Thursday, February 02, 2012

Today's Headlines

Posted by Gary .....at 2:56 PM

Bloomberg:
  • Greece Seen as Struggle Even After 2nd Rescue. Greece, struggling to seal agreement on a second rescue from creditors in coming days, will remain at risk of abandoning the euro, say economists including Holger Schmieding of Berenberg Bank. Greece may stay saddled with too much debt, too little economic growth and too large a budget hole to do without yet more aid that euro nations led by Germany are increasingly reluctant to offer. Deeper spending cuts required for extra loans of at least 130 billion euros ($170 billion) and domestic resistance to overhauling the economy risk limiting the impact of any second aid package, the economists say. The deal is also slated to include a 50 percent cut in the face value of more than 200 billion euros of Greek debt through a voluntary exchange by private creditors of outstanding bonds for new securities. “Greece is in deep trouble,” Schmieding, chief economist at Berenberg in London, said in a Jan. 30 report. “The current Greek adjustment program is failing. Excessive austerity, a lack of supply-side reforms, administrative incompetence and political deadlock have pushed the Greek economy into an apparent death spiral. More of the same will not work.” Greece remains in intensive care more than two years after triggering Europe’s debt crisis, testing the patience of other European Union nations. Last November, when discussing the Greek situation, French President Nicolas Sarkozy and German Chancellor Angela Merkel for the first time raised the prospect of a country’s exit from the euro.
  • Spanish Unemployment Grows Most in Three Years as Recession Looms: Economy. Spanish unemployment registrations jumped by the most in three years in January as the economy edged into its second recession since the end of 2009. The number of people signing on for jobless benefits increased by 177,470 to 4.6 million, the Labor Ministry in Madrid said in an e-mailed statement today. That was the biggest increase since January 2009 and the total is the most since records began 16 years ago. Data last week showed overall unemployment in the fourth quarter reached a 15-year high. “For countries like Spain and Italy, where the fiscal tightening in the pipeline this year is immense already and there will be more to come, we do have concerns about significant contraction in output,” said Chris Scicluna, head of economic research at Daiwa Capital Markets Europe in London.
  • Sovereign, Corporate Bond Risk Falls, Credit Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt fell, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments declined five basis points to 321 basis points at 8 a.m. in London, the lowest since Dec. 5. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings decreased five basis points to 580, the lowest since Aug. 8, according to JPMorgan Chase & Co. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell one basis point to 135.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers decreased 2.5 basis points to 207 and the subordinated index dropped four to 358.
  • Barclays Plans 25% to 30% Pay Cut for Bankers. Barclays Plc (BARC), the British lender run by Robert Diamond, plans to cut compensation for the 24,000 employees at its investment banking unit by as much as 30 percent, two people with knowledge of the talks said. The lender is preparing to tell employees at Barclays Capital next week that overall pay will be down by 25 percent to 30 percent on average from a year earlier, said the people, who declined to be identified because the plans haven’t yet been made public. The bank will also eliminate about 5 percent of its senior bankers, said the people. Those at risk typically hold titles such as executive directors and managing directors.
  • Jobless Claims in U.S. Fell Last Week. Applications (INJCJC) for unemployment insurance payments dropped by 12,000 to 367,000 in the week ended Jan. 28, according to Labor Department figures issued today in Washington. Worker output per hour increased at a 0.7 percent annual rate from October through December, down from a 1.9 percent gain in the prior three months, another report showed.
  • Oil Declines to Six-Week Low as U.S. Inventories Climb Amid Weak Demand. Oil fell to a six-week low in New York as U.S. supplies climbed and fuel demand tumbled. Brent crude in London traded at the biggest premium to the American benchmark grade in 12 weeks. Futures declined for a fifth day after the Energy Department reported yesterday that crude supplies in the U.S. rose to a three-month high last week. Total fuel use dropped 8.3 percent to 17.7 million barrels a day, the least since 1999. Tension over Iran’s nuclear program may ease after United Nations inspectors announced more talks in Tehran. “The market is looking heavy because supplies are rising and demand is very weak,” said Phil Flynn, an analyst at PFGBest in Chicago. “A major reason for the recent rise in prices was concern about Iran. The hyperbole about the Iranian situation has calmed