Late-Night Headlines
Bloomberg:
- The euro may fall toward a 15-month low against the dollar after forming a so-called dead cross, said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. Ltd. in Tokyo. The European currency’s 50-day moving average, currently at $1.4324, dropped below its 200-day moving average of $1.4351 today, creating a dead-cross pattern. The euro slid 11.9 percent in less than two months after the last such cross occurred, dropping from $1.3998 on Sept. 10, 2008, to $1.2330 on Oct. 28, 2008. “The dead cross is significant for the euro as it’s a rare development, signaling a long-term bearish trend,” said Soma in a Bloomberg News interview. “The target would likely be the October 2008 low.”
- The euro traded near an eight-month low against the dollar on concern a European Union summit this week will fail to address Greece’s fiscal crisis, damping demand for assets in the region. The 16-nation currency was close to the weakest in 11 months versus the yen after EU President Herman Van Rompuy said yesterday the Feb. 11 summit will focus on long-term economic strategy, making no direct reference to Greece. “Investors won’t be willing to take the risk to buy higher-yielding currencies unless organizations such as the European Central Bank and EU speak up to rescue Greece,” said Masahide Tanaka, a senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second-largest bank. “If investors switch their attention to the fragility of Europe’s economy, euro weakness may accelerate.” “We are trying to implement a very difficult stability and growth program to which we are fully committed,” Greek Finance Minister George Papaconstantinou said in an interview with Bloomberg Television yesterday. “The worst possible signal which we could be sending out is one calling for outside help.” European Central Bank President Jean-Claude Trichet will today depart a meeting of policy makers in Sydney a day early to attend the EU summit, ECB spokeswoman Regina Schueller said.
- A gauge of corporate credit risk climbed to the highest in three months amid investor concern that “contagion” from rising government deficits in Europe may spread to other assets. Credit-default swaps on the Markit CDX North America Investment-Grade Index Series 13, which is linked to 125 companies and used to speculate on creditworthiness or to hedge against losses, rose 5.25 basis points to a mid-price of 107 basis points, according to broker Phoenix Partners Group. The index is at its highest since it was 107.02 basis points on Nov. 3, CMA DataVision prices show. “This is looking more and more like a contagion that can only be stopped via outside intervention,” Guy Lebas, chief fixed-income strategist and economist at Janney Montgomery Scott LLC, wrote in an e-mail. “The labor aspect is limiting the Hellenic government’s credibility to fight deficits, and once credibility goes in these situations, it takes an outside body to try and restore it,” such as the European Central Bank or European Union. Contracts tied to Bank of America Corp. rose 5.5 basis points to 135.5 basis points, swaps on Morgan Stanley increased 7 basis points to 154.5 basis points, swaps linked to JPMorgan Chase & Co. rose 2 basis points to 87.5 basis points, those on Goldman Sachs Group Inc. advanced 1 basis point to 135.5 basis points and those tied to Citigroup increased 11 basis points to 226.5 basis points, CMA prices show. Contracts tied to Portugal, where politicians are trying to push through increases in spending, climbed 16.5 basis points to 243.5 basis points, CMA prices show. Swaps on Greece rose 25 basis points to 420 basis points.
- The cost of protecting Australian government bonds from default jumped to close to a nine-month high as growing concerns about sovereign credit risk in Europe hurt other debt around the world. The cost to buy protection against an Australian sovereign default rose 6 basis points to 71 basis points, according to Deutsche Bank AG. That’s the highest since May 15, prices from CMA DataVision in New York show. The Markit iTraxx Australia index of credit-default swaps on 25 Australian companies increased 10 basis points to 115.5 basis points, the highest since Oct. 5, Deutsche Bank and CMA prices show. Other risk benchmarks in Asia also rose. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan climbed 9 basis points to 134 basis points as of 8:06 a.m. in Singapore, a five-month high, according to Citigroup Inc and CMA. The Markit iTraxx Japan index rose 6 basis points to 158 basis points as of 9:06 a.m. in Tokyo, its highest since Dubai’s debt standstill roiled credit markets in November, Deutsche Bank and CMA prices show.
