Tuesday, December 22, 2009

Today's Headlines


- Sales of existing U.S. homes rose more than forecast in November, to the highest level since February 2007, a sign housing is gaining strength along with the broader economy entering 2010. Purchases increased 7.4 percent to a 6.54 million annual rate from a revised 6.09 million pace the prior month, the National Association of Realtors said today in Washington. The median sales price declined 4.3 percent from the same month a year earlier, the smallest decrease since November 2007. Purchases of existing homes rose 44 percent in November compared with a year earlier, the biggest increase on record. The median price fell to $172,600. The number of previously owned unsold homes on the market fell 1.3 percent to 3.52 million. At the current sales pace, it would take 6.5 months to sell those houses compared with 7 months at the end of October. The ratio is the lowest since December 2006. Purchases increased 10.6 percent in the West, 8.4 percent in the Midwest, 6.6 percent in the Northeast, and 4.8 percent in the South.

- Greece had its credit rating cut one step to A2 by Moody’s Investors Service, sparking a rally in its bonds as concern eased that a steeper downgrade would make its debt ineligible as collateral at the European Central Bank. “There is some relief that it’s only one notch,” said Peter Chatwell, London-based fixed-income strategist at Calyon, Credit Agricole SA’s investment-banking arm. Moody’s “talks quite positively about Greece’s liquidity situation.”

- The cost to protect U.S. corporate bonds from default fell to the lowest since January 2008, trading in a benchmark credit derivatives index shows. Credit-default swaps on the Markit CDX North America Investment-Grade Index, used to speculate on the creditworthiness of 125 companies in the U.S. and Canada or to protect against losses on their debt, declined 1.5 basis points to 84 basis points as of 10:08 a.m. in New York, according to broker Phoenix Partners Group. The index fell to its lowest since Jan. 3, 2008, according to CMA DataVision.

- A majority of U.S. voters object to President Barack Obama’s proposed health-care overhaul and think even less of the way he has handled the issue, according to a poll out today. The survey by Hamden, Connecticut-based Quinnipiac University taken Dec. 15-20 found that 53 percent of voters disapprove of plans to make over the health-care system, with 36 percent in support. Fifty-six percent said they don’t like Obama’s handling of health care. “While the Senate leadership reportedly has the votes to pass a health-care overhaul plan this week, outside the Beltway there appears to be weak support,” said Peter Brown, assistant director of the Quinnipiac University Polling Institute.

- The Organization of Petroleum Exporting Countries agreed to keep production targets unchanged for a fourth time this year, as expected. The producer group kept total output quotas at 24.845 million barrels a day, Saudi Arabia’s Ali al-Naimi and other ministers said after their meeting today in Luanda, Angola. OPEC is content with today’s oil price near $73 a barrel even as most of its members pump more than their allotted targets. “No change in quotas was largely expected by the market,” said Kaha Kiknavelidze, a managing partner at London-based Rioni Capital Partners LLP, a hedge fund that specializes in emerging markets. “More important is compliance which has deteriorated meaningfully. That puts pressure on prices.” As well as excess production from Iran and Venezuela, Nigerian output has also swelled in recent months following a cease-fire by militants in the Niger Delta, Bloomberg estimates show. Angolan Oil Minister Jose Maria Botelho de Vasconcelos acknowledged his country is not complying with “expected” levels with respect to its OPEC production quota. “We are complying at certain levels but our production capacity is significantly higher than the quota that was given to us,” the minister said at a press conference in Luanda. Iraq may also become a headache for the producer group in future years because it is exempt from quotas and has signed several contracts with international companies such as BP Plc and Royal Dutch Shell Plc to boost oilfield production.

- The value of commodity investments tracking the Dow Jones-UBS group of indexes jumped 20% during the third quarter, based on a measure of new money and price appreciation. About $43 billion was invested in funds tracking the group’s raw-material indexes as of Sept. 30, Sophie Gaussiran-Racine, a spokeswoman for Dow Jones Indexes/STOXX Ltd. in Frankfurt, said today. That compares with $36 billion at the end of the second quarter, she said.

- The global steel industry will suffer more losses should iron ore prices increase next year, Baoshan Iron & Steel Co., China’s largest steelmaker, said. “There aren’t many profitable steelmakers at present,” Shanghai-based Baoshan told the official Xinhua News Agency in an interview posted on the company’s Web site. “A further rise in iron ore prices would cause more losses.”

