- EU Faces More Bailouts as Euro Contagion Spreads to Portugal: Euro Credit. The failure of the Irish rescue to stem a selloff across euro-region bond markets may spell more bailouts to come, starting with Portugal. The costs to insure Portuguese debt against default rose to a record today and Spanish bonds extended declines today after sliding the most since the euro’s debut yesterday, highlighting investor concerns that officials lack the tools to contain a debt crisis threatening the currency’s survival. The extra yield that investors demand to hold Italian debt over German 10-year bonds rose to the highest in more than 13 years. “We are barely halfway through the current crisis in the euro zone,” Paul Donovan, deputy head of global economics at UBS AG in London, said in an interview with Ken Prewitt and Tom Keene on Bloomberg Radio’s “Bloomberg Surveillance” program. “Unless we can see a further significant decline in bond yields in Portugal, the market is going to expect another bailout. And then market attention will turn to Spain.”
- Obama Appoints Geithner, Lew to Negotiate on Tax Cuts. President Barack Obama said he asked Treasury Secretary Timothy Geithner and budget office director Jack Lew to lead negotiations with congressional Republicans on extending Bush-era tax cuts. Obama said after meeting with Republican and Democratic congressional leaders at the White House that both sides agree action is needed to extend tax cuts to middle-income families before the end of the year even as they remain divided on tax rates for the wealthiest Americans.
- Consumer Confidence Rose in November to a Five-Month High. Confidence among U.S. consumers rose in November to the highest level in five months and a gauge of business activity unexpectedly climbed, signaling the recovery is taking hold heading into 2011. The Conference Board’s sentiment index increased to 54.1, exceeding the median forecast in a Bloomberg News survey, figures from the New York-based research group showed today. Another report today showed housing remained the American economy’s weak link. The S&P/Case-Shiller index of home values in 20 cities climbed 0.6 percent in September from the same month in 2009, the smallest gain since January, the last time prices declined year over year. The gauge fell 0.8 percent from the prior month after adjusting for seasonal variations, the biggest drop since April 2009. Factories, which helped lead the economy out of the recession, are still bolstering the expansion. The Chicago ISM’s business barometer rose to 62.5 in November, exceeding even the highest estimate of economists surveyed by Bloomberg.
- Italy-Germany 10-Year Yield Spread Reaches 200 Points, Widest Since 1997. Italian and Spanish government bonds fell, driving the extra yield investors demand to hold the securities instead of German bunds to euro-era records, as Europe’s debt crisis intensified. The drop pushed the yield spread between 10-year Italian securities and similar-maturity German debt to more than 2 percentage points for the first time since 1997. The Belgian yield premium over bunds reached a record after its borrowing costs rose at a sale of 2.8 billion euros ($3.7 billion) of treasury bills. The cost of insuring debt for Italy, Spain, Portugal and Ireland surged to records, stocks and the euro slid and U.S. Treasuries advanced. “Contagion risk is still high on the agenda,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “Nobody wants to expose themselves to any peripheral risks.” The Italian 10-year bond yield rose a sixth day, gaining three basis points to 4.68 percent at 4:34 p.m. in London, after reaching 4.88 percent earlier today. The 3.75 percent security due in March 2021 fell 0.26, or 2.60 euros per 1,000-euro face amount, to 92.89. The spread with 10-year German bonds increased to as much as 212 basis points, a euro-era record.
- U.S. Retail Sales Rise 3.5% as Shoppers Snap Up Deals. Weekly retail sales rose in the week ended Nov. 27 as shoppers flocked to the Black Friday sales with renewed confidence following the economic downturn. Sales climbed 0.5 percent from the preceding week, the International Council of Shopping Centers and Goldman Sachs Group Inc. said today in a statement. Sales at stores open at least a year rose 3.5 percent from a year earlier. The results don’t include online sales.
- 'Real Bad' Cash Jam May Force Michigan Towns to Borrow or Default by March. Cities and towns across Michigan have had property-tax collections plunge as much as 20 percent in the past year, the steepest drop since a 1994 state tax rewrite, forcing scores of communities to choose by March whether to borrow to pay bills or risk default on bonds. The municipalities rely on property taxes for as much as 60 percent of their revenue, according to the Michigan Municipal League. State support that typically makes up an additional 20 percent to 35 percent of city budgets has been slashed by almost a third in the past year, during the longest recession since the 1930s.
- Gold Advances as Concern European Debt Crisis May Worsen Increases Demand. Gold in New York rose the most in a week as Europe’s escalating debt woes boosted demand for the precious metal as a haven asset. The dollar climbed today to a 10-week high against the euro. Investor concern has shifted to burgeoning debt in Spain and Portugal after European governments bailed out Ireland and Greece. Gold has risen 26 percent this year, touching a record $1,424.30 an ounce on Nov. 9. “Gold is moving higher predominantly on the continued fear of debt contagion in Europe,” said Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago. Gold futures for February delivery rose $18.10, or 1.3 percent, to $1,385.60 an ounce at 11:29 a.m. on the Comex in New York. The price is up 2.1 percent in November, heading for the fourth straight monthly gain.
