Monday, January 24, 2011

Today's Headlines

Posted by Gary .....at 3:08 PM

Bloomberg:
  • U.S. Credit Swaps Fall to Lowest in a Year on Corporate Earnings, Recovery. The cost of protecting U.S. corporate bonds from default fell to the lowest in more than a year as company earnings exceeded forecasts, adding to evidence the economic recovery is gaining pace. “There’s still no fundamental risk,” said Stephen Antczak, head of U.S. credit strategy at Societe Generale SA in New York. “Profits are OK, there are no defaults. People just aren’t fearful of negative fundamentals.” The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, decreased 0.9 basis point to a mid-price of 82 basis points as of 10:51 a.m. in New York, according to Markit Group Ltd. The index is falling as headline risk from the sovereign debt crisis in Europe declines, according to Antczak.
  • Moscow Blast Kills at Least 35; Medvedev Delays WEF Trip: Video.
  • Intel(INTC) Will Add $10 Billion to Its Stock-Repurchase Program; Shares Advance. Intel Corp., the world’s largest chipmaker, added $10 billion to its stock-buyback plan to return money to shareholders as corporations’ spending on technology boosts its earnings. The increase brings the total authorized for buybacks to $14.2 billion, Santa Clara, California-based Intel said on its website today.
  • Carrying capacity for ships hauling commodities such as coal, iron ore and grains will expand at more than twice the rate of demand this year, according to forecasts from Clarkson Plc, the world's largest shipbroker. The fleet will grow 13% in 2011, led by a 17% expansion for capesize vessels that primarily carry iron ore. Demand will grow 6%, Clarkson said. Capacity rose 17% last year and demand 11%, it said.
  • Obama Keeps Corps of Corporate Friends Close Amid Criticism From Business. Even though his relationship with U.S. business has been strained at times, President Barack Obama has kept a coterie of business leaders, such as Robert Wolf, chairman of UBS AG’s Americas unit, and Honeywell International Inc. chairman David Cote, in his orbit. Obama raised more than $40 million for his presidential campaign from business groups and financial firms in the 2008 presidential campaign, more than double what his Republican opponent John McCain got. Many of those supporters have stayed with Obama during the first two years of his term even as the administration drew criticism over government regulation, the overhaul of health-care laws and rules for financial institutions. Obama, 49, counted corporate executives among his advisors and top fundraisers in his run for the presidency in 2008. Wolf, for example, helped raise $500,000 for Obama’s campaign and has stayed close to the president. He served on the original advisory panel and was part of an exclusive group who played golf with Obama while the first family was on vacation at Martha’s Vineyard in August. Wolf also was among the executives invited to a series of meals in Washington as Obama reached out to win support from businesses. He was joined on the invitation list by Intel Corp.’s Paul Otellini and Andrew Liveris of Dow Chemical Co., who were back at the White House on Jan. 18 for the state dinner honoring Chinese President Hu Jintao. Immelt, Boeing Co.’s James McNerney and Coca-Cola Co.’s Muhtar Kent, who serve on Obama advisory boards, attend regular meetings at the White House and get seats at state dinners as well, as do JPMorgan Chase & Co. CEO Jamie Dimon, Microsoft Corp. CEO Steve Ballmer and Lloyd Blankfein, chairman and CEO of Goldman Sachs Group Inc. At the White House, Obama and his aides regularly welcome corporate executives to private meetings. Immelt, Ballmer and Cote have each been to the White House more than a half-dozen times, according to Secret Service visitor logs. Billionaire investor Warren Buffett has been hosted by the president at least twice. The chairman of Berkshire Hathaway Inc. was also an informal advisor to Obama’s presidential campaign.
