Bloomberg:
- Bank Bond Risk Falls in Europe After Portuguese Debt Auction. The cost of insuring bank bonds fell by the most in six weeks after Portugal sold debt, amid speculation Asian sovereign wealth funds and central banks will help finance Europe’s deficit-ridden governments. The Markit iTraxx Financial Index of credit-default swaps on the senior debt of 25 banks and insurers dropped 12 basis points to 188, according to JPMorgan Chase & Co. at 3 p.m. in London. The gauge is down from 209 basis points on Jan. 10, the highest closing level since the March 2009 record of 210. Lower borrowing costs and speculation the European Central Bank has been buying Portuguese bonds helped ease concern the government will be forced to request a bailout. Markit Group Ltd.’s subordinated financial index dropped 21 basis points to 332, JPMorgan prices show. was down 41 at 1,002. Credit-default swaps on Portuguese government debt dropped 25 basis points to 511, helping push the Markit iTraxx SovX Western Europe Index of swaps on 15 nations 6 basis points lower to 208. Contracts on Ireland declined 19 basis points to 659, Spain fell 18 to 330 and Belgium was 14 lower at 232. Italy decreased 14 basis points to 228 and GreeceThe Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings declined 17 basis points to 426, JPMorgan prices show. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings decreased 5.25 basis points to 107.25.
- Portuguese Borrowing Costs Fall at 10-Year Bond Auction After ECB Buying. Portugal’s borrowing costs fell and demand rose at a sale of 10-year bonds after European Central Bank debt purchases this week helped push down yields, sending the securities higher in the secondary market. The nation sold 599 million euros ($778 million) of bonds due in 2020 at a yield of 6.716 percent, the Portuguese debt management agency said today. That compares with 6.806 percent at the previous auction on Nov. 10.
- Corn, Soybean, Wheat Prices Surge as U.S. Cuts Supply Outlook. Corn and soybeans jumped to the highest prices since July 2008 and wheat surged after the government cut its forecasts of U.S. inventories, signaling tighter food supplies as demand increases and adverse weather reduces harvests. Production of corn in the U.S., the world’s largest grain exporter, dropped 4.9 percent last year and will leave supply before the 2011 harvest at the lowest in 15 years, the U.S. Department of Agriculture said. The USDA also cut its estimate of the soybean crop by 1.4 percent and said domestic wheat inventories will be 16 percent less than a year earlier. Corn, used mostly as livestock feed, has surged more than 60 percent in the past year, while soybeans and wheat advanced 45 percent. Wholesale world food prices tracked by the United Nations surged 25 percent last year to a record, fueled partly by rallies in grains and oilseeds.
- Cattle Futures Surge to Record, Hogs Rally, on Signs of Rising Meat Demand. Cattle futures jumped to a record and hog prices climbed to an eight-month high on signs that meat demand is rising at a time when higher feed costs may curb supply. In the 10 months ended Oct. 31, U.S. beef exports jumped 17 percent from a year earlier and pork shipments rose 2 percent, the latest government data show. The price of corn, the main ingredient in livestock feed, surged 52 percent in 2010.
- China's Chongqing Plans Tax for Used Homes, CCTV Says. The Chinese city of Chongqing plans to introduce a property tax for both new and existing homes, Mayor Huang Qifan said in an interview with state television CCTV, without providing further details. Including existing homes is “quite a surprise,” said Wee Liat Lee, a Hong Kong-based property analyst for Samsung Securities Co., adding that the consensus among analysts had been that the tax would be imposed only on new homes.
- Clarium Hedge Fund Slumps 90% From Peak After Thiel Has Third Losing Year. Peter Thiel got rich investing in PayPal and Facebook Inc. before most people knew them, built a hedge fund that at its apex managed $7.2 billion, and forecast the collapse of the U.S. housing market. He also lost almost two-thirds of his clients’ money. Clarium Capital Management LLC, which Thiel started in 2002 in San Francisco, fell about 23 percent in 2010, the third straight year of declines, according to investors. His fund’s assets are down about 90 percent and clients who stuck with him suffered losses of 65 percent from the mid-2008 peak.
- China Assures Gates on Defense Ties After Surprise Test of Stealth Plane. U.S. Defense Secretary Robert Gates leaves China today with assurances from his counterparts on improved military ties marred by the same uncertainties that have dogged the relationship for years. Gates won a pledge from Chinese military and civilian leaders to consider higher-level dialogue on strategic security issues and he praised them for “constructive” action to rein in North Korea. At the same time, officials wouldn’t commit to specific timelines and seemed at odds internally over U.S. ties.
