BETWEEN THE HEDGES: Today's Headlines

Bloomberg:
- General Motors Corp.(GM), poised to get at least $9.4 billion in U.S. aid, gained the most in a month in New York trading after the Federal Reserve approved lender GMAC LLC’s bid to become a bank holding company. GMAC’s shift to a bank eases the threat of a default that threatened to dry up credit for GM dealers who used the company to finance about three-quarters of their inventory. GMAC also handled loans for about 35 percent of GM’s 2007 retail buyers.

- Commercial-mortgage bonds are outperforming investment-grade company debt and Fannie Mae corporate notes this month, all among the top debt categories rewarding investors who bought or held on to devalued securities. Top-rated commercial-mortgage bonds, which returned 32 percentage points less than Treasuries in October and November, have offered a record 12 percentage points more than government notes through Dec. 24, Barclays Capital index data show. Debt markets are improving amid hopes that prices fell enough to account for potential defaults and as the U.S. government continues efforts to thaw credit and curb a yearlong recession. One of the AAA classes of a $7.6 billion 2007 Goldman Sachs Group Inc. commercial-mortgage-bond deal, considered a market benchmark, has jumped 24 percent, according to Ken Hackel, head of fixed-income strategy at RBS Greenwich Capital Markets.

- Kimberly Rodriguez, principal of Grant Thornton LLP’s automotive practice, says GMAC bank status to unlock auto lending. (video)

- Jacob Schmidt, CEO of Schmidt Research Partners Ltd., sees changes to hedge-fund transparency, fees. (video)

- Tony Regan, an independent oil and gas analyst, says oil is ‘bouncing along bottom,’ may fall further. (video)

- Aluminum declined from a three-week high in Shanghai as a state purchase plan by China, the world’s largest producer and consumer, was smaller than expected. The metal still posted the biggest weekly gain in ten weeks.

- The ruble fell to a record low against the euro as Russia's central bank extended six weeks of devaluations to compensate for falling oil prices. The ruble lost 1.3 percent to 40.7960 per euro at 12:48 p.m. in Moscow, the lowest level since the European currency was introduced in 1999. It declined 1.1. percent to 29.0107 against the dollar, a four-year low, capping a 20 percent drop since early August.

- Crude oil rose more than 5 percent after the United Arab Emirates said it would reduce production to comply with OPEC’s supply curbs. Abu Dhabi National Oil Co., the biggest producer in the U.A.E., will reduce oil supply to Asia in January and February, according to a statement sent to Asian buyers. OPEC agreed to a record production cut on Dec. 17 in response to collapsing demand because of the economic slowdown. Oil also advanced because the dollar dropped against the euro.

- US mortgage rates, already the lowest since Freddie Mac started tracking them in 1971, have plenty of room to fall if history is any guide. The average 30-year fixed-rate mortgage is still relatively costly compared with the yield on 10-year Treasury notes, a benchmark for home loans. The difference, or spread, between them exceeded 3 percentage points this week for the first time since 1986. The gap has averaged 1.64 points during the past two decades. Add that figure to the benchmark Treasury’s yield on Dec. 24 and the resulting mortgage rate would be 3.82%, well below this week’s reading of 5.14%. It’s possible that the spread may narrow to 1.25 points because the government is “absolutely obsessed” with making home loans more affordable, Don Hays, an investment strategist with Hays Advisory LLC, wrote. Hays projected that the 30-year fixed rate will drop as low as 4.25% by March, and perhaps sooner. “That will really ignite the spirits of home buyers,” he wrote.

- Allergan Inc.(AGN), maker of the wrinkle smoother Botox, won U.S. approval to sell the first prescription medicine to make eyelashes longer, darker and thicker. The Food and Drug Administration cleared the solution, called Latisse, to treat hypotrichosis of the eyelashes, “another name for having inadequate or not enough eyelashes,” Allergan said.

- Jones Apparel Group Inc.(JNY), the maker of Jones New York clothing and Nine West shoes, surged the most in 17 years in New York trading after it reduced credit lines and obtained more flexible lending terms from bankers. Jones Apparel jumped $1.40, or 36 percent, to $5.29 at 12:37 p.m. in New York Stock Exchange composite trading.

Wall Street Journal:

- Hundreds of private lenders, using the latest technology and paying high salaries, failed to adequately manage mortgage credit risk during the housing boom. Now, the Federal Housing Administration, using 24-year-old computer programs and civil servants who still handle some loan documents by hand, is trying to do better. At an FHA processing center in Philadelphia's Center City -- one of four such centers across the country -- the number of loans approved for insurance has soared to an average of about 40,000 a month from 12,250 a year ago.

- The Securities and Exchange Commission is casting a wide net as it investigates the apparent $50 billion fraud allegedly committed by Bernard Madoff, and it continues to look into whether Mr. Madoff's family had any connection to wrongdoing, according to a person familiar with the probe.

- India's print-media industry is being forced to delay expansion plans, lay off staff, freeze hiring and cut the number of pages as companies reduce the amount they spend on advertisements to cope with a softening economy.

- An American-backed drive to curb misconduct at the United Nations is faltering, blighted by bureaucracy and accusations of retaliation against whistle-blowers. Launched in December 2005 with advice from U.S. officials, the reform initiative was supposed to protect U.N. employees who exposed wrongdoing. The U.N. pledged this would ensure the "highest standards of integrity." Since then, the organization has been hit by numerous allegations of misconduct, from claims that U.N. peacekeepers in Congo traded guns for gold with rebels to accusations of corruption by U.N. employees in Kosovo.

- Fixed-rate home mortgage rates fell again this week, with the 30-year fixed-rate mortgage setting another record low, at least since Freddie Mac began doing its weekly survey in the early 1970s. The 30-year averaged 5.14% for the week ended Dec. 24, down from last week's 5.19% average, according to the Freddie Mac survey released Wednesday. It was more than a full percentage point below its 6.17% average a year ago, and hasn't been lower since Freddie started doing its rate survey in 1971.

CNBC.com:
- The steep drop in oil prices may not be over yet, says the CEO of Gulf Oil. While oil has tumbled more than $100 off its $147 a barrel high in the summertime, the price of US light, sweet crude could yet move as low as $25, and even $20 if current conditions persist, Gulf CEO Joe Petrowski said on CNBC.

MarketWatch.com:

- The average U.S. retail gasoline price resumed its fall after a week of stability, dropping to $1.64 a gallon for regular, according to the AAA Fuel Gauge report Friday. Prices had remained at or near $1.66 per gallon for well over a week prior to the recent drop. AAA attributed the decline to seasonal factors, in which "holiday demand for gasoline starts draining from the market and the slowest period of the year for fuel consumption - January and February - gets underway." The current price is far below the year ago level of $2.98 a gallon and the record $4.11 a gallon reached on July 17.

ZDNet: