Bernanke Says Fed Likely to Raise Rates Before Full Employment. Federal Reserve Chairman Ben S. Bernanke said the central bank will raise its benchmark interest rate from a record low before the U.S. economy returns to full employment or inflation surges. “It will be the case that when we start the process of tightening policy that the economy will not yet be back at full employment,” Bernanke said.
Pimco's Crescenzi Sees 'Endpoint' in Devaluations. Nations have reached a “Keynesian endpoint” as exhausted balance sheets leave policy makers with few options to bolster economic growth, according to Anthony Crescenzi, an investor at Pacific Investment Management Co., the world’s largest bond-fund manager. “Time, devaluations, and debt restructurings might be the only way out for many nations,” Crescenzi wrote in an e-mailed note. Debt-fueled spending programs aimed at combating the global financial crisis of 2008 are among policy tools now “being seen as a magic elixir that has morphed into poison.” “The world is full of dirty shirts in terms of excessive debt, and the United States is one of those countries, but it still remains the reserve currency and still remains the flight- to-quality haven,” said Bill Gross, who runs the world’s biggest bond fund at Newport Beach, California-based Pimco. “The U.S. is the least dirty shirt,” he said in a June 4 radio interview on Bloomberg Surveillance with Tom Keene. The Obama administration forecast a $1.6 trillion budget deficit, the most ever, in the current fiscal year that began Oct. 1.
Bund Spread With Spain Nears Danger Zone: Technical Analysis. The premium investors receive for holding Spain’s debt compared with Germany’s has risen to near a level that may trigger another flight to quality, according to Citigroup Inc. The difference in yield between the nations’ 10-year securities widened today to 2.04 percentage points, a level not seen since before the introduction of the euro in 1999. A close this week of 1.98 percentage points will signal renewed sovereign-debt concern in Europe, according to Tom Fitzpatrick, an analyst in New York at Citigroup, one of the 18 primary dealers required to bid at Treasury auctions. “There is real danger if the spread widens out further, similar to the equivalent of the pivot moment Greece had in April before the crisis really took off,” Fitzpatrick said in a telephone interview. “If we see a real breach, we will see a domino effect into anti-risk developments including weaker equities, a higher VIX and further strength to Treasuries and bunds -- just more flight to quality.”
Aluminum prices in China have fallen below the cost of production, Luo Jianchuan, president of Aluminum Corp. of China Ltd., said in Shanghai today.
China's aluminum export growth may stall should the yuan be allowed to appreciate against the dollar, the China Nonferrous Metals Industry Association said. Rising labor costs have already made China's products less competitive overseas, Li Defeng, director of aluminum at the association, said in slides prepared for the Antaike aluminum conference in Shanghai today. U.S. purchases accounted for 19% of China's overseas aluminum sales last year.
Obama Gives States $250 Million to Review Premiums. Insurers led by UnitedHealth Group Inc.(UNH) and WellPoint Inc.(WLP) risk losing access to as many as 24 million customers a year under a plan announced by the White House today that expands funding for states to scrutinize “unreasonable” rate increases. The U.S. will give states $250 million in grants over five years to strengthen their ability to review premiums, starting with $51 million this year, said Kathleen Sebelius, the federal health secretary, in a statement today. UnitedHealth, WellPoint and Aetna Inc., the largest U.S. insurers, urged regulators in letters delivered last month to limit the new rate-review plans or risk driving insurers out of some markets.
European government bonds show the debt crisis that sent the euro to its lowest level in four years against the dollar yesterday is spreading to nations that previously were considered safe. The extra yield investors demand to hold Belgian and French 10-year government bonds instead of benchmark German bunds doubled in the past week. Investors, having focused on the budget deficits of countries such as Greece and Portugal, are now starting to recognize that Europe's so-called core economies have excessive borrowings, according to Bob McKee, chief economist at Independent Strategy, an economics consultancy in London. "France has a deficit that is comparable to some of the peripheral countries," McKee said in an interview. "Belgium has a major debt problem and we won't find out if it has a government to deal with it until the weekend." France's debt load of 77.6% of gross domestic product last year was the fourth-largest in the 16-member currency region, after Italy, Greece and Belgium.
