- Greece Leads Decline in Sovereign Default Swaps on Bailout Bets. Greece led a decline in the cost of insuring against a sovereign bond default in Europe on speculation a rescue package is being crafted for the cash-strapped nation. Credit-default swaps linked to Greek government bonds tumbled 28.5 basis points to 335.5, the lowest since Jan. 27, according to CMA DataVision prices. Swaps on Portugal fell 11 basis points to 152.5, Spain declined 5.5 to 124 and Italy dropped 6 to 122. Greek government bonds jumped. The yield on the 10-year security dropped as much 19 basis points to 6.18 percent, and the difference in spread with benchmark German bunds narrrowed 14 basis points to 312, the least since Feb. 15. The two-year note yield slid as much as 69 basis points to 5.46 percent, its biggest decline since Feb. 10. Improved sentiment on government debt helped cut the cost of default protection on corporate bonds, with the Markit iTraxx Europe index of swaps on 125 investment-grade companies declining 1.5 basis points to 83.5, the lowest level since Feb. 3, according to JPMorgan Chase & Co. The Markit iTraxx Crossover Index 50 companies with mostly high-yield credit ratings fell 11 basis points to a one-week low of 455, JPMorgan prices show.
- Lacker Says Fed Being Made 'Scapegoat' to Satisfy Bailout Anger.
- HSBC Posts Lower-Than-Estimated 2009 Profit on Europe. HSBC Holdings Plc, Britain’s biggest bank, posted full-year net income that missed analyst estimates after costs for bad loans climbed and profit fell for units in Europe, the Middle East and Asia. Earnings increased to $5.83 billion from $5.73 billion a year earlier, the London-based lender said today in a statement. That was less than the $7.76 billion median estimate of analysts surveyed by Bloomberg. The bank dropped the most in 10 months in London trading.
- Frank, Peterson Vow to Eliminate Provision Keeping Swaps Opaque. Congressional leaders are vowing to eliminate a provision in legislation passed by the House in December that would allow banks to keep the private derivatives market opaque, protecting billions in profits on swap trades. Barney Frank and Collin Peterson, chairmen of the Financial Services and Agriculture Committees respectively, indicated they’ll remove a section of the bill that allows trades to be routed through systems that keep prices private, even though the legislation was touted as a way to make the transactions transparent. The five largest U.S. derivatives dealers, including JPMorgan & Co.(JPM), Goldman Sachs Group Inc.(GS) and Bank of America Corp.(BAC), were on pace through the third quarter to record as much as $35 billion in revenue last year from trading unregulated derivatives contracts, according to company reports collected by the Federal Reserve and people familiar with banks’ income sources. “The banks obviously have a desire to maintain the status quo,” said Craig Pirrong, a finance professor at the University of Houston. Weak competition in derivatives markets and a lack of transparency help boost their earnings, he said. “Superior access to price information in a relatively opaque ‘search’ market can be quite profitable.” JPMorgan spokesman Justin Perras, Goldman Sachs spokesman Michael DuVally and Scott Silvestri of Bank of America declined to comment on the legislation.
- Oil Reverses Gains as Dollar Strengthens Against Euro, Pound. Crude oil reversed earlier gains as the dollar strengthened against the euro and pound, lessening the appeal of commodities, before reports later today detail the pace of U.S. economic growth. “The $80 mark indicates the upper end of the $70-$80 trading range that has been going on for some months now, and when we look at fundamentals we don’t see many reasons for oil to break that level,” said Tobias Merath, head of commodity research at Credit Suisse Group AG in Zurich. “Weak demand in the U.S. and OECD countries are putting a cap on performance.”
- Manufacturing in U.S. Expands for Seventh Month. Manufacturers increased production and employment in February, signaling factories are leading the nation out of recession as the new year begins. The Institute for Supply Management’s factory index fell to 56.5 from January’s 58.4, which was a five-year high, figures from the Tempe, Arizona-based group showed.
