Today's Headlines

Bloomberg:

• Wall Street Asks Agencies to Slow Down on New Derivatives Rules. Eleven financial-industry trade associations representing Wall Street banks, hedge funds, swaps dealers are asking federal regulators writing new derivatives rules to slow down. In a letter sent to the Commodity Futures Trading Commission and the Securities and Exchange Commission, the groups called for extending public comment periods on some regulatory proposals and said firms should be given more time to implement new directives. “We are concerned that market participants will be asked to do too much in too short a time,” the groups wrote in the letter sent yesterday. “This could have significant adverse consequences for the customers that rely on these products.”
• Democrats Urge Senate Leaders to Add Build-America Program to Tax Accord. Democratic senators are urging the chamber’s leaders to continue the Build America Bond program as part of legislation enacting the agreement that President Barack Obama struck to extend the 2001 and 2003 income-tax cuts. The federally subsidized initiative, which pays 35 percent of the interest on state and local government bonds sold for public-works projects, wasn’t included in the deal that the White House brokered with Republicans.
• Byron Wien Says S&P 500 May Advance to Record in 2011 on Profits, Economy. The Standard & Poor’s 500 Index may rise at least 28 percent through next year to a record as corporate profits and the economy improve, according to Byron Wien, the vice chairman of Blackstone Advisory Services.
• Physical Gold Sales Slowing as Prices Rally, Standard Bank Says. Gold investors and jewelers are becoming more accustomed to higher prices and physical sales of the metal slowed compared with when bullion last climbed above $1,400 an ounce, according to Standard Bank Plc. The Standard Bank Physical Gold Flow Index dropped to minus 21 yesterday as prices reached a record $1,431.25. That compares with a slide to as low as minus 85 on Nov. 11, two days after the metal climbed to a then-record $1,424.60. An index value below zero indicates net selling of physical gold and a value above zero shows net buying.
• U.S. States Face 'Cliff' as Federal Stimulus Ending Opens $38 Billion Hole. U.S. states are preparing for more budget cuts next year as tax revenue isn’t likely to rebound enough to replace almost $38 billion in aid that will be gone as federal economic stimulus ends, according to a report. At least 31 states and Puerto Rico are forecasting deficits of $82.1 billion in the next fiscal year even as tax receipts are picking up, the National Conference of State Legislatures said today. Under a temporary mandate since 2009, the U.S. has provided economic aid to states, helping to pay government workers and shoulder the cost of the Medicaid program to provide health care for the poor. That aid will be gone, the group said.
• Bank of America(BAC) Deal in Muni Case May be 'Tip of the Iceberg'.
• Banks in Europe Fail Stress Tests With No Authority. In the five months after the U.S. published results of its 2009 bank stress tests, the Standard & Poor’s 500 Financials Index rose 25 percent. Five months after the European Union released its version, the Bloomberg Europe Banks and Financial Services Index is down 4 percent. The failure of the EU tests to restore confidence in the region’s banks was underscored last month when Ireland directed its two biggest lenders, both of which passed the exams, to raise additional capital. Since the results were disclosed on July 23, the cost of insuring the senior debt of 110 European banks against default rose 113 basis points, or 1.13 percentage points, while credit-default swaps on 34 of the largest U.S. banks are unchanged, according to data compiled by Bloomberg.
• Tax Appeals Swamp US Cities, Towns as Property Prices Plunge. A fiscal flood that threatens to swamp local government budgets across the U.S. overflows from file cabinets in the office of Patty Halm, chair of the Michigan Tax Tribunal. The backlog of cases from taxpayers seeking to lower property-tax bills of more than $100,000 shot up to 14,236 this year from an annual average of about 6,000 during the past decade. The backlog of smaller claims was at 28,558 at the end of September, eight times higher than a decade ago, according to records at the tribunal, a Lansing-based administrative court.
• IMF's Strauss-Kahn Says Europe Still in 'Troubling' Situation on Deficits. Europe, where a debt crisis prompted bailouts of Greece and Ireland this year, remains in a “troubling” situation, the head of the International Monetary Fund said. The effects of the global financial turmoil “are far from over,” IMF Managing Director Dominique Strauss-Kahn said today in Geneva, according to a copy of his prepared remarks. “The situation in Europe remains troubling and the future is more uncertain than ever.”

