Weekend Headlines
Bloomberg:
- Senate Majority Leader Harry Reid and other top Democrats say they plan to take a break from negotiating an overhaul of the U.S. health-care system after a Republican victory in Massachusetts left them unsure how to proceed with President Barack Obama’s top legislative priority. “No one knows what to do,” Senator Tom Harkin, an Iowa Democrat who heads the chamber’s health committee said yesterday. He said Democrats would let the health legislation “sit for a while” and then take it up “in a week or so.” Harkin said lawmakers need a “breather” that would “let everyone calm down, get that panic out of their bodies” after Republican Scott Brown’s Jan. 19 victory in the race for the late Senator Edward M. Kennedy’s seat cost Democrats their 60- vote supermajority in the chamber. “We’re going to move onto some other things,” said Reid, of Nevada, while declining to estimate how long such a break might last. Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said it’s “really unrealistic and not helpful” to try to decide the health-care issue now, “given the emotions” stirred up by the Massachusetts race. “We need some time to sort this out” and “we’re probably going to do that in a calmer environment,” he told reporters yesterday. Lawmakers don’t want to “jam something down people’s throats, which the public would react negatively to.” Dodd, who earlier this month announced he wouldn’t seek re- election in November’s election, suggested a break of as long as six weeks. Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat who is one of the architects of the health-care bill, said Brown’s win shows major changes in the legislation are in order. “Clearly, the package that we have constructed so far doesn’t meet the approval of a significant part of the population,” he said. “The people we represent are sending us a loud and clear message that the package that’s there is not acceptable” and “the first thing we’ve got to say to people is, ‘We get it -- we hear you loud and clear.’”
- Senate Republican leader Mitch McConnell said he expects Federal Reserve Chairman Ben S. Bernanke will win a second term, indicating enough Republicans will join Democrats in backing the central banker. “He’s going to have bipartisan support in the Senate, and I would anticipate he will be confirmed,” McConnell, a Kentucky Republican, said today on NBC’s “Meet the Press.” McConnell, 67, declined to say how he would vote. Assurances during the past two days from Republican and Democratic lawmakers and White House officials have eased concerns about Bernanke’s confirmation, and online traders today put near-certain odds on approval.
- Treasury Secretary Timothy F. Geithner spoke with Berkshire Hathaway Inc.(BRK/A) Chief Executive Officer Warren Buffett, JPMorgan Chase & Co.(JPM) CEO Jamie Dimon and Goldman Sachs Group Inc.(GS) CEO Lloyd Blankfein on the day of the bailout of American International Group Inc.(AIG), phone logs show. Geithner ran the Federal Reserve Bank of New York, which helped organize AIG’s rescue, on Sept. 16, 2008, when the calls took place. The logs were submitted by the New York Fed in response to a subpoena last week from the House Oversight and Government Reform Committee. The insurer met with representatives from the New York Fed, Goldman Sachs and JPMorgan on Sept. 15, 2008, the day Lehman Brothers Holdings Inc. collapsed, to consider creating a $75 billion loan with contributions from a “number of large financial institutions,” according to an AIG regulatory filing. By the next day “it had become apparent that Goldman, Sachs & Co. and J.P. Morgan were unable to syndicate a lending facility,” AIG said in the filing. Geithner’s logs also show calls on the day of the bailout with Senator Charles Schumer, Democrat of New York, Eric Dinallo, then the state’s insurance superintendent, and New York Mayor Michael Bloomberg.
- Al-Qaeda leader Osama bin Laden claimed responsibility for the failed attempt to blow up a U.S. airliner on Dec. 25 and vowed more attacks, in audio comments broadcast by al-Jazeera television today. “God willing, our raids on you will continue as long as your support for the Israelis continues,” the recording said. Bin Laden said in the taped comments that his message was intended for U.S. President Barack Obama. He also praised Nigerian national Umar Farouk Abdulmutallab, who is facing trial over the Detroit bomb plot, as a “hero and mujahid,” or Islamic fighter. “America won’t dream of security until we live that security as a reality in Palestine,” the al-Qaeda leader was heard saying in the broadcast, linking Abdulmutallab to the “heroes of 9/11.” The authenticity of the recording couldn’t immediately be verified. The al-Qaeda leader’s decision to associate himself directly with the Detroit plane bomb attempt is “very significant,” said Rohan Gunaratna, head of the Singapore-based International Center for Political Violence and Terrorism Research. “This clearly demonstrates that Bin Laden considers this particular attack as an extension of his organization.” Colonel Richard Kemp, commander of U.K. troops in Afghanistan in 2003, told the British Broadcasting Corp. that bin Laden’s message may “presage further activity” like the Detroit attempted bombing.
