- Default-Prone Companies Drop for Fifth Quarter. Moody’s Investors Service added fewer potentially default-prone companies to its B3 Negative List for the fifth straight quarter after a drop in downgrades. There are 233 firms with a speculative credit grade of B3 and negative outlook or a lower rating, including American Safety Razor Co., SuperMedia Inc. and Harlan Laboratories Inc. among the 14 added this year, according to Moody’s. There were 262 last quarter, with 25 companies added, said the report, scheduled for release today. The B3 list decline coincides with rising upgrades relative to downgrades, according to Moody’s. The default rate, which peaked at 14.5 percent in November, is anticipated to drop to 3.3 percent by the end of the year. “What’s interesting about the list is that at the stronger-end of it, fewer names are coming in and a lot of names that are in aren’t getting downgraded,” David Keisman, senior vice president at Moody’s and an author of the report, said in a telephone interview. “The higher-quality side is really reflecting the turnaround of the economy.”
- SEC Says Lehman Oversight Was 'Flawed' as Report Cites Inaction. Securities and Exchange Commission Chairman Mary Schapiro said her agency’s oversight of Lehman Brothers Holdings Inc. was “terribly flawed,” days after a bankruptcy examiner found the SEC didn’t try to stop the firm’s exaggeration of liquid assets. “It was so terribly flawed in design and execution,” Schapiro testified to a Congressional committee today, referring to SEC examinations aimed at monitoring the soundness of Wall Street’s biggest investment banks. “We were ill-suited because of our enforcement and disclosure mentality.”
- Ford's(F) $65 Billion in Debt Upgraded by Moody's. Moody’s Investors Service upgraded the ratings of Ford Motor Co. and Ford Motor Credit Co. and is reviewing the ratings for further possible upgrade. The upgrade affects about $65 billion in debt. “The upgrade of Ford’s long-term ratings anticipates that the company’s restructured business model will generate significantly improved operating and financial performance,” Moody’s said in a statement.
- States Hope for a Rich Uncle. Governors Lobby Washington for More Money as Stimulus Aid Runs Out. Strapped states, facing up to $180 billion in budget deficits in the next fiscal year, are going hat in hand to Washington.
- Blackstone(BX) Working On $1Bln Blind Pool To Buy Failed Banks - Sources. Blackstone Group LP (BX) is working with R. Brad Oates, who led the turnaround of Bluebonnet Savings Bank FSB during the savings and loan crisis, to raise a blind pool of capital to acquire failed banks from the Federal Deposit Insurance Corp., said several people familiar with the plan.
- Start-Ups Add Third Dimension to Chips. A perennial race to squeeze more features on flat pieces of silicon is taking a step into the third dimension. Two Silicon Valley start-ups are breaking from conventional designs—which lay out components on chips in two-dimensional patterns—to develop products that are configured by customers after they are manufactured.
- Deutsche Bank(DB), JPMorgan(JPM), UBS(UBS) Are Charged With Fraud. Deutsche Bank AG, JPMorgan Chase & Co., UBS AG and Hypo Real Estate Holding AG’s Depfa Bank Plc unit were charged with fraud linked to the sale of derivatives to the City of Milan. Judge Simone Luerti scheduled the trial of the four firms, 11 bankers and two former city officials for May 6, Prosecutor Alfredo Robledo said after a hearing in Milan today. The banks allegedly misled the city over swaps that adjusted interest payments on 1.7 billion euros ($2.3 billion) of bonds sold in 2005. Prosecutors across Italy are investigating banks as local and national government agencies face potential losses of 2.5 billion euros on derivatives, lawyers say. The Milan probe may also affect cases as far away as the U.S., where securities firms have faced charges for price-fixing and bid-rigging in the sale of derivatives to municipalities, though not for fraud, according to former regulator Christopher “Kit” Taylor.
- Upgrade Helps Lift BlackRock(BLK) Shares More than 5%. BlackRock Inc. shares rose on Wednesday following a Credit Suisse upgrade on the belief that the private-equity firm will significantly increase its assets under management over the next two years.
- EU Will Crack Down on 'Naked' CDS Selling in June. The European Commission will crack down on "naked" selling and speculation in the market for credit default swaps with proposed controls as soon as June, the EU's financial markets chief said on Wednesday. Speaking to a group of influential parliamentary committee members who will play a key role in passing such proposals into law, he said: "We will be proposing on naked selling and credit default swaps." He said that the draft law would come as soon as June.
- Four Ways to Profit When Market Volume Takes a Plunge.
- Jim Rogers: The Euro Will Be Dead In 20 Years.
- Watch How Medicare Spending Swallows Washington DC. Here's a two-fer that combines our feature on the retirement crisis and the healthcare hullabaloo. It's a chart -- from the Heritage Institute (.pdf) and David Leonhardt -- showing just how big Medicare and Medicaid spending are going to get. Basically, 50% of all program spending will be on these two items.
