Thursday, June 21, 2012

Today's Headlines

Posted by Gary .....at 2:58 PM

Bloomberg:
  • Spain's Banks Need Up To $78 Billion, Report Shows. Spain’s banks would need as much as 62 billion euros ($78 billion) in capital to withstand a worst- case economic scenario, according to two consulting firms hired by the government to conduct stress tests on the lenders. Oliver Wyman Ltd. estimated banks would need between 51 billion euros and 62 billion euros should Spanish gross domestic product shrink by 6.5 percent and house prices drop 60 percent from the peak.
  • Spain Meets Bond Auction Maximum Target With Surging Costs. Spain paid the most in at least eight years to sell three-year debt ahead of the publication of its banks' capital needs that will determine how much the euro area's fourth-largest economy needs from European rescue funds. The Treasury today sold 2.22 billion euros ($2.81 billion) of bonds, the Madrid-based Bank of Spain said today. That's above a 2 billion-euro maximum target for the sale. Three-year bonds maturing in July 2015 fetched an average rate of 5.547 percent, compared with 4.876 percent on May 17, and the most since at least 2004.
  • Samaras Names Banker to Greek Cabinet as Troika Prepares Return. Greek Prime Minister Antonis Samaras appointed Vassilios Rapanos, head of the country’s biggest bank, to lead his finance team as the government prepares for talks with international creditors on relief from austerity measures. Rapanos, chairman of National Bank of Greece SA (ETE), was named as finance minister today after Samaras, the head of the New Democracy party, met with his coalition partners, socialist Pasok chief Evangelos Venizelos and Democratic Left leader Fotis Kouvelis. Demetris Avramopoulos, a former defense and tourism minister and mayor of Athens, was named foreign minister.
  • National Bank of Greece to Sell Luxury Resort as Slump Bites. National Bank of Greece SA is preparing to sell an Athenian Riviera resort, visited by world leaders and movie stars for more than half a century, in a test of the country’s ability to sell assets amid concern that it will leave the euro. The 3.3 million-square-foot (307,000 square-meter) Astir Palace complex has already drawn investors’ interest, according to Aristotelis Karytinos, general manager of real estate at the lender. The Athens-based bank and Greece’s privatization fund, which owns part of the property, will put out a public tender in coming months, he said.
  • Russian Exports Seen Threatening Europe Steel Industry, FTD Says. Russia joining the World Trade Organization means its steel exports are a threat to Europe’s steel industry, according to Karlheinz Blessing, the chief executive officer of Dillinger Huette Saarstahl AG, the Financial Times Deutschland reported. Speaking at the Economic Press Club in Dusseldorf, Blessing said Russian steelmakers have ample raw materials and produce at lower cost than German companies, and imports could lead to overcapacity in the market, the newspaper reported.
  • Moody’s Said to Be Poised to Announce Bank Downgrades Today. Moody’s Investors Service has told banks it may later today announce downgrades of the credit ratings of as many as 17 lenders and securities firms with global capital markets operations, according to two people with knowledge of the plans. The announcement may come after the close of trading in New York today, said one of the people, who asked to not be identified because the information is private.
  • Ratings Cuts at Three-Year High on China Slowdown: Brazil Credit. Brazilian companies are being downgraded at the fastest pace in three years as economic growth slows, driving up borrowing costs for companies from Usinas Siderurgicas de Minas Gerais SA to Suzano Papel & Celulose SA. S&P and Moody's Investors Service have lowered the rating and outlooks of Brazilian companies 27 times this year, compared with 21 in all of 2011.
  • Manufacturing Slump Deepens From Euro Area To China: Economy. Euro-area manufacturing output shrank at the fastest pace in three years in June and a Chinese output gauge indicated contraction as Europe’s worsening fiscal crisis clouded global economic-growth prospects. A gauge of euro-region manufacturing fell to 44.8 from 45.1 in May, London-based Markit Economics said today in an initial estimate. That’s the lowest in 36 months. The preliminary reading was 48.1 for a Chinese purchasing managers’ index from HSBC Holdings Plc and Markit. A reading below 50 indicates contraction. A gauge of German manufacturing output dropped to 44.7 in June from 45.2 in the previous month, Markit said today. The French indicator rose to 45.3 from 44.7. Euro-region gross domestic product probably dropped 0.6 percent in the second quarter, according to Chris Williamson, chief economist at Markit. In the year’s first three months, the area’s economy stalled. “The downturn is gathering pace and spreading across the region, with Germany on course for a marginal fall in GDP in the second quarter, though far steeper declines are likely elsewhere,” Williamson wrote in the statement. “Firms are preparing for conditions to worsen in the coming months, with the darker outlook often attributed to uncertainty caused by the region’s ongoing economic and political crises.”
