Evening Headlines
Bloomberg:
- Strauss-Kahn Granted $1 Million Bail Pending Trial. Dominique Strauss-Kahn, the former International Monetary Fund chief charged with sexually assaulting and attempting to rape a hotel housekeeper, may be spending his last night in jail on Rikers Island after a judge said he can go free on bail while awaiting trial. Strauss-Kahn, 62, who was granted bail yesterday after his fifth night in custody, will be released when he meets the requirements set by the court, said William Taylor, his lawyer. Taylor said he thought Strauss-Kahn may be able to leave the prison today. The bail conditions imposed by New York state Supreme Court Justice Michael Obus include posting $1 million in cash and a $5 million insurance bond secured by his house. He must wear an electronic monitor and have an armed guard at all times. He won’t be able to leave his residence except for legal, medical and religious travel.
- Bank of Japan Refrains From Adding Stimulus. The Bank of Japan’s policy board unanimously voted to maintain monetary policy even after a report yesterday showed the country slipped into a recession following a record earthquake. Governor Masaaki Shirakawa and his eight colleagues decided to maintain a 30-trillion yen ($370 billion) credit program and a 10-trillion yen asset-purchase fund that represent the bank’s main policy tools. Deputy Governor Kiyohiko Nishimura dropped his call made last month to expand asset buys to provide more stimulus. The key overnight rate was kept at zero to 0.1 percent.
- Patriot Act to Be Extended to 2015 in Congressional Accord. Congressional leaders reached agreement on extending the USA Patriot Act until June 1, 2015, providing law enforcement continued powers to track suspected terrorists that include the use of roving wiretaps. The Senate will move the legislation on May 23 under a timetable Senate Majority Harry Reid established late today, and a spokesman for House Speaker John Boehner said he plans to have a House vote on it before the law expires May 27. “The speaker supports this common-sense proposal because this law has been crucial to detecting and disrupting terrorist plots and protecting the American people,” said Boehner spokesman Michael Steel.
- Liberty Media Offers $1 Billion for Barnes & Noble. Barnes & Noble Inc. (BKS), the U.S. bookstore chain that began exploring a possible sale last year, said it received an offer from John Malone’s Liberty Media to buy the company for about $1 billion in cash. Liberty Media offered $17 a share, a 20 percent premium to the closing price today, the company said in a statement. A special committee of the Barnes & Noble board will evaluate the proposal, which is subject to reaching a definitive purchase agreement, shareholder and regulatory approvals.
- Iron Ore 'Bubble' Looms, Will Lower Price. The iron ore market has risen to “bubble” levels that will burst as new mines create oversupply of the steelmaking raw material, according to Baosteel Group Corp., China’s second-biggest mill. “There is a bubble in this market, many are gambling,” making acquisitions and investment expensive, Chairman Xu Lejiang said in an interview in Shanghai, without saying when prices would drop. “Everyone who has money is rushing in to invest in iron ore.” Vale SA (VALE3), Rio Tinto Group and BHP Billiton Ltd. (BHP), the three biggest suppliers, plan to spend $45 billion on mines. Macquarie Group Ltd. predicts prices will average about half current levels after 2014 as demand growth in China, the world’s biggest buyer, slows. “The reason the big three keep spending is that they probably think growth in India, Brazil, Russia and South Africa will be sustained, and also because they believe the return on their input would beat those blind investments” by smaller rivals, Xu said. The biggest losers from the new mines may be the speculative companies that haven’t yet started production and their investors, Xu said.
- Emerging Equity Funds Post First Outflows in Eight Weeks. Emerging-market equity funds reported the first net withdrawals in eight weeks as the strengthening dollar and weakening commodity prices sapped demand for riskier assets, Citigroup Inc. said. Funds investing in developing nations reported outflows of $1.6 billion for the week ended May 18, Citigroup analysts led by Markus Rosgen wrote in a report today, citing data compiled by EPFR Global. “U.S. dollar strength and commodity weakness amidst concerns with Greek debt restructuring has probably led to investor risk aversion and thus selling in emerging-market equities as a risk asset,” the analysts wrote.
- Food Inflation in India to Climb on Labor, Energy Costs, Commission Says. Food-price inflation in India, Asia’s third-largest economy, may accelerate in the second half as farmers are paying 20 percent more to grow crops, according to the commission that helps set minimum farm-product prices. “The cost of production is going up very fast,” Ashok Gulati, chairman of the Commission for Agricultural Costs and Prices, said in a telephone interview yesterday. “The labor cost has gone up dramatically in the past one year and energy costs are also going up.” Inflation in India has been above 8 percent for 16 months, with the wholesale-price index increasing 8.66 percent in April. Farm-product wholesale prices rose 7.47 percent in the week to May 7 from a year earlier, the trade ministry said yesterday.
