Bloomberg:
- Dubai shares tumbled and Abu Dhabi’s stock index fell the most in at least eight years on the first trading day since the government announced state-run Dubai World, with $59 billion of liabilities, may delay debt payments. The Dubai Financial Market General Index dropped 7.3 percent, the biggest decline since October 2008, and Abu Dhabi’s ADX Index tumbled 8.3 percent, the most since Bloomberg began compiling the data in 2001. Dubai World’s port operator, DP World, fell by the maximum 15 percent allowed on the Nasdaq Dubai, and Emaar Properties PJSC, the biggest developer in the United Arab Emirates, dropped nearly 10 percent, the most permitted on the DFM General Index.
- Crude oil prices may slide toward $70 a barrel in New York after breaching the bottom of a monthlong price channel, according to technical analysis by Societe Generale SA. “It is possible to drop down to the $70 mark, and we’d need to break through that for confirmation that this is a really big correction.”
- The Greek-owned supertanker Maran Centaurus was seized by pirates off Somalia while heading to the U.S., as attackers venture ever farther from shore to hijack merchant ships. It’s the second time Somali pirates have seized an oil supertanker, with the last incident a year ago leading to a record ransom and an increase in Western naval patrols. Today’s hijacking is “probably” the farthest from shore by Somali pirates, said Cyrus Mody, a manager at the International Maritime Bureau in London. His organization has yet to verify details of the attack, he said. The vessel, which can carry 2 million barrels of oil, was taken by Somali pirates in the Somali Basin about 600 nautical miles northeast of the Seychelles, the European Union anti- piracy naval force in the region said on its Web site today. The 28-man crew comes from Greece, Philippines, Ukraine, and Romania. “We are surely getting closer to the day where nothing is safe anywhere between the Seychelles and Suez,” Jonathan Bruce, a partner and maritime law expert at Elborne Mitchell Solicitors in London, said in a telephone interview. “We’re seeing insurance companies extending their war risk zones.”
- Natural Gas Glut Overwhelms Speculators, Defies Rally. When Qatar’s biggest natural gas shipment to the U.S. arrived this month, it signaled to Barclays Capital Inc. and PFC Energy that this year’s worst performing commodity investment won’t recover in 2010. Murwab, a Qatari liquefied natural gas tanker, carried the first shipment to the U.S. from the Persian Gulf nation since June 2008. Its cargo, enough to heat about 9 million homes for a day, added to the largest gas inventories for this time of year since at least 1994, Energy Department data show. Rising supplies threaten to hurt the record-large $4.2 billion bet in the U.S. Natural Gas Fund LP, while traders hold 51 percent more options contracts to buy gas than they do to sell. The International Energy Agency warned of a glut that Qatar’s energy minister said may last until 2012.
- American International Group Inc.(AIG), the insurer rescued by the U.S., has an $11 billion shortfall in reserves to pay property-casualty claims that may hinder efforts to repay the government, Sanford C. Bernstein said. The company slipped 11 percent in New York trading. AIG may have been “aggressive” in pricing its workers’ compensation and professional liability policies and cut back on its use of reinsurance, analyst Todd Bault said today in a research note. He slashed his price target on New York-based AIG’s shares by 40 percent to $12. Chief Executive Officer Robert Benmosche is seeking to bolster profitable underwriting units to help repay loans within the $182.3 billion bailout that was required after investment losses tied to subprime mortgages. Insurance operations, already facing customer and employee defections, may need additional funds to pay claims, Bault said. “AIG shareholders and the federal government face considerably more uncertainty than they may have anticipated,” Bault said.
- The Federal Reserve Bank of New York said it will conduct “small scale, real value” three-way reverse repurchase transactions as the central bank prepares for an eventual withdrawal of its unprecedented monetary stimulus. The tests will be conducted in coming weeks “as a matter of prudent advance planning by the Federal Reserve,” the New York Fed said in a statement today.
- The Atlantic hurricane season ended today after producing the fewest named storms in 12 years. It was the first time in three years that no hurricane struck the U.S. mainland. Nine named storms formed during the season, which started June 1, according to a National Oceanic and Atmospheric Administration statement. Three of the storms reached hurricane strength, with maximum sustained winds of at least 74 miles per hour, and two of those became major ones with winds of 111 miles (179 kilometers) per hour or more.
