Tuesday, September 22, 2009

Today's Headlines


- Crude oil rose in New York for the first time in four days as the dollar weakened, bolstering the investment appeal of commodities, while China confirmed its August net imports were the second highest on record.

- Goldman Sachs Group Inc.’s(GS) third- quarter earnings per share estimate was raised 28 percent by FBR Capital Markets analysts, who said they expect the New York- based bank to continue achieving high returns on assets.

- U.S. home prices rose 0.3 percent in July from the previous month, less than analysts’ estimates, in a sign that the housing recovery is tenuous. The house price index fell 4.2 percent for the 12 months ended in July, the smallest decline this year, the Federal Housing Finance Agency in Washington said today.

- The Baltic Dry Index, a measure of shipping costs for commodities, fell to the lowest in more than four months after data showed Chinese demand for coal and iron ore to make steel is tumbling. The index tracking transport costs on international trade routes slid 72 points, or 3.1 percent, to 2,246 points, according to the Baltic Exchange. That’s the lowest since May 11. “China’s in what we call ‘off-peak mode’ and not going hell for leather importing iron ore,” Hendrik Leusink, division executive for capesize and panamax vessels at Island View Shipping in Cape Town, said by phone today. Also, “there are so many more ships coming free” for rental while new vessels are being delivered. Chinese iron-ore imports fell 14 percent in August from July and coal imports slid 15 percent, a second consecutive monthly decline, according to customs data today. The drops were due to rising global costs and domestic supplies.

- Total SA Chief Executive Officer Christophe de Margerie said recent gains in oil prices reflect market anticipation of a supply shortfall within five years rather than current demand. “If it was purely offer and demand, prices would be lower than the $60 we are seeing,” de Margerie said today in a Bloomberg Television interview in New York. “The market is anticipating in the long term there won’t be enough oil, some people would say speculating.”

- Yale University, whose endowment strategy became a model for schools across the country, said its investments lost 24.6 percent in the past year because of declines in private equity, energy and real estate.

- Palm Inc.(PALM), maker of the Pre mobile phone, gained as much as 9.7 percent in Nasdaq trading, a jump that some analysts attributed to speculation Nokia Oyj may bid for Palm. Palm, based in Sunnyvale, California, rose $1.10 to $17.05 at 1:26 p.m. on the Nasdaq Stock Market, after climbing to $17.50 earlier.

- American International Group Inc.(AIG), the insurer bailed out by the U.S., extended its rally for a second day, exceeding the company’s highest closing share price this year. The insurer gained $3.71, or 7.7 percent, to $52.11 at 11:39 a.m. in New York Stock Exchange composite trading.

- U.S. securities and commodities regulators urged Congress to tighten rules for derivatives beyond the Treasury Department’s proposal, to close loopholes and prevent traders from exploiting gaps in oversight. All dealers and markets should be subject to the rules, Commodity Futures Trading Commission Chairman Gary Gensler said today at a House Agriculture Committee hearing. Securities and Exchange Commission Chairman Mary Schapiro said the Treasury Department proposal lets traders investing in swap indexes engage in “regulatory arbitrage.”

- Georgia Governor Sonny Perdue issued a state of emergency for 17 counties after as much as 20 inches of rain in the past week turned creeks into torrents and killed at least seven people. It’s the worst flooding in the Atlanta area since the state began keeping detailed climate records after World War II, said David Stooksbury, Georgia’s climatologist.

Wall Street Journal:

- New Pentagon Priorities Reshape Defense Business. Smaller Contractors Benefit Amid Shift From High-Tech Weapons to More-Basic Arms Meant for Quick Deployment.

- Wind-turbine makers say growth in their industry could dramatically slow unless the federal government requires more electricity come from renewable energy. New federal stimulus grants helped restart a stalled wind-power industry, but Vic Abate, a General Electric Co.(GE) vice president in charge of its wind-turbine business, said orders for wind turbines to be built in 2012 and thereafter have been "extremely light." He is worried that wind-power installation by 2012 could fall back to one-third of last year's construction levels without additional government support, taking the wind industry from "a boom to a bust cycle."

- New York City students who win a lottery to enroll in charter schools outperform those who don't win spots and go on to attend traditional schools, according to new research to be released Tuesday. The study, led by Stanford University economics Prof. Caroline Hoxby, is likely to fire up the movement to push states and school districts to expand charter schools -- one of the centerpieces of President Barack Obama's education strategy.