Goldman(GS) Deserves Regulatory Probe in Bloomberg Poll. Goldman Sachs Group Inc. is being “legitimately scrutinized” by regulators who sued the firm for fraud based on conduct that many in the industry consider to be common practice, according to a Bloomberg survey. The most profitable securities firm in Wall Street history has suffered the worst reputational decline among its largest competitors, according to the global quarterly poll of 1,001 investors and analysts who are Bloomberg subscribers. Eighty- three percent of respondents said Goldman Sachs’s stature diminished in the past six months; the next closest were UBS AG, with 27 percent, and Citigroup Inc., at 26 percent.
Investors Pick U.S. Over BRICs in Bloomberg User Poll. The U.S. has supplanted China and Brazil as the most attractive market for investors as confidence in the global economic recovery wanes in the wake of the Greek debt crisis. Following the U.S.’s 39 percent rating as the most promising market were Brazil, chosen by 29 percent; China, 28 percent; and India, 27 percent. Those are three of the four so- called BRICs, large emerging markets that also include Russia. Just 6 percent chose Russia. In a poll taken in January, China was the favorite followed by Brazil. Respondents were allowed to pick multiple countries.
China, Hong Kong Stocks Downgraded at BofA Merrill. China and Hong Kong stocks were cut to “neutral” from “overweight” on speculation that policy easing may be “far away” and growth expectations will continue to fall, according to BofA Merrill Lynch Global Research. China is now the most “overbought” market in Asia while its yield curve has narrowed “sharply” to 102 basis points from 160 basis points in mid-April, strategists led by Sadiq Currimbhoy said in a report dated yesterday. They upgraded South Korea and India to “neutral,” and Singapore to “overweight.” “The Chinese 10-year bond is now 3.3 percent, down from 3.7 percent a few months ago, hardly a sign of accelerating either growth or inflation expectations,” the analysts wrote. “Any further narrowing and we would need to ‘underweight’ the market.” China has the highest number of “sell” signals within Asia based on a comparison of the markets’ 14-day relative strength index, according to the report.
Obama to Reopen Oil Drilling. The Obama administration, facing rising anger on the Gulf Coast over the loss of jobs and income from a drilling moratorium, said Monday that it would move quickly to release new safety requirements that would allow the reopening of offshore oil and gas exploration in shallow waters. Gulf Coast residents, political leaders and industry officials said delays in releasing the new rules, along with the administration's six-month halt on deepwater drilling—both issued amid public pressure—threatened thousands of jobs.
Goldman(GS) Gets Subpoena From Financial Crisis Panel. The commission investigating the causes of the financial crisis said Monday that it had subpoenaed Goldman Sachs and harshly accused the investment bank of trying to delay and disrupt its inquiry, The New York Times’s Sewell Chan reports from Washington. “Goldman Sachs has not, in our view, been cooperative with our requests for information, or forthcoming with respect to documents, information or interviews,” Phil Angelides, the chairman of the Financial Crisis Inquiry Commission, told reporters in a conference call. The deputy chairman, Bill Thomas, accused Goldman of “stonewalling,” and said, “They may have more to cover up than either we thought or than they told us.”
Business Insider:
Chinese Media Cites Foxconn Suicides In Calling for New Proletarian Revolution. Maoists have expressed concern with the growth of inequality in a country that only decades ago paid the same wage to all workers. Calls for a new proletarian revolution appears today in the state-owned People's Daily. Although many Chinese enjoy economic liberalization, technically everyone is still a Maoist. Watch what happens to the boom when this opinion catches on.
Gulf Spill Widows: Don't Stop Drilling. The widows of two men killed on the Deepwater Horizon drill rig urged lawmakers Monday to allow drilling in the Gulf of Mexico to continue, saying the oil industry is a major source of income for families in the region. "Drilling in the gulf must continue," said Courtney Kemp, of Jonesville, La., whose husband was killed along with 11 other workers when the drill rig exploded and sank in April. The rig, operated by Transocean, was contracted to develop a well leased by BP. "If drilling ceases, not only would off-shore employees lose their jobs," said Kemp, "but the trickle-down effect would be devastating not only to the coastal states, but eventually to the entire country."
