Wednesday, November 10, 2010

Today's Headlines

Posted by Gary .....at 3:04 PM

Bloomberg:
  • Corporate Bond Risk Rises in Europe, Credit-Default Swaps Show. The cost of protecting European corporate bonds from default rose, according to traders of credit-default swaps. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings climbed 17 basis points to 453, according to JPMorgan Chase & Co. at 4:01 p.m. in London. The Markit iTraxx Europe index of 125 companies with investment-grade ratings rose 4.25 basis points to 103. The cost of protecting bank bonds from default also rose, with the Markit iTraxx Financial Index linked to the senior debt of 25 banks and insurers up 7 at 144 and the subordinated index 13 higher at 224, the highest since June.
  • The Baltic Dry Index, a measure of commodity shipping costs, matched its longest losing streak since July as rents fell for three of the four vessel types tracked by the gauge. The index lost 13 points, or .5%, to 2,454 points. The drop was the 10th in a row.
  • LCH Clearnet Increases Irish Government Bond-Margin Payments From Tomorrow. LCH Clearnet Ltd. demanded its clients place a larger deposit when trading Irish government bonds after the yield on the nation’s debt soared, and may impose similar measures on other European securities. The additional margin requirement of 15 percent, which takes effect tomorrow, will be charged on investors’ net position in Irish debt from Nov. 11, and the change will be reflected in a margin call on Nov. 12, LCH said on its website. The London-based company is the world’s second-largest fixed- income clearing house. The move by LCH pushed Irish bonds lower, extending their two-week decline as investors speculate costs to bail out the nation’s banks have made the government debt load unsustainable. “This is LCH recognizing that the markets are quite serious about the potential for Ireland to default or restructure,” said Simon Penn, a market analyst at UBS AG in London. The yield on Irish 10-year debt surged 44 basis points to 8.52 percent as of 1:24 p.m. in London. The spread over the Bloomberg Fair Value Sovereign Benchmark 10-year bond widened 32 basis points to 585 basis points, according to Bloomberg generic data. It was at 370 basis points as recently as Oct. 26. “Irish banks are not LCH members, so this should not directly affect their funding,” Francesco Garzarelli, chief interest-rate strategist at Goldman Sachs Group Inc. in London, said in a research report today. “However, this could amplify the re-assessment of counterparty risk.”
  • U.S. Jobless Claims Fell Last Week to Lowest Level Since July. The number of Americans filing initial jobless claims last week fell to the lowest level in four months, reinforcing evidence the U.S. labor market is healing. Applications for jobless benefits declined by 24,000 to 435,000 in the week ended Nov. 6, lower than the median forecast in a Bloomberg News survey, Labor Department figures showed today in Washington. The four-week moving average, a less volatile measure than the weekly figures, dropped to 446,500 last week, the lowest since Sept. 13, 2008, from 456,500, the report showed. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, dropped to 3.4 percent in the week ended Oct. 30, from 3.5 percent in the prior week.
  • Mortgage Applications in U.S. Increase on Gain in Purchases. The number of mortgage applications in the U.S. rose as purchases increased for a third straight week and refinancing picked up. The Mortgage Bankers Association’s index increased 5.8 percent in the week ended Nov. 5, the Washington-based group said today. Refinancing rose 6 percent and purchase applications were up 5.5 percent, the most since Oct. 1.
  • Copper Imports by China Drop to One-Year Low as Rising Prices Deter Buyers. Copper imports by China, the world’s largest consumer, declined for the second month to the lowest level in a year, as high international prices and ample domestic supplies reduced the appeal of buying from overseas. Shipments of copper and products fell 26 percent to 273,511 metric tons from 368,410 tons in September, the General Administration of Customs said on its website today. China’s copper output increased in September, after dipping in July and August, as high prices and high raw-material supplies encouraged production. Inventories in Shanghai warehouses increased 21 percent last month. Copper inventories at Shanghai Futures Exchange-monitored warehouses expanded to the highest level in two months as of last week, according to the bourse. Imports stored in Shanghai’s bonded warehouses have at least doubled in the past three months, Na Liu, Scotia Capital’s China strategy advisor, said in an e-mail yesterday. China also imported 310,000 tons of scrap copper, down 24 percent from 410,000 tons in September, data from the Beijing- based customs showed.