- Gold prices fell to a six-week low on speculation that an improving U.S. economy will help extend this month’s rally in the dollar and reduce demand for precious metals as an alternative investment. “The trend is your friend, and the trend right now is for lower gold prices as the dollar gains,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois.

- China’s stocks fell, making the benchmark index the world’s worst performer, on concern the government will step up measures to prevent asset bubbles. Industrial and Commercial Bank of China Ltd. led declines among banks after central bank Governor Zhou Xiaochuan said today reserve requirements for lenders remain an important tool.

- The euro’s stability could be jeopardized if the budget concerns hurting Greek bonds spread to larger economies such as Spain, said Goldman Sachs Group Inc. Chief Global Economist Jim O’Neill. “If you start having serious problems credit wise with the likes of Spain, then the issue for the euro’s credibility and its pricing against other currencies becomes a much bigger issue,” O’Neill said in an interview with Bloomberg Radio in New York today. “Obviously the euro appears to be already affected by this.”

- Iraq’s plan to boost oil output with the help of foreign companies may upset the Organization of Petroleum Exporting Countries’ efforts to support prices because the nation has no quota to limit its production. Oil companies including Royal Dutch Shell Plc, BP Plc and OAO Lukoil may help Iraq meet a target to boost oil output capacity to 12 million barrels a day in the next six years after winning oil licensing rounds earlier this year.

- The Pentagon today announced the deployment of 6,000 more soldiers to Afghanistan, the second wave in President Barack Obama’s planned surge of 30,000 troops.

- Online sales surged 13 percent over the final weekend of the holiday shopping season, spurred by storms on the East Coast that forced consumers to stay at home, according to ComScore Inc. The full week posted a year-over-year growth rate of 6 percent to $4.8 billion, marking a one-week sales record, ComScore said. For the first 50 days of the November-December holiday shopping season, online sales rose 4 percent to $25.5 billion, Comscore said.

- Hewlett-Packard Co.(HPQ) Executive Vice President Vyomesh Joshi said the printing market is “healthy” and poised for a recovery in 2010 after customers held off buying new devices this year. “2009 was a difficult year for printing hardware,” Joshi, who has led the Imaging and Printing Group for nine years, said last week in an interview. “But supplies sales were fine. What that means is that printing is healthy -- even with economic pressure, customers are still printing the content.”

- General Growth Properties Inc., the shopping mall owner under bankruptcy protection, is undervalued and the shares may be worth as much as four and a half times yesterday’s price, William Ackman’s Pershing Square Capital Management LP said. General Growth rose 11 percent. “Using comparable public company valuations, Pershing Square believes GGP is worth between $24 and $43 per share,” the hedge fund run by Ackman said in a presentation distributed today. General Growth closed at $9.15 yesterday in over-the- counter trading.

Wall Street Journal:

- The foundation stones of Iran's Islamic Republic were shaken again yesterday, showing that the largest antigovernment movement in its 30 years may be one of the biggest stories of next year as well. Now imagine the possibilities if the Obama Administration began to support Iran's democrats. The perseverance of the so-called Green Movement is something to behold. Millions of Iranians mobilized against the outcome of June's fraudulent presidential election, and their protests were violently repressed. But the cause has only grown in scope, with the aim of many becoming nothing less than the death of a hated system.


- With this week's upturn, the U.S. markets are showing signs of life. At least one major benchmark, the Nasdaq Composite, broke out on Monday, and its relative strength bodes well for the broader markets.

- Shares of Infineon Technologies AG rose on Tuesday after the German semiconductor maker raised its guidance for the first quarter. Infineon said it expects high-single-digit growth in group revenue in the first quarter of the next fiscal year compared with the fourth quarter of this year. It also expects a high-single-digit margin for its combined segment result. Previously, Infineon had projected its revenue and combined segment result to be about on the same level as they were in the fourth quarter. The increase in guidance is mainly driven by the automotive as well as the industrial and multimarket segments, the Neubiberg company said.


- Moody’s Investors Service chief economist Mark Zandi told CNBC that he expects “actual positive job growth” in February. “That’s real income for real people,” Zandi told the financial news channel, predicting a lift for the US economy.

