Monday, September 28, 2009

Today's Headlines


- European Central Bank President Jean-Claude Trichet said a strong dollar is “extremely important” for the world economy and it’s too early for the ECB to unwind emergency stimulus measures. “In the present situation it is extremely important that we can have in the framework at the level of global finance and the global economy a strong dollar as the authorities in the U.S. are saying,” Trichet told lawmakers in Brussels today. “The solidity of the dollar is very important.” Trichet’s comments come after a 15 percent slide in the dollar against the euro since February that’s threatening to slow Europe’s recovery from the worst recession since World War II. With the Group of 20 nations pledging to rebalance the global economy, the risk for the ECB is that its economy feels the pain of further dollar adjustment.

- John Calamos Sr., whose mutual fund beat 99 percent of rivals over the past decade, said technology and energy exploration stocks that benefit from global economic growth will offer better returns than the banks that have driven this year’s market rebound. “We want to be in areas where we feel a bit of wind at our back,” Calamos, an Air Force combat pilot during the Vietnam War who started his company in 1977, said in a telephone interview from Naperville, Illinois. Financials “are being driven by hope more than economic fundamentals.”

- One of President Barack Obama’s biggest obstacles to closing the Guantanamo Bay detention center by the January deadline he imposed is determining where to send about 100 Yemenis, the largest single group of prisoners by nationality. The U.S. wants many of them to go to a rehabilitation program in Saudi Arabia, according to two Obama administration officials familiar with the matter who spoke on condition of anonymity. The Saudis refuse to accept them, the officials said, and Yemen’s president wants the detainees returned to their homeland.

- Xerox Corp.(XRX) agreed to buy Affiliated Computer Services Inc.(ACS) for $6.4 billion in its biggest purchase, shifting to computer services as sales of its printing equipment drop. The acquisition will help triple sales from services to about $10 billion, Xerox said today in a statement. The total price of the cash-and-stock deal is about 34 percent more than Dallas-based Affiliated Computer’s closing price Sept. 25.

- Gasoline prices face a potential “meltdown” should futures close below a pivotal correction point at $1.5823 a gallon in New York, according to technical analysis by PVM Oil Associates Ltd. Gasoline “has very much led the way lower with early negative signals,” PVM said today. “The real key is $1.15823. Below that, and we’re in meltdown.” PVM said a decline in gasoline may drag down other energy contracts, including crude oil. Crude may slide to $64.69 a barrel after breaching a correction point at $66.92, and a series of moving averages, the broker added. Crude is trading below it 5,8 and 13-day rolling averages.

- Climate envoys met today in Bangkok with a new sense of urgency, saying negotiators are racing against a December deadline to devise a global deal. “Time is not just pressing, it has almost run out,” said Yvo de Boer, executive secretary of the UN Framework Convention on Climate Change. “But in two weeks, real progress can be made toward the goals that world leaders have set for the negotiations, to break deadlocks, and to cooperate toward concrete progress.” Nations across the globe are at odds over the level of emissions cuts developed countries must take, potentially binding commitments that the developing world could undertake, and the level of aid from wealthier to poorer nations to help them adapt to global warming and develop clean-energy sources.

- Emerging-market countries face pressure on their credit ratings as the economic recovery remains sluggish and governments rack up deficits, Standard & Poor’s said. “Our forecasts also point to persistent ratings pressure,” said New York-based John Chambers, managing director of S&P’s sovereign ratings in a report today. “Economic conditions remain difficult. The fiscal positions of almost every government will be worse than that of the preceding five years.”

- The steepest rally in natural gas prices since 2006 is coming to an end as the 400 salt caverns, depleted oil fields and aquifers used to store the fuel in the U.S. reach capacity for the first time. Stockpiles may surpass the record of 3.545 trillion cubic feet by as much as 350 billion cubic feet this fall, Energy Department estimates show. Gulf South Pipeline Co. says its fields in Louisiana and Mississippi are so full that customers will have to pay penalties for exceeding their limits. With no place to go, producers will be forced to dump excess fuel on the market.

- The U.S. Northeast may have the coldest winter in a decade because of a weak El Nino, a warming current in the Pacific Ocean, according to Matt Rogers, a forecaster at Commodity Weather Group.

Wall Street Journal:

- The Obama administration is close to committing as much as $35 billion to help beleaguered state and local housing agencies continue to provide mortgages to low- and moderate-income families, according to administration officials. The move would further cement the government's role in propping up the housing market even as some lawmakers push to curb spending at a time of rising debt.