  • France's Sarkozy Urges Group of 20 to Regulate Commodities, Price Swings. French President Nicolas Sarkozy said regulation of commodity markets will be a priority as he leads the Group of 20 nations this year, and inaction may cause food rioting in the world’s poorest countries. Some commodity markets lack safeguards to limit price spikes and “price manipulation,” Sarkozy said at a press briefing in Paris today. "If we do nothing, we risk having food riots in the poorest countries and also an unfavorable impact on global growth,” Sarkozy said. “We want regulation of the financial markets for commodities.” Commodity-producing countries must be made to understand “that they themselves have the largest interest in an orderly movement,” Sarkozy said. “A frenetic upward jump is followed by a frenetic movement downward.” One of the rules France proposes is for commodity investors to set aside a deposit equal to part of the value of the raw material being traded, according to the president. “Does it make sense that you can buy considerable stocks of commodities without running any risk, without blocking any sum, without committing to any cargo delivery?” Sarkozy said.
  • Wheat Extends Advance to Five-Month High as La Nina Threatens Global Crops. Wheat rose to a five-month high in Chicago on signs of stronger demand and on speculation adverse weather that has hurt production in Australia, the U.S. and South America will persist. U.S. sales to overseas buyers surged to 1.054 million metric tons in the week ended Jan. 13, seven times more than a week earlier and the most since August, the Department of Agriculture said last week. Cold weather in the U.S. and a drought in China curbed crop prospects as rain in Australia floods fields and drought in South American hurts plants. “The price of wheat has gained in the last few days from surprisingly positive U.S. export data and the extreme cold in major U.S. growing areas,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a report today. “The market still has to digest the loss of high-quality wheat from Australia due to the flood catastrophe.” Wheat for March delivery climbed 10.75 cents, or 1.3 percent, to $8.3525 a bushel at 1:14 p.m. London time on the Chicago Board of Trade. The grain reached $8.395, the highest price for a most-active contract since Aug. 6. Prices have gained for five days and are up 5.2 percent this month. Milling wheat for March delivery added 3.75 euros, or 1.4 percent, to 263.25 euros ($357.31) a ton on NYSE Liffe in Paris. The price has more than doubled in the past year.
  • Oil Drops in New York After Saudi Arabia's Al-Naimi Signals More Supplies. Crude for delivery in March dropped for a fifth day after Saudi Arabian Oil Minister Ali al-Naimi signaled OPEC may increase supply to meet growing demand in China and India. Saudi Arabia won’t let prices rise too quickly, in order not to distort demand,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. Al-Naimi reiterated that the Organization of Petroleum Exporting Countries’ policy is to meet any additional requirement for crude. Hedge-fund managers and other large speculators increased their net-long position 0.4 percent in crude contracts in the week ended Jan. 18, according to Commodity Futures Trading Commission data. Bets that prices will rise held by the managed money category of investors, in futures and options, outnumbered short positions by 210,564 contracts, the Washington-based regulator said Jan. 21 in its weekly Commitments of Traders report.
  • Brazil's Amazon May Hold 'Super Giant' Oil Fields, HRT Says; Shares Climb. Brazil’s Amazon may hold “super giant” fields of light oil in an area the country is starting to explore, HRT Participacoes em Petroleo SA Chief Executive Officer Marcio Mello said. The shares gained. The Rio de Janeiro-based oil-exploration company will start producing from its wells in the Amazon’s Solimoes river basin as early as June, Mello said today in a Bloomberg Television interview in New York. HRT will begin drilling in February and expects to reach an oil reservoir in May, he said. HRT will drill 12 wells at the Amazon this year. “The oil at Solimoes is the best in the whole of South America,” Mello said. “The Amazon is a completely unexplored frontier.” Brazilian oil deposits below a layer of salt in the Atlantic Ocean hold at least 123 billion barrels of reserves, more than double government estimates, according to a university study by a former Petroleo Brasileiro SA geologist. The research, which set out to show government figures were too optimistic, found they underestimated the area’s potential, said Hernani Chaves, a professor at the Rio de Janeiro State University who worked at Petrobras for 35 years. The forecast, which the study puts at a 90 percent probability, compares with the Brazilian oil regulator’s 50 billion-barrel estimate.
