(AAPL) may sell half a million iPhone 3G S models in their first weekend on sale, half as many as the previous version, because the device debuts in fewer countries, according to Piper Jaffray & Co.

- Treasuries fell for a second day as reports showed the deepest recession in 50 years may be ending and the U.S. said note sales will increase to a record $104 billion next week. Ten-year yields climbed from a two-week low amid concern President Barack Obama’s record borrowing will overwhelm demand as manufacturing in the Philadelphia region contracted in June at the slowest pace in nine months and U.S. leading indicators rose more than forecast in May. The difference in yield between 2- and 10-year notes widened to 2.56 percentage points, the most in over a week.

- The U.S. House rejected by a single vote today a Republican proposal to keep President Barack Obama from closing the prison for suspected terrorists at Guantanamo Bay, Cuba. Lawmakers voted 213-212 against an amendment by Representative Jerry Lewis of California to ban the Department of Justice from spending any money next year to implement Obama’s Jan. 22 order to close the prison. The proposal, which came as lawmakers debated the Justice Department’s budget, split Democrats, with dozens siding with Republicans.

- New York City’s unemployment rose a full percentage point to 9 percent last month, the second- biggest jump in the past 33 years after February’s record, according to state Labor Department data. The jobless rate in the most populous U.S. city reached the highest since October 1997, while unemployment in New York state overall rose to a 16-year high of 8.2 percent in May, the department said today.

- The euro tumbled against the dollar after failing to strengthen beyond $1.40, prompting traders to close out bets that the common European currency would appreciate further. “We spent all morning trying to break $1.40 and got rejected again,” said Brian Dolan, chief currency strategist at, a unit of online currency trading firm Gain Capital in Bedminster, New Jersey. “We are testing $1.3885, the trend line now. If breaks, we have more room to go.”

Wall Street Journal:

- The Obama administration's proposed regulatory overhaul could force big changes at financial firms. But one large lender, GE Capital, may find them especially painful. Though General Electric's lending arm has $613 billion in assets, it isn't a bank-holding company like, say, J.P. Morgan Chase. If the administration's changes become law, GE Capital, because of its size and reach, would likely be classified as systemically important. Such firms face a stricter regulatory regime. For GE Capital, the adjustment could be tricky. Perhaps the biggest potential headache for GE is a demand that regulatory supervision should cover any systemically important firm's parent company and other subsidiaries. Under the proposed rules, these firms also would face restrictions on "nonfinancial activity." Since GE would be unlikely to countenance limits on its industrial businesses, it might become necessary to split off GE Capital.

- The Guardian Council, one of Iran's top oversight bodies, said Thursday it would invite the country's three unsuccessful presidential challengers to a meeting, while protests again filled the streets of the capital. The move by the council was the latest in a series of unprecedented concessions to the losers in June 12 elections, which officials said were won in a landslide by President Mahmoud Ahmadinejad. Mir Hossein Mousavi and two other presidential challengers have alleged vote rigging, a charge Mr. Ahmadinejad has denied.

- Back before recorded history, in 1965, Congress erected the nation's first two monuments to health-care "reform," Medicaid and Medicare. Medicaid was described at the time as a modest solution to the problem of health care for the poor. It would be run by the states and "monitored" by the federal government. The reform known as Medicaid is worth our attention now because Mr. Obama is more or less demanding that the nation accept another reform, his "optional" federalized health insurance program. He suggested several times before the AMA that opposition to it will consist of "scare tactics" and "fear mongering." Whatever Medicaid's merits, this federal health-care program more than any other factor has put California and New York on the brink of fiscal catastrophe. I'd even call it scary.

NY Times:

- North Korea may fire a long-range ballistic missile toward Hawaii in early July, a Japanese newspaper said Thursday, amid escalating tensions between the communist country and the United States over Pyongyang's nuclear and missile programs. The missile, believed to be a long-range Taepodong-2 with a range of up to 4,000 miles (6,500 kilometers), would be launched from North Korea's Dongchang-ni site on the northwestern coast, said the Yomiuri daily, Japan's top-selling newspaper. The report cited an analysis by the Japanese Defense Ministry and intelligence gathered by U.S. reconnaissance satellites. The Yomiuri said the Taepodong-2 could fly over Japan and toward Hawaii, but that it would not be able to hit the main islands of Hawaii, which lie about 4,500 miles (7,200 kilometers) from the Korean peninsula. The missile launch could come between July 4 and 8, the paper said. It noted that North Korea had fired its first Taepodong-2 missile on July 4, 2006. Also, July 8 is the anniversary of the 1994 death of North Korea founder Kim Il Sung.

Fox News:

- The U.S. military is tracking a flagged North Korean ship suspected of proliferating weapons material in violation of a U.N. Security Council resolution passed last Friday, FOX News has learned. The ship, Kang Nam, left a port in North Korea Wednesday and could be carrying weaponry, missile parts or nuclear materials. The U.S. military has been tracking it since its departure. "It is believed to be 'of interest,'" a senior U.S. official told FOX News.

