Style Underperformer:
- Mid-Cap Value (-.52%)
- 1) Coal -3.24% 2) Airlines -2.40% 3) Oil Service -1.65%
- BEXP, BMA, LFC, DGIT, CAAS, ISLN, CAGC, MELI and BWS
- 1) CDNS 2) CASY 3) PCX 4) CX 5) MAR
- 1) AEO 2) XEL 3) BKC 4) DKS 5) RIG
Wednesday, August 25, 2010
Bear Radar
Style Underperformer:
Bull Radar
Style Outperformer:
- Small-Cap Growth (-.01%)
- 1) Education +2.23% 2) HMOs +1.85% 3) Gold +1.04%
- SLW, KRC, SSRI, UNH, HNT, HD, LOW, MMR, LNC, VIP, GDP, OSIS, VECO, ISRG, GTLS, OPEN, VLTR, QSII, VPRT, NETL, PAAS, COST, ADVS, OSTK, PAY, OB and MMR
- 1) BZH 2) TER 3) DHI 4) VPRT 5) UNH
- 1) TGT 2) AMZN 3) AAPL 4) WMT 5) GOOG
Wednesday Watch
Evening Headlines
Bloomberg:
- Ireland Long-Term Sovereign Credit Rating Cut by S&P. Ireland’s long-term sovereign credit rating was cut one step to AA- from AA by Standard & Poor’s, which cited the projected cost of supporting the nation’s financial sector. “The negative outlook reflects our view that a further downgrade is possible if the fiscal cost of supporting the banking sector rises further, or if other adverse economic developments weaken the government’s ability to meet its medium- term fiscal objectives,” S&P said today in a statement. S&P said its new projections suggest that Ireland’s net general government debt will rise toward 113 percent of gross domestic product in 2012. That’s more than 1.5 times the median for the average of euro zone sovereign nations, and “well above” the debt burdens the New York-based firm said it projects for similarly rated countries in the region such as Belgium at 98 percent and Spain at 65 percent.
- Debt Rally Cracking as Swaps Soar, Yield Spreads Flatline: Credit Markets. The rally that drove corporate bond prices to the highest in six years is showing signs of strain as worsening economic data rattle investor confidence that the U.S. can avoid relapsing into recession. A benchmark gauge of U.S. corporate credit risk for companies ranging from Alcoa Inc. to Wal-Mart Stores Inc. has climbed for four days, reaching the highest in more than five weeks.“It’s inevitable that we fall into a double-dip recession,” said Komal Sri-Kumar, who helps manage $118 billion as chief global strategist at TCW Group Inc. in Los Angeles. “The employment situation went into a double-dip; housing is going into a double-dip as we see from today’s numbers; and now the next stage is the overall economy will go into a double- dip.” The Markit CDX North America Investment Grade Index, tied to the debt of 125 U.S. and Canadian companies, rose 3.6 basis points to a mid-price of 113 basis points as of 6:22 p.m. in New York, the highest since July 16. The extra yield investors demand to own U.S. investment-grade corporate bonds instead of Treasuries with similar maturities has climbed 2 basis points since July 30 to 190 basis points, after falling to as low as 186 on Aug. 9, according to Bank of America Merrill Lynch index data. Leveraged loan prices fell for the third straight day to a four-week low. The S&P/LSTA U.S. Leveraged Loan 100 Index declined 0.1 cent to 89.44 cents on the dollar. The price has dropped from 89.88 cents on Aug. 9. In emerging markets, spreads widened 16 basis points, the most since June 4, to 283 basis points, according to JPMorgan Chase & Co.’s Emerging Market Bond index. Credit-default swap indexes are signaling caution even with bond sales on pace for the busiest August since 2007, following record July sales, Bloomberg data show.
- Lack of Jobs, Foreclosures May Keep Housing in U.S. Depressed.
