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Bloomberg:
- Sales of new U.S. homes unexpectedly fell in September as the end of a tax credit for first-time homebuyers approached. Purchases dropped 3.6 percent to a 402,000 annual pace that was lower than the most pessimistic economist’s forecast, according to Commerce Department figures issued today in Washington. The median price of a new house fell to $204,800, compared with $225,200 at the same time last year. The value was up 2.5 percent from the prior month, reflecting a plunge in the share of houses selling for less than $150,000, a category that often includes first-time buyers. Sales fell 11 percent in the West and 10 percent in the South. Purchases in the Midwest jumped 34 percent and were unchanged in the Northeast. Builders had 251,000 houses on the market last month, the fewest since November 1982. It would take 7.5 months to sell all homes at the current sales pace, the same as in August.
- K1 Group, the German hedge fund firm, is embroiled in an international criminal investigation after saddling banks, including Barclays Plc, JPMorgan Chase & Co. and BNP Paribas SA, with about $400 million of losses, people with knowledge of the probe said. European and U.S. authorities are examining whether K1, which manages funds of hedge funds, deceived the banks when borrowing money to ratchet up the size of its investments, according to the people, who declined to be identified because the investigation isn’t public. German and U.S. prosecutors may announce the first charges in the case as soon as this week, they said. JPMorgan inherited its exposure to K1 after acquiring Bear Stearns Cos., which did business with the fund manager.
- Crude oil fell more than $2 a barrel after a government report showed an unexpected increase in U.S. gasoline stockpiles and crude supplies rose to a two-month high.
Gasoline inventories climbed 1.62 million barrels last week, the Energy Department said. A 1 million-barrel decline was forecast, according to a Bloomberg News survey. Crude inventories rose as imports advanced the first time in five weeks. Oil also dropped as the dollar gained against the euro. “The gasoline number was a big surprise and makes people less optimistic about the economy and demand,” said Sean Brodrick, natural resource analyst with Weiss Research in Jupiter, Florida. Fuel demand dropped 0.8 percent to an average of 18.5 million barrels a day last week, the report showed. Gasoline consumption fell 1 percent to 8.86 million barrels a day. “We continue to see evidence of weak demand and excess supply,” said Antoine Halff, head of energy research at Newedge USA LLC in New York. “The gasoline number reflects both a lack of demand and an increase in refinery output.” Refineries operated at 81.8 percent of capacity, up 0.7 percentage point from the previous week, the report showed. Refiners produced 8.83 million barrels of gasoline a day, up 4.5 percent from the prior week. Inventories of crude oil rose 778,000 barrels to 339.9 million last week, the report showed. The gain left supplies 9.1 percent higher than the five-year average for the period. Imports of crude oil increased 2.2 percent to 8.89 million barrels a day last week, the report showed. Fuel imports climbed 6.3 percent to 2.54 million barrels a day.
- Copper prices dropped for the third straight day after a downbeat report on U.S. housing signaled demand for the metal may slacken. “We could be at a turning point for copper, where we could see prices start to head much lower,” said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. Inventories of copper in warehouses monitored by the London Metal Exchange rose 0.3 percent to 371,725 metric tons, the highest since May 13. “Markets are still running ahead of fundamentals,” said Alex Heath, the head of industrial metals trading at RBC Capital Markets in London.
- Swine Flu Vaccine Scarcity Stirs Anger in US Communities. San Diego health officials said that the county expected to run out of swine flu vaccine yesterday after receiving only 25 percent of the 411,000 doses anticipated for October, as reports of shortages nationwide mount. San Diego health officials said that the county expected to run out of swine flu vaccine yesterday after receiving only 25 percent of the 411,000 doses anticipated for October, as reports of shortages nationwide mount.
- Google Inc.(GOOG) is adding a free U.S. turn-by-turn mapping service to the Android mobile-phone operating system, opening up a new source of competition for makers of navigation devices. The service is part of the updated Android 2.0 software, which was released to developers yesterday. The new maps service, called Google Maps Navigation, will include audio instructions for routes and simple ways to search for businesses, the company said.
