Wednesday, September 14, 2011

Today's Headlines

  • Stocks, Euro Gain on Europe Debt Optimism. Stocks extended gains, sending the Standard & Poor’s 500 Index higher for a third day, as German and French leaders expressed support for Greece to remain in the euro monetary union and speculation grew that China may offer help for Europe’s most-indebted nations. The euro rose against most peers, while commodities fell. U.S. stocks and the euro extended gains as French President Nicolas Sarkozy and German Chancellor Angela Merkel said they're “convinced” Greece will remain in the euro area, according to a statement issued by Sarkozy after they spoke to Greek Prime Minister George Papandreou by telephone today. Italian and Spanish debt rose as Caijing reported that China is willing to buy bonds of nations hit by the debt crisis, citing Zhang Xiaoqiang, a vice chairman of the National Development and Reform Commission. “There’s still hope out there that Europe will get their issues worked out and that Greece is not as big a problem as people think,” Don Wordell, a fund manager for Atlanta-based RidgeWorth Capital Management, which oversees about $48 billion, said in a phone interview.
  • The cost of insuring European sovereign and corporate debt fell for a second day, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps tied to 15 governments dropped 11 basis points to 341 as of 1 pm in London.
  • Credit Agricole Debt Ratings Cut by Moody's Along With Societe Generale's. Credit Agricole SA (ACA) and Societe Generale SA, France’s second- and third-largest banks, had their long-term credit ratings cut one level by Moody’s Investors Service, which now plans to examine the impact of tighter financing markets on French lenders. Moody’s put the companies, along with BNP Paribas (BNP) SA, on review for a possible downgrade on June 15, citing the risks posed by their investments in Greece. Since then, concern over Europe’s escalating sovereign debt crisis has crimped European banks’ ability to raise funds in dollars. “We extended the review to take into account the system fragility in the banks’ financing markets,” said Nicholas Hill, senior vice president at Moody’s in Paris, in an interview.
  • Euro Strengthens as European Leaders Work to Contain Region's Debt Crisis. The euro rose against the majority of its most-traded counterparts as optimism increased that area leaders will work to avoid a default in Greece and contain the region’s debt crisis.
  • China has its own problems such as asset bubbles and inflationary pressure, Li Daokui, an adviser to the People's Bank of China said. The government should be "super cautious" in navigating the "troublesome weather" and puts its own domestic policies in proper orders, he said. China can help the U.S. and Europe by increasing its investments there and not by buying bonds, Li said.
  • China Willing to Buy Bonds From Crisis Nations. China is willing to buy bonds from nations involved in the sovereign debt crisis, National Development and Reform Commission Vice Chairman Zhang Xiaoqiang said in an interview with the media in Dalian yesterday. China is willing to offer assistance, Zhang said without elaborating, adding that Premier Wen Jiabao made similar remarks earlier, according to a transcript distributed on the planning agency’s website yesterday evening.
  • Retail Sales in U.S. Unexpectedly Stagnate. The unchanged reading followed a 0.3 percent gain for July that was smaller than previously estimated, Commerce Department figures showed today in Washington. Prices paid by producers were also unchanged in August, according to the Labor Department, while so-called core costs that exclude food and fuel rose less than forecast.
  • Intel(INTC) Plans First Straight Bond Issue in 24 Years to Fund Stock Buybacks. Intel Corp. (INTC), the world’s largest chipmaker, is planning its first non-convertible bond offering in more than two decades as corporate debt issuance revives in September with borrowing costs at about record lows. The company plans to sell at least $1.5 billion of debt maturing in five, 10 and 30 years, mainly to fund stock buybacks, Santa Clara, California-based Intel said today in a statement distributed by Business Wire. Intel last tapped the market for bonds that aren’t convertible into stock in 1987, according to data compiled by Bloomberg.
  • Obama Plan to Begin Taxing Health Insurance Stirs Democrat Opposition. President Barack Obama is asking lawmakers to tax the health-insurance benefits of top earners, stirring opposition from congressional Democrats who fought a similar proposal in the 2010 health-care law. The provision, tucked deep inside the 155-page jobs legislation Obama submitted to Congress on Sept. 12, would make health plans provided by employers partially taxable for couples earning more than $250,000 a year and individuals earning more than $200,000. For these taxpayers, the proposal is a dramatic departure from their current tax treatment, in which all their health benefits are exempt from taxation. It also revives a debate among Democrats over whether taxing health-insurance plans for the wealthy sets the stage for one day expanding the tax to lower-income brackets.