- Posco, Asia's biggest stainless steelmaker by 2008 output, said it may raise stainless steel output by 22% this year. Production may rise to 1.8 million metric tons this year from 1.47 million tons last year, Choi Youn Joung, a spokeswoman for the Pohang, South Korea-based company said in a phone interview today.
- Washington’s respite from paralyzing snow may come to an end today as storm systems barreling across the country bring as much as 20 inches (50 centimeters) to a region still snowbound from a weekend blizzard. The latest blast of winter, which may also dump a foot of snow on New York, “is going to be accompanied by heavy winds, which will make it feel worse, and across the Northeast that wind is going to last through the weekend,” said Tom Kines, a meteorologist with AccuWeather Inc. A winter storm watch was posted by the National Weather Service for New York beginning late today, as well as Rhode Island and southern Connecticut and Massachusetts. A winter storm warning was posted for Washington starting at noon today, and 10 to 20 more inches may fall, the agency said. A snow emergency issued in the District of Columbia on Feb. 5 while as much as 40 inches of snow began falling over the mid-Atlantic region was lifted yesterday morning, the Washington Post said.
- New York Mayor Michael Bloomberg today said he wants President Barack Obama to promise to pay all the costs of providing security should the federal government prosecute five accused terrorists in Manhattan. A trial in downtown New York “would be very expensive and we expect the federal government to pay for it,” the mayor said at news conference in Brooklyn. “We have always had skepticism because a lot of times the federal government promises to pay and then the monies don’t come. So I’d like some assurance because the taxpayers in New York City are certainly strapped.” Bloomberg told U.S. Budget Director Peter Orszag last month it would cost more than $200 million a year to provide security for trials of Khalid Sheikh Mohammed, the accused mastermind of the 2001 attacks, and four fellow Guantanamo Bay detainees. They are set to stand trial in U.S. District Court about a quarter- mile from where the World Trade Center towers stood. The federal government hasn’t told him where it intends to hold the trial, the mayor said. “If it is in New York City, New York City will provide security,” Bloomberg said. “That’s our first and foremost obligation. It would be disruptive to the people in the neighborhood, so my preference would be that it be elsewhere.”
- The Shanghai Composite Index may retreat another 8.6%, almost doubling its losses so far this year, after a gauge of property stocks sank to a nine-month low, according to WJB Capital Group Inc. The 34-company China Se Shang's Property Index has tumbled 23% from a three-month high on Nov. 23 as the government curbed lending to cool the economy. The Shanghai Composite Index has dropped 12% during the same period. The 120-day correlation between the property measure and the nation's main stock index climbed to .87 yesterday, the highest in almost seven years, according to data compiled by Bloomberg. The property measure fell beneath its September low last month, indicating that the Shanghai Composite may drop beyond its lowest close that month, according to John Roque, the NY-based chief technical strategist at WJB. That implies an 8.6% retreat from yesterday's close. "The pullback in the property index suggests people are becoming less confident in China's growth," Roque said in an interview.
- The European Central Bank may be forced to delay the withdrawal of emergency lending measures because it could inflame financial-market concerns about Greece, Spain and Portugal, economists said. Investors are already dumping those countries’ assets as their governments struggle to rein in budget deficits, making it more expensive for them to finance the debt. Should the ECB push ahead with its exit strategy by pulling its unlimited cash support for euro-area banks, interest rates could rise, further undermining confidence in Europe’s economic recovery.