Market Oracle:
Why a Rising U.S. Dollar is Horrible News for China. You'd think a country would be happy to have a strong exchange rate, so why is a rising dollar so bad for China? China used its pegged exchange rate to destroy the trading competition and grow its economy at 9% a year for the last 15 years. Hong Kong, Korea, Singapore, and Taiwan only managed 7%-8% growth over the same period. A 1% difference may not sound like much, but China basically used this edge to overtake Germany as the world's largest exporter in 2009 and build the largest lowest-cost manufacturing "sector" the world has ever seen. In other words, China fell for the classic trap. It built its future prosperity on the idea the dollar would always be cheap against other foreign currencies. Already, the Chinese renminbi has risen 16% against the euro over the last 120 days... This is the fastest, most violent move in the history of euro-renminbi markets. The Chinese renminbi has also risen 13% against the British pound, 13% against the Aussie dollar, and 5% against the Japanese yen. Europe is China's largest trading partner, and Chinese goods have just gotten 16% more expensive for Europeans. If you're a Chinese businessman and you're using a 2% profit margin to beat the competition and sell your goods to France, it only takes a 2% currency appreciation to put you out of business. As China's vice commerce minister put it recently, "Water doesn't boil if it's heated to 99 degrees Celsius. But it will boil if it's heated by one more degree."
Washington Post:
In Chinese Admiral's Outburst, a Lingering Distrust of U.S. Interviews in China with a wide range of experts, Chinese officials and military officers indicate that Guan's rant -- for all its discomfiting bluster -- actually represents the mainstream views of the Chinese Communist Party, and that perhaps the real outliers might be those in China's government who want to side with the United States. Guan's speech underscored that 31 years after the United States and China normalized relations, there remains a deep distrust in Beijing. That the United States is trying to keep China down is a central part of the party's catechism and a foundation of its claims to legitimacy. More broadly, many Chinese security experts and officials view the Obama administration's policy of encouraging Chinese participation in solving the world's problems -- including climate change, the global financial crisis and the security challenges in Iran and North Korea -- not as attempts to elevate China into the ranks of global leadership but rather as a scheme to enmesh it in a paralyzing web of commitments.
LA Times:
The Ties That Bind. Remember Rahm Emanuel's Rent-Free D.C. Apartment? The Owner: A BP(BP) Adviser. In case you were tempted to buy the faux Washington outrage at BP and its gulf oil spill in recent days, here's a story that reveals a little-known corporate political connection and the quiet way the inner political circles intersect, protect and care for one another in the nation's capital. And Chicago. We already knew that BP and its folks were significant contributors to the record $750-million war chest of Barack Obama's 2007-08 campaign. Now, we learn the details of a connection of Rahm Emanuel, the Chicago mayoral wannabe, current Obama chief of staff, ex-representative, ex-Clinton money man and ex-Windy City political machine go-fer. Shortly after Obama's happy inaugural, eyebrows rose slightly upon word that, as a House member, Emanuel had lived the last five years rent-free in a D.C. apartment of Democratic colleague Rep. Rosa DeLauro of Connecticut and her husband, Stanley Greenberg. For an ordinary American, that would likely raise some obvious tax liability questions. But like Emanuel, the guy overseeing the Internal Revenue Service now is another Obama insider, Tim Geithner, who had his own outstanding tax problems but skated through confirmation anyway by the Democratic-controlled Congress. Remember this was all before the letters BP stood for Huge Mess. Even before the Obama administration gave BP a safety award. Now follow these standard Washington links if you can: Greenberg's consulting firm was a prime architect of BP's recent rebranding drive as a green petroleum company, down to green signs and the slogan "Beyond Petroleum." Greenberg's company is also closely tied to a sister Democratic outfit -- GCS, named for the last initials of Greenberg, James Carville, another Clinton advisor, and Bob Shrum, John Kerry's 2004 campaign manager. According to published reports, GCS received hundreds of thousands of dollars in political polling contracts in recent years from the Democratic Congressional Campaign Committee. Probably just a crazy coincidence. But you'll never guess who was the chairman of that Democratic Congressional Campaign Committee dispensing those huge polling contracts to his kindly rent-free landlord.
Crain's Chicago Business:
Rep. Gutierrez Threatens to Oppose UAL Merger. A Chicago congressman Monday said he will oppose the pending merger of United and Continental airlines unless the carrier makes concessions to its customers and workers.
Harry Reid Lays Out Huge Senate Agenda. Majority Leader Harry Reid (D-Nev.) laid out an daunting summer agenda for the Senate on Monday afternoon, including a tax extenders bill, an emergency extension of unemployment benefits, a small-business jobs bill, the financial reform conference report and a war funding bill. To top that off, the Senate also has to begin the confirmation hearings of Supreme Court nominee Elena Kagan and deal with the ongoing oil spill crisis in the Gulf. "The work period between now and July 4 is short, but our to-do list is very long," Reid said. As if that’s not enough to deal with, Reid wants key Senate committees to draw up an energy bill in wake of the oil spill crisis.