- BOJ May Hold Emergency Meeting to Discuss Easing Policy, Nikkei Reports. The Bank of Japan may take more steps to loosen monetary policy such as increasing liquidity and reducing interest rates because the yen has reach a 15-year- high, Nikkei English News reported, without saying where it obtained the information. The BOJ policy board may meet sooner then the next meeting planned for Sept. 6-7, Nikkei said.
- Greentown China Cuts 2010 New Housing Starts Target, Oriental Post Reports. Greentown China Holdings Ltd. has cut its target for new housing starts this year to 9.6 million square meters from an earlier target of 11 million square meters, the Oriental Morning Post reported today, citing Chief Executive Officer Shou Bainian. It also “may be difficult” for the company to achieve its 67 billion yuan contract sales target for this year, the Shanghai-based newspaper reported, citing Shou. China’s central government is unlikely to ease property control measures in the second half and more measures may be introduced for some cities, Shou was cited as saying.
- Irish, Portuguese and Greek bonds are trading close to distressed values seen before the European Union and International Monetary Fund announced a $945 billion bailout package to safeguard monetary union. The premium investors demand to hold Irish 10-year government rather than benchmark German bunds has soared past the record set the day before the rescue package was unveiled. "Anyone contemplating selling any of their bund holdings should beware, because the peripherals story is back," said Andrew Roberts, head of European interest-rate strategy at Royal Bank of Scotland Plc in London. "It had a little holiday after the stress-tests nirvana allowed everyone a false sense of security, and now we're back to reality."
- Retiree Ponzi Scheme $16 Trillion Short: Laurence Kotlikoff. Social Security just celebrated its 75th birthday. Love it or hate it, it has done its job and should retire. We need a new system, the Personal Security System, which retains Social Security’s best features, scraps the rest, and covers its costs. Social Security’s objective -- forcing people to save for retirement -- is legit. Otherwise millions of us would seek handouts in our old age. But Social Security has also played a central role in the massive, six-decade Ponzi scheme known as U.S. fiscal policy, which transfers ever-larger sums from the young to the old. In so doing, Uncle Sam has assured successive young contributors that they would have their turn, in retirement, to get back much more than they put in. But all chain letters end, and the U.S.’s is now collapsing. The letter’s last purchasers -- today’s and tomorrow’s youngsters -- face enormous increases in taxes and cuts in benefits. This fiscal child abuse, which will turn the American dream into a nightmare, is best summarized by the $202 trillion fiscal gap discussed in my last column. The gap is the present value difference between future federal spending and revenue. Closing this gap via taxes requires doubling every tax we pay, starting now.
- Drillers May Face Months of Waiting Even After Obama Lifts Deep-Water Ban. President Barack Obama’s administration may agree to an early end for its moratorium on deep-water oil and gas drilling while backing new regulations that may keep rigs idle for months afterward.
- Putting the Brakes on ObamaCare. How a Republican Congress could begin the process of repealing this unpopular law. If Republicans take control of one or both houses of Congress this fall, many will have been elected with a promise to "repeal and replace" ObamaCare. But what are their options, really? There likely will be an initial showdown, but President Obama will surely veto any challenge to the law, and it would be hard to imagine mustering the votes to overturn it. Information is the key weapon. Republicans can use congressional hearings to explain what ObamaCare is doing to the economy and the health sector. Their strongest cases would be built around jobs, the cost of health care, and the rising deficit. If evidence shows that looming mandates on employers are crippling job-creation, they should be repealed. If health costs are rising, as they inevitably will be, Congress needs to hold hearings to investigate the causes and explain why the offending taxes and regulations must be repealed. Here are six key strategies that a Republican Congress could employ to put on the brakes:
- BHP Hopes to Thwart Potash Defense. Anglo-Australian miner BHP Billiton Ltd. is likely to ask Canadian regulators to strike down a poison pill that Potash Corp. of Saskatchewan Inc. put in place to stave off BHP's $38.6 billion hostile bid, people familiar with the process said Tuesday.
