Thursday, September 02, 2010

Today's Headlines

Posted by Gary .....at 3:05 PM

Bloomberg:
  • Corporate Bond Risk Declines to Two-Week Low in Europe on Economic Outlook. The cost of insuring against losses on European corporate bonds fell to the lowest level in two weeks as investors bet the global economy will escape another recession. The Markit iTraxx Crossover Index of credit-default swaps on 50 companies with mostly high-yield credit ratings decreased 10 basis points to 496, according to JPMorgan Chase & Co. at 2:30 p.m. in London. “The market has done a turnaround from fearing recession to seeing it as less likely,” said Bill Blain, joint head of fixed income at Matrix Corporate Capital LLP. “Buyers have woken up to the fact they’re underinvested and are concerned they miss any bargains still out there.” The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell 2.25 basis points to 109.75, JPMorgan prices show. The Markit iTraxx Financial Index of 25 banks and insurers dropped 4 basis points to 134. The cost of insuring against default on sovereign debt also fell, with the Markit iTraxx SovX Western Europe Index of swaps on 15 governments dropping 4 basis points to 143, according to CMA. Swaps on Portugal dropped 23 basis points to 304, Greece tumbled 23 to 874, Spain declined 6.5 to 212.5, Italy was 6 lower at 200 and Ireland was down 3 at 332.
  • U.S. Economy: Pending Home Sales Rise in Sign Market Steadying. Pending sales of existing houses unexpectedly climbed in July from a record low, indicating the real-estate market is steadying following the end of a government tax credit. The index of purchase contracts rose 5.2 percent after a revised 2.8 percent drop the prior month, figures from the National Association of Realtors showed today in Washington. Combined with data showing claims for unemployment benefits dropped and orders to factories increased, the reports allayed concern the economy was tipping back into a recession. “We’re growing at a mediocre clip,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut.
  • U.S. Stock Pessimism Brightens September Outlook: Chart of the Day. Investors are so down on U.S. stocks that any rebound in sentiment may head off the market’s typical September slump, according to Thomas J. Lee, JPMorgan Chase & Co.’s chief U.S. equity strategist. Lee cited the results of separate weekly surveys by the American Association of Individual Investors and Investors Intelligence, which tracks the views of newsletter writers, in a report today. Both gauges signaled that pessimism is as pervasive as it was when the most recent bear market ended about 18 months ago.
  • Copper Rises to Four-Month High on Unexpected Housing Gain, Jobless Drop. Copper futures rose to the highest price in four months as U.S. housing and employment reports signaled an improving economy, easing concern that demand for metal will slow. Copper futures for December delivery added 1.75 cents, or 0.5 percent, to $3.495 a pound at 12:44 p.m. on the Comex in New York. Earlier, the commodity reached $3.5045, the highest level for a most-active contract since April 27.
  • Economy Avoids Recession Relapse as Data Can't Get Much Worse. The U.S. economy is so bad that the chance of avoiding a double dip back into recession may actually be pretty good. The sectors of the economy that traditionally drive it into recession are already so depressed it’s difficult to see them getting a lot worse, said Ethan Harris, head of developed markets economics research at BofA Merrill Lynch Global Research in New York. Inventories are near record lows in proportion to sales, residential construction is less than half the level of the housing boom and vehicle sales are more than 40 percent below five years ago. “It doesn’t rule out a recession,” Harris said. “It just makes it less likely than otherwise.” The possibility of the economy lapsing into another contraction during the next year is 25 percent, he said in a Sept. 1 report. Harris cut his forecast for growth this year by 0.1 percentage point to 2.6 percent and lowered his 2011 estimate by a half point to 1.8 percent, according to the report.