- Spanish Banks' Financing Costs Spur Doubt on Profit. Spanish banks have more than 30 billion euros ($39 billion) in debt coming due in the next four months. That’s spurring investor doubt on their future profitability as higher financing costs eat into margins. Concern that the country won’t be able to reduce the euro region’s third-highest budget deficit and avoid a European Union bailout has driven up financing expenses for banks.
- India Industrial Output Growth Slows to 2.7% Even as Rate Pressure Mounts. India’s industrial production grew at the slowest pace in 18 months in November, a deceleration that may not prevent the central bank from raising interest rates this month as surging food prices drive up inflation. Output at factories, utilities and mines rose 2.7 percent from a year earlier, the government said in a statement in New Delhi today, less than the revised 11.3 percent jump in October when the Hindu festivals of Dussehra and Diwali boosted demand for goods. The median estimate of 30 economists in a Bloomberg News survey was for a 6.6 percent gain. Food inflation accelerated to 18.32 percent in the week ended Dec. 25, the highest rate since July, the commerce ministry said on Jan. 6. Prices of onions, a key ingredient in the nation’s cuisine, soared 80 percent during the week and milk by 20 percent. The inflation rate may be “around” 6.5 percent by March 31, Mukherjee said, more than the 6 percent prediction he made on Dec. 14. The rate was 7.5 percent in November.
- ITT(ITT) Shares Surge on Decision to Split Conglomerate Into Three Businesses. ITT climbed $10.46, or 20 percent, to $63.24 at 9:39 a.m. on the New York Stock Exchange, the biggest intraday gain since July 1980.
- Pimco's Gross Clashes With Whitney Over Muni-Bond Outlook. Bill Gross, who manages the world’s biggest bond fund at Pacific Investment Management Co., clashed with Meredith Whitney, the banking analyst, when he said he doubted there would be many local-government bankruptcies. “Ultimately, municipal bankruptcies will be at a lower level,” Gross said today on Bloomberg Television’s “InBusiness” program. “I don’t subscribe to the theory that there will be lots of them.”
Wall Street Journal:
- Giffords Continues to Make Progress in Recovery. The recovery of U.S. Rep. Gabrielle Giffords after brain surgery is proceeding without setbacks and the congresswoman is showing signs of awareness, although some damage will linger, a doctor said Wednesday. By Friday, doctors will be able to determine whether she is "out of the woods."
- Postings of a Troubled Mind. Accused Shooter Wrote on Gaming Site of His Job Woes, Rejection by Women. A trove of 131 online-forum postings written between April and June 2010, which were viewed by The Wall Street Journal, provides insight into Mr. Loughner's mind-set in the year leading up to Saturday's shootings in Tucson, Ariz.
- GM(GM) Rethinks Pay for Unionized Workers. In a Major Shift, Executives Want to Tie Compensation of UAW Members to Performance and Company's Financial Health.
- Beige Book: US Economy, Jobs Outlook Improving.
- Hedge Funds Lever Up to Pre-Lehman Level as Banks Play Safe. As of the end of 2010, hedge funds have increased leverage to within 10 percent of pre-credit levels, according to a report from UBS Prime Brokerage Services and have likely increased risk up even more to start this year, traders said. Gross leverage for funds has climbed 43 percent from the bottom reached after the collapse of Lehman Brothers in 2008 and is up 13 percent in 2010, according to UBS.
- White House Weighing Corporate Tax Cuts, Geithner Says. The White House is looking for a way to lower the rate of corporate taxes without increasing the deficit, Treasury Secretary Timothy Geithner said Wednesday.
- Hedge Fund Manager Michael Hintze On Why There Isn't Any Inflation Yet. Hintze predicted that stocks and bonds will “generally produce positive returns” in 2011 because the Fed’s actions will stimulate global markets, companies are repairing balance sheets and “emerging economies” such as India and China are growing. Despite all this talk about commodities and currencies, currently, Hintze's biggest long investments are in BHP Billiton (his biggest holding), Six Flags, Comcast, Discovery Communications, and Mead Johnson Nutrition.
- Wrenching Photos of the Inflation and Unemployment Protests Tearing Apart Tunisia.
- After Massive Tax Hike, Illinois Continues to Get Humiliated by Neighboring Governor.
- IT'S OFFICIAL: Our IPO Market is Crippled - And It's Hurting Our Country.
- Meet The Central Banker Whose Reckless Money Printing Is Causing Commodity Spikes and Riots Worldwide. What, you thought it was Ben Bernanke?
- More Clues of China's Real Estate Bubble: Ghost Malls. We have already seen Chinese ghost cities, rickety buildings, and a construction spree that makes our own unionized labor force seem positive antiquated. Time to add empty malls to the list.