- Business activity in the U.S. unexpectedly accelerated in November as orders climbed, signaling the economic recovery will carry through into 2010. The Institute for Supply Management-Chicago Inc. said today its barometer rose to 56.1, the highest level since August 2008, from 54.2 the prior month. Readings above 50 signal expansion. Milwaukee and Texas also showed gains in manufacturing, other reports showed.
Wall Street Journal:
- Global semiconductor sales rose 5.1% in October from the previous month -- the eighth-straight month of gains -- as companies continue to build up inventories to prepare for the holidays, according to the Semiconductor Industry Association. The $21.7 billion total was down 3.5% from last year, by far the smallest decline of 2009. "As semiconductor sales are increasingly driven by the performance of the overall global economy, our sales are reflecting the improved economic conditions in our world markets," said SIA President George Scalise. "Sales increased sequentially in all geographic regions." Chip companies in recent months have been increasingly optimistic about their prospects and those of the broader technology industry amid better-than-expected personal computer and cellphone sales and as demand for industrial applications also shows initial signs of recovery.
- Larry Ellison is known for forward thinking. With his new business model, though, the billionaire chief executive of software maker Oracle Corp. is taking a page from the past. Mr. Ellison plans to buy Sun Microsystems Inc. and transform Oracle into a maker of software, computers, and computer components -- a company more like the U.S. conglomerates of the 1960s than the fragmented technology industry of recent years. "It is back to the future," he told financial analysts in October. Mr. Ellison is among the executives reviving "vertical integration," a 100-year-old strategy in which a company controls materials, manufacturing and distribution. Others moving recently in this direction include ArcelorMittal, PepsiCo Inc., General Motors Co. and Boeing Co.
- Venezuela's economy is tumbling just as the rest of the world begins to recover, which may create the perfect combination needed for the country's long-delayed oil drilling auction to finally get under way. Industry sources say a contracting local economy alongside stronger global growth, which has pushed up worldwide oil prices, is providing incentive for both sides--the Hugo Chavez-led government and foreign oil firms--to make concessions and find common ground on the terms of the so-called Carabobo oil tender.
- Write-offs and other revaluations of sterling and foreign-currency loans by U.K. banks and building societies both marked record highs in the third quarter, underscoring the continuing challenges faced by financial institutions and the disincentives to extend more credit. Write-downs of sterling loans jumped to £4.32 billion ($7.12 billion) between July and September from £3.61 billion between April and June, while write-offs of foreign-currency loans soared to £1.01 billion in the third quarter from £249 million in the second, data from the Bank of England Monday showed. Both figures were the largest since the central bank began publishing the data series in March 1993.
- President Barack Obama issued orders Sunday night for a revamped war strategy in Afghanistan that includes tens of thousands of additional U.S. forces and benchmarks for the eventual transfer of Afghanistan's defense to the Afghan government. Mr. Obama met in the Oval Office Sunday at 5 p.m. with Defense Secretary Robert Gates, Adm. Mike Mullen, chairman of the Joints Chiefs of Staff, Gen. David Petraeus, head of Central Command, National Security Adviser James Jones, and White House Chief of Staff Rahm Emanuel, White House spokesman Robert Gibbs said. He then communicated his decision to Gen. Stanley McChrystal, head of the multinational force in Afghanistan, and U.S. Ambassador to Karl Eikenberry over a secure video link from the White House situation room.
- 500,000 Iranian Centrifuges. Tehran ups the ante again as diplomacy goes nowhere.
NY Times:
- The Federal Reserve, under attack in Congress for being too entwined with big banks, closed a loophole on Wednesday that allowed a director at Goldman Sachs(GS) to be a director of the New York Fed as the agency was bailing out Wall Street during the financial crisis. The Fed tightened its restrictions on so-called public directors of Fed’s 12 regional banks, who are not supposed to hold posts or own stock in banks or bank holding companies, The New York Times Edmund L. Andrews reported. The rule itself is narrow, a response to an embarrassment earlier this year involving Stephen Friedman, a director and former top executive at Goldman Sachs who was also serving as a public board member of the New York Fed.
The Business Insider:
- Goldman’s(GS) Christmas celebration rules have a funny condition: they can't hang out in groups of twelve or more. The Business Insider wrote about the voicemail all Goldman Sachs employees received earlier this month. They were told not to organize small parties even if no firm money goes to pay for them. By "small," Goldman means exactly twelve. Starting tomorrow, they can hang out outside of Goldman in groups of eleven, but not twelve. The rule is set to stay in place for the month of December. Why? The firm believes that it would be inappropriate for its employees to be seen partying while the economy is still shaky and unemployment is high.
