Vigilantes Sidelined as Treasury Swaps Show Growth Tops Deficit. The worst performance by Treasuries since the second quarter of 2009 reflects prospects for faster U.S. economic growth rather than concern that rising budget deficits will drive investors away from government debt. While the average yield on Treasuries rose to 1.89 percent from 1.42 percent at the end of September, according to the Bank of America Merrill Lynch Treasury Master index, the price of credit-default swaps tied to U.S. debt declined to 41.5 basis points from 48.4 basis points at the end of September, according to Bloomberg data. The dollar rose 1.5 percent against an index of currencies of six major U.S. trading partners. The drop in swap prices and the greenback’s strength shows bond vigilantes aren’t ready to punish the U.S. for its spending. Pacific Investment Management Co. and JPMorgan Chase & Co. raised their growth forecasts after President Barack Obama agreed to extend George W. Bush-era tax cuts as reports show gains in retail sales, manufacturing and consumer confidence.
U.S. Yield Spreads Fall Below Rest of the World. For the first time on record, investors are demanding a smaller premium to own U.S. corporate bonds than global company debt. Bondholders require 166 basis points more yield to hold U.S. investment-grade company debt instead of Treasuries, compared with an average 169 basis-point spread worldwide, according to Bank of America Merrill Lynch data. At the height of the credit crisis in December 2008, companies had the disadvantage of having to pay about 150 basis points more to lure U.S. investors to their bonds than borrowers seeking buyers elsewhere in the world. The shift highlights confidence in North America’s economic recovery as companies across the Atlantic in Europe contend with bailing out Greece and Ireland while waiting to see whether the fiscal crisis ensnares more countries. The U.S. economy is forecast to grow faster this year than either the euro region or Japan, according to Bloomberg surveys. “In the U.S. you have a little more optimism while in Europe you have more concerns about the sovereigns,” said Greg Venizelos, a credit strategist at BNP Paribas SA in London. “The sovereign issues are holding back spreads in Europe.”
Dollar Rises Versus Euro as Data Shows Slower China Manufacturing Growth. The dollar rose against the euro for the first time in four days after a Chinese report showed manufacturing expanded at a slower-than-forecast pace in December, boosting demand for safer assets. The U.S. currency gained versus 13 of 16 major counterparts after China’s logistics federation and statistics bureau said on Jan. 1 its purchasing managers’ index fell to 53.9 from 55.2 in November. The euro fell by the most in more than two weeks against the dollar as concern Europe’s sovereign debt crisis will linger damped demand for securities in the region, which added Estonia as the 17th member nation on Jan. 1.
Copper Gains to Record For Third Straight Session on Tight Supply Concern. Copper jumped to a record in New York, extending a second annual advance, on speculation that supply will lag behind demand as the global economic recovery gathers pace. Copper for March-delivery on the Comex in New York gained as much as 0.7 percent to $4.4795 a pound, the highest ever for a most-active contract, before trading at $4.46 a pound. The metal surged 33 percent in 2010, a second annual increase, as the global economy recovered from the worst recession since World War II. The London Metal Exchange and Shanghai Futures Exchange are closed today for holidays. “We’re expecting the Chinese come back into the market in early 2011, leading to a rebound in demand and driving a deficit in the global market balance,” said Xin Yi Chen, a Singapore- based analyst at Barclays Capital.
Russian Oil Output Hits Post-Soviet Record in 2010. Russia, the world’s largest oil producer, set a post-Soviet record for yearly crude output in 2010, even as the country’s production in December slipped from the previous month. Russian output last year rose 2.2 percent to 10.15 million barrels a day, the highest annual average since the collapse of the Soviet Union in 1991, the Energy Ministry’s CDU-TEK statistics unit said in a statement today. Russia produced 9.93 million barrels a day in 2009.
