Bloomberg:
- Sarkozy, Merkel Urge Faster EU Curbs on Speculation. France and Germany called on the European Union to speed up curbs on financial speculation, saying some bets against stocks and government bonds should be banned as markets suffer a resurgence of “strong volatility.”
- Coal's Share of Energy Use Rises as Natural Gas Falls. Coal’s share of global energy consumption rose last year to its highest level since 1970 as use of natural gas fell the most on record, a tendency that may continue, BP Plc said in a report. Coal accounted for 29 percent of world energy use, BP said today in its annual Statistical Review of World Energy. Global consumption dropped 1.3 percent in 2009 to 11.16 billion metric tons of oil equivalent, the first decline since 1982, BP said. “China became a large-scale coal importer, which prevented global coal consumption from falling,” Tony Hayward, BP’s chief executive officer, said today in an introduction to the review. “Given the OPEC cuts, the world’s largest increase in oil production by far came from the U.S., mainly from the Gulf of Mexico. This is not an excuse for anything but a piece of the reality in which we all live.”
- Crude Oil Rises the Most in Almost Two Weeks as Dollar Declines. Oil jumped as much as 4.1 percent and the dollar retreated as Federal Reserve Chairman Ben S. Bernanke told a congressional panel the central bank will act as needed to aid financial stability and economic growth, increasing the likelihood U.S. interest rates will remain at record lows.
- Bank of America(BAC) May Lead Banks in Home-Equity Losses. Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. may lead 20 publicly traded U.S. banks that charge off as much as $40.9 billion on home-equity investments this year, Fitch Ratings said. In the worst-case scenario considered by Fitch, the three banks may write off a combined $31.2 billion as loans from the height of the housing market sour, analysts John Mackerey and Ken Ritz wrote in a report today. The 20 banks on the list, which includes only lenders with above-average exposure to the business, may charge off a total of as much as $76.7 billion in the two years through 2011, the New York-based rating company estimated. “Fitch is concerned that large core portions of these portfolios that were originated during the peak of the housing boom are increasingly at risk due to continued weakness in the housing market,” the analysts wrote. “These loans are becoming less secured and will increasingly exhibit loss severities more similar to unsecured credit.”
- Fed Says Economy Improved, With 'Modest' Gains in Many Regions. The Federal Reserve said the U.S. economy, driven partly by consumer and business spending, strengthened in all 12 of the central bank’s regions in April and May, while noting growth in many districts was subdued. “Economic activity continued to improve since the last report across all 12 Federal Reserve Districts, although many Districts described the pace of growth as ‘modest,’” the Fed said in its Beige Book business survey, published two weeks before the Federal Open Market Committee meets to set monetary policy.
Wall Street Journal:
- BP(BP) Investors Brace for Dividend Suspension.
- U.N. Imposes New Sanctions on Iran.
- Goldman(GS) Being Sued by Hedge Fund Over Toxic CDOs. An Australian hedge fund manager said it has filed a lawsuit against Goldman Sachs Group Inc. (GS) seeking more than $1 billion in damages after losing money in troubled mortgage-linked securities. Basis Capital's Basis Yield Alpha Fund alleges it was defrauded when it purchased $78 million of the Timberwolf synthetic collateralized debt obligations being sold by Goldman in June 2007. The Sydney-based hedge fund manager said in the suit that Goldman knew at the time that the securities were doomed.
- Pimco Treasury Head Rodosky: US Economy To Slow Down In 2H. A senior fund manager at bond fund giant Pacific Investment Management Co. said the U.S. economy peaked in the first quarter and will slow down in the second half of the year. Against this backdrop, Steve Rodosky, head of Treasury and derivatives trading at Newport Beach, Calif.-based Pimco, said that he has bought Treasurys in recent weeks--as have many other investors fleeing the euro zone's debt crisis.
- ECB's Weber: High Public Debt Could Lead to Higher Rates. High and rising public debt could force the European Central Bank into higher interest rates to anchor inflation expectations, European Central Bank Governing Council member Axel Weber said on Wednesday.
- Lack of Refinancing is Another Blow For Housing. A surprise in this morning's weekly mortgage applications report from the Mortgage Bankers Association. I'm not talking about the part that said purchase applications tanked another 5.7 percent, now down 42 percent from where they were at the end of the home buyer tax credit April 30th. I'm talking about the refinance index. Despite the rate on the 30-year fixed still hanging around 4.8 percent, refinances took a plunge last week for the first time in a month, down 14.3 percent. "Despite the historically low rates, many homeowners have already refinanced recently, remain underwater on their mortgages, have uncertain job situations, or have damaged credit following this downturn, and therefore may not qualify to refinance," writes Michael Fratantoni, MBA's VP of Research and Economics.
- Gasparino Says Financial Crisis Panel May Probe Lehman and JPMorgan(JPM).
- Europe's Horrendous Liquidity Just Got Even Worse(And Nonexistent In Spain).
- Renaissance Technologies' Medallion Fund: Performance Numbers Illustrated. As we detailed previously, Medallion returned 80% in 2008 in a year where many hedge funds stumbled and some completely crumbled. Additionally according to Barron's, Medallion returned 39% in 2009 and has a 3 year annual compound return of 62.8%. While it's cheesy to say, Medallion certainly holds the gold medal in the land of hedge fund lore.
- Florida to Jump into Hedge Funds, Boost Private Equity. The Florida Retirement System is taking the plunge into hedge funds, allocating 6% of its $109.5 billion in assets to the alternative asset class. The move comes amidst a raft of changes at the public pension fund that will dramatically increase its exposure to alternative investments. In addition to the hedge fund allocation, Florida will increase its allocation to private equity from 3.5% to 5% under plans approved by the Florida State Board of Administration yesterday. It will also move 2% of its assets into infrastructure and an unspecified amount into commodities and timberland.