- States Weigh Cap-and-Trade Market Spanning North America. California, New Mexico and 10 U.S. Northeastern states may try to create a North American carbon market on their own now that President Barack Obama has given up on cap-and-trade legislation that stalled in Congress. The emissions-trading system would be based on a planned carbon market in California, the most populous state, and an existing regional cap-and-trade program for power plants in the Northeast, according to state environmental officials. Three Canadian provinces have also shown interest in a cross-border carbon-trading system, the officials said.
- ECB Tried to Force Ireland Into Bailout, Minister Says. European Central Bank officials tried to force Ireland to seek a bailout earlier this month and European officials are now trying to do the same to Portugal, Irish Justice Minister Dermot Ahern said. “Clearly there were people from outside this country who were trying to bounce us in as a sovereign state, into making an application, throwing in the towel before we had even considered it as a government,” he told Irish state broadcaster RTE in an interview today. “And if you notice, they are doing the same with Portugal now.” Asked about who was pressuring Ireland, he said “quite obviously people from within the ECB.”
- Spain Banks Face Funding Hurdle Amid Bailout Threat. Spain’s banks may struggle to refinance about 85 billion euros ($111 billion) in debt next year as costs surge on concern continental Europe’s fourth- biggest economy may need an Irish-style bailout. “There’s a universal dumping of Spain going on,” said Andrea Williams, who helps manage about 623 million pounds ($968 million), including shares in Banco Santander SA, at Royal London Asset Management. “The fear is that Portugal, Spain and Italy are now in line after what happened in Ireland.”
- Senate Backs Biggest Food-Safety Overhaul in 70 Years. The U.S. Food and Drug Administration would gain more power to police food companies under the bill that passed today in a 73-25 vote. The measure, backed by the food industry, public- health groups and consumer advocates, adds inspections and lets the FDA force recalls, rather than relying on companies to voluntarily remove contaminated foods from store shelves.
- JPMorgan(JPM) Gives Bankers iPads, Signaling Danger to RIM(RIMM). JPMorgan Chase & Co. will give its investment bankers iPads to provide an additional mobile tool as Apple Inc. expands its domain to Wall Street, threatening Research in Motion Ltd. in a market it traditionally dominated. “We believe there are real benefits in our working environment that can be realized using this device - as well as the personal productivity and enjoyment that come as part of the package,” two managing directors at New York-based JPMorgan said in an e-mail obtained by Bloomberg News. Apple is building on its momentum in the tablet space, leveraging its 95 percent market share to expand from its traditional consumer base into the corporate market as RIM readies a rival device, the BlackBerry PlayBook.
Wall Street Journal:
- Did New Rules Worsen Pay Situation? A study prepared for an influential shareholder group says rule changes meant to revamp Wall Street's pay culture have been negative, concluding that pay practices at six U.S. banks and securities firms have "worsened" since the financial crisis. The report, set to be released Tuesday and commissioned by the Council of Institutional Investors, which represents about 130 pension funds, contends that financial firms still tie too much of their compensation to short-term results and have increased salaries to offset the impact of recent regulatory curbs on pay.
- Miners Dig In For a Fight. The phosphate mined for more than a century here in central Florida to make fertilizer has yielded thousands of jobs and countless harvests around the world. But environmental groups are arguing in federal court that the cornucopia extracts too high a price.
- iGate(IGTE) Seeks Up to $700 Million Via Debt to Fund Patni Bid. Software services company iGate Corp. (IGTE) is looking to raise up to $700 million to help fund its joint bid with Apax Partners LLP to take control of rival Patni Computer Systems Ltd. (532517.BY), two people familiar with the matter said Tuesday.
- Lukoil Eyes 150,000 B/D From Iraq W Qurna-2 In 2013. OAO Lukoil Holdings (LKOH.RS), Russia's largest non-state oil producer, aims to produce 150,000 barrels a day at Iraq's supergiant West Qurna Phase 2 in January 2013, a person familiar with the project said Tuesday.
- Portugal's Banks Pile Up Sovereign Debt. Portuguese banks are buying their government's debt at a fast pace, a move that could pose a risk to institutions that so far have weathered the financial crisis better than many. According to the Portuguese Central Bank, the country's financial institutions, including banks, have together invested €17.91 billion ($23.5 billion) in the country's public debt as of September, up 87% from €9.58 billion a year ago. Since the beginning of the year, the exposure has risen 77%.
- EU Opens Google(GOOG) Antitrust Probe.
- Mohamed El-Erian, the chief executive officer at PIMCO, said Europe's debt contagion will likely spread to nations such as Spain and Portugal. The 16-nation euro will probably be shared as a currency by fewer countries in five years.