Snowplow Slowdowns Might Become American Way: Kevin Hassett. Europeans have grown accustomed to seeing government workers shut down their countries when provoked. At this time of huge deficits from Washington to the smallest towns, government workers in the U.S. also face significant cutbacks. Americans may have had their first taste of what that will mean. New York City Mayor Michael Bloomberg and New York Governor David Paterson are both calling for an investigation of allegations that city workers intentionally dragged out the cleanup of the Dec. 26 blizzard as a way to protest cuts in the city budget. The New York Post, citing City Councilman Dan Halloran, reported that some snow-plow drivers skipped streets on their routes or kept their plows too high to clear streets.
Wall Street Journal:
Insurers Sued Over Death Bets. Scrutiny on Secondary-Market Policies That Paid Investors When Others Died. New investor lawsuits are emerging amid the wreckage of an investment boom in life-insurance policies that spectacularly collapsed. The suits involve the secondary market in life policies, which boomed from 2004 to 2008 as thousands of old people sought to make fast cash by taking out multimillion-dollar policies on their own lives to sell to investors. Tens of billions of dollars worth of insurance changed hands. Under the deals, the investors pay the premiums until the insured person dies, at which point they collect the death benefit.
Drilling Is Stalled Even After Ban Is Lifted. More than two months after the Obama administration lifted its ban on drilling in the deep-water Gulf of Mexico, oil companies are still waiting for approval to drill the first new oil well there. Experts now expect the wait to continue until the second half of 2011, and perhaps into 2012. The delay is hurting big oil companies such as Chevron Corp. and Royal Dutch Shell PLC, which have billions of dollars in investments tied up in Gulf projects that are on hold and are paying hundreds of thousands of dollars a day for rigs that aren't allowed to drill. Smaller operators such as ATP Oil & Gas Corp., which have less flexibility to focus on projects in other regions, have been even harder hit. The impact of the delays goes beyond the oil industry. The Gulf coast economy has been hit hard by the slowdown in drilling activity, especially because the oil spill also hurt the region's fishing and tourism industries. The Obama administration in September estimated that 8,000 to 12,000 workers could lose their jobs temporarily as a result of the moratorium; some independent estimates have been much higher. The slowdown also has long-term implications for U.S. oil production. The Energy Information Administration, the research arm of the Department of Energy, last month predicted that domestic offshore oil production will fall 13% this year from 2010 due to the moratorium and the slow return to drilling; a year ago, the agency predicted offshore production would rise 6% in 2011. The difference: a loss of about 220,000 barrels of oil a day. Drilling in waters of less than 500 feet also has been snared by the government's increased scrutiny. Regulators requested modifications to 101 shallow-water drilling plans in 2010, compared with 59 such requests in 2009 and just 31 in 2008. Rig operators say drilling permits once approved in a matter of weeks have taken up to five months to process as the government introduced new rules. Some companies are shifting investments out of the Gulf. Erik Milito, a senior official at the American Petroleum Institute, the oil industry's main lobbying group, said more rigs will leave soon if drilling isn't allowed to resume. "They're doing everything they can to keep the contracted rigs in the Gulf," said Mr. Milito. "But they're idle, they're not able to do the work they intended to be out there doing, and that can only go on so long." ATP Oil & Gas, one of the smallest deep-water operators in the Gulf, has seen its share price fall 27% since the Deepwater Horizon exploded, a sign investors are concerned about lost revenue from its delayed wells. ATP's chairman, Paul Bulmahn, has said the company is now looking for projects in other countries. In a letter to President Barack Obama last month, Mr. Bulmahn pleaded for a drilling permit. The slow pace of permitting has drawn fire even from some Congressional Democrats, especially Louisiana Sen. Mary Landrieu, who has said the policy is hurting the region's economy. Louisiana Department of Natural Resources Secretary Scott Angelle pushed for a return to drilling last month. "It's time to get the men and women of this industry back to work, as well as the other industries that are dependent upon drilling activity for survival—the welders, the boat captains, the pipefitters and caterers," he said. "There is a multitude of individuals on the coast who want to get back to work finding the fuel to energize America."
