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Bloomberg:
- Eric Dinallo, former New York state insurance superintendent, said reducing risk-taking by financial firms is more important than restricting executive pay. “The real problem is not around compensation,” Dinallo said today in an interview on Bloomberg Radio in New York. “It is around the regulatory structure that has not been changed in Congress.” Congress must remedy the “mistake” it made in 1999 when it overturned the Glass-Steagall Act, which had separated investment banks from deposit-taking lenders, Dinallo said. “The abrogation of Glass-Steagall was a disaster,” Dinallo said. Banks that are “essentially being subsidized by America and the taxpayers” should be restricted from bets that risk depositors’ funds, Dinallo said. He urged Congress to curb credit-default swaps, which forced New York-based insurer American International Group Inc. to take a government rescue valued at $182.3 billion. “I am shocked that one year after this instrument brought a lot of havoc, it has not been solved yet,” Dinallo said.
- Microsoft Corp.(MSFT), the world’s largest software maker, posted a smaller drop in profit than analysts estimated after slashing costs to make up for falling sales. The stock had its biggest jump in six months on the Nasdaq. Microsoft rose $2.07, or 7.8 percent, to $28.66 on the Nasdaq Stock Market at 10:13 a.m. New York time, after climbing as much as 10 percent, the biggest intraday jump since April 24.
- Citigroup Inc.(C), which has yet to repay $45 billion in federal assistance, has more lobbyists than any other company who registered to try to shape legislation regulating the financial industry, U.S. Senate records show. The New York-based bank, 34 percent-owned by the U.S. government, is listed as a client by 46 of the 1,537 lobbyists who filed with Congress to work on President Barack Obama’s push for rules to limit financial risks and impose stricter consumer protections. They join 44 advocates for the American Bankers Association, 41 for Prudential Financial Inc., and 29 for Goldman Sachs Group Inc.(GS) Altogether, lobbyists for companies, business organizations and financial industry groups outnumber, by 25 to 1, the 58 who registered to represent consumer groups, unions and other proponents of tougher regulations.
- New Jersey taxpayers are sending almost $1 million a month to a partnership run by Goldman Sachs Group Inc.(GS) for protection against rising interest costs on bonds that the state redeemed more than a year ago. The most-densely populated U.S. state is making the payments under an agreement made during the administration of former Governor James E. McGreevey in 2003, when New Jersey’s Transportation Trust Fund Authority sold $345 million in auction-rate bonds whose yields fluctuated with short-term interest costs. The agency finances road and rail projects. “This vividly shows the risk of entering into interest- rate swap agreements,” said Christopher Taylor, former executive director of the Municipal Securities Rulemaking Board in Alexandria, Virginia. “The world’s got to see what stupidity even the sophisticated investors like the transportation fund can get into.”
- Sales of existing U.S. homes climbed in September to the highest level in more than two years as homebuyers rushed to take advantage of a tax credit before it runs out. Purchases jumped 9.4 percent to a 5.57 million annual rate, more than forecast and following a 5.09 rate in August, the National Association of Realtors said today in Washington. The median price fell at the slowest pace in a year as the number of houses on the market shrank. The $8,000 credit for first-time buyers, due to expire Nov. 30, has probably pulled sales and construction forward, signaling housing may cool in coming months. While Congress is considering extending the incentive, lower prices and mortgage rates have also contributed to steadying a market that endured the worst slump since the Great Depression. “The rush to take advantage of the tax credit is obviously pushing up sales,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto, who forecast sales would rise to a 5.5 million pace. “Although this is going to be temporary, it does absorb some excess supply and helps bring the market into balance going forward.” Purchases of existing homes were up 9.2 percent compared with a year earlier. The median price fell to $174,900, down 8.5 percent from a year ago. It was the smallest decrease in 13 months. The number of previously owned homes on the market dropped 7.5 percent to 3.63 million in September. At the current sales pace, it would take 7.8 months to sell those houses, the lowest level since March 2007. A seven months’ supply is usually consistent with stabilization in prices, NAR chief economist Lawrence Yun said in recent months.
- General Motors Co.(GM) will boost total pay for Chief Executive Officer Fritz Henderson under guidelines for recipients of U.S. bailout funds to $5.45 million, a 400% increase, a person familiar with the plan said. “Most people wouldn’t consider it a raise,” said Julie Gibson, a GM spokeswoman. “They brought the salary down some and increased the reliance on long-term stock.” The rules are part of the Obama administration’s effort to curb cash pay and match compensation to performance at GM, Chrysler Group LLC and five financial companies that got aid from the Troubled Asset Relief Program. Henderson, 50, led GM through a bankruptcy backed by $50 billion from taxpayers.
