Wednesday, May 08, 2013

Today's Headlines

  • EU Warns of ‘Huge Shocks’ Without Bank Depositor Preference Rule. European Union deposit-insurance funds would be vulnerable to “huge shocks” unless depositors get preferred treatment over other unsecured creditors, a study on proposed rules for handling failing banks showed. The EU is weighing whether depositors should be paid back ahead of other unsecured creditors in new rules on bank resolution. If clear preference isn’t given to any depositors, national funds would stand in line with uninsured depositors, senior bondholders and other unsecured creditors to divide up a failed bank’s assets and share in absorbing losses, according to the confidential EU impact study. 
  • Euro Gains Most in Three Weeks as German Industrial Output Rises. The euro rallied the most in three weeks against the dollar as German industrial production unexpectedly rose for a second month in March, a sign that Europe’s largest economy may be returning to growth.
  • European Stocks Advance as ING Earnings Exceed Estimates. European stocks climbed, with the Stoxx Europe 600 Index extending its highest level since June 2008, as companies from ING Groep NV (INGA) to Deutsche Telekom AG (DTE) posted quarterly earnings that beat estimates.
  • Issa Says Heads of Benghazi Review Panel Refused to Testify. Republican Representative Darrell Issa said the Obama administration has failed to cooperate with his probe of the attack on the U.S. mission in Benghazi, Libya. Issa of California, chairman of the House Oversight and Government Reform Committee, also said today at a hearing of the panel that leaders of the State Department’s review board refused to testify before the panel. Today’s hearing revives efforts by Republicans to show the Obama administration didn’t provide enough security to U.S. diplomats in Libya before the attack last Sept. 11 that killed U.S. Ambassador Christopher Stevens and three other Americans, failed to respond militarily during it and engaged in what Issa has called a “cover-up” afterward to hide the role of terrorists linked to al-Qaeda.
  • Iron Ore Seen Dropping by BHP as Supply Growth Tops Demand. Global iron ore supplies will expand faster than demand over the long term, lowering prices and reducing volatility of the raw material used to make steel, according to BHP Billiton Ltd. (BHP), the largest mining company. New seaborne cargoes will replace more expensive output, mainly in China, Alan Chirgwin, general manager of iron ore marketing, told a conference in Singapore today. He didn’t give price forecasts or define long term. China is the world’s largest buyer of the biggest seaborne cargo after crude oil. Iron ore has lost 10 percent this year, nearing bear-market territory, amid forecasts for an increase in global supplies just as demand growth in China drops. As producers boost output, higher-cost Chinese supply will drop and the price will extend declines, Deutsche Bank AG said in report last month. Rio Tinto Group (RIO) is pressing ahead with its expansion, Alan Smith, president of iron ore Asia, said at the conference today
  • China April Copper Imports Drop to 22-Month Low on Demand. Copper imports by China declined to the lowest level in 22 months in April, raising concern that demand is waning from the biggest user. Inbound shipments of the refined metal, alloy and products were 295,799 metric tons last month, the General Administration of Customs said on its website today. That was the lowest since June 2011, down 7.4 percent from March and 21 percent lower than a year earlier, according to data compiled by Bloomberg.
  • Gold Futures Gain Amid Signs of Physical Demand in India, China. Gold rose for the second time in three days amid signs of increasing purchases in India and China, the world’s largest consumers of the metal.
  • McDonald’s April Store Sales Drop 0.6% on Asia Slowdown. McDonald’s Corp. (MCD), the world’s biggest restaurant chain, said sales at stores open at least 13 months fell 0.6 percent last month as growth slowed in its Asia-Pacific region. Analysts estimated a 0.5 percent drop, the average of 11 estimates from Consensus Metrix. Sales at stores in the company’s Asia-Pacific, Middle East and Africa unit fell 2.9 percent, the Oak Brook, Illinois-based company said today in a statement. Analysts projected a 1.4 percent decline.
Wall Street Journal:  
  • Live-Blogging the Ira Sohn Conference.