Hedge Funds Extend Gains, but Insider Probe Swirls. Hedge funds notched another run of gains in 2010. But as the year closed, a wide-ranging insider-trading investigation spooked the industry and cast a cloud that will loom in the months ahead. In 2010, hedge funds on average returned 7.11% through November, according to the latest data from Hedge Fund Research Inc. The Dow Jones Industrial Average climbed 11% in 2010, with December being particularly strong.
Cooking Oil's Surge Shows How Inflation Hits Chinese. These days, Liu Chuansheng nervously scouts five locations before he buys cooking oil, illustrating how a sudden spike in the price of the Chinese kitchen's most vital ingredient has become close to a national crisis.
Investors' Forecast: Sunny With Chance of Overheating. Investor optimism is almost as much of a New Year's tradition as hangovers and resolutions: This January, like last, forecasters see the U.S. economy growing at a rate that is neither too hot nor too cold. For many Americans, with unemployment hovering near 10%, it's hard to feel optimistic in the midst of the current recovery, but investors see things differently: They believe the economy has more to fear from growing too quickly rather than too slowly.
Big Firms Poised to Spend Again. Big U.S. companies have cleaned up their balance sheets and, flush with cash, appear open to using it in 2011 on factories, stores and even hiring. "We preserved cash" over the past few years, said Jim Flaws, chief financial officer of Corning Inc. "Now we're turning around and feeling comfortable about our outlook and spending it."
The EPA's War on Texas. The Environmental Protection Agency's carbon regulation putsch continues, but apparently abusing the clean-air laws of the 1970s to achieve goals Congress rejected isn't enough. Late last week, the EPA made an unprecedented move to punish Texas for being the one state with the temerity to challenge its methods.
Boomers Hit New Self-Absorption Milestone: Age 65. In keeping with a generation’s fascination with itself, the time has come to note the passing of another milestone: On New Year’s Day, the oldest members of the Baby Boom Generation will turn 65, the age once linked to retirement, early bird specials and gray Velcro shoes that go with everything.
Public Workers Face Outrage as Budget Crises Grow. “The mantra is that the problem is the unions, the unions, the unions.” Across the nation, a rising irritation with public employee unions is palpable, as a wounded economy has blown gaping holes in state, city and town budgets, and revealed that some public pension funds dangle perilously close to bankruptcy. In California, New York, Michigan and New Jersey, states where public unions wield much power and the culture historically tends to be pro-labor, even longtime liberal political leaders have demanded concessions — wage freezes, benefit cuts and tougher work rules. It is an angry conversation.
Real Estate Developers Prosper Despite Defaults. Industry lore has it that New York is one of the toughest, most unforgiving real estate markets in the world. The costs are so high, the unions so ornery, the politicians so demanding and the rivalries so fierce, that one false move invites financial disaster. But the truth is that there have been surprisingly few career fatalities among New York developers, even though they have lost billions of investor dollars on overpriced real estate and have littered the city with unfinished apartment buildings. While a homeowner who lost a house to foreclosure would find it difficult to borrow for years, developers who defaulted on enormous loans have still been able to attract money. The reasons, experts say, are that there is still plenty of money floating around and that the market has a very short memory.
The New Speed of Money Reshaping Markets. A SUBSTANTIAL part of all stock trading in the United States takes place in a warehouse in a nondescript business park just off the New Jersey Turnpike. Few humans are present in this vast technological sanctum, known as New York Four. Instead, the building, nearly the size of three football fields, is filled with long avenues of computer servers illuminated by energy-efficient blue phosphorescent light. Countless metal cages contain racks of computers that perform all kinds of trades for Wall Street banks, hedge funds, brokerage firms and other institutions. And within just one of these cages — a tight space measuring 40 feet by 45 feet and festooned with blue and white wires — is an array of servers that together form the mechanized heart of one of the top four stock exchanges in the United States. The exchange is called Direct Edge, hardly a household name. But as the lights pulse on its servers, you can almost see the holdings in your 401(k) zip by. “This,” says Steven Bonanno, the chief technology officer of the exchange, looking on proudly, “is where everyone does their magic.”