- Mortgage applications in the U.S. fell to a two-month low, hurt by declines in purchases that may reflect concern over the expiration of government tax credits. The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan decreased 12 percent to 562.3 in the week ended Oct. 23, the third consecutive drop. The group’s refinancing gauge fell 16 percent, while the index of purchases declined 5.2 percent.
- US companies have retreated .7% on average in the trading session following their earnings reports this month, the worst performance in Bespoke Investment Group LLC data going back to 2001. Stocks are retreating even though a record 82.3% of S&P 500 companies have beaten the average analyst estimate, which would be the biggest full-quarter proportion in 16 years of Bloomberg data.
Wall Street Journal:
- It's long been hard for health-care consumers to learn how much doctor visits or hospital stays will cost them. That's now beginning to change, as a growing array of Web sites try to lift the veil on pricing. The online resources come from insurers, government agencies, Internet companies and medical-care providers. The sites aren't perfect: Unlike online retailers that sell products such as televisions, the health sites can't typically give exact prices for medical procedures and services. Still, consumers can get a rough idea of typical costs in their area, and that can help them choose doctors and hospitals, budget for medical costs and sort out disputed bills.
- The protests at the American Bankers Association Conference in Chicago are over, but the campaign of venting anger and criticism against the nation’s largest banks continues. Today, protesters in Oregon and Washington are planning to walk into local branches of J.P. Morgan Chase(JPM) and cancel their personal checking and savings accounts. The act is meant to protest CEO James Dimon’s opposition to the Obama Administration’s proposal to create a new consumer protection agency. [Dimon has said the new agency would create cumbersome, costly restrictions and the banks will likely pass those costs onto the consumers.] The protest groups urge the public to switch their accounts in big banks to community banks. But the financial crisis has tarred small banks, too. Many are reeling from their own excessively risky lending practices, mostly to commercial real-estate developers. About half of the 106 banks to fail this year are small banks with $250 million or less in assets. We spoke with James Mumm, Director of Organizing at National People’s Action, one of the groups heading the Chicago protests, in addition to the Service Employees International Union.
- U.S. retirement asset rose $1 trillion in the second quarter, according to the Investment Company Institute, rising 7.4% and making up 34% of household assets. The increase to $14.4 trillion came as the stock market rebounded from the lowest point in more than a decade in early March. The S&P 500 stock index climbed 16% during the quarter, while the Citigroup Broad Investment Grade Bond Index gained 1.2%. Individual retirement accounts held the largest amount of U.S. retirement assets as of June 30 at $3.7 trillion, according to the fund-industry group. Just behind were employer-sponsored defined-contribution plans at $3.6 trillion, of which $2.5 trillion was in 401(k)s. The ICI said 45% of IRA assets and 48% of defined-contribution assets were in mutual funds. Life-cycle, or target-date funds, continued to attract increased investment, rising 22% during the quarter to $194 billion.
- A powerful car bomb ripped through a market Wednesday in the northwestern city of Peshawar, killing at least 90 people hours after U.S. Secretary of State Hillary Clinton arrived in Pakistan to smooth relations strained by terms of an American aid package for the key South Asian ally. Mrs. Clinton was meeting with officials in Islamabad, a three-hour drive from Peshawar, when the explosion went off. The bombing was the second attack to hit one of Peshawar's crowded markets this month.
NY Times:
NYPost:
- As Bank of America's(BAC) board of directors approaches a self-imposed deadline at the end of this week to pick a successor to outgoing CEO Ken Lewis, it's finding few willing takers outside the bank, sources told The Post. According to people familiar with the matter, at least three high-profile bank executives have turned down the chance to be wooed by BofA, leaving the board to pick from a number of internal candidates. Sources said that the BofA board was keen on ex-JPMorgan Chase co-president Bill Winters, as well as Barclays Capital President Bob Diamond and ex-Merrill Lynch exec-turned-Yale professor Greg Fleming, but none of the three is interested. Diamond is said to have outright rejected an offer to be on a short list of candidates interviewed by the board.