  • China Said to Propose Keeping Limit on Local Government Loans. China’s banking regulator proposed keeping a cap on local government loans to curtail defaults while encouraging funding for railways, roads and affordable homes, a person with direct knowledge of the matter said. The China Banking Regulatory Commission suggested limiting loans to local government financing vehicles to levels reached at the end of 2011, according to a person with knowledge of the matter who asked not to be named because the proposal is confidential. The watchdog made the recommendation in a report sent to the cabinet after Premier Wen Jiabao’s call last month for the government to focus on growth, the person said.
  • Firings In US Remain Elevated and Factories Retrench: Economy. More Americans than forecast filed claims for jobless benefits and manufacturing in the Philadelphia region shrank, adding to evidence the U.S. economic expansion is weakening. Applications for unemployment insurance payments fell by 2,000 to 387,000 in the week ended June 16, Labor Department figures showed today in Washington. The median forecast of 45 economists surveyed by Bloomberg News called for 383,000. The Federal Reserve Bank of Philadelphia’s factory index dropped to minus 16.6 in June, the lowest level since August. “The labor-market recovery appears to be stalling,” said Millan Mulraine, a senior U.S. strategist at TD Securities in New York. “We are likely to see further moderation in consumer spending, which suggests weakness in manufacturing. This provides confirmation of the Fed’s stance.” Another report today showed the fewest Americans in five months said the economy was improving in June, signaling the slowdown in employment is seeping into consumer psychology. The share of households viewing the economy as heading in the right direction fell to 22 percent this month, the lowest since January, pushing the Bloomberg monthly expectations gauge to minus 11 from minus 1 in May. The weekly Bloomberg Consumer Comfort Index was minus 37.9 in the period ended June 17, down from a four-week high of minus 36.4. “The steady drip of dreary economic data and a deteriorating labor market is reshaping public expectations,” said Bloomberg LP senior economist Joseph Brusuelas in New York. The decline “will likely result in slower spending, which in turn will likely have an adverse impact on business confidence.”
  • Sales of Existing US Homes Fall in May to 4.55M. Sales of previously owned U.S. homes declined in May, showing an uneven recovery in residential real estate. Purchases of existing properties dropped 1.5 percent to a 4.55 million annual rate last month, figures from the National Association of Realtors showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 4.57 million pace. The weakest employment gain in a year last month and limited access to credit are restraining a housing industry that’s been supported by record-low borrowing costs and cheaper properties that are drawing investors. At the current pace, it would take 6.6 months to sell existing inventory, compared with 6.5 months at the end of the prior period.
  • Commodities Fall to Lowest Since 2010 as Fed Cuts Outlook. Commodities dropped to the lowest level in almost 19 months after the U.S. Federal Reserve cut its growth outlook for the world’s largest economy. Crude fell below $80 a barrel in New York for the first time since October. The Standard & Poor’s GSCI Spot Index of 24 commodities fell for a second day, losing as much as 1.5 percent to 566.85, the lowest since November 2010, and was at 568.91 at 9:49 a.m. in London. Raw materials will enter a bear market if they finish around 570.26, or 20.3 percent below their Feb. 24 closing high.
  • Coal Excess Grows on U.S. Shale Boom, China Mines: Chart of the Day. Global coal output will exceed consumption by a record this year, surpassing the margin set in 2011, as China mines more for its power plants while U.S. utilities shift their fuel of choice to natural gas. Global coal production rose 6.2% in 2011 to a record 3.96 billion metric tons of oil equivalent, compared with a 5.4% increase in consumption to 3.72 billion tons, according to the BP Statistical Review of World Energy 2012, published last week. Coal prices at Australia's Newcastle port slumped to $83.75 a ton in the week ended June 15, the lowest since December 18,2009, as overcapacity rises, Bloomberg data show. Global coal supply will expand about 8% annually this year and next, while demand growth will decelerate, Standard Chartered Plc said in a recent report.
  • China Crude Imports From Iran Climb To Highest This Year. China’s imports of crude from Iran rose to the highest level this year even as Western nations stepped up pressure to cut purchases of the commodity from the Persian Gulf nation. China, the world’s second-biggest crude consumer, bought 2.22 million tons of oil from Iran in May, according to a report e-mailed by the Beijing-based General Administration of Customs today. That’s equivalent to more than 524,000 barrels a day, up 35 percent from the 390,000 barrels a day purchased in April. It imported 2.27 million tons, or about 537,000 barrels a day, in May last year.
  • Former Fed Chief Greenspan Says Economy 'Very Sluggish'. Alan Greenspan, the former Federal Reserve chairman, said today the U.S. economy “looks very sluggish.” Greenspan, in a television interview on Bloomberg Surveillance with Tom Keene, also said he sees “global slack” in the economy. “It looks very sluggish to me,” Greenspan said when asked about the U.S. expansion. “We have a two-stage economy in this country.”