Goldman(GS) Invests in Facebook at $50 Billion Valuation. Facebook, the popular social networking site, has raised $500 million from Goldman Sachs and a Russian investor in a deal that values the company at $50 billion, according to people involved in the transaction. The deal makes Facebook now worth more than companies like eBay, Yahoo and Time Warner.
An Unlikely Duo's Auto Safety Quest. A college professor and a former federal transportation official team up to seek standard installation of black boxes in cars — a system they hoped would do for traffic safety what it's done for aviation.
Feds Wind Plan May Zap Massachusetts. Massachusetts electric ratepayers could get jolted by plans to open up huge swaths of federal waters south of Martha’s Vineyard and Nantucket for more offshore wind farms. About a million National Grid ratepayers are already expected to get hit with a 2 percent hike in their electric bills due to the planned Cape Wind project in Nantucket Sound. But if 3,000 square miles of additional federal waters are fully developed, as envisioned by the U.S. Interior Department and the Patrick administration, then ratepayers could see double-digit rate hikes valued at tens of billions of dollars, business and industry experts warn.
gigaom:
Amazon.com(AMZN) in Talks to Buy Out UK's Lovefilm. Amazon is reportedly looking to buy U.K.-based video rental firm Lovefilm in a deal that would value it at £200 million ($312 million), according to a report in the Sunday Times (cited by Reuters). Buying Lovefilm could give Amazon a stronger position in the U.K. and also give it some expertise to go up against Netflix’s(NFLX) subscription DVD-by-mail and video rental business.
House GOP Plans Two-Pronged Assault on Health Law. The new Republican-controlled House plans to schedule a vote to repeal the sweeping health care overhaul before President Barack Obama delivers his annual State of the Union address late this month, incoming House Energy and Commerce Chairman Fred Upton (R-Mich.) said Sunday. “We have 242 Republicans,” he said on “Fox News Sunday.” He added, “There will be a significant number of Democrats, I think, that will join us. You will remember when that vote passed in the House last March, it only passed by seven votes.” Upton, whose committee will play a key role in the GOP's effort to roll back the law, said that he believes the House may be near the two-thirds majority required to override a presidential veto. “If we pass this bill with a sizeable vote, and I think that we will, it will put enormous pressure on the Senate to do perhaps the same thing,” he said. “But then, after that, we're going to go after this bill piece by piece.”
USA Today:
Experts: Gas Could Climb to $3.75 Per Gallon. Drivers in the USA could be paying as much as $3.75 a gallon for gas this spring, oil experts predict. Prices at the gas pump have inched up all year as the cost of crude oil neared $100 a barrel. On Christmas Day, the average nationwide price of self-serve regular hit $3, a record for that day. By year's end, the average price reached $3.06. Prices creeping toward $4 a gallon could have dire consequences for some industries and slow the economic recovery, analysts say. The record price is $4.11 a gallon on July 17, 2008. "We learned in 2008 that $4-a-gallon gas is a deal-breaker for the economy," says Joel Naroff, president of Naroff Economic Advisors. "If it happens, it's not sustainable. There's only so much the consumer will bear."He says drivers who need gas to get to work will buy it, but they'll cut spending elsewhere, sucking money out of the recovering economy. Consumers react when the price reaches $3.50, says Tom Kloza, chief oil analyst for the Oil Price Information Service. People living paycheck to paycheck will cut back on other spending to compensate for higher gas prices, he says, and gas at $4 a gallon "throws us into a consumer slowdown." "Oil prices ripple through every part of the economy," Kloza says. "I think it'll be the second highest year for oil prices on record." He predicts the price of a gallon of gas will range from $3.25 to $3.75 in the spring and crude oil will exceed $100 a barrel for a short time. He attributes much of the increase to speculation in oil futures. Last week, former Shell CEO John Hofmeister caused a stir when he predicted $5-a-gallon gas in 2012 as worldwide demand for oil grows while U.S. production shrinks. Developing wind, solar and biofuel alternatives will not generate enough power to meet the demand, Hofmeister says.
