Tuesday, September 06, 2011

Today's Headlines

Posted by Gary .....at 2:59 PM

Bloomberg:
  • Greek Yields, CDS at Records on Debt Concern; Italy Notes Slide. Greece’s two- and 10-year yields rose to records on speculation the nation’s deepening recession may make a second international bailout agreement redundant even before it’s implemented. German two- and 10-year yields dropped to all-time lows as equities fell. The yield difference, or spread, between Greek 10-year bonds and German bunds widened to the most since at least 1998, and the cost of insuring against default on Greek sovereign debt surged to a record. Italian two-year yields rose to the highest level in a month as workers held a general strike. Spanish 10-year bonds rose for the time in eight days as the European Central Bank bought the nation’s debt. “The consensus seems to be that the second bailout package for Greece might be obsolete before it has been put into law, which is obviously detrimental for sentiment,” said Michael Leister, a fixed-income strategist at WestLB AG in London. “The ECB is having a hard time stabilizing these markets. The pressure is rising.” Greece’s 10-year yield climbed 50 basis points to 19.81 percent at 4:51 p.m. in London. The 6.25 percent security due June 2020, fell 1.155, or 11.55 euros per 1,000-euro ($1,400) face amount, to 45.47. Two-year note yields added 283 basis points, or 2.83 percentage points, to 53.20 percent. The yield spread between Greek 10-year securities and similar-maturity German bunds widened as much as 50 basis points to a euro-era record 1,796 basis points. Credit-default swaps on Greece climbed 109 basis points to 2,659, according to CMA. German Chancellor Angela Merkel told members of her Christian Democrat party that Greece will not receive aid payments due this month unless it meets conditions of the rescue, two party officials said. Greece’s economic woes, wavering commitment to budget cuts in Italy and mounting borrowing costs for European banks underscore investor concern that efforts by euro-area officials to contain the debt crisis are unraveling. Portuguese two-year notes fell for a third day, pushing the yield on the securities up 77 basis points to 14.48 percent, after touching 14.62 percent, the highest level since Aug. 4. The nation’s 10-year bond yield reached 10.87 percent, the most since Aug. 30. The yield difference between Belgian 10-year bonds and similar-maturity German bunds widened as much as eight basis points to 233 basis points. That’s the widest since the euro’s debut in 1999, according to data compiled by Bloomberg.
  • Schaeuble Urges Curbs on European Debt to Soothe Global Market 'Anxiety'. German Finance Minister Wolfgang Schaeuble called on euro-area governments to fully implement curbs on debt, saying that only fiscal “solidity” will help tame financial-market turmoil. Schaeuble’s comments to lawmakers in Berlin today seek to raise the pressure on euro-area states to follow Germany and clamp down on debt to tackle the core cause of the sovereign crisis that is rocking markets worldwide. Financial markets are in “a state of anxiety,” requiring “a new mentality” rather than short-term stimulus, he said. “Markets are not the problem, excesses are,” Schaeuble said in parliament’s first session after the summer recess, as he opened a debate on the 2012 budget. The constitutionally mandated debt ceiling enacted by Germany and now being emulated by France and Spain is “of fundamental importance,” he said. Only “financial-policy solidity will win the confidence of markets.”
  • Berlusconi Cabinet Will Call for Confidence Vote on Revised Austerity Plan. Italian Prime Minister Silvio Berlusconi called a Cabinet meeting today to authorize a confidence vote in Parliament on an amended 45.5 billion-euro ($64.5 billion) austerity plan that prompted a general strike. The meeting at 6 p.m. in Rome will pave the way for a vote on the measures, which will include raising the value-added tax rate by one percentage point to 21 percent, a 3 percent levy on incomes of more than 500,000 euros a year as well as an increase in the retirement age of women in the private sector starting in 2014, Berlusconi’s office said in an e-mailed statement.
  • The cost of insuring against default on European bank bonds rose to a record as the region's debt crisis roils credit markets. The Markit iTraxx Financial Index linked to the senior debt of 25 banks and insurers increased 7 basis points to 277, according to JPMorgan Chase at 4 pm in London. The subordinated index was up 6.5 basis points at 487.5 basis points. Credit-default swaps on Madrid-based Banco Popular Espanol SA increased 48 basis points to 847, according to CMA. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments rose 4 basis points to a record 330. The Markit iTraxx Crossover Index of credit-default swaps on 40 companies with mostly high-yield credit ratings increased 15.5 basis points to 771, the highest level since July 2009, according to JPMorgan. The Markit iTraxx Europe Index of 125 companies with investment grade ratings climbed 5 basis points to 188.5.