  • BofA(BAC) Fined $2.8 Million for Overbilling 95,000 Accounts. Bank of America Corp.’s Merrill Lynch wealth-management unit was fined $2.8 million by the Financial Industry Regulatory Authority for overbilling customers by $32.2 million over an eight-year period. Merrill Lynch charged the fees to about 95,000 accounts between April 2003 and December 2011, FINRA said in a statement today. New York-based Merrill Lynch, which was acquired by Bank of America in 2009, lacked an adequate supervisory system to ensure that customers were billed in accordance with their contracts and disclosure documents, the regulator said. “Investors must be able to trust that the fees charged by their securities firm are, in fact, correct,” Brad Bennett, FINRA’s chief of enforcement, said in the statement. “When this is not the case, investor confidence is threatened.”
  • Shunning Second Car May Hurt U.S. Auto Sales: Chart of the Day. Auto sales may have less room to grow because Americans are increasingly willing to settle for owning one car or truck, according to Itay Michaeli, a Citigroup Inc. analyst. The CHART OF THE DAY displays the average number of vehicles for every U.S. driver since 1960, according to data that Citigroup compiled from the Federal Highway Administration and Ward’s Automotive Reports. Michaeli included a similar chart in a report two days ago. Last year’s average was little changed at 1.14, according to his estimate. The indicator of what he called auto density had fallen for three straight years after rising to a record 1.18 in 2007.
  • Navistar(NAV) Fined by EPA Over Technology Built With Agency. The U.S. Environmental Protection Agency is fining diesel-engine maker Navistar International Corp. for shortcomings in pollution-control technology the agency helped it develop. “EPA is entangled in a blatant conflict in regulating a business partner,” Jeff Ruch, executive director of Public Employees for Environmental Responsibility, said in an e-mail.
  • Onyx(ONXX) Wins Backing of FDA Advisory Panel for Cancer Drug. Onyx Pharmaceuticals Inc. (ONXX) rose the most in five years after winning support from a U.S. advisory panel for its drug to treat a deadly blood cancer that affects 50,000 Americans. Onyx jumped 39 percent to $62.19 at 9:39 a.m. New York time, after reaching $63 in the biggest intraday increase since February, 2007. The shares have gained 29 percent in the 12 months before today. Ligand Pharmaceuticals Inc. (LGND), which has an agreement with Onyx to explore an IV version of the medicine, increased 10 percent to $16.
  • Philip Morris Cuts 2012 Earnings Forecast on Currency Swings. Philip Morris International Inc., the world’s largest publicly traded tobacco company, cut its 2012 earnings forecast as the strength of the dollar hurts sales generated abroad by the maker of Marlboro cigarettes. Earnings per share this year will be $5.10 to $5.20 based on prevailing rates, the New York-based company said in a statement today, compared with an April forecast of $5.20 to $5.30. Philip Morris said currency shifts will cut 25 cents from EPS, more than the 15 cents forecast in April. The U.S. dollar has gained 4.5 percent against the euro in the past two months. Philip Morris, created in 2008 when Altria Group Inc. (MO) (MO) spun off its businesses outside the U.S., got 39 percent of revenue (PM) from the European Union in 2011. Philip Morris fell 2.4 percent to the equivalent of $86.39 in European trading (PM) as of 8:47 a.m. London time.
  • Blankfein Sees 80% of Goldman's(GS) Growth Coming From BRICs. Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said the firm will rely on the biggest emerging markets for most of its growth even amid increasing concern economic expansion in Brazil, Russia, India and China may be slowing.
  • Egypt Islamists Call for Protest Over Army's Power Move. Egypt’s main Islamist groups called for protests after prayers tomorrow against moves by the ruling generals to expand their powers, as a delay in presidential election results added to political tensions.
Wall Street Journal:
MarketWatch:
  • Senate Approves Sweeping Five-Year Farm Bill. The Senate on Thursday passed a sweeping, $500 billion farm bill that would end direct payments and other subsidies to farmers, while expanding crop insurance and funneling new money to “specialty” crop growers.
  • Lack of Leadership Marks G-20 Summit. The photo op at the Group of 20 economic summit this week with President Barack Obama and Russia’s Vladimir Putin showing their evident distaste for one another drew a lot of attention, but a less visible spectacle was that of Obama lecturing German Chancellor Angela Merkel on economics. That’s a picture — much like the blind leading the blind.
Fox News:
  • Supreme Court Rules Against FCC Profanity, Nudity Policy. The Supreme Court on Thursday ruled against the FCC's policy regulating curse words and nudity on broadcast television. In an 8-0 decision, the high court threw out fines and sanctions imposed by the Federal Communications Commission. The case involved some uncensored curse words and brief nudity on various networks, including Fox. "Because the FCC failed to give FOX or ABC fair notice prior to the broadcasts in question that fleeting expletives and momentary nudity could be found actionably indecent, the Commissions' standards as applied to these broadcasts were vague," the Supreme Court said in its opinion. The court said the FCC is "free to modify its current indecency policy" in light of the ruling.