- Chelsea Clinton Engaged To Goldman Sachs’s(GS) Marc Mezvinsky.
- The Top 8 Winners Of Obamanomics.
- Temasek Hedge highlights how these days Singapore's port has become too quiet. The Financial Times agrees. Temasek Hedge: These days, though, the view is obscured by hundreds of ships lying at anchor, some of them part of the estimated 10 per cent of the world container fleet idled due to lack of business. At the ultra-modern Pasir Panjang container terminal, stacks of empty containers piled up behind protective fencing tell a similar story.
- Goldman Sachs (GS) is in trouble, and it's not just because of questionable remarks by its executives. CNBC reporter Charlie Gasparino notes that despite big gains from its trading business, the venerable financial titan is getting beat in a critical Wall Street growth area: stock underwriting.
Lloyd’s List:
EconompicData:
- The Scale of Hedge Fund Gold Purchases. In case you missed it... early last week The Reformed Broker detailed the incredible amount of gold that hedge funds (in this case Paulson & Co.) have accumulated in a very short period of time: John Paulson of Paulson & Co, the legendary hedge fund manager who made tens of billions betting on the mortgage crisis between 2007 to 2009, likes gold. He really likes it. He likes gold more than a friend. To most market participants, this is not news, but here’s something you probably didn’t know: Paulson owns more gold than several major countries! Combined! Regardless of what is or is not a justified price for gold, the only thing that matters is the next price that a buyer or seller is willing to transact. And while I continue to expect to see a one-sided trade, when that one sided trade ends, it has the potential to get real ugly, real fast (though I think we are still a long ways away) as this "tonnage" hits the market.
Rassmussen:
- The U.S. Senate is now formally beginning debate on a plan to reform health care in America, but most voters remain opposed to the plan working its way through Congress. The latest Rasmussen Reports national telephone survey finds that 41% of voters nationwide favor the health care reform plan proposed by President Obama and congressional Democrats. Fifty-three percent (53%) are opposed to it. Those figures include 22% who Strongly Favor the plan and 40% who are Strongly Opposed.
Politico:
- 7 stories Barack Obama doesn’t want told.
- As Senate Majority Leader Harry Reid struggles to pass a health care bill in Washington and his polling numbers in Nevada continue to tank, there’s another aggravation he can’t seem to escape — the Las Vegas Review-Journal and its publisher, Sherman Frederick. Frederick has called Reid a “political corpse,” said a visit by President Barack Obama to Nevada earlier this year “was only to try to stop Nevadans from bouncing their unpopular senior Sen. Harry Reid in 2010” and suggested that “Reid’s power so far has done more for Reid personally than it has for Nevadans as a whole.” A recent Frederick blog post openly mocked Reid’s reelection theme: “Isn’t the slogan ‘Harry Reid — independent like Nevada’ libelous as hell?”
The Detroit News:
- Cyber shopping for holidays expected to be up 8%.
USAToday:
Reuters:
- Russia plans to start up the nuclear reactor at Iran's Bushehr power plant in March 2010 to coincide with the Iranian New Year, two sources closely involved with the project told Reuters. The sources, who asked not to be identified because of the sensitivity of the situation, both said that Russia had ordered the plant be ready for operation by Iranian New Year, known as Nowruz, in the second half of March.
- U.S. banks continue to face significant challenges, particularly from rising delinquencies in commercial real estate and commercial loans, a Federal Reserve official said on Monday. "Credit losses at banking organizations continue to rise, and banks face risks of sizable additional credit losses given the outlook for production and employment," said Jon Greenlee, associate director of the division of bank supervision and regulation.
Financial Times:
- The panic provoked by last week’s debt standstill request from Dubai World and property arm Nakheel has come full circle. On Monday, when the main Gulf stock markets reopened after a four-day religious holiday, Nasdaq Dubai fell more than 7 per cent and the Abu Dhabi stock exchange over 8 per cent. Investors, already shocked by Dubai’s confirmation it would not guarantee the state-owned conglomerate’s debt, were told trading had been halted on $5.25bn of Nakheel’s sharia-compliant bonds. The problem is that global investors see the borrowers’ woes as a microcosm of the oil-less emirate’s. Its failure to communicate decisively and promptly with the capital markets on which it relies, has left its ambition of becoming a credible financial services hub in tatters. Still, Monday’s UAE central bank liquidity support for local and foreign lenders should keep open a regional banking lifeline for now. Although British banks, the most heavily exposed to the UAE, will not be derailed by Dubai World or Nakheel, the same may not be true of regional lenders, which have disproportionately large exposure – in the case of Abu Dhabi’s banks, about a third of their assets, Morgan Stanley estimates. Local banks are already paying the price in more costly funding and, absent sovereign support, will do their best to wriggle out of making big impairments on their property lending.
