Monday, November 01, 2010

Today's Headlines

Posted by Gary .....at 3:00 PM

Bloomberg:
  • ISM U.S. Factory Index Rises in October to Five-Month High. Manufacturing in the U.S. expanded at the fastest pace in five months in October, pointing to renewed strength in the industry that led the nation out of recession. The Institute for Supply Management’s factory index increased to 56.9 from 54.4, the Tempe, Arizona-based group said today. Readings greater than 50 signal growth. The ISM’s U.S. new orders climbed to 58.9 from 51.1, while the production index jumped to 62.7 from 56.5. Both were the highest in five months. Measures of employment and export orders also increased.
  • U.S. Consumer Spending Rises Less Than Forecast, Prices Cool. Consumer spending rose less than forecast in September as incomes dropped for the first time in more than a year, a sign Americans may keep rebuilding savings and paring debt as the economy is slow to recover. Purchases increased 0.2 percent, the smallest gain in the third quarter, Commerce Department figures showed today in Washington. Incomes fell 0.1 percent, the first drop since July 2009, and the Federal Reserve’s preferred measure of inflation stagnated, capping the smallest 12-month gain in nine years. The report showed the damage being done by unemployment near 10 percent, one reason why Fed policy makers may pump more money into the financial system after they meet this week.
  • Chinese Economic Growth May Face 'Big Drop,' CIC Chairman Lou Jiwei Says. China’s $300 billion sovereign wealth fund said there may be a “big drop” in the pace of the nation’s economic growth in the coming three to four years as more of the population retires. “We cannot use the past 15 years or 30 years as a simple extrapolation of growth trends to forecast China’s future,” Lou Jiwei, chairman of China Investment Corp., said at a forum in Beijing today, according to prepared remarks obtained by Bloomberg News. “If we consider the population factors and the movement to a higher stage of development, it implies that China’s potential economic growth rate will experience quite a big drop in the next three to four years.” China’s start of the one-child policy 30 years ago and longer life spans from better medicines are set to slash the number of working adults able to support each retired citizen. China’s population will change “drastically” as the ratio of working adults to those 65 or older declines from 9 in 2006 to 2.5 by 2050, according to the Washington-based Population Reference Bureau. Individuals 65 or older will account for 24 percent of the population by 2050, rising from 8 percent in 2006, the advocacy group said in a report on its website. That trend will “endanger” the nation’s health care system, according to the group. As a result of its aging population, China’s economic growth rates may slow at an earlier stage of development than in Japan and South Korea, according to the speech transcript. China should introduce a property tax to provide a stable source of funds for local governments, lower its highest income tax rate, and extend its value-added tax beyond manufactured goods to also include services, Lou said.
  • BHP(BHP) May Raise Hostile Potash Corp.(POT) Takeover Bid to $165 a Share, UBS Says. BHP Billiton Ltd., the world’s biggest mining company, may raise its offer for Potash Corp. of Saskatchewan Inc. as much as 27 percent should the deal win Canadian federal government approval this week, UBS AG said.
  • Exco(XCO) CEO Proposes $4.36 Billion Buyout of Company. Exco Resources Inc., the Dallas-based oil and natural gas producer that had fallen 30 percent this year, said its chief executive officer has offered to buy all shares he doesn’t already own in a purchase that values the company at about $4.36 billion. CEO Douglas H. Miller said Dallas billionaire T. Boone Pickens, Oaktree Capital Management LP and Ares Management LLC, three of the four largest shareholders in Exco, are interested in joining him, according to a letter released today by the company. Miller is offering to pay $20.50 a share in cash, a 38 percent premium over the closing price on Oct. 29.
  • McKesson(MCK) to Purchase US Oncology in Deal Valued at $2.16 Billion. McKesson Corp., the biggest U.S. drug distributor, agreed to buy closely held US Oncology Inc. for about $560 million to expand in cancer care and medicines. McKesson will pay cash for the deal, valued at $2.16 billion, including $1.6 billion in debt, John H. Hammergren, chief executive officer of the San Francisco-based company, said today on a conference call.
  • Gains during the worst two-month period for stock investors have coincided with some of the most powerful rallies in the S&P 500. The S&P 500 has gained 13% over the past two months, one of the best showings over the last 30 years. After a 12% gain in the two months during 1982, the index more than doubled through 1987, while the 15% surge in 1998 was followed by a 39% climb through 2000, Bloomberg data show.
  • JPMorgan(JPM) Trims Biggest Mortgage Putback Estimate to $90 Billion. JPMorgan Chase & Co. analysts lowered their estimate for the cost to sellers of repurchasing soured U.S. mortgages to as much as $90 billion from a range that went as high as $120 billion.
  • Fortinet(FTNT) Said to Be Approached by IBM(IBM); Shares Soar. Fortinet Inc., a maker of network- security systems, has received a takeover approach from International Business Machines Corp., according to two people close to the situation. Fortinet is working with Morgan Stanley and exploring its strategic options, said the people, who asked not to be identified because the talks haven’t been made public.
  • Fed Likely to Announce $500 Billion of Purchases, Survey Shows. The Federal Reserve will probably begin a new round of unconventional monetary easing this week by announcing a plan to buy at least $500 billion of long-term securities, according to economists surveyed by Bloomberg News.

