Tuesday, November 20, 2012

Today's Headlines

Posted by Gary .....at 3:12 PM
Bloomberg:
  • French Downgrade Widens Gulf With Germany as Talks Loom: Economy. France’s loss of the top credit rating at Moody’s Investors Service may weaken President Francois Hollande’s leverage in European budget talks and deepen concern in Germany over its neighbor’s lagging competitiveness. The downgrade late yesterday of Europe’s second-biggest economy underscores the concern expressed by allies of German Chancellor Angela Merkel that the Socialist Hollande’s failure to recognize the urgency of France’s woes risks a deepening of Europe’s slump. “This downgrade will certainly increase pressure on France big-time,” Jan Techau, director of the Carnegie Endowment for International Peace office in Brussels, said today in a phone interview. “It gives Germany more of an edge over France.” With French bonds rallying since Standard & Poor’s stripped the country of its AAA credit rating in January, the impact of the Moody’s downgrade may be more political than financial. Just last week, German Finance Minister Wolfgang Schaeuble spoke out against his countrymen calling France the “sick man” of Europe. The day before, France’s Liberation newspaper ran a front-page article highlighting German anxiety about Hollande’s policies.
  • French Swaps Rise on Downgrade as Bonds, European Banks Decline. The cost of insuring France’s government debt rose to a one-month high and its bonds declined after Moody’s Investors Service cut the nation’s credit rating. European bank stocks fell before the region’s finance ministers meet to discuss Greece’s debt burden. Credit-default swaps on France jumped to 92 basis points, the highest since Oct. 15, and the yield on the country’s 10- year bonds climbed five basis points to 2.12 percent at 7:52 a.m. in New York. German bund yields also increased. The Stoxx Europe 600 Index dropped 0.2 percent and Standard & Poor’s 500 Index futures were little changed. Commodities slid as crude oil fell from a one-month high. “The downgrade raises concerns about the structure of the euro zone and adds more of a burden on to the shoulders of German sovereign creditworthiness,” said John Wraith, a fixed- income strategist at Bank of America Merrill Lynch in London. “It’s another sign that things continue to deteriorate in Europe.”
  • Hewlett-Packard(HPQ) Profit Forecast; $8.8 Billion Charge. Hewlett-Packard Co. plunged to the lowest price in a decade after it said the British software company purchased last year falsified its finances, resulting in an $8.8 billion charge to write down the value of the Autonomy Corp. business. “HP is extremely disappointed to find that some former members of Autonomy’s management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy’s acquisition by HP,” Palo Alto, California-based Hewlett-Packard said today in a statement.
  • Housing Starts in U.S. Increase. Housing starts rose 3.6 percent to a 894,000 annual rate, the fastest since July 2008 and exceeding all estimates in a Bloomberg survey, Commerce Department figures showed today in Washington. The median forecast of 82 economists called for an 840,000 pace. Permits for the construction of single-family homes also advanced to the highest in four years.
  • Oil Falls on Signs Gaza Cease-Fire Imminent. Oil tumbled from a one-month high in New York as Hamas said a draft accord for a cease-fire that would end fighting between Israel and Palestinian groups in the Gaza Strip is almost ready. Futures dropped as much as 3.5 percent after Hamas official Osama Hamdan said by phone from Beirut that an announcement was likely at 9 p.m. Cairo time and that it will take effect at midnight. His comments came as U.S. Secretary of State Hillary Clinton flew to the region to join truce talks. Prices surged 2.7 percent yesterday as the conflict escalated. “Crude is down because cooler heads are prevailing in the Middle East,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania. “The huge run-up yesterday is being exorcised.” Crude oil for January delivery declined $2.92, or 3.3 percent, to $86.36 a barrel at 12:25 p.m. on the New York Mercantile Exchange.
  • Dimmer Profit Outlook Seen Weighing on Stocks: Chart of the Day. Lower earnings estimates are dragging down stocks from this year's highs and their full effect has yet to be felt, according to Hasan S. Tevfik, a global equity strategist at Citigroup Inc. Since the first week of May, the revision index has been less than zero, which means there were more estimate cuts than increases among analysts. "ERI remains an anchor for global equity markets," Tevfik wrote. A similar disparity between estimate changes and share prices in 2011 was resolved when stocks declined in July and August of that year, he added. Earnings projections for next year are poised to decline further, he wrote, citing the gap between analysts' estimates for companies and strategists' projections for stock indexes.
  • Ex-SAC Manager Martoma Charged in Record Insider-Trading Scheme. A former portfolio manager for Steven A. Cohen’s SAC Capital Advisors LP was charged with what U.S. prosecutors called a record-setting insider-trading scheme that netted as much as $276 million for the hedge fund. Prosecutors in the office of U.S. Attorney Preet Bharara in Manhattan today charged the portfolio manager, Mathew Martoma, with trading on insider tips about clinical trials of bapineuzumab, a drug to treat Alzheimer’s disease. Martoma, 38, is accused of advising Cohen to sell shares of Wyeth LLC (PFE) and Elan Corp. (ELN) before bad news about the drug's prospects was announced. Cohen's firm made $276 million in profits or losses avoided after receiving the advice, prosecutors said in a criminal complaint.
Wall Street Journal: 
CNBC: 
New York Times: 
Reuters: 
Telegraph:
  • Eurozone split over Greek debt. Greece's international lenders remained split on how to deal with Greece's next loan deal and it was not clear if a deal would be reached at a key meeting being held in Brussels this evening, which could be set to turn into an all-nighter.
Les Echos:
  • ArcelorMittal Sees Europe Steel Demand Drop in 2013. The company told unions at a meeting Nov. 19 in Paris that it doesn't expect any improvement next year, citing labor rep. Francois Pagano. 
The Economic Times: 
  • Moody's to review EFSF, ESM ratings after French cut. Credit ratings agency Moody's said on Tuesday it would assess the ratings of the euro zone's EFSF and ESM bailout funds in light of its decision to strip France of its AAA rating on Monday. "The ratings of the European Financial Stability Fund (EFSF) and European Stability Mechanism (ESM) remain (P)Aaa and Aaa respectively, in each case with a negative outlook," Moody's said in a statement. "Moody's will assess the implications of the downgrade of the French government's rating for the EFSF's and ESM's ratings as a matter of course, focusing in particular on whether the support available from the remaining Aaa guarantors and shareholders is consistent with the EFSF and ESM retaining the highest ratings," it said.
Xinhua:
  • Wen Says Huangyan Island Belongs to China. Chinese Premier Wen Jiabo said here Tuesday that the Huangyan Island is an integral part of China's territory, and its sovereignty is indisputable. Wen, when responding to remarks from leaders of certain countries at the seventh East Asia Summit, said China's actions to defend the island's sovereignty is legitimate and necessary.
Yunnan Info Daily:
  • China CBRC Halts Some Infrastructure, Vehicle Loan Trusts. The China Banking Regulatory Commission ordered some trust companies to halt their vehicle loan, infrastructure and pool businesses, citing people in the trust industry.

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