Reuters:
Iraq OKs Shell Plan to Build Its Own Dock. Royal Dutch Shell may build its own dock in Iraq's Shatt al-Arab waterway to speed up delivery of heavy equipment to the supergiant Majnoon oilfield which the oil major is developing with a Malaysian partner.
BofA(BAC) Reviews Documents Amid WikiLeaks Threat. A team of up to 20 Bank of America Corp officials, led by the chief risk officer, Bruce Thompson, have been reviewing thousands of documents amid a threat that it may be a target of WikiLeaks, The New York Times reported on Sunday.
Telegraph:
European Debt Markets 'Face Second Credit Crisis'. European debt markets could be hit by a second credit crisis within months as fears grow over the huge volume of new bonds that must be sold by governments and banks in 2011. Banks alone must refinance about €400bn (£343bn) of debt in the first half of the year, but add in the more than €500bn European governments must replace over the same period, as well as further hundreds of billions of euros of mortgage-backed debt maturing and there is the potential for chaos in the credit markets. "What we are looking at here clearly has the potential to become a second credit crunch. However, this time it would be much worse than before," said Celestino Amore, founder of IlliquidX, which specialises in trading hard-to-price debt. "Governments have been able to slow down the process, but the problems did not go away. There remains trillions of dollars of debt that must be refinanced or sold."
World on Red Alert Over China's Inflation. China could be hit by inflation of 7pc to 8pc over the next two months, panicking Beijing's policy-makers into dramatically raising interest rates, economists have warned. The prospect of at least four further interest rate rises in the world's second-largest economy is likely to alarm global markets, which tumbled in shock at China's decision to raise rates on Christmas Day.
Der Sonntag:
There is mounting evidence that the economic recovery is sustainable, Swiss Reinsurance Co. Chairman Walter Kielholz said. The situation in the U.S. has improved recently, Kielholz said in an interview. The risk of a double dip is "very small," he said.
CBCNews:
Egyptian Church Bomb Victims Mourned. Dozens of grieving Christians attended mass at the Saints Church in Egypt's Mediterranean port city of Alexandria on Sunday, the day after 21 worshippers were killed there in an apparent suicide bombing. The service was marked by the grief and anger felt by a congregation devastated by the attack, which took place outside the church's door about 30 minutes into the new year as churchgoers were leaving. Many sobbed while others cried hysterically and screamed in anger. Some lamented that attacks on Christians and churches often happen during usually happy occasions like Christmas. Others complained that the government was not doing enough to protect churches. Riot police backed by armoured vehicles were deployed outside the church on Sunday, however many felt it was too little, too late. "There is a lack of security in Egypt. The Interior minister must be removed," said one man who had lost a relative in the attack. Rev. Maqar, who led the service, did not give a sermon, preferring to express his grief with silence. "Is it possible that what happened is even remotely human? We were carrying dead bodies, but in pieces. Who can fathom such a thing? Who can tolerate it?" he said on Sunday. Saturday's attack, which left nearly 100 people injured, was the worst violence against Egypt's Christian minority in a decade. The Interior ministry blamed the bombing on "foreign elements." The Alexandria governor has accused al-Qaeda, pointing to the network's branch in Iraq, which has attacked Christians there and threatened Egypt's Coptic Orthodox Christian community.
Sydney Morning Herald:
Two Dead as Flood Chaos Hits 22 Queensland Towns. Two people are dead and one other is feared drowned in Queensland as northern Australia's devastating flood emergency continues to wreak havoc. More than 1000 people were sheltering in evacuation centres across Queensland last night. Twenty-two towns in the state's centre are either under water or isolated and 900 houses have been abandoned.
Weekend Recommendations Barron's:
Made negative comments on (AIG).