NY Post:

- Bailed-out Bank of America(BAC) has been doling out millions in bonuses in an effort to lure talent and keep investment bankers who management views as vital, sources tell The Post. Among those who are said to have received payouts are two former Merrill Lynch bankers, Fares Noujaim, who was recently appointed as BofA's vice chairman of investment banking, and Harry McMahon, a well-connected West Coast-based banker. Both were offered guarantees not to leave the firm. Noujaim, a former Bear Stearns banker who joined Merrill last year, is said to have received roughly $15 million over two years. Sources say Noujaim -- a well-regarded banker focusing on the Middle East -- was offered a vice-chairman role, and may have been offered at least $5 million more to stay. The guarantees being shelled out by the embattled bank run by CEO Ken Lewis are raising eyebrows on Wall Street because BofA has taken $45 billion in capital from the Troubled Asset Relief Program and hasn't been allowed to refund that money.

Miami Herald:

- For the first time in years, South Florida's international trade numbers are declining. The world economic crisis has reduced trade in the Miami Customs District by 12.8 percent -- more than $3.6 billion -- during the first four months of this year, said Ken Roberts, president of WorldCity, a Miami-based media company that tracks imports and exports. During the first four months of last year, South Florida trade increased by 14.6 percent. For full-year 2008, trade grew by more than 14 percent to a record high of $90.2 billion. ''The decline in trade has accelerated since the beginning of the year,'' Roberts said Wednesday at a WorldCity conference in Miami. ``Every year, trade has gone up. So when it goes down, it's startling.'' As bad as the Miami District figures were, however, trade for the entire country fell by even more -- about 28 percent, Roberts said. ``U.S. trade this year has dropped to the 2004 level.''


- The Senate has unanimously passed a resolution apologizing for slavery and racial segregation and sent the measure to the House.


- President Barack Obama’s long-awaited financial regulation reform seems to have let hedge funds off relatively easy, for the time being. While other jurisdictions, notably the European Union, consider substantially stricter measures to limit hedge funds’ activities, the Obama plan doesn’t have any specific restrictions at all.

USA Today:

- The United States is closer to no longer being a United Nations deadbeat. The House of Representatives passed a war-funding bill Tuesday that includes about $900 million for U.N. peacekeeping missions and related activities. That funding includes $175 million in arrears accrued since fiscal year 2005, according to the United Nations Foundation, a charitable group that promotes U.N. causes. The United States is the United Nations' biggest donor, but Congress capped payments for peacekeeping and didn't pay its bill in full. "This is a strong indication of the Obama administration's commitment to working with the U.N.," U.N. spokeswoman Michele Montas said. For years, Republican conservatives such as North Carolina Sen. Jesse Helms urged withholding payments to prompt an overhaul of the way the bureaucratic United Nations does business.

- Loomis Sayles' Dan Fuss said on Thursday the U.S. recession is over and the United States is set for a prolonged recovery that may take until 2011 to fully blossom.

Globe and Mail:

- One of the biggest threats to Potash Corp. of Saskatchewan's (POT) profit is stacked in the back room of the All Points Co-Op in rural Nebraska. That's where manager Gregg Anderson piles the bags and bags of fertilizer he can't sell. "We bought the stuff when it was at its peak last year," says Mr. Anderson, who manages the co-op in Gothenburg, about 400 kilometers west of Omaha. "Now we're stuck with it. I offer it to customers, but they're digging in their heels and saying they aren't going to pay that kind of price. So they go without." Farmers, it appears, are proving to be more price sensitive than people thought, and are gambling that fertilizer sellers like Mr. Anderson will lower their prices next year. That, in turn, is having an effect in places like Saskatoon, where Potash Corp. announced yet another cut to production, an 800,000-tonne curtailment that brings its total reductions to 5.5 million tons since August. The clog in the supply chain has pushed global stockpiles of fertilizer 100 per cent above their five-year average, Goldman Sachs estimates.

Maeil Business Newspaper:

- Samsung Electronics and Hynix Semiconductor Inc. will raise prices for dynamic random access memory, or DRAM, later this month, citing a person in the semiconductor industry.

China Finance:

- China may increase its holdings of US Treasuries in the “near” term should the dollar remain stable, citing Dai Zianglong, chairman of China’s national pension fund.

Emirates Business 24/7:
- Emirates Steel Industries plans to boost annual steel-rolling capacity by 50%. Capacity will be increased to 6.5 million tons by 2014.

- Foreign Minister Avigdor Lieberman told U.S. Secretary of State Hillary Clinton on Wednesday that Israel could not accept the Obama administration's demand to "completely" halt activity in West Bank settlements. "We have no intention to change the demographic balance in Judea and Samaria," Lieberman said during his talks with the secretary of state in Washington. "Everywhere people are born, people die, and we cannot accept a vision of stopping completely the settlements. We have to keep the natural growth." Still, he said, Israel "ready for direct negotiations with the Palestinians."

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