- The government of Dubai on Monday said it would not guarantee the debt of Dubai World as it sought to clarify comments made last week by the state-owned entity that sent shockwaves through global markets. In its first public comments since the crisis erupted over the liabilities of its public companies, Dubai’s department of finance on Monday outlined its policy towards the outstanding loans, which total $59bn.
TimesOnline:
- A battle between Exxon Mobil, the American oil giant, and BP over one of the largest oilfields in the world is set to intensify this month ahead of a key January deadline. Ghana has no oil industry. The field, estimated to hold 1.8 billion barrels, has the potential to vastly alter the fortunes of a nation with a per capita GDP of $1,500. BP, which is being advised by Goldman Sachs, offered to buy the stake with Sinopec, the Chinese state oil group, and Ghana National Petroleum as partners. Ghana’s Jubilee field was discovered in 2007 by a group of oil companies led by Tullow Oil, the FTSE 100 explorer. It was hailed as the largest discovery in West Africa in more than a decade. Tullow is the controlling shareholder with a 49% stake. US partners Sabre Oil and Anadarko Petroleum own the rest. They expect to start producing oil next summer.
Telegraph:
- Britain risks becoming the first country in the G10 bloc of major economies to risk capital flight and a full-blown debt crisis over coming months, according to a client note by Morgan Stanley. The US investment bank said there is a danger Britain’s toxic mix of problems will come to a head as soon as next year, triggered by fears that Westminster may prove unable to restore fiscal credibility. “Growing fears over a hung parliament would likely weigh on both the currency and gilt yields as it would represent something of a leap into the unknown, and would increase the probability that some of the rating agencies remove the UK’s AAA status,” said the report, written by the bank’s European investment team of Ronan Carr, Teun Draaisma, and Graham Secker.
Guardian:
- The carbon market could become double the size of the vast oil market, according to the new breed of City players who trade greenhouse gas emissions through the EU's emissions trading scheme. The ETS market may see $3tn (£1.8tn) worth of transactions a year in the next decade or two, according to Andrew Ager, head of emissions trading at Bache Commodities in London, with it even being used as a hedge against falling equities or rising inflation. "It is still a relatively new industry with annual trades of around €300bn every year. But this could grow to around $3tn compared to the $1.5tn market there is for oil," says Ager, who used to be a foreign currencies trader. The speed of that growth will depend on whether the Copenhagen summit gives a go-ahead for a low-carbon economy. Many political leaders, especially in industrialized countries, are enthusiastic: carbon markets hold the promise of cost-efficient emission cuts without the need for taxpayer funding. But their enthusiasm to place carbon markets at the heart of the Copenhagen treaty is matched by growing criticism of the concept, and not just from environmentalists opposed to free market solutions. Vincent de Rivaz, chief executive of EDF Energy, warned of the dangers of a "sub-prime" crisis inside the ETS if complex financial instruments were created by market participants. The key problem seems to be that ETS carbon prices have remained resolutely low, thwarting low-carbon, high-cost investment. Carbon is currently trading at around $13 a tonne but many believe it needs to be $30, if not $50, to deliver a decisive boost for clean technologies such as wind, solar, CCS and nuclear power. The criticisms of environmentalists such as James Lovelock and Friends of the Earth (FoE) are far more fundamental. The basic charge is that the market has put millions of pounds into the pockets of some without making any real impact on carbon emissions.
Radio 1:
- Success of the vote banning the construction of minarets in Switzerland means more initiatives critical of Islam may come, former Justice Minister and Swiss People’s Party member Christoph Blocher said. Initiatives like yesterday’s could be on a ban on veils covering the whole body, forced marriage, circumcision and the disregard of women’s rights, Blocher said. Blocher also said some consideration should be given to demands that Muslims seeking Swiss citizenship should distance themselves in writing from passages in the Koran that contradict human rights.
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