- Copper imports by China, the biggest consumer, may drop as much as 46 percent next year as higher prices increase scrap metal supplies and curb demand growth, said a senior executive at Pan Pacific Copper Co. Declining overseas purchases may curb a climb in copper prices driven by China’s economic expansion and government stockpiling. The nation may be preparing to reduce monetary stimulus after an 8.9 percent economic expansion in the third quarter from a year earlier, boosted by a 4 trillion yuan ($586 billion) package and record lending growth. “This year China has bought copper and other commodities from overseas well beyond its actual needs,” Kazuhiko Saito, chief analyst at Tokyo-based commodity broker Fujitomi Co., said today by phone. “If the country returns to a normal import growth pace, we will see a technical correction in copper as well as other commodities.”
Wall Street Journal:
- Lacking the votes for a strong public health insurance option, House Democratic leaders are shifting their focus to alternatives preferred by moderate Democratic lawmakers. House leaders spent the last week trying to round up votes for a robust public option, tied to Medicare rates, that is preferred by liberal members of their caucus. In a Friday news conference, they said the robust public option hasn't been ruled out but added what form the public option takes isn't as important as the fact that there is a public option in the bill. "At the end of the day, we will have a public option in our legislation to keep the insurance companies honest and to provide real competition," said House Speaker Nancy Pelosi (D., Calif.). Ms. Pelosi said there is "no philosophical difference" between the robust public option and other versions. She said it is less important now for the House to include a strong public option, than it was several weeks ago when it looked like a Senate health bill might omit the public option all together.
CNBC:
Washington Times:
- When software firm MobilVox wanted to break into the lucrative world of defense contracting, it pursued an unmistakable strategy: It expanded operations from its Northern Virginia base in Rep. James P. Moran's congressional district to the southwestern Pennsylvania district of Rep. John P. Murtha. Working with two of the most powerful members of a House subcommittee that controls Pentagon spending, the company also hired lobbying firms that employed former top aides of both the Democratic lawmakers and Mr. Murtha's brother. Company executives and their lobbyists donated thousands of dollars to the two congressmen. Soon, money flowed the other way. Between 2003 and 2009, Mr. Murtha and Mr. Moran helped deliver $12 million to MobilVox in earmarks - money that is set aside by lawmakers for pet projects in the government's annual spending bills. The latest House defense spending bill introduced and pushed through by Mr. Murtha includes an additional $2 million earmark for MobilVox requested by Mr. Moran. The bill is currently pending in conference committee.
- The White House has told Congress it will reject calls for many of President Obama's policy czars to testify before Congress - a decision senators said goes against the president's promises of transparency and openness and treads on Congress' constitutional mandate to investigate the administration's actions. "I think Congress should be able to call the president's climate czar, Carol Browner, the energy and environment czar, to ask her about the negotiations she conducted with the automobile industry that led to very significant policy changes with regard to emissions standards," Miss Collins said at a hearing Thursday that examined the proliferation of czars. The debate goes to the heart of weighty constitutional issues about separation of powers. The president argues that he should be allowed to have advisers who are free to give him confidential advice without having to fear being called to testify about it. Democrats and Republicans in Congress, though, argue that those in office who actually craft policy should be able to be summoned to testify because they do more than just give the president advice. At issue are the 18 positions Miss Collins says Mr. Obama has created since he took office. Of those, she says 10 - the White House says eight - are in the executive office and not subject to Freedom of Information Act requests or requests for testimony.
Rassmussen:
- For the first time in recent years, voters trust Republicans more than Democrats on all 10 key electoral issues regularly tracked by Rasmussen Reports. The GOP holds double-digit advantages on five of them. Republicans have nearly doubled their lead over Democrats on economic issues to 49% to 35%, after leading by eight points in September. The GOP also holds a 54% to 31% advantage on national security issues and a 50% to 31% lead on the handling of the war in Iraq. But voters are less sure which party they trust more to handle government ethics and corruption, an issue that passed the economy in voter importance last month. Thirty-three percent (33%) trust Republicans more while 29% have more confidence in Democrats.