- U.S. Weighs Expanded Strikes in Yemen. U.S. officials believe al Qaeda in Yemen is now collaborating more closely with allies in Pakistan and Somalia to plot attacks against the U.S., spurring the prospect that the administration will mount a more intense targeted killing program in Yemen.
- Commercial Property Owners Choose to Default. Like homeowners walking away from mortgaged houses that plummeted in value, some of the largest commercial-property owners are defaulting on debts and surrendering buildings worth less than their loans.
- Costco(COST) Targets Mall Space to Expand Reach. Costco Wholesale Corp. is taking on the role of mall anchor, moving into spaces once occupied by department stores that for decades reigned as the retail centers' big draws. The largest U.S. wholesale-style retailer plans to speed up steps that will in essence put its mini-mall type stores into shopping centers, its co-founder and chairman, Jeff Brotman, saidin an interview.
- McCain, Brewer Win Re-Nomination in Arizona. In Florida, Meek, Scott Win Races.
- Big Unions to Pool Money for Fall Elections. The leaders of the AFL-CIO and the Service Employees International Union have agreed to coordinate spending millions of dollars in the midterm elections to support pro-union candidates, most of them Democrats.The two labor organizations say they have a combined $88 million or more to deploy in this year's election cycle.
- Commodities Fall to Six-Week Low on Concern Recovery is Slowing. Commodities fell to a six-week low as figures showing weaker-than-expected U.S. home sales fanned concern that the global economic rebound is slowing. The S&P GSCI Spot Index of 24 raw materials slid as much as 1.9 percent to the lowest level since July 13. Crude oil declined to a seven-week low, coffee tumbled the most in more than two years, corn had its greatest drop in five weeks, and copper slipped to the lowest price this month.
- Economy Like a 'Drunk That Keeps Drinking': Langone. The struggling U.S. economy, held up by "artificial" stimulus, is not unlike a "drunk that keeps drinking," Ken Langone, former director of the New York Stock Exchange and co-founder of Fieldpoint Private Bank and Trust told CNBC Tuesday. "We have not begun to take the cure," Langone said. "We should have taken the cure a couple years ago...we've prolonged it by the stimulus packages." Langone also dismissed growing worries that the United States will slide into a second recession—chiefly because the banker doesn't believe the U.S. economy ever really recovered. "It's not a double-dip—we never came out of it," Langone said. "We were artificially propped up." "We've got a lot of problems to address and the sooner we get started...the better we're gonna be," he added.
- Cramer: No Rally Until Obama Steps Up. The markets will continue to push lower until leadership steps forward to inspire confidence that things will get better, Cramer said Tuesday. Until President Obama renews our faith in stocks, no rally will be sustainable. “With the right push from the president of the United States, virtually all the negatives we're fretting about today could partially be fixed,” said Cramer. “The president has enough firepower to blast aside the obstacles standing in the way of higher stock prices ... and a stronger economy. We just don't know if he has the will or the inclination.”
- FedEx(FDX) Sues NY Attorney General Cuomo Over Probe. FedEx sued New York Attorney General Andrew Cuomo Tuesday seeking to stop an investigation of the company, arguing that his office had exceeded its authority.
- The Latest Bill Gross Letter Was His Most Blatantly Self-Serving One Ever. PIMCO boss Bill Gross published his September letter today -- a defense of his call to completely nationalize housing finance in America. And though we wrote about the letter earlier, we definitely did not go far enough in pointing out how scandalously self-serving it was.
- Small Business CEOs Reveal Why They're Not Hiring: Economic Contraction, Obama, And Healthcare.
- Bell Council Members Were Paid Thousands for Sitting on Boards That Rarely Met. Bell council members earned tens of thousands of dollars over the last four years as members of city commissions that rarely met, records reviewed by The Times show.
- Illinois Teachers' Retirement System Selling Off $3 Billion to Cover Benefits.
