Monday, December 21, 2009

Today's Headlines


- The US dollar is rallying in tandem with stocks and commodities for the first time since before Lehman Brothers Holdings Inc.’s bankruptcy last year sparked the financial crisis, signaling the worst may be over for the greenback. The currency, equities and raw materials are on pace for their first simultaneous two-month gain since 2008 as the U.S. Dollar Index rises the fastest in 10 months.

- Sanofi-Aventis SA agreed to buy Chattem Inc.(CHTT), the maker of Gold Bond medicated body powder, for $1.9 billion to enter the U.S. consumer health care market. Sanofi will pay $93.50 a share in cash, which is 34 percent above Chattem’s closing price on Dec. 18, the Paris-based drugmaker said today. The purchase will create the world’s fifth-largest consumer health company by revenue, Sanofi said.

- The Treasury yield curve, a barometer of the health of the U.S. economy, widened to a record as investors bet an accelerating recovery will fuel inflation and hurt demand for unprecedented sales of government debt. The difference between 2- and 10-year Treasury note yields increased to 281.4 basis points before the government announces Dec. 23 how much it plans to auction in 2-, 5- and 7-year securities next week. It rose from 145 basis points at the beginning of the year.

- Twitter Inc. will make about $25 million from Internet-search deals with Google Inc.(GOOG) and Microsoft Corp.(MSFT) announced in October, enough to push the site into profitability, people familiar with the matter said.

- A hedge-fund manager who is betting against First Solar Inc.’s(FSLR) stock wants his $9 cab fare back after he was invited to a company analyst event then turned away at the door. First Solar is the third most-shorted company in the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

- OPEC has a consensus to extend the output quotas it set last year as the group meets tomorrow with “very comfortable” prices, its secretary-general said. “There is a consensus that there is no change,” Abdalla Salem el-Badri told reporters today in Luanda, Angola, referring to the current production limit of 24.845 million barrels a day. “The price is very comfortable.” El-Badri said he is “not happy” with members’ compliance with oil production targets, adding that overall compliance is about 60 percent.

Wall Street Journal:

- A holiday season of Web price wars and aggressive online promotions by store-based retailers is leaving e-commerce a larger force in American retail. While sales conducted at brick-and mortar stores are about flat this season compared with 2008, online retailing grew 4% from the beginning of November through Dec. 18 to $24.8 billion, according to Web tracking company comScore Inc. Online sales on Dec. 15 totaled $913 million, marking a one-day record for the industry.

- Duke Energy Corp.(DUK) is in talks with State Grid Corp., China's biggest electricity distributor, over a joint venture that may involve cooperating on power transmission lines in the U.S., according to two people familiar with the situation. The move -- which could test U.S. acceptance of Chinese investment in domestic projects -- shows how U.S. utilities are keen to tap China's low-cost equipment and access to cheap credit to advance capital-intensive projects.

- A fragile recovery for the U.S. economy would prevent any rate increases from the Federal Reserve in the next two years as the central bank will remain concerned with the real danger of deflation, said David Rosenberg, a closely watched Wall Street economist.

- The euro is overvalued by between 7% and 8% relative to other major currencies, and a further rise could be a "serious concern" for the more open euro-zone economies, the European Commission said.

- Gold futures edged lower Monday on expectations that key data due this week might bring closer an eventual interest-rate hike in the U.S., curbing inflation expectations and reducing gold's investment appeal. Meanwhile, the dollar erased its losses against the euro, weighing on dollar-denominated gold prices.


- Stocks Next Year: More Gains As ‘Pessimism Bubble’ Pops.

- The economy will continue to grow over the next few years, though unemployment will remain high and inflation tame, so there's "no urgent need" for the Federal Reverse to change its low-interest rate policy, Chicago Federal Reserve President Charles Evans told CNBC.

NY Times:

- Pfizer Inc.(PFE) said Sunday that it was buying the rights to a somewhat controversial cell therapy from Athersys, a biotechnology company — a sign of big pharmaceutical companies’ growing interest in stem cells.

- Deep in Health Bill, Very Specific Beneficiaries. Nebraska, with help from Mr. Nelson, won a particularly generous arrangement under which the federal government would indefinitely pay the full cost of covering certain low-income people added to the Medicaid rolls under the bill. Republicans derided this provision as the “Cornhusker kickback.” And they said it was typical of the favors Democrats had given to Mr. Nelson and a handful of other senators. “You’ve got to compliment Ben Nelson for playing ‘The Price is Right,’ ” said Senator Richard M. Burr, Republican of North Carolina. “He negotiated a Medicaid agreement for Nebraska that puts the federal government on the hook forever. Not for six years, not for 10 years. This isn’t the Louisiana Purchase; this is the Nebraska windfall.”

- During a recent speech on leadership at West Point, General Electric(GE) CEO Jeff Immelt proclaimed, "The richest people made the most mistakes with the least accountability." To some GE staffers and shareholders, that comment rings most true about one person in particular: Jeff Immelt. "That's the sense people inside the company have about him," one GE source told The Post. "He's destroyed a lot of shareholder value at the expense of the long-term health of the company, while making plenty of money for himself."