- So maybe the snowstorm that struck the Northeast wasn't the Grinch that stole a profitable Christmas away from retailers after all. Several analysts are now predicting that retailers will make up a good chunk of the sales lost when shopping malls closed early due to the snowstorm. According to several analysts, consumers headed to the stores early to get shopping done before the snow hit some densely populated East Coast towns. Plus, some shoppers will make up for lost time in the final days before the holiday, they said. The bottom line: With three shopping days left until Christmas, most analysts are still calling for a profitable holiday season.

- The Wall Street bank which collapsed last year plunging the world into a deeper financial crisis is paying generous bonuses and recruiting middle and back office staff to help administrators sort millions of transactions, the Financial Times reported Tuesday. Lehman's European business is trying to stop employees defecting as it is helping administrators Pricewaterhouse Coopers reconcile transactions with clients and trading partners to determine what is owed or can be claimed.

NY Times:

- Senator Dianne Feinstein introduced legislation in Congress on Monday to protect a million acres of the Mojave Desert in California by scuttling some 13 big solar plants and wind farms planned for the region. But before the bill to create two new Mojave national monuments has even had its first hearing, the California Democrat has largely achieved her aim. Regardless of the legislation’s fate, her opposition means that few if any power plants are likely to be built in the monument area, a complication in California’s effort to achieve its aggressive goals for renewable energy.

The Business Insider:

- Falling Oil Demand Terrifies OPEC, Spurring It To Restrict Production. (graph)

- Treasury In Denial About Goldman’s(GS) Role In AIG(AIG) Crisis.

- 10 New Taxes Americans Will Get Slapped With To Pay For Healthcare.

Lloyd’s List:

- NORTH American ports are expected to stage a strong recovery in cargo volumes in the opening months of 2010 compared with corresponding 2009 levels, but still face an uncertain future. The year-on-year increases forecast by a new Global Port Tracker report will be compared with exceptionally poor volumes in the opening months of 2009.


- Google(GOOG) is very seriously planning to add a version of the Google Voice product to its Apps/Office suite of applications for businesses. Currently, businesses are offered enterprise versions of Google Docs (online Office), Gmail, calendar and other applications. More than 2 million businesses and 20 million people use Google Apps.

Real Clear Politics:

- Science is one of the great achievements of the human mind and the biggest reason why we live not only longer but more vigorously in our old age, in addition to all the ways in which it provides us with things that make life easier and more enjoyable. Like anything valuable, science has been seized upon by politicians and ideologues, and used to forward their own agendas. This started long ago, as far back as the 18th century, when the Marquis de Condorcet coined the term "social science" to describe various theories he favored. In the 19th century, Karl Marx and Friedrich Engels distinguished their own brand of socialism as "scientific socialism." By the 20th century, all sorts of notions wrapped themselves in the mantle of "science." "Global warming" hysteria is only the latest in this long line of notions, whose main argument is that there is no argument, because it is "science." The recently revealed destruction of raw data at the bottom of the global warming hysteria, as well as revelations of attempts to prevent critics of this hysteria from being published in leading journals, suggests that the disinterested search for truth-- the hallmark of real science-- has taken a back seat to a political crusade.


- The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 25% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-six percent (46%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -21 That’s the lowest Approval Index rating yet recorded for this President (see trends).

- Iran has now rejected a year-end deadline to comply with a UN plan to end the deadlock over the Islamic country’s nuclear program. But U.S. voters strongly believe the United Nations hasn’t been tough enough with Iran. A new Rasmussen Reports national telephone survey finds that 67% of voters say the UN has not been aggressive enough in response to Iran’s nuclear program. Just five percent (5%) say the international organization has been too aggressive, and 19% think the amount of pressure has been about right.


- The multimillion-dollar deals cut with Sen. Ben Nelson (D-Neb.) and others to win the 60 votes needed for the historic health care reform bill gave President Barack Obama the margin he needed to fulfill a central campaign promise — but may also have upped the ante for future presidential horse trading. With the bill hanging in the balance, Nelson won a provision exempting his state from paying the usual share of costs for new Medicaid patients. The deal critics have dubbed the Cornhusker Kickback is expected to cost the federal government $100 million over 10 years. Before a close vote last month, Sen. Mary Landrieu (D-La.) won an even larger break for her state — an estimated $300 million in extra federal spending, in a move opponents derided as the Louisiana Purchase. Some critics branded the special deals as functionally equivalent to the kind of earmarks Obama crusaded against as a senator — and a quantum leap from eleventh-hour deals Obama’s predecessors have cut. After Nelson and Landrieu, what will key congressional swing votes want from future White Houses?