- U.S. Says NYC Overbilled Medicaid. The federal government has accused New York City of overbilling by “at least tens of millions of dollars” by improperly approving 24-hour home care for thousands of patients.
- Massacre, Followed by Libel. The charge: The Tucson massacre is a consequence of the "climate of hate" created by Sarah Palin, the Tea Party, Glenn Beck, Obamacare opponents and sundry other liberal betes noires. The verdict: Rarely in American political discourse has there been a charge so reckless, so scurrilous and so unsupported by evidence. As killers go, Jared Loughner is not reticent. Yet among all his writings, postings, videos and other ravings - and in all the testimony from all the people who knew him - there is not a single reference to any of these supposed accessories to murder. Not only is there no evidence that Loughner was impelled to violence by any of those upon whom Paul Krugman, Keith Olbermann, the New York Times, the Tucson sheriff and other rabid partisans are fixated. There is no evidence that he was responding to anything, political or otherwise, outside of his own head.
- Lawmaker Raises Questions About Bank of America(BAC), Mortgage Deal. Rep. Brad Miller is raising questions about Bank of America's settlement with the government over soured mortgage-backed securities, asking whether the government got the best deal for taxpayers. In a letter to the agency that oversees Fannie Mae and Freddie Mac, Miller and three other Democratic lawmakers asked for details on how the government reached settlements with Bank of America and Ally Financial over the repurchase of mortgage-backed securities.
- 'Holiday Hat Trick' of 16M iPhone, 6M iPad, 4.2M Mac Sales Expected From Apple(AAPL). With Apple's quarterly earnings report for the 2010 holidays less than a week away, one Wall Street analyst believes Apple will sell a record 16 million iPhones, 6 million iPads, and 4.2 million Macs. Analyst Mike Abramsky with RBC Capital Markets said on Wednesday that he sees Apple's iPhone sales over the holidays increasing 84 percent year over year. At 16 million, that would well exceed the previous record of 14.1 million iPhones sold in the Sept. 2010 quarter, and put the company on its way toward a "holiday hat trick" of personal bests. And Apple looks poised to have an even better fiscal year in the rest of 2011, with Monday's announcement that a CDMA variant of the iPhone is coming to Verizon on Feb. 10. He sees the iPhone accounting for 50 percent of all smartphone sales on Verizon in calendar year 2011, with a third of current Verizon smartphone owners upgrading to the iPhone. In calendar year 2011, Abramsky expects Apple to sell a total of 70 million iPhones, which would account for 19 percent of the global smartphone market. That would help Apple achieve $90.8 billion in revenue in its fiscal year 2011, with $20 earnings per share, he said. He has also called for Apple to sell 6 million iPads and 4.2 million Macs in the holiday quarter, which concluded in December. Apple notebook sales are projected to be bolstered by the popular new MacBook Air. Both the projected Mac and iPad sales would be new records for those product categories, as Apple achieved sales of 3.89 million Macs and 4.19 million iPads last quarter. In particular, he referred to the iPad as a "monster holiday hit." Finally, Abramsky also sees Apple selling a total of 18.7 million iPods in the quarter. RBC Capital Markets has increased its 12-month price target for AAPL stock to $395, up from a previous prediction of $365.
- Ballmer's Window of Opportunity to Prove His Worth. Some members of Microsoft’s board of directors feel the need to keep their chief executive under closer scrutiny.
- Hedge Funds Bet on $100-A-Barrel Oil. It's not just oil traders who are fueling the price of crude, but financial traders too. Global hedge funds and market speculators have pumped millions of pounds into oil futures pushing the number of contracts held by financial traders to a four year high. The number of bets taken out by the traders soared by 4.6pc in the week to December 28th, taking the total to its highest level since June 2006, according to figures from the Commodity and Futures Trading Commission (CFTC) in America. The volumes traded by hedge funds and commodity funds is likely to re-ignite concerns about the impact of speculators on the price of oil. In May last year, there was alarm when the price of 2010 settlement oil plunged over three weeks as financial investors halved their net-long positions, according to the CFTC data. Since then, traders have tripled their holdings of oil futures to 217,046 contracts. The volume rose by 9,578 holdings to December 28th, according to the latest report from the CFTC’s weekly Commitments of Traders report.
- Renewable Energy Corp. ASA's Chief Executive Officer Ole Enger expects supply growth in the solar market of 30-40% this year, citing the CEO. The "big question" is of course if demand will rise correspondingly, citing a presentation at a Pareto Securities conference.
Financial Times Deutschland:
- The European Commission and the European rescue fund are preparing to provide as much as $130 billion in credit guarantees to Portugal should it become necessary, citing European Union officials.