  • U.S. 30-Year Mortgage Declines to 4.32%, Setting Record Low for 11th Week. U.S. mortgage rates dropped to a record, the 11th straight week of matching or setting a new low, reducing borrowing costs for homebuyers as demand slumps. The average rate for a 30-year fixed mortgage fell to 4.32 percent in the week ended today from 4.36 percent, Freddie Mac said in a statement today. That was the lowest since the McLean, Virginia-based company began compiling the data in 1971. The average 15-year rate was 3.83 percent, also a record.
  • SEC Said to Probe Possible Role of Canceled Trades in May 6 Market Crash. The U.S. Securities and Exchange Commission is examining whether high-speed traders helped trigger a 700-point drop in the Dow Jones Industrial Average on May 6 by repeatedly placing and immediately canceling orders in an attempt to manipulate share prices, a person with direct knowledge of the inquiry said. The strategy, known as quote stuffing, is among several market practices being investigated by regulators, said the person who declined to be identified because the probe isn’t public. The SEC is also looking into whether traders may have used so-called sub-penny quotations to artificially generate price movements, the person said.
  • EU May Limit Naked Shorts of Stocks, Government Debt. Naked short sales of shares and government bonds may be limited by European Union proposals that say the practices cause a “disorderly market and possible systemic risks.” Under the proposed rules, traders would be required to submit proof they can access the underlying security to settle a trade designed to profit from falling prices, according to a European Commission document obtained by Bloomberg News.
  • China and Russia agreed to expand cooperation over nuclear power, the China Atomic Energy Authority said on its website. The countries will cooperate over uranium exploration, floating nuclear power plants and development of overseas markets.
  • Unions Spurns Democrats Seen as Turncoats on Health, Organizing. Representative Zack Space, a two- term Democrat running for re-election in Ohio, faces an online campaign urging voters to boycott his candidacy. The anti- incumbent pitch isn’t from Republicans or Tea Party activists. The website, skipaspace.com, is backed by four unions that say they refuse to work for Space’s return to Congress after he voted against President Barack Obama’s health-care legislation. Leaders of organized labor helped Democrats win the White House and expand their control of Congress two years ago, only to find some candidates they supported didn’t return the favor with votes for the health-care measure that passed or a union- organizing bill that stalled.
  • California 'Budget Kabuki' Increases Schwarzenegger Debt Costs. California’s borrowing costs are rising, even as Governor Arnold Schwarzenegger says he’s not ready to call lawmakers into special session to eliminate a $19.1 billion deficit before the state runs out of cash. The extra yield investors demand on 10-year California bonds rose to 124 basis points above AAA rated municipal securities yesterday, up 14 percent in a week, Bloomberg Fair Value Index data show. The increase comes as the state will need to borrow as much as $10 billion in short-term notes within four weeks of any budget agreement and more than $6 billion in longer-dated bonds by December for public-works projects.
  • Food-Stamp Recipients Climb to Record With Jobless at 27-Year High. The number of Americans receiving food stamps rose to a record 41.3 million in June as the jobless rate hovered near a 27-year high, the government said. Recipients of Supplemental Nutrition Assistance Program subsidies for food purchases jumped 18 percent from a year earlier and increased 1.2 percent from May, the U.S. Department of Agriculture said today in a statement on its website. Participation has set records for 19 straight months. About 40.5 million people, more than an eighth of the population, will get food stamps each month in the year that began Oct. 1, according to White House estimates. The figure is projected to rise to 43.3 million in 2011.
  • HP(HPQ) Increases Offer for 3Par(PAR) to $33, Trumping Dell(DELL). Hewlett-Packard Co. increased its offer for 3Par Inc. to $33 a share, topping Dell Inc.’s new $32 proposal and stretching the public bidding war for the data- storage supplier into its 18th day. HP’s offer is a “superior proposal,” 3Par said today in a statement. The Fremont, California-based company said it notified Dell of its intention to terminate their merger agreement.
  • Gulf Oil Workers Safe After Explosion Causes Fire.
  • Hurricane Earl Strengthens, Bears Down on North Carolina.

