Weekend Headlines
Bloomberg:
- Legislation tightening oversight of the $592 trillion over-the-counter derivatives market would give regulators authority to ban so-called abusive swaps. The Securities and Exchange Commission and Commodity Futures Trading Commission would get the power to “prohibit transactions in any swap” that regulators determine “would be detrimental to the stability of a financial market or of participants in a financial market,” according to a 187-page draft measure released yesterday by House Financial Services Committee Chairman Barney Frank. Opaque financial products, including some derivatives, have contributed to almost $1.6 trillion in writedowns and losses at the world’s biggest banks, brokers and insurers since the start of 2007, according to data compiled by Bloomberg.
- The dollar strengthened the most against the euro in four months as public officials from
- The International Monetary Fund said central banks in Europe should keep interest rates low and possibly extend non-standard stimulus measures because the region’s economic recovery is likely to be “slow and fragile.” “Monetary policy will need to remain supportive for the time being and keep all options open,” the IMF said in its economic outlook for Europe published in
- Eight U.S. soldiers and two Afghan troops died in a gun battle with militants in eastern Afghanistan, according to the coalition force. Militants from a nearby mosque and village attacked two outposts in
- Federal Deposit Insurance Corp. Chairman Sheila Bair said regulators should consider making bank holding companies and secured creditors carry more of the cost of bank failures. “This could involve potentially limiting their claims to no more than, say, 80 percent of their secured credits,” Bair said in a speech to a banking conference in
- Investors are snapping up commodities at the fastest pace in 18 months just as stockpiles of raw materials rise and shipping rates plunged, signaling that prices may be poised to fall. Open interest, or contracts yet to be closed, liquidated or delivered, rose 6.6% in the third quarter for the 20 most-traded
- President Barack Obama should consider legislation to limit greenhouse gas emissions as he looks for new ways to speed the U.S. economy’s recovery from the recession, said Senator Barbara Boxer, a California Democrat. Boxer and Senator John Kerry, a Massachusetts Democrat, last week unveiled a “cap-and-trade” proposal to cut
- The federal government should not consider a new stimulus package, even with U.S. unemployment likely “to penetrate the 10 percent barrier and stay there for a while,” former Federal Reserve Chairman Alan Greenspan said. “The focus has got to be on trying to get the economy going, but you also have to be careful that in trying to do too much you can actually be counterproductive,” Greenspan said on ABC’s “This Week” program. Greenspan appeared on ABC two days after the Labor Department reported an unemployment rate of 9.8 percent, the highest since 1983. Third-quarter economic growth is likely to be 3 percent and “possibly even higher,” Greenspan said today on ABC. Only 40 percent of the $787 billion economic stimulus package approved in February is “in place,” he said. “It’s far better to wait and see how this momentum that’s already begun to develop in the economy carries forward,” he said. While last week’s unemployment report was “pretty awful no matter how you looked at it,” the economy is recovering and it would be “premature” for Obama and Congress to enact another stimulus package, Greenspan said. “We are in a recovery and I think it would be a mistake to say the September (unemployment) numbers alter that significantly,” he said. The “silver lining” to the unemployment numbers is that firms have cut jobs expecting “the economy would go down far more sharply than it in fact did” after the “whole financial system imploded” following the September 2008 bankruptcy of Lehman Brothers Holdings Inc., Greenspan said.
- Hand Over Your Job If You Want to Dream in Green.
Wall Street Journal:
- A deal to merge General Electric Co.'s(GE) NBC Universal into a new joint venture with Comcast Corp.'s(CMCSA) cable networks might solve pressing needs for both companies. But a number of financial and legal issues still hang over the talks, which are still at an early stage. While both sides hope to complete a deal, people familiar with the matter give the transaction "50-50" odds of coming together. In the deal under discussion, Comcast would contribute cash and its cable networks to NBC Universal for a 51% stake in the expanded company. NBC Universal would borrow money that would be turned over to GE, along with the cash contribution, according to the person familiar with the matter. GE would use that cash to buy out a 20% stake in NBC Universal held by Vivendi SA and then pocket the remainder, the person said. In the end, GE would have a 49% stake. The chief issue for all parties remains valuation.