Citigroup:
Rated (WR) Buy, target $27.
Rated (ANAC) Buy, target $9.
Reiterated Buy on (AMD), raised estimates, boosted target to $12.50, added to Top Picks Live list.
Night Trading
Asian indices are +.50% to +1.0% on average.
Asia Ex-Japan Investment Grade CDS Index 102.0 -1.0 basis point.
ISM Manufacturing for December is estimated to rise to 57.0 versus a reading of 56.6 in November.
ISM Prices Paid for December is estimated to rise to 71.3 versus a reading of 69.5 in November.
Construction Spending for November is estimated to rise +.2% versus a +.7% gain in October.
Upcoming Splits
None of note
Other Potential Market Movers
None of note
BOTTOM LINE: Asian indices are higher, boosted by technology and commodity shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the week.
BOTTOM LINE: I expect US stocks to finish the week mixed as more economic optimism, equity fund inflows, seasonal strength, buyout speculation and short-covering offsets profit-taking, rising sovereign debt angst and China inflation worries. My intermediate-term trading indicators are giving mostly bullish signals and the Portfolio is 100% net long heading into the week.
BOTTOM LINE: I expect US stocks to finish the week mixed as US debt ceiling concerns, global growth worries and emerging market inflation fears offset short-covering, less financial sector pessimism and technical buying. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 100% net long heading into the week.
North American Investment Grade CDS Index 85.18 +.04%
European Financial Sector CDS Index 152.60 bps -4.1%
Western Europe Sovereign Debt CDS Index 204.83 bps unch.
Emerging Market CDS Index 200.28 -1.07%
2-Year Swap Spread 20.0 +1 bp
TED Spread 18.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .12% +1 bp
Yield Curve 270.0 -1 bp
China Import Iron Ore Spot $170.10/Metric Tonne unch.
Citi US Economic Surprise Index +14.60 -.1 point
10-Year TIPS Spread 2.28% -1 bp
Overseas Futures:
Nikkei Futures: Indicating +2 open in Japan
DAX Futures: Indicating +13 open in Germany
Portfolio:
Slightly Higher: On gains in my Medical and Ag long positions
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite recent stock gains, some weakness in European equities and China inflation worries. On the positive side, Gaming, Oil Service, Alt Energy, Ag, Telecom, Wireless, I-Banking, HMO, Homebuilding and Road & Rail shares are especially strong, rising more than .5%. Cyclicals are outperforming. Copper is jumping another +1.74% and the S&P GSCI Ag Spot Index is rising +2.28%. The 10-year yield is falling -7 bps to 3.29% despite recent positive economic data, the rise in commodities and "hot" prices paid readings. Put/call readings for the broad market are showing more bearishness today, which is a positive. The Shanghai Composite surged +1.76% last night, finishing at session highs, and is now back above its 200-day moving average. The Belgium sovereign cds is falling -3.17% to 217.93 bps and the UK sovereign cds is declining -5.57% to 72.41 bps, which are also positives. On the negative side, Education and Internet shares are under mild pressure, falling more than .5%. The Euro Financial Sector CDS Index remains near its highest level since mid-June and the Western Europe Sovereign CDS Index is right at a record high, despite the recent bounce in the euro currency. The broad market continues to trade in a healthy fashion as it grinds slowly higher and then consolidates. One of my longs, (AAPL), is resting after its recent run to record highs and +52.8% gain YTD. I still see further significant upside in the shares from current levels longer-term and expect the stock to strongly outperform the S&P 500 again next year. I expect US stocks to trade mixed-to-higher into the close from current levels on seasonal strength, short-covering, technical buying, lower long-term rates, less financial sector pessimism, more economic optimism, buyout speculation and investment manager performance angst.
Credit-Default Swaps Little Changed on Last Trading Day of 2010. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, increased 0.1 basis point to a mid-price of 85.2 basis points as of 10:49 a.m. in New York, according to index administrator Markit Group Ltd. The index, which typically rises as investor confidence deteriorates and falls as it improves, has declined from 99.4 basis points on Nov. 30.
