Tuesday, March 06, 2012

Today's Headlines

Posted by Gary .....at 2:49 PM

Bloomberg:
  • Euro-Region Economy Contracts as Investment, Exports Decline. Europe's economy contracted in the fourth quarter as investment declined by the most since 2009 and exports and consumer spending dropped. Gross domestic product shrank 0.3 percent from the third quarter, the European Union's statistics office said today, confirming an estimate published on Feb. 15. Exports fell 0.4 percent after a 1.4 percent gain in the previous three months, while household spending declined 0.4 percent and investment dropped 0.7 percent. "The region is still facing major headwinds, notably including increased fiscal tightening in many countries and markedly rising unemployment," said Howard Archer, chief European economist at IHS Global Insight in London. "Despite some recent overall improvement in euro zone surveys and evidence that Germany is returning to growth, we doubt that the euro zone will be able to avoid further contraction in the first quarter of 2012 and very possibly the second.'"
  • SocGen Joins Generali in Greece's Swap Offer. Societe Generale SA (GLE), France’s second-biggest bank, Assicurazioni Generali SpA and UniCredit SpA (UCG) joined firms saying they would participate in Greece’s debt swap as the country threatened to compel holdouts to take part. They join more than a dozen banks, insurers and hedge funds that said they plan to accept the deal, accounting for at least 45 billion euros ($59 billion) of bonds, based on data compiled by Bloomberg from the companies and their reports. About 206 billion euros of Greek bonds are eligible for the swap.
  • European Stocks Decline Most Since November; Banks Retreat With Carmakers. European (SXXP) stocks declined, with the Stoxx Europe 600 Index dropping the most since November, as a report confirmed a contraction in the euro-area economy and investors weighed Greece’s chances of getting bondholders to accept a debt swap. Commerzbank AG and Societe Generale SA led a slump in bank shares. Cable & Wireless Worldwide (CW/) Plc retreated 6.7 percent after a newspaper report speculating that a potential bidder won’t make an offer for the company. Nyrstar NV, the largest producer of refined zinc, paced commodity shares lower. The Stoxx 600 (SXXP) declined 2.7 percent to 258.46 at the close in London, for the biggest drop since Nov. 21, as bondholders owning a fifth of Greece’s debt agreed for the exchange, even as the government has set 75 percent participation as the threshold for proceeding with the plan.
  • Portugal in Sights as Yields Fuel Bailout Talk. Portuguese bond yields are rising as investors are busy putting cheap money from the European Central Bank to work elsewhere. The increase in 10-year borrowing costs by almost two percentage points in the past two weeks is stoking concern among investors that the nation will struggle to resume bond sales in 2013. Portugal has been unable to sell debt due in more than a year since it was given a 78 billion-euro ($102.8 billion) bailout in May 2011, following Greece and Ireland. “The ECB’s cash provides liquidity, but not solvency,” said Stuart Thomson, who helps oversee the equivalent of $110 billion as a portfolio manager at Ignis Asset Management in Glasgow. “If the perception is that a country is already bankrupt, these liquidity measures won’t work. There is growing concern that Portugal may need a second bailout.” Portugal’s 10-year yield was at 13.83 percent at 12:07 p.m. in London, up from 7.48 percent a year ago. The extra yield investors demand to own the nation’s bonds rather than Germany’s widened 1.1 percentage points to 12.04 percentage points since the ECB announced its program of three-year loans to banks on Dec. 8.
  • Sovereign, Corporate Bond Risk Rises, Credit-Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt rose for a third day, according to BNP Paribas SA. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments soared 9.5 basis points to 356.5 at 4:20 p.m. in London, the highest since Jan. 16. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings increased 24.5 basis points to a two-week high of 615.5. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 6.5 basis points to 141.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers jumped 11 basis points to 225.5 and the subordinated index soared 17 to 371.
  • EU Considers Tougher Collateral Rules on Repo Agreements to Rein In Risks. European Union regulators may impose tougher collateral requirements on repurchase agreements on concerns that such trades might lead to unsustainable debt levels that threaten market stability. The European Commission is weighing the measure as part of proposals to rein in risky financial activities that take place outside the regular banking system, according to a document obtained by Bloomberg News. Michel Barnier, the EU’s financial services commissioner, is scheduled to publish the plans next week.
  • Automakers Prepare for Deepening Decline in Europe Market. Ford Motor Co. (F), Bayerische Motoren Werke AG (BMW), Toyota Motor Corp. (7203) and their competitors are preparing for a deeper slump in European sales after deliveries at the beginning of the year were at the low end of their expectations. “The market is very difficult,” Didier Leroy, Toyota’s chief for the region, told reporters at the Geneva International Motor Show. “The start of the year is even worse in terms of the market than was planned a few months ago.”
  • Brazil's GDP Growth of 2.7% Last Year Underperformed BRIC Peers: Economy. Brazil’s economy last year registered its second-worst performance since 2003 as higher borrowing costs and a currency that rallied to a 12-year high led it to underperform emerging-market peers China and India. Gross domestic product expanded 2.7 percent even after growth accelerated in the fourth quarter, the national statistics agency said today in Rio de Janeiro. The median estimate of 32 economists surveyed by Bloomberg was for the economy to grow 2.8 percent. “Brazil is losing international competitiveness,” John Welch, chief strategist for CIBC World Markets, the investment- banking arm of Canada’s fifth-largest bank, said by phone from New York. “They’re blaming all the problems on the exchange rate, but have ignored structural reforms.” The economy expanded 0.3 percent in the fourth quarter from previous three months, when it shrank 0.1 percent, the statistics agency said. From the year-earlier, GDP expanded 1.4 percent, with manufacturing dropping 3.1 percent and household consumption up 2.1 percent.
  • Tanker Glut Stays at Highest Level This Year, Survey Shows. A surplus of the largest oil tankers competing to load crude at Persian Gulf ports remained at this year's highest level for a second consecutive week, a Bloomberg News survey showed. There are 10% more VLCCs available for hire over the next 30 days than there are likely cargoes, a Bloomberg survey of seven shipbrokers and owners today showed.