- White House officials and Democratic leaders in Congress on Friday said they were weighing extending key elements of the economic-stimulus program as the nation grapples with a deteriorating job market. Obama administration economists said they would like the enhanced unemployment-insurance program to extend beyond its Dec. 31 expiration date. They also want to maintain a program that offers tax credits to pay 65% of the cost of health insurance policies under the COBRA program, which allows laid-off workers to purchase the health plans they had through their previous employer. White House officials said they also are examining whether to extend a soon-to-expire tax credit for first-time homebuyers, but that provision faces a stiffer headwind. "The question is, does it need to be extended or would fiscal considerations lead us to not do so," one administration official said. "We've got a budget deficit to think about, too." Administration officials are reluctant to call these possible moves a second stimulus package because about 60% of the initial $787 billion stimulus package remains unspent and not contractually obligated to projects. They are focused on what they call the "safety net" parts of the original package, which expire Dec. 31. But since the extensions would require congressional action, they would likely reopen a debate about the fast-rising federal deficit and the effectiveness to date of the stimulus package. For the fiscal year that ended Wednesday, the government is expected to post a record $1.56 trillion budget deficit. That rise is feeding criticism of the administration's spending, and sowing some worry among officials about spending.
- The U.S. government is expecting delivery starting this week of enough doses of the new swine-flu vaccine for nearly every American who wants it, but state and local budget cuts coupled with limits on who can administer the vaccine could hamstring the campaign. A second wave of the new flu, known as the 2009 H1N1 virus, is widespread across more than half of
- In recent years, many Americans have had cause to wonder whether decisions made at EPA were guided by science and the law, or whether those principles had been trumped by politics," declared Lisa Jackson in San Francisco last week. The Environmental Protection Agency chief can't stop kicking the Bush Administration, but the irony is that the Obama EPA is far more "political" than the Bush team ever was. How else to explain the coordinated release on Wednesday of the EPA's new rules that make carbon a dangerous pollutant and John Kerry's cap-and-trade bill? Ms. Jackson is issuing a political ultimatum to business, as well as to Midwestern and rural Democrats: Support the Kerry-Obama climate tax agenda—or we'll punish your utilities and consumers without your vote. The EPA has now formally made an "endangerment finding" on CO2, which will impose the command-and-control regulations of the Clean Air Act across the entire economy. Because this law was never written to apply to carbon, the costs will far exceed those of a straight carbon tax or even cap and trade—though judging by the bills Democrats are stitching together, perhaps not by much. In any case, the point of this reckless "endangerment" is to force industry and politicians wary of raising taxes to concede, lest companies have to endure even worse economic and bureaucratic destruction from the EPA.
- Tensions over
- After a six-year building frenzy that transformed this city, casino companies are shifting strategies dramatically toward slower growth, paying down debt and cutting back on spending. Many casino executives don't expect to break ground on another major building project in
- Chávez imports Ahmadinejad's ideology to Latin America.
Barron’s:
- Steris(STE) is cleaning up, as demand for sterilization equipment grows.
MarketWatch.com:
- Prince Alwaleed bin Talal, a major Citigroup Inc.(C) investor, is urging the U.S. government to sell its stake in the bank as soon as this year to boost investor confidence, Emerging Markets magazine reported, according to Reuters. "The earlier the U.S. government exits its investments in those companies, the better," as long as the government's move isn't done in a way that hurts the prices of U.S. banking stocks, the Saudi billionaire was quoted as saying in an interview published Sunday, according to Reuters. "We need to give confidence back to the shareholders and investors that these companies are moving along without government support." The
CNBC.com:
- Three more large investment firms have raised sufficient capital to participate in the joint partnership with the government to purchase toxic assets from banks. The Treasury Department said Alliance Bernstein and BlackRock, both headquartered in
NY Times:
- Senior staff members of the United Nations nuclear agency have concluded in a confidential analysis that Iran has acquired “sufficient information to be able to design and produce a workable” atom bomb. The report by experts in the International Atomic Energy Agency stresses in its introduction that its conclusions are tentative and subject to further confirmation of the evidence, which it says came from intelligence agencies and its own investigations. But the report’s conclusions, described by senior European officials, go well beyond the public positions taken by several governments, including the
The Business Insider:
- Letterman Backlash: Will CBS Have To Fire Him?
