Wednesday, November 20, 2013

Today's Headlines

Posted by Gary .....at 3:06 PM
Bloomberg:
  • High-Yield Borrowing Costs Decline to Record Low of 5% in Europe. Borrowing costs for junk-rated companies fell to a record in Europe as investors seek riskier debt amid confidence central banks will keep benchmark rates at all-time lows. The average yield on speculative-grade corporate bonds in euros dropped three basis points this week to 5 percent, Bank of America Merrill Lynch index data show. The cost of insuring the securities against losses fell to the lowest in six years, with the Markit iTraxx Crossover index dropping as much as 5.4 basis points to 332 basis points. The gauge was at 334 basis points at 1:53 p.m. in London. “There’s tremendous demand for higher yielding product,” said Suki Mann, a strategist at Societe Generale SA in London. “With the ECB and Fed in dovish mood, it’s more of the same in the medium term.” Non-financial companies raised a record 65 billion euros ($88 billion) from junk bond sales in Europe this year, up from 31 billion euros over the same period in 2012, according to data compiled by Bloomberg.
  • Chinese Hackers Seen Exploiting Cloud to Spy on U.S. China-based hackers may target Internet-based e-mail, data storage and other services provided overseas by such companies as Microsoft Corp. (MSFT) to spy on the U.S., a congressional commission found. 
  • Europe Stocks Little Changed as Investors Weigh U.S. Data. European stocks were little changed as investors weighed U.S. retail and home-sales (ETSLTOTL) data, as well as comments from people familiar with the debate saying the European Central Bank is considering a smaller-than-normal cut in the deposit rate if officials decide to take it negative. Metro AG climbed 2.4 percent after Barclays Plc upgraded its recommendation on the retailer. Diageo Plc dropped 1.2 percent after Chief Executive Officer Ivan Menezes said uncertainties in the global economy will drag on sales. Alcatel-Lucent slid 3.5 percent after announcing a capital increase. The Stoxx Europe 600 Index climbed 0.1 percent to 322.91 at the close of trading.
  • U.S. 10-Year Yields at Almost 2-Month High on Fed Taper Outlook. Treasury 10-year yields rose to almost the highest level in two months as Federal Reserve officials said they might reduce their $85 billion in monthly bond purchases “in coming months” as the economy improves, minutes of their last meeting show. Benchmark yields rose for a second day as Fed Bank of St. Louis President James Bullard said a cutback in the central bank’s purchase program is “on the table” for the December meeting. Fed Chairman Ben S. Bernanke said yesterday interest rates will probably stay low until long after policy makers end debt purchases. Five percent of investors surveyed are looking next month for a Fed decision to taper, according to the latest Bloomberg Global Poll.
  • Bullard Says Tapering Bond Buying Is ‘On the Table’ Next Month. Federal Reserve Bank of St. Louis President James Bullard, a voter on policy this year who has backed record stimulus, said that a strong jobs report could increase the chance of a reduction in bond purchases next month. “It’s definitely on the table, but it’s going to depend on the data,” Bullard said in a Bloomberg Television interview with Erik Schatzker. “A strong jobs report, I think, would increase the probability some for a December taper.”
  • Taxpayer-Funded Technology Flops Plague U.S. Government. Almost a decade before the Obamacare website’s failed debut, the Air Force began work on a project to replace 240 outdated networks with a single logistics system. After spending about $1 billion, the program led by Computer Sciences Corp. collapsed last year. Senators Carl Levin and John McCain described it as “one of the most egregious examples of mismanagement in recent memory.” The list of federal information-technology lapses and flops includes systems to modernize air-traffic control and to secure the nation’s border, and now even President Barack Obama is wondering why the government can’t get it right. 