- Australia’s minister of resources and energy said the government, which has been given no “firm proposal” on changes to mining taxes, has been asked by metals producers to act quickly on any alterations. “There has been no government consideration and no government response” to tax recommendations from an independent committee headed by the treasury secretary, Martin Ferguson said today in an interview at Bloomberg headquarters in New York.
- Concern that short-sellers accelerate stock declines may prompt the Securities and Exchange Commission to adopt a rule next month aimed at curbing bearish bets when equities are plunging. The regulation would require the trades be executed above the best existing bid in the market when shares fall 10 percent in a day, said Brian Hyndman, the senior vice president in transaction services at Nasdaq OMX Group Inc. “There is no empirical data to support the introduction of a new rule,” Hyndman said yesterday at a securities industry conference in Chicago. “But this is the least intrusive of the proposals the SEC was considering.” Hyndman expects the SEC to adopt a so-called alternative uptick rule that includes a 10 percent trigger, changing regulations that were eliminated from U.S. markets in 2007. The implementation date for the new rule is likely to be later in the year, according to Hyndman, who didn’t say what he was basing his estimate on.
- China will probably let its currency appreciate by at least 5 percent in a one-time move and raise interest rates to cool the economy and curb inflationary pressures, Goldman Sachs Group Inc. Chief Economist Jim O’Neill said. The Chinese government may allow the yuan to have “a bigger one-off move than people talk about, at least 5 percent, maybe more,” O’Neill said in an interview today at the London School of Economics. “They may also consider having a wide band to let it move more frequently on the daily basis to stop speculative players.” Besides loosening controls on the exchange rate, Beijing will also raise interest rates soon, according to O’Neill. “It will definitely happen, and it could happen any day,” he said.
- Google Inc.’s(GOOG) YouTube is talking with major Hollywood studios about providing movies for an online rental service that started today with five independent films from the Sundance Film Festival. The discussions reflect Google’s interest in expanding the fledging service, which offers the Sundance movies for 24 to 48 hours for $3.99, David Eun, Google’s vice president for content partnerships, said yesterday in an interview. YouTube, the world’s most popular video-sharing site, is seeking new ways to generate revenue.
- Crude oil traded near a one-month low as sliding equity markets and expectations of interest-rate increases in China dented investor confidence in the strength of the global economic recovery. OPEC nations must improve their compliance with the group’s output quotas to prevent further pressure on oil prices, Shokri Ghanem, chairman of Libya’s National Oil Corp., said yesterday. Prices slumped 4.9 percent last week as U.S. gasoline stockpiles reached a 22-month high, equities and commodities tumbled on the nation’s bank reform plans, and investors fretted that China will raise interest rates to slow growth in the world’s second-largest energy consumer. Hedge-fund managers and other large speculators reduced their bets on rising oil prices for the first time in five weeks, based on U.S. Commodity Futures Trading Commission data. Speculative net-long positions, the difference between orders to buy and sell the commodity, fell 1 percent to 134,381 contracts in the week ended Jan. 19, the commission said last week. Positions a week earlier were the highest in at least 27 years.
- China’s worst sea ice in 40 years showed signs of receding after subzero temperatures and high winds froze parts of Bohai Sea, where Cnooc Ltd. drills for oil and natural gas, for more than three weeks. The ice cover in Bohai Sea in northern China has decreased in size, with 39 percent of the area frozen as of yesterday, the State Oceanic Administration said.