  • U.S. ISM Services Index Increased in August. Service industries unexpectedly expanded at a faster pace in August, easing concern the biggest part of the U.S. economy was slumping. The Institute for Supply Management’s index of non- manufacturing businesses increased to 53.3 last month from 52.7 in July. Economists forecast the gauge would drop to 51, according to the median estimate in a Bloomberg News survey. The index of new orders in the services industry increased to 52.8 from 51.7 the prior month. A gauge of business activity fell to 55.6 from 56.1 in July. The measure of prices paid increased to 64.2 from 56.6. The group’s employment index declined to 51.6, the lowest since September 2010, from 52.5 a month earlier.
  • German Factory Orders Decline More Than Forecast on Exports. Factory orders in Germany, Europe’s largest economy, fell more than economists forecast in July, led by a drop in export demand as the global economy cooled. Orders, adjusted for seasonal swings and inflation, dropped 2.8 percent from June, when they rose 1.8 percent, the Economy Ministry in Berlin said in a statement today. The decline, the first in four months, exceeded economists’ forecast of 1.5 percent, according to the median of 37 estimates in a Bloomberg News survey.
  • Commodities Drop to One-Week Low on Deepening European Debt-Crisis Concern. Commodities fell to the lowest level in more than a week on deepening concern the European sovereign debt crisis may further slow global economic growth, damping demand for raw materials. Gold fell from a record in London after the Swiss central bank set a minimum exchange rate. The Standard & Poor’s GSCI Index dropped as much as 2.1 percent to 647.88, the lowest intraday level since Aug. 26, and was down 2 percent at 648.46 by 1:58 p.m. in London. Crude oil fell as much as 3.8 percent in New York.
  • Zoellick Says World in 'Dangerous' Period as Europe Turmoil Adds to Risks. World Bank President Robert Zoellick indicated that risks to the global economy are intensifying, with the euro region’s outlook dependent on European leaders making the right decisions. “We are moving into a dangerous period,” Zoellick said in an interview with Bloomberg Television in Singapore today. While the U.S. is likely to avoid a return to recession, escaping with slow growth, the euro zone is facing a “particularly sensitive time,” he said.
  • Fund Managers Bullish on Stocks in Q3: HSBC. Global fund managers are bullish on stocks for the third quarter, as the turmoil in financial markets offers investors “attractive buying opportunities,” according to a HSBC Holdings Plc (5) survey. A survey of 12 investment companies overseeing $4.4 trillion in funds showed 63 percent are holding “overweight” positions on equities this quarter, up from 44 percent in the previous three months, HSBC said in a statement today. Some 57 percent of fund managers are “underweight” bonds in the third quarter, compared with 38 percent in the previous period.
  • U.S. Employment Index Drops for Fourth Time in Five Months. A measure of job prospects in the U.S. fell in August for a fourth time in five months, reflecting declines in consumer confidence and job openings that indicate payrolls may fail to pick up in the final months of the year. The Conference Board’s Employment Trends Index decreased 0.3 percent to 100.8 from the prior month’s revised reading of 101.0, the New York-based private research group said today.
  • Fed's Kocherlakota: Economy Does Not Need More Easing. Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said the U.S. economy didn’t need additional stimulus in August and probably won’t require more easing this month. “The data in August did not justify the additional accommodation provided” by the central bank on Aug. 9, Kocherlakota said today in the text of a speech in Minneapolis. “It is unlikely that the data in September will warrant adding still more accommodation.”
  • Brazil Inflation Accelerated to Fastest Since 2005 Ahead of Shock Rate Cut. Brazil’s inflation accelerated for the 12th straight month in August to its fastest annual rate since 2005, reinforcing economist views that the central bank may have cut borrowing costs prematurely. Consumer prices, as measured by the IPCA index, rose 0.37 percent in August from the previous month, the national statistics agency said today. That was in line with analyst expectations for a 0.36 percent increase, according to the median estimate of 40 analysts surveyed by Bloomberg. Prices rose 7.23 percent from a year ago, the highest since June 2005. “Inflation is worrying, mostly in the long run with elevated service prices growth,” Mauricio Rosal, chief economist at Raymond James in Sao Paulo, said in a telephone interview. “It will be harder for the central bank to bring inflation down to its target because it’s at such a high rate.”
