Thursday, February 23, 2012

Today's Headlines

  • Euro Economy to Contract as Italy, Spain Tumble, EU Says. Europe's economy will shrink in 2012, with Italy and Spain facing sudden crunches as they battle to escape the debt crisis, the European Commission said. The 17-nation euro economy will contract 0.3 percent, the commission said, abandoning a November forecast of 0.5 percent growth. The downgrade was mainly due to projected contractions of 1.3 percent in Italy and 1 percent in Spain. "The euro area has entered into a mild recession," European Union Economic and Monetary Commissioner Olli Rehn told reporters in Brussels today after releasing the forecasts. "Prospects have worsened and risks to the growth outlook do remain, but there are signs of stabilization." Two days after Greece clinched a second bailout, the forecasts showed an economy pockmarked by the two-year-old fiscal crisis and looked set to stiffen resistance in southern Europe to further doses of German-demanded austerity. The full-year Europe-wide contraction would be the first since 2009, when a 4.3 percent drop in the wake of the U.S.-led banking crisis exposed the overborrowing and imbalances that plunged Europe into its sovereign debt troubles.
  • Syrians Defy Crackdown on Eve of Meeting. Syrian opposition supporters rallied in Aleppo and the government resumed its assault on Homs as U.S., European and Arab politicians prepared to meet in Tunisia tomorrow to seek ways to oust President Bashar al-Assad. Assad’s forces started shelling the Baba Amr neighborhood of Homs at 7 a.m., the U.K.-based Syrian Observatory for Human Rights said. The residential area is where Marie Colvin, an American reporter working for the U.K.’s Sunday Times, and French photographer Remi Ochlik were killed yesterday. Mortar shells also landed on the Khalideyeh neighborhood of Homs, the group said, while explosions were heard in Aleppo where protesters had rallied for the funeral of an eight-year-old child who died in gunfire overnight.
  • Oil Increases to Nine-Month High. Crude oil for April delivery gained 58 cents, or 0.5 percent, to $106.86 a barrel at 12:53 p.m. on the New York Mercantile Exchange. Earlier, futures touched $107.09 a barrel, the highest price since May 5. Oil has risen 8.9 percent in the past year. Brent oil for April settlement increased 17 cents to $123.07 a barrel on the ICE Futures Europe exchange in London.
  • Home Prices Declined 2.4% in Fourth Quarter. U.S. home prices fell 2.4 percent in the fourth quarter from a year earlier, as sales were boosted by investors seeking lower-cost distressed properties. Prices dropped 0.1 percent from the prior three months on a seasonally adjusted basis, the Federal Housing Finance Agency said today in a report from Washington. In December, prices retreated 0.8 percent from a year earlier, while increasing 0.7 percent from the previous month.
  • USPS Plans 35,000 Job Cuts as Plants Shut. The U.S. Postal Service, which predicts an annual loss of $18.2 billion by 2015, plans to eliminate 5.4 percent of its workforce by closing almost half of its mail-processing facilities to cut costs. The service plans to shut 223 of its 461 mail-processing plants by February 2013, Postmaster General Patrick Donahoe said in a telephone interview today. The closings will cut about 35,000 jobs, said David Partenheimer, a Postal Service spokesman.
  • Germany Slashes Subsides for Solar Energy to Curb Boom in Installations. Germany, the world’s biggest market for solar power, plans record reductions in subsidies for the industry as part of a program to rein in a boom in installations. Environment Minister Norbert Roettgen said he plans to cut premium rates for solar power by between 20.2 percent and 29 percent from March 9 and decrease them further each month beginning in May. Plants larger than 10 megawatts won’t get support after July 1.
  • Junk ETFs Draw Most Cash on Record as High-Yield Hunt Speeds Up. Exchange-traded funds for speculative-grade bonds are drawing the biggest inflows on record from investors seeking easier access to higher-yielding assets. ETFs that track junk-bond indexes have tapped $5.5 billion of investments in the securities this year, according to data from Lipper. That almost quadruples the $1.4 billion recorded during the same period of 2011, which was then the highest since the fund research firm started tracking junk ETF data in 2007.
  • Global Warming Made First Tiny Horses Even Smaller, Michigan Study Finds. Global warming 50 million years ago caused the first horses, already tiny in stature compared with present-day animals, to shrink 30 percent to about 8.5 pounds, the size of a house cat today, a study suggests. Later, as the climate cooled, the horse called Sifrhippus began to grow in size, according to research in the journal Science. Scientists the University of Michigan’s Museum of Paleontology used fossilized teeth to make the size estimates. From 1906 to 2005, the world was an “unequivocal” warming trend, according to the Environmental Protection Agency’s website. The earth warmed about 1 to 1.7 degrees Fahrenheit over that time, much less than the warming trend 56 million years ago.