Illinois Teachers' Retirement System, Springfield, plans to sell $3 billion in investments, or about 10% of its $33.1 billion in assets, in the current fiscal year to pay pension benefits, according to Dave Urbanek, public information officer. The system is the fifth Illinois statewide defined benefit plan to sell off investments this fiscal year to pay benefits.
- 79% Trust Their Doctor. A new Rasmussen Reports national telephone survey finds that an overwhelming majority (79%) of Americans say they trust their doctor. Just eight percent (8%) do not, and 12% more are not sure. Doctors enjoy a high level of trust across all demographic categories. Perhaps not surprisingly, trust is even higher among those age 50 and older.
- US Manufacturers Warn About CFTC Swaps Rules Costs. U.S. manufacturers are concerned that new regulations aimed at curbing risky trading of swaps by banks and other financial companies could sap the resources of the manufacturing sector as it tries to recover from recession. Regulators' definition of "major swaps participant" -- a key part of the new Wall Street reform law -- could pose risk for the members of the National Association of Manufacturers, the trade association said in a letter to the Commodity Futures Trading Commission. "With the U.S. economy still in recovery mode, it is critical that any new regulations on derivatives not inadvertently harm economic growth," said Dorothy Coleman, vice president of the group, whose members include heavyweights like Dow Chemical (DOW.N), Caterpillar (CAT.N) and General Electric (GE.N).
- Short Interest Steady in Mid-August. Short interest on the NYSE and the Nasdaq was little changed in the first half of August, the exchanges said on Tuesday, as trading volumes remained light and investors stayed on the sidelines. The small change came even as the S&P 500 index saw significant volatility and negative sentiment among inventors increased after data pointed to a slowdown in the economy."I'm surprised the numbers aren't really high. I thought they would've spiked considering the individual investor is so negative on this market," said Keith Springer, president of Capital Financial Advisory Services in Sacramento, California. As of August 13, short interest on the NYSE rose 0.4 percent to about 13.75 billion shares, compared with a revised 13.69 billion shares as of July 30. The short interest on August 13 was equal to 3.60 percent of the total shares outstanding. Over the same time period on Nasdaq, short interest fell 1.6 percent to about 7.22 billion shares, compared with 7.34 billion in the previous period. The average number of days it would take to cover the outstanding short positions was 3.54, up from 3.37 in the previous period.
- Plan to Raise Cash for US School Reforms. The Obama administration will ask Congress for another $700-800m next year so it can continue its Race to the Top education reform scheme, says Arne Duncan, the US education secretary. The scheme, which saw another 10 reforming states receive $3.4bn in funding on Tuesday, has proven wildly popular as many states face budget crises.
- Rio Tinto(RTP) Will Not Counterbid for Potash(POT). Rio Tinto is not planning to make a counterbid for PotashCorp, sources close to the company have said.
- Market Says 25% Change of Ireland Debt Default. INSURANCE against Ireland defaulting on its €85.32 billion national debt has soared on fears the cost of rescuing Anglo Irish Bank will rise, indicating the market believes there is a one-in-four chance of a default. The rising cost of Ireland’s pledge to support its biggest banks has made the nation’s debt riskier than that of Iceland, whose financial system collapsed in 2008. Credit-default swaps on Irish government debt have surged nearly 200 basis points since March, to a record 319 basis points yesterday, according to data provider CMA. That implies a 22.4% probability Ireland will default within five years, compared with a 21.9% likelihood of Iceland failing to meet its commitments. Investors are concerned the cost of rescuing Anglo Irish Bank will exceed the maximum €25bn forecast by the Central Bank, which is equivalent to 15% of the nation’s annual gross domestic product and 75% of its tax take. "When you can’t put a cap on liabilities, market confidence is obviously going to get eroded and that is what’s happening," said Gary Jenkins, head of credit research at Evolution Securities in London.