Corn, Soybean Prices Head for Best Second-Half Performance in 50 Years. Corn and soybeans rose, heading for their best second-half performances in at least five decades, as stockpiles tumbled and adverse weather threatened crops in South America. U.S. corn inventories before next year’s harvest will decline to the lowest since 1996 and global consumption will outpace supplies for a second year in the season ending Aug. 31, U.S. Department of Agriculture data show. “Damage is occurring daily and it is irreversible,” said Jim Gerlach, the president of A/C Trading Inc. in Fowler, Indiana. “These prices have not slowed demand.”
Copper Advances to Record on Speculation Supply Shortage Poised to Worsen. Copper futures rose to a record for the fourth time this week as speculation heightened that a supply deficit will widen as China, the world’s biggest consumer, leads a rebound in demand for industrial metals. The price reached an all-time high of $4.432 a pound as the global economy recovered from its deepest recession since World War II. Supplies of copper, used in wiring and pipes, will lag behind demand by 825,000 metric tons next year, almost double this year’s deficit of 449,000 tons, Barclays Capital says.
Cotton Futures Poised for Biggest Yearly Gain Since 1973 on China Demand. Cotton rose, heading for the biggest annual gain since 1973, as inventories plunged, adverse weather damaged global crops and demand surged in China, the world’s biggest user. Stockpiles monitored by ICE Futures U.S. tumbled 72 percent in 2010, the biggest annual decline since at least 2003, when the data begins.
CVS(CVS) to Buy Universal American Unit for $1.25 Billion. CVS Caremark Corp. agreed to buy the Medicare Part D unit of Universal American Financial Corp. for about $1.25 billion, more than doubling the size of its program after pharmacy-benefits management sales fell for two quarters.
Wall Street Journal:
Portugal Confident on Debt Program. Portugal has the means to resolve its financing problems through ambitious targets to cut public debt and to put public finances under control, the country's Minister of the Presidency Pedro Silva Pereira said Thursday. "We are confident in the capacity of the Portuguese economy to confront the current situation,"Mr. Pereira told reporters after a cabinet meeting, rejecting any notion that the country may be forced to seek European Union aid early next year, as many economists fear.
Debunking Krugman(Again): On The Shift From Net to Gross Income Tax Basis. It seems anywhere one looks there days, one reads a refutation of Paul Krugman's tortured "economist" logic. Lately, the NYTer has fallen into the crosshairs of many due to his contention that currently taxes, based on some chart which the Nobelist probably mislabeled again, are at 20th century lows. Of course, cherrypicking data that fits the theory is precisely what economists do. Which is why Krugman may be excused for missing out on a trend so subversive that we have seen it only mentioned by tax attorneys at Weil Gotshal: namely the gradual transition in the definition of taxable income from a "net" to a "gross" tax basis. As Weil's Kimberly Blanchard explains:
High IPO Fees Weigh on U.S. Firms, Study Finds. American companies could save more than $1 billion a year if banks charged the same fees for initial public offerings as banks do in Europe, according to a new study by three British academics.
E.P.A. Limit on Gases to Pose Risk to Obama and Congress. With the federal government set to regulate climate-altering gases from factories and power plants for the first time, the Obama administration and the new Congress are headed for a clash that carries substantial risks for both sides. “These are hand grenades, and the pins have been pulled,” said William K. Reilly, administrator of the environmental agency under the first President George Bush. He said that the agency was wedged between a hostile Congress and the mandates of the law, with little room to maneuver.
Washington Post:
Government by Regulation. Shhh. Obama knows he has only so many years to change the country. In his first two, he achieved much: the first stimulus, Obamacare and financial regulation. For the next two, however, the Republican House will prevent any repetition of that. Obama's agenda will therefore have to be advanced by the more subterranean means of rule-by-regulation. But this must simultaneously be mixed with ostentatious displays of legislative bipartisanship (e.g., the lame-duck tax-cut deal) in order to pull off the (apparent) centrist repositioning required for reelection. This, in turn, would grant Obama four more years when, freed from the need for pretense, he can reassert himself ideologically and complete the social-democratic transformation - begun Jan. 20, 2009; derailed Nov. 2, 2010 - that is the mission of his presidency.