Wall Street Journal:

• Two Large Banks Tied to Gerson, Big Network Firm. Two large Wall Street firms formed alliances with the nation's largest "expert-network" firm in recent years, giving them a vested interest in the outcome of a big insider-trading investigation. One of those Wall Street firms, Credit Suisse Group(CS), recently received a subpoena seeking information and documents related to its use of experts at Gerson Lehrman Group, a large expert-network firm, by the banks' researchers and clients, people familiar with the matter says. Credit Suisse declined to comment. Credit Suisse and Morgan Stanley(MS), another large bank, have formal partnership agreements with Gerson Lehrman dating back to 2008. Those alliances boosted access by the banks and their clients to Gerson's network of doctors, technology-firm employees and thousands of other experts; and some of the banks' researchers and analysts in turn were made available to consult with Gerson clients.
• Overhaul of Oil Industry Urged. The oil and gas industry needs a "major transformation" in its approach to safety to avoid another big offshore-drilling disaster, a leader of the presidential panel investigating the BP PLC accident plans to tell a gathering of industry officials Wednesday.
• Wells Fargo(WFC), Visa(V) Test Mobile Payments. Wells Fargo & Co. said Tuesday it is testing mobile payments through a pilot program with Visa Inc., stepping up competition with telephone companies that also hope to dominate the business. The pilot program, which will take place in San Francisco, where the two companies are based, comes on the heels of a mobile payments joint venture announced last month between three major U.S. wireless carriers. The developments underscore tension among card lenders and wireless companies over who controls the mobile-payment network.
• States Face Budget Shortfalls of $26.7 Billion. States are reporting billions in midyear budget shortfalls, and the crunch is likely to continue for at least several more years, a new report says. Fifteen states are facing combined budget gaps midway through their 2011 fiscal year totaling $26.7 billion, according to a National Conference of State Legislatures report to be released Wednesday. Illinois had the largest midyear shortfall relative to the size of its budget among the 15 states with deficits: $13 billion, or 47% of its general-fund budget. While states have been able to rely partly on federal funding from the stimulus program to weather the recession and its aftermath, most of that funding will be exhausted next year, fiscal 2012. States will have $37.9 billion less in federal stimulus funding in fiscal 2012, compared with this year.
• EU Seeks Limits on Commodity Trading. The European Commission Wednesday said it wants to ensure that national regulators have the power to limit commodity traders' bets. The proposal is aimed at preventing traders from manipulating commodities markets, a common accusation in the summer of 2008 when food and energy prices soared to record highs. The commission, the European Union's executive arm, said it wants to ensure that EU national regulators have the authority to set limits when they determine that commodity markets aren't functioning properly, with EU institutions having a coordinating role.
• Investors Pile Into Commodities. Investors are holding their biggest positions on record in the commodities markets as prices surge and debate intensifies among U.S. regulators about whether to limit the amount that any one trader can bet in markets for energy, metals and agricultural products. Hedge funds, pension funds and mutual funds dramatically ramped up their holdings in everything from oil and natural gas to silver, corn and wheat this year. In many cases, the number of contracts held for individual commodities now far exceeds the amount outstanding in mid-2008, the last time commodity markets were soaring to records and debate raged about whether excessive speculation was driving up prices. Contracts held by investors have risen 12% this year through October and are 17% higher than June 2008, according to data from the Commodity Futures Trading Commission, the market regulator. In several commodities, including the $200 billion crude oil market, so-called speculative investors now make up a significantly larger proportion of the market than they did in 2008. Investors increased their bullish bets on crude oil by 24% since June 2008 and now represent 16% of the market, up from 13% just over two years ago. Bets in the copper market are up 58% and for silver they are up 52%, according to the CFTC data. "Speculative money from the likes of hedge funds, index funds and pension funds is coming into the commodity markets at a blistering pace," Mr. Chilton said in prepared remarks for a speech he plans to make on Wednesday at a conference in New York. "If prices are skewed in a manner that is not fair by speculators, consumers can pay more than they should," he said. According to Barclays Capital, investors have piled a total of $121.2 billion into commodities since the beginning of 2009. The emergence of exchange-traded funds that buy commodities futures contracts, such as the U.S. Oil Fund and U.S. Natural Gas Fund, have helped lead a march into commodities over the past few years. Gold has jumped 29% this year and reached a nominal record of $1,415.30 per troy ounce this week. Copper is up 22% and trading near its record high of $4.0775 per pound. Silver prices are at 30-year highs and oil on Tuesday surpassed $90 during the trading day for the first time since October 2008.
• BofA Merrill to Expand Its Online Brokerage Business.
• The Bush Tax Cuts Never Went Far Enough. A permanent reduction in capital taxes would increase productivity and wages. Postwar Britain shows how higher capital tax rates reduce investment and damage economic growth.

CNBC:

• In Shift, Mexico to Allow Oil Drilling Again. In a major shift for Mexico, the country will allow private companies—both domestic and foreign—to drill for oil there, the first time in 70 years. This move came as a result of a supreme court decision there on Tuesday. This step for Mexico is crucial for the oil-rich nation and it’s long-term prospects. Even though it has so much oil, if the country doesn’t make the right moves—and build infrastructure—the nation will end up importing oil. Mexico ranks number three as an oil supplier to the US.
• Online Retail Sales Up 12% and Best Yet to Come. The latest read on online holiday shopping from Comscore shows a 12 percent increase in spending in the first 35 days of the November through December shopping season compared with the same period a year ago.

