Thursday, February 14, 2013

Today's Headlines

Posted by Gary .....at 3:45 PM
Bloomberg:
  • Euro-Area Economy Shrinks Most Since Depths of Recession. The euro-area recession deepened more than economists forecast with the worst performance in almost four years as the region’s three biggest economies suffered slumping output. Gross domestic product fell 0.6 percent in the fourth quarter from the previous three months, the European Union’s statistics office in Luxembourg said today. That’s the most since the first quarter of 2009 in the aftermath of the collapse of Lehman Brothers Holdings Inc. and exceeded the 0.4 percent median forecast of economists in a Bloomberg survey. The data capped a morning of releases showing that the economies of Germany, France and Italy all shrank more than forecast in the fourth quarter.
  • Italian Economy Shrinks Most in Almost Four Years Before Vote.Italy’s economy contracted the most in almost four years in the quarter through December as the country’s fourth recession since 2001 deepened. Gross domestic product shrank 0.9 percent from the previous three months, a sixth quarterly contraction and almost five times the 0.2 percent pace of the third quarter, the National Statistics Institute Istat in Rome said in a preliminary report today. The decline was more than the 0.6 percent median forecast in a Bloomberg News survey of 24 economists. From a year earlier, output shrank 2.7 percent. Italy’s central bank has called on whichever government emerges from this month’s elections to consolidate public finances to boost competitiveness and economic growth, after revising its GDP forecast for the euro region’s third-biggest economy. The economy shrank 2.2 percent in 2012, Istat said today. The Bank of Italy forecast the economy will contract 1 percent this year and won’t emerge from the recession until the second half of 2013, citing weak domestic demand. The central bank’s new forecast is five times the 0.2 percent contraction it estimated in July.
  • S&P 500 Bearish Bets at Two-Year Low: Options. Puts protecting against a 10% decline in the S&P 500 cost 7.88 points more than calls betting on a 10% gain, according to three-month options data compiled by Bloomberg. The price relationship known as skew fell to 7.49 on Feb. 1, the lowest since November 2010.
  • Euro Drops to Three-Week Low as Recession Deepens; Yen Advances. The euro slid to a three-week low against the dollar after a report showed Europe’s recession deepened more than forecast last quarter, sapping demand for the region’s assets and spurring bets on lower interest rates. The 17-nation currency dropped for a third day versus the yen as separate data showed gross domestic product shrank in both Germany and France. “The GDP data out of the euro zone was quite poor, putting the idea of a potential rate cut by the European Central Bank back on the table,” Brian Daingerfield, a currency strategist at Royal Bank of Scotland Group Plc in Stamford, Connecticut, said in a telephone interview. “The market priced in further potential for easier monetary policy coming out of the ECB, which led to a weaker euro.” The euro slumped 0.9 percent to $1.3327 at 11:43 a.m. New York time and reached $1.3315, the lowest level since Jan. 24.
  • Gold Demand Rose 3.8% in Fourth Quarter, Narrowing Annual Drop. Gold demand rose 3.8 percent in the fourth quarter as Indian purchases jumped, narrowing the first drop in annual usage in three years, the World Gold Council said. India remained last year’s biggest buyer, ahead of China.
  • The Real Risk-Takers Are at the Federal Reserve. In a nutshell: The Fed buys risk-free Treasury securities, depressing the yields. The public is goaded into buying riskier assets, such as stocks and corporate bonds, sending those prices higher. Businesses financing themselves with equity have more money to invest. Consumers feel wealthier and spend more. Whenever I hear the bit about risk-taking, I wonder what the dividing line is between encouraging higher asset prices and creating froth in asset markets. How does the Fed know when asset prices have gotten out of whack?