Washington Times
- During his first nine months in office, President Obama has quietly rewarded scores of top Democratic donors with VIP access to the White House, private briefings with administration advisers and invitations to important speeches and town-hall meetings. High-dollar fundraisers have been promised access to senior White House officials in exchange for pledges to donate $30,400 personally or to bundle $300,000 in contributions ahead of the 2010 midterm elections, according to internal Democratic National Committee documents obtained by The Washington Times. One top donor described in an interview with The Times being given a birthday visit to the Oval Office. Another was allowed use of a White House-complex bowling alley for his family. Bundlers closest to the president were invited to watch a movie in the red-walled theater in the basement of the presidential mansion. Mr. Obama invited his top New York bundler, UBS Americas CEO Robert Wolf, to golf with him during the president's Martha's Vineyard vacation in August. At least 39 donors and fundraisers also were treated to a lavish White House reception on St. Patrick's Day, where the fountains on the North and South Lawns were dyed green, photos and video reviewed by The Times and CBS News also show. Presidential aides said there has been no systematic effort to use the White House complex to aid fundraising, though they acknowledge the DNC has paid for some events at the presidential mansion.
Business Insider:
- Credit is likely to become increasingly less attractive on a relative basis over the course of 2010. This forecast, coupled with a modest economic recovery, could encourage some
investors to move their assets from credit funds to equity funds. We do not expect such a
shift to occur rapidly or in large size given the fact that the credit mutual fund market is
$1.3 trillion smaller than the US equity mutual fund market ($2.1 trillion versus $3.4 trillion) and given the fact that funds invested in credit tend to be slower moving than funds invested in riskier asset classes. The large pool of assets still in cash suggests that we may see investors leapfrog credit funds and move directly from cash to equities in addition to any modest re-allocation from credit to equity.
Washington Post:
- The Federal Reserve Bank of New York said Tuesday that it had no choice but to instruct American International Group last November to reimburse the full amount of what it owed to big banks on derivatives contracts, a move that ended months of effort by the insurance giant to negotiate lower payments. Fed officials offered the explanation in a rare response to a media report after Bloomberg News said that the New York Fed, led at the time by then-President Timothy F. Geithner, directed AIG to make the payments after it received a massive government bailout. The officials said AIG lost its leverage in demanding a better deal once the company had been saved from bankruptcy. Lawmakers and financial analysts critical of the payouts say it amounted to a back-door bailout for big banks. AIG, the recipient of a $180 billion federal rescue package, ended up paying $14 billion to Goldman Sachs(GS) over months and $8.5 billion to Deutsche Bank, among others. Before the New York Fed intervened, AIG had been trying to persuade the firms to take discounts. The precise cost to taxpayers of these decisions is difficult to determine. Bloomberg, quoting an industry source, reported Tuesday that AIG was aiming to pay just 40 percent of the $32.5 billion it owed to the banks. Using those figures, the report concluded that the government needlessly overpaid $13 billion.
Rassmussen:
Politico:
- There have been a lot of bad days recently for what’s come to be known as the mainstream media — or MSM — but Monday was one of the worst. New circulation figures showed that big city papers had lost as much as a quarter of their circulation in the past six months. And new TV ratings showed that CNN, the cable network that prides itself on news coverage down the middle, finished dead last in prime time against more partisan rivals like Fox News and MSNBC.
- House Speaker Nancy Pelosi has sent out invitations to tomorrow's 10 a.m. unveiling of the House Democrats' health care reform legislation. The announcement should make a fair bit of news because the final contours of the bill are still unclear.
USA Today:
Reuters:
- More U.S. manufacturers are optimistic about the economy, but poor demand remains a top concern, according to a survey. Forty-eight percent of U.S.-based industrial manufacturers surveyed by PricewaterhouseCoopers in the third quarter said they were optimistic about the U.S. economy over the next year, while only 43 percent had said so in the second quarter. The largest number of manufacturers polled -- 45 percent -- did not expect their businesses to regain strength until the second half of 2010, the survey showed. Twenty-three percent said they expected business to pick up in the first half of 2010 but 17 percent believed their companies were unlikely to recover until 2011.
