Today's Headlines

Bloomberg:

• Bond Sales Make Comeback as Swap Spreads Narrow: Credit Markets. Corporate bond sales are back to levels not seen since April as interest-rate swap spreads show investors are gaining confidence that Europe’s debt crisis is contained. Investors put $164 million in high-yield bond funds in the week ended June 16 after withdrawing $6.27 billion in the five previous periods, according to EPFR Global, a Cambridge, Massachusetts-based research firm that tracks asset allocations. One measure of investor fear, two-year interest-rate swap spreads, fell to 33.93 basis points today, the narrowest since May 13 and down from 52.25 on May 24. The Markit CDX North America Investment Grade Index of credit-default swaps, which investors use to hedge against losses on corporate debt or speculate on creditworthiness, declined 4.5 basis points to a mid-price of 105.4 basis points as of 11:48 a.m. in New York, according to Markit Group Ltd. In London, the Markit iTraxx Europe Index of swaps on 125 companies with investment-grade ratings fell 5.1 basis points to 112.5, Markit prices show.
• Corn Falls as Push Below Technical Levels Triggers Sell Orders. Futures for July delivery dropped below the 50-day moving average of $3.6175 a bushel and the 40-day moving average of $3.60375 a bushel, said analyst Jerry Gidel. The price then dropped through the 30-day moving average of $3.58 a bushel. As prices declined past each technical level, automatic sell orders were triggered, Gidel said. “Pulling back below Friday’s close is surprising to me,” said Gidel, a market analyst at North American Risk Management Service in Chicago. “Maybe we were a little optimistic and got overenthusiastic this morning” after China said on June 19 that it would end the yuan’s peg to the dollar, he said. Corn futures for July delivery fell 7 cents, or 1.9 percent, at $3.5375 a bushel at 11:45 a.m. on the Chicago Board of Trade.
• Democrats Use Oil Spill to Push Energy Bill, McConnell Says. President Barack Obama and Democratic lawmakers are trying to “seize on a crisis” to pass a “national energy tax,” Senate Republican Leader Mitch McConnell said. Legislation that charges power plants, factories and oil refineries for carbon dioxide and other greenhouse gases released into the atmosphere “doesn’t have anything to do with an oil spill in the Gulf,” McConnell, a Kentucky Republican, said yesterday on the “Fox News Sunday” program. Senate Democrats plan to bring up legislation next month that responds to the BP Plc oil spill in the Gulf of Mexico and boosts alternative energy sources such as windmills and solar panels.
• Louisiana Governor Asks Judge to Lift Drilling Ban. in papers filed yesterday in federal court in New Orleans. Louisiana Governor Bobby Jindal and state Attorney General Buddy Caldwell asked a U.S. judge to lift a six-month moratorium on deepwater drilling in the Gulf of Mexico within 30 days to avoid “turning an environmental disaster into an economic catastrophe.” The drilling ban may cost Louisiana’s economy, “which was already weakened by Katrina and is now crippled by the Deepwater Horizon disaster,” almost 11,000 direct and indirect jobs in five months, Caldwell saidDeepwater rigs probably will ship out for work overseas during the U.S. ban, Caldwell said, so “there will likely be no deepwater rigs available to resume drilling in the Gulf of Mexico. Having to wait an additional year or more for available rigs will turn the short-term adverse effects of the moratorium into a long-term economic disaster for Louisiana.”
• Brazil's Petrobras(PBR) Will Invest $224 Billion 2010-2014. Petroleo Brasileiro SA, the Brazilian state-controlled oil company, plans to invest $224 billion through 2014 as it seeks to develop the Americas’ largest discovery in three decades and more than double output. About 95 percent of the plan will be invested in Brazil, the Rio de Janeiro-based company said today in a regulatory filing. Petrobras said it expects to raise $58 billion through debt and equity sales over the five-year period, including a planned share sale this year. It plans to spend about $118 billion on oil exploration and production. Petrobras is looking to fund the development of offshore reserves in the so-called pre-salt region off Brazil’s coast, home to discoveries including Tupi, the largest find since Mexico’s Cantarell in 1976. Chief Executive Officer Jose Sergio Gabrielli plans to double output to 5.38 million barrels a day by 2020, compared with 2.7 million barrels in 2010.
• SEC Sues ICP Asset Management, Priore, for Triaxx CDO. ICP Asset Management LLC and its founder were sued by U.S. regulators for their role in selling mortgage-backed securities to vehicles insured by American International Group Inc. as the housing market declined. Thomas Priore, 41, and New York-based ICP directed more than $1 billion of trades starting in 2007 by multibillion- dollar collateralized-debt obligations known as Triaxx at artificially high prices to protect other clients from losses or generate profits for ICP, the Securities and Exchange Commission said in a lawsuit filed today at federal court in New York.
• FAA's Aviation Revamp Puts Taxpayer Dollars at Risk, U.S. Says. A $40 billion overhaul of the U.S. aviation control network may put tax dollars at risk as regulators have so far failed to set realistic goals and coordinate with other agencies, a government report said.
• States Probe Google(GOOG) Data-Gathering, Blumenthal Says. Connecticut Attorney General Richard Blumenthal said his office will lead a multistate investigation into Google Inc.’s unauthorized collection of personal data from wireless computer networks.
• Germany Rejects Obama's Call on Growth, Stoking G-20 Conflict. Chancellor Angela Merkel’s government rebuffed U.S. calls to focus on bolstering growth over debt reduction, setting a course for conflict at the Group of 20 summit in Canada this week. “Nobody can seriously dispute that excessive public debts, not only in Europe, are one of the main causes of this crisis,” Finance Minister Wolfgang Schaeuble told reporters in Berlin today alongside Merkel. “That’s why they have to be reduced.”