- The Federal Deposit Insurance Corp. is leaning toward asking banks to prepay future fees as a way to quickly rebuild the agency's deposit insurance fund, people familiar with the matter said. Such a move is within the agency's power and would have banks push forward some of their payments in order to recapitalize the FDIC's fund, which is supported by fees levied on the banking industry. The agency is expected to propose a new policy at a board meeting next week. A final decision on how to recapitalize the fund hasn't been made, the people said.

- Congress could strengthen a White House proposal to reform the derivatives market through a variety of means, the head of the Securities and Exchange Commission said Tuesday, such as by approving a measure to have over-the-counter derivatives be regulated and disclosed in the same way as their underlying commodities or securities.

- A critical Senate Finance Committee work session on a sweeping health-care reform bill got off to a contentious start on Tuesday, with the panel's chairman seeking to wrap up debate this week but other members saying the bill needs many improvements before they can support it. "I look forward to a constructive floor debate starting as early as next week," said Finance Committee Chairman Max Baucus, D-Mont. "Let us make this a time for progress," said Baucus, who unveiled changes to the bill on Tuesday in a bid to attract new support.


- The worldwide personal-computer market is pulling out of its slump quickly and could defy predictions by growing this year, Intel(INTC) CEO Paul Otellini said Tuesday. Otellini's comments at a conference Tuesday were more bullish than many analysts have been.

- Car dealership chain CarMax said Tuesday its fiscal second quarter profit surged on higher sales and a one-time gain related to its auto financing business.

NY Times:

- The White House’s intervention in the race for New York governor is the latest evidence of how President Obama and his top advisers are taking an increasingly direct role in contests across the country, but their assertiveness has bruised some Democrats who suggest it could undercut Mr. Obama’s appeal with voters tired of partisan politics. The overt involvement of Mr. Obama’s team in New York, where they have tried to ease Gov. David A. Paterson out of the race, has made clear that this is a White House willing to use its clout to help clear the field for favored Democratic candidates and to direct money and other resources in the way it thinks will most benefit the administration and help preserve the Democrats’ majority in Congress.

- It was not exactly a planned strategy, but the recession, particularly in the United States, has been very good for Hyundai, the South Korean automaker.

Vanity Fair:

- 100 to Blame: Miami and Las Vegas.


- The Financial Times Lex commentary team is hoping to raise its profile and revenues thanks to a deal with business news broadcaster Bloomberg TV. Lex columnists will appear on the financial channel every weekday to expand on commentary addressed in the day’s column. In a collaboration that taps into the growing premium being placed on commentary, the clips will also be available on the FT.com website, where the newspaper group will run advertising alongside them. The FT said the deal will help its commentators reach Bloomberg’s 200 million global viewers and those visiting Bloomberg.com.


- Fifty-nine percent (59%) of U.S. voters believe that the current level of political anger in the country is higher than it was when George W. Bush was president. A new Rasmussen Reports national telephone survey finds that only 22% think the level of political anger is lower now, while 16% rate it as about the same.

- Sixty-six percent (66%) of voters nationwide say they’re at least somewhat angry about the current policies of the federal government. That figure includes 36% who are Very Angry. The latest Rasmussen Reports national telephone survey finds that only 30% are not angry about the government's policies, including 10% who are Not at All Angry. Adding to the voter frustration is the fact that 60% believe neither Republican nor Democratic political leaders have an understanding of what is needed today. Among those who are Very Angry about government policies, 80% say that neither political party’s leaders have the answers.


- Just when President Barack Obama has got Congress focused on health care again, Afghanistan keeps pulling him back in. With a $629.6 billion defense bill heading for the Senate floor, Washington woke up to headlines Monday warning of “mission failure” if more U.S. troops aren’t committed to battle the Taliban.

- President Barack Obama urged world leaders at the United Nations on Tuesday to act swiftly to address climate change, but did not offer a plan, or timetable, to get stalled cap-and-trade climate legislation through the U.S. Senate.


