Bloomberg:
- U.S. Considering China Yuan Probe, Locke Letter Says. The U.S. is considering investigating charges from U.S. businesses that the undervalued Chinese currency is an illegal trade subsidy, Reuters reported, citing a letter from U.S. Commerce Secretary Gary Locke.
- The Baltic Dry Index, a measure of commodity shipping costs, declined for a fifth session in London as grain shipments weakened and the market reacted to a drop in freight derivative contracts yesterday. The index fell 2.7% to 3,933 points, according to the Baltic Exchange. The largest decline was for iron ore-carrying capesizes and charter rates for all vessel sizes tracked by the exchange fell. Forward freight agreements, contracts to bet on, or hedge, future charter costs for capesizes, fell 3% to $50,906 a day yesterday for April-to-June. Actual charter rates for the ships fell 4.1% to $56,912, it said today. Demand for smaller carriers may be falling because of reduced grain shipments from South America, Jeffrey Landsberg, president of Commodore Research, said by phone from NY.
- OPEC is set to reduce shipments this month as demand from Europe and the US remains weak, according to tanker-tracker Oil Movements. OPEC will ship 23.47 million barrels a day in the four weeks to June 19, the consultant said. That's down from a revised figure of 23.6 million in the four weeks to June 5. "The indications are that growth is certainly not strong in the West and temporarily not that strong in the East," Oil Movements founder Roy Mason said.
- EU's Barroso Says 'Hungary Is in a Very Delicate Situation'. European Commission President Jose Barroso warned Hungary against easing up on efforts to cut the budget deficit. “Our message to Hungary and to other countries is that they should accelerate their fiscal consolidation and not to relax consolidation,” Barroso told reporters in Brussels today after meeting Hungarian Prime Minister Viktor Orban. “Hungary is in a very delicate situation, let’s put it clear. No complacency.”
- Copper Falls Most in a Week on Concern China Demand to Dwindle. Copper prices fell the most in a week on concern that demand for the metal will decline in China, the world’s biggest consumer. Freeport-McMoRan Copper & Gold Inc. and Codelco, the world’s largest producers, said China’s plans to curb its economy threaten to reduce demand. Copper prices are down 20 percent from a 20-month high in April as China acted to cool its property market and Europe struggled with fiscal woes. “China is the biggest user, so any concerns about demand there will continue to be a drag on copper,” said Donald Selkin, the chief market strategist at National Securities Corp. in New York. “People are more concerned about what’s happening overseas in Asia and Europe than with what’s going in the U.S.” Copper futures for July delivery fell 9.4 cents, or 3.1 percent, to $2.9465 a pound on the Comex in New York, the biggest drop for a most-active contract since May 25.
- Lockhart Says Rates May Rise With Unemployment High.
- U.S. States Plan More Spending Restraint Amid Curtailed Revenue. U.S. states reduced spending for a second consecutive year as the worst U.S. recession since the 1930s cut tax revenue, a survey by two associations found. Governors may struggle to raise spending in fiscal 2011, which begins July 1 for 46 states, as they close deficits without the aid of federal stimulus money that runs out this year, the report by the National Governors Association and National Association of State Budget Officers said.
- North Korea Says War With South Korea Could Begin 'Any Moment'.
- Offshore Drilling Applications Must Be Resubmitted, U.S. Says. Oil and gas producers seeking permission to drill in Gulf of Mexico waters less than 500 feet deep must resubmit plans to comply with new safety and environmental requirements, the U.S. Interior Department said. The Obama administration is “pulling back” exploration plans and requiring updated information to “ensure that new safety standards and risk considerations are incorporated,” said Bob Abbey, acting director of the Minerals Management Service, in a statement.
- Congress Prepares Bill to Remove BP Liability Limit.
Wall Street Journal:
- Fiorina Pivots to Challenge Boxer in California. Front-Runner in Republican Primary Is Already Looking Toward November; Incumbent Senator Boosts Fund-Raising Goal.
- EU Tells Italy to Raise Retirement Age for Women.
