Monday, March 29, 2010

Today's Headlines


  • Greece Pays Bond Investors 5 Times Spain Yield Spread. Greece, the European Union’s most indebted member, offered more than five times the yield premium of comparable Spanish debt to lure investors to its first bond sale since a bailout was agreed for the nation. Greece priced the 5 billion euros ($6.7 billion) of seven- year bonds to yield 310 basis points more than the benchmark mid-swap rate, according to a banker involved in the transaction, who declined to be identified before the sale is completed. The bonds’ 6 percent yield equates to 334 basis points more than seven-year German bunds, Europe’s benchmark government securities. That compares with a yield premium, or spread, of 61 basis points for similar-maturity Spanish debt and 114 basis points on Portugal’s government bonds due 2017, according to composite prices on Bloomberg. Italy’s seven-year bonds yield 45 basis points more than bunds, the prices show.
  • FDIC Chairman Shelia Bair said she's troubled that Wall Street hasn't changed in response to the worst financial crisis since the Great Depression. "I'm very concerned that the culture that led to the crisis is still there," Bair said today. "I haven't seen anything change."
  • S. Korean Divers Reach Sunken Warship; No Response. South Korean navy divers today reached a patrol boat that sank off the west coast three days ago near the nation’s disputed border with North Korea, with no sign of the 46 missing crew members. When navy divers knocked on the ship’s stern with hammers, they didn’t hear any response, defense ministry spokesman Won Tae Jae said in a briefing. The 1,200-ton Cheonan sank within hours after an explosion on March 26 split the vessel in two. Commodore Lee Ki Sik of the South Korean Joint Chiefs of Staff told reporters that missing crew members may be trapped inside the sunken ship. Oxygen in the ship’s waterproof cabins would have enabled those trapped to survive for a maximum of 69 hours, Lee said. North Korea today warned the U.S. and South Korea not to “disturb the security and order” in the demilitarized zone. The statement by an unidentified Army spokesman, carried by the Korean Central News Agency, made no reference to the explosion.
  • Oil Rises the Most in Five Weeks as Dollar Weakens Against Euro. Crude oil rose the most in more than five weeks as the dollar fell on European Union plans to help Greece and on signals that economic growth will accelerate. Oil topped $82 a barrel as the greenback dropped following an International Monetary Fund and European Union pledge to help finance Greece’s debt.
  • Birinyi Raises Full-Year S&P 500 Forecast to 1,325. Birinyi Associates Inc. raised its year-end forecast for the Standard & Poor’s 500 Index to 1,325 because of rallies by General Electric Co., Citigroup Inc. and Microsoft Corp.’s shares. The estimate from the research and money-management firm founded by Laszlo Birinyi implies a 14 percent advance from last week’s closing price and a full-year increase of 19 percent.
  • Shoppers Emerging With Best Buy(BBY) Sales Signal Revival. Companies from Saks Inc. to Best Buy Co. are growing more confident that the recent revival of consumer spending is more than just a blip.
  • Apollo(APOL) Quarterly Earnings, Forecast Beat Analysts' Estimates. Apollo Group Inc., owner of the biggest for-profit university in the U.S. by enrollment, reported earnings and forecast third-quarter results that beat analysts’ estimates, as more students signed up for its courses. The company rose the most in three months in Nasdaq trading.
  • U.K.'s AAA Rating, Negative Outlook Affirmed by S&P. Britain had its AAA credit rating affirmed by Standard & Poor’s, which also kept its negative outlook on the nation’s debt on concern the government hasn’t been specific enough about how it will cut the budget deficit. “In the absence of a strong fiscal consolidation plan, the U.K.’s net general government debt burden may approach a level incompatible with a AAA rating,” S&P analysts including Trevor Cullinan wrote in a statement published in London today. “We expect to review the long-term rating and outlook again once medium-term fiscal policy becomes clearer following the 2010 parliamentary elections.”