- OSI(OSIP) Surges After Astellas' $3.5 Billion Hostile Bid. OSI Pharmaceuticals surged above an unsolicited $52-a-share takeover bid from Astellas Phara Inc., Japan’s second-largest drugmaker, as investors anticipated a higher offer and possible bidding war. OSI jumped $19.41, or 52 percent, to $56.43 at 11:50 a.m. New York time in Nasdaq Stock Market composite trading.
- Quarter of Americans Get News on Cellphones. Just over a quarter of American adults now read news on their cellphones, according to a new report from the Pew Research Center. The survey results being released by the group Monday offer another sign of how people are changing they way they get information.
- Union Pushes for Its Own Jobs Plan. The AFL-CIO labor federation is pushing for a jobs package far bigger than the $15 billion bill the Senate passed, and it wants to fund the package in part through a tax on securities transactions. Such a tax has the backing of some prominent investors but is largely opposed by business. A notable opponent of the tax, which the AFL-CIO says could generate more than $100 billion a year and also help pay down the deficit, is Treasury Secretary Timothy Geithner. The U.S. Chamber of Commerce also opposes labor's plan, saying levying more taxes isn't conducive to job creation. The AFL-CIO wants revenue from a transactions tax to be put toward creating jobs in infrastructure, such as road building, which tend to be highly unionized. The federation also wants funding to directly create jobs with certain minimum labor standards that could also be unionized jobs. The labor federation is expected to announce its push for new-jobs legislation at its winter meeting this week. The labor campaign for the jobs program, called "Jobs Now Make Wall Street Pay," will try to harness voter anger at the government's bank bailouts. The group plans to emphasize the billions of dollars banks received in bailout funds, while unemployment remains stubbornly at 9.7%. The grass-roots mobilization is set to begin mid-March and include hundreds of rallies, town-hall meetings and other events around the country.
- BP Deal To Expand US Shale Gas Operations. BP PLC (BP) is expected to announce Tuesday an expansion of its U.S. shale gas operations through a joint-venture deal in Texas with privately held Lewis Energy Group worth at least $160 million, people familiar with the situation told Dow Jones Newswires. BP's move is the latest in a string of big deals that have brought major oil companies into U.S. shale gas--a significant new resource that is transforming the energy industry. BP will take a 50% stake in 80,000 acres of the Eagle Ford Shale play in the southeastern part of Texas held by Lewis Energy at a price of $4,000 to $4,500 an acre, said one of the people. The two companies are already running one drilling rig on the license and could be running four rigs by the end of the year, another person said. A technology-driven boom in the production of natural gas trapped in shale rock has dramatically shifted the supply picture in the U.S., reducing the need for imports and driving down prices. In a speech in Buenos Aires last year, BP Chief Executive Officer Tony Hayward called this "a quiet revolution...in the gas fields of North America." New techniques like hydraulic fracturing and horizontal drilling are opening up new gas resources that could last the U.S. between 50 and 100 years, he said.
- EU Still Divided Over Hedge-Fund Rules. European Union countries remain divided over planned rules for hedge funds and private-equity firms, according to the Spanish government. Spain, which currently holds the EU's six-month rotating presidency, said representatives from the bloc's 27 member countries raised three main concerns at a Feb. 25 meeting: the scope of the regulation, the use of depositaries and rules for funds based outside the EU. These lingering concerns highlight the bloc's deep ideological divisions about regulating financial markets in the wake of the economic downturn.
- Vice Chairman Kohn to Leave Fed in June.