Wall Street Journal:
  • Burger King Agrees to 3G Capital Offer. Burger King Holdings Inc. agreed to be acquired by New York-based private-investment firm 3G Capital Management Inc. for $24 a share. The total deal, including both equity and debt, is around $4 billion and is expected to closed before the end of the year. Burger King said it may solicit better offers through mid-October.
  • Japan Minister Warns China on Business Rules. Japanese Foreign Minister Katsuya Okada warned Thursday China risks losing foreign investments unless it introduces more transparency and consistency into its business rules, including its legal framework to deal with labor issues. Swinging back at Beijing in an emerging dispute over the treatment of Japanese companies operating in China, Mr. Okada said a lack of comprehensive rules makes it difficult for foreign investors to solve labor disputes and other problems they face with increasing frequency in the nation.
  • Bernanke, Bair Defend Markets Overhaul. The need to eliminate firms that are effectively "too big to fail" was the top lesson from the recent financial crisis, Federal Reserve Chairman Ben Bernanke told an investigative panel Thursday. Regulators "now have the tools to do that" under the recently passed Dodd-Frank law, he said, and will force firms to divest or restructure if they pose an untenable risk to the broader economy. "My projection is that even without direct intervention...that over time we will see some breakups and some reduction in size and complexity of some of these firms," Mr. Bernanke told the Financial Crisis Inquiry Commission, which is tasked with investigating the causes and fallout from the credit-market collapse.
  • If Saddam Had Stayed. Saddam would have joined the nuclear bad-boys club with Iran and North Korea.
CNBC:
Business Insider:
Zero Hedge:
Washington Times:
  • Waters Family Profiting From Mailer Biz. Rep. Maxine Waters has turned political endorsements into a family business, using federal election laws to charge California candidates and political causes to include their names as her personal picks on a sample ballot, or "slate mailer," she sends to as many as 200,000 South Central Los Angeles voters, records show. Some statewide candidates paid as much as $45,000 for their share of the costs to be included in the mailer, according to state and federal election records, and while it can be costly for the candidates, the mailer has proved profitable for Mrs. Waters' daughter, Karen. Karen Waters' public relations firm, Progressive Connections, has been paid $354,500 since late 2004 to direct production and distribution of the mailer - about a third of the $1 million collected from the candidates and issue groups seeking to be included on the sample ballot, the records show.
Forbes:
FINalternatives:
Hedge Funds Review:
  • Investor Confidence Index Falls in August. The State Street Investor Confidence Index has fallen from 96.5 to 92.1 in August, with confidence decreasing in North America, Europe and Asia. August recorded a significant global decrease in investor confidence in North America with a drop of 5.7 points to 95.3 from July's revised reading of 101, according to the index produced by State Street Global Markets, the investment research and trading arm of State Street Corporation. Confidence also fell among European investors dropping 1.2 points from 99.9 to 98.7. In Asia there was a decrease of 1.6 points from 103.8 to 102.2.
Talking Biz News:
MoneyWatch.com:
  • Stocks Rally on Schedule, Catching Hedge Funds Off Guard. So far, so good. In a post before the stock market opened Wednesday, I highlighted a report by Citigroup (C) showing that hedge funds were making one of their biggest bets on record against stocks. Citigroup’s analysts (and I) concluded that this was a sign of excessive pessimism, the sort that precedes a rally. Right on cue, stocks put in their best session in nearly two months, and they were up again in midday trading Thursday, albeit more modestly.