  • Oil Falls to Two-Week Low as EU Offers to Restart Negotiations With Iran. Futures fell as much as 2.1 percent after Catherine Ashton, the EU’s foreign-policy chief, in a statement on behalf of China, France, Germany, Russia, the U.K. and the U.S., urged Iran’s nuclear envoy to meet to seek an accord on the nation’s nuclear program. Commodities also declined as the euro-area economy contracted and on concern a Greek swap deal will fail. Crude for April delivery fell $1.98, or 1.9 percent, to $104.74 a barrel at 12:13 p.m. on the New York Mercantile Exchange. Prices dropped to $104.52, the lowest intraday level since Feb. 21. Futures are up 6 percent this year. Brent oil for April settlement declined $1.86, or 1.5 percent, to $121.94 a barrel on the London-based ICE Futures Europe exchange.
  • Asia Hedge Fund Startups Falter as Backers Pull Cash. Asia-focused hedge funds that were started with the help of a major backer after the 2008 credit crisis are shutting down as a shrinking pool of key investors makes it harder for them to raise capital. Isometric Investment Advisors Ltd. decided in December to close after its largest startup investor said it would withdraw its cash. Black’s Link Capital Ltd. closed after its biggest investor, a U.S.-based fund of hedge funds, pulled its capital last year, said two people with knowledge of the matter.
  • Qualcomm(QCOM) to Buy Back as Much as $4 Billion of Its Shares, Boosts Dividend. Qualcomm Inc. (QCOM), the world’s biggest maker of mobile-phone chips, said it plans to buy back as much as $4 billion of shares and raise its dividend by 16 percent to return cash to shareholders as earnings increase. The quarterly cash dividend will expand to 25 cents from 21.5 cents, San Diego-based Qualcomm said today in a statement. The buyback authorization replaces a $3 billion program, which had $948 million of repurchase authority remaining.
  • S&P Blocked in CMBS After Derailed Goldman Sachs(GS) Deal: Mortgages. Standard & Poor’s is frozen out of the commercial-mortgage bond market by the biggest underwriters after derailing a $1.5 billion sale by Goldman Sachs Group Inc. (GS) and Citigroup Inc. last July. Since then, those banks along with JPMorgan Chase & Co. (JPM), Deutsche Bank AG and Morgan Stanley have bypassed S&P’s credit ratings as they issued $11.3 billion of debt linked to skyscrapers, shopping malls and hotels, according to data compiled by Bloomberg. They’re turning to Kroll Bond Ratings Inc. and Morningstar Inc. (MORN) after S&P, the world’s largest credit- rating company, forced bankers to pull an offering they’d already committed to sell, roiling the $600 billion market.
  • Euro Trend Break May Spur Decline, Citi Says: Technical Analysis. The euro is trading weaker than a support level against the dollar and a close below it may signal a retreat to a six-week low, according to Citigroup. The 17-nation currency is trading below support at $1.3171, which comes in on a trend line drawn from the currency pair's Jan. 13 and Feb. 16 lows. If it stays below this level today, the euro may be poised for a move down to $1.2974 and even $1.2624, the lows reached last month and in January, according to Tom Fitzpatrick, chief technical analyst at Citigroup.
  • Hackers Charged in Crackdown on LuzSec, Anonymous Groups. The U.S. charged six alleged members of Anonymous, LulzSec and other hacking groups with trying to break into computers used by News Corp.'s Fox Broadcasting and security firm HBGary Inc. and by governments including Yemen. Ryan Ackroyd, Jake Davis, Darren Martyn and Donncha O'Cearrbhail were charged in an indictment unsealed today in Manhattan federal court, the Office of U.S. Attorney Preet Bharara said in a statement. Jeremy Hammond was arrested in Chicago and accused of crimes related to the hack of Strategic Forecasting Inc., or Stratfor.
  • Stanford Convicted of Defrauding Investors in Ponzi Scheme. R. Allen Stanford was convicted of fraud in what prosecutors said was a $7 billion scheme involving bogus certificates of deposit at his Antigua-based bank. A federal jury in Houston today found the financier guilty of all but one of the 14 counts against him, including wire and mail fraud and obstructing a federal regulatory investigation. Stanford, 61, faces as long as 20 years in prison for each fraud count.
  • China May Expand Property-Tax Trials Beyond Cities of Shanghai, Chongqing. Chinese Finance Minister Xie Xuren said the nation may expand property-tax trials, as the government prolongs efforts to cool the real-estate market, make housing affordable and limit asset bubbles. Taxes can guide housing demand, Xie said at a press briefing in Beijing today during the annual meeting of the National People’s Congress, without saying where more tests could take place. So far, the government has pilot projects in Shanghai and Chongqing. “There is agreement among the authorities that a property tax is one mechanism that can prevent asset bubbles in the long run,” said Yao Wei, a Hong Kong-based economist for Societe Generale SA. Xie’s comments are “confirmation that they are going to do it on a wider scale,” she said. Premier Wen Jiabao’s efforts to rein in property prices have added to the risk of a deeper slowdown in the world’s second-biggest economy. In his report to the National People’s Congress yesterday, he said that regulation of the real estate market is at a “crucial stage.” China ought to introduce a property tax to provide a stable source of revenue for local governments, Li Daokui, an academic adviser to the People’s Bank of China, told reporters in Beijing today. Sales at Vanke, the nation’s biggest listed property developer, dropped 27 percent in the first two months of 2012 from a year earlier to 19 billion yuan ($3 billion). Sales last month slumped 40 percent from January, the company said. Separately, Xie said the government will appropriately handle debt repayments by local governments and continue to take steps to control their borrowing.
Wall Street Journal:
  • Romney Looks to Build Lead on Super Tuesday. Mitt Romney looked to take a commanding lead in the Republican presidential race as 10 states hosted Super Tuesday contests, the biggest day yet in the fight for the right to challenge President Barack Obama this fall. Ohio, a critical state in the general election, was the spotlight race, with Mr. Romney running close to former Sen. Rick Santorum, who has seen his Ohio lead erode. The former Pennsylvania senator was hoping a win there would infuse his campaign with new momentum.
MarketWatch:
  • China Economist Tips Uncertain Inflation Outlook. China is still facing uncertain inflationary factors, though inflation has been easing recently, prominent Chinese economist Li Yining said Tuesday. Li, a member of the Chinese People's Political Consultative Conference, an advisory body that meets alongside China's legislature, said China would focus on the quality rather than the pace of economic growth this year. Chinese Premier Wen Jiabao said Monday in his government work report to the National People's Congress, the country's legislature, that the government aims to contain consumer price inflation around 4% this year. China missed the 4% target for last year, with the consumer price index rising 5.4% over the year.
Business Insider:
Zero Hedge:

