Thursday, May 30, 2013

Today's Headlines

  • Euro-Area Economic Confidence Climbs Amid Recession. Economic confidence in the euro area increased in May, adding to signs the region is beginning to emerge from the longest recession in the single-currency era. An index of executive and consumer sentiment rose to 89.4 from 88.6 in April, the European Commission in Brussels said today. That’s in line with the median estimate in a Bloomberg News survey of 33 economists
  • European Stocks Rebound From Three-Week Low. European stocks climbed, rebounding from a three-week low, as investors weighed data on U.S. economic growth and house sales to gauge the Federal Reserve’s view on continuing stimulus measures. Lonmin Plc and Fresnillo Plc both rallied at least 5.5 percent as precious metals climbed. Genmab A/S jumped to its highest price since August 2009 after its Arzerra cancer treatment met its objective in a trial. Tate & Lyle Plc paced declining shares after earnings missed analyst estimates. The Stoxx Europe 600 Index added 0.4 percent to 303.55 at the close.
  • Frontline(FRO) Says Tanker Glut Preventing Recovery as Debt LoomsFrontline (FRO) Ltd., the oil-tanker company led by billionaire John Fredriksen, said an oversupply of the vessels is preventing the market recovery needed to be able to repay a convertible bond maturing in 2015. “The tanker market is massively oversupplied and it may take some time before a reasonable market balance is restored and sustained recovery of the tanker market occurs,” the manager of 32 supertankers said today as it reported a fourth quarterly loss. Its cash might run out if the market doesn’t recover and it can’t raise equity or sell assets, Hamilton, Bermuda-based Frontline said, reiterating comments made Feb. 22. 
  • Joy(JOY) Cuts Forecast as Commodity Surplus Curbs Mining Expenditure. Joy Global Inc. (JOY), the largest maker of underground mining equipment, cut its full-year profit and sales forecasts and said it sees no immediate recovery in orders as commodity producers reduce spending amid surplus supply
  • Gold Futures Advance on Speculation Fed Will Maintain Stimulus. Gold futures rallied the most in a week on speculation that the Federal Reserve will maintain bond purchases to bolster the U.S. economy, boosting demand for the precious metal as a store of value. Silver also rose.
Wall Street Journal:
  • Smithfield(SFD) Deal Signals China's Need for Meat, Dairy, Other Food Buys. China's rising hunger is driving ever-larger acquisitions of global food assets as the shifting dietary profile of the world's most populous nation increasingly puts meat, dairy and processed-food producers into play.
  • Iron Ore Has Fallen 30% Since February. Iron ore slumped to a seven-month low on Thursday, down 30% from this year's high in February, hit by slowing demand from China and a glut of a supply. The raw material for steel making joins a broad selloff in global commodities and is a key bellwether of economic activity in China, the world's top buyer of iron ore. Signs are mounting that growth is continuing to slow in Asia's largest economy, with traders rushing to sell off supplies of iron ore and steel. Shares of Australian iron-ore producers are also in the cross hairs. "The market is flush with product at the moment," RBS Morgans resources analyst James Wilson said. "The pricing power has switched from the iron-ore miners to the steel mills."
Fox News:
  • When Chinese Walls Come Crumbling Down. One of the key reforms put in place in the settlement was the bar on basing the compensation of stock analysts on their contribution to investment banking revenue. This was meant to prevent analysts from becoming shills for the corporate clients that were paying fees to the investment banks for stock and bond underwriting deals. A new study suggests that this part of the settlement may have fallen by the wayside.
Zero Hedge:
Business Insider:
  • Credit crunch casualty Eckert plots hedge fund reincarnation. Fred Eckert - the hedge fund manager who lost $250 million of his own money, saw his firm go bankrupt in the credit crisis, went through a divorce and spent two months in a coma - is back with the launch of his new firm. The 65-year-old former Goldman Sachs executive, who once lived in one of the most expensive houses in New Jersey, has launched a new firm called Phoenix Star Capital. He has already an initial $100 million from investors to pursue the strategy. And despite a chastening credit crisis, the man who once enjoyed a fleet of 18 vintage cars and a 1,500-bottle wine collection before filing for personal bankruptcy in 2010, remains optimistic about his chances. "I'm not afraid of being able to raise substantial amounts," Eckert told Reuters in the American bar of the luxury Savoy hotel in central London. "They (investors) believe my record is excellent." Eckert's former hedge fund firm GSC Group ran $28 billion at its peak, but filed for bankruptcy in 2010 after borrowing around $250 million, some of it just before the credit crisis sent asset prices tumbling and froze money markets.
  • Risky derivatives make return for returns' sake. Investors facing record low bond yields are increasingly chasing higher returns via complex derivatives, the instruments at the root of the 2008 global financial crisis, which can punch yawning holes in balance sheets if they go awry. Monetary stimulus from central banks has driven down sovereign and corporate bond yields and sent shares to multi-year highs, which in turn has encouraged investors to buy structured products that bundle derivatives with stocks or bonds to increase returns. "The low interest rate environment is pushing clients to search for yield," said Sebastien Gyger, head of portfolio management for private clients at Lombard Odier. 
  • With big-name backers, Chinese firm eyes Smithfield's know-how, brands. In three decades, Wan Long has turned Shuanghui International Holdings from a small, loss-making meat processor into China's largest, and is making his country's biggest takeover of a U.S. company - the $4.7 billion acquisition of Smithfield Foods Inc, the world's leading pork producer. 
  • Italy's debt costs rise in hint rally of the vulnerable may be over. Italy's long-term borrowing costs edged up at an auction on Thursday for the first time in three months, adding to signs that a 10-month-long rally in vulnerable euro zone bonds may be faltering.
USA Today:

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