- Japanese Prime Minister Naota Kan said addressing the strength of the yen is his top priority, citing comments to lawmakers.
- China Steel Corp. may lower prices of hot-rolled coil by $40 a metric ton in October and November.
- None of note
- Asian equity indices are -2.0% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 130.0 +4.0 basis points.
- Asia Pacific Sovereign CDS Index 120.25 +4.5 basis points.
- S&P 500 futures +.30%.
- NASDAQ 100 futures +.25%.
Earnings of Note
Company/Estimate
- (TOL)/-.16
- (AEO)/.12
- (JAS)/.02
- (JDSU)/.14
- (HEI)/.37
- (GES)/.68
- (RUE)/.25
8:30 am EST
- Durable Goods Orders for July are estimated to rise +3.0% versus a -1.0% decline in June.
- Durables Ex Transportation for July are estimated to rise +.5% versus a -.6% decline in June.
- New Home Sales for July are estimated at 330K versus 330K in June.
- The House Price Index for June is estimated to rise +.1% versus a +.5% gain in May.
- Bloomberg consensus estimates call for a weekly crude oil inventory gain of +300,000 barrels versus a -818,000 barrel decline the prior week. Gasoline supplies are expected to fall by -450,000 barrels versus a -39,000 barrel decline the prior week. Distillate inventories are estimated to rise by +1,000,000 barrels versus a +1,069,000 barrel gain the prior week. Finally, Refinery Utilization is expected to fall by -.45% versus a +1.9% gain the prior week.
- None of note
- The $36 Billion 5-Year Treasury Notes Auction, weekly MBA mortgage applications report, Morgan Stanly Semi/Semi Cap Equipment Investor day, (MDT) shareholders meeting and the EnerCom Oil/Gas Conference could also impact trading today.
Tuesday, August 24, 2010
Stocks Lower into Final Hour on Rising Economic Fear, Increasing Sovereign Debt Worries, Technical Selling, Financial Sector Pessimism
Broad Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Most Declining
- Volume: Slightly Below Average
- Market Leading Stocks: Underperforming
- VIX 27.36 +6.66%
- ISE Sentiment Index 104.0 -10.34%
- Total Put/Call .96 +39.13%
- NYSE Arms 1.76 +43.08%
- North American Investment Grade CDS Index 112.07 bps +2.62%
- European Financial Sector CDS Index 125.20 bps +6.59%
- Western Europe Sovereign Debt CDS Index 144.0 bps +1.34%
- Emerging Market CDS Index 241.90 bps +2.88%
- 2-Year Swap Spread 18.0 +1 bp
- TED Spread 16.0 -1 bp
- 3-Month T-Bill Yield .15% unch.
- Yield Curve 202.0 -8 bps
- China Import Iron Ore Spot $147.40/Metric Tonne -.07%
- Citi US Economic Surprise Index -57.80 +1.8 points
- 10-Year TIPS Spread 1.51% -6 bps
- Nikkei Futures: Indicating -105 open in Japan
- DAX Futures: Indicating +4 open in Germany
- Slightly Lower: On losses in my Medical and Tech long positions
- Disclosed Trades: Added to my (IWM)/(QQQQ) hedges and added to my (EEM) short
- Market Exposure: 50% Net Long
Today's Headlines
Bloomberg:
- U.S. Existing Home Sales in Record Plunge. Sales of existing houses plunged by a record 27 percent in July as the effects of a government tax credit waned, showing a lack of jobs threatens to undermine the U.S. economic recovery. Purchases plummeted to a 3.83 million annual pace, the lowest in a decade of record keeping and worse than the most pessimistic forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. Demand for single-family houses dropped to a 15- year low and the number of homes on the market swelled. “Today’s data do not bode well for home prices,” said Michelle Meyer, a senior economist at BofA Merrill Lynch Global Research in New York. “There is a decent chance we reach a new bottom for home prices. There’s going to be a prolonged, painful drop.” The pace of existing home sales is the slowest since comparable records began in 1999. Purchases of single-family homes also dropped 27 percent, the biggest one-month decrease in data going back to 1968. July’s 3.37 million annual rate was the lowest since May 1995. Compared with a year earlier, existing home sales fell 26 percent before adjusting for seasonal patterns. The median price increased 0.7 percent to $182,600 last month from July 2009. The number of previously owned homes on the market rose 2.5 percent to 3.98 million. At the current sales pace, it would take 12.5 months to sell those houses, the highest since at least 1999 and compared with 8.9 months in June. The months’ supply of single-family homes at 11.9 months was the highest since 1983, the NAR said. “The problem with housing is there’s actually a lot of shadow inventory,” said Constance Hunter, chief economist at Aladdin Capital Management LLP in Stamford, Connecticut. Sales last month fell in all four U.S. regions, today’s report showed. Foreclosures accounted for 22 percent of total purchases in July, while short sales, where banks agree to take less than the value of the mortgage, made up another 10 percent, the NAR said. Purchases will be “soft for at least two more months as the housing market works through the effects of the end of the tax credit,” Lawrence Yun, the group’s chief economist, told reporters at a press conference.