Wall Street Journal:
- The special commission probing the causes of the financial crisis intends to use subpoena powers to get information it wants from banks and government agencies as it focuses on the role of pay, subprime lending, securitization practices and other issues in the market meltdown, the head of the commission said.
CNBC.com:
- President Barack Obama said on Friday that regulatory oversight of the country's banks might now be erring too much on the side of caution, potentially hindering the flow of credit to small businesses. "The banks feel as if regulators are looking over their shoulder, discouraging them from lending," Obama told a town-hall style meeting in Elyira, Ohio during a trip to promote his jobs and health care policies. Obama said it was not his intention to interfere with bank supervision. But he had told Treasury Secretary Timothy Geithner to make sure that the country has not "seen the pendulum swing too far", with regulators now being too tough after being too slack in the past.
Business Insider:
NY Times:
- President Obama is reconstituting the team that helped him win the White House to counter Republican challenges in the midterm elections and recalibrate after political setbacks that have narrowed his legislative ambitions. Mr. Obama has asked his former campaign manager, David Plouffe, to oversee House, Senate and governor’s races to stave off a hemorrhage of seats in the fall. The president ordered a review of the Democratic political operation — from the White House to party committees — after last week’s Republican victory in the Massachusetts Senate race, aides said. In addition to Mr. Plouffe, who will primarily work from the Democratic National Committee in consultation with the White House, several top operatives from the Obama campaign will be dispatched across the country to advise major races as part of the president’s attempt to take greater control over the midterm elections, aides said.
CNNMoney.com:
- 100 Best Companies To Work For.
Business Week:
- Corporate bond sales are falling and borrowing costs are increasing for the first time in eight weeks amid investor concerns about the pace of the economic recovery. Bond sales worldwide fell 52 percent last week to $48 billion from $99.8 billion in the previous period, according to data compiled by Bloomberg. So-called yield spreads widened for the first time since the five days ended Nov. 27, based on Bank of America Merrill Lynch’s Global Broad Market Corporate Index.
ABC News:
Hot Hardware:
- AT&T(T) Insiders Report iPhone Exclusivity Going Away On Wednesday.
Rasmussen Reports:
Real Clear Politics:
Houston Chronicle:
- State and federal officials will continue a massive cleanup today after a collision between an oil tanker and a barge sent up to 450,000 gallons of crude oil gushing into the water only yards from shore Saturday and brought all nearby shipping traffic to a halt. Crews worked into the night to seal the leak and keep the oil that had already escaped from spreading. They deployed 4,000 feet of booms in the vicinity of the tanker Eagle Otome and the barge that put a 15-by-8-foot gash in one of its starboard compartments near the bow. The two vessels remained entangled Saturday night. Only one compartment of the double-hulled tanker was compromised.
Financial News:
- Short-biased equity hedge funds, which aim to make money from falling share prices, have performed so disappointingly over the past 10 years that some investors are questioning whether there is any point in having them. Between 2000 and 2009 the strategy made an average of 4.4% a year, according to data provider Hedge Fund Research. Alex Allen, chief investment officer at UK fund of hedge funds manager Eddington Capital Management, said: "This is hardly a ringing endorsement of the strategy, given that these were just about the best of times for a short-biased strategy. They never make enough in bear markets to offset the substantial losses they incur in bull markets."
zerohedge:
- The True Bank Bailout is Ongoing.
OpenSecrets.org:
Reuters:
- U.S. securities regulators originally treated the New York Federal Reserve's bid to keep secret many of the details of the American International Group bailout like a request to protect matters of national security, according to emails obtained by Reuters. The new batch of emails, along with others that have become public in recent weeks, reveal that some at the New York Fed had gone to great lengths to keep the terms of the bailout private and the SEC may have played a role in contributing to some of the secrecy surrounding the AIG rescue package. "The New York Fed was orchestrating what can only be characterized as an extreme effort to ensure that details of the counterparty deal stayed secret," Rep. Darrell Issa from California, the ranking Republican on the House Oversight Committee, said through a spokesman. "More and more it looks as if they would've kept the details of the deal secret indefinitely, it they could have."