Business Week:
- CEO Eric Schmidt discusses how Google(GOOG) is handling challenges from Microsoft and upstarts Twitter and Facebook—and why search remains its priority.
- Is it possible to use one embattled politician to save another? That’s the implausible but intriguing scenario that New York Democrats are considering as they try to persuade David Paterson to withdraw from next year's governor's race. The turmoil engulfing one of Paterson's oldest friends, Representative Charles Rangel, could point the way to a resolution. The trickiest part about pushing Paterson out of Albany has been finding the proper cushion to soften the fall. An ambassadorship? That would require U.S. Senate confirmation and the intense scrutiny that comes with it. A post in the Obama administration? It's possible, but less likely after the governor's response to the president's request that he step down. With the options appearing limited, Democrats are quietly floating an alternative exit strategy. Rangel, one of the highest-ranking Democrats in the House, has been mired in multiple tax scandals and legislative setbacks that have weakened his standing. The 79-year-old has vigorously fended off Republican attempts to strip him of his chairmanship of the
Politico:
- What was he thinking? Monday-morning Quarterbacking became
Rasmussen Reports:
- Sixty-three percent (63%) of voters nationwide say guaranteeing that no one is forced to change their health insurance coverage is a higher priority than giving consumers the choice of a "public option" health insurance company. The latest Rasmussen Reports national telephone survey finds that just 29% take the opposite view. They say it’s more important to give people a government-sponsored non-profit health insurance option.
InvestmentNews:
- The Achilles heel of hedge funds — tax inefficiency — could soon send investors limping toward other options. “If investors feel they are getting less after-tax income, they will find other alternative investments,” said Ken Rubenstein, senior partner at the law firm Rubenstein & Rubenstein LLP, which specializes in hedge funds. If tax rates rise, as most ob-servers expect given the ballooning federal deficit, hedge funds may find themselves in a structural bind should investors become more conscious of after-tax returns. “The nature of what hedge funds do doesn't lead to a lot of tax efficiency,” said Jeffrey Mindlin, chief operating officer at Advanced Equities Asset Management Inc. Hedge funds are characterized by high portfolio turnover, which leads to lots of short-term gains taxed at ordinary income rates. But managing a portfolio to avoid short-term gains can adversely affect performance and hedge fund manager income.
- A new report from a national coalition of mayors urges President Obama to adopt dozens of reforms to help curb gun violence, including steps to crack down on problems at gun shows and the creation of a federal interstate firearms trafficking unit. The "Blueprint for Federal Action on Illegal Guns," a copy of which was obtained by The Washington Post, presents 40 recommendations that "would dramatically improve law enforcement's ability to keep guns out of the hands of criminals -- and, in doing so, save innocent lives." The strategies outlined by the Mayors Against Illegal Guns, a bipartisan group of about 450 mayors nationwide, focus on the federal Bureau of Alcohol, Tobacco, Firearms and Explosives.