- Counterterrorism officials have issued security bulletins to police around the nation about terrorist interest in attacking stadiums, entertainment complexes and hotels — the latest in a flurry of such internal warnings as investigators chase a possible bomb plot in Denver and New York. In the two bulletins — sent to police departments Monday and obtained by The Associated Press — officials said they know of no specific plots against such sites, but urged law enforcement and private companies to be vigilant. These two bulletins followed on the heels of a similar warning about the vulnerabilities of mass transit systems. The bulletin on stadiums notes that an al-Qaida training manual specifically lists "blasting and destroying the places of amusement, immorality, and sin... and attacking vital economic centers" as desired targets of the organization. "While DHS and FBI have no information regarding the timing, location or target of any planned attack, we believe it is prudent to remind transit authorities to remain vigilant," Homeland Security spokesman Sean Smith said Monday night. Separately, law enforcement officials said a Colorado man may have been planning with others to detonate backpack bombs on New York City trains in a terrorism plot similar to past attacks on London's and Madrid's mass-transit systems. The investigation and the earlier warning about mass transit system have already prompted officials around the nation to step up patrols. Two law enforcement officials speaking on condition of anonymity because they were not authorized to discuss details of the investigation told The Associated Press late Monday that more than a half-dozen individuals were being scrutinized in the alleged plot.

- Room rates at luxury hotels will remain weak through 2010, but group bookings have started to perk up, a sign that economic conditions are turning around, the president of the Ritz Carlton hotel chain said on Monday. Business from conferences, media organizations and sports teams are stacking up, and they're booking rooms at rates slightly higher than today's current prices, said Simon Cooper, who is also chief operating officer of the Ritz Carlton, one of Marriott International's (MAR) luxury brands.

- India's gold imports in 2009 may fall to their lowest level since trade was liberalised 12 years ago as high prices have put off buyers in the world's biggest market for the metal, a top importer said on Tuesday. Total imports may fall to 500 to 550 tonnes, Shilpa Kumar, senior general manager of the global markets group at ICICI Bank, one of India's top three gold importers, told Reuters in an interview. In the first half of the year, Indian demand was 55 percent lower than a year ago, but the gap will be narrowed to 23-30 percent for the full year as higher wages for government employees and an official scheme for rural employment has cushioned the impact of failed monsoons, she said.

- U.S. Treasury Secretary Timothy Geithner on Tuesday said that the U.S. economy appeared to be picking up steam and G20. leaders gathering in Pittsburgh this week would strive to ensure the recovery was balanced. "We are at the very beginnings of this recovery ... We need to make sure that we keep at this, so we have in place a recovery that is going to be self-sustaining, led by private demand, (and) a financial system that can actually provide the credit that is needed," he told a press briefing.

- Carnival Corp & Plc (CCL) lifted its 2009 earnings forecast on Tuesday and said ticket prices for its cruises were stabilizing, boosting shares of the world's largest cruise operator as much as 9 percent.

Les Echos:

- Germany still faces “enormous” systemic risks, especially among its state-owned banks or ‘landesbanken’, finance minister Peer Steinbrueck said in an interview. Restructuring of the banks must be speeded up.


- BMW AG’s Spartanburg South Carolina factory will reach full technical capacity at the middle of next year, citing management board member Frank-Peter Arndt.


- US calls a truce in row over Megrahi release. America has vowed to draw a line under the release of the man convicted of the Lockerbie bombing and work to repair shattered transatlantic relations.

Justice Secretary Kenny MacAskill’s decision to free Abdelbaset Ali Mohmed al Megrahi sparked fury among American leaders, but a US State Department official has said the Obama administration recognizes Scotland’s right to decide its own affairs. Fears had been raised over a possible US boycott of Scottish produce, but State Department spokesman Ian Kelly promised that there would be no knee-jerk reaction against the country.


- HTC (High Tech Computer) is evaluating the possibility of adding Broadcom(BRCM) to its supplier list of 3.5G chipset solutions to fulfill its goal of introducing more entry-level and mid-range smartphones, according to market sources. The evaluation is also part of HTC's continuing strategy to reduce the risk of relying on a single supply source, said the sources, noting that HTC is dealing mainly with Qualcomm(QCOM) for the supply of 3.5G chipset solutions at present.


- China’s steel production capacity may rise by at least 50 million metric tons to 710 million tons next year, citing Wu Xichun, a consultant and former chairman of the China Iron and Steel Association. A total of $50 billion has been invested in steel projects in China, citing Wu. The industry will have a “difficult period” from the fourth quarter into next year because of worsening domestic overcapacity and weak global demand, the report said. China’s steel consumption increased by 17% in the first eight months of this year from a year ago, Wu was cited as saying. That pace will be hard to maintain during the rest of the year, the report said.

21st Century Business Herald:

- Chinese local governments are putting their solvency at risk by guaranteeing bank loans to investment projects, citing Liu Shiyu, a vice governor at the central bank. Local-government liabilities tripled to $770 billion as of May 31 from the start of 2008.

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