- Iran said it successfully completed two days of missile tests that included launching its longest-range missiles on Monday, weapons capable of carrying a warhead and striking Israel, U.S. military bases in the Middle East, and parts of Europe. State television said the Revolutionary Guard, which controls Iran's missile program, successfully tested upgraded versions of the medium-range Shahab-3 and Sajjil missiles, which can fly up to 1,200 miles. It was the third and final round of missile tests in two days of drills by the Guard.

- China's ambition to create "green cities" powered by huge wind farms comes with a dirty little secret: Dozens of new coal-fired power plants need to be installed as well. Part of the reason is that wind power depends on, well, the wind. To safeguard against blackouts when conditions are too calm, officials have turned to coal-fired power as a backup.

- After struggling to sell cutting-edge products to utilities, technology companies are sensing better times ahead with the influx of $4.5 billion in federal stimulus funds for so-called smart-grid projects. The federal grants are expected to speed transformation of the power grid from a largely electromechanical system into a digital network that gives utilities more efficient ways to send electricity to customers. That could help cut pollution and electric bills. Smart meters, one component of a smart grid, allow utilities to monitor usage almost in real time, letting them charge variable prices based on demand, for example. Corporate and residential customers would acquire tools to manage their energy use. Residential customers could be given an in-home meter to see how much power they are using and what it is costing them.

- Usually, franchisers don't want to gamble on young entrepreneurs—they prefer seasoned managers who have built up lots of savings to plow into the venture. Now a host of companies are rethinking that logic. They're aggressively recruiting twentysomethings through franchise brokers, marketing themselves in youth-friendly venues like Facebook, and in some cases offering financial lures to get young people on board—such as deep discounts on franchise fees, which many beginners can't afford.

- Wireless networks are not just for cellphones and laptops anymore. AT&T Inc. (T) and Verizon Wireless have also struck deals to supply Internet access for electronic book readers, spurred by Sprint Nextel Corp.'s (S) pioneering deal with Inc. (AMZN). And AT&T this month unveiled the industry's first-ever agreement to provide access for a satellite-navigation device. It's all part of a mounting effort by wireless carriers to tap fresh sources of growth as the number of Americans without mobile phones shrinks.
- Barclays Capital boosted its rating on Cisco Systems to overweight from equal weight Monday, citing "improved visibility" in the networking-gear maker's key markets. Shares of Cisco(CSCO) jumped 5% early Monday after analyst Jeff Kvaal issued the upgrade, saying, "We believe visibility into carrier capex [capital expenses] has improved, Europe is starting to uptick in certain regions, and U.S. networking demand is better."


- Sageworks has compiled a list of 10 facts about today’s consumer based on the analysis of sales in consumer-related private businesses over the past year. The data depicts a thriftier and do-it-yourself-friendly consumer who is unwilling to give up the simple pleasures of life despite job losses and budget cuts. Sageworks’ data shows that people are still shopping, but they are doing more shopping online.
- Steve Jobs likes to wait for nice round numbers before he announces his milestones, and on Monday Apple (AAPL) hit a big one: the 85,000 apps in the iPhone App Store have now been downloaded more than 2 billion times — a number Jobs described as "staggering." "The rate of App Store downloads continues to accelerate," he said in a prepared statement, pointing out that more than half a billion apps were downloaded in Apple's fourth fiscal quarter alone.

Washington Post:

- President Obama will travel to Denmark on Thursday to lend his weight to efforts to land the 2016 summer Olympics for his adopted hometown of Chicago, the White House said Monday. Obama will join first lady Michelle Obama, senior adviser Valerie Jarrett, Education Secretary Arne Duncan and a contingent of Chicagoans to make make a final effort to persuade the International Olympic Committee to award the games to Chicago. The committee is scheduled to announce its decision on Friday. Initially, Obama said he would not go to Copenhagen, saying he was too busy with his legislative initiatives, including the health care reform package taking shape in Congress.

Chicago Sun-Times:

- Four years ago, the Let's Talk, Let's Test Foundation helped persuade Illinois legislators to spend $3 million a year to fight the spread of AIDS in African-American communities. The Chicago not-for-profit organization -- founded by state Rep. Connie Howard (D-Chicago) -- went on to get $1.2 million in taxpayer money from that program, called the African American HIV/AIDS Response Fund. Now, state health department officials are questioning $523,545 in spending by Let's Talk, Let's Test. The expenses being scrutinized range from the purchase of a skybox at a college football game at Soldier Field to five-figure "bonus" payments to two staffers, state records show. Federal authorities also are looking into the foundation. "As of today, we can confirm that the U.S. attorney's office is investigating the LTLT matter," Kelly Jakubek, communications manager for the Illinois Department of Public Health, said Friday.