- Hedge Fund Manager Survey Finds Sentiment Moving Against Europe, in Favor of U.S. Investors have recovered their bullishness towards equity markets but are shifting their focus away from Europe and into the U.S. and Japan, according to the BofA Merrill Lynch Survey of Fund Managers for March. After weakened sentiment in February, the survey shows that investors have restored their faith in equities with a net 46 percent of asset allocators saying they are overweight the asset class, up from 33 percent the previous month. Cash positions have fallen with respondents at a net neutral cash allocation compared with a net 12 percent underweight in February. Asset allocators have retrenched from Europe, however. A net 21 percent are underweight European equities this month, up sharply from a net 2 percent overweight in January. The change in favor of U.S. equities has been similar. A net 19 percent of asset allocators are overweight U.S. equities this month, up from just 1 percent in January. Japan is also regaining popularity. A net 6 percent of allocators are overweight Japanese equities, the most bullish reading since August 2007, and up from a net 10 percent underweight in January. Global investors believe that the corporate outlook is better away from Europe. A net 40 percent of the panel says the outlook for eurozone corporate profits is the least favorable of all regions. “Investors’ concerns about Greece are easing, but European country risk remains a key constraint to optimism over economic recovery,” said Gary Baker, head of European Equities strategy at BofA Merrill Lynch Research. “Investors are more willing to embrace corporate risk, via equities, than sovereign risk,” said Michael Hartnett, chief Global Equities strategist at BofA Merrill Lynch Research.
- Now It's Easy Switch to Google(GOOG) Apps from Microsoft Exchange. Today we're making it a lot easier for customers of Microsoft Exchange to go Google with Apps. Google Apps Migration for Microsoft® Exchange is a new server-side tool that migrates your company's email, calendar and contact data from Microsoft Exchange to Google Apps. With the tool, migrations are:
- Health Care Reform in Washington Meets the Chicago Way. Not even three or four pipes full of Hopium could have convinced me that the Congress of the United States would ever start looking like the Chicago City Council. But now, with the Chicago Way White House twisting arms for its federal health care legislation, Democrats in Congress and Chicago aldermen are beginning to share a remarkable resemblance. They're starting to look like fall guys.
- Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 24% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-two percent (42%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -18 (see trends).
- Dennis Kucinich is a 'Yes' on Health Care. The presidential arm-twisting worked. Rep. Dennis Kucinich (D-Ohio), enjoying a rare moment where his vote could be critical on a landmark issue, said Wednesday morning that he will reluctantly vote for the Democratic health care bill, a significant boost from a liberal critic of the legislation.
- LSI(LSI) Boosts Outlook on Improved Business Demand. Microchip and software maker LSI Corp (LSI) raised its first-quarter outlook on Wednesday, citing renewed strength in corporate demand, sending its shares up 11 percent.
- Lagarde Urges Germany to Consider Tax Cuts. Germany should consider cutting taxes to boost domestic demand, France’s finance minister said on Wednesday as she persisted with her view that Germany’s “single motor” economy may be unsustainable for the rest of the eurozone. Despite a backlash from German politicians and media, Christine Lagarde showed no intention of backing away from her comments in the Financial Times when she called on Berlin to boost domestic consumption to help other economies in the bloc regain competitiveness and cut budget deficits. “I think Germany could perhaps use measures, which incidentally are being considered by the governing coalition, to reduce taxes to encourage domestic consumption." “When there is an effort to make in an interdependent economic zone such as the eurozone, everybody must make an effort: those who are in deficit must reduce their deficits, that is the priority, and those that are in surplus must not be single motors [because ...] they can undoubtedly drive growth through other means.”
- Germany is blocking a euro-region decision that would allow Greece to gain aid if needed, citing the group's disagreement over tapping International Monetary Fund help. Germany, Italy, Finland and the Netherlands favor bringing the IMF on board in case Greece needs aid while other member states are opposed. The German government in Berlin said yesterday that no decision on aid for Greece will be taken at a meeting of EU leaders in Brussels on March 25-26, an indication that the issues aren't resolved.
- China's Hunger for Oil Hard for US to Digest. The world’s third-largest energy consumer continues to devour crude, meaning Washington faces a potential problem as it tries to tighten the screws on Iran, Tamsin Carlisle reports. It is no secret that some OPEC nations have been pumping crude above their quotas. What is more mysterious in an oversupplied oil market is where in the world those unsanctioned barrels have ended up. In the case of Iran’s estimated 400,000 barrels per day (bpd) of excess output, the answer could lie, at least partly, in China. The world’s third-biggest energy consumer has been stockpiling crude for the past 18 months in response to a government programme to establish strategic petroleum reserves equal to 90 days of consumption. China’s state-controlled oil companies may be planning to increase their supply of refined fuels to Iran as the traditional western suppliers have yielded to diplomatic pressure from their governments to discontinue business ties with Iran. Chinese enterprises have signed agreements to develop three of Iran’s biggest untapped oilfields. The unwritten side deal is for many barrels of current and future Iranian crude production to flow to Beijing in return for a smaller supply of fuel from Chinese refineries. While its oil exports to the West have shrunk, Iran strengthened its crude flow to China by about a third between 2007 and last year, to 544,000 bpd from 411,000 bpd. China is Tehran’s second-biggest customer for crude after Japan. Iran is Beijing’s second-biggest crude supplier, behind Saudi Arabia. It supplied about 15 per cent of Chinese oil imports last year. Beijing looks to Iran as “a major source of future oil supplies”, and that is not likely to change, said James Placke, a senior associate at IHS Cambridge Energy Research Associates. “They’d have to go through a substantial policy reversal and I’d be surprised if they did that.” That does not bode well for the success of Washington’s plan to toughen sanctions against Tehran by cutting off petrol supplies and urging others to do the same. To work, that strategy would require a UN Security Council resolution, which China would be unlikely to support. India, which supplies the most petrol to Iran, is also unlikely to comply with the US call for tougher sanctions. Like China, Asia’s second-most populous nation is also a significant importer of Iranian crude and is looking at future gas supplies from Iran.