  • Crude Oil Increases to Two-Year High on Unexpected Drop in U.S. Supplies. Crude oil rose to a two-year high after a report showed an unexpected decrease in inventories as imports declined and refineries bolstered fuel production. Oil climbed as much as 1.5 percent as supplies dropped 3.27 million barrels to 364.9 million last week, the Energy Department said. Crude oil for December delivery increased $1.17, or 1.4 percent, to $87.89 a barrel at 12:03 p.m. on the New York Mercantile Exchange. Futures touched $88.02 a barrel, the highest level since Oct. 9, 2008. Crude-oil imports tumbled 5.7 percent to 8.09 million barrels a day, the lowest level since January.
  • Wall Street Collects $4 Billion From Taxpayers as Swaps Backfire. The subprime mortgage crisis isn’t the only calamity Wall Street created that’s upending the finances of U.S. states and cities. For more than a decade, banks and insurance companies convinced governments and nonprofits that financial engineering would lower interest rates on bonds sold for public projects such as roads, bridges and schools. That failed promise has cost more than $4 billion, according to data compiled by Bloomberg, as hundreds of borrowers from the Bay Area Toll Authority in Oakland, California, to Cornell University in Ithaca, New York, quietly paid Wall Street to end agreements since 2008.
  • Polo Ralph Lauren(RL) Boosts Sales Forecast for the Year. Polo Ralph Lauren Corp., the New York-based seller of the namesake brand clothing, raised its sales projection for the year as customers snapped up footwear and apparel. Sales will increase at “a low double-digit” rate, the company said today in a statement. In August, the company projected a “mid-to-high single-digit” rate. Net income in the quarter ended Oct. 2 climbed 16 percent to $205.2 million, or $2.09 a share, from $177.5 million, or $1.75, a year earlier. Revenue climbed 11 percent to $1.53 billion, fueled by the wholesale business in the U.S. and Europe. Consumers are beginning to spend again as they recover from the worst economic slump in about 70 years. Ralph Lauren, led by its namesake chief executive officer, gets about 70 percent of sales from North America. The shares climbed $5.54, or 5.5 percent, to $106.46 at 9:39 a.m. in composite trading on the New York Stock Exchange.
  • Attorneys General Foreclosure Probe on 'Fast Track,' Miller Says. The investigation by attorneys general in 50 U.S. states into banks’ foreclosure practices is on “a fast track” and any resolution might involve multiple settlements, Iowa Attorney General Tom Miller said.
  • Palestinian Authority to Get $150 Million Additional U.S. Aid to Pare Debt. Secretary of State Hillary Clinton today said the U.S. gave $150 million in direct aid to help the cash-strapped Palestinian Authority close its budget deficit, after direct peace talks with Israel stalled. The assistance to the government led by President Mahmoud Abbas is an advance on $200 million requested in fiscal 2011 for the Economic Support Fund, the State Department said. Total aid to the Palestinians for fiscal 2010 is almost $600 million. This “underscores the strong determination of the American people and of this administration to stand with our Palestinian friends even during difficult economic times as we have here at home,” Clinton said, during a video conference with Palestinian Prime Minister Salam Fayyad.
  • Goldman Sachs(GS) Said to Pull $120 Million From Falcone Hedge Fund. Goldman Sachs Group Inc. plans to pull all of its $120 million from Philip Falcone’s main hedge fund after returns lagged behind peers and Falcone disclosed he borrowed $113 million from a smaller fund that had suspended redemptions, said three people briefed on the matter.
  • Permanent Tax-Cut Extensions Needed to Reduce 'Uncertainty,' Boehner Says. A permanent extension of tax cuts is needed “to reduce the uncertainty in America” that’s chilling business investment and hiring, John Boehner, the presumptive U.S. House speaker, said today. Asked whether he’s willing to compromise with President Barack Obama on the tax reductions enacted in 2001 and 2003, the Republican leader said he wants the cuts, which expire at the end of this year, to be made permanent for all taxpayers.

