Today's Headlines

Bloomberg:

• Fed Lowers Interest Rate on Dollar Swaps. Six central banks led by the Federal Reserve made it cheaper for banks to borrow dollars in emergencies in a global effort to ease Europe’s sovereign-debt crisis. Stocks rallied worldwide, commodities surged and yields on most European debt fell on the show of force from central banks aimed at easing strains in financial markets. The cost for European banks to borrow dollars dropped from the highest in three years, tempering concerns about euro’s worsening crisis after leaders said they’d failed to boost the region’s bailout fund as much as planned. “It’s supportive but not necessarily a game changer,” said Michelle Girard, senior U.S. economist at RBS Securities Inc. in Stamford, Connecticut. “The impact is more psychological than anything else” as investors take heart from policy makers’ coordination, Girard said. The premium banks pay to borrow dollars overnight from central banks will fall by half a percentage point to 50 basis points, the Fed said today in a statement in Washington. The so- called dollar swap lines will be extended by six months to Feb. 1, 2013. The Fed coordinated the move with the European Central Bank and the central banks of Canada, Switzerland, Japan and the U.K. The six central banks also agreed to create temporary bilateral swap programs so funding can be provided in any of the currencies “should market conditions so warrant.” Those swap lines were also authorized through Feb. 1, 2013.
  
• Euro Ministers Seek Greater IMF Role as Bailout-Fund Expansion Falls Short. European finance ministers said they would seek a greater role for the International Monetary Fund alongside their own bailout fund in their latest gamble at taming the euro zone’s sovereign debt crisis. Ministers turned to the IMF after conceding that higher interest rates and lower appetite for European bonds made it impossible for the European Financial Stability Facility to be leveraged up to its 1 trillion euro ($1.3 trillion) target. Meeting in Brussels, the ministers also suggested that any IMF help or increase in bond purchases by the EFSF, and possibly by the ECB, depends on a Dec. 9 summit of heads of government accepting German demands for governance changes that would tighten enforcement of budget rules. “The feasibility of interventions by both bodies depends on making progress on institutional matters such as moving toward fiscal union,” new Italian Prime Minister Mario Monti said after the meeting. “The euro summit of next week will be fundamental because further progress has to achieved on the governance of the euro zone.” With about $390 billion currently available for lending, the Washington-based IMF may not have enough money to meet demand if the global outlook worsens, managing director Christine Lagarde has said. The IMF is co-funding the bailouts of Greece, Ireland and Portugal and is preparing to send a team to Italy for an unprecedented audit of that country’s efforts to cut its debt. “We’re ready in general to increase the IMF’s funds by means of bilateral loans,” Schaeuble told reporters. “If the IMF, to widen its leeway to act, wants to increase its Special Drawing Rights, then that’s something we’re ready to talk about.” Boosting the IMF’s resources may not be so simple, said Tony Fratto, former White House and Treasury Department spokesman in the George W. Bush administration. “It will be very difficult if not impossible for the U.S. to contribute fresh resources to the IMF,” he said in an e-mailed comment.
• Corporate, Sovereign Bond Risk Tumbles in Europe, Swaps Show. The cost of insuring against default on European corporate debt fell, according to traders of credit- default swaps. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings dropped 33 basis points to 758.5, according to JPMorgan Chase & Co. at 3 p.m. in London. A decline signals improved perceptions of credit quality. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings was down 11.75 at 184 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers declined 29.5 basis points to 301.5 and the subordinated gauge was 42 lower at 533.
• EU Writedown Plan Puts Banks' Long-Term Debt in Firing Line. Owners of long-term unsecured debt in a collapsing bank would be first in line to take losses under draft plans from the European Union to protect taxpayers’ money from future bailouts. Short-term debt, with a less than one-year maturity, and derivatives should only be written down by regulators as a last resort if losses from longer-term debt aren’t “sufficient to restore the capital of the institution and enable it to operate as a going concern,” according to a draft European Commission proposal obtained by Bloomberg News. “They are terrified of inadvertently killing off the interbank market,” Simon Gleeson, a financial services lawyer at Clifford Chance LLP in London, said in a telephone conversation. “This is a desperate attempt” to preserve it.
• Commodities Rise to Two-Week High as Fed, Central Banks Boost Liquidity. Commodities rose to the highest in almost two weeks after the Federal Reserve cut the cost of emergency funding for banks in Europe as part of a global effort to stem the region’s sovereign-debt crisis. The Standard & Poor’s GSCI index of 24 raw materials rose 1.2 percent to 661.08 at 12:51 p.m. New York time. Earlier, the measure reached 664.56, the highest since Nov. 17. Industrial and precious metals led the rally. In the two weeks ended Nov. 25, the GSCI gauge dropped 4.5 percent as borrowing costs surged in Europe, imperiling the euro and banks.
• China Reduces Reserve Ratios to Spur Bank Loans. China cut the amount of cash that banks must set aside as reserves for the first time since 2008 as Europe’s debt crisis dims the outlook for exports and growth. Reserve ratios will decline by 50 basis points effective Dec. 5, the People’s Bank of China said in a statement on its website today. Before the announcement, the level was a record 21.5 percent for the biggest lenders, based on previous PBOC statements. A government clampdown on property speculation has added to the risk of a deeper slowdown in the economy that contributes the most to global growth. Exports rose by the least in almost two years in October and inflation eased to 5.5 percent, the smallest gain in five months. “The move will help ease liquidity after previous tightening measures cooled credit growth too much and may have added to the risks of a hard landing for China,” Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd., said before today’s release. Premier Wen Jiabao said last month the government will fine-tune economic policies as needed to sustain growth while pledging to maintain curbs on real estate.
• PBOC Adviser Says Don't Count on China Easing Property Curbs. China’s policy “fine-tuning” doesn’t mean credit controls will be loosened and people shouldn’t hope for a reversal of curbs on the property market, central bank adviser Xia Bin said. Fine-tuning “will target areas where the financial system isn’t giving effective support due to some failures in the system,” Xia said at a forum in Beijing today, citing examples such as ensuring lending to small businesses. It doesn’t mean “loosening curbs on property. Don’t count on it,” he said.
• China Raises Electricity Price, Caps Coal Cost Amid Power Profit Squeeze. China, the world’s biggest energy user, increased retail and wholesale electricity prices for the first time in six months and said it will cap the cost of power- station coal in a move that may reduce outages in coming months. Wholesale rates charged by coal-fired power plants to distributors, or the on-grid tariff, rose by 0.026 yuan (0.41 cent) a kilowatt-hour effective today, according to a statement on the National Development and Reform Commission website yesterday. Retail power prices rose by an average 0.03 yuan a kilowatt-hour, the NDRC said. Price gains for contract thermal coal next year will be limited to less than 5 percent, it said.
• U.S. Employment, Businesses Beat Forecast. Companies boosted payrolls in November by the most this year and U.S. businesses expanded at the fastest pace in seven months, giving the economy a lift as 2011 draws to a close. Private employment, which excludes government jobs, climbed 206,000 this month, according to data today from Roseland, New Jersey-based ADP Employer Services. The Institute for Supply Management-Chicago Inc.’s business barometer increased to 62.6 in November from 58.4 the prior month as orders and production strengthened.
• Pending Sales of Existing U.S. Homes Exceed Forecasts With 10.4% Increase. The number of Americans signing contracts to buy previously owned homes rose more than forecast in October as buyers took advantage of falling prices and low borrowing costs. The index of pending home sales increased 10.4 percent, the biggest gain since November 2010, after falling 4.6 percent the prior month, figures from the National Association of Realtors showed today in Washington. Economists forecast a 2.0 percent increase, according to the median estimate in a Bloomberg News survey.
• Blankfein May Be Deposed in Gupta Case. Goldman Sachs Group Inc. (GS) Chief Executive Officer Lloyd Blankfein and six others may be questioned under oath by lawyers for the Securities and Exchange Commission and Rajat Gupta, who was charged with insider trading as part of the Galleon Group LLC investigation.
• Obama Administration Plans $304 Million Guided Bombs Sale to UAE. The Obama administration notified Congess today of proposed sale of 4,900 guided bomb kits including 600 bunker-buster bombs to the United Arab Emirates. The estimated price is $304 million, the administration said. Boeing Co. of Chicago and the McAlester Army Ammunication Plant in McAlester, Oklahoma, make the weapons, the notice said. “The proposed sale will improve the UAE’s capability to meet current and future regional threats,” it said.

