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Bloomberg:
- Optimism among chief executive officers about the U.S. economy rose to a one-year high as more said they expect stronger sales and plan to boost spending while limiting hiring. The Business Roundtable’s economic outlook index increased this quarter to 71.5, the highest since July-September 2008, from 44.9 in the previous three months. Readings higher than 50 are consistent with economic expansion. Sixty-eight percent of executives said they expect sales to grow, compared with 51 percent in the third quarter, and 84 percent plan to either boost capital spending or hold it steady. Most respondents said they would limit hiring, posing a hurdle for the recovery next year. The survey, completed between Nov. 5 and Nov. 30, showed that CEOs estimate the economy will expand 1.9 percent in 2010. Fifty percent of executives said there would be no change in employment at their company during the next six months and 31 percent projected a decrease. Nineteen percent said they planned on increasing headcount.
- Crude oil in New York is poised to fall to $66 a barrel after the benchmark dropped below the 200-week moving average, according to a technical analysis by Barclays capital. The January contract has fallen beneath support at $75.58, the moving average, and $74.91, the bottom of a downward channel that has contained prices since Oct. 21, as speculators unwind “extreme long” positions in energy markets, MacNeil Curry, a technical analyst at Barclays Capital, said today. “Many technically inclined longs are likely to begin reconsidering and paring back,” Curry said. “Such an environment would easily open a break to $70 and a potential move toward the September 25 lows at $66.10.”
- Cutbacks in US household spending appear to be temporary because consumers are no longer rushing to repay debt, according to Michael Shaoul, Oscar Gruss & Son Inc.’s chief executive officer. The earlier drop in borrowing “proved to be an aberration,” not a harbinger of the “new normal,” the note said. Consumer debt may start rising on a year-over-year basis in the first quarter of next year, assuming the trend of the past few months stays intact, Shaoul wrote.
- Iran’s chief prosecutor warned that former Prime Minister Mir Hossein Mousavi and other opposition leaders may face charges of disrupting public order, according to local news agencies cited by Agence France-Presse. “I declare that from today on there will be no tolerance,” the chief prosecutor, Gholam Hossein Mohsen Ejeie, was cited as saying by the Iranian Labor News Agency, AFP said.
- Crude oil declined for a fifth day, the longest losing streak since July, on forecasts that U.S. stockpiles rose and as the dollar gained against the euro. “Oversupply and weak demand are taking a toll on this market,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “The strengthening of the dollar is taking the rug out from under the market.” “It’s amazing what a little dollar strength will do,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “You could see oil fall below $60 a barrel if the dollar rally has legs.”
- Kenneth Feinberg, the U.S. paymaster for rescued companies, will exempt some executives at American International Group Inc. from a $500,000 salary cap after at least five employees threatened to quit because of the limits, people familiar with the matter said.
- Transocean Ltd.(RIG) and Diamond Offshore Drilling Inc., the world’s biggest deepwater oil drillers, may face a drop in rig-rental revenue because of a glut of vessels that can operate in oceans two miles (3.2 kilometers) deep. The oversupply will develop in 2011 as rigs that drillers started building when oil prices surged to a record last year are completed, said Jud Bailey, an analyst at investment bank Jefferies & Co. in Houston. Rig rents are likely to drop 10 to 15 percent and stay down until new deepwater developments create enough demand to end the surplus in 2012 or 2013, he said. “It was a classic case of panic on the part of operators when oil was over $100,” Bailey said. “A part of that panic was just the fact that they couldn’t get a rig. When that psychology reverses, it can be a pretty powerful dynamic.”
Wall Street Journal:
- George Soros, the hedge-fund manager famous for “breaking the pound,” had a few good quips at The Wall Street Journal’s Future of Finance Initiative in Horsham, England. “I didn’t know about credit-default swaps, they developed when I wasn’t looking,” said Soros, describing derivatives that provide insurance against corporate defaults. After studying the market, Soros concluded that they are toxic assets. His illustration? Selling someone insurance that covers someone else and then selling them a gun to shoot that person.
- Moody's Investors Service says the U.S. and U.K. must prove they can whittle down their ballooning deficits to avoid threats to their triple-A credit ratings. In a report released on Tuesday, Moody's set the two countries apart from other top-rated sovereign borrowers, calling them merely "resilient" rather than "resistant," a label it applied to Canada, France and Germany, where public finances are in better shape.
CNBC:
- The US dollar's long decline may finally be coming to an end.
NY Times:
- When the financial crisis began, few firms on Wall Street looked more ripe for reform than the Big Threer credit rating agencies, David Segal writes in The New York Times. It wasn’t just that Moody’s Investors Service, Standard & Poor’s and Fitch Ratings, played a crucial role in the epochal housing market collapse, affixing their most laudatory grades to billions of dollars worth of bonds that went bad in the subprime crisis. It was the near universal agreement that potential conflicts were embedded in the ratings model. For years, banks and other issuers have paid rating agencies to appraise securities — a bit like a restaurant paying a critic to review its food, and only if the verdict is highly favorable. So as Washington rewrites the rules of Wall Street, how is the overhaul of the Big Three coming? It isn’t, finance experts say.
The Business Insider:
- The 10 Countries Most Likely to Default.
- A simulation conducted at Harvard University's Kennedy School of Government over the weekend predicts that the United States will fail in its efforts to prevent Iran from acquiring nuclear weapons, and will, for lack of other options, attempt to convince Iran not to use those weapons. The simulation further predicts that a serious crisis will break out between Israel and the U.S., as Washington pressures Jerusalem not to take any defensive action against Iran's weapon, while Israel insists on its right to self defense. According to sources at Harvard, the results of the simulation will be presented to U.S. President Barack Obama.
