Thursday, November 17, 2011

Today's Headlines

Posted by Gary .....at 3:07 PM

Bloomberg:
  • European Stocks Decline as Lower Spanish Bond Demand Fuels Crisis Concern. European stocks fell after Spain’s borrowing costs surged to a euro-era record on waning demand at a bond sale, adding to concern the region’s sovereign debt crisis is deepening. BNP Paribas SA and Societe Generale SA led a sell-off in banks, both dropping at least 3.9 percent as dollar funding costs for European lenders climbed to a three-year high. Mining companies tumbled with metal prices. The benchmark Stoxx Europe 600 Index lost 1.3 percent to 233.97 at the close in London, extending the decline from this year’s high on Feb. 17 to 20 percent as the debt crisis spreads across the region’s core. “You have a lot of pressure on yields, you have the structural issues, the liquidity issues, plus market fears -- it’s very bad,” said Patrick Legland, head of research at Societe Generale, on Bloomberg Television. “We are not very far from the point where the European Central Bank will need to intervene one way or another.” Spanish bonds sank, driving 10-year yields to as much as 6.78 percent, the highest since before the euro was introduced, as borrowing costs climbed to the most in at least seven years at an auction of securities. The benchmark yield was trading at 6.49 percent at 4:39 p.m.
  • France Clashes With Germany on ECB's Rescue. German Chancellor Angela Merkel rejected French calls to deploy the European Central Bank as a crisis backstop, defying global leaders and investors calling for more urgent action to halt the turmoil. As the crisis sent borrowing costs in core economies outside Germany to euro-era records, Merkel listed using the ECB as lender of last resort alongside joint euro-area bonds and a “snappy debt cut” as proposals that won’t work. “I’m convinced that none of these approaches, if applied right now, would bring about a solution of this crisis,” Merkel said in a speech in Berlin today. “If politicians believe the ECB can solve the problem of the euro’s weakness, then they’re trying to convince themselves of something that won’t happen.” Merkel’s comments underscore German reluctance to assume more liability for taming the debt crisis even as it roils France, the euro region’s second-largest economy, and threatens to trigger a global recession.
  • IMF to Wait for Political Support for Greek Funds. The International Monetary Fund won’t release the next tranche of funding for Greece until there is broad political support for the measures attached to the loan, a spokesman said. “It’s important that the unity government now shares its commitment to the implementation of the economic program” and the decisions agreed by European leaders last month, IMF spokesman David Hawley told reporters today. “Once broad political support” for the measures “is assured, then we can proceed with completion” of the review and the release of the tranche.
  • Irish Government Draws Fire as Budget Plans Shown to Lawmakers in Germany. Ireland’s government laid out plans to raise sales tax and pledged to consider “ambitious” asset sales in documents shown to lawmakers in Germany before their Irish counterparts, drawing criticism from opposition politicians in Dublin.
  • Crude Oil Falls From Five-Month High on Signs Europe Crisis Is Spreading. Oil fell from a five-month high in New York as Spain’s borrowing costs surged, heightening concern that Europe’s debt crisis is spreading and will hurt demand. “We expect the euro zone to get into recession next year,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, who expects the price of Brent to slip to $100 a barrel by the end of the year. “I don’t think prices fully reflect the weakening outlook for Europe. There’s still some geopolitical fears priced in with Brent at $112.” Crude for December delivery fell as much as $2.58 to $100.01 a barrel in electronic trading on the New York Mercantile Exchange and was at $101.04 at 1:19 p.m. London time. Earlier it reached $103.37, the highest price since May 31. Prices have gained 11 percent this year, after increasing 15 percent in 2010. Brent oil for January settlement on the London-based ICE Futures Europe exchange was down $2.26, or 2 percent, at $109.62 a barrel. Supplies at Cushing increased for the fifth time in six weeks, rising to 32 million barrels in the period to Nov. 11, according to yesterday’s Energy Department report. Oil has technical resistance at $103.39 a barrel, near where yesterday’s rally was halted, according to data compiled by Bloomberg. On the weekly chart, that’s the 61.8 percent Fibonacci retracement of the intraday decline to $32.40 in December 2008 from a record high of $147.27 in July that year. The 14-day relative strength index climbed above 70 for the first time since April 8, signaling further gains aren’t sustainable. The reading was 73.5 today.