Wall Street Journal:

• Anadarko(APC) Would Take Huge Hit If Forced To Pay Into BP's(BP) $20 Billion Oil Spill Fund.
• Cost To Insure Anadarko(APC) Debt Rises On Downgrade, Sparring With BP(BP). The cost of protecting Anadarko Petroleum Corp. (APC) debt from nonpayment rose Monday after the company accused BP PLC (BP, BP.LN), its partner in the leaking Gulf of Mexico oil well, of gross negligence and saw its long-term debt rating from Moody's Investors Service cut to junk. Protection in the form of credit default swaps rose to 4 points upfront from 3 points Friday, meaning someone buying insurance on $10 million of Anadarko debt for five years would have to pay $400,000 upfront on top of annual payments of $500,000. The upfront payment Monday was $100,000 more than it was on Friday. Moody's downgraded Anadarko on Friday to Ba1 from Baa3, citing its nonoperating stake in the well and therefore its share in the escalating cleanup costs and potential fines.

Barron's:

• RIMM(RIMM): Goldman(GS) Repeats Sell Rating; Sees Risk From Android. Could Research In Motion (RIMM) post a May quarter miss when it reports earnings on Thursday? thinks so.

CNBC:

• Financial Reform Is a Disaster For Banks, Consumers: Bove. New financial services regulations will be so disastrous that Congress will need to repeal them to undo the damage they will cause, banking analyst Dick Bove said Monday.

Business Insider:

• Remember How We Saved The Banks So They Would Keep Lending To The "Real Economy"? Two years ago, when the government rushed to bail out Wall Street, the justification was always the same. We have to do it. If we don't, the banks will stop lending. And then the world will end.And so we bailed out Wall Street. And the world didn't end. But the banks still aren't lending.
• Chinese Real Estate Bubble Creating New Crisis For Single Males. Already outnumbering women by 39 million, Chinese men are now finding it impossible to afford the home necessary to attract a wife.
• Don't Mean To Be Alarmist, But The Odds Are Increasing That Microsoft's(MSFT) Business Will Just Completely Collapse.
  

Zero Hedge:

• Meredith Whitney: "No Doubt We Have Entered A Double-Dip For Housing". (video)
• New Intraday Low For Euro As S&P Releases Bearish Report On Spanish Banking.
  

Rasmussen Reports:

• Congress Still Receives Poor Ratings From Voters. Though voters see more action from Congress, they continue to give the legislature poor ratings. The latest Rasmussen Reports national telephone survey of Likely Voters shows only 12% give Congress’ performance good or excellent ratings. The majority (56%) gives Congress a poor rating.