- U.S. Housing Slowdown Concerns Trigger Rise in European Bank Default Swaps. Investor concern that a slump in the U.S. housing market is threatening the global economic recovery triggered a surge in the cost of insuring against losses on European bank bonds to the highest level in a month. The Markit iTraxx Financial Index of credit-default swaps on 25 banks and insurers rose 7.25 basis points to 142, the highest level since July 20, according to JPMorgan Chase & Co. The Markit CDX North America Investment Grade Index of contracts linked to 125 companies in the U.S. and Canada jumped 3.27 basis points to 112.7, according to Markit Group Ltd. “High excess supply, high unemployment and rising delinquencies all make for an explosive mix, powerful enough to tip the U.S. economy back into recession,” said Christian Weber, a Munich-based credit strategist at UniCredit SpA. The conditions could create a “negative feedback loop,” he said. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings increased 19 basis points to 518 and the Markit iTraxx Europe Index of 125 companies with investment-grade ratings climbed 5.75 basis points to 117.5.
- Basel Banking Reform Plans Must Be Supported, Bair Writes in FT. Critics of reforms proposed by the Basel Committee on Banking Supervision are misguided, for the recent financial crisis showed that excessive leverage has disastrous consequences for the economy, said Sheila Bair, the chairman of the U.S. Federal Deposit Insurance Corp. Writing in the Financial Times, she said the Basel committee proposes to eliminate hybrid instruments that weaken banks’ capital structures, add capital buffers so that deleveraging doesn’t wipe out lending, and place higher capital charges on risky derivatives and trading activities. The critics claim these reforms will stifle lending, raise the cost of borrowing and damp economic recovery, Bair said.
- Crude Drops Below $72 as Equities Decline Amid Concern Recovery Is Slowing. Oil plunged to its lowest level in seven weeks as sales of previously owned U.S. homes fell more than forecast in July, boosting speculation that economic growth is slowing, curbing fuel demand. Crude for October delivery fell $1.10, or 1.5 percent, to $72 a barrel at 11:32 a.m. on the New York Mercantile Exchange. “The market is extremely weak fundamentally and without a strong euro or a strong stock market, it just doesn’t have anything else to peg its hopes on,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut. Stockpiles of oil and fuels climbed 5.3 million barrels to 1.13 billion in the week ended Aug. 13, the highest level since at least 1990, when the Energy Department began to collect weekly data. On a monthly basis, supplies are at the highest level since November 1983.
- Gold Rebounds on Investor Demand for Safe Haven as Global Equities Tumble. Gold rebounded from the biggest drop in four weeks as some investors purchased the metal as a haven from tumbling equity markets.
