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Bloomberg:
- The U.S. economy returned to growth in the third quarter after a yearlong contraction as government incentives spurred consumers to spend more on homes and cars. The world’s largest economy expanded at a 3.5 percent pace from July through September, figures from the Commerce Department showed today in Washington. Household purchases climbed 3.4 percent, the most in two years. Policy makers will now focus on whether the recovery, supported by government spending and tax credits, can be sustained into 2010 and generate jobs. The record $1.4 trillion budget deficit means President Barack Obama has little room for maneuver as he tries to keep unemployment from rising above 10 percent, while Federal Reserve policy makers wind down emergency programs in a bid to prevent a surge in inflation.
- Why the Goldman Sachs(GS)-AIG Story Won’t Go Away. How did so much taxpayer money end up in the coffers of American International Group Inc.’s too- big-to-fail customers? The more we find out, the more it becomes obvious we still don’t know the half of it. It’s the story that won’t go away: Was last year’s federal rescue of AIG a back-door bailout for the likes of Goldman Sachs Group Inc., Societe Generale SA, Deutsche Bank AG, Merrill Lynch & Co. and other large banks? To believe AIG’s disclosures, you’d have thought its executives decided on their own last year to pay 100 cents on the dollar to the various banks that had bought $62 billion of credit-default swaps from the company. Now, thanks to an Oct. 27 story by Bloomberg News reporters Richard Teitelbaum and Hugh Son, we know otherwise. It turns out the decision to make the banks whole wasn’t AIG’s. It was made by the Federal Reserve Bank of New York, back when its president was the current U.S. Treasury secretary, Timothy Geithner, and its chairman was Goldman Sachs director Stephen Friedman. (Friedman resigned from the New York Fed in May, after the Wall Street Journal reported he had bought more than 50,000 shares of Goldman stock following AIG’s takeover.) Before AIG was seized, its executives had been negotiating for months with the banks, trying to get them to accept discounts of as much as 40 cents on the dollar, Bloomberg reported, citing people familiar with the matter. Then, late in the week of Nov. 3, the New York Fed took over the negotiations with the banks from AIG, together with the Treasury Department (at the time run by former Goldman boss Henry Paulson) and Chairman Ben Bernanke’s Federal Reserve Board. Less than a week later, the New York Fed instructed AIG to pay the counterparties in full, Bloomberg reported. Judging by the result, you might think Geithner’s team was on the banks’ side, rather than AIG’s. But why the rush to pay the banks in full once Geithner’s team took over the talks? The public has never gotten satisfactory answers, notwithstanding that the government’s commitment to AIG now stands at about $182 billion. In a story published yesterday in response to Bloomberg’s scoop, the New York Fed’s general counsel, Thomas Baxter, told the Washington Post that officials were racing to prevent AIG’s collapse and didn’t have time for protracted negotiations with each creditor. That won’t put to rest suspicions that regulators used AIG as a slush fund to shield some of the banks from losses, using taxpayer money. Nor has anyone from AIG or the government explained why there was such a hurry to buy the CDOs. While the banks supposedly received market prices, that deal has since turned sour for taxpayers. The value of the securities, now held by a Fed-run entity called Maiden Lane III, was down by about $7 billion as of June 30, according to the New York Fed. The public might get some answers soon. Next month, the inspector general for the government’s Troubled Asset Relief Program, Neil Barofsky, is scheduled to release a report on whether AIG overpaid the banks, and the extent to which the counterparties’ own financial problems may have been at issue.
- Deflation remains a threat to the euro-area economy and a greater risk in some countries, presenting a “headache” for the European Central Bank over when to tighten policy, according to Capital Economics Ltd. While ECB President Jean-Claude Trichet said Oct. 1 that there has been “no materialization of deflationary risks” in the 16-nation economy, Capital’s European economist Ben May said in a report late yesterday that spare capacity leaves the region in jeopardy of a “prolonged and damaging period of falling prices.”
- The number of Americans collecting unemployment insurance fell more than forecast to the lowest level in seven months, a government report showed. The number of people receiving jobless benefits declined by 148,000 to 5.8 million in the week ended Oct. 17, the lowest since March 21 and biggest weekly drop since July, Labor Department figures showed today in Washington. Initial jobless claims fell by 1,000 to 530,000 in the week ended Oct. 24, from 531,000 the prior week. The four-week moving average of initial claims, a less volatile measure, declined to 526,250 last week, the lowest level since January, from 532,250. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 4.4 percent in the week ended Oct. 17, from 4.5 percent the prior week.