Reuters:
Iran Sanctions Vote Could Come Wednesday: U.N. Envoys. Western nations are hoping the U.N. Security Council will be able to vote on Wednesday on a resolution imposing a fourth round of sanctions on Iran over its nuclear program, diplomats said.
New Crisis Could Expand German Short Ban - CESR Head. A new crisis could spark the expansion of Germany's new ban on naked short selling, but there is no reason for that now, a top European markets regulator said on Monday.
China Steelmakers Face Tough Q3 - Baosteel Group Head. The Chinese steel industry will face its toughest time of the year during the third quarter, the head of the parent of Baosteel, China's biggest-listed steelmaker, said on Tuesday. "The third quarter will be the most difficult time of the year because iron ore prices will peak," Xu said. He added: "Demand from the downstream industry will be sluggish."
TimesOnline:
William Hague Wins European Backing for Israeli Raid Inquiry. William Hague condemned Iran’s plan to send aid boats to Gaza yesterday, warning that the move would deliberately aggravate an already tense situation. “It is not helpful, and probably it is not designed to be helpful,” the British Foreign Secretary said after meeting Franco Frattini, his Italian counterpart. He and Mr Frattini agreed that Europe wanted an international presence in any Israeli inquiry into the deadly storming of the boats. Such an inquiry must be “transparent, honest and complete,” Mr Frattini said. When asked what form the international component could take because of Israeli opposition to a role by the United Nations, Mr Hague said: “The UN is not the only option, there are other organisations.”
Telegraph:
UK Would Have to Double Scale of Cuts to Match Canada's Public Sector Bonfire. The 20pc cut in public spending which Canada implemented in the 1990s would be equivalent today to some £140bn worth of public spending cuts, according to the Institute of Economic Affairs. This is dramatically higher than the £71bn the Conservatives signalled they would aim for ahead of the election, and would necessitate the biggest reduction in public spending on record. The warning came after David Cameron said that the imminent spending cuts, which will be spelt out by the coalition Government over the coming days, with George Osborne due to provide more detail of the mechanism for the cuts on Tuesday, would affect every Briton's life. He cited Canada as a country which successfully cut its national debt while maintaining stability and escaping recession.
China Economic Times:
Now is the best time for China to reform its exchange rate mechanism because weakening pressure for appreciation of the yuan means there will be fewer negative effects from the change, citing government researcher Fan Jianjun.
Shanghai Securities News:
China's sales of land for residential development projects fell 14% in 70 cities in May from the previous month, citing the China Index Research Institute, which tracks the nation's real estate market.
Evening Recommendations
None of note
Night Trading
Asian indices are -.25% to +.75% on average.
Asia Ex-Japan Investment Grade CDS Index 147.50 -1.0 basis point.
NFIB Small Business Optimism for May is estimated to rise to 91.0 versus 90.6 in April.
Upcoming Splits
(DHR) 2-for-1
Other Potential Market Movers
The Fed's Duke speaking, Fed's Evans speaking, Fed's Hoenig speaking, weekly retail sales reports, $36 Billion 3-Year Treasury Notes Auction, ABC Consumer Confidence reading, IBD/TIPP Economic Optimism Index, (PLXS) investor day, (ORBK) investor day, RBC Energy/Power Conference, Bank of America Merrill Lynch Small/Mid Cap Conference, Jefferies Life Sciences Conference, UBS Tech/Services Conference, Goldman Lodging/Gaming/Restaurant/Leisure Conference, JPMorgan Diversified Industries Conference, Piper Jaffray Consumer Conference, Needham Internet/Digital Media Conference and the (DPS) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
North American Investment Grade CDS Index 128.65 bps +5.01%
European Financial Sector CDS Index 179.78 bps +8.98%
Western Europe Sovereign Debt CDS Index 141.83 bps -5.86%
Emerging Market CDS Index 293.99 bps -.17%
2-Year Swap Spread 46.0 -1 bp
TED Spread 43.0 +1 bp
Economic Gauges:
3-Month T-Bill Yield .11% -1 bp
Yield Curve 245.0 -3 bps
China Import Iron Ore Spot $147.50/Metric Tonne unch.