Real Clear Politics:
Rasmussen Reports:
  • Most Voters Believe the Democrats in Congress Want to Raise Taxes, Increase Government Spending. Heading into the final two months of the mid-term election campaign, most voters believe that Democrats in Congress want to raise taxes and spending while Republicans in Congress want to cut taxes and spending. At the same time, most voters believe that reducing taxes and spending would be good for the economy. A new Rasmussen Reports national telephone survey finds that 62% of Likely Voters believe Congressional Democrats want to increase government spending. Only 16% believe the party wants to cut spending. On the tax front, 59% believe that most Democrats in Congress want to increase taxes. Only 17% hold the opposite view. As for Republicans, 51% say that most Republicans want to cut government spending and 50% say they want to cut taxes. Twenty-seven percent (27%) believe GOP legislators want to increase spending and 25% believe they want to increase taxes. Sixty percent (60%) believe that tax cuts are good for the economy while 56% say tax hikes will hurt the economy. Fifty-six percent (56%) believe that additional government spending will hurt the economy and 50% believe that spending cuts will help.
Politico:
  • McConnell Says Dems Short Tax Votes. Senate Minority Leader Mitch McConnell (R-Ky.) believes Senate Democrats and the White House might not have the votes to repeal the Bush era tax cuts for the wealthiest two percent of Americans.
  • Senate Control Hinges on Unlikely Trio. Control of the U.S. Senate increasingly appears to hang on the fate of an unlikely trio of Democratic incumbents who were elected along with Bill Clinton in 1992, hail from liberal-leaning states and have lived mostly charmed political lives. At the start of the year, few observers thought the Senate was up for grabs, in part because it seemed implausible that Washington’s Patty Murray, California’s Barbara Boxer and Wisconsin’s Russ Feingold were in any serious danger.
AP:
  • Discovery Channel Hostage-Taker Hated Programming. A gunman police shot to death after he took hostages at Discovery Channel's headquarters said he hated the company's shows such as "Kate Plus 8" because they promote population growth and its environmental programming because it did little to save the planet. It wasn't the first time Lee, a homeless former Californian, had targeted Discovery's headquarters. In February 2008, he was charged with disorderly conduct for staging a "Save the Planet Protest." In court and online, he had demanded an end to Discovery Communications LLC's shows such as TLC's "Kate Plus 8" and "19 Kids and Counting." Instead, he said, the network should air "programs encouraging human sterilization and infertility." "Humans are the most destructive, filthy, pollutive creatures around and are wrecking what's left of the planet with their false morals and breeding cultures," Lee wrote in a bitter manifesto on his website. Lee, 43, also objected to Discovery's environmental programming. He wrote in 2008 that a show he called "Planet Green" was "about more PRODUCTS to make MONEY, not actual solutions."
Reuters:
Financial Times:
  • Foreign Companies 'Losing Out' in China. Foreign companies are losing market share in China across a broad range of industries because of discriminatory treatment by the government and regulators, according to the European Chamber of Commerce in China. In its annual position paper, the organisation aired a host of complaints from its member companies and explicitly accused Beijing of violating its World Trade Organisation commitments through its heavy-handed certification requirements. “Compulsory certification in excess of what is reasonable is being used to keep foreigners out of the market and business license requirements continue to exclude foreign companies from entire sectors,” the group said. China uses business licensing to restrict foreign access to some sectors and applies “vague and unprecedentedly broad definitions of public security and critical infrastructure” in its certification of a wide range of products, the EU chamber said. This means foreign companies, particularly in industries like banking, transportation, IT and telecommunications, are often unable to get their products certified and so cannot sell them in China. Based on information gathered from hundreds of European companies operating in China, the position paper is widely distributed in Beijing and Brussels and is important in the formulation of EU policy towards China.
DigiTimes:
  • TI(TXN) Expects Shipments of DLP 3D Ready Chips to Reach 2-3 Million Units in 2011. Texas Instruments (TI) vice president of DLP business Kent Novak at a conference has commented that the company's shipments of DLP 3D Ready chips will increase to 2-3 million units in 2011, and the company already shipped over 300,000 from the fourth quarter of 2009 to the first quarter of 2010. Global front projector shipments in 2010 are expected to reach 7.3 million units, and to 8.1 million units in 2011, according to data from PMA. TI's DLP chips will account for 50% of the global projector market in 2010, which will be about 3.65 million units in shipments, PMA data showed.

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