Wall Street Journal:
  • Turkey Suspends Defense Trade With Israel. Turkey's Prime Minister Recep Tayyip Erdogan said Tuesday that his country was suspending defense trade with Israel completely and that Turkish naval vessels would be seen in the Eastern Mediterranean more often, as Ankara ratcheted up pressure in a rising dispute with its former ally.
  • Slovak Official's Delay of Rescue Fund Vote Poses Problem for Euro Zone. Slovakia's Parliament Speaker Says He Will Push Back Vote to Widen Role of Fund. Slovak lawmakers will reconvene here Tuesday after their summer break, but a critical piece of legislation will be conspicuously absent from the agenda: A bill to widen the role of a euro-zone rescue fund. Parliament Speaker Richard Sulik said he will do everything he can to delay a vote on the measure—passage of which is necessary for the common currency bloc to move ahead with plans to strengthen the financial safety net for the euro's weakest members. As speaker, Mr. Sulik has significant power in setting Parliament's legislative agenda. "It's not possible to solve a debt crisis by creating new debts," Mr. Sulik said in an interview Friday, in which he made clear his opposition to any expansion of the European Financial Stability Facility. He pledged to postpone a final vote on the measure until at least the end of the year. The delay is one of a growing list of potential disruptions that is vexing European policy makers and unsettling markets, which are anxious about precarious state finances in Greece and Italy and are questioning the political resolve of euro-zone governments.
  • Debt Anger Imperils GOP, Democrats Alike. As dark as the political picture is for President Barack Obama right now, Republicans aren't exactly basking in a healthy glow either, suggesting that some wild and unpredictable political forces have been unleashed across the land.
CNBC.com:
  • Poll: Do You Approve of Obama's Handling of the Economy?
  • US Risking Recession With Attack on Big Banks: Bove. Speaking just days after the Federal Housing Finance Agency sued 17 banks over mortgage-related practices during the collapse of the subprime lending industry, Bove told CNBC that Washington is acting without concern over what effect its actions against banks are having.
  • More Bad News on Jobs: Stores Trim Holiday Hiring. Although the vast majority of retailers — some 68 percent — plan on keeping holiday hiring at roughly the same level as last year, a quarter expect to trim hiring plans for seasonal workers, according to an annual hiring survey conducted by the Hay Group, a global management consultancy. That’s a greater number than last year, when 17 percent of the retailers Hay surveyed said they would scale back hiring.
Business Insider:
Zero Hedge:
 NY Post:
  • 46 Shot in Brooklyn Since Saturday Morning. Gunfire erupted today near the massive West Indian Day Parade in Brooklyn -- not far from where Mayor Bloomberg was marching -- as the entire city reeled from a epidemic of shootings over the past two days. By noon today, a total of 46 people had been shot in the city since Saturday morning, authorities said.
New York Time:
  • Hacking in the Netherlands Took Aim at Internet Giants. Attackers who hacked into a Dutch Web security firm have issued hundreds of fraudulent security certificates for intelligence agency Web sites, including the C.I.A., as well as for Internet giants like Google, Microsoft and Twitter, the Dutch government said on Monday. Experts say they suspect the hacker — or hackers — operated with the cooperation of the Iranian government, perhaps in attempts to spy on dissidents. The latest versions of browsers including Microsoft’s Internet Explorer, Google’s Chrome and Mozilla’s Firefox are now rejecting certificates issued by the firm that was hacked, DigiNotar.
Washington Post:
  • Obama Ratings Sink to New Lows as Hope Fades. Public pessimism about the direction of the country has jumped to its highest level in nearly three years, erasing the sense of hope that followed President Obama’s inauguration and pushing his approval ratings to a record low, according to a new Washington Post-ABC News poll. More than 60 percent of those surveyed say they disapprove of the way the president is handling the economy and, what has become issue No. 1, the stagnant jobs situation. Just 43 percent now approve of the job he is doing overall, a new career low; 53 percent disapprove, a new high.