  • Gold Falls Most in Seven Weeks as Equities, Commodities Slump on Euro Debt. Gold fell the most in more than seven weeks as commodities and equities slumped after Fitch Rating said U.S. banks face a “serious risk” from Europe’s debt woes. Silver tumbled. The MSCI World Index of equities dropped for a fourth day, and the Standard & Poor’s GSCI index of 24 raw materials fell the most in eight weeks. Fitch said yesterday that “the broad credit outlook for the U.S. banking industry could worsen,” unless Europe’s woes are resolved soon. Before today, gold rose 25 percent this year on demand for a store of value. “Apparent liquidation from fear of possible contagion from the European crisis has commodities, including gold, under continued pressure,” Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York, said in telephone interview. “This is a big collapse.” Gold futures for December delivery fell 2.9 percent to $1,722.60 an ounce at 1:17 p.m. on the Comex in New York. A close at that price would mark the biggest drop for a most- active contract since Sept. 23.
  • Sears(SHLD) 3rd-Quarter Loss Widens on Softness in Canada, Weaker Consumer Electronics sales. Sears Holdings Corp. turned in a wider-than-expected loss in its third-quarter, dragged down by weakness in Canada, declining consumer electronics sales and softer clothing sales at its Kmart stores. The downbeat report, announced Thursday, underscored the big challenges the ailing chain faces as it heads into the critical weeks of the holiday shopping season.
  • Solyndra Funding Mostly Lost to Taxpayers: Chu. Energy Secretary Steven Chu told lawmakers he was responsible for the $535 million U.S. loan guarantee to Solyndra LLC and said he doubted much of the money would be recovered after the company’s bankruptcy. Chu, who once predicted the California maker of solar panels would be a “shared success story,” testified today before a House Energy and Commerce subcommittee investigating the Energy Department’s reasons for backing Solyndra and providing refinancing as it slid toward collapse. “Red flags” about the company’s prospects were “either ignored or minimized by senior officials” in the Obama administration, Representative Fred Upton, a Michigan Republican and chairman of the Energy Committee, told Chu. “Who is to apologize for the half-billion dollars out the door?” Upton asked. “Was there incompetence?” Chu said. “Was there any influence of a political nature? So I would say no. It is extremely unfortunate what has happened to Solyndra.” Asked how much of the taxpayer funding invested in Solyndra may be recovered, Chu, 63, said, “I’m anticipating not very much.”
  • Legg Mason's Miller to Exit Main Fund. Bill Miller, the Legg Mason Inc. (LM) manager famous for beating the Standard & Poor’s 500 Index for a record 15 years through 2005, will step down from his main fund after trailing the index for four of the past five years. Miller, 61, will be succeeded by Sam Peters as manager of Legg Mason Capital Management Value Trust (LMVTX) on April 30, which is the 30-year anniversary of the fund, the Baltimore-based firm said today in an e-mailed statement. Miller will remain chairman of the Legg Mason Capital Management unit while Peters will be chief investment officer.
  • Initial U.S. Jobless Claims Fall to 7-Month Low. Claims for unemployment benefits dropped to the lowest level in seven months and housing starts exceeded forecasts, signaling improvement in the weakest areas of the U.S. economy. Applications for jobless benefits decreased 5,000 in the week ended Nov. 12 to 388,000, Labor Department figures showed today in Washington.
  • Bullard Warns Additional Stimulus Risks Emergence of 1970s-Style Inflation. “If you try to push really hard, even harder, you might get a lot of inflation in the U.S.,” Bullard said in a CNBC interview today. “You might replay the 1970s. I’m telling you, people will not be happy if we go to that situation.”