Citi US Economic Surprise Index +4.90 -3.3 points
10-Year TIPS Spread 1.96% -1 bp
Overseas Futures:
Nikkei Futures: Indicating -31 open in Japan
DAX Futures: Indicating -10 open in Germany
Portfolio:
Slightly Lower: On losses in my Technology long positions
Disclosed Trades: None
Market Exposure: 50% Net Long
BOTTOM LINE: Today's overall market action is very bearish as the S&P 500 trades near session lows and appears to be breaking down from its recent range. On the positive side, Utility, Gold, Telecom, REIT and Food stocks are rising. On the negative side, Education, Gaming, Homebuilding, Construction, I-Banking, Networking, Semi, Disk Drive, Coal, Alt Energy, Oil Tanker and Steel shares are under significant pressure, falling more than -2.0%. The tech sector has traded heavy throughout the day. Copper and Ag commodities continue to trade very poorly. The Hungary sovereign cds is soaring +11.07% to 400.58 bps, the China sovereign cds is jumping +10.7% to 94.65 bps, the Japan sovereign is rising +6.2% to 98.71 bps and the Spain sovereign cds is gaining +3.95% to 267.06 bps. Moreover, the Emerging Markets Sovereign CDS is soaring +14.3% to 260.80 bps. It is also a big negative to see the Eurozone Investment Grade CDS Index rising another +4.97% to 127.71 bps. Like Friday, today's decline is on only mediocre volume and is a bit too orderly to indicate some sort of capitulation, in my opinion. Action is the tech sector is also worrisome. I expect US stocks to trade mixed-to-lower into the close from current levels on rising economic pessimism, more shorting, technical selling, rising financial sector pessimism, increasing sovereign debt angst and tax hike worries.
Spreading European Fiscal Crisis Hurts Banks: Credit Markets. Signs the global economic recovery is faltering and Europe’s fiscal crisis is spreading added to investor concern that banks will have difficulty in clawing back the $2.4 trillion they’re owed by that region’s most indebted nations. The cost of insuring against a default on financial-company bonds surged, with the Markit iTraxx Financial Index of credit- default swaps linked to the senior debt of 25 European banks and insurers climbing 6 basis points to 189, according to CMA DataVision in London, near the highest level since March 2009. The Markit iTraxx SovX Western Europe Index of contracts on 15 governments rose 0.5 basis point to 169, compared with the record-high 174.4 reached on June 4. Europe’s debt-ridden nations have to raise almost 2 trillion euros ($2.4 trillion) within the next three years to refinance maturing bonds and fund deficits, according to Bank of America Corp. Data.
Lawmakers May Sacrifice Swaps Plan for Volcker Rule in Talks. Congressional negotiators meeting to resolve differences over bank-regulation legislation are likely to retain a proprietary-trading ban and higher capital standards while stripping a measure that would bar commercial lenders from running swaps desks, said lawmakers and analysts. Senator Blanche Lincoln’s swaps-desk provision, which has been criticized by bankers and regulators alike, probably will be sacrificed in favor of Volcker rule trading curbs in House- Senate talks that may begin this week. Higher capital levels for larger U.S. banks may remain in the final bill as a nod to Senator Susan Collins, the Maine Republican who voted with Democrats to ensure passage of the legislation. “The battleground will end up being the derivatives rule,” said Kevin Petrasic, a former bank regulator now with law firm Paul, Hastings, Janofsky & Walker LLP. “It will cause the Volcker rule to be locked in because folks will be willing to give on the derivatives rule if they think the Volcker rule will stay in place,” Petrasic said in a telephone interview.
Copper, Nickel Tumble on Concern Global Recovery Is Faltering. Copper, nickel and lead slumped on concern that the global economic recovery may be at risk, imperiling metals demand, as Europe battles a sovereign-debt crisis and the U.S. added fewer jobs than expected. Copper, which entered a bear market last week, slumped to the lowest price in more than seven months on the London Metal Exchange, losing as much as 3.2 percent to $6,076.25 a metric ton. Nickel fell for a sixth day to as low as $17,500 a ton, while lead dropped as much as 4.5 percent to $1,535 a ton. In Shanghai, copper, aluminum and zinc all fell by the daily limit.