- Global infrastructure fundraising dropped by more than half in 2009 from the year before as investors moved to more liquid assets, according to data sent to Reuters on Sunday by placement agent Probitas Partners. Just $10.7 billion was raised by infrastructure funds in 2009, 57 percent less than the $24.7 billion raised in 2008, according to figures compiled by Probitas. The contrast is even greater when compared to the $34.3 billon raised in 2007.
Financial Times:
- The proposal to subject some bank liabilities to a financial crisis responsibility fee highlights the unintended consequences of regulating an industry that depends on an obscure but crucial funding model. A fee of 15 basis points would be paid on all liabilities not already subject to an insurance premium paid to the Federal Deposit Insurance Corporation. That places the repo market – which is used by banks for funding a large amount of their liabilities – in the line of fire. It also has implications for bank funding via commercial paper and could affect trading in the overnight rate set by the Federal Reserve. “A 15bp tax on bank assets above $50bn will have a devastating effect on the repo market,” says Scott Skyrm, senior vice-president at Newedge, a repo broker. The market is mainly used for Treasuries and any disruption in its operation threatens the stability and efficiency of the US government bond market. Brad Hintz, an analyst at Bernstein Research, said in a recent note typical repo operations at Wall Street dealers did not generate a spread of 15bp. “As a result, this tax strongly motivates primary dealers of US securities to reduce financing provided to clients for government securities transactions,” he said. Disrupting the repo market could also affect mooted plans by the Federal Reserve to use large-scale reverse repos to drain excess banking reserves from the monetary system – part of its “exit strategy” to unwind extraordinary policies put in place after the financial crisis.
TimesOnline:
- THE United Nations climate science panel faces new controversy for wrongly linking global warming to an increase in the number and severity of natural disasters such as hurricanes and floods. It based the claims on an unpublished report that had not been subjected to routine scientific scrutiny — and ignored warnings from scientific advisers that the evidence supporting the link too weak. The report's own authors later withdrew the claim because they felt the evidence was not strong enough. The claim by the Intergovernmental Panel on Climate Change (IPCC), that global warming is already affecting the severity and frequency of global disasters, has since become embedded in political and public debate. It was central to discussions at last month's Copenhagen climate summit, including a demand by developing countries for compensation of $100 billion (£62 billion) from the rich nations blamed for creating the most emissions. Ed Miliband, the energy and climate change minister, has suggested British and overseas floods — such as those in Bangladesh in 2007 — could be linked to global warming. Barack Obama, the US president, said last autumn: "More powerful storms and floods threaten every continent." The latest criticism of the IPCC comes a week after reports in The Sunday Times forced it to retract claims in its benchmark 2007 report that the Himalayan glaciers would be largely melted by 2035. It turned out that the bogus claim had been lifted from a news report published in 1999 by New Scientist magazine. The new controversy also goes back to the IPCC's 2007 report in which a separate section warned that the world had "suffered rapidly rising costs due to extreme weather-related events since the 1970s". It suggested a part of this increase was due to global warming and cited the unpublished report, saying: "One study has found that while the dominant signal remains that of the significant increases in the values of exposure at risk, once losses are normalized for exposure, there still remains an underlying rising trend." The Sunday Times has since found that the scientific paper on which the IPCC based its claim had not been peer reviewed, nor published, at the time the climate body issued its report. When the paper was eventually published, in 2008, it had a new caveat. It said: "We find insufficient evidence to claim a statistical relationship between global temperature increase and catastrophe losses." Despite this change the IPCC did not issue a clarification ahead of the Copenhagen climate summit last month. It has also emerged that at least two scientific reviewers who checked drafts of the IPCC report urged greater caution in proposing a link between climate change and disaster impacts — but were ignored. The claim will now be re-examined and could be withdrawn.
- Gordon Brown’s government has become “utterly dysfunctional” according to the head of the UK’s top civil servants' union. First Division Association general secretary Jonathan Baume accused the Prime Minister of “government by announcement” without any consideration of the cost or practicalities of his policies. He claimed top civil servants were now preparing for a new Conservative government, while Labour ministers had “given up the fight”.