  • In Beijing, Mass Gathering Draws Police. Beijing on Wednesday saw an unusually large public demonstration, according to eyewitnesses and images circulating on social media. The demonstration appeared to end without violence or conflict, the eyewitnesses said, after police ushered the protesters off the streets. Still, it underscored the tensions that can bubble over in China, even in tightly monitored Beijing.
Fox News:
  • Benghazi witness describes effort to lure more Americans into 'trap,' says knew attack was terrorism. (video) A key Benghazi whistle-blower testified Wednesday that his team knew the Sept. 11 attack on the U.S. compound was terrorism, revealing that it appeared some were trying to lure even more U.S. personnel into a separate "ambush" while the attack was still being carried out. Greg Hicks, the deputy chief of mission in Libya who became the top U.S. diplomat in the country after Ambassador Chris Stevens was killed, revealed new details as he and other whistle-blowers delivered emotional testimony on Capitol Hill. He described how, as diplomatic officials were trying to find out what happened to Stevens, they were receiving phone calls from supposed tipsters saying they knew where the ambassador was and urging Americans to come get him. 
Zero Hedge: 
Business Insider: 
  • Seatbelt Sign. Aggressive aircraft orders have an inverse relationship with expansion in global GDP a year later. If that affiliation holds, big orders by Asian airlines point to rising risks of economic turbulence next year.
  • Weaker Europe, iron ore price weigh on ArcelorMittal - CEO. The world's largest steelmaker ArcelorMittal suffered in the first quarter from "very weak" demand in Europe and falling iron ore prices, its chief executive said on Wednesday ahead of results due on Friday. The company, which makes some 6-7 percent of the world's steel, has said it sees global steel consumption up 3 percent this year, but European demand falling by between 0.5 and 1.5 percent after a 9 percent drop in 2012. "We are seeing it could be more minus 1.5 than minus 0.5 because the first quarter has been very weak. It started well, but as we entered it, it looks weak," Lakshmi Mittal told Reuters on the sidelines of the company's annual shareholder meeting. He said Chinese steel demand would probably grow by between 2.5 and 3 percent this year. In February, the company had forecast a 3 percent expansion. "It is strong in auto and construction, but recently there has been some credit squeeze and we are seeing some softening of the overall demand," Mittal said.
  • U.S. can pursue case against Bank of America over mortgages. federal judge ruled on Wednesday that the United States can pursue parts of a civil lawsuit against Bank of America Corp over its sale of toxic mortgages to Fannie Mae and Freddie Mac, boosting a largely untested legal theory the government used in the case. 
  • McKesson(MCK) forecasts strong profit growth in fiscal 2014. Drug wholesaler McKesson Corp reported a smaller-than-expected fourth-quarter profit, but forecast strong 2014 adjusted earnings as it expects its technology solutions business and the acquisition of smaller peer PSS World Medical to significantly contribute to growth. 
  • European banking union? Don't hold your breath. In June last year, European Union leaders made a great fanfare of committing to 'banking union', a three-step plan to shore up the region's 8,000 banks and prevent a repeat of the debt and financial crisis. Eleven months on, deep cracks have emerged in the visions member states have of the scheme, with Germany in particular raising doubts about its overall feasibility although both it and France have promised progress by the end of next month.
  • Germany Should Sue ECB, State Minister Hahn Says. Germany should sue ECB at European Court of Justice in Luxembourg because announced bond-buying program violates mandate, Joerg-Uwe Hahn, Free Democrat minister in charge of Europe affairs in state of Hesse says in a guest commentary. ECB bond-buying would constitute monetary state financing and increase inflation risks, Hahn said. ECB has chosen to become a "political actor," Hahn said.
  • EU to Impose Punitive Tariffs on Chinese Solar Panels. European Commission will implement tariffs averaging 456% today, citing people familiar with the matter.

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