Hon Hai Falls on Plan to Double Wages at China Plants. Hon Hai Precision Industry Co., the maker of Apple Inc. iPhones, dropped the most in a year in Taipei trading after the company agreed to more than double wages at its Shenzhen factories following a spate of suicides. The flagship of the Foxconn Technology Group, the world’s largest contract manufacturer of electronics, fell 5.6 percent to close at NT$117.50 in Taipei, the biggest drop since May 12, 2009, while the benchmark Taiex index fell 2.5 percent. Foxconn International Holdings Ltd., a Hong Kong-listed affiliate, tumbled 5.5 percent before trading was halted. At least 10 workers have died from suicide, five during May, with three more attempts, according to Hon Hai.
Merkel's Cabinet Backs 'Decisive' Cuts as US Urges Spending. Chancellor Angela Merkel’s Cabinet is meeting to tie up a “decisive” round of budget cuts that will shape government policy for years to come, fueling disagreement with U.S. officials who favor measures to step up growth.
Cameron Prepares UK for Cuts Hurting 'Every Single Person'. U.K. Prime Minister David Cameron, preparing voters for the deepest spending cuts in a generation, said the previous Labour government left the public finances in a weaker state than he anticipated. “The overall scale of the problem is even worse than we thought,”Cameron said in a speech today in Milton Keynes, 50 miles (80 kilometers) north of London. “The decisions we make will affect every single person in our country. And the effects of those decisions will stay with us for years, perhaps decades to come.” He said Treasury estimates show government debt-interest costs reaching 70 billion pounds ($101 billion) in five years’ time, up from 31 billion pounds in the last fiscal year. “Today we spend more on debt interest than we do on running schools in England,” Cameron said.
G-20 Silence on Euro Drop Signals Approval, Morgan Stanley Says. Group of 20 finance chiefs’ lack of comment on the 17 percent drop in the euro versus the dollar this year at last week’s meeting signals they approve of the shared currency’s direction, according to Morgan Stanley. “Despite the volatility we’ve seen in currency markets, there haven’t been complaints about the path of the euro,” Sophia Drossos, co-head of global foreign-exchange strategy at Morgan Stanley, said in an interview on Bloomberg Television’s “In the Loop With Betty Liu.”
Bristol(BMY) Rises After Drugs Combat Skin, Blood Cancers. Bristol-Myers Squibb Co. rose the most of any stock in the Standard & Poor’s 500 Index after studies showed two of its cancer drugs could change the standard of care for patients with deadly skin and blood malignancies.The New York-based drugmaker jumped $1.70, or 7.6 percent, to $24.14 at 10:28 a.m. in New York Stock Exchange trading, the biggest gain in 20 months. Also today, Goldman Sachs Group Inc. raised their recommendation on the stock to “buy” from “neutral” on the positive results reported at the meeting.
FCIC Subpoenas Goldman Sachs(GS), Seeking Docments. The U.S. panel investigating the causes of the financial crisis issued a subpoena to Goldman Sachs Group Inc. after the Wall Street firm failed to hand over documents in a “timely manner.” The Financial Crisis Inquiry Commission “has made it clear that it is committed to using its subpoena power” if firms under review don’t comply with information requests, the panel said in a statement today. Moody’s Corp. and Berkshire Hathaway Inc. Chief Executive Officer Warren Buffett were previously subpoenaed by the commission.
IMF Calls for 'Decisive Action' on Euro-Area Fiscal Problems. The International Monetary Fund urged euro-area governments to take “decisive action” to ensure the sovereign debt crisis doesn’t derail the region’s monetary integration. “Policy makers need to take decisive action to complete the project of monetary union,” the IMF said in a statement today. The IMF said European nations need to take action to “establish fiscal sustainability” and “spur growth.”
White House Reporter Helen Thomas Retires. Legendary White House scribe Helen Thomas retired today following a weekend of blowback over comments she made on camera in which she stated that Jews should “get the hell out of Palestine” and go back to Germany, Poland, or the U.S.
Bloomberg Businessweek:
Build America Bonds May Push Cities to Bankruptcy: Joe Mysak. The bonds designed by the U.S. government to help municipalities recover from the worst recession since the Great Depression may cost them millions of dollars in unforeseen borrowing costs instead of saving them money. Build America Bonds were part of the American Recovery and Reinvestment Act, passed in 2009. The government offered state and local issuers a 35 percent subsidy on interest costs if they sold bonds on a taxable basis, making such financing cheaper than borrowing in the traditional tax-exempt market. Now the Treasury says it will reduce the BAB subsidies by any amount issuers owe the government. This would force municipalities to come up with the cash to repay debt service at the same time they are trying to fill holes in their budgets. Three major cities that have discussed chapter 9 bankruptcy this year -- Detroit, Los Angeles and Miami -- have sold a combined $4.5 billion in BABs. The last thing these issuers need is a surprise.