- The Small Error That Could Ruin Dem's Health Care Efforts. Conservative foes of the Affordable Care Act want the federal courts to smother the new health care law in its crib. They've argued that Democrats failed to erect the proper safeguards to protect the legislation from being stricken down entirely by the courts. And when a Virginia district court judge rules in the coming days on the Constitutionality of the law's insurance mandate, he'll also have to decide whether none, some, or all of the law must go with it. The obscure term of art here is "severability."
- Bank of America(BAC) Selling Accelerates, As Fears Spread That It's in the Wikileaks Crosshairs.
- The Next Shoe to Drop: European Insurance Companies - Assicurazioni Generali CDS Explodes.
- Olli Rehn's Upcoming Executive Diktat to Ireland #2: "Double Your Tax Rate".
- Intuit(INTU): Small Biz Employment Ticking Up. Small business employment grew slightly in November, while wages were down and hours worked were flat.
- Google(GOOG) is Said to be Poised to Buy Groupon. Google is near a deal to acquire Groupon, the pioneering online discounter, for as much as $6 billion, people with direct knowledge of the matter told DealBook on Monday.
- Wiretaps Said to Widen Insider Treading Inquiry. Secret, court-approved wiretaps put in place more than two years ago are now being used by prosecutors in a widening inquiry of securities fraud and insider trading involving hedge funds and consultants that provide industry research, according to court documents and interviews with people close to the investigations.
- Just Tidbits, or Material Facts for Insider Trading? On Wall Street, it is called the “mosaic theory.”
- Why Hasn't WikiLeaks Been Put Out of Business? So now we know what it takes to get everyone to realize how damaging is to U.S. foreign policy. When WikiLeaks released nearly half a million documents undermining U.S. war efforts in Iraq and earlier this year, it was met with a collective yawn. And it was hard to find more than a just few top officials in the United States or abroad who complained when the site released raw footage of a shooting video taken from a U.S. helicopter in . What's the big deal? After all, those were unpopular wars. But now that the site has started releasing what it promises to be 250,000 diplomatic cables, suddenly, the entire world is up in arms. Examples:
- EPA: More Renewable Fuels Required. The Obama administration Monday increased the amounts of ethanol and other renewable fuels it wants to see as part of the nation’s gasoline supply, but a senior official took aim at the practice. Responding to a congressional mandate, the Environmental Protection Agency will require that 13.95 billion gallons of transportation fuel comes from renewable sources in 2011, or about 8 percent of domestic gasoline and diesel supplies.
- Strong Showing in Anti-Earmark Vote. Thirty-nine senators voted Tuesday in support of a three-year moratorium on appropriations earmarks, the strongest showing ever by opponents of the current process and a potential game changer in the year-end budget debate. Seven Democrats backed the proposal, and the party leadership will have to decide now whether to strip out or weaken draft language in an omnibus spending bill that currently sets aside billions for home-state projects.
- CFTC to Unveil Position Limit Plan Dec. 16: Source. The U.S. futures regulator intends to unveil on December 16 its long-awaited revised plan to limit speculative positions held by commodity traders, a source with direct knowledge of the matter said on Monday.
- Baltic Index Falls, China PMI Survey Awaited. The Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, fell for a fourth session on Tuesday as slower cargo business kept pressure on the larger capesize market. The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, fell 2.14 percent, or 46 points, to 2,099 points. "The capes can find a support only if the Chinese start restocking again, which I don't see happening in the immediate future," said Georgi Slavov, head of dry research and structured products at ICAP Shipping.
- AP-CNBC Poll: Cut Services to Balance the Budget. To ease surging budget deficits, Americans prefer cutting federal services to raising taxes by nearly 2-1 in a new poll. An Associated Press-CNBC Poll showed widespread anxiety about budget shortfalls exceeding $1 trillion a year. Eighty-five percent worry that growing red ink will harm future generations — the strongest expression of concern since AP polls began asking the question in 2008. Fifty-six percent think the shortfalls will spark a major economic crisis in the coming decade.
- The French government is preparing a plan to cut subsidies for solar energy. French Prime Minister Francois Fillon will meet ministers in two days to discuss a possible lowering by about 10% in the price paid by Electricite de France SA for solar power and a cap on the annual volume of installations.
- IMF Chief: Yes You Can Bounce Back. THE head of the IMF mission in Ireland last night insisted the country can bounce back from the economic crisis -- but outlined a swathe of painful measures that must be taken. And he warned that further losses at the Irish banks could be uncovered, possibly in the area of tracker mortgages and small business loans. In an exclusive interview with the Irish Independent, the IMF's Ajai Chopra also insisted Ireland would be able to afford to pay back the crippling multi-billion-euro loans it received in bailout funds.
- China's consumer price index probably increased 4.7% on year in November, accelerating from October's 4.4% gain, citing a Bank of Communications report.