Bloomberg:
- U.S. home prices fell 6.8 percent in April from a year earlier as rising unemployment and record foreclosures kept buyers out of the market. Measured monthly, the average price fell 0.1 percent from March, the Federal Housing Finance Agency in Washington said today. The number was projected to drop 0.4 percent in April, according to the median forecast of 15 economists in a Bloomberg survey. The housing slump has reduced the median price of an existing home 26 percent from the July 2006 peak, pushing affordability to near record levels. Prospective buyers are now being constrained by rising mortgage rates, the highest unemployment since 1983 and concern the housing rebound will be anemic.
- Developing-nation stocks fell for a second day, sending the MSCI Emerging-Markets Index down more than 10 percent from its 2009 high, amid concern the global recession will persist. The 22-country benchmark index dropped 1.6 percent to 724.67 as of 12:36 p.m. in New York. It slid as much as 2.4 percent earlier, bringing its losses since June 1 to 10 percent and marking the first so-called correction since emerging-market stocks began rallying almost four months ago. Dubai’s Financial Market General Index sank 5.9 percent. In Latin America, Mexico’s Bolsa Index slid 0.9 percent, while Brazil’s Bovespa dropped 0.2 percent.
- The European Union and the U.S. complained at the World Trade Organization about Chinese export restrictions on raw materials such as magnesium, their third joint complaint against the Asian nation. The EU and the U.S. said they filed a request for consultations at the WTO in Geneva today, setting off a period of discussions with China aimed at resolving the dispute. If talks fail, WTO judges can be asked to rule on the issue. “We are most troubled that it appears this is a conscious policy to subsidize Chinese industry,” U.S. Trade Representative Ron Kirk told journalists in Washington. “China is a leading global producer and exporter of the raw materials in question, and access to these materials is critical for U.S. industrial manufacturers.”
- Treasuries gained for a third day as the government’s sale of $40 billion of two-year securities, the first of three auctions this week of a record $104 billion in notes, drew stronger demand than forecast. The sale drew a yield of 1.151 percent, and a ratio indicating demand was the highest since September 2007. A bidder class that includes foreign central banks took the biggest share of the securities in at least six years.
- A young woman who was shot through the heart and died on the streets of Tehran has become the face of the opposition movement in Iran. Neda Agha Soltan was killed by a Basij militiaman during a protest march on June 20, according to people who said they were eyewitnesses and posted videos of her death on the Internet. The videos on Facebook and YouTube show her collapsing, losing consciousness and dying. Her death has resounded worldwide and become a symbol of the crackdown by Iranian authorities against demonstrations over President Mahmoud Ahmadinejad’s disputed June 12 re-election. Police used tear gas and batons to disperse about 1,000 people who had gathered in Haft-e Tir Square in central Tehran yesterday to mourn the university student. “The violence of the regime has intensified. They are trying to create a regime of terror,” said Mohammad-Reza Djalili, an Iran expert at the Graduate Institute of International and Development Studies in Geneva in a telephone interview. “The future will be marked by this horrible chain of events,” he said of Soltan’s killing.
- Crude oil rose more than $1 a barrel and gasoline climbed for the first time in five days as a weaker dollar bolstered the appeal of commodity futures as an alternative investment.
- U.S. Defense Secretary Robert Gates urged Persian Gulf states to support Iraq as a way to strengthen regional security and as a buffer against Iran. “The embrace of Iraq by its fellow Gulf states will help contain the ambitions of Iran,” Gates told a Washington conference of top defense officials from 11 countries in the energy-rich region.
Wall Street Journal:
- Netflix Inc.(NFLX) is a standout in the recession. The DVD-rental company added more subscribers than ever during the first three months of the year. Its stock has more than doubled since October. But Netflix's chief executive officer, Reed Hastings, thinks his core business is doomed. As soon as four years from now, he predicts, the business that generates most of Netflix's revenue today will begin to decline, as DVDs delivered by mail steadily lose ground to movies sent straight over the Internet. So Mr. Hastings, who co-founded the company, is quickly trying to shift Netflix's business -- seeking to make more videos available online and cutting deals with electronics makers so consumers can play those movies on television sets. His position offers a rare look at how a CEO manages a still-hot business as its time runs out.
- Harvard's endowment, scalded in the financial crisis, is shying from some riskier bets even as markets had been improving -- and losing talent in the process. Marc Seidner, the head of domestic bond investing for Harvard Management Co., the company that manages the nation's largest endowment, is leaving along with a colleague, Michael Llodra. The endowment lately turned away from investing in a strategy that they wished to pursue -- buying distressed assets such as bonds backed by mortgages. Mr. Seidner is the second-highest paid employee there, paid $6.3 million in the last fiscal year, behind Stephen Blyth, managing director for international fixed income, at $6.4 million. Harvard is also making other moves to maintain its cash cushion, even as it puts some money to work. "Harvard is actively managing its mix of cash and investments with an eye toward the future," said Jane Mendillo, the endowment's investment chief, in an email. "We see some enticing investment opportunities today, and have put money back into several of our target markets, but we are holding some cash for even better opportunities down the road."