down.” Crude oil for March delivery declined $1.84, or 1.9 percent, to $95.77 a barrel at 12:49 p.m. on the New York Mercantile Exchange. Futures dropped to $95.44, the lowest level since Dec. 20. Prices are down 3.1 percent this year. Gasoline consumption decreased to 7.97 million barrels a day, the lowest level since September 2001, according to Energy Department data. Stockpiles of the fuel increased 3.02 million barrels last week, the report showed yesterday. “Gasoline supplies rose 3 million barrels even though production was down because demand is so weak,” said Stephen Schork, president of the Schork Group in Villanova, Pennsylvania. “Demand looked weak across the board, which is going to weigh on the entire U.S. energy complex,” Wittner said. “It’s now February and refineries have already started planned maintenance, which explains the rise in Cushing supplies.” Refineries operated at 81.8 percent of capacity, down 0.4 percentage point from the week before. It was the lowest operating rate since May. Units are often idled for maintenance in February as attention shifts away from heating oil and before gasoline use rises. OPEC output in January rose to the highest level in more than three years, led by a rebound in Libyan output, a Bloomberg News survey showed on Jan. 31. Production (OPCRTOTL) increased 183,000 barrels, or 0.6 percent, to an average 30.9 million barrels a day in January.
  • Gold Futures Climb to Eight-Week High. Gold futures for April delivery gained 0.5 percent to $1,757.60 an ounce at 10:37 a.m. on the Comex in New York. Prices earlier reached $1,758.10, the highest since Dec. 8. The metal climbed 11 percent last month, the biggest January rally since 1983.
  • Facebook(FB) Punters Put Shares at $35 Each. The odds are pointing to Facebook Inc. pricing its IPO at between $35 and $44.99 a share in the $5 billion initial public offering it filed for yesterday, according to the Irish bookmaker Paddy Power Plc. (PAP) Facebook, based in Menlo Park, California, will price the new shares within that range at odds of 10 to 11, according to an e-mailed statement from Paddy Power. The likelihood of the social networking firm selling shares as low as $25 stands at 7 to 2, and at 9 to 2 for prices of more than $65, the gambling company site said.
Wall Street Journal:
  • Fitch's Riley Says Euro-Zone Crisis To Persist Another 12-18 Months. The sovereign debt crisis in Europe will persist for "at least" another year, the head of sovereign ratings at Fitch Ratings said during a conference here Thursday. "This is going to be a long hard slough that will be punctuated with extreme market volatility," said Fitch's David Riley. The New York-based debt-rating firm believes it will take "at least 12 to 18 months before we have stabilization for the euro zone," Riley said. Italy, the euro-zone's third-largest economy, is a core country, Riley said. It also has the region's largest sovereign bond market. "It is too big to fail," because if it did it would undermine confidence and stability in the euro, he said. Riley said the question then becomes if Italy is too big to rescue. The country must roll over about EUR200 billion this year. "The challenge (for Italy) is to shift expectations" not only by delivering on its fiscal plan for a balanced budget, but also its ability to grow, he said.
  • Feds Disclose New 401(k) Rules.
  • The Really Negative Story on Natural Gas. Natural-gas prices are on the floor. Could they go negative? The probability that wholesale gas prices will drop below $2 per million British thermal units, from today's almost $2.50, is rising. Gas hasn't closed below $2 since September 2009. Today's market shares one critical similarity to then: bulging gas inventories. This overhang of excess supply could crash prices even further this spring.
CNBC.com:
Business Insider:
Zero Hedge:
Washington Examiner:
  • Obama's Economic Approval Just 36%. In another indication of the difficulty President Obama's reelection campaign faces, only 36 percent of likely voters grade the administration's handling of the economy at good or excellent, according to a new Rasmussen poll. In a national survey of 1,000 likely voters January 31-February 1, a whopping 62 percent grade the president at fair to poor, with poor collecting the largest number: 45 percent.
Miami Herald:
  • Florida Senate Considers Taxing Internet Sales. Florida lawmakers took the first step Thursday toward joining the ongoing national battle to force online retailers to start collecting sales taxes. A state Senate committee agreed to introduce a bill (SB 7206) that would require online retailers such as Amazon.com to collect the state's 6 percent sales tax if the retailer has a warehouse or provides commissions to Florida residents who direct customers to the website. Those backing the bill say they aren't trying to generate more money for the state but that they are supporting it to help merchants in Florida who are losing out to online retailers that don't collect sales taxes.
Reuters:

Telegraph:

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