NY Post:
- Ben the Bank Czar. Senate Pushes to Widen Bernanke's Power. A reform proposal is gaining traction in Washington to crown Federal Reserve Chairman Ben Bernanke as the new banking king, with broad authority over the nation's largest banks, according to people familiar with the matter. These people tell The Post that the proposal, which is gaining support in the Senate Banking Committee, would give the Fed chief supervisory power over the 25 largest banks, including Citigroup(C) and Bank of America(BAC). In addition, the proposal would tap the Fed to be the lead protector of consumers when it comes to products such as credit cards and mortgages sold by these banks. "There's a lot of enthusiasm for getting something done," said one Washington insider briefed on the discussions. And given Bernanke's popularity with Wall Street, this proposal is being pushed to the top of the pile, this person said. Sources aware of the discussions stress that things remain very fluid in the Senate, but the hope is to try to hammer out a plan quickly so that the committee can introduce legislation as soon as this week. If Bernanke gets the additional responsibilities, it would mark a dramatic change in the Fed chief's influence in less than a month.
- Germany and France Secretly Planning a New Europe-Wide Federal Government After Greece Is Bailed Out.
- Bill Gross: Markets Will Soon Discover How Sovereign Nations Can Go Bust Just Like Companies.
- Villaraigosa Considers a Carbon Surcharge for DWP Customers. The extra revenue would be used to move the utility from coal to wind, solar and geothermal sources of energy. The mayor wants 20% of the agency's power to come from renewables by December. Los Angeles Mayor Antonio Villaraigosa is moving ahead with a plan requiring customers of the Department of Water and Power to pay higher bills to help the utility tap more sources of renewable energy. While Villaraigosa has been talking publicly about the need for the city to tighten its belt, his advisors have been working behind the scenes to gauge public support for a monthly DWP "carbon surcharge" of $2.50 -- one that would move the utility away from coal and toward wind, solar and geothermal sources of energy. Clegg said the mayor had not settled on the size of a proposed surcharge, which could be higher or lower than the $2.50 proposal included in a voter survey commissioned by the mayor. Councilwoman Jan Perry said it would be "hard to explain" why the city is scaling back on services, including road repairs and libraries, while asking DWP customers to absorb more expensive bills. "I think this is a tough time to ask people about any increase, unless you've made a very strong case to show that you have reduced operating costs as much as possible," she said.
VentureBeat:
- 3D TV Forecast: Sales Will Rise Tenfold in Next Five Years. Electronics market intelligence firm iSuppli issued a report Monday morning that claims 78 million television sets with 3D capability will be sold in the year 2015. ”The market so far has been more talk than action,” researcher Riddhi Patel wrote in a note accompanying the report. “However, announcements made before and after the 2010 Consumer Electronics Show (CES) in January indicate that 3D TV is becoming a reality.” For the next couple of years, iSuppli forecasts that only early adopters will spend the average $1,768 selling price for a 3D set. But it’s likely that TV makers will soon start adding 3D support to inexpensive models, rather than keeping it a premium feature. If you can buy a 3D set in five years for, say, $500, iSuppli’s forecast for a tenfold increase in the number of sets bought by home viewers in 2015 doesn’t seem like a stretch.
- Ford's(F) 'Fiesta Agents' Shift Gears. Ford Motor Co. is starting the second phase of its "Fiesta Agents" program as it prepares to launch its new subcompact in the United States.The grass-roots marketing effort already has created big buzz about Ford's newest small car.For the original campaign, Ford recruited 100 volunteers from around the country, gave them cars and regular assignments that had to be performed with their vehicles. Then the automaker sat back and let them blog about their exploits, creating viral buzz around the Fiesta. Ford picked people with large online followings.Now, the company has recruited a smaller group with stronger ties to their real world communities in the hope of turning that interest into sales.
- 44% Favor Health Care Plan, 52% Oppose. President Obama’s health care summit last week seems to have nudged up support, but 52% of U.S. voters continue to oppose the plan proposed by the president and congressional Democrats. A new Rasmussen Reports national telephone survey finds that 44% favor the plan, up three points from last week just before the summit and the highest level of support recorded since mid-November. But passion remains on the side of the opponents: just 22% Strongly Favor the plan while 43% Strongly Oppose it.