- Iran, OPEC’s second-largest crude producer, has at least three supertankers idling in the Persian Gulf, as oil prices decline five weeks before the group’s next meeting, vessel-tracking data show. The tankers, each bigger than the Chrysler Building, have been almost stationary for at least four weeks, according to data from the ships collected by AIS Live Ltd. The depth of the 2-million-barrel vessels sitting in the water indicates they are loaded. The amount of oil stored may expand because signals from two more idled tankers shows they are partially loaded or empty. “We are entering the season when there should be some low demand from Japan, which is a big user of Iranian crude,” Olivier Jakob, managing director of Zug, Switzerland-based oil consultant Petromatrix GmbH, said by phone. “When you have some floating storage, from Iran or from pure traders, it always adds a bit to the feeling there’s spare capacity available.” If full, the three tankers’ combined capacity of about 6 million barrels is equal to 19 percent of all the crude the U.S. Energy Department estimates is stored in Cushing, Oklahoma, the pricing point for benchmark West Texas Intermediate oil. As Iran’s cargoes sit, oil companies and banks are selling crude stored on tankers into the market. The number of ships involved in the “contango” trade, named after the term used to describe a market where future commodity prices are higher than today, declined 16 percent last month, according to data from London-based E.A. Gibson Shipbrokers Ltd. The amount of crude tied up in storage fell 25 percent last week, Morgan Stanley said in a Feb. 7 report.
- Copper imports by China may halve from last year's record as the government rolls back stimulus spending and curbs credit growth, according to China Minmetals Nonferrous Metals Co., the nation's largest metals trader. Shipments of refined copper may be about 1.5 million metric tons this year, down 53% from 2009, as China bids to prevent the economy from overheating, said Gu Liangmin, general manager of Minmetal's copper department. Lower imports by the world's largest metals user may help to reduce copper prices, extending this year's 12% drop. "Demand last year was driven by stockpiling, investment demand and government spending." China shipped in a record 3.18 million tons of refined copper last year, helping to boost stockpiles in the country by more than 500%. "Imports will moderate and return to pre-stimulus levels," Lin Yuhui, deputy general manager at Jinhui Futures Co., said from Shenzhen. Copper inventories in warehouses monitored by the Shanghai Futures Exchange stood at 114,302 tons last week, the highest level since April 2004. Unreported stockpiles, including those held by producers and end-users, are "in excess of 1 million tons," Minmetals Gu estimates.
Wall Street Journal:
- When Charles E. Haldeman Jr. became Freddie Mac's chief executive officer in August, the ailing housing-finance giant had already consumed $51 billion of government money to stay afloat. It's likely to need even more. Freddie's federal overseers nevertheless have instructed Mr. Haldeman to focus on something that isn't likely to make the bleak balance sheet look any better: carrying out the Obama administration plan to allow defaulted borrowers to hang onto their homes. Freddie and its larger rival, Fannie Mae, were among the first big financial institutions to receive massive federal bailouts after the financial crisis hit in 2008. Government officials have been racing to fix bailed-out car makers and banks and are pushing to reshape the financial-services industry. But Fannie and Freddie remain troubled wards of the state, with no blueprints for the future and no clear exit strategy for the government. Nearly a year and a half after the outbreak of the global economic crisis, many of the problems that contributed to it haven't yet been tamed. The U.S. has no system in place to tackle a failure of its largest financial institutions. Derivatives contracts of the kind that crippled American International Group Inc. still trade in the shadows. And investors remain heavily reliant on the same credit-ratings firms that gave AAA ratings to lousy mortgage securities. Fannie and Freddie, for their part, remain at the core of a housing-finance system that inflated a dangerous housing bubble. After prices collapsed, sending shock waves around the world, the federal government put America's housing-finance system on life support. It has yet to decide how that troubled system should be rebuilt. On Dec. 24, Treasury said there would be no limit to the taxpayer money it was willing to deploy over the next three years to keep the two companies afloat, doing away with the previous limit of $200 billion per company. So far, the government has handed the two companies a total of about $111 billion. The government is "running Fannie and Freddie as an instrument of national economic policy, not as a business," says Daniel Mudd, who was forced out as Fannie Mae's chief executive in September 2008 when the government took control. Some housing experts contend that prolonged government intervention will make it more difficult and costly to eventually wean the companies off government support. "The more aggressively we continue kicking the can down the road, the larger the losses become and the harder it becomes" to address the companies' future, says Joshua Rosner, managing director at investment-research firm Graham Fisher & Co. With delinquencies still rising, the outlook is grim. At Freddie, 3.87% of single-family mortgages were at least 90 days past due at the end of December, up from 1.72% a year earlier. Fannie is worse: 5.29% were 90 days past due in November, up from 2.13% a year earlier.