- Citigroup Inc. (C) is in the market with a repackaged commercial mortgage bond, due to be sold next week, according to a person familiar with the matter. The $87 million deal, dubbed CGCMT 2009-RR1, is a re-REMIC, or resecuritization of real estate mortgage investment conduit. Since last week, Morgan Stanley (MS), Bank of America Corp. (BAC), Barclays Capital and Citigroup have all been repackaging bonds backed by commercial mortgages on office buildings, malls and hotels, and selling them.
- President Barack Obama for the first time cast doubt on his administration's willingness to directly engage Iranian President Mahmoud Ahmadinejad, sharply raising his criticism of Tehran's recent election and its crackdown on reformist leaders. After days of criticism from Republicans, Mr. Obama opened a White House press conference saying he was "appalled and outraged" by the threats and confrontations in the streets of the Iranian capital. "In 2009, no iron fist is strong enough to shut off the world from bearing witness to the peaceful pursuit of justice," the president said. Mr. Obama's comments could mark a significant shift in the White House's broader Middle East strategy, which has largely been framed upon a willingness to hold direct, high-level negotiations with Tehran over its nuclear program and support for militant groups.
- The insurance industry Tuesday laid down a marker on health care, warning in stark terms that a proposed government insurance plan would dismantle the employer coverage Americans have relied on for a half century and overtake the system. In a joint letter to senators, the two largest industry groups also said they don't believe it's possible to design a government plan that can compete fairly with private companies in a revamped health care market. That particular statement seemed to be aimed at lawmakers of both parties who are seeking a compromise on the contentious issue. Release of the letter from America's Health Insurance Plans and the Blue Cross Blue Shield Association came as House Democrats pushed forward with a partisan health care bill. "A government-run plan no matter how it is initially structured would dismantle employer-based coverage, significantly increase costs for those who remain in private coverage, and add additional liabilities to the federal budget," said the letter from AHIP chief Karen Ignagni and Scott Serota, the head of Blue Cross. "We do not believe that it is possible to create a government plan that could operate on a level playing field. Regardless of how it is initially structured, a government plan would use its built-in advantages to take over the health insurance market," added the industry letter. Looming large is the question of cost. Initial estimates had Senate plans topping $1.6 trillion over 10 years, and senators are working to scale back. Curbs on Medicare and Medicaid spending are assured, and a range of taxes are under consideration, along with the possibility of fees on employers who don't cover their employees.
- Dear President Barack Obama and Members of Congress: I understand that you have undertaken the Herculean task of repairing the health-care system in the United States. As a physician who has practiced medicine for the past 19 years, I think you would benefit from hearing about my experience. I am a board-certified internist with a specialty in endocrinology who currently practices in Washington, D.C. I also provide primary care to many of my patients.
- Regulators appear to be turning a critical eye to sales of leveraged and inverse exchange-traded funds, complex instruments that can magnify not only investors' returns but their risks as well. The Financial Industry Regulatory Authority has reminded brokers and registered investment advisers about their fiduciary duties when selling ETFs that offer leverage, are designed to perform inversely to the index or benchmark they track, or both. In a notice posted to its Web site earlier this month, Finra reminded the brokers and advisers that these instruments are complex and typically unsuitable for retail investors who plan to hold them longer than one trading session. Scott Burns, director of ETF analysis at investment-research firm Morningstar Inc., applauded the Finra notice, which was reported by Index Universe. Mr. Burns has been calling for increased oversight of leveraged and inverse funds. "This is a huge step forward toward protecting individual investors from having exposure to these products unwittingly inserted into their portfolios," Mr. Burns said.
Rassmussen:
- Congress now has sent its “Cash for Clunkers” bill to President Obama to sign into law, but most Americans oppose the plan to encourage people to trade in old cars for new, more fuel-efficient models. Few adults plan to take advantage of the program at this time. A new Rasmussen Reports national telephone survey shows that 54% oppose the “Cash for Clunkers” proposal. Thirty-five percent (35%) favor the plan, and 12% are undecided.
- Eighty-one percent (81%) of U.S. voters agree with Israeli President Benjamin Netanhyahu that Palestinian leaders must recognize Israel’s right to exist as part of a Middle Eastern peace agreement. A new Rasmussen Reports national telephone survey finds that just seven percent (7%) disagree and say this should not be a requirement for a peace agreement. Twelve percent (12%) are not sure.
Politico:
- House Minority Whip Eric Cantor — who thinks President Obama needs to get tougher on Tehran — is steamed that the repressive regime's diplos are still being invited to U.S.-sponsored July 4 parties. “This is just the latest example of an Administration so desperate to keep a campaign promise that it will celebrate our own Independence Day with the agents of a regime that supports terror and brutalizes its own people,” says Cantor spokesman Brad Dayspring.
The Washington Times:
- Family members of the victims of the Sept. 11 attacks say they have been blindsided by the Obama administration's opposition to their lawsuit seeking damages from top members of the Saudi Arabian government over suspected financial links to the 9/11 attackers. A series of closed-door meetings between the relatives' groups and Justice Department officials, arranged as an update on Mr. Obama's plan to close the detention facility at the U.S. Naval Base Guantanamo Bay, Cuba, turned instead into a sharp clash over the Saudi legal action, The Washington Times has learned.