- Obama's Israel Surprise. President Barack Obama, seeking to get ahead of historic changes rolling through the Middle East, promised support for democratic uprisings in the Arab world and called for the first time to begin negotiations for a Palestinian state based on Israel's pre-1967 borders. Mr. Obama, in a wide-ranging speech on the Mideast, stressed to a global audience—the speech was broadcast in English, Arabic and Farsi. With grievances deep and ideological lines drawn decades ago, some in the Mideast, including Israel's prime minister, said Mr. Obama went too far; some pro-Israel U.S. lawmakers agreed. Others, from Palestinians to Arab diplomats, said he didn't go far enough.
- Spain Vote Threatens to Uncover Debt. Weekend elections that threaten to drive Spain's ruling Socialist party from power in several regions and cities also promise a potentially nasty surprise: the revelation of piles of undisclosed debt in local governments that could undercut the country's drive to avoid an international bailout. Five months ago, a government change in Spain's Catalonia region revealed a budget deficit more than twice as big as previously reported. Now, a growing chorus of economists, local politicians and business leaders say that new governments are likely to discover, as Catalonia did, piles of "hidden debt" owed to health clinics and other suppliers.
- Goldman(GS) Braces for Federal Subpoenas. Bank Expects a Demand for Mortgage Documents; Move Would Follow Senate Subcommittee's Report. Goldman Sachs Group Inc. executives expect to receive subpoenas soon from U.S. prosecutors seeking more information about the securities firm's mortgage-related business, according to people familiar with the situation. Officials at the New York company believe the Justice Department will demand certain documents and other information, possibly within days, these people said.
- LinkedIn IPO Soars, Feeding Web Boom.
- Offshore Oil Rig Demand High Except in US: Drilling CEO. Diamond Offshore Drilling is seeing lots of demand for its oil rigs from China, India and other industrialized nations — but not the United States, Chief Executive Larry Dickerson told CNBC Thursday.
- Strauss-Kahn to Get at Least $250,000/Year Pension For Rest of Life From IMF. According to the IMF, the global financial institution is contractually obligated to pay Strauss-Kahn a standard staff pension, plus an enhanced supplemental retirement allowance and a "separation allowance" that was negotiated in his original contract.
- You Need to Be Watching What's Developing In Spain Right Now. (video) The center of the movement is very much Puerta del Sol, where protesters are now camping out overnight just like they did in Tahrir Square in Egypt. The protesters claim they will stay in the square until after regional elections this Sunday, according to Der Spiegel. The protest movement has been declared illegal by the government, over fears it may influence the result of the elections. The traditional media is allegedly under-covering the story.
- Bubble? These China Stocks Got DESTROYED Today.
Forbes:
- Obama Administration Grants $737 Million for a 24/7 Solar Power Plant. The Obama administration on Thursday offered Santa Monica solar startup SolarReserve a $737 million loan guarantee to build a 110-megawatt solar thermal power plant in Nevada that can generate electricity 24 hours a day. That’s the holy grail for intermittent sources of carbon-free energy such as solar and wind and the SolarReserve loan guarantee is a sign that the United States Department of Energy is willing to gamble on a technology untested on a commercial scale.
- A Trial Balloon That Could Deflate The Muni Market Even Further. The trial balloons unleashed by Congress have a lot of investors scratching their heads as to the ramifications for municipal bonds and Master Limited Partnerships. With the utmost simplicity, if the Wyden-Coats Bipartisan Tax Fairness and Simplification Act of 2011 gains momentum, the bill will eliminate the tax exempt interest on all new municipal bonds issued after 2011. However, it will instead provide a 25% tax credit on the interest payments of the bonds. So, what happens to the old munis issued before December 31, 2011 if this bill passes?
- Chinese Student Takes Aim, Literally, at Internet Regulator. The authorities are seeking a college student who sneaked into a lecture hall at one of ’s most prestigious universities on Thursday and tossed eggs and shoes at a computer scientist both lionized and reviled as the architect of China’s strict Internet controls.