Wall Street Journal:
CNBC.com:
  • China Doesn't Have a Forex Bazooka to Bail Out Europe. Europeans searching for a bazooka to blast away euro zone debt problems might well eye China's $3.2 trillion foreign exchange arsenal with envy, but Beijing has far less firepower available than many assume. Most of money in the world's biggest store of FX reserves is prudently kept in near-cash instruments to fund import and debt service bills in the event of an unforeseen domestic emergency, or invested in long-term assets that, if sold in size to help Europe, would spark panic on global financial markets. In fact, analysts reckon China's armory has only about $100 billion to spare. "The sheer size of China's foreign exchange reserves is massive, but the actual amount of money available for investing in Europe each year isn't that big," said Wang Jun, an economist at CCIEE, a top government think-tank in Beijing.
  • With MF Global Money Still Missing, Suspicions Grow. Nearly three weeks after $600 million in customer money went missing from MF Global, the search for the cash has been hampered by the bankrupt brokerage firm’s sloppy record-keeping, an increasingly worrisome situation that has left regulators frustrated and customers in the lurch.
Business Insider:
Zero Hedge:
 NY Post:
Forbes:
Carbon Finance:
  • US States Formally Quit the Western Climate Initiative Leaving Only California. Six US states have now entirely dropped out of the Western Climate Initiative (WCI), leaving California as the only participating US state. On 10 November, only California of the US and four Canadian provinces—British Columbia, Manitoba, Ontario and Quebec – announced the formation of a non-profit organisation to administer the WCI cap-and-trade programme and service its technical needs. Arizona and the other US states formerly associated with the WCI have now clarified that they are no longer associated with the organisation, according to Arizona Department of Environmental Quality Director Henry Darwin, in announcing that his state has formally withdrawn from the WCI. While some states and provinces may continue to pursue cap and trade, Arizona will not be one of them, he emphasised. “Arizona believes there are more effective, responsible ways to realise the environmental and health benefits the WCI programme seeks to achieve while avoiding the economic costs to industries that are subject to cap and trade,” Darwin said, adding that those costs are ultimately borne by customers.
DesMoinesRegister.com:
  • Corn Prices Plunge. The corn market has taken a sudden nasty turn, dropping 30 cents per bushel to $6.12 for December delivery through noon on the Chicago Board of Trade. Soybeans are down 23 cents per bushel to $11.64 and wheat, which has traded at an unusual discount to corn this week, is down 24 cents per bushel to $5.92. The market was spooked by a lackluster weekly export report from the U.S. Department of Agriculture. For the marketing year corn exports are down 18.6 percent, soybeans down 33 percent and wheat down 17 percent.
LA Times:
Huffington Post:
Reuters:
  • Fed Alone Cannot Cure Economy's Ills - Pianalto. The U.S. Federal Reserve must do its part to boost a "frustratingly" slow recovery, a top Fed official said on Thursday, but low interest rates alone cannot get households spending again. "Our policy is appropriate in this economic environment; it is supporting a stronger recovery while ensuring that inflation remains consistent with our mandate," Federal Reserve Bank of Cleveland President Sandra Pianalto told the Rotary Club of Lexington, Kentucky. "But in this economy, monetary policy alone cannot cure all of the economy's ills."
Telegraph:
  • Debt Crisis: Live. Job of new Italian government will be harder as country is 'likely already in recession', warns ratings agency Fitch, while Spain and France were forced to pay higher borrowing costs in bond auctions.
Frankfurter Allgemeine Zeitung:
  • Wolfgang Franz, who heads German Chancellor Angela Merkel's council of economic advisers, is against making the European Central Bank the euro-area's lender of last resort, citing an interview. "Based on all historic experiences, including in Germany, the monetization of government debt is one of the deadly sins for a central bank," Franz said. He said the ECB would lose its policy-making independence and risk stoking inflation.
Rheinische Post:
  • Germany aims to reduce annual solar power installations to 1 gigawatt from July 2012 to cut costs, Economy Minister Philipp Roesler said.
Expansion:
  • Spanish opposition People's Party advisers are considering the creation of a so-called bad bank to lift from banks the burden of covering losses linked to real estate, citing party officials. The new government will make public funds available to clean up financial entities' balance sheets.
Epikaira:
  • Antonis Samaras, Greece's main opposition leader, said he won't sign a letter pledging commitment to new austerity measures, as requested by European Union officials, saying his support for the transitional government is enough, citing an interview.

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