Tuesday, March 27, 2012

Today's Headlines

  • Merkel Said to Say She Sees German Yields Rising as Crisis Ebbs. Chancellor Angela Merkel told lawmakers that she expects German borrowing costs to rise as the debt crisis ebbs and the country’s status as a haven wanes, according to two party officials who took part in the meeting. Merkel made her comments to lawmakers of her Christian Democratic Union at a regular meeting in parliament in Berlin today, according to the officials, who spoke on condition of anonymity because the briefing was private.
  • Corporate Bond Risk Falls in Europe on Recovery Support Bets. The cost of insuring against default on European corporate debt fell for a second day on speculation policy makers will bolster support for the economic recovery. The Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings dropped 16 basis points to 574.5, according to JPMorgan Chase & Co. at 10:30 a.m. in London. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell 2.75 basis points to 115. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers fell 3.5 basis points to 200 and the subordinated index declined seven to 316.
  • Libor Flatlines as Europe-Wary See Stress: Credit Markets. Stresses in the global financial system have stopped easing as European policy makers signal they’re unlikely to extend a third round of unlimited loans to the region’s banks and as bond yields in Spain and Portugal begin to rise again. The three-month London interbank offered rate has held at about 0.47 percent every day in March, after sliding from this year’s high of 0.58 percent on Jan. 3. Measures from interest- rate swap spreads to the relative yields on short-term bonds sold by the world’s biggest banks also show the health of the financial system isn’t improving.
  • Barclays Gas ETN(GAZ) Plummets as Credit Suisse VIX Note(TVIX) Crashes. A Barclays Plc (BARC) exchange-traded note that traded 134 percent above the value of the natural-gas index it’s tied to lost 42 percent of the premium in three days as investors exit funds that diverge from underlying assets. The iPath Dow Jones-UBS Natural Gas Total Return Sub-Index ETN has plunged 30 percent since March 21 as its benchmark index decreased 7.1 percent, according to data compiled by Bloomberg.
  • Egypt Parties Quit Constitution Panel Citing Islamist Dominance. Some of Egypt’s leading secular parties and politicians quit a panel to draft a constitution, adding to tensions over the country’s political transition that have weakened the economy. Among those who pulled out were the Free Egyptians, founded by billionaire Naguib Sawiris, the Egyptian Social Democrats, and prominent lawmakers including Mohamed Abu Hamed and Amr Hamzawy, the state-run Middle East News Agency reported today. They criticized what they said were attempts by the Muslim Brotherhood to monopolize selection of members, MENA said. The withdrawal, a day before the committee was to meet for the first time, adds to turmoil surrounding Egypt’s transition to democracy which has set back the economy’s recovery after last year’s uprising against Hosni Mubarak.
  • Consumer Confidence Falls in March. The Conference Board’s index was 70.2 this month, in line with the median forecast in a Bloomberg News survey, down from a revised 71.6 reading in February, according to the New York- based research group.
Wall Street Journal:
  • Justices Challenge Government Over Health Law. The Supreme Court's five conservative justices on Tuesday sharply challenged the Obama administration's arguments for the health-care law, with Justice Anthony Kennedy saying the government has a "very heavy burden of justification" for the measure's requirement that people carry health insurance or pay a penalty. But Justice Kennedy, a perennial swing vote on the court, also asked some skeptical questions of the law's challengers, leaving the fate of President Barack Obama's signature legislation in doubt
  • ObamaCare Will Bankrupt States. If the U.S. Supreme Court finds the Obama health insurance law constitutional "it's going to basically bankrupt the states," Texas Gov. Rick Perry told CNBC Tuesday. The former Republican presidential candidate said his state is considering its options if the constitutionality is upheld. Perry claimed the Obama administration "misrepresented the cost of this bill" for the program when President Barack Obama said Texas would pay $27 billion over the next 10 years. "Those numbers are going to escalate," Perry predicted. "The cost of the bill to the states is going to be absolutely stunning."
Business Insider:
Zero Hedge:
Seeking Alpha:


  • Goldman(GS) Losing Private Equity Exec. Gene Yoon is leaving Goldman Sachs (GS) to manage a new $500 million private equity fund, Fortune has learned. Sources say that the new effort will officially launch in May, and that it will be bankrolled by a European family office.
market folly:
The Hill:
  • Toobin: Obama Healthcare Reform Law 'in grave, grave trouble'. A top legal analyst predicted Tuesday that the Obama administration's healthcare reform legislation seemed likely to be struck down by the Supreme Court. Jeffrey Toobin, a lawyer and legal analyst, who writes about law related topics for The New Yorker said the law looked to be in serious "trouble." "This law looks like it's going to be struck down," Toobin said Tuesday on CNN. "I think this law is in grave, grave trouble."


  • Higher Gasoline Prices Could Stem Travel Plans - Survey. Rising gasoline prices in the United States could lead business and leisure travelers to cut back on travel plans, which in turn could have implications for airlines, hotels and retailers, a survey found. A survey of some 2,500 people by the U.S. Travel Association earlier this month found that higher gas prices would affect the summer travel plans of 54 percent of vacationers who planned to go by car. Among business people, 26.8 percent said rising fuel prices would alter their summer travels.
  • Harbinger Capital II Down 29.6% in February - Sources. Philip Falcone's Harbinger Capital Partners Fund II lost more money in February, due largely to the fund's big investment in ailing telecom company LightSquared, two sources familiar with the numbers said. The fund declined 29.6 percent in February, leaving it down 26.7 percent for the first two months of the year.


  • Egypt's Brotherhood Considering Presidential Run. Egypt's Muslim Brotherhood was debating Tuesday whether to field a candidate in upcoming presidential elections, a much-anticipated decision that would signal whether the fundamentalist group intends to escalate or defuse rising tensions with the nation's other political players. The Brotherhood has emerged as the most powerful political group since Hosni Mubarak was ousted last year, capturing nearly 50 percent of the seats in Egypt's first post-uprising parliamentary elections. It's increasing grip on power has fueled concerns among liberals and secularists of the Islamist group's intentions and whether it aims to govern alone, controlling both the parliament and the presidency. More than 100 members of the Brotherhood's senior legislative council were meeting Tuesday to decide on fielding a presidential candidate, according to a statement on the group's website. For months, the Brotherhood pledged not to contest the presidency, but recently officials from the group have reconsidered, opening the door to a possible presidential run.

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