CNBC.com:

  • Beware the Looming 'Monetary Cliff': Goldman's(GS) Hatzius. After reading so much about the dreaded “Fiscal Cliff” these days, market participants can add another term to their fear lexicon thanks to Goldman Sachs: the “Monetary Cliff.” On Wednesday, the Federal Reserve extended its so-called Operation Twist program (selling short-term Treasurys and using the proceeds to buy long-term Treasurys) to the end of this year. This timeline — and the central bank’s failure to explicitly extend its low-rate guidance — sets the country up for a drop-off in accommodative Fed policies, points out the firm’s chief U.S. economist, Jan Hatzius. “The economy now faces a ‘monetary cliff’ in addition to the ‘fiscal cliff,’ ” wrote Hatzius, in a note to clients. “Our forecast implies that the U.S. economy will continue to struggle with slow growth and high unemployment of more than 8 percent going into 2013. Specifically, we forecast a slowdown in real (gross domestic product) span#ExplainsLink a, span#ExplainsLink a img, span#ExplainsLink a:visited img, span#ExplainsLink a:visited {border:none;} growth to just 1.5 percent (quarter-on-quarter, annualized) in the first quarter of 2013.”
  • ECB Mulls Scrapping Sovereign Rating Rules: Sources. The European Central Bank is discussing a medium-term plan to scrap rating rules on euro zone sovereign bonds and instead set their value when used as collateral in lending operations on its own internal assessment, central bank sources said.
  • Bosses Rein in UBS Banker Who Golfs With Obama. The banker, Robert Wolf, a top UBS executive in New York, is among President Obama's leading fund-raisers, building more than $500,000 for his re-election so far this year. A regular presence at big campaign fund-raisers, Mr. Wolf, who is 50, golfs and vacations with Mr. Obama and is known for e-mailing friends photos of himself with the president. While such a close relationship might have been envied by other bankers in 2008, when much of Wall Street was infatuated with Mr. Obama and donated heavily to his presidential bid, it has been making other UBS executives uneasy of late.

Business Insider:

Zero Hedge:

New York Times:
  • France and Germany Fae Delicate Talks Over Economy. Armed with a new mandate and a solid legislative majority, France’s François Hollande is off to do battle with Germany in the name of growth, prosperity and human decency. Or that’s the popular image, at least, of what is in fact a more delicate and nuanced relationship between the new French president and the German chancellor, Angela Merkel.
Benzinga:
  • Whitney Stands By Call On Municipal Defaults. Meredith Whitney, widely known as the first bank analyst to call to light the risks of the sub-prime market, is standing by her call that some U.S. states and municipalities remain financially vulnerable. In an interview with Bloomberg Television's "Risk Takers" program, Whitney cleared the air about her controversial view on the financial health of U.S. states and cities.