  • Spain Banks Capital Need Won't Exceed $27 Billion, Finance Minister Says. Spanish Finance Minister Elena Salgado said the amount needed to recapitalize the country’s banking system won’t exceed 20 billion euros ($27 billion) and “all or part” of that sum will come from financial markets. Spain will also make lenders adopt a core capital ratio of at least 8 percent, Salgado said in a news conference in Madrid today. Lenders will have until the fall to raise enough capital to meet that requirement, and those that can’t do so will be able to tap the state’s bank-rescue fund known as FROB, which will take ordinary shares with voting rights in exchange. The figure is lower than estimates from analysts including those at Moody’s Investors Service, which said today that lenders may need at least 17 billion euros, rising to 89 billion euros in a stressed case. Savings banks, or cajas, have been locked out of wholesale debt markets amid investor concern about 181 billion euros of what the Bank of Spain terms “potentially troubled exposure” to construction and real estate.

Wall Street Journal:
  • Suicide Attack Rocks Moscow Airport. A suicide attacker detonated a bomb at Russia's busiest airport Monday, killing at least 31 people and wounding more than 100 others, authorities said. The 4:32 p.m. blast near the international arrivals area of Moscow's Domodedovo Airport was the country's worst terrorist attack since twin bombings left 40 dead in the Moscow subway last March.
  • Energy Power Shifts From the West. The center of the global energy industry is shifting away from the West as publicly traded companies in Russia, China and Brazil take more top spots in an influential global ranking of the world's energy giants.
  • Spain Can Still Avoid Financial Doom. And so we wait. We wait for the spate of new data on the health of the euroland economies, we wait for the policymakers to come up with some device that satisfies the markets that the eurocracy has come up with a structure that controls national budgets to the satisfaction of German Chancellor Angela Merkel, euroland's paymaster-in-chief. The waiting for data will end this week, at least for a while; the waiting for a policy decision might not arrive before Godot. Meanwhile, it is all about Spain, Europe's fifth largest economy. Greece is gone, Ireland is gone and Portugal is going—all will have to restructure one way or another. If Spain, larger than all three combined, can survive the tender attentions of the bond market, policymakers will have time for their usual leisurely decision-making pace.
  • India Government Bonds Fall Ahead of RBI Rate Meet; Rupee Down. Indian government bonds ended lower on Monday as traders avoided new positions a day ahead of the Reserve Bank of India's rate-setting meeting, where the central bank is widely expected to increase its policy rates to rein in growing inflation expectations. Post market hours, a Reserve Bank report said its main policy objective in the near term will be to control inflation, a statement which may pressure bonds in early session Tuesday. "Since a lower inflation regime is essential for sustainable high growth, containing inflation becomes the dominant policy objective in the current environment," it said in its third-quarter review of macro-economic and monetary developments, which provides cues going into the policy meeting. The market though ended lower, recovered from the day's lows when some traders bought bonds as yields rose following a government official's comments on inflation. "Our advisers on the economy tell me we are going to end the [fiscal] year with 9.0% inflation," Revenue Secretary Sunil Mitra told reporters at a conference. The RBI expects inflation at 5.5% at the end of March.
CNBC:
Zero Hedge:
  • "On The Ground" First Person Report on Chinese Inflation. A Zero Hedge reader writes from the ground in China, and shares his first person perspective on just how real inflation has become in the world's most populous and thus most price margin sensitive, country. Inflation is HUGE. In every way and is so noticeable in daily life that we talk about it, well, everyday as everything we buy is rapidly increasing in price. The thing is, is that it doesn't affect my life that badly, except for my rent that increased 10% (which was low, compared to the city-wide 20% increase in 2010), because I'm in a high income level, for local Chinese standards. For example, a bowl of dumplings I typically get for lunch has gone from 3rmb ($0.44) to 4rmb ($0.59). That's a 25% increase and happened in one day. Again, clearly in USD terms you can see that doesn't bother me, but for the average Chinese, it kills them. Veggies have gone up 60% in some cases.
  • Italian Scientists Claim to Have Discovered Nickel-Hydrogen Cold Fusion, Create Copper As Byproduct.