Der Spiegel:
- The European Union Commission is worried that the ''enormous" budget deficits of some EU member states may undermine the monetary union's coherence and weaken confidence in the Euro. The EU's competition authority in Brussels is particularly concerned about countries such as Spain, Greece and Ireland, citing a draft report by the commission's Directorate General for Economic and Financial Affairs. The combination of decreasing competitiveness and "excessive" deficits is "worrying," the report said.
Sonntag:
- President Barack Obama's proposals to reform banks are neither thought out nor easy to implement, citing Hans-Joerg Rudloff, the chairman of Barclays Plc's securities unit.
Globe and Mail:
Indian Express:
- A day after it was revealed that terrorist organizations were planning to hijack an airplane — probably an Air India or Indian Airlines aircraft flying to, or from, a SAARC country — comes another intelligence input: that the Lashkar-e-Toiba has shopped for over 50 sets of paragliding equipment in Europe. The equipment has been bought to carry out airborne attacks using suicide bombers, government sources said Friday. They said intelligence agencies were picking up information about plans to carry out aerial strikes on important buildings and installations around Republic Day. Consequently, security forces have been put on high alert and security around all vital installations has been tightened. Mock drills are on to thwart a possible aerial attack, sources said.
Sydney Morning Herald:
- Retired Cuban leader Fidel Castro on Sunday called on the United Nations to assume a monitoring role in Haiti, and he decried the US military "occupation" of the quake-ravaged Caribbean country. Castro, in an opinion article published in the local newspapers, said that neither the United Nations nor Washington have given a proper explanation of the US military's role in the wretchedly poor nation. "Amid the Haitian tragedy, with no one knowing how or why, thousands of (US Marines) and paratroopers from the 82nd Airborne Division and other military forces have occupied Haitian territory. Even worse, neither the United Nations nor the (US government) has offered an explanation ... of this movement of forces," Castro wrote. Venezuelan President Hugo Chavez, Bolivia's Evo Morales and Nicaraguan leader Daniel Ortega have all described the presence of some 20,000 US soldiers in Haiti as an "occupation".
Xinhua:
- China restated on Sunday its resolute opposition to claims that the government was involved in cyber attack and vowed to enhance cooperation with international community to fight against Internet crimes. "Accusation that the Chinese government participated in cyber attack, either in an explicit or inexplicit way, is groundless and aims to denigrate China. We firmly opposed to that," spokesman of the Ministry of Industry and Information Technology told Xinhua in an exclusive interview on Sunday.
Weekend Recommendations
Barron's:
- Made positive comments on (RDWR), (RBS), (GNW), (GS), (SLE), (INTC) and (FRX).
- Made negative comments on (SHLD).
Night Trading
Asian indices are -1.0% to -.50% on avg.
S&P 500 futures +.52%.
NASDAQ 100 futures +.33%.
Morning Preview
BNO Breaking Global News of Note
Yahoo Most Popular Biz Stories
MarketWatch Pre-market Commentary
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Stock Quote/Chart
WSJ Intl Markets Performance
Commodity Futures
IBD New America
Economic Preview/Calendar
Earnings Calendar
Who’s Speaking?
Upgrades/Downgrades
Politico Headlines
Rasmussen Reports Polling
Earnings of Note
Company/Estimate
- (ETN)/1.23
- (DGX)/.96
- (HAL)/.27
- (SEE)/.39
- (AKS)/.20
- (ATHR)/.54
- (TXN)/.50
- (AAPL)/2.08
- (VMW)/.26
- (AMGN)/1.12
- (SLG)/.89
- (WAT)/1.10
Upcoming Splits
- None of note
Economic Releases
10:00 am EST
- Existing Home Sales for December are estimated to fall to 5.9M versus 6.54M in November.
10:30 am EST
- Dallas Fed Manufacturing Activity for January is estimated to rise +6.0% versus a +3.8% gain in December.
Other Potential Market Movers
- The BoJ rate decision and the Jeffries Healthcare Services Conference could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by financial and commodity stocks in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the week.
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