CNN:

FINalternatives:
  • Hedge Funds Fall In Early June. Hedge funds extended their May—and April—losses in the first half of this month, one industry benchmark shows. The HFRX Global Hedge Fund Index shed 0.54% on the month through June 15. The decline leaves the index up just 0.97% on the year. Only one of the 15 strategy, sub-strategy and regional indices complied by Hedge Fund Research for the HFRX suite was in the black in the first two weeks of June, and it only barely: Fundamental value equity funds rose a microscopic 0.03% (0.54% YTD). The rest of the report was a sea of red. Macro funds and commodity trading advisers lost 1.06% (down 1.57% YTD), relative value arbitrage funds 0.42% (up 1.72% YTD), and equity hedge fund and event-driven funds 0.38% apiece (up 0.27% and 3.18% YTD, respectively). Systematic diversified funds took the biggest loss in early June, dropping 1.89% (down 2.6% YTD). Equity market neutral funds lost 0.98% (down 4.5% YTD), special situations 0.52% (up 1.52% YTD) and convertible arbitrage 0.47% (up 2.73% YTD).

Reuters:

  • US Ex-Im Bank signs $1 bln pact with Russia's Sberbank. The U.S. Export-Import Bank on Thursday said it has signed a $1 billion financing arrangement with Sberbank, Russia's largest financial institution, to boost exports of U.S. aircraft, energy equipment and other goods and services to the former Cold War enemy. The action comes as Russia is the verge of entering the World Trade Organization and the U.S. Congress is facing a vote on whether to establish "permanent normal trade relations" by repealing a 1974 provision that makes favorable U.S. tariff rates for Russia conditional on the rights of Jews to emigrate.
  • Big investors eye loading up on hedge funds: survey. Pension funds, endowments and charities may soon heap more hedge funds into their portfolios. Nearly one third of institutional investors said they have too much cash on hand and not enough money invested in hedge funds, according to a poll released by Russell Investments on Tuesday. "At least 30 percent of respondents indicated they were below their target weights in hedge funds, private real estate and private equity," Russell wrote in its 2012 Global Survey on Alternative Investing, a biennial survey.
  • CarMax(KMX) shares down as wholesale unit disappoints. CarMax Inc, a retailer of new and used cars, posted a quarterly profit that missed analysts' estimates as its wholesale business sold fewer cars. The largest retailer of used cars in the United States said although more people visited its stores to sell their cars during the quarter compared with a year earlier, the visits did not translate into as many buys by the company.

Financial Times:

  • Germany Infected By Eurozone Woes. (graph) The eurozone is stuck firmly in a sharp economic contraction, with the region’s escalating debt crisis hitting Germany with increasing severity, according to a closely watched survey.

Telegraph:

meps:

  • MEPS Reports Weaker Northern European Steel Prices As Demand Declines. The market for flat products in northern Europe remains very weak. Activity levels in mainland Europe are very depressed and, although demand in the Nordic region is better, research at the beginning of June revealed falling transaction values throughout all the countries reviewed.

Handelsblatt:

  • States represented in the euro-area rescue fund may lack seniority in the event that Spain cannot repay aid granted, citing European Union officials. EU officials are considering the move, adding that Spain will today formally request financial help for its banks. The Spanish government will seek a direct injection of aid to its lenders, circumventing the state administration, a move Germany opposes.

Digi Times:

  • Branded Handset Vendors Cutting Orders to Component Suppliers, Say Sources. A number of branded handset vendors, including Nokia, Motorola Mobility, Samsung Electronics, LG Electronics, Sony Mobile Communications, RIM, HTC, Huawei Device and ZTE, have reduced their orders to Taiwan-based handset component suppliers recently, with the reduction expected to swell into the third quarter, according to industry sources. A crunch in buying activities in Europe combined with a slowdown in growth momentum for smartphones in North America has induced branded vendors to revise downward their orders for parts and components, the sources explained. The ratios of reduction ranged from 5-10% for vendors which slashed their orders in small scale, but some vendors cut orders as much as 20-30%, noted the sources. Although some vendors will launch new models in the third quarter, the traditional peak season for component suppliers in the third quarter may not happen this year, said the sources. With the exception of display sizes and clock frequencies of CPUs, the competition of hardware specifications for smartphones has nearly reached the end stage, making it difficult for branded vendors to push sales as well as to figure out the projected shipment volumes for new models, the sources commented.

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)