- Warren Buffett Would Scrap Health Care Bill. Billionaire investor Warren Buffett advised President Barack Obama on Monday to scrap the health care bill and start over. In an interview with CNBC, Buffett said the current bill does not focus on controlling costs, which he sees as the central problem that must be addressed to reform the system.
- Goldman Sachs(GS) Won't Investigate Executive Pay. Goldman Sachs Group Inc. said Monday it has rejected demands by shareholders to investigate the Wall Street bank's compensation practices. Shareholder lawsuits filed recently in New York and Delaware charge that Goldman's compensation levels in 2009 were too high, Goldman said in a Securities and Exchange Commission filing. The lawsuits seek to recover some of the pay and force the bank to adopt pay reforms. Goldman said shareholders have made similar demands in letters to its board. Lawmakers and shareholders sharply criticized Wall Street pay after the biggest banks lost billions of dollars on bad mortgage bets, helped cause the recession and then had to be bailed out by the government. "The board believes that the firm's compensation policies and practices, which directly align pay with the performance of the company, are appropriate and in the best interests of shareholders broadly," Goldman spokesman Ed Canaday said in a statement. "When the firm does well, our people do well and when the firm does less well, our people do less well." Goldman employees received $16.2 billion in salaries and bonuses for 2009, up 47 percent from the previous year.
- Senator Shelby Counters on Financial Consumer Watchdog. A senior Republican U.S. senator has made a sweeping counter-offer to Democrats on creating a new government watchdog for consumers, an issue that has snagged negotiations for weeks over financial reforms, according to a document obtained on Monday by Reuters.
- Green Fuels Cause More Harm Than Fossil Fuels, According to Report. Using fossil fuel in vehicles is better for the environment than so-called green fuels made from crops, according to a government study seen by The Times. The findings show that the Department for Transport’s target for raising the level of biofuel in all fuel sold in Britain will result in millions of acres of forest being logged or burnt down and converted to plantations. The study, likely to force a review of the target, concludes that some of the most commonly-used biofuel crops fail to meet the minimum sustainability standard set by the European Commission.
- German Carmakers Must Move Production Abroad. German car manufacturers need to move production to China and the U.S. to stay competitive by avoiding tariffs and reducing exchange rate risk, citing Matthias Wissmann, head of the VDA industry group. He said carmakers are facing a "rocky road," while Wissman told the newspaper that he expects the U.S. market to rebound "strongly" in 2011 adn 2012.
- Juncker: Disintegration of Eurozone Not An Absurd Idea. The idea the eurozone could dissolve is not automatically ridiculous, Jean-Claude Juncker, the head of the Eurogroup of finance ministers, said in an interview published Monday. Asked by German business daily Handelsblatt whether predictions the eurozone could come apart are realistic against the backdrop of Greece's severe fiscal problems, Juncker replied: "That is for me not an absurd idea. Since we brought the euro to life, I must live with some critics exploiting every incident so as to bring it down after the fact.""Seriously: I don't believe that competitive differences per se lead to a weakness of the euro. After all, there are also such differences in the dollar area. However, the fact is that the divergences have tended to widened too much." Juncker warned that "the markets cannot act as though there were no efforts in Greece for budget consolidation" and noted that these efforts are "an obligation of the Greeks and no option." "Should the Greeks stick to the very stringent conditions and the markets nevertheless speculate against Greece, we will not simply let the markets march on through," he warned. Declining to be precise about what steps would be taken to restrain the markets lest his answer "lead to a let-up of savings efforts in Greece," the oftentimes poetic Juncker added nonetheless that "we have the instruments of torture in our cellar and we show them when it is necessary." It is in any case "clear, that in accordance with the Treaty, it will not come to a bailout," he said. The proposal of the IMF that central banks accept higher inflation is "not purposeful," Juncker objected. "We would endanger the culture of stability built up with effort in the eurozone. Inflation would intensify still more the competitive differences in the eurozone."Bundesbank head and European Central Bank Governing Council member Axel Weber's rejection of the proposal must thus be underscored, he said.
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