- The Big Tax Increases Facing Small Business. Hedge fund taxes get all the attention. Congress is about to raise billions in taxes on some doctors, accountants and architects.
- The Dark Side of Stimulus. Americans are getting increasingly anxious - and for good reason.
Boston Globe:
- E-Mails Reveal Rift Over Health Insurance Caps. Industry seizes on disagreements of state regulators. The official in charge of monitoring Massachusetts insurer solvency at the state Division of Insurance sent an internal e-mail this spring warning that the rates the division imposed on health plans “have no actuarial support’’ and could lead to “a train wreck’’ in the industry. Shortly after the division rejected proposed double-digit rate increases for small businesses and individuals, Robert G. Dynan, the division’s deputy commissioner for financial analysis, wrote to members of his staff on April 6 that “our jobs of monitoring solvency just got exponentially more difficult’’ as a result of “artificial price caps.’’ Dynan also complained that “this action was taken against my objections and without including me in the conversation.’’ The division’s internal rift “is very serious and should not be taken lightly,’’ said Lora Pellegrini, president of the Massachusetts Association of Health Plans, a trade group representing most of the state’s heath insurers. Pellegrini said the Patrick administration’s rate caps are forcing carriers to lose money on their policies. The four major Massachusetts health insurers posted first-quarter losses totaling more than $150 million, blaming the bulk of the losses on the rate cap. Dynan followed up the April 6 e-mail to his staff with a longer e-mail to Murphy on April 30 suggesting state officials should make an effort to settle the lawsuit filed by the insurers. “There is the potential for catastrophic consequences to our non-profit health care industry if they are not allowed to charge actuarially sound rates,’’ he wrote. He also warned the rate cap could jeopardize the financial conditions of hospitals if they weren’t able to collect on bills sent to insurers.
Huffington Post:
- Blanche Lincoln Win Sparks Furious Sniping Between White House, Labor. "Organized labor just flushed $10 million of their members' money down the toilet on a pointless exercise," the unnamed official said to Politico's Ben Smith. "If even half that total had been well-targeted and applied in key House races across this country, that could have made a real difference in November." Another senior Democrat (who also would not be quoted by name) echoed the point in an exchange with the Huffington Post. "Labor is humiliated," the source said. "$10 million flushed down the toilet at a time when Democrats across the country are fighting for their lives, they look like absolute idiots."
- Obama Approval Tanks in Florida. Just ahead of the President's trip to Florida to check out the oil spill, Quinnipiac is out with a poll today showing Obama's job approval taking a dramatic turn for the worse in the Sunshine State. Six weeks ago, 50% of Floridians approved of the job Obama was doing as President, while 45% disapproved. Today, however, Quinnipiac finds a 54% majority disapproves of how Obama is handling his job as President while just 40% approve - a net swing of 19 points against the President in the last month and a half. Not surprisingly, those numbers are nearly identical to Floridians' view of Obama's handling of the Gulf oil spill. Just 37% approve of the job he's done on the oil spill, while 54% disapprove of the way he's handled the disaster.
- Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 25% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-three percent (43%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -18 (see trends).
- Welch Calls on BP(BP) to Suspend Dividend Payments and Marketing Campaigns. After BP announced its intention to move forward with a payment to shareholders Tuesday, Rep. Peter Welch (D-Vt.) and a coalition of House members called on CEO Tony Hayward to suspend dividend payments and advertising campaigns until it remedies the environmental disaster it caused in the Gulf of Mexico.
- Exxon(XOM), Petronas to Lift Tapis Oil Output in 2013. Exxon Mobil Corp (XOM) plans to invest more than $1 billion to enhance crude oil output at Malaysia's maturing Tapis field in 2013, a company spokeswoman said on Wednesday.
- China Bank ICBC Head Warns Recovery Not Solid.
Financial Times:
- U.K. Chancellor of the Exchequer George Osborne told cabinet ministers that departmental spending cuts of 15 to 20% might be necessary as part of the drive to reduce the public deficit.
- Spanish lenders have failed to secure financing in the interbank market from foreign banks since June 4.
- Chinese banks can withstand a 30%-50% decline in home prices, citing bank officials. The nation's banks have completed stress test on their exposure to mortgages. Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. can withstand about a 35% decline in home prices. Bank of Communications Co. can withstand a 30% decline in prices and Agricultural Bank of China can take a 20% drop. China Minsheng Banking Corp. can withstand a decline of 40%. China Merchants Bank Co. can withstand a drop of 37%.
- New-home prices fell 3% in Beijing last month from April and may fall further, citing Lin Qian, vice president of real estate agency Homelink.
- Yum!'s(YUM) Agrees to Raise Some China Workers' Pay. Workers at Yum! Brands Inc.’s fast- food chain KFC in northeast China will see their minimum wages rise to 900 yuan ($132) a month from 700 yuan after the company agreed to demands from the local trade union, the official Xinhua news agency reported. Employees of the U.S. company’s branch in Shenyang, Liaoning province, will also receive an annual pay rise of 5 percent, Xinhua said in a report late yesterday, citing Feng Hui, head of the Shenyang Municipal Trade Union for Service Industries.
- Osama Bin Laden and Top Aides Are Hiding in Sabzevar, Iran. Osama bin Laden's hiding place was pinned down for the first time Monday, June 7, by the Kuwaiti Al-Siyassa Monday, June 7, as the mountainous town of
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