The Business Insider:

- As the end-credits rolled for James Cameron's new movie, Avatar, the audience burst into rowdy applause. It seemed to me that they were applauding the sheer computerized dazzlement of the show -- but in the story itself they had just watched the US suffer a humiliating defeat on a distant planet. In the final frames, American soldiers and the corporate executives they had failed to protect were shown lined up as prisoners-of-war about to embark on a death march. More to the point, the depiction of our national character through the whole course of the film was of a thuggish, cruel, cynical, stupid, detestable, and totally corrupt people bent on the complete destruction of nature. Nice. And the final irony was that Cameron had used theatrical technology of the latest and greatest kind to depict America's broader techno-grandiosity -- as the army's brute robotic warriors fell to the spears and arrows of the simple blue space aliens. Altogether, it was a weird moment in entertainment history, and perhaps in the American experience per se. No doubt audiences overseas will go wild with delight, too, but perhaps with a clearer notion of what they are clapping for than the enthralled masses of zombie Americans.

- It seems as though many folks have concluded that last week's incursion by Iranian forces into Iraq, and onto an old oil well, was a minor, meaingless story. A popular, benign, interpretation is that it was just a few, rogue Iranian forces foolishly hoisting a flag onto a well that wasn't pumping oil, with absolutely no consequence whatsoever. Not so say the independent geopolitics analysts at Stratfor. Multiple sources have reported that Tehran ordered the incident.


- A calendar listing for San Francisco's Moscone Center has led to speculation that Apple's(AAPL) annual Worldwide Developer's Conference will coincide with the three-year anniversary of the original iPhone's launch.

Absolute Return:

- Only 50% of hedge funds to get paid in 2009.

- After two expensive, messy and ultimately failed attempts at building a hedge fund business, Citi(C) is trying again – with a new platform, a new name and a couple of former senior Morgan Stanley executives at the helm.


- The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 26% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-three percent (43%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -17 (see trends).

- Over the past week, Senate Majority Leader Harry Reid found a way to collect 60 votes and move health care reform legislation forward in the U.S. Senate. However, his negotiating and the ongoing debate did nothing to improve public opinion of the legislation. The latest Rasmussen Reports weekly tracking update shows that 41% of voters nationwide favor the bill and 55% are opposed.


- RNC Chairman Michael Steele has settled on his sound bite of the day: "flipping the bird." In a conference call with reporters this morning, Steele twice referenced the middle finger, first saying "I’m tired of the Congress flipping the bird to the American people." Later in the call, he invoked the middle digit again saying the Senate had "flipped the bird in the dead of night" with its 1 a.m. health care vote Monday.

- The Democratic Party’s decades-long push to remake the U.S. health care system cleared a major hurdle early Monday morning, with the Senate voting to advance a massive $871 billion bill to extend coverage to nearly all Americans and tighten regulations on private insurers. Less than two days after releasing a bill with 383 pages of changes, Senate Majority Leader Harry Reid (D-Nev.) corralled his politically diverse caucus and delivered the 60 votes necessary for the most crucial test vote in the legislative process so far — effectively ensuring the reform package will clear the Senate later this week. The final tally was a straight party-line vote, 60-40. All Democrats and two independents voted yes and all Republicans voted no — and each side bitterly accused the other of trying to thwart true reform through petty gamesmanship. The senators voted just after 1 a.m. while seated at their desks, a rarely used practice implemented only for historic votes.

- Is Goldman Sachs(GS) just a big, risky, US-backed hedge fund? Goldman Sachs, the biggest US investment bank, is back making a billion dollars a month, same as it was in 2007. Its share price is back in the $160s, same as it was before Lehman Bros. blew up. Is that a good thing? Depends on whether you see Goldman as America's premier dealmaker whose health is important to getting American business moving again - or as a giant hedge fund that's taking bigger-than-ever risks, now financed with public money, writes Bloomberg's Christine Harper here. How the US helped Goldman:


- Shares of Intel Corp.(INTC), the world's biggest chip maker, edged higher Monday after Barclays Capital upgraded the company, citing "solid" market conditions in the computer industry and a cheap share price. The stock rose 64 cents, or 3.3 percent, to $20.27 in morning trading.


- ManTech International Corp (MANT) said it agreed to buy privately held Sensor Technologies Inc for $242 million in cash to expand its presence in the high-end defense and intelligence market. Sensor Technologies, a Red Bank, New Jersey-based provider of IT services to the U.S. Army, is expected to generate about $340 million in revenue in 2009 and $450 million in 2010, ManTech said. "With the defense appropriation bill on track and a clear mission and strategy for Afghanistan, this acquisition allows us to provide more direct support to the U.S. Army as it continues its overseas operations," George Pedersen, ManTech's chief executive, said in a statement.

Dutch Central Bank:

- European Central Bank Governing Council member Nout Wellink said the cost of higher budget deficits will have to be redistributed and income growth will either slow or fall, according to an interview.

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