Wall Street Journal:

• Global Stocks Surge on Coordinated Action.
  
• Eurozone Crisis Tracker.
• L.A. Police Make Arrests, Begin Disbursing Occupy Camp. About 1,500 police officers streamed into the Occupy Los Angeles encampment early Wednesday morning, making arrests and gradually shutting down the two-month-old protest. By 2 a.m. Wednesday, police were still making arrests and leading protesters out of the park in front of the L.A. City Hall. By that time, many of the demonstrators had dispersed into the closed streets of downtown L.A., while others remained in the park.
  

Business Insider:

• The European Death Spiral In One Simple Chart.
• Marc Faber Sees Signs Of A Major China Slowdown Everywhere He Looks In Asia.
• Fed Beige Book Out: Most of the US Still Growing.
• The Senate Says 'No Problem' With Military Imprisoning Americans Indefinitely.
• You Bet Apple(AAPL) TV Is Coming, Says Apple Guru Gene Munster - Here Are The Details.
• Here's What Obama Will Eat At The $35,800-A-Head Fundraising Dinner In New York Tonight.
• Russia Arms Cuba Amid Rising Tension With U.S.
• Chart of the Day: BRICs = Bloody Ridiculous Investment Concepts. (graph)
  

Zero Hedge:

• Did A Large European Bank Almost Fail Last Night?
• China To Embrace Fracking In An Effort To Ramp Up Energy Production.
• Euro Basis Swap Perspectives. (graph)
• Egan Jones Downgrades France From AA- to A; Negative Watch, Sees Debt/GDP Rising From 91% to 117% by 2013.
  

Rasmussen Reports:

• National Poll: Gingrich 45%, Obama 43%.
• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 19% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-three percent (43%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -24 (see trends).

Al Shorouk:

• Egypt's Muslim Brotherhood expects its party to win 35% of seats in the first round of parliamentary elections that ended yesterday, citing Mohamed Saad Aliwa, a party official.