  • Obama Aides Pushed for Solyndra Decision. President Barack Obama’s aides pressured White House budget officials to complete a review of a $535 million U.S. loan guarantee to Solyndra LLC, a solar-panel maker that has filed for bankruptcy protection, according to a U.S. House committee report based on e-mails and documents. Republicans on the House Energy and Commerce Committee released the findings of a seven-month investigation into U.S. support for Fremont, California-based Solyndra today before a hearing where two administration officials faced questions about White House support for the company and its goals for clean energy. The Department of Energy and the Office of Management and Budget “did not take adequate steps to protect taxpayer dollars,” according to the report. Solyndra, promoted by the Obama administration as a successful example of the use of stimulus money to spur development of a clean-energy industry, filed for bankruptcy on Sept. 6, and two days later its offices were raided by the Federal Bureau of Investigation. “Was Solyndra just one bad bet by an administration rushing to claim credit for the first loan guarantee, or is it the tip of the iceberg?” said Committee Chairman Fred Upton, a Michigan Republican. Documents collected during the Republicans’ investigation “raise troubling questions” about whether the staff at the Office of Management and Budget “was rushed to complete its review of the Solyndra loan guarantee by Sept. 4, 2009, in time for a groundbreaking event organized at Solyndra’s facilities organized by the White House,” according to the report.
Wall Street Journal:
  • Noda 'Concerned' Over Chinese Military Build-Up. Japan's Prime Minister Yoshihiko Noda voiced concern over China's military build-up and increased maritime activity near Japan, even as he emphasized the importance of ties between Asia's two largest economies. "I have concerns over the lack of transparency in [China's] reinforcement of its national defense capability, as well as the acceleration of maritime activities" by Beijing, Mr. Noda said Wednesday during a parliamentary session. "I expect China to play an appropriate role as a responsible member of the international community."
  • US Bancorp(USB) Wants to Boost Dividend. U.S. Bancorp Chairman and Chief Executive Richard Davis said the bank will be asking federal regulators for permission to raise its dividend and buy back more shares, with approval likely coming early next year. Davis, speaking Wednesday at the Barclays Capital financial conference in New York, reiterated the bank expects to use anywhere from 60% to 80% of its earnings for dividends and repurchases. He said the nation’s biggest banks are expecting to deliver new stress-test scenarios to regulators by the end of the year and would expect to receive regulatory approval on capital plans in the first quarter of the year. “Well, you can bet we are going to be asking for permission to raise the dividend,” said Davis, the head of the nation’s fifth largest bank.
  • Hedge Fund Fees Totally Worth It, Says Hedgie.
  • Papandreou to Ask Sarkozy, Merkel to Squelch Criticism, Default Leaks - Sources. Greek Prime Minister George Papandreou later Wednesday will ask German Chancellor Angela Merkel and French President Nikolas Sarkozy to tone down their criticism of Greece and control leaks that the debt-ridden country will default, according to people familiar with the agenda of a planned teleconference.
  • MF Global to Cut Staff in Asia, Europe.
Business Insider:
San Francisco Chronicle:
  • Obama Approval Rating at 46% in California. Even as President Obama's approval rating has plummeted across the nation, it was always sunnier in California. Until now. For the first time since Obama became president in January 2009, fewer than half (46 percent) of California voters approve of his performance as president - a figure that's dropped eight percentage points in three months, according to a Field Poll survey of attitudes toward Obama released today.
Sueddeutsche Zeitung:
  • Italy is prepared to give up "all sovereignties necessary" to allow the creation of a European central government," citing Foreign Minister Franco Frattini. The European Union's existing contracts should be extended or changed if necessary to incorporate a "stabilizing finance mechanism," according to the report. The ECB should gain a "political role," while remaining an independent institution, Frattini said.
Globe and Mail:
  • Survey Shows Unprecedented Demand for iPhone 5. RBC Dominion Securities Inc. has released details of a proprietary survey that shows “unprecedented” demand for the iPhone 5 and strong back-to-school buying intentions for the iPad. The survey, taken Aug 2 to 10, found that 31 per cent of 2,200 respondents were very or somewhat likely to buy the iPhone 5. That significantly exceeds the 25 per cent of respondents who had said they intended to buy the iPhone 4 ahead of its launch more than a year ago. Meanwhile, 66 per cent of existing iPhone users said they were very or somewhat likely to buy the iPhone 5, suggesting many current customers are planning to upgrade.

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