Reuters:
Boeing Co(BA) on Tuesday postponed the first test flight of its 787 Dreamliner for a fifth time, citing a structural problem that marked the latest blow to the credibility of the No. 2 planemaker and sent its shares tumbling 9 percent.
- U.S. chief executives took a slightly less grim view of the economy in the second quarter, but still plan to cut jobs and capital spending, according to a Business Roundtable survey released on Tuesday. The quarterly CEO Economic Outlook Index rebounded to 18.5 in the second quarter from a record low of negative 5 in the first quarter. But it was still the third-lowest reading in the survey's six-year history. A reading below 50 means CEOs expect economic contraction rather than growth.
Financial Times:
Byron Trott, the former Goldman Sachs banker and frequent financial adviser to Warren Buffett, has raised more than $2bn in capital for his fledging investment firm. The early fundraising successes come as many of the biggest private equity firms struggle to lure as much investment capital as planned, and highlight the cachet that has accompanied Mr Trott’s role as Mr Buffett’s favorite investment banker.
- An economic recovery in the eurozone is only inching forward, according to a closely-watched survey that has highlighted the fragility of recent turnaround in growth prospects. June’s purchasing managers’ indices for the 16-country region rose to a nine-month high, indicating that the worst recession to hit continental Europe since the second world war was continuing to lose its ferocity. But the rate of improvement was less than expected, dragged down by a weaker performance in the service sector, and the indices still pointed to a substantial contraction in second quarter economic activity. The weaker-than-expected results will damp hopes that the eurozone could return to growth this year, even if the worst of the recession is clearly over, but were consistent with the view of many forecasters, including at the European Commission and European Central Bank that the economy will start expanding again in 2010. Chris Williamson, chief economist at Markit, which produces the purchasing managers’ indices, said June’s readings pointed to a contraction of about 0.5 per cent or 0.6 per cent in eurozone GDP in the second quarter. The rate of easing had “lost considerable momentum towards the end of the quarter,” he said, especially in the service sector, where demand appeared to have been hit by rising unemployment. Dominic Bryant at BNP Paribas ruled out a robust recovery “anytime soon”, and said he expected the economy to be “more or less flat for the next four quarters”. That lacklustre performance compared with the US and UK would reflect, he said, “the less aggressive action of policy makers in the eurozone in the areas of monetary policy, fiscal policy and banking sector support.”
The Telegraph:
- Traders are using software developed by US-based technology StreamBase to monitor "tweets" for price sensitive information. The software plugs into Algorithm-based automated trading platforms that have been used by traders for years. But rather than searching Reuters or Bloomberg the software now scans Twitter.com. The company, whose investors include Inqtel, Central Intelligence Agency's venture capital arm, claims it could give traders an edge when deciding whether to trade on breaking news, like terrorist attacks and natural disasters, rather than waiting for the information to be filtered through providers like Reuters Thomson or Bloomberg.
Financial Post:
- The amount of unused Canadian office space business put on the sublease market grew by almost 75% last quarter from a year ago, a further indication of the crumbling economy. CB Richard Ellis Ltd. said more than 7.7 million square feet of office space came back into the market across the country, an increase from the more than 4.4 million that hit the market in the same quarter a year ago. The sheer size of the increasing sublease market drove the national vacancy rate to 8.3% from 6.4% a year ago.
China Daily:
- China will not back away from its July 1 launch date for the controversial anti-pornography computer filter Green Dam Youth Escort, a Ministry of Industry and Information Technology (MIIT) source said. The assertion followed criticism from the US embassy in Beijing about the software's potential impact on trade and about technical issues that called into question the program's efficacy. The Chinese government is calling for Green Dam software, which limits access to violent and pornographic websites, to be included with all computers sold on the Chinese mainland starting July 1. "The US government is concerned about Green Dam, both in terms of its potential impact on trade and the serious technical issues raised by use of the software," a US embassy spokesperson said yesterday. Representatives from the US embassy, the MIIT and the Ministry of Commerce held a meeting on the subject on Friday but details of the discussion are unknown. The US embassy spokesperson said the US government also viewed with concern any attempt to restrict the free flow of information. Such steps were incompatible with China's aspirations to build a modern, information-based economy and society, the spokesperson said.
The Jerusalem Post:
Jewish neighborhoods in east Jerusalem are included in the US demand that Israel halt "settlement" construction, including for natural growth, State Department spokesman Ian Kelly told The Jerusalem Post during a press briefing on Monday. "We're talking about all settlement activity, yes, in the area across the line," he said, referring to neighborhoods in Jerusalem over the Green Line, or pre-1967 armistice line, in response to a question on where America's calls to halt construction in the settlements would be applied.
Emirates Business 24/7:
UAE banks have 20 billion dirhams in outstanding loans on credit cards, and 8% to 10% of that could be distressed or delinquent.
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