Today's Headlines

Bloomberg:

• OPEC Can't Find Consensus on Output Quotas. OPEC failed to reach an agreement on crude production for the first time in at least 20 years, after six countries opposed a Saudi Arabia-led group that urged members to raise output as oil trades above $100 a barrel. “It was one of the worst meetings we’ve ever had,” Saudi Arabian Oil Minister Ali al-Naimi said as representatives of the 12-member group left the meeting in Vienna after five hours of talks. “We were unable to reach an agreement.” Crude jumped 2.7 percent in 20 minutes in New York after the meeting ended. The split underscores growing divisions within the Organization of Petroleum Exporting Countries. OPEC announced its biggest-ever output cuts in December 2008 amid a collapse in global demand, capping production at 24.845 million barrels a day for all members except Iraq, which is exempt from the quota system. The limit has remained unchanged since then.
• Merkel Faces Dissenting Lawmakers on Greece as Schaeuble Stokes ECB Clash. Less than 24 hours after Angela Merkel was urged by President Barack Obama to take the lead in managing Europe’s debt crisis, the German chancellor faces members of her own coalition who say she’s done enough. Merkel and Finance Minister Wolfgang Schaeuble briefed lawmakers in Berlin today on a second bailout for Greece, outlining a stance at odds with central bankers, French allies and German voters. That’s a circle not easily squared, said Christoph Rieger, head of fixed-income strategy at Commerzbank AG in Frankfurt. By calling for bondholders to contribute a “substantial” share of the rescue, Schaeuble is “openly clashing” with European Central Bank President Jean-Claude Trichet, Rieger said. “Either Schaeuble softens his calls or the ECB makes further concessions,” he said. “One will have to give in.”
• Senate Rejects Delay of Debit Swipe-Fee Rule. The U.S. Senate rejected a six-month delay of a Federal Reserve rule capping debit-card swipe fees set by Visa Inc. (V) and MasterCard Inc. (MA), whose shares fell after the vote was completed. Senator Richard Durbin of Illinois, the No. 2 Democrat in the chamber, led the opposition to the delay amendment, which was defeated today in a 54-45 vote. The measure needed 60 votes for approval. Visa Inc. and MasterCard Inc., the world’s biggest payment networks, dropped the most since Dec. 16. Visa fell 3.8 percent to $76.78 at 2:38 p.m. in New York Stock Exchange composite trading. MasterCard declined 3.3 percent to $265.18. Shares of U.S. banks also slipped. The Fed now has until July 21 to implement the final rule on capping the fees, which accounted for more than $16 billion in 2009, according to the Fed.
• German Industrial Production Unexpectedly Declined in April. German industrial production unexpectedly declined for the first time in four months in April, led by a drop in construction output. Production fell 0.6 percent from March, when it rose a revised 1.2 percent, the Economy Ministry in Berlin said today. Economists had forecast a gain of 0.2 percent, the median of 36 estimates in a Bloomberg News survey showed. Construction output fell 5.7 percent in April from March, when it advanced 5.5 percent, today’s report showed. Manufacturing declined 0.6 percent, led by a 1.5 percent drop in investment-goods production.
• Harbinger Said to Face $1 Billion in Redemptions. Harbinger Capital, the $6 billion investment firm run by Philip Falcone, is facing at least $1 billion in redemptions from its main hedge fund after assets shrank by almost $2 billion in 2010, according to two investors. The main fund had $4.25 billion in assets at the end of 2010, 30 percent less than at the start of the year due to client withdrawals and losses, according to the people, who asked not to be identified because the information is private. Investors, who can pull 25 percent of their money every quarter, have asked to redeem $1 billion, which would be paid between now and next March, said the people, who have seen the fund’s financial statement.
• Exxon(XOM) Finds Biggest Oil Field in Gulf of Mexico Since 1999. Exxon Mobil Corp. (XOM) announced it found the equivalent of 700 million barrels of oil beneath the Gulf of Mexico, the biggest discovery in the region in 12 years. The estimated size of the Hadrian field may increase as drilling continues, Exxon said in a statement today. The discovery is about 250 miles (400 kilometers) southwest of New Orleans in water about 7,000 feet (2,000 meters) deep, Irving, Texas-based Exxon said. Exploratory drilling began in 2009 at the prospect and was halted last year after a record oil spill from BP Plc’s Macondo well prompted a U.S. moratorium on deep-water exploration. “This is a very, very significant find,” Rahman said. “When a supermajor like Exxon Mobil throws a number like 700 million at you, it indicates they are very confident in what they’ve got here.” The Gulf accounted for 29 percent of U.S. crude production in 2009, according to the Energy Information Administration.
• Greek Jobless Rate Breached 16% for First Time on Record in March. Greece’s unemployment rate exceeded 16 percent in March, extending a record high as the nation’s economy remained mired in the third year of a recession. Greece’s jobless rate has risen every month since July, after Prime Minister George Papandreou’s government cut wages and pensions and increased taxes to narrow a budget deficit that reached 15.4 percent of gross domestic product in 2009.