- Knight Capital Group Inc. CEO Thomas Joyce said about 40,000 trades were adjusted on May 6 "because the prices were wrong" after the DJIA temporarily plunged almost 1,000 points.
- $239,000 Conductor Among M.T.A.'s 8,000 Six-Figure Workers. In an era of generous municipal salaries and union-friendly overtime rules, it may not come as a complete shock that there are thousands of employees — 8,074, to be precise — who made $100,000 or more last year.
- Equipment Maker Searches For Profit in the Mind of the Gambler. As gambling receipts in Las Vegas and other casino venues have fallen, operators have cut back on their purchases of new gaming machines. But even as they have, WMS Technologies (WMS) has been beefing up sales and gaining market share.
- Federal Debt Tops $13 Trillion Mark. The federal government is now $13 trillion in the red, the Treasury Department reported Wednesday, marking the first time the government has sunk that far into debt and putting a sharp point on the spending debate on Capitol Hill. Calculated down to the exact penny, the debt totaled $13,050,826,460,886.97 as of Tuesday, leaping nearly $60 billion since Friday, the previous day for which figures were released. At $13 trillion, that figure has risen by $2.4 trillion in about 500 days since President Obama took office, or an average of $4.9 billion a day. That's almost three times the daily average of $1.7 billion under the previous administration, and led Republicans on Wednesday to place blame squarely at the feet of Mr. Obama and his fellow Democrats.
Washington Examiner:
- Mexico Opens California Office to Provide ID for Illegals. The Mexican government is opening a satellite consular office on Catalina Island -- a small resort off the California coast with a history of drug smuggling and human trafficking -- to provide the island's illegal Mexican immigrants with identification cards, The Washington Examiner has learned. The Mexican consular office in Los Angeles issued a flier, a copy of which was obtained by The Examiner, listing the Catalina Island Country Club as the location of its satellite office. It invites Mexicans to visit the office to obtain the identification, called matricular cards, by appointment. Rep. Dana Rohrabacher, a Republican whose district includes Catalina Island, said handing out matricular cards will exacerbate an already dangerous situation. "Handing out matricular cards to Mexicans who are not in this country legally is wrong no matter where it's done," he said. "But on Catalina it will do more damage. It's a small island but there's evidence it's being used as a portal for illegals to access mainland California." Rohrabacher added, "If there were a large number of Americans illegally in Mexico and the U.S. consulate was making it easier for them to stay, Mexico would never permit it." The matricular consular identification card, is issued by the Mexican government to Mexican nationals residing outside the country, regardless of immigration status. The purpose is to provide identification for opening bank accounts and obtaining other services. But the cards are usually used to skirt U.S. immigration laws, since Mexicans in the country legally have documents proving that status, Immigration and Customs Enforcement officials said.
- Mass. Home Deals Slip in May. In the first sign that home sales have suffered since the expiration of the $8,000 tax credit, pending sales were off in May for the first time in 10 months, according to the Massachusetts Association of Realtors. “It’s payback,” said Gus Faucher of Economy.com. “You’re seeing a temporary weakness in sales thanks to the expired tax credit, because people who would have bought in summer got pushed up to meet the deadline.” The number of single-family homes put under agreement last month slipped 3 percent to 4,663, compared to a year ago. Condominiums put under agreement in May fell by 6 percent to 1,894.
- Computer Simulates Gulf Oil Flow into Atlantic(video). Scientists at the National Center for Atmospheric Research (NCAR) have conducted computer simulations to suggest how oil from the BP Deepwater Horizon blowout in the Gulf of Mexico might flow into the Atlantic Ocean in the coming weeks. As has been suggested before, the researchers concluded that once the oil is swept up in the Gulf's fast-moving Loop Current, it will move quickly beyond the Gulf, in to the Gulf Stream, up the East Coast to Cape Hatteras, and from there far out into the Atlantic.
