Wednesday, December 31, 2008

Today's Headlines


- U.S. mortgage rates dropped to the lowest in more than three decades as the government stepped up efforts to revive the housing market.

The average rate on a 30-year fixed mortgage tumbled for a ninth straight week, to 5.10 percent from 5.14 percent a week earlier, Freddie Mac said in a report today. That’s the lowest on record, according to data that goes back to 1971, the McLean, Virginia-based mortgage buyer said.

- John Paulson, who runs the $36 billion hedge-fund firm Paulson & Co., has some harsh words for his peers and their tendency this year to block or curb clients’ attempts to get their money back. “We think it’s a mistake for managers to use gates and other tools to limit investor access to their funds,” Paulson wrote in a 2009 outlook to investors. “While we recognize the difficulties of the current environment, we think it is a manager’s responsibility to raise liquidity to meet the redemption needs of their investors.”

- Yields on Fannie Mae, Freddie Mac and Ginnie Mae mortgage bonds declined to record lows after the Federal Reserve announced plans to buy $500 billion of the securities faster than expected. Yields on Washington-based Fannie’s current-coupon 30-year fixed-rate mortgage bonds declined 1 basis point, or .01 percentage point, to 3.81 as of 10:45 am in NY, according to Bloomberg. The difference between the yields on the bonds and 10-year Treasuries narrowed 8 basis points to 164 basis points.

- The cost of borrowing in dollars in London for three months dropped for the third day, ending 2008 at the lowest level in more than four years as policy makers provide cash and lower interest rates. The London interbank offered rate, or Libor, for such loans fell one basis point to 143 basis points, the least since June 8, 2004, according to British Bankers’ Association data. “There’s no reason for the easing in rates not to continue,” said David Keeble, head of fixed-income strategy in London at Calyon, the investment-banking unit of Credit Agricole SA. “The banking sector is more stable and cash is coming into the system.” The Libor-OIS spread, a gauge favored by former Fed Chairman Alan Greenspan, narrowed one basis point to 125 basis points today. The TED spread, the difference between what the U.S. government and banks pay to borrow for three months, dropped two basis points to 133 basis points. That’s two basis points lower than on Sept. 12, the last working day before Lehman Brothers Holdings Inc. collapsed.

- Treasuries fell, trimming their biggest annual rally since 1995, as stocks rose after fewer Americans filed initial claims for jobless benefits last week. The Securities Industry and Financial Markets Association recommends that Treasuries trading end today at 2 p.m. New York time for New Year’s Eve and stay shut around the world tomorrow for New Year’s Day and in Japan on Jan. 2. The number of Americans filing first-time claims for jobless benefits dropped by 94,000 to 492,000 in the week ended Dec. 27, from 586,000 the previous week, the Labor Department said today. The median forecast in a Bloomberg News survey of economists was for a decline to 575,000. U.S. yields indicate traders expect almost no inflation for the next decade. The difference between yields on 10-year Treasury Inflation Protected Securities, or TIPS, and conventional notes, which reflects the outlook among traders for consumer prices, was eight basis points.

- Crude oil rose after a government report showed a smaller-than-expected gain in U.S. fuel stockpiles. Futures are heading for a record annual drop.

- The US dollar’s share of foreign exchange reserves climbed in the third quarter as the currency rebounded and central banks sought the safety of the world’s leading reserve currency, data from the International Monetary Fund showed. The dollar accounted for 64.6 percent of the reserves held by governments and central banks at the end of September, up from 63 percent at the end of June, the Washington-based lender said today.

- GMAC LLC, the auto lender that’s getting a $6 billion federal bailout, completed a debt swap designed to bolster its capital after falling short of its $38 billion goal.

- Hamas is prepared to halt rocket attacks on Israel if the Israeli government lifts its blockade of the Gaza Strip, Russian Foreign Minister Sergei Lavrov said. Hamas’ Damascus-based political leader Khalid Mashaal made the offer in a telephone call today with Lavrov, the Russian Foreign Ministry said on its Web site.

- Bernard Madoff will file a list of his assets with the U.S. Securities and Exchange Commission today, his lawyer said, meeting the regulator’s deadline for disclosure of what money he has left.

- Tremont Group Holdings Inc., a hedge- fund firm owned by Massachusetts Mutual Life Insurance Co., was sued for investing with financier Bernard Madoff who allegedly confessed to a $50 billion Ponzi scheme.

Wall Street Journal:

- Mortgage lenders who wake up Thursday with a New Year's hangover are likely to face another headache soon: The effort to give bankruptcy judges the power to rewrite mortgages is gaining steam. The banking industry hoped the mortgage "cram-down" measure died when Congress removed it from the $700 billion bailout bill that passed in October. But it has been gathering momentum in Democrat-controlled Washington, as evidence emerges that current voluntary foreclosure-prevention programs are falling short.