Wall Street Journal:

• U.S. Hedge Funds to Fight Bank of Ireland Restructuring. A group of U.S. hedge funds with large stakes in the Bank of Ireland's subordinated debt is preparing to fight the government's proposed restructuring of €2.6 billion ($3.82 billion) in junior bonds.
• Japan Opposition Says Bond Market "Doomsday" Could Come in 7 Years. Japanese bond yields, which have remained at record-low levels despite the country's ballooning debt, may rise sharply in seven years as the country's savings and current account surplus decrease, the main opposition party said Wednesday. The report by the Liberal Democratic Party's "X-day" project team--tasked with preparing for such a crunch in the nation's finances--comes as the party debates the possibility of forming a coalition with the ruling party following Prime Minister Naoto Kan's announcement that he will step in the near future. Despite Japan's huge outstanding debt--twice the size of its annual economic output--the bond market has so far been supported by domestic investors, who hold well over 90% of Japanese government bonds.
• Tepco Plans Radioactive Water Release From Second Plant. Tokyo Electric Power Co. plans to release 3,000 tons of lightly radioactive water into the ocean from the Fukushima Daini nuclear complex, the sister plant of the stricken Fukushima Daiichi complex, officials said Wednesday. The announcement casts the first major spotlight on disaster-related issues at the Daini plant, which officials said was quickly brought under control after Japan's March 11 earthquake and tsunami.

CNBC.com:

• Abercrombie & Fitch(ANF) Shares on Weak Sales Outlook. Teen apparel retailer Abercrombie & Fitch reiterated its second-quarter forecast, but said sales during the quarter will not be as good as those in the first, according to CFO Jonathan Ramsden, who was speaking at a conference in New York.

Business Insider:

• The World's Best Business Schools.
• Beige Book Out: Slowing Seen In Multiple Districts, Only Dallas Is Accelerating.
• Meredith Whitney On Muni Doom: "I Know I'm Right On This".
• France Tells Ireland: Increase The Corporate Tax Rate, Or We Won't Cut Your Bailout Rate.
  

Zero Hedge:

• Greek Economy Grinding to a Halt as Daily Protests Cripple Industrial Production. (graph)
• Greek CDS Surges to All Time Record on Talk Accord for Greek Bailout Faces Major Obstacles. (graph)
• Structural Unemployment: The Average Unemployed American Looks For a Job for 20 Weeks Before Giving Up. (graph)
  

NY Post:

• Slasher Street. The Closing Bell Tolls for Thousands of Jobs. On Wall Street the hatchet man cometh. Deep-pocketed bankers and traders are bracing for what could be a fresh round of job cuts on the Street, concentrated in equities trading and investment banking, where firms are considering eliminating thousands of jobs in the coming weeks, The Post has learned. Barclays Capital(BCS), Goldman Sachs(GS), Bank of America(BAC), JPMorgan Chase(JPM) and Morgan Stanley(MS) currently are among those financial institutions either weighing staff cuts or actually paring payroll as they struggle to rein in costs and eke out profits in a choppy market, sources told The Post.

Forbes:

• California's Green Jihad.

Politico:

• Poll: Record-High Number Think Country Headed Into Depression. A record-high of nearly half the country fears the economy is careening toward a depression, helping push President Barack Obama’s approval rating down by six points in just the last two weeks, according to a new CNN/Opinion Research poll.

Reuters:

• Pharmasset(VRUS) Says HCV Drugs Show Promise. Pharmasset Inc said interim analyses of clinical studies of its two drugs for chronic hepatitis C showed promise.
• Ciena(CIEN) Forecasts Weak Q3 Revenue; Shares Tumble. Ciena Corp (CIEN.O) forecast third-quarter sales below Wall Street expectations as the network equipment maker's transition to a new technology for its optical switches might take longer than expected. Shares of the company, which makes optical switches that help telecom carriers such as AT&T (T.N) and Verizon Communications (VZ.N) manage their networks, fell more than 16 percent to $20.43 -- their biggest fall in at least two years.

Financial Times:

• Gates Criticises 5 Allies Over Libya. Robert Gates, the US defence secretary, criticised five European Nato members on Wednesday for not doing enough in the air war over Libya, a rare diplomatic breach that underlines the growing tensions within the alliance over who is bearing the burden of the two-month-old campaign. During a closed-door meeting of Nato defence ministers, Mr Gates specifically named Germany and Poland as two countries with the capabilities to assist in the air war who were currently not contributing at all.

Telegraph:

• UK's Cable Threatens Harsher Taxes for Banks Over Lending. Vince Cable, the Business Secretary, has warned banks could face 'more forceful' taxes if lending fails to rise and they don't become more open about pay.
• UK Warned Credit Rating Could Be At Risk. Britain's top-notch credit rating could be slashed if growth stays weak and the Government does not stick to its austerity plans, one of the world’s top credit rating agencies warned.

Figaro:

• French local government is holding "toxic" loans worth about 7 billion euros, minister for local government Phillippe Richert said in an interview. It's possible that there are more such loans that haven't yet been uncovered, Richert said.