- US May Send Aircraft Carrier to Korea. The United States is considering dispatching the massive aircraft carrier USS George Washington to the waters where North Korea allegedly sank a South Korean warship, defense officials said Wednesday. The deployment of the nuclear-powered carrier, one of the world's largest warships, would represent a major show of force by the U.S., which has vowed to protect South Korea and is seeking to blunt aggression from North Korea.
- White House Admits Effort to Avoid Primary. The White House acknowledged having made overtures to Colorado Senate candidate Andrew Romanoff about a possible administration appointment Thursday, the morning after the former state legislator said White House deputy chief of staff Jim Messina offered to consider Romanoff for three posts as an alternative to his Senate campaign.
Huffington Post:
- Summers Hears From Unions On Wall Street Reform. The White House is confident that a strong Wall Street reform package will emerge from conference committee negotiations between the House and Senate, senior administration officials told unions and consumer groups at a high-level meeting in the Old Executive Office Building Wednesday. Senior economic adviser Larry Summers; his deputy, Diana Farrell; and Eric Stein, Treasury's deputy secretary for consumer protection, met with the AFL-CIO, SEIU, consumer groups and other progressive organizations to update them on the status of negotiations and hear out remaining concerns.
Financial Times:
- CFTC Chief Presses for Derivatives Transparency. Gary Gensler, chairman of the Commodity Futures Trading Commission, said on Thursday that moves by the derivatives industry to provide increased information about trades to regulators were “not enough”. Mr Gensler, who has emerged as a strong critic of the banks that dominate derivatives markets, said there needed to be more. “Bringing transparency to the regulators, however, is not enough,” he said at a conference organised by Sandler O’Neill. “We must also bring transparency to the public.” He said the OTC derivatives must become similar in transparency to the futures and securities markets. “The more transparent a marketplace, the more liquid it is and the more competitive it is and the lower the costs for hedgers, borrowers and, ultimately, their customers,” he said in prepared remarks. Mr Gensler said when Wall Street dealers enter into derivatives transactions with their customers, they benefit from knowing how much their last customer paid for the same deal, but such information is not publicly available. “They benefit from internalising this information,” he said. “The buyer and seller never meet in a centralised market. The lack of transparency enables Wall Street to profit from wider spreads between bids and offers.” “Transparency narrows bid-ask spreads and benefits the users of derivatives contracts,” Mr Gensler said. “That may be why some of the major Wall Street firms have been opposed to a trading requirement.” He added: “They have estimated that if the derivatives reform becomes law, they could lose billions in revenue – billions that their customers could save by getting better pricing on their derivatives transactions.” Mr Gensler also focused on the exemption clause from clearing when banks transact swaps with their end-user customers - one of the key items that will be debated as the financial reform legislation enters its next phase. “We should ensure that this exemption is not so broad that it includes transactions between two financial entities,” he said, noting data from the Bank of International Settlements which shows just 8 per cent, or $35,607bn, of interest rate swaps transactions were between non-financial entities and dealers. "As long as financial entities remain interconnected through their derivatives, one entity’s failure could mean a run on another financial entity and a difficult decision for a future Treasury secretary,” said Mr Gensler. “Every exemption for financial companies creates a link in the chain between a dealer’s failure and a taxpayer bailout.”
- The Gamblers Betting on Britain Going Bust. Hedge funds are wagering billions on the UK defaulting, says Edmund Conway. A small band of hedge funds is now building up a series of sizeable bets on Britain defaulting. In the past few weeks, they have placed more than $3 billion worth of bets on that precise outcome in the credit default swap market. History – three centuries without default – suggests that they will be proved wrong. But these are unprecedented times. Had Britain joined the euro, it would certainly have shared Greece's fate, and would have been too big to be bailed out. Avoiding euro membership, however, will not guarantee that Britain avoids default. We cannot afford to be smug for ever.
- German Finance Minister Wolfgang Schaeuble has proposed increasing the so-called solidarity tax from 5.5% to 8%.
- There is a risk that the euro zone financial crisis could spread to the UK and the US unless Europe moves to normalize its banking system, Bank of England Monetary Policy Committee Member Adam Posen said. Banks in the euro zone need to become healthier, he said.