- Some of the nation's largest companies pushed back against U.S. Democrats' plans to deliver a government-run insurance option in a healthcare overhaul, decrying it as a step backward that would drive up costs for employers and their workers. The Business Roundtable, comprised of chief executives at Verizon Communications (VZ), JPMorgan (JPM), General Electric (GE), Wal-Mart (WMT) and other companies that together employ more than 12 million people, said the federal government is inefficient and would underpay providers. That would result in providers boosting prices for private insurers and employers, the group said on Wednesday. "A public plan would neither manage cost nor encourage innovation," said Antonio Perez, chief executive of Eastman Kodak Co (EK) and head of the Business Roundtable's health initiative. "We believe it is the wrong direction for fixing our health care system." Although an earlier congressional analysis found that about 9 million to 10 million people, most uninsured, would opt for the public plan, the Business Roundtable fears that number will jump as people see their private plan premiums climb. "The costs for all of us in the system will continue to go up and again put pressure on employers to get out of the healthcare system," John Castellani, president of Business Roundtable, told reporters at a news conference. Other business groups also oppose a public insurance option and are pushing for alternative cooperative exchanges. The U.S. Chamber of Commerce launched television ads on national cable stations and in seven states on Wednesday to fight the government option. Companies want to offer employees health care to recruit and retain talented workers, said Bruce Josten, a vice president at the Chamber of Commerce. The chamber backs an national exchange "with an Orbitz-like website," Josten told Reuters, referring to a popular travel site that compares deals among various providers. Even if companies were to drop their health care coverage, employers would likely face higher costs elsewhere in the form of higher taxes and other charges to help the government cover the costs, the Business Roundtable's Perez said.
- GMAC Inc on Wednesday launched a new government-backed bond sale ahead of a regulatory deadline next month that will test the company's capital levels and ability to absorb losses. GMAC came to market with a $2.9 billion three-year government-guaranteed note issue expected to price as soon as Wednesday, according to IFR, a Thomson Reuters service. The bond sale comes amid conversations the Detroit-based firm, the traditional lender to General Motors Co, is having with the U.S. Treasury about a possible third cash infusion to its GMAC Financial Services Inc unit. GMAC, which is also taking over the auto loan business of Chrysler, converted to a bank holding company in December to become eligible for bailout money the U.S. Treasury was pumping into banks. Bank holding companies, including GMAC, that regulators have viewed as being undercapitalized face a November 9 deadline for implementing plans to enhance their capital positions. Concerns that GMAC could fail the impending test had sent the cost of insuring debt at its residential mortgage arm, Residential Capital, spiraling in the past week as investors worried that the unit would need to be spun off.
Financial Times:
- China and the US will not sign a landmark agreement on climate change policies when Barack Obama visits Beijing next month, the US president’s climate change envoy said on Wednesday, in spite of high hopes this year among US officials. The low expectations for the climate change talks might please some European nations, which feared that China and the US would seek to impose a bilateral accord on other countries at Copenhagen. But the fact that no landmark deal will be agreed underlines the weak position of the US in climate change discussions until cap-and-trade legislation is passed by Congress.
Style Underperformer:
Small-Cap Value (-2.62%)
Sector Underperformers:
Education (-7.94%), Hospitals (-5.05%) and Steel (-4.65%)
Stocks Falling on Unusual Volume:
DDS, ORI, PUK, VQ, IVN, CLF, PTR, BCS, MFC, PBR, UBS, PSYS, CLDA, APOL, ILMN, VCLK, ULTI, GRMN, CECO, SVVS, GSIC, BWLD, KONG, CSKI, AAWW, ARCC, AIXG, SWSI, ININ, LOPE, POOL, KSP, GT, IRE, EMF, SAP, SPW, ASH, WBK and CTB
Stocks With Unusual Put Option Activity:
1) GT 2) BGC 3) MAS 4) RF 5) CX
Style Outperformer:
Large-Cap Value (-.83%)
Sector Outperformers:
Telecom (+1.61%), Road & Rail (+.44%) and Restaurants (+.32%)
Stocks Rising on Unusual Volume:
NSC, AIG, UNP, TGT, TRMK, NAL, DFG, ACL, DLTR, TLVT, PNRA, PEET, NATI, NTRI, WBMD, CHBT, DWA, BIDU, PMTC, INSU, MKTX, OSIS, MDVN, TRMK, SOHU, VRTX, ASEI, SHPGY, SBNY, CRI, DV, HRS, CQB and WAT
Stocks With Unusual Call Option Activity:
1) ILMN 2) APOL 3) GT 4) HRS 5) GRMN
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