- Wells Fargo(WFC) Builds CMBS Business Once Dominated by Wachovia. Wells Fargo & Co. is plunging back into the commercial mortgage-backed securities market that helped fell Wachovia Corp., the bank it bought in 2008 for $12.7 billion.
- Hero Honda Expects India Motorcycle Sales to Slow on Rising Interest Rates. Hero Honda Motors Ltd., maker of about half the motorcycles sold in India, said demand will grow more slowly this year as the central bank raises interest rates to pare inflation. India may take further steps to damp rising prices, Sud said, after four interest-rate increases since March failed to bring inflation down from near 10 percent. Rising prices have stoked public protests and sap demand for motorcycles in India, the world’s second-biggest two-wheeler market.
- Vietnam Equities Tumble, Entering Bear Market, as Monetary Policy Tightens. Vietnam stocks tumbled, entering a so-called bear market, on concern the government may add measures to plug the nation’s deficit after devaluing the dong last week. The Ho Chi Minh City Stock Exchange’s VN Index slumped 3 percent to 434.42 at the 11 a.m. local-time close, the worst performer today among 93 benchmark indexes tracked by Bloomberg, extending its decline from this year’s high on May 6 to more than 20 percent, which analysts define as a bear market.
- Treasury Two-Year Yield Drops to Record Low on Plunge in Housing Market. Treasuries remained higher as the government sold $37 billion of two-year securities, the second of four note and bond auctions this week totaling $109 billion.
- Fed's Evans Says U.S. Recovery Uncertain as Housing Not 'Out of the Woods'. Federal Reserve Bank of Chicago President Charles Evans said that while the housing market and U.S. economy have shown signs of improvement, recovery isn’t yet assured. “Although there are some signs of general economic recovery and some evidence of home-price stabilization, we are certainly not out of the woods,” Evans said today in a speech in Indianapolis. The recovery “seems to be extremely modest” and the central bank’s “accommodative policy is appropriate,” he said in reply to an audience question.
- Miami Seeks to Impose Contracts on Unions to Help Cut Deficit, Mayor Says. Miami commissioners are likely to impose contracts on the city’s employee unions that will cut wages and pensions to ease a projected $96.5 million operating- budget gap next fiscal year, Mayor Tomas Regalado said. “Probably in two weeks the commission will impose a contract whereby we will be reducing salaries and pensions, which is what’s responsible for the deficit,” the first-term mayor said in an interview on Bloomberg Television outside City Hall today.
- Republican Boehner Calls on Obama to Fire Geithner for Mishandling Economy. to fire Treasury Secretary U.S. House Republican leader John Boehner called on President Barack ObamaTimothy Geithner and the other remaining members of the president’s economic team. In a speech today to the City Club of Cleveland, Boehner said Obama’s stimulus policies are failing to create jobs. “We do not have the luxury of waiting months for the president to pick scapegoats for his failing ‘stimulus’ policies,” Boehner said. “We’ve tried 19 months of government-as-community-organizer. It hasn’t worked. Our fresh start needs to begin now.”
- Apple(AAPL) Said to Prepare New 99-Cent TV Show Rental Service. is in advanced talks with Apple Inc.News Corp. to let iTunes users rent TV shows for 99 cents and is in discussions with other media companies about similar deals, said three people familiar with the plan. Viewers would be able to rent programs from News Corp.’s Fox for 48 hours, said the people, who declined to be identified because discussions aren’t public. CBS Corp. and Walt Disney Co., where Apple Chief Executive Officer Steve Jobs is a board member and the largest shareholder, also are in talks about joining the effort, the people say.
Wall Street Journal:
- Feinberg Criticized for Spill-Compensation Terms. Kenneth Feinberg's effort to set the terms for handing out BP PLC's money to Gulf oil spill victims came under fresh attack Monday from state officials and private lawyers who said he planned to be too restrictive in deciding who gets paid. "Mr. Feinberg seems to be completely tone-deaf to the concerns of people along the Gulf Coast," said Alabama Attorney General Troy King, who blasted Mr. Feinberg as a "corporate shill" of the oil giant.