Reuters:

• Baltic Index Fall Further, China Demand Soft. The Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, fell for an 18th day to its lowest level in over three months on Monday as sluggish demand weighed on sentiment. The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, fell 3.45 percent, or 93 points, to 2,601 points in its 18th consecutive fall to reach its lowest since Feb. 16. "Higher raw material costs on iron ore and lower selling prices for steelmakers are dampening importers' demand for iron ore, thus the level of fixtures is being reduced negatively, impacting dry bulk rates," Lorentzen & Stemoco said in a report. Analysts said easing port congestion could also put pressure on freight rates especially in the absence of stronger demand. More broadly, industry concerns over the pace of global economic recovery could hit shipping, given that about 90 percent of the world's traded goods by volume are transported by sea. Analysts said freight rates also could be dampened this year by concerns over the rising number of new ships set to enter the market in 2010 and 2011, despite indications of some vessel cancellations and delays. SSY's Langston estimated net fleet growth at 68 million deadweight tonnes (dwt) this year, versus 38 million dwt in 2009 and 27 million dwt in 2008. 85 capesize ships had already been delivered this year compared with 112 for the whole of 2009. "This year we think we are going to see over 200 capes."

Financial Times:

• US Housing 'Double Dip' Fears Grow. Steve Romeyn, a builder in the northern suburbs of Atlanta, Georgia, is feeling increasingly alone in his industry. “There are many, many builders who have gone out of business . . . a lot of them are working at Home Depot now,” says Mr Romeyn, managing partner at Windsong Properties in Woodstock, Georgia. Fortunately for Mr Romeyn, his company has been somewhat insulated from the problems facing its rivals, as Windsong builds communities for adults over the age of 55, who tend to be more financially stable. Windsong’s fortunes have also been helped by an $8,000 (€6,460, £5,400) tax credit for first-time homebuyers put in place last year and extended to the end of last April. Before the deadline, Mr Romeyn’s business benefited as retirees were able to sell their homes more easily, allowing them to move into his adult communities. Now the tax credit has run out, that momentum has slowed dramatically. “In the last four weeks I’ve seen very weak traffic and weaker activity,” says Mr Romeyn. “It’s not encouraging and it means we’ll have to work even harder to convince people to move forward with their purchases.” In May, new residential home construction in the US fell by 10 per cent to a seasonally adjusted rate of 593,000 units, its lowest level in five months, the commerce department said last week. Economists expected to see an impact from the ending of the tax credit, but not such a steep drop. If the weakness continues, the likely conclusion will be that the tax credit brought forward demand from aspiring homeowners but failed to spur a more fundamental improvement in the housing market. One of the biggest restraints on the housing sector is persistently high unemployment. With joblessness at 9.7 per cent, and expectations that it will improve only gradually over the course of this year and next, homeownership will remain an elusive goal for many Americans. This is particularly true given that credit conditions for home loans remain tight, with many buyers expected to pay at least 20 per cent in equity up front – a huge difference compared to the boom years when mortgages were easy to secure. Meanwhile, home prices have continued to drop as many houses are being sold out of foreclosure or at distressed values. According to the widely followed Standard and Poor’s/Case-Shiller index, home prices across the US actually rose by 2 per cent over the year to March. However, they fell in the fourth quarter of last year by 1 per cent, and the pace of decline accelerated to 3.2 per cent in the first quarter of this year. Mr Logan says falling prices remove one of the main motivations for people to buy a house, which is the chance to own a home that is also a good investment.

Handelsblatt:

• Germany's support for renewable energy is "breaking" the nation's ability to pay for power and threatens the competitiveness of electricity producers, citing a former industry group leader. Guaranteed prices for solar and wind power, paid for by consumers, are threatening the renewable-energy industry's ability to compete, citing Johannes Lackmann, the former head of Germany's BEE renewable-energy lobby group.

Cinco Dias:

• Spain's Development Ministry will cut 40 public works contracts as it tries to reduce spending on government projects by $4 billion this year and next. The Ministry will have the list of contracts to be suspended ready in coming weeks.