Business Insider:

• David Einhorn Explains How QE2 Will Affect The Average American In One Sentence. In case you've been MIA the past month, the Federal Reserve decided to buy another $600 billion in Treasuries (and might buy more) on November 3rd. Technically, they did it "to lower borrowing costs and stimulate the economy," says Einhorn, but QE2 will instead probably result in rising prices of basic goods for consumers and businesses, which will curtail economic growth. Basically, the Fed just threw away $600 + billion because QE2 "will be counterproductive," he told Rose, according to Bloomberg. “The goal of quantitative easing right now is to raise the inflation rate. If you do raise the price of clothing, it effectively lowers everybody’s standard of living and gives them less money to buy other things.”

Zero Hedge:

• Maryland Democrat Chris Van Hollen Says "Unsure Whether Obama-Republican Deal Can Pass House In Current Form".
• TIPS Breakevens Indicate Inflation Expectations "Double" From Two Months Ago.
  

New York Times:

• What the Fed Is Still Owed by Wall Street. The Federal Reserve has a story and is sticking to it: We didn’t lose taxpayer money, and we won’t. But several emergency programs and credit lines still exist, and the path to profitability on them remains uncertain. Hedge funds, pension funds and other investors have some $25 billion in outstanding loans from the Fed, some backed by subprime consumer debt. The central bank’s books are stocked with $66 billion of securities related to Bear Stearns and the American International Group, and the troubled insurer also owes $20 billion on a Fed credit line.
• Three Years After Private Equity Boom, an Exit Strategy. Private equity firms may finally have an exit strategy for deals made at the height of the buyout boom. While the market for initial public offerings remains unpredictable, the industry increasingly is finding a steady stream of buyers among rival firms and corporate suitors flush with cash.
• Central Bank and Financiers Fight Over Fate of the Euro. On one side is the European Central Bank, which is spending billions to prop up Europe’s weak-kneed bond markets and safeguard the common currency. On the other side are hedge funds and big financial institutions that are betting against those same bonds and, by extension, against the central bank, that mighty symbol of Europe’s monetary union. The war keeps escalating as traders position themselves for what some believe is inevitable: a default by Greece, Ireland or perhaps even Portugal. The central bank owns about 17 percent of the combined debt of Greece, Ireland and Portugal, Goldman Sachs estimates.

Forbes:

• Russell Abrams' Hedge Fund Accused of Fraud Amid Losses of 70%. Russell Abrams, founder of New York hedge fund firm Titan Capital Group, which not so long ago reportedly managed $400 million, is having a terrible year. One of his main hedge funds has suffered losses of as much as 70% since the end of June, according to a document filed in Manhattan’s New York state court.

GoldSeek:

• Fed's QE Ponzi Scheme Begins to Backfire.

Reuters:

• ECB Consensus at Risk Unless Governments Act. A fragile consensus at the European Central Bank could break down soon, threatening its triage operation to buy bonds from the euro zone's weakest economies, unless governments do more to resolve the bloc's debt crisis.
• US Regulations Hurt Competitiveness - Business Group. A broad-based financial regulatory overhaul enacted this year overreaches and must be modified to avoid hurting U.S. companies' ability to compete and create jobs, a prominent business group said on Wednesday. The Business Roundtable, made up of chief executives of leading firms from banking to oil production, said the Dodd-Frank bill contains provisions that reach far beyond the financial sector and could be a drag on economic recovery.

Telegraph:

• Eurozone Debt Fears Infect German Bonds. Eurozone debt crisis worries spread to German bonds as nervous markets turned their attention from Ireland to the splits within the European Union over how to stem contagion.

DigiTimes:

• LED Lighting to Reach US$15.4 Billion in 2011 With Over 10% Market Share. Lighting will generate significant growth for the LED industry. Based on latest data from Digitimes Research, the high brightness LED market will grow to US$12.6 billion in 2011, up 53% from US$8.25 billion in 2010. The overall use of LEDs in lighting will increase to 12.4 billion units in 2011 from 4.8 billion units in 2010, as the effects of LED light bulbs replacing incandescent bulbs will start to show in 2011.

Macau Daily Times:

• Five Unused Plots to Be Taken Back. The Government has decided to push forward with the recall of five undeveloped plots, secretary for Transport and Public Works, Lau Si Io, revealed yesterday at the Legislative Assembly. The process to declare that the concession of these areas has lapsed has already begun, he explained. During the 2011 Policy Address, Lau said two more cases were sent to the Public Attorney’s Office to evaluate whether or not there are grounds for a civil suit. In total, he stated, “approximately 30 cases” of unused plots are being analysed.