- Nvidia Corp. (NVDA) plans to unveil software to reduce battery drain in notebook computers that use high-powered graphics cards, according to people familiar with the company's plans. The software, called Optimus, will turn off power hungry graphics cards when not in use, potentially saving hours in battery life and helping remove one hurdle in the wider adoption of graphics cards in notebooks.
- Amid churning doubts over his political future, New York Gov. David Paterson has told one of his closest advisers that he will officially announce his campaign for governor next week. William Lynch, a Harlem lobbyist and political aide, said Mr. Paterson will give a "major statement on why he's running" and will travel around the state to make clear his intentions. "He's running," Mr. Lynch said. Mr. Paterson, who was elected lieutenant governor and then succeeded Gov. Eliot Spitzer, who resigned amid a sex scandal, has struggled with low poll numbers for months and battled with lawmakers over the deterioration of the state's finances. He is gearing up for an announcement as Democrats in Albany have circulated rumors about the Democratic governor's private life and questioned his viability as a candidate.
- How to Keep the Scary US Debt From Eating Up Your Assets.
CNBC:
NY Times:
Business Insider:
- The world's tallest skyscraper has unexpectedly closed to the public a month after its lavish opening, disappointing tourists headed for the observation deck and casting doubt over plans to welcome its first permanent occupants in the coming weeks. Electrical problems are at least partly to blame for the closure of the Burj Khalifa's viewing platform – the only part of the half-mile high tower open yet. But a lack of information from the spire's owner left it unclear whether the rest of the largely empty building – including dozens of elevators meant to whisk visitors to the tower's more than 160 floors – was affected by the shutdown. The indefinite closure, which began Sunday, comes as Dubai struggles to revive its international image as a cutting-edge Arab metropolis amid nagging questions about its financial health.
Politico:
zerohedge:
- What Do Rising Sovereign Credit Default Swaps Mean?
- The Ever Increasing Parallels Between AIG and Greece...And The CDS Puppetmaster Behind It All.
Crain's Chicago Business:
- An Illinois bill would ban the state's public pension funds from any investments that trade derivatives in non-public markets and would require divestment of any such existing derivative investment within one year of the bill's effective date. The bill, introduced by state Rep. Kevin Joyce on Jan. 25, is under debate in the Illinois House Rules Committee.
DenverPost.com:
- Cap-and-trade bills bad news for Colorado jobs.
Forbes:
- The High Cost Of The US Budget by David Malpass and Eric Singer.
- The World's Most Powerful People.
- Guru's Six Best Tech Stocks For 2010.
American Interest Online:
- The Great IPCC Meltdown Continues. It’s not just the threat of Himalayan glaciers disappearing by 2035. Now another headline grabbing IPCC scare story is melting away. A report in Sunday’s London Times highlights new humiliations for the IPCC. “The most important is a claim that global warming could cut rain-fed north African crop production by up to 50% by 2020, a remarkably short time for such a dramatic change. The claim has been quoted in speeches by Rajendra Pachauri, the IPCC chairman, and by Ban Ki-moon, the UN secretary-general.” There is however one teensy-weensy little problem. As Professor Chris Field, the lead author of the IPCC’s climate impact team has now told reporters that he can find “no evidence” to support the claim in the IPCC’s 2007 report.
Reuters:
- Electronic Arts Inc (ERTS) warned that fiscal 2011 earnings would miss Wall Street expectations as it grapples with a lack of blockbuster new games after a succession of missed targets and restructurings. Shares of the U.S. video game publisher fell 8 percent after its current-quarter forecast also missed analysts' expectations on Monday, a month after it had updated its current 2010, fiscal year outlook.
- FACTBOX-Republican US healthcare reform proposals.