- A key U.S. self-regulatory agency hasn’t done a very good job of regulating its own risky investments. The Financial Industry Regulatory Authority has sharply curtailed its investments in hedge funds, private equity funds and other volatile investments after taking a bath on them last year. The regulator, formed two years ago by the merger of the National Association of Securities Dealers and NYSE Regulation, saw its $1.2 billion investment fund fall 27% last year. In response, FINRA sharply increased its fixed-income allocation to 50%, at the expense of some of the 10 hedge funds and 20 private equity firms that made up about half of FINRA’s money managers last year. Among the alternative investment firms that FINRA had money were Farallon Capital Management, Alinda Capital Partners and Siguler Guff & Co., The Wall Street Journal reports. FINRA said the losses “have in no way hindered our ability to fulfill our regulatory responsibilities.” But they’ve drawn a lawsuit from one member firm. Inglewood, Calif.-based Amerivet Securities has sued the regulator, alleging that it was “reckless in pursuing high-risk strategies inappropriate to preservation of capital.”

- Deutsche Bank reiterates a 'Buy' rating on Intuitive Surgical (ISRG), raises price target to $300 from $225. Deutsche analyst says, "Intuitive Surgical received notice from the Pharmaceutical and Medical Devices Agency (PMDA) of a favorable recommendation for approval of the da Vinci System. As a result, we expect regulatory approval in October. Japan, the second largest MedTech market globally, should account for 10% of the da Vinci installed base, representing 140 systems."


- Apple's iPhone 3G smartphone will go on sale in China in October, operator China Unicom said on Monday. The iPhone 3G will go on sale in October for around 5,000 yuan (US$733), the operator said, without offering specific pricing for the two iPhone 3G models, which have storage capacity for 16GB and 32GB of data, respectively. Details of all eight pricing plans were not available, and it was not immediately clear if iPhone 3G customers would pay the full retail price with all of these plans.


- Just 41% of voters nationwide now favor the health care reform proposed by President Obama and congressional Democrats. That’s down two points from a week ago and the lowest level of support yet measured. The latest Rasmussen Reports national telephone survey finds that 56% are opposed to the plan. Senior citizens are less supportive of the plan than younger voters. In the latest survey, just 33% of seniors favor the plan while 59% are opposed. The intensity gap among seniors is significant. Only 16% of the over-65 crowd Strongly Favors the legislation while 46% are Strongly Opposed.

- The leaders of the world’s most powerful nations may have agreed late last week to work more closely together to control and protect the global economy, but Americans believe more than ever that the best solutions start at home. A new Rasmussen Reports national telephone survey finds that just 23% of Americans believe that decisions made by world leaders to help the global economy will do more to help the U.S. economy than decisions made by domestic business leaders. Fifty-eight percent (58%) say the American economy will be helped more by decisions made by U.S. business leaders to help their own businesses grow.


- Wall Street has showered nearly $11 million on the Senate since the beginning of the year, and more than 15 percent of it has gone to a single senator: Democrat Chuck Schumer of New York. Schumer’s $1.65 million take from the financial services industry is nearly twice that of any other senator's — and more than five times what the industry gave to any single Republican senator. While the industry has scaled back its political spending in the wake of last year’s economic collapse, data from the Center for Responsive Politics show that it’s still investing heavily in the Senate, where it’s likely to have its best shot at stopping — or at least shaping — the crackdown on Wall Street that President Barack Obama has proposed. And it’s clearly looking to Democrats to do it.


- It’s not just large auto brands like Toyota and Chevy and niche players such as Tesla announcing future plug-in hybrids. Today, Volvo announced it would start selling plug-ins by 2012 and showed off a V70 Plug-in Hybrid as an example of the technology at work.

- U.S. copper futures dipped to a 5-1/2-week low below $2.70 a lb Monday morning, under pressure from a steadier dollar, rising inventory levels, and worries about waning demand growth in China, the world's top copper consumer.

- The International Monetary Fund will increase its forecast for global growth next year in the next few days to account for a faster recovery in major economies, its deputy director said on Monday. The IMF will raise its forecast for 2010 global growth to about 3 percent from 2.5 percent, said Murilo Portugal, the fund's deputy managing director. The revised forecast could come as soon as Tuesday. "The recovery is stronger than initially forecast," Portugal, a former deputy finance minister in Brazil, told journalists on the sidelines of a business seminar.


- Germany was threatened by the Taliban in a new video, in which a German-speaking fighter said attacks against the country are “attractive,” citing the recording.

Le Temps:

- Credit Suisse Group AG’s private bank plans to expand its onshore US business, Walter Berchtold, chief executive officer of the unit, said in an interview. The bank aims to create an organization of between 600 and 800 client advisers.

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