- The concert industry has so far bucked the recession, according to year-end data from trade magazine Pollstar, but promoters are bracing for a bumpy 2009. Box-office receipts from North American concerts through December were $4.2 billion, up 7.8% from 2007.

- Buyout Shops Swoop In for a Feast on the Cheap.
- These Airline Stocks Will Soar: Strategist.

- Demand for U.S. mortgage applications was unchanged during the Christmas holiday week, holding the highest levels in more than five years with loan rates near record lows, an industry group said on Wednesday.


- Developers who have been reluctant to develop applications for Google's(GOOG) mobile Android platform because apps have only been available for free should be much happier in 2009. Google plans to start offering paid applications for sale as early as the first quarter, according to reports.

Seeking Alpha:
- Google(GOOG): A Gorilla Not to Be Missed.

The Detroit News:

- It is hard to imagine the head of any automaker -- foreign or domestic -- being optimistic about 2009. But Ford Motor Co. CEO Alan Mulally is downright ebullient. While he is all too aware of the dangers posed by the deepening recession, Mulally says Ford's decision to pass on the initial federal bailout of the U.S. auto industry has resonated with many Americans. The challenge now is getting them to come into the showroom and buy a Ford car or truck.

The Boston Globe:

- US Representative Barney Frank said yesterday he wants the government to spend $10 billion to jump-start the stalled development of affordable rental housing nationwide, including 31 projects in Massachusetts that can't move forward because of a lack of funds. Frank is proposing that the US Treasury buy $5 billion in low-income housing tax credits, a key source of funding for affordable housing, and provide states with another $5 billion they can spend on hundreds of stalled projects.


- Worldwide iPhone WiFi ad requests grew 52% month-over-month to 359 million in November, giving the iPhone 6.3% share of global total requests and 9.9% share of requests in the US, where it is now the #1 device, according to research from AdMob.


- Local yogurt store tells blogger that Steve Jobs is “in great health.”

- Solar-panel incentives lure customers.

USA Today:

- As 2008 ends, U.S. troop deaths for the year in Iraq and Afghanistan are the lowest combined total since the Iraq war began in 2003.


- While rumors of forthcoming Apple (AAPL) products for at Macworld next week have been relatively muted this month, Friedman, Billings, Ramsey analyst Craig Berger put out a note this morning stating that his “incremental checks into the Apple supply chain” have revealed the prospect that “a lower-cost version of the iPhone is coming … possibly in mid 2Q. Berger’s takeaway is that swings in production are lessening for Apple, and that that could lead to more stable order patterns for components, which could benefit Apple suppliers such as Intel (INTC), Marvel Technology (MRVL), LSI Logic (LSI), Nvidia (NVDA), while being “neutral” for suppliers of parts to primarily the iPhone, including Broadcom (BRCM), Marvel, Lattice Semiconductor (LLTC), National Semiconductor (NSM), Triquint (TQNT), and Skyworks Solutions (SWKS).
Berger prefers On Semiconductor (ONNN), Marvel, Microsemi (MSCC), Silicon Labs (SLAB), International Rectifier (IRF), Broadcom, Fairchild Semiconductor (FCS), and Atmel (ATML).

- ComScore (SCOR) last night published statistics from its measurement of U.S. visits to shopping Web sites from home and work, and found that Apple (AAPL) and (AMZN) had the biggest jump in unique visitors for the period November 1 to December 23. Apple’s traffic soared, up 19% to 35 million unique users, from 29.5 million in the year-earlier period. Amazon saw a surge of 7%, rising to 76.2 million unique users. Ebay (EBAY) topped the charts for unique users, with 85.4 million unique users, but that number was down 4% year-over-year. Wal-Mart Stores (WMT) and Target (TGT) were third and fourth, after eBay and Amazon, with Apple coming in number five in unique visitors.


- Growing numbers of U.S. financial firms have started to play on the European Climate Exchange (ECX) as they seek to gain experience of how carbon markets operate ahead of the launch of a U.S. cap-and-trade scheme. Sara Stahl, business development director for the ECX, said the second half of the year had seen an influx of U.S. firms joining the exchange, helping to drive traded volumes of carbon credits up to record levels.


- China will issue third-generation phone licenses tonight, citing an official at a telecom equipment supplier.

- Toshiba Corp. plans to increase sales of liquid-crystal-display televisions by at least 43% in fiscal 2009. The company plans to increase its global market share to 10% from about 6% currently, by March 2011.

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