- Crude oil rose the most in a month after the U.S. economy grew in the third quarter for the first time in more than a year, spurring optimism that fuel demand will increase. U.S. fuel consumption dropped 0.8 percent to an average of 18.5 million barrels a day last week, yesterday’s report showed. Gasoline demand fell 1 percent to 8.86 million barrels a day.
- Cooper Tire & Rubber Co. is paying tariffs on imported tires. Free-trade agreements sought by Caterpillar Inc. and Wal-Mart Stores Inc. are on hold. Delta Air Lines flight attendants may join a union. There’s a common thread running through these developments. Organized labor is gaining momentum under the Democratic administration of President Barack Obama. Though reaching their most-publicized goals -- legislation making it easier to organize and a government-run health insurance program -- remains in doubt, unions are making other gains through executive orders, rule changes and appointments. More advances may be ahead as regulatory nominees are confirmed. “You absolutely know something is going to happen to you, you just don’t know when,” said Michael Lotito, a San Francisco attorney at Jackson Lewis LLP who handles labor issues for companies. “There is going to be a flurry of labor action down the pike.”
- Federal Deposit Insurance Corp. Chairman Sheila Bair, breaking with the Obama administration, said U.S. financial companies should prepay into a fund the government would use to unwind large failed firms. Congress should set up a Financial Company Resolution Fund and force institutions with more than $10 billion of assets to pay before a firm collapses, Bair said in testimony prepared for a House Financial Services Committee hearing today. Investors in failed companies also should take losses, she said.
Wall Street Journal:
- U.S. lawmakers and the regulators who will oversee the nation's financial-services industry split Thursday on key portions of the Obama administration's proposal to monitor and avert financial crises, highlighting the thorny issues that could slow progress on regulatory overhaul efforts. A draft proposal to deal with "too big to fail" firms unveiled by the Treasury Department and Rep. Barney Frank (D., Mass.) earlier this week received a sharp response at a key hearing on Capitol Hill. The Federal Reserve gave the measure a vote of confidence, but the Federal Deposit Insurance Corp. and lawmakers on both sides of the aisle on the House Financial Services Committee expressed unease or outright opposition about the broad new authorities envisioned to oversee financial markets.
Forbes:
- For more than six months, HTC enjoyed the privilege of being the only cellphone maker to have a handset running on Google's mobile platform, Android. Several manufacturers, including Samsung, Motorola (MOT) and LG have since crowded in. Motorola, which announced a new Android phone with Verizon( VZ) Wireless on Oct. 28, is forging particularly close ties with Google( GOOG).
CNNMoney:
Rassmussen:
- Most voters think the news media has too much power over their elected representatives in Washington and the decisions they make. It’s yet another finding that highlights the distance voters see between themselves and their government. A new Rasmussen Reports national telephone survey finds that 62% believe that what the media thinks is more important to the average member of Congress than what voters think. Just 27% say what voters think is more important to the average congressman.
Politico:
- House Speaker Nancy Pelosi unveiled a $894 billion health care bill Thursday that would extend coverage to 36 million Americans through a mix of subsidies, tax incentives and penalties on individuals and small businesses, but the final package falls short of the more liberal vision of a public health insurance option. Party leaders would like to start debate on the bill next week and hope to have a final vote before Veteran's Day on Nov. 11. The long-awaited introduction of a combined House health care bill that totals 1,990 pages produced few major surprises. After weeks of public hand-wringing, leaders – and party liberals – bowed to political reality by allowing doctors and hospitals to negotiate their rates with the government under the public plans.
- One of President Barack Obama’s key political advisers has become the central strategist in New Jersey Gov. Jon Corzine’s bruising campaign for re-election, a race the White House desperately wants to win to avert the consequences for its own agenda of a Republican winning in a traditionally Democratic state. The White House was so concerned about Corzine's chances during the summer that Corzine's aides feared the first-term governor was being pressured to step aside for a stronger candidate. Those fears turned out to be groundless, but were part of the reason Corzine hired Joel Benenson, who has helped impose discipline on a struggling campaign and crystallize Corzine’s aggressive attacks on the character of his Republican opponent, former U.S. Attorney Chris Christie. The race is seen as extremely close, complicated by the presence of a third candidate, Chris Daggett. For the White House, it’s a crucial symbolic prize. With Democrat Creigh Deeds running far behind his Republican rival in Virginia, the New Jersey race – once believed to be hopeless for Corzine – is now seen as the White House’s best bet to make the 2009 election cycle a political wash and to calm the nerves of congressional Democrats approaching the crucial 2010 midterm elections.
USA Today:
- More than 40% of President Obama's top-level fundraisers have secured posts in his administration, from key executive branch jobs to diplomatic postings in countries such as France, Spain and the Bahamas, a USA TODAY analysis finds. Twenty of the 47 fundraisers that Obama's campaign identified as collecting more than $500,000 have been named to government positions, the analysis found. Overall, about 600 individuals and couples raised money from their friends, family members and business associates to help fund Obama's presidential campaign. USA TODAY's analysis found that 54 have been named to government positions, ranging from Cabinet and White House posts to advisory roles, such as serving on the economic recovery board charged with helping guide the country out of recession. Nearly a year after he was elected on a pledge to change business-as-usual in Washington, Obama also has taken a cue from his predecessors and appointed fundraisers to coveted ambassadorships, drawing protests from groups representing career diplomats. A separate analysis by the American Foreign Service Association, the diplomats' union, found that more than half of the ambassadors named by Obama so far are political appointees, said Susan Johnson, president of the association. That's a rate higher than any president in more than four decades, the group's data show. Ambassadors earn $153,200 to $162,900 annually. "It is time to end the spoils system and the de facto sale of ambassadorships," Johnson said. "The United States is best served by having experienced, knowledgeable and trained career officers fill all positions in our diplomatic service."
Reuters:
- Iraq's Oil Ministry said on Thursday that it will sign a final deal on November 3 with BP (BP) and China's CNPC to develop its biggest oilfield, Rumaila, the nation's first major oil pact since the U.S. invasion in 2003. The ministry will also sign an initial deal on November 2 with Italy's Eni Spa over the Zubair oilfield, Oil Ministry spokesman Asim Jihad said. Both deals involve supergiant oilfields and a promise of increased production that could catapult Iraq up to the top ranks of the league of oil producing nations. Iraq's oil infrastructure is dilapidated after years of war, sanctions and underinvestment, and while it has the world's third largest reserves, it is only the 11th largest producer. The country hopes foreign investment will help it move up to third place with oil output of around 7 million barrels per day (bpd) -- triple current production of around 2.5 million bpd -- within six or seven years. Rumaila, with estimated reserves of 17 billion barrels, is the workhorse of Iraq's oil sector, producing almost half of the country's total daily output.
The Australian:
- BHP Billiton chief executive Marius Kloppers sees signs of a ``pullback'' in demand as China finishes rebuilding its inventories of raw materials. ``China has been the major and sometimes only source of demand for commodities in the second half of 2009,'' he said in a speech overnight at the London annual general meeting of the world's largest mining company. ``Restocking in China is now essentially complete and we are seeing signs of a pullback in demand.'' ``We ... believe it won't be until mid-2010 before we see clean underlying demand that is not masked by inventory effects,'' he said.
Digitimes:
- The current shortage in the supply of LED chips is expected to continue in the first quarter of 2010 due to significant demand for LED backlighting from the LCD TV and notebook segments, according to industry players. LED chipmaker Epistar revealed that its order visibility has extended to December, even though demand for LED-backlit LCD TVs is expected to slow down in that month amid off-season effects. In addition, ASP (average selling price) of LED-backlight units for LCD TV and notebook applications will also remain steady in 2010 thanks to strong demand, Epistar said.
Style Underperformer:
Large-Cap Growth (+1.40%)
Sector Underperformers:
Education (-2.39%), Drugs (+.30%) and Medical Equipment (+.40%)
Stocks Falling on Unusual Volume:
GT, APOL, COCO, BW, USMO, GLBC, MDAS, FSLR, ACLI, GTIV, USMO, XRAY, FDML, LHCG, VPRT, KSP and POR
Stocks With Unusual Put Option Activity:
1) RDC 2) AVP 3) GT 4) ODP 5) WFT
Style Outperformer:
Small-Cap Value (+2.34%)
Sector Outperformers:
Steel (+5.82%), Hospitals (+4.52%) and Homebuilders (+4.15%)
Stocks Rising on Unusual Volume:
LNC, VIP, ING, MBT, CLF, AA, DB, BCS, PBR, SU, SFLY, CTB, SWSI, AAWW, FIRE, AMAG, PSYS, TLVT, ITRI, CERN, ASIA, AKAM, AMSC, ODSY, PNRA, TTEC, PTEN, ORLY, IDCC, ACXM, BRKR, AIXG, DTG, CRR, KDN, PZJ, JAH, RZV, MTA, PZD, HBI, IJT, TBL and RNE
Stocks With Unusual Call Option Activity:
1) GT 2) MOT 3) UWM 4) ATI 5) SNDA
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