TheStreet.com:
Detroit News:
- The Obama administration will tell Congress Wednesday that it expects to lose about $30 billion of the $82 billion government bailout of the auto industry, two administration officials familiar with the report said today.
Politico:
- Critics start fast in Copenhagen.
Washington Times
- Nancy-Ann DeParle, one of President Obama's chief advocates for the health care reform bill wending its way through Congress, earned more than $6.6 million as a paid director for health care firms, some of which were targeted in government investigations or whistleblower lawsuits on suspicions of billing fraud and other legal problems. Five of the companies faced allegations ranging from overcharging Medicare to failing to warn patients of the dangers of their products, according to a study by the Investigative Reporting Workshop at American University and a review by The Washington Times of U.S. Securities and Exchange Commission (SEC) records and Mrs. DeParle's financial disclosure statement.
Reuters:
- Hedge funds have been taking their bets off the table in November and December, wary of a last-minute sting in the tail to a turnaround 2009 for the industry, battered by poor performance in the credit crisis. Prime brokers and managers say some funds in the secretive industry have decided to cut back risk after the market's fall in late October, so as not to endanger gains which have reached an average of 15.1 percent in the first 10 months of the year, according to Credit Suisse/Tremont. "Leverage is coming off towards the end of the year. Hedge funds are happy to take what they've got from 2009," said one prime brokerage executive, who asked not to be named. The Financial Services Authority's prime brokerage survey shows leverage -- an indicator of risk appetite -- crept up between October 2008 and April 2009 to around 1.2 times, while prime brokers say it rose to around 1.4 times by the autumn. But there is some anecdotal evidence suggesting it may have fallen back since then. Investors pulled $330 billion (202 billion pounds) of cash from the industry during four straight quarters of redemptions, and only returned with a tiny net inflow of $1.1 billion during the third quarter, according to data from Hedge Fund Research. "It stands to reason, especially after 2008, that if you've had a good year in 2009 so far and markets are getting a bit wobbly, you don't want to lose a few percentage points in December and maybe you deleverage," Odi Lahav, vice president at Moody's alternative investment group. Funds may also be cutting their risk exposure because of seasonal factors, such as market liquidity. "From mid-November to December, funds tend to reduce exposure. The markets tend to become less liquid from mid-December," said Arie Assayag, chief executive of New York and Paris-based hedge fund firm Nexar Capital.
- Two hedge fund veterans who worked at SAC Capital Advisors, LP and Pequot Capital Management, long considered among the industry's most successful, are launching their own firm next month, people familiar with the matter said on Monday. arry Foley, who had been a senior portfolio manager at SAC from 1994 to 2008, and Paul Farrell, a member of Pequot's executive committee and co-portfolio manager of its Scout Fund Group, plan to open Bronson Point Partners on January 1, 2010.
- Citigroup (C) Chief Executive Virkam Pandit canceled a scheduled trip to Texas to promote a microlending program, an official from the program said on Tuesday. The cancellation comes as Citigroup negotiates its exit from the government's Troubled Asset Relief Program. Sources said on Monday that the bank was locked in negotiations with
the government, and a key point of contention was the amount of capital the bank needs to leave the program.
Financial Times:
- New European Union rules to regulate the hedge fund and private equity industries could reduce the annual growth rate of the bloc by as much as 0.2 percentage points, according to an official report released on Monday. Though regulation of the sector was needed, according to Europe Economics, the think-tank commissioned to write the report, the current proposals were misguided. According to the assessment, one-off compliance costs for the European alternative fund management industry could be as high as €22bn ($32.7bn, £19.9bn) - far exceeding previous estimates. Although heavy regulation would damp European market volatility, the report said, its long-term effects on growth would be damaging. Industry groups welcomed the findings. The Alternative Investment Management Association said: "Not only will Europe's economic growth rate and employment be affected but there will be long-term consequences for Europe's pensions too."
- Mexico has taken out a $1bn insurance policy against oil prices falling next year, a clear signal that commodities producers remain wary about the threat of a double-dip recession. The world’s sixth largest oil producer said on Tuesday that it had hedged all its net oil exports for 2010, by buying protection against oil prices falling below $57 a barrel. The move follows a successful hedging strategy at $70 this year which netted Mexico more than $5bn on the back of low oil prices between January and June. Barclays Capital, Deutsche Bank, Goldman Sachs and Morgan Stanley arranged this year’s hedge. Bankers said Barclays Capital was leading next year’s program. Olivier Jakob, of the Swiss-based consultancy Petromatrix, said there was potential for a drop in oil prices in 2010 unless demand recovered meaningfully. “The fundamental supply and demand picture looks weak, but the weakness of the US dollar and financial flows are supporting oil prices right now,” he explained.
Style Underperformer:
Large-Cap Value (-1.28%)
Sector Underperformers:
Gold (-3.47%), Oil Service (-2.78%) and Steel (-2.44%)
Stocks Falling on Unusual Volume:
CLMT, CCJ, DLLR, MBT, VIP, PBR, MDAS, BARE, NVDA, KR, NYB, CYD, MTN, EBS, SIG, KIM, BSI and SWY
Stocks With Unusual Put Option Activity:
1) KR 2) VALE 3) BUCY 4) NYB 5) ARIA
Style Outperformer:
Small-Cap Value (-.08%)
Sector Outperformers:
HMOs (+1.43%), Education (+.89%) and REITs (+.05%)
Stocks Rising on Unusual Volume:
HPT, CI, SLG, FDX, AAPL, IVN, CAGC, SMED, SAFM, CAAS, PEET, DIOD, VISN, GMCR, SNHY, ALGT, AAPL, AAWW, RIMM, TAR, PTE, BF/B, AZO and FDX
Stocks With Unusual Call Option Activity:
1) TLB 2) GCI 3) AZO 4) CMCSA 5) SOHU
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