- Hartford Financial Services Group Inc (HIG) posted its first quarterly profit since mid-2008, as rising stock markets helped bolster investment income in its life insurance business. The results beat expectations and signal the giant life and property insurer may be turning itself around after suffering massive losses on stock market-linked annuities and investments. Those losses forced Hartford to take $3.4 billion of government bailout money. But even with the profit, Hartford's shares fell 4 percent in after-hours trading to $22.49 after the company offered a 2010 earnings forecast that seemed to offer ample room for the company to miss analysts' current average forecast.
Financial Times:
- DE Shaw, the world’s third-largest hedge fund, has established a special in-house team to look at buying up portfolios of distressed assets and is targeting the holdings of rival hedge fund firms. The DE Shaw Portfolio Acquisitions Unit – launched late last year – aims to capitalize on the steep discounts at which many illiquid assets are still trading, as well as a widespread desire among many investors to cut loose portfolios that have yet to recover after last year’s market rallies. DE Shaw, which has around $28bn under management, is particularly interested in acquiring so-called “side-pocketed” assets from other hedge funds, according to people familiar with the situation. Side-pockets have been a commonplace solution over the past few months for hedge fund managers to carve out distressed parts of their portfolios in order to protect ongoing returns and performance in their main funds. Side-pocketed clients, however, have in some cases seen their investments languish.
Telegraph:
- It is a perfect day for skiing at Yabuli International ski resort, China's first purpose-built winter sports destination. The skies are powder-blue, winds mercifully light given the -12C temperatures and the snow immaculately groomed by a squadron of imported German piste-bashing machines. Even more perfect, for those used to threading their way down the crowded slopes of Europe or the USA, is that the runs carved through the native pine forests of China's far northeastern province of Heilongjiang are deserted to the point of eeriness. "Where is everyone?" wondered my ski partner as we carved our way down a black run in splendid isolation – the very same question being posed by international resort developers who only four or five years ago were predicting a massive boom in Chinese skiing. But as so often in China the enticing back-of-the-envelope calculations – the numbers of newly wealthy middle classes multiplied by annual rises in domestic tourism revenues of more than 10pc – have proved hopelessly optimistic.
Der Spiegel:
- How Goldman Sachs(GS) Helped Greece to Mask its True Debt. Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country's already bloated deficit.
AFP:
- Supreme leader Ayatollah Ali Khamenei said on Monday that Iran is set to deliver a "punch" that will stun world powers during this week's 31st anniversary of the Islamic revolution."The Iranian nation, with its unity and God's grace, will punch the arrogance (Western powers) on the 22nd of Bahman (February 11) in a way that will leave them stunned," Khamenei, who is also Iran's commander-in-chief, told a gathering of air force personnel. The country's top cleric was marking the occasion when Iran's air force gave its support to revolutionary leader Ayatollah Ruhollah Khomeini, a key event which led to the toppling of the US-backed shah on February 11, 1979. His comments came as Iran said it would begin to produce higher enriched uranium from Tuesday, in defiance of Western powers trying to ensure the country's nuclear drive is peaceful.
South China Morning Post:
Evening Recommendations
Citigroup:
- Reiterated Buy on (LNCR), target $47.
- Reiterated Sell on (ANF), lowered estimates, target $25.
Night Trading
Asian indices are -1.25% to +.50% on avg.
S&P 500 futures +.16%.
NASDAQ 100 futures +.17%.
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
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IBD New America
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Earnings of Note
Company/Estimate
- (NYX)/.48
- (CVH)/.56
- (TAP)/1.10
- (IACI)/.02
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- (KO)/.66
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- (PHM)/-.24
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- (CERN)/.71
- (ASEI)/.95
Economic Releases
8:30 am EST
- Wholesale Inventories for December are estimated to rise +.5% versus a +1.5% gain in November.
Upcoming Splits
- None of note
Other Potential Market Movers
- The NFIB Small Business Optimism Index, IBD/TIPP Economic Optimism Index, Treasury's $40B 3-Yr Note Auction, $26 B 1-Year Note Auction, API Energy Inventory report, (TXT) analyst day, (SIVB) analyst day, weekly retail sales reports and the ABC consumer confidence reading could also impact trading today.
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