New York Post:
  • Cuomo's Budget Ax to Cut $1 Billion From NYC. Look out, Mike! Here comes Gov. Cuomo -- and he's wielding a brutal bud get ax. Mayor Bloomberg, who last week warned of multibillion-dollar city deficits over the next several years, will get more bad news next week when Cuomo presents a cut-to-the-bone budget that "slashes" state aid to New York City by $1 billion or more, sources said yesterday.
  • Eisman Hit by Losses Amid Departure Talk. After a high-profile bet against subprime mortgages brought him huge profits, star money manager Steve Eisman is having a tough time extending his winning streak. Eisman, a prominent hedge fund manager at FrontPoint Partners, has seen his assets under management fall along with fund performance in the past year. Eisman's FrontPoint Financial Services, which launched in 2004, was down 8.3 percent through Dec. 31, and FrontPoint Financial Horizons Fund slipped 7.7 percent. In 2010, the two funds were the firm's worst performers, according to reports sent to clients.
New York Times:
  • Increasingly Confident Fed Is Set for First Meeting of 2011. The Federal Reserve will use its first policy meeting of 2011 this week to revisit its economic projections amid a climate of modest but increasing confidence about the recovery. The statement it will issue on Wednesday, according to people familiar with the private deliberations of Fed officials, is likely to reflect a guarded optimism about the economy, while also maintaining the Fed strategy announced last November to accelerate the recovery by pumping $600 billion into the banking system.
Forbes:
AppleInsider:
The Weekly Standard:
Politico:
  • Rahm Emanuel Booted Off Chicago Mayoral Ballot. A panel of appellate judges ruled 2-1 that Emanuel - well ahead in the polls and fundraising - did not meet the one-year residency requirement to be on the ballot for the Feb. 22 election.
Reuters:
  • Thailand Down 4% on Region Inflation Worries. Thailand's stock market fell 4.3 percent on Monday, leading most other Southeast Asian bourses down as foreign investors continued to bale out of markets they believe are vulnerable to growing inflationary pressures. Thailand .SETI posted its biggest loss since Oct 15, 2009, led by energy and banking shares. Indonesia .JKSE, the region's worst-performing bourse this year, lost 1 percent and the Philippines .PSI fell 1.2 percent to a 4-½ month low. On Monday, Indonesia and the Philippines saw net foreign outflows of $27.5 million and $14.7 million respectively. On Friday Thailand saw an outflow of $251 million. In baht terms, according to stock exchange data, it was the highest figure since May 24 last year when Bangkok was still picking itself up after bloody political protests. On Monday, the exchange recorded foreign selling of 4.05 billion baht ($132 million), according to exchange data. In the four weeks to Jan. 21, Thailand suffered outflows of $465 million, while Indonesia and the Philippines saw selling worth $280 million and $52 million respectively, according to Nomura Research.
  • Small Firms Not Spared in US SEC Say-On-Pay Rule. Small businesses and newly listed public companies will not be exempt from a new rule U.S. securities regulators are poised to adopt on Tuesday giving shareholders an advisory say-on-pay vote, according to a person familiar with the rule. The rule is expected to stir concerns among the Republican commissioners at the Securities and Exchange Commission, as well as some small businesses who have urged the SEC in their comment letters not to burden smaller companies with additional say-on-pay requirements.
  • No Bailouts for States - US House Leader Cantor. U.S. House of Representatives Majority Leader Eric Cantor said on Monday that he does not support any federal bailouts for states or allowing them to declare bankruptcy.
International Business Times:
  • JC Penney(JCP) Adds Investors Ackman, Roth to Board. Ackman, the chief executive officer of hedge fund firm, Pershing Square Capital Management, has a 16.5 percent stake in Penney. Steven Roth, chairman of Vornado Realty Trust (NYSE: VNO), will also join the board. Vornado owns about 9.9 percent of Penney.
Financial Times:
Telegraph:
  • McDonalds(MCD) Sees Food Costs Rising as Sales Slow.McDonald’s, the world’s biggest burger chain, said its food costs will rise this year, leading analysts to forecast the company will put up prices, as it reported weaker-than-expected December sales.
DigiTimes:

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