- There was once a swagger to the scotch-swilling, insurgent-fighting Raed Sabah. He was known as Sheik Raed to his sycophants. Tribesmen who relied on his largess called him the same. So did his fighters, who joined the Americans and helped crush the insurgency in Anbar province. Sabah still likes his scotch -- Johnnie Walker Black, with Red Bull on the rocks -- but these days, as the Americans withdraw from western
AP:
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Reuters:
- The head of the U.S. Federal Deposit Insurance Corp. said on Sunday that she wanted to end the "too big to fail" doctrine and shrink the shadow banking system that operates outside the reach of regulators. FDIC Chairman Sheila Bair, speaking to the
- If the stock market bulls are right, U.S. third-quarter corporate earnings could show revenue kicked into gear after some disappointing numbers last quarter, sustaining the rally. As the reporting period approaches, analysts said economic growth in the quarter could lift companies' sales in contrast to the previous quarter, when revenue lagged bottom-line earnings. "The key is revenue. I think (it) will surprise. It will grow from the second quarter along with GDP, and I think that's what investors are going to focus on," said Jeff Kleintop, chief market strategist at LPL Financial in
- NetApp Inc's (NTAP) chief executive told Barron's in an interview that selling the data storage company might make sense at some point in the future. "This is
Financial Times:
- Goldman Sachs(GS) stands to receive a payment of $1bn – while US taxpayers would lose $2.3bn – if embattled commercial lender CIT files for Chapter 11 bankruptcy protection, people familiar with the matter said. The payment stems from the structure of a $3bn rescue finance package that Goldman extended to CIT on June 6 2008, about five months before the Treasury bought $2.3bn in CIT preferred shares to prop it up at the height of the crisis. The potential loss for taxpayers would be the biggest to crystalize so far from the government’s capital injection plan for banks. The agreement with Goldman states that if CIT defaults or goes bankrupt, it “would be required to pay a make-whole amount” that totals $1bn, the people familiar with the matter said. In the event of bankruptcy, Goldman would reap more than $1bn because it also holds credit insurance that would be paid off.
- Lakshmi Mittal is close to pulling out of a $20bn plan to build two large steel plants in India – the centerpiece of efforts by one of the world’s most prominent industrialists to expand in the country of his birth. Delays in persuading farmers and others to sell the land he needs for the developments in the states of Jharkand and Orissa are “unacceptable”, the chairman and main owner of the ArcelorMittal steel company told the FT. Although Mr Mittal said he was still committed to building at least one steel plant in India, abandoning his plan to have two sites producing between them about 24m tons of steel a year by around 2015 would be a big blow.
- A sweeping process of democratization is opening up the investment landscape to an unprecedented array of participants. Hitherto secretive hedge fund managers are racing to launch vehicles aimed at the smallest of retail investors, while once hidebound traditional asset managers are rolling out complex absolute return and equity long/short structures to fight for a share of potentially lucrative markets.
TimesOnline:
- Iran has the know-how to produce a nuclear bomb and may already have tested a detonation system small enough to fit into the warhead of a medium-range missile, according to confidential papers. The “secret annexe” to this year’s International Atomic Energy Agency (IAEA) report on
Automobilwoche:
- Volkswagen AG, Europe’s biggest carmaker, expect German car sales to contract by almost 20% next year after the German “cash-for-clunkers” program expired, citing an interview with Christian Klingler, sales chief for the VW brand.
Yonhap News:
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Weekend Recommendations
Barron's:
- Made positive comments on (TGT), (JNJ), (DIS), (BTU), (AVII) and (AGO).
Citigroup:
- Upgraded (PNW) to Buy, target $35, added to Top Picks Live List.
- Reiterated Buy on (DOW), target $29.
- Reiterated Buy on (NLC), target $24, added to Top Picks Live List.
- Upgraded (CVG) to Buy, target $12.
- Reiterated Buy on (NVDA), target $19.
Merrill Lynch:
- Raised Toshiba to Buy.
Night Trading
Asian indices are -.75% to +.25% on avg.
S&P 500 futures +.33%.
NASDAQ 100 futures +.38%.
Morning Preview
BNO Breaking Global News of Note
Yahoo Most Popular Biz Stories
MarketWatch Pre-market Commentary
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Stock Quote/Chart
WSJ Intl Markets Performance
Commodity Futures
IBD New America
Economic Preview/Calendar
Earnings Calendar
Who’s Speaking?
Upgrades/Downgrades
Politico Headlines
Rasmussen Reports Polling
Earnings of Note
Company/Estimate
- (RPM)/.44
- (MOS)/.34
- (RBN)/.20
- (AGP)/.56
Upcoming Splits
- (DEER) 2-for-1
Economic Releases
10:00 am EST
- ISM Non-Manufacturing for September is estimated to rise to 50.0 versus 448.4 in August.
Other Potential Market Movers
- The Fed’s
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and commodity stocks in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the week.
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