- Europe and Emerging Nations Vie to Fill I.M.F. Job. European officials moved quickly to assert their claim over the leadership of the on Thursday, suggesting a serious challenge is being mounted by emerging economic powers like China and India that believe the time has come to break Europe’s historic grip on the post. Nations like Brazil want a more open process that does not see the top position at the I.M.F. granted to a European, as has been the convention since the fund was founded 65 years ago. They hope instead to put forth a credible candidate from the emerging world to reflect its growing economic clout.
- At I.M.F., Men on Prowl and Women on Guard. It is an international island in the midst of the American capital, a sharp-elbowed place ruled by alpha male economists. The days are long, and employees are regularly pressed together for weeks on end during overseas “missions.” It is a climate in which romances often flourish — and lines are sometimes crossed. Some women avoid wearing skirts for fear of attracting unwanted attention. Others trade whispered tips about overly forward bosses. A 2008 internal review found few restraints on the conduct of senior managers, concluding that “the absence of public ethics scandals seems to be more a consequence of luck than good planning and action.” This is life at the , the lender of last resort for governments that need money and, under the leadership of , an emerging force in the regulation of the global economy.
- FrontPoint to Shut Most Funds After Insider Charges. FrontPoint Partners, once a multibillion-dollar hedge fund before it was battered by allegations of insider trading, will shut down most of its funds by the end of the month.
- Making Financial Comparisons Easy With Google(G))G) Advisor. Financial decisions may be some of the most difficult decisions we face—whether it’s finding the right credit card or understanding the impact of paying an extra point on a mortgage. And these days, it seems like we have more financial options than ever. To help solve these problems, we began testing a mortgage comparison tool in 2009 and have added other financial products such as credit cards, CDs, checking, and savings accounts. Today, we’re rolling these tools into one place: Google Advisor, a site designed to help you quickly find relevant financial products from many providers and compare them side-by-side.
- Running From Obama's Health Care Law. Hear that? It's the escalating cry of American employers and workers trying to hold on to their health care benefits in the age of stifling Obama health insurance mandates: Gangway! Gangway! Save me! Waive me! Obamacare refugees first began beating down the exit doors in October 2010. As I've documented since last fall, waiver-mania started with McDonald's and Jack in the Box; spread to Dish Networks, hair salon chain Regis Corp and resort giant Universal Orlando; took hold among every major Big Labor organization from the AFL-CIO to the CWA to the SEIU; roped in the nationalized health care promoters at the Robert Wood Johnson Foundation (whose board of trustees includes health care czar Nancy Ann DeParle); and is now gripping entire states (Maine, New Hampshire and Nevada all recently got in on the act).
- Morgan Stanley(MS) Launches $410 Million MLO for Apollo Credit. Morgan Stanley has pre-placed a new US$410.1m collateralized loan obligation with investors, according to sources with knowledge of the deal. The offering is managed by Apollo Credit Management and is expected to price the week of June 6th.
- Tepco to Announce Record Annual Loss, Replace President - Media. Tokyo Electric Power Co is set to book a record annual net loss on Friday due to the accident at its Fukushima Daiichi nuclear plant and its top executive will resign to take responsibility for the handling of the crisis, Japanese media reported.
- North America April Chip-Gear Orders Rise 1.1% vs March.
- Gap(GPS) Slashes Outlook, Cites Tougher Cost Inflation. Clothing maker and retailer Gap Inc slashed its full-year profit outlook, saying higher price tags will not be enough to offset rising cotton costs, and its shares fell more than 15 percent.
- Symantec(SYMC) Buys Data Experts Clearwell for $390 Million. Symantec Corp will buy privately held database specialist Clearwell Systems for $390 million, as the world's No. 5 software maker shores up its storage and cloud computing capability.
- Salesforce.com(CRM) Raises Revenue Outlook, Shares Rise. Salesforce.com Inc raised its full-year revenue outlook as quarterly sales of its Web-based software surged, sending its stock up more than 7 percent.
- Beijing may start a property tax as early as the second half of this year, citing a person familiar with the situation.
- None of Note
- Asian equity indices are -.50% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 106.0 +.5 basis point.
- Asia Pacific Sovereign CDS Index 113.50 -1.0 basis point.
- S&P 500 futures unch.
- NASDAQ 100 futures -.05%.
Earnings of Note
Company/Estimate
- (ANN)/.48
- (DCI)/.72
- (HIBB)/.67
- None of note
- (FAST) 2-for-1
- (KRO) 2-for-1
- (MOH) 3-for-2
- The Goldman Sachs(GS) Insurance Symposium and the (BGCP) analyst conference could also impact trading today.
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