CNBC:
In Brutal Job Market, More Than a Million Quit Looking. The staggering level of "discouraged workers" as the government calls them has swelled to historic proportions in 2010, past the million barrier for the first time since the Bureau of Labor Statistics has been tracking the number.
NY Times:
Changes in China Could Raise Prices Worldwide. The cost of doing business in China is going up. Coastal factories are raising salaries, local governments are hiking minimum wage standards and if China allows its currency, the renminbi, to appreciate against the U.S. dollar later this year, as many economists are predicting, the cost of manufacturing in China will almost certainly rise. Although the salaries of factory workers in China are still low compared to those in the United States and Europe (the minimum wage in southern China is close to $125 a month), economists say the changes will eventually ripple through the global economy, driving up the prices of everything from T-shirts and sneakers to computer servers and smart phones.
NY Post:
Sony, Discovery(DISCA) and IMAX Set 3D Venture. Sony, Discovery Communications and IMAX are expected to raise the curtain on their joint venture 3D channel this week, sources tell The Post. The partners, these sources add, have hired cable executive Tom Cosgrove, now Discovery Channel's chief operating officer and executive VP, as their new chief. The as-yet unnamed 24-hour 3D service is expected to launch in January, carrying a mix of movies, documentaries and children's programming.
Start-Up Aims to Sequence Human Genomes for $30, In Just a Few Hours. The race to sequence genomes faster and cheaper has a new entrant — a start-up spun out of a Harvard University laboratory that focuses on emulsions, or mixtures of liquids like those found in mayonnaise and salad dressings.
Rasmussen Reports:
58% Favor Repeal of Health Care Law. The latest Rasmussen Reports national telephone survey finds that 58% now favor repeal of the bill while 35% are opposed to repeal.
Politico:
Pols Turn on Labor Unions. Spurred by state budget crunches and an angry public mood, Republican and some Democratic leaders are focusing with increasing intensity on public workers and the unions that represent them, casting them as overpaid obstacles to good government and demanding cuts in their often-generous benefits. Unlike past battles over the high cost of labor, this time pitched battles over wages and pensions are being waged from Sacramento to Springfield to New York City and the conflict is marked by its bipartisan tone, with public employee unions emerging as an intransigent public enemy number one in cities and state capitals across the country.
Lloyd's List:
Iran increased the number of supertankers it has storing crude oil by 20%, citing Steve Christy, head of reserach at E.A. Gibson Shipbrokers Ltd. Iran has 25 VLCCs and one suezmax used for storage, up from 21 VLCCs and one suezmax at the end of April. VLCCs hold 2 million-barrel cargoes. The storage charters have increased the total number of VLCCs not delivering their consignments to 47 vessels, the highest since April last year, it said.
America's Jobless Picture is Alarmingly Bleak. We are drifting. We take comfort in bits of good news, but we are in dangerous waters; the Great Recession is being starkly revealed as a global crisis with the US, the traditional engine of recovery, sputtering on every cylinder. The US government responded with dramatic financial support by transferring money to the household sector. But outside of these transfers the personal income of Americans is still declining; the residential market remains stagnant at best; consumer growth is nominal. The only real energy in the economy has come from the cessation of inventory liquidation, which is now the main factor in rising industrial output and any modest improvement in the economy. The mood of US households is despondent. In May only 11.3 per cent believed they would see their income rise in the following six months, while 16.6 per cent thought they would see it decline. This is the first time in over four decades that more people believe they will be worse off than better. Any massive fiscal and monetary stimulus that might reverse the trend is likely to be politically unsustainable given the growing concern over the exploding national deficit.
El Confidencial:
Spain is considering raising the rate of capital gains tax as it seeks to boost revenue. An increase in the basic rate of 19% for capital gains to 24% is among tax proposals under analysis by the government that has the greatest chance of being enacted, citing people familiar with the situation.
The race to sequence genomes faster and cheaper has a new entrant — a start-up spun out of a Harvard University laboratory that focuses on emulsions, or mixtures of liquids like those found in mayonnaise and salad dressings.