- Main Street has had a tough year, losing jobs and seeing little evidence of the economic revival that experts say has already begun. But K Street is raking it in. Washington’s influence industry is on track to shatter last year’s record $3.3 billion spent to lobby Congress and the rest of the federal government — and that’s with a down economy and about 1,500 fewer registered lobbyists in town, according to data collected by the Center for Responsive Politics. Many lobbying firms have escaped the worst of the corporate belt-tightening, thanks, in large part, to the ambitious agenda set out by President Barack Obama — who, ironically, came to Washington with a pledge to break what he considered the undue influence of special-interest lobbyists.

- POLITICO has learned that Rep. Parker Griffith, a freshman Democrat from Alabama, will announce today that he’s switching parties to become a Republican. According to two senior GOP aides familiar with the decision, the announcement will take place this afternoon in Griffith's district in northern Alabama. Griffith’s party switch comes on the eve of a pivotal congressional health care vote and will send a jolt through a Democratic House Caucus that has already been unnerved by the recent retirements of a handful of members who, like Griffith, hail from districts that offer prime pickup opportunities for the GOP in 2010. The switch represents a coup for the House Republican leadership, which had been courting Griffith since he publicly criticized the Democratic leadership in the wake of raucous town halls during the summer.


- China has issued new Internet regulations, including what appears to be an effort to create a "whitelist" of approved websites that could potentially place much of the Internet off-limits to Chinese readers. The Ministry of Industry and Information Technology ordered domain management institutions and internet service providers to tighten control over domain name registration, in a three-phase plan laid out on its website (www.miit.gov.cn) late on Sunday. "Domain names that have not registered will not be resolved or transferred," MIIT said, in an action plan to "further deepen" an ongoing anti-pornography campaign that has resulted in significant tightening of Chinese Internet controls. Only allowing Chinese viewers to access sites registered on a whitelist would give Chinese authorities much greater control, but would also block millions of completely innocuous sites.

- Business software maker Progress Software Corp (PRGS) forecast strong earnings for fiscal 2010 as it continued to reduce expenses and said it would cut 12 to 14 percent of its global workforce. Shares of the company, which sells business application infrastructure software, rose 10 percent in early morning trade.

The Sun:

- A MAN who was blinded in one eye when he was squirted with ammonia has had his sight restored in a breakthrough operation. They took stem cells from the cornea in his good eye, grew them in a lab and then implanted them into his damaged eye.

The surgery worked and delighted Russell has now got perfect sight again in both eyes. He said: "It's almost impossible to put into words what it means to me. I haven't just got my full sight back, I've got my life back."

Le Figaro:

- OECD countries will have to raise taxes to reduce their debts, said Pier Carlo Padoan, the chief economist of the Organization for Economic Cooperation and Development, in an interview. To shrink the debts, growth in the euro zone would have to exceed 1%, which is “not our scenario for 2010,” Padoan said.


- Germany’s energy, chemical and metal industries say the government’s goal of cutting greenhouse gas by more than the European Union average will hurt their competitiveness.

- Chinese Foreign Ministry spokeswoman Jiang Yu early Tuesday morning refuted a British official who said China "hijacked" the climate negotiations in Copenhagen, Denmark. The remarks against China by "an individual British politician "contained "obvious political attempts," as they were made with the aim of escaping obligations and fomenting discord among developing countries, said Jiang. Jiang's comments came after British climate change secretary Ed Miliband's published an article on the Guardian saying China tried to "hijack" the Copenhagen climate conference. Jiang said such an attack was made in order to shirk the obligations of developed countries to their developing counterparts and foment discord among developing countries, but the attempt was doomed to fail, said Jiang. "We urge them to correct mistakes, fulfill their obligations to developing countries in an earnest way, and stay away from activities that hinder the international community's cooperation in coping with climate change," she said.

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