Boy Genius Report:
Citibank(C): Apple's(AAPL) App Store Will Generate $2 Billion in 2011. And if research firm Gartner’s forecasts are accurate, that number could be low. Gartner believes the global app market in 2010 totaled $4 billion, and that revenues will climb to a staggering $27 billion over the next two years.
Climate PR Effort Heats Up. Hey America! Are you ready to get wonky on global warming? After a year that started with fallout from the “Climategate” e-mail release, saw the cap-and-trade bill die in Congress, and ended with a gang of Republican climate skeptics winning House and Senate seats, global warming experts are going back to basics.
Environmentalists, scientists and lawmakers have renewed public relations efforts to put global warming plainly before Americans' eyes. "Folks are enraged about this, rightly so, and are looking for ways to educate," said Peter Frumhoff, director of science and policy at the Union of Concerned Scientists.
Reuters:
Molycorp(MCP) In Talks With More JV Partners: CEO. The top executive of rare earth mining company Molycorp Inc (MCP.N) said on Thursday his company is in discussions with a number of potential joint venture partners and customers scrambling to find other suppliers of the critical minerals in the wake of China's supply cut. In an interview with Reuters, Molycorp Chief Executive Mark Smith said the company was "absolutely" in negotiations to reach deals similar to the ones it announced earlier this month with Hitachi Metals Ltd (5486.T) and Sumitomo Corp (8053.T).
Greece in Talks on Extending Debt Repayment. Greece is in talks with commercial banks on extending the repayment of its outstanding debt, in line with a similar plan to stretch out paying back its EU/IMF bailout, an Athens weekly reported on Friday.
Global Stock Fund Inflows Gain, Bonds Slow - EPFR. Money flows to global equity and other stock funds accelerated during the fourth quarter, signaling a possible twist in 2011 from the record investments made in bond portfolios over the last year, according to a report published by EPFR Global on Friday.
Hedge Funds Offered Weak Returns in 2010. Hedge funds often claim to offer strong returns that are not correlated with broader markets, but in 2010 many failed on both of those counts. That failure came in large part because hedge funds cannot make as many bets with borrowed money, analysts said. Hedge funds on average returned just 4.52 percent this year to December 28, according to Hedge Fund Research's HFRX index. That is short of the FTSE 100's .FTSE 10.5 percent jump or the Standard & Poor's 500 Index .SPX 12.7 percent rise.
Blockbuster Deal Coming to IMAX. The curtain on a mergers and acquisitions boom could go up early in 2011. Wall Street and IMAX could light the blue touch paper because red-hot rumours suggest that the giant screen movie operator is attracting the admiring glances of Sony Corporation. Whispers that the Japanese multinational conglomerate is prepared to pay north of $40 a share lifted IMAX stock $0.62 to $26.23 in early trade yesterday.
Kathimerini:
Greece plans to gradually reduce the size of the public sector by 30%, starting with the redeployment of tens of thousands of state employees, who will change roles and departments in the first six months of 2011. The transfers, part of an efficiency drive, will affect workers in state-owned enterprises as well as those employed directly by the state.
DigiTimes:
Solar Cell Spot Prices Continue Slide in December. Solar cell spot prices have slid to US$1.20-1.25/W in December 2010, down from a peak of US$1.40-1.43/W in November, according to industry sources. Prices continued to be dragged down by seasonality and new capacity at suppliers. The downward price trend will likely hurt revenues performance of solar cell companies in December, the sources claimed. Some unspecified solar cell makers have admitted that December revenues will not be able to remain at high levels, due to falling demand and prices. They expect to manage single-digit drops sequentially through effective quote reductions.