  • U.S. Postal Service May Lose $8 Billion More. The postmaster general is going to Congress to discuss the Postal Service’s mounting debt. Postmaster General Patrick Donahoe is among the witnesses scheduled to appear Tuesday before the Senate Homeland Security and Governmental Affairs Committee. The Postal Service is facing a second straight year of losses of $8 billion or more. A decline in mail because of the Internet and the loss of revenue from advertising amid the economic downturn have taken a toll on the agency. Postal officials say they will be unable to make this month’s $5.5 billion payment to cover future employee health care costs because the agency will have reached its borrowing limit and doesn’t have enough cash.
Insider Monkey:
9To5Mac:
  • GameStop(GME) to Carry iOS Devices Soon. We’ve received a word from several sources that GameStop will soon begin offering the entire lineup of Apple’s(AAPL) popular iOS mobile devices such as iPhones, iPods and iPads at their stores. The announcement was made to dealers at an annual trade show in Las Vegas this past week. Also, as of this week, GameStop began accepting iOS device trade-ins for in-store credits.
Reuters:
  • 25 German MPs Rebel in Preliminary EFSF Votes. Twenty-five lawmakers from Germany's ruling coalition refused to back a draft law that would boost the powers of the euro zone's rescue mechanism in votes late on Monday, underscoring the risk that Chancellor Angela Merkel might fail to secure a conservative majority for the measure. In a vote taken by members of Merkel's conservative bloc of Christian Democratic Union (CDU) and Christian Social Union (CSU), 12 members of parliament voted against introducing the law into parliament and seven others abstained, party sources told Reuters. In a separate vote by lawmakers from the Free Democrats (FDP), two voted against the measure to boost the European Financial Stability Facility (EFSF) and four abstained. Germany's Bundestag lower house of parliament is due to vote on new powers for the EFSF on Sept. 29. Although a majority in the broader house is a foregone conclusion due to opposition support for the legislation, Merkel would face pressure to dissolve parliament and call new elections if she was unable to secure a majority with conservative allies alone. Her coalition has 330 seats in the 620-seat Bundestag, meaning she can afford 19 dissident votes.
  • Alden Global Hedge Fund Down 13% in August - Letter. U.S.-based hedge fund manager Alden Global Capital saw its Distressed Master fund fall 13 percent in August, as tumbling global markets played havoc with hedge funds' returns. New York-based Alden, which runs approximately $3 to $4 billion in assets, also saw its Value Recovery fund lose 13.9 percent, according to an investor letter obtained by Reuters.
  • Eurozone Worries Raise Dollar Funding Costs.
  • Italy to Hike VAT as Strikers Protest Austerity. Italy's government pledged on Tuesday to hike value added tax and introduce a constitutional balanced budget amendment as hundreds of thousands of people went on strike against an already widely criticised plan.
  • Global Private Sector Growth Weakest in 2 Years - PMI. The global private sector grew at its weakest pace since August 2009 last month as a subdued service sector added to feeble growth amongst manufacturers, a business survey showed on Tuesday. JPMorgan's Global All-Industry Output index, which is based on the results of purchasing managers surveys of thousands of companies worldwide, nudged down to 51.5 in August from July's 52.5. Link
Telegraph:
  • Cost of Insuring RBS, Lloyds Against Default at New High. (graph) Credit default swaps, effectively insurance on a borrower becoming unable to payback their debt, written on state-backed lenders Royal Bank of Scotland and Lloyds Banking Group yesterday hit new highs. At yesterday’s close, RBS credit default swaps were quoted at 355 basis points, up 37.9 basis points on their Friday close. Lloyds TSB credit default swaps hit a new high of 340 basis points, up 33.4 basis points on last Friday. The cost of insuring the junior debt of the two banks also soared to new highs of 653 basis points for Lloyds and 705 basis points for subordinated bonds issued by RBS. HSBC and Standard Chartered saw their credit default swaps widen to new 12-months highs, while Barclays saw its trade just below the 12-month high it reached late last month.
  • Debt Crisis: Live. UN: Eurozone Austerity Could Lead to 'Lost Decades'.
ynetnews.com:
  • IDF General: Likelihood of Regional War. Senior IDF officer warns of 'radical Islamic winter' that may lead to regional war, could prompt use of WMDs; new, more lethal weapons discovered in hands of terrorists during latest round of fighting in Gaza, Major General Eisenberg says. "It looks like the Arab Spring, but it can also be a radical Islamic winter," he said in a speech at the Institute for National Security Studies in Tel Aviv. "This leads us to the conclusion that through a long-term process, the likelihood of an all-out war is increasingly growing," the IDF general said.

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