  • Wall Street Keeps Swagger in CMBS as Sales Surge: Credit Markets. With almost six weeks to go in 2013, sales of commercial-mortgage bonds are already surpassing Wall Street’s forecasts for the year, defying concern that rising interest rates would stymie new deals. Issuance of the securities is poised to exceed $80 billion, eclipsing the $60 billion that Barclays Plc predicted in January, according to analysts at the bank. Lenders have arranged $65.5 billion of offerings this year and another $14.5 billion is in the works, including a $3.5 billion deal tied to Hilton Worldwide Inc. that will be the largest such offering since before the credit crisis, Bank of America Corp. data show. The average cost to borrow in the CMBS market climbed to as high as 5.38 percent in deals sold earlier this month after dipping to as low as 3.9 percent in June, Bank of America data show. The increase hasn’t discouraged landlords from seeking new loans as had been anticipated, according to Alan Todd, a commercial-mortgage debt analyst at Bank of America in New York. “A lot of borrowers are getting off the sidelines before rates go up again,” he said.
Wall Street Journal:
  • Fed Grappled With Policy Message. Bond Buying Likely to Be Pared 'in Coming Months,' but Low Rates Prove Vexing. Federal Reserve officials still expect to start pulling back on the central bank's $85 billion-a-month bond-buying program "in coming months," but they engaged in a wide-ranging conversation at their October meeting about ways to reinforce their plans to keep short-term interest rates low for a long time after the program ends. Officials "generally expected that the data would prove consistent with the [Fed's] outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months," minutes from the Fed's Oct. 29-30 meeting said. The minutes were released Wednesday after the customary three-week lag. Officials also looked at different scenarios that could differ from their expectations for how the economy or the bond-buying program would evolve. One scenario they considered was if officials decided they needed to roll back the program before it had fully achieved its goals because they perceived its costs had started to outweigh the benefits. Two considerations came up under such a view, according to the minutes. First, the Fed would need to clearly communicate to the public the reasons it was making the decision to pull back, some officials said. Secondly, the Fed may want to find a different way to stimulate the economy. "It might well be appropriate to offset the effects of reduced purchases by undertaking alternative actions to provide accommodation at the same time," the minutes said.
MarketWatch: 
  • Gold futures mark lowest close since mid-July. Prices fall further in electronic trade after the release of Fed meeting minutes. In electronic trading not long after the release of the minutes, prices traded even lower at $1,251.70 an ounce.
CNBC: 
Zero Hedge: 
ValueWalk:
Business Insider: 
New York Times:
  • Dozens Killed in Wave of Attacks in Baghdad. A wave of apparently coordinated bombings hit bakeries and public markets in Baghdad on Wednesday, killing at least 37 people and wounding more than 80, many of them as they rushed to shop during a break in heavy rainstorms, according to the police, residents and medical officials.
Time:
  • ‘You Can Keep Your Doctor’: Obamacare’s Next Broken Promise? Barack Obama’s broken promise that all Americans would be able to keep their health care plans after the implementation of the Affordable Care Act has infuriated people who took the President at his word and rattled even his staunchest supporters. But for the President, the real political pain may only be starting. Come 2014, the rest of the country may learn that another high-profile pledge was untrue. “No matter how we reform health care,” Obama said in 2009, “we will keep this promise: if you like your doctor, you will be able to keep your doctor. Period.” It’s not that simple. In order to participate in health-insurance exchanges, insurers needed to find a way to tamp down the high costs of premiums. As a result, many will narrow their networks, shrinking the range of doctors that are available to patients under their plan, experts say.
Washington Times:
  • Obama’s 37% approval rating approaches Nixon’s second-term average. A new CBS poll puts the President’s sinking approval rating at an abysmal 37%. Only 57% approve of President Obama’s job performance due, in large part, to the bungling of the Affordable Care Act roll out.  For the President, it is a stunning nine-point drop in a one month period.
ABC News:
  • Exclusive: US May Have Let 'Dozens' of Terrorists Into Country As Refugees. (video) Several dozen suspected terrorist bombmakers, including some believed to have targeted American troops, may have mistakenly been allowed to move to the United States as war refugees, according to FBI agents investigating the remnants of roadside bombs recovered from Iraq and Afghanistan.
Euromoney:

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