New York Post:
- Bill & Hillary Clinton Party With Hedge Fund King. Bill and Hillary Clinton kicked off Bubba's celebratory birthday weekend in the Hamptons by stopping by the Wainscott home of hedge-fund king and big Hillary fund-raiser Daniel Neidich Friday night. Before forming Dune Capital Management, Neidich was a managing director at Goldman Sachs(GS).
- Oil Spill Seafood Lie. As shrimp season starts, The Daily Beast tested the Gulf's seafood for oil and dispersant, and the results were immaculate. If Gulf and Atlantic seafood are equally safe, why won't America buy?
- Medical Care Facts and Fables. There is so much political spin, and so many numbers games being played, when it comes to medical care, that we have to go back to square one and the simplest common sense, in order to get some rational idea of what government-run medical care means. In particular, we need to examine the claim that the government can "bring down the cost of medical care."
- Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 25% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-three percent (43%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -18 (see trends).
- Grads Taking Law Schools to Task for Poor Job Market. Law schools, once viewed as a guaranteed path to a high-paying career, are coming under fire as disillusioned graduates find a tighter job market than they say they were led to expect. A small but growing coalition of graduates, on blogs with names like "Scammed Hard" and "Shilling Me Softly," blame their alma maters for luring them into expensive programs by overstating their employment prospects.
- Potash Corp.(POT) Spurns BHP(BHP), Seeks White Knight. Potash Corp. is in talks with a handful of Chinese firms and other international companies looking to trump BHP $38.6-billion (U.S.) hostile takeover bid for the fertilizer giant. The Saskatoon-based company is discussing a range of investment options that would include more than one company stepping forward with a joint bid to rival BHP’s $130-per-share offer. Anglo-Australian firm Rio Tinto is said to be considering a bid alongside a Chinese player as relations between the two sides strengthen, according to sources.
- Spain Uses Social Security Fund to Prop Up the Bond Market. Spain is putting all its eggs into one basket, and if it carries on like this, we may start to see a lot of Basques and Catalans crowding into one exit. The state pension fund – the €64bn Fondo de Reserva, known as the ‘hucha de las pensiones‘ – is buying Spanish sovereign debt at a vertiginous pace.
- Wolfgang Franz, head of Chancellor Angela Merkel's council of economic advisers, said Germany's economy will slow after a record expansion in the second quarter, citing an interview. U.S. unemployment, weak economies in southern Europe and slowing growth in emerging nations pose risks for Germany's export-driven economy, Franz said.
Valor Economico:
- Petroleo Brazileiro SA(PBR), Brazil's state-controlled oil company, and the government may use a price of $9 a barrel for state-owned oil reserves that will be swapped for company stock.
- China is still studying property tax and plans to introduce property tax reform, citing Xu Lin, director of finance department at the National Development and Reform Commission. Xu did not say when the tax may take place. China may introduce other tax reforms including environmental and social security tax, he said.
- Mistrust in US and India May Limit China Telecom Gear Suppliers Growth, Says iSuppli. Concerns are rising in the US and India over perceived security risks associated with using China-made telecommunications equipment, potentially slowing global sales growth for China's major gear makers, according to iSuppli. A group of US senators recently asked the Obama administration to review a bid from China's Huawei Technologies to supply telecommunications gear to Sprint Nextel, citing concerns over espionage. Meanwhile, Huawei and fellow China-based equipment maker ZTE reported that the government in India started blocking purchase orders placed with them in mid-February. "The key elements that have made Chinese vendors successful: inexpensive labor, a home-field advantage in China's hot telecom market and access to an almost unlimited line of credit though government banks, are unlikely to disappear any time soon," said Lee Ratliff, senior analyst for broadband and the digital home at iSuppli. "However, the vendors face serious opposition in several of the largest markets left to penetrate."
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