Politico:
- A White House effort to undermine conservative critics is generating a backlash on Capitol Hill — and not just from Republicans. “It’s a mistake,” said Rep. Jason Altmire, a moderate Democrat from western Pennsylvania. “I think it’s beneath the White House to get into a tit for tat with news organizations.” Altmire was talking about the Obama administration’s efforts to undercut Fox News. But he said his remarks applied just the same to White House efforts to marginalize the U.S. Chamber of Commerce, a powerful business lobby targeted for its opposition to climate change legislation. “There’s no reason to gratuitously piss off all those companies,” added another Democrat, Rep. Jim Moran of Virginia. “The Chamber isn’t an opponent.” POLITICO reported earlier this week on an all-fronts push by the White House to cut the legs out from under its toughest critics, whether it’s the Chamber, radio talk show host Rush Limbaugh or Glenn Beck and the rest of the Fox News operation. White House Communications Director Anita Dunn has defended the push, saying the administration made “a fundamental decision that we needed to be more aggressive in both protecting our position and in delineating our differences with those who were attacking us.” Congressional Republicans counterattacked Thursday. House Minority Leader John Boehner (R-Ohio) said the administration was “targeting those who don’t immediately fall in line” with “Chicago-style politics” aimed at “shutting the American people out and demonizing their opponents.” Boehner’s No. 2, Minority Whip Eric Cantor (R-Va.) complained that the nation’s problems are growing while the White House “bickers with a cable news network.”
AP:
- President Barack Obama's push to curtail Iran's nuclear program was set back Friday when Iranian leaders failed to accept a proposal to ship most of their uranium abroad for enrichment. The U.S., along with Russia and France, officially endorsed the plan Friday. But Iranian state television reported that Tehran wants to buy the nuclear fuel it needs for a reactor, rather than comply with the proposal to ship uranium to Russia to be enriched for fuel. The White House said Obama is waiting to hear from Mohamed ElBaradei, the head of United Nations nuclear watchdog, before responding.
Reuters:
- Russia plans to sell as much as 50 metric tons of gold this year.
Financial Times:
- When the Federal Reserve cut interest rates to virtually zero in December last year, it told the market it expected to keep them there for quite a while. The message was in a key line in the Fed statement that said “weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time”. The idea was to give additional stimulus by lowering market expectations of the future path of interest rates. In March, the Fed went a step further and said the committee “anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period”. Ever since, the US central bank has stuck with the “extended period” phrase – indicating policymakers see little likelihood that interest rates will rise over a time frame that has never been defined, but some see as at least six months. But now senior officials are starting to mull changing the statement in a way that would soften this guidance. That would be a natural step in the slow glide- path towards eventual policy normalization. Importantly, however, it would also give the central bank greater flexibility to respond to inflation risks if they escalate in a way the Fed does not expect but cannot rule out.
- The European Central Bank is only the latest body to criticize proposed European regulation of alternative assets, such as hedge funds and private equity. But compared to other voices, such as the UK’s financial regulator or current EU president Sweden, the ECB is an impartial arbiter amid the squabbles. The UK, worried about the rules’ impact on its position as King of European finance, opposes them. France, which seeks the crown, supports them. The ECB looks further afield. It knows that rules need to be globally harmonized to avoid regulatory arbitrage. It also recognizes that “shadow banks” are a key source of credit when normal banks cannot or will not lend. The European Commission itself now admits the proposal need to be redrafted. Hedge funds have Frankfurt to thank for that.
CTV:
Kyodo News:
- The Bank of Japan is likely to project that the Japanese economy will fall into a three-year period of deflation through fiscal 2011 in its upcoming report, fueling speculation that the central bank will maintain its ultra-easy monetary policy for the time being, sources close to the matter said Friday.
Style Underperformer:
Small-Cap Value (-2.25%)
Sector Underperformers:
Road & Rail (-4.80%), Oil Tankers (-3.09%) and I-Banks (-2.84%)
Stocks Falling on Unusual Volume:
CA, BKS, KNOL, CETV, GMXR, IBKR, WOOF, MPWR, CYBS, SPWRB, COLM, RVBD, BRCM, SCSC, BIIB, CHBT, OMCL and NTCT
Stocks With Unusual Put Option Activity:
1) BIIB 2) ESV 3) TXT 4) FNM 5) RDN
Style Outperformer:
Large-Cap Growth (-.31%)
Sector Outperformers:
Software (+2.54%), Retail (+.76%) and Internet (+.62%)
Stocks Rising on Unusual Volume:
AMZN, EPAY, MSFT, NILE, WHR, TNE, KNOL, SNP, ALGN, NFLX, HWAY, BUCY, POWI, DECK, RNOW, CISG, SYNA, TROW, CAKE, ITRI, RBCN, HITT, GIFI, GSIC and CSGP
Stocks With Unusual Call Option Activity:
1) LO 2) TER 3) TIVO 4) NFLX 5) AMZN