Gallup:

Breitbart.com:

Reuters:
Financial Times:
  • Greece Threatens Default on PSI Holdouts. Greece threatened to default on any of its bondholders who do not take part in this week’s €206bn debt swap, raising the pressure on potential holdouts. The Greek public debt management agency said in a statement that Athens “does not contemplate the availability of funds to make payments to private sector creditors that decline to participate in PSI”.

Telegraph:

  • Debt Crisis: Live. Stock markets slide on worries over slowing growth in China and Europe, amid increasing tensions in the eurozone in Spain and the Netherlands and a warning that a disorderly Greek default will cost the eurozone €1trillion.

Irish Independent:

  • Disorderly Greek Default Could Cost at Least €1 trillion. A DISORDERLY Greek default could cost €1 trillion and force Italy and Spain into bailout territory while Ireland and Portugal would need more funding, according to the Institute of International Finance. An IIF document, seen by the Reuters news agency, said a failure of ongoing negotiations between Greece and bank creditors would leave the potential for such a default putting unprecedented pressure on Europe.

Sueddeutsche Zeitung:

  • Germany's ruling parties plan limitations on trading agricultural and other commodities, requiring traders and banks to notify authorities about open derivatives positions, including reasons for individual holdings, citing a draft resolution by the ruling Christian Democrats and their coalition partner, the Free Democratic Party.
  • Germany's Free Democratic Party wants to push through limitations on high-frequency trading to regulate hedge funds and private-equity companies more strictly, citing a plan by Economy Minister Philipp Roesler. Roesler wants price volatility caused by computer trading to trigger trading interruptions at all European exchanges; he also wants a financial markets tax on the lines of U.K. stamp duty.

DigiTimes:

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)