  • Chicago Shamed by Murder as Aurora Has Homicide-Free Year. Aurora saw its factories shrivel and its street gangs thrive until the past five years, when its police methodically smothered the criminals by partnering with neighborhood groups as well as state and federal law enforcement. The agencies drew from the playbook used to get the Chicago crime icon Al Capone - - attacking the enterprise, not just the violence it spawns. Aurora’s violent-crime rate has plunged, even as the city’s population soared 38 percent in the last decade to almost 200,000, roughly the size of Salt Lake City. Aurora’s annual homicide total in the past five years averaged fewer than 3, down from 26 in 2002, according to police. The last year for which the city recorded no killings was 1946.
  • BlackBerry(BBRY) Co-Founder Balsillie Sells Stake in Company.Jim Balsillie, who served as co- chief executive officer of Research In Motion Ltd. until January of last year, has cut his 5.1 percent ownership stake to zero, raising concern that he has lost confidence in the company.
  • Postal Union Millions to Democrats Roils Saturday Cuts. All but five of Congress’s 255 Democrats and independents received campaign donations from postal worker union groups in the past six years, raising the political risk of Postmaster General Patrick Donahoe’s move to end Saturday mail delivery. Political action committees for the seven postal unions contributed $9.6 million from 2007 to 2012 to current members of Congress, 91 percent of it to Democrats and two independents who caucus with them, according to data compiled by Bloomberg from the Federal Election Commission and the Center for Responsive Politics, a Washington-based research group.
  • Berkshire(BRK/A) Joins 3G Capital to Buy Heinz(HNZ) in $23 Billion Deal. Warren Buffett’s Berkshire Hathaway Inc. and Jorge Paulo Lemann’s 3G Capital agreed to buy HJ Heinz Co. for about $23 billion as the billionaires increased their bets on consumer products. The buyers will pay $72.50 a share, compared with yesterday’s closing price of $60.48, according to a statement today. Berkshire will spend about $12 billion to $13 billion on the deal for the maker of condiments and Ore-Ida potato snacks. The transaction is valued at about $28 billion including the assumption of debt, according to the statement.
  • Hong Kong Bourse to Start After-Hours Futures Trading. Hong Kong Exchanges & Clearing Ltd., the world’s largest exchange company by market value, said it received regulatory approval to start after-hours futures trading and will begin the service on April 8. Hang Seng Index and H-shares Index futures will be available for trading from 5 p.m. to 11 p.m. from the date, in addition to regular hours, the bourse said in a statement today. Gold futures will also be considered for inclusion at a later stage, it said.
Wall Street Journal: 
  • Boehner: House Won’t Act First to Avoid Sequester. House Speaker John Boehner (R., Ohio) challenged the Senate to pass a bill to avoid the across-the-board spending cuts known as the sequester, saying the House won’t act to do so first. At a weekly press conference, Mr. Boehner declined to comment on a Senate Democratic bill that is expected to be unveiled later Thursday that would partially defer the $85 billion in scheduled spending cuts by raising revenues through ending some tax deductions. He said that until the Senate passes such a bill, there was no reason for him to comment on it. The Republican leader said the House had passed legislation last year to shift the burden of the cuts away from defense and other key federal programs. But that bill died at the end of the last Congress, House GOP leaders don’t plan to reintroduce it this year.
  • Hagel Nomination Again in Jeopardy. Chuck Hagel's confirmation as the next secretary of defense was again in jeopardy Thursday as Republicans declared he wouldn't have the 60 votes necessary for his nomination to proceed. Republican leaders told Senate Majority Leader Harry Reid (D., Nev.) they were withholding GOP votes until they received more information, a Democratic leadership aide said.
MarketWatch:
  • Sen. Warren: Too-big-to-fail is too-big-for-trial. Fed’s Tarullo: changes to Volcker rule ahead. In her first hearing as a U.S. senator Thursday, Elizabeth Warren criticized federal regulators for settling civil cases with Wall Street banks instead of taking them to trial.
CNBC: 
Zero Hedge:
Business Insider:
Forbes:
Reuters: 
The Guardian:

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