Wall Street Journal:
  • QE2 No Smooth Ride For Bondholders. If QE2 either disappoints because the scale is too small, or works too well in raising inflation expectations, Treasury yields will rise and corporate bonds will suffer too. This effect will be magnified for investors who sought yield by buying longer-maturity debt.
Bloomberg Businessweek:
  • Portuguese Parties Agree Austerity Plan for Deficit. Portugal’s government and biggest opposition party agreed to approve next year’s budget as they scrambled to show investors they can cut the euro region’s fourth-biggest deficit and stave off an international bailout. The governing Socialists will reconsider some public-works projects to overcome the opposition of the Social Democrats, who will abstain in the Nov. 3 vote under an agreement signed late on Oct. 29. Portugal is also cutting wages for public-sector workers and raising taxes as the government tries to convince investors it can control the nation’s deficit following this year’s surge in borrowing costs.
Barron's:
CNBC:
Business Insider:
LA Times:
  • Federal Reserve's Proposed Home Appraisal Rules May Not Prevent Inaccurate Valuations. The rules would replace those imposed last year by Fannie Mae and Freddie Mac. Critics say they won't lessen the system's tilt toward cut-rate fees and short turnaround times.
  • Turkey: Ankara Adds Israel to List of Strategic Security Threats. Turkey and Israel are at it again, but this time it's over reports that Turkey has added Israel to its so-called "Red Book," the top-secret security document that lists the country's threats and enemies. Israeli tourism minister Stas Misezhnikov struck back on Sunday by calling on Israelis to boycott Turkey as a tourist destination out of "national honor." According to Turkish media, the Red Book, which is amended every five years, now identifies Israel as a "strategic threat" to Turkey.
The Detroit News:
ProPublica:
GreenTech:
  • US Venture Investments in Cleantech Plummet in Q3. Domestic venture capital funding of cleantech businesses fell 55% to $575.6 million in the third quarter of 2010 compared to the same period last year according to a new report from Ernst & Young and Dow Jones VentureSource.
comScore:
U.S. News:
  • Obama Is Turning Women and Working Families Away From Dems. Thursday’s New York Times/CBS News poll had a few gems buried in it: first, that previously undecided women are now turning to the GOP, for the first time since polls began tracking the breakdown between male and female voters in 1982. In the previous New York Times poll last month, women preferred Democrats by 7 points. As of yesterday, they prefer Republicans by 4 points--an 11-point swing that suggests that undecided women are moving to the right. In the same results, we also find that the Democrats’ long-standing 20-point advantage among families with incomes of less than $50,000 has been completely erased, replaced by a small lead for Republicans.
Politico:
  • Evan Bayh Predicts Democrats Will Suffer Big Midterm Losses. Retiring Democratic Sen. Evan Bayh of Indiana on Monday predicted huge losses for his party in Tuesday’s midterm elections, particularly in the House, but suggested that with some “introspection” President Barack Obama “can save himself” before his 2012 reelection campaign. Bayh, who announced his retirement earlier this year in part because he said he no longer wanted to deal with divisive partisanship in Washington, was harsh on the agenda embraced by his colleagues — and himself — adding that the massive GOP pickups he’s predicting on Tuesday should serve as a “wake-up call” for Democrats. “We can save ourselves — the president can save himself — but we have to step back and learn from this,” Bayh said on MSNBC’s “Morning Joe.” “We have to listen to what the public is saying. ... As painful as it will be for people I care about, [Tuesday] will be a wake-up call against business as usual.” Bayh forecast Democrats could lose as many as 60 seats in the House but keep control of the Senate by a slim margin.
  • Tuesday Could Produce New Latino Stars - in GOP. In an election year when Democrats are accusing the GOP of being anti-immigrant, Hispanic candidates are poised to make historic gains Tuesday – on the Republican ticket. It’s an unusual twist on one of the dominant narratives of the election: The party that reignited the immigration debate by writing the Arizona enforcement law, pushed for repeal of the 14th Amendment, and produced hard-hitting ads against illegal immigrants is likely to wake up Wednesday with a bench of Hispanic Republicans who will be instant celebrities in the political world.
  • The Twilight of Harry Reid? If Harry Reid loses this election, it will be a crushing end to a storied political career. The majority leader of the United States Senate will have been defeated after four terms by an opponent he doesn't respect or even take seriously. He will be the victim, in his view, of an electorate gone mad, taken down in his prime after rising higher than anyone from his state ever has. Is this the twilight of the majority leader? Reid certainly doesn't think so. He refuses to acknowledge the possibility that he could lose on Tuesday and has refused to grow wistful or discouraged in his campaign's final hours.
Rasmussen Reports:
  • 58% Favor Repeal of Health Care Law. Just before midterm congressional elections in which the new national health care law has been a major issue, 58% of Likely U.S. Voters favor repeal of the measure, including 45% who Strongly Favor it. That’s the highest overall level of support for repeal since mid-September. A new Rasmussen Reports national telephone survey finds that only 36% of voters oppose repeal of the health care law, with 27% who are Strongly Opposed.
  • Generic Ballot: Republicans 51% Democrats 39%.

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