Wall Street Journal:
  • Quant Veteran to Retire From Goldman(GS). Senior Goldman Sachs Group Inc. quantitative-investing director Robert C. Jones is retiring at year end, according to a memo sent to Goldman asset-management executives Wednesday morning.
  • Ultra-Rich Pour Back Into Hedge Funds. Memories sure are short among the rich. Just a year after getting burned by the steep losses, high fees and lock-up windows of hedge funds, the wealthy are piling back into these investment vehicles. A survey from Spectrem Group shows that half of all households surveyed with $25 million or more in net worth had investments in hedge funds in 2010. That is a big jump from 2007, before the depths of the financial crisis, when just 35% of such households had hedge-fund investments. They also are putting in sizable amounts of cash. The mean hedge-fund holding for this group is $4.6 million in 2010.
  • Panel Chairman Recommend Cutting Federal Spending by $200 Billion. The co-chairs of a deficit commission established by the White House would seek to limit federal spending on health care, gradually raise the retirement age and lower the corporate tax rate to 26%, according to a draft set of proposals released Wednesday.
CNBC:
Business Insider:
  • The Fed's QE2 Misadventure Will Cost U.S. Households $4.6 Trillion. The Fed's Quantitative Easing Part 2 has destroyed $4.6 trillion in household wealth, all to boost the stock portfolios of the top 10%. The Federal Reserve's stated goals in launching QE2 were to trigger a "wealth effect" and boost inflation. The net result of their program is a massive destruction of household wealth.
New York Post:
  • Stop Overtaxing the Rich: Andrew Cuomo. After repeatedly bashing the ineptitude of Albany on the campaign trail, Gov.-elect Andrew Cuomo yesterday finally admitted there was one thing state government has a talent for -- taxing the wealthy. "We have no problem telling rich people they have to pay taxes. We do it extraordinarily well. We do it better than almost any state in the nation," Cuomo said at Gov. Paterson's East Side offices after their first face-to-face meeting since the election. "At what point do the rich people say, 'I'm moving'? That's the question." Cuomo predicted the state's prospects will be bleak if Albany continued slapping taxes on residents to pay the bills.
CNNMoney:
  • Boeing(BA) Cancels Dreamliner Test Flights. Boeing said Wednesday it has canceled test flights of its 787 Dreamliner, after one of the new airplanes made an emergency landing in Texas. "Until we understand the event, we're not going to schedule any new flights," said Boeing spokeswoman Lori Gunter.
McClatchy:
  • Obama Officials Moving Away From 2011 Afghan Withdrawal Date. The Obama administration has decided to begin publicly walking away from what it once touted as key deadlines in the war in Afghanistan in an effort to de-emphasize President Barack Obama's pledge that he'd begin withdrawing U.S. forces in July 2011, administration and military officials have told McClatchy. The new policy will be on display next week during a conference of NATO countries in Lisbon, Portugal, where the administration hopes to introduce a timeline that calls for the withdrawal of U.S. and NATO forces from Afghanistan by 2014, the year when Afghan President Hamid Karzai once said Afghan troops could provide their own security, three senior officials told McClatchy, along with others speaking anonymously as a matter of policy.
NJ.com:
TechCrunch:
  • The 158,221st Best-Selling Kindle Book: The Pedophile's Guide to Love And Pleasure. One thing Amazon loves to tout about their Kindle bookstore is their huge collection of wide-ranging titles. I’ll say. Here’s a great example of something I’m pretty sure you won’t find in rivals e-bookstores: The Pedophile’s Guide to Love and Pleasure. Yep, that’s the actual title.This book can’t actually be about that, can it? Well, here’s the description: This is my attempt to make pedophile situations safer for those juveniles that find themselves involved in them, by establishing certian rules for these adults to follow. I hope to achieve this by appealing to the better nature of pedosexuals, with hope that their doing so will result in less hatred and perhaps liter sentences should they ever be caught. “Liter” aside, yes, this is outrageous. And Amazon customers are letting their feelings be known about such a book. Of the 59 customers reviews of the product, 58 give it the minimum 1 star (while one joker gave it 5 stars). And it looks like just about all of them are from today, and they’re all basically either calling for a boycott of Amazon for carrying such a book, or for Amazon to remove it immediately. A few of them say they’ve called or email Amazon and that the company has said it’s looking into it. But one commenter says that Amazon already got back to them with the following: “Let me assure you that Amazon.com does not support or promote hatred or criminal acts; we do support the right of every individual to make their own purchasing decisions.” “Amazon.com believes it is censorship not to sell certain titles because we believe their message is objectionable.”
USA Today:
  • Number of Federal Workers Making More Than $150,000 Soars. The number of federal workers earning $150,000 or more a year has soared tenfold in the past five years and doubled since President Obama took office, a USA TODAY analysis finds. The fast-growing pay of federal employees has captured the attention of fiscally conservative Republicans who won control of the U.S. House of Representatives in last week's elections. Already, some lawmakers are planning to use the lame-duck session that starts Monday to challenge the president's plan to give a 1.4% across-the-board pay raise to 2.1 million federal workers.
Reuters:
  • US Democrats Applaud Fed's Bond Buying Program. Two leading U.S. Democratic lawmakers on Wednesday expressed support for the Federal Reserve's controversial $600 billion bond buying program, which has come under sharp criticism at home and abroad. "We applaud the Fed's action and are especially encouraged by its clear signal that it stands ready to do more," Representatives Barney Frank and Sander Levin said in a statement.
Telegraph:
Kathimerini:
  • Greece's budget shortfall this year will be 9.5% of gross domestic product after a revision of 2009 data. The deficit will be about 22 billion euros, exceeding the 18.5 billion euros, or 8.1% of GDP, originally projected. The revision of last year's shortfall to 15.5% followed the inclusion of debt from state-owned companies and other agencies in the wider public sector, adding 1.8 billion euros to the 2010 budget gap. The higher figure is also due to a 2 billion-euro shortfall in revenue this year.
Caijing:
  • China should raise interest rates as inflationary pressure rises, citing the People's Bank of China's adviser Xia Bin.

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