  • Obama Apologizes for Koran Burning as Afghans, Troops Killed. President Barack Obama apologized for the burning of Korans on a U.S. air base in Afghanistan as Afghans and NATO troops died in a third day of riots over the treatment of the Islamic scripture. At least five deaths raised the riots' Afghan death toll to 12, according to provincial officials reached by phone from Kabul. An Afghan in an army uniform killed two soldiers of the U.S.-led coalition force in Afghanistan, a statement from its headquarters said. Obama wrote to Afghan President Hamid Karzai that "I wish to express my deep regret for the reported incident" in which personnel at the Bagram air base threw copies of the Koran and other books into a burning rubbish pile. "I extend to you and the Afghan people my sincere apologies," Obama wrote, according to a statement from Karzai's office. "We will take the appropriate steps to avoid any recurrence, to include holding accountable those responsible," Obama said.
Wall Street Journal:
  • Brazil Wants IMF to Give More Say to Emerging Nations - Source. Changes to the quotas that represent member countries' voting weight in the International Monetary Fund should reflect emerging economies' larger presence in the world economy, a Brazilian government official said Thursday.
  • Commerzbank CEO Questions Greek Bond Deal. Commerzbank AG Chief Executive Martin Blessing Thursday criticized the bond-exchange program Greece is seeking to slash its debt, comparing the so-called voluntary nature of private-sector involvement in the deal to "the Spanish inquisition."
Fox News:
  • Rapid-Fire Attacks Across Iraq Kill 55 People. A rapid series of attacks spread over a wide swath of Iraq killed at least 55 people on Thursday, targeting mostly security forces in what Iraqi officials called "frantic attempts" by insurgents to show civilians that their country was doomed to violence for years to come. The apparently coordinated bombings and shootings unfolded over hours in the capital Baghdad -- where most of the deaths occurred -- and 11 other cities. They struck government offices, restaurants and one in the town of Musayyib hit close to a primary school. At least 225 people were wounded.
  • Apple(AAPL) Adopts Board Voting Standard, Ponders Dividend. Apple on Thursday adopted a measure long desired by investors and corporate governance activists, granting its shareholders a bigger say in the appointment of directors to the board of the world's largest technology company. Chief Executive Tim Cook also repeated that he has been "thinking very deeply" about investors' demands that the consumer electronics company return some of its $98 billion in cash and securities to shareholders via a dividend.
  • P&G(PG) to Cut 5,700 Jobs. Procter & Gamble plans to cut about 5,700 nonmanufacturing jobs as part of a new plan to reduce costs by $10 billion by the end of fiscal 2016, Chief Executive Officer Bob McDonald said on Thursday.
  • Is The Smart Money Heading For The Sidelines?
Zero Hedge:

Boston Globe:

  • Austerity Anger: Poll Finds Greeks Dislike Germany. Pro-austerity Germany is not the flavor of the month in debt-crippled Greece. Sentiments ranging from anger to downright hatred dominate Greeks' view of their country's biggest international creditor, according to a poll in Thursday's Epikaira magazine. Asked to identify their main feelings on Germany, 41 percent of respondents named anger, indignation or fury. An additional 30 percent ranged from disappointment and fear to revulsion. Total positive sentiments were just 8.6 percent. Some 79 percent said they saw Germany's role in Europe as negative, while 81 percent offered a poor opinion of Chancellor Angela Merkel.


Frankfurter Allgemeine Zeitung:

  • European Central Bank President Mario Draghi said Greece's implementation of its reform program must be "flawless," citing an interview. "Since everything depends on the implementation of the program, monitoring is very important. And that is being taken care of," Draghi said.


  • Germany's government doesn't want Greece to get any funds from its second bailout package until the country has implemented the agreed structural reforms, citing a draft government document.
El Mundo:
  • Italian Prime Minister Mario Monti said Europe's system of social protection such as unemployment payments and pensions is at risk unless the bloc's economy can increase its competitiveness. "There is a real risk that welfare in Europe as we have known it may disappear," Monti said.

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