Wall Street Journal:
  • Nestle Takes a Beating on Social-Media Sites. For nearly two weeks, environmental activists have been using social media to wage war against Nestlé over its purchases of palm oil for use in KitKat candy bars and other products, catching the Swiss food giant off guard. Protesters have posted a negative video on YouTube, deluged Nestlé's Facebook page and peppered Twitter with claims that Nestlé is contributing to destruction of Indonesia's rain forest, potentially exacerbating global warming and endangering orangutans.
  • Dozens Killed in Moscow Subway Explosions. Suicide-bomb blasts that killed 38 people in two Moscow subway stations brought the specter of southern Russia's Muslim insurgency back to the capital Monday, exposing flaws in what the Kremlin has often termed a successful anti-terrorist strategy. Officials said preliminary investigation indicated both blasts were set off by women with links to the country's North Caucasus region. Militants there, largely subdued in Chechnya, have spread into neighboring republics in recent years, seeking to turn them into bases for strikes into the Russian heartland. Monday morning's rush-hour blasts, in subway cars four stations and 40 minutes apart, confronted Muscovites with images of terror their city had not experienced in six years—dazed passengers holding their heads in despair, choking in smoke-filled tunnels, stepping over corpses strewn at their feet.
Business Insider:
  • Basically, Angela Merkel Has Wrecked The EU. Greece bailout or not, the Iron Lady of Germany has killed the European Union in the estimation of The Telegraph's Ambrose Evans-Pritchard. Far from stemming contagion, the deal leaves Club Med exposed. Underlying default risk has risen for Greece, Portugal, Italy and Spain, as well as for Ireland, Slovakia and Malta even if credit markets keep missing the point. The world's top holder of EU debt does understand. Greece is the "tip of the iceberg", said the deputy-governor of China's central bank. "The main concern today, obviously, is Spain and Italy."
  • Apple(AAPL) to Build 8-10M iPads in 2010, Begins Shipping Preorders. As Apple began shipping the first iPads to those who first preordered, a new report on Monday said the company plans to ship between 8 million and 10 million devices in the 2010 calendar year. In a new note to investors, analyst Katy Huberty with Morgan Stanley said suppliers for the iPad have currently forecast 2.5 million iPads to be shipped in the first three months of availability, from March to May. In all, Apple will ship between 8 million and 10 million by the end of 2010, suppliers said -- a number much higher than the previous expectation of 5 million.
Rasmussen Reports:
  • One Week Later, 54% Favor Repeal of Health Care Bill. One week after the House of Representatives passed the health care plan proposed by President Obama and congressional Democrats, 54% of the nation's likely voters still favor repealing the new law. The latest Rasmussen Reports national telephone survey shows that 42% oppose repeal.
  • Florida Poll Shows Dem Health Woes. A Mason-Dixon poll of Florida voters released over the weekend offers the dose of cold water Democrats may need to temper their expectations on health care's electoral impact. The Miami Herald reports that in a state home to several Democrats who took risky votes on health care — Reps. Allen Boyd, Suzanne Kosmas and Alan Grayson — "Only 34 percent of Florida voters support the new law while 54 percent are against it, according to the poll. Opposition is significantly strong among two crucial blocs: those older than 65 and voters with no party affiliation. Seniors disfavor the bill by a 65-25 percent margin, while independents oppose the law 62-34. The poll, conducted last week, is the first to be taken in Florida since Obama signed the healthcare reform bill into law. It shows that Floridians have a more negative than positive view of Obama by a margin of 15 percentage points. And they oppose his so-called 'cap-and-trade' global warming legislation as well as the new health care law."
  • Man Arrested for Cantor Death Threat. Federal authorities have arrested a Philadelphia man and charged him with threatening to kill House Minority Whip Eric Cantor (R-Va.) and his family. Norman Leboon will be charged with two federal counts: threatening to kill Cantor and interfere with his federal duties, and posting video online containing such threats. He is scheduled to appear in federal district court in Philadelphia on Monday afternoon. The arrest is the most serious in a string of threats of violence against lawmakers in wake of the divisive health care vote. At least 10 Democrats along with a handful of Republicans, including Cantor, reported threats of violence during the past week.
Real Clear Politics:
  • Planting the Seeds of Disaster. When historians recount the momentous events of recent weeks, they will note a curious coincidence. On March 15, Moody's Investors Service -- the bond rating agency -- published a paper warning that the exploding U.S. government debt could cause a downgrade of Treasury bonds. Just six days later, the House of Representatives passed President Obama's health care legislation costing $900 billion or so over a decade and worsening an already-bleak budget outlook. Should the United States someday suffer a budget crisis, it will be hard not to conclude that Obama and his allies sowed the seeds, because they ignored conspicuous warnings.
Financial Times:
  • US Poised to Set Tone for Smartphone Boom. Sales of smartphones in the US such as the iPhone, BlackBerry and Motorola Droid will overtake sales of older-generation “feature phones” by the end of next year, according to the Nielson research company. Smartphone sales in the US will climb steadily over the next 18 months and account for just under 50 per cent of total sales by the autumn of next year, predicts a new report prepared by Roger Entner, who is in charge of Nielson’s telecom practice. “We are just at the beginning of a new wireless era where smartphones will become the standard device consumers will use to connect to friends, the internet and the world at large,” he said. At the end of last year only 21 per cent of American wireless subscribers were using a smartphone compared with 19 per cent in the previous quarter and just 14 per cent at the end of 2008. “If we combine these intentional data points with falling prices and increasing capabilities of these devices along with a explosion of applications, for devices, we are seeing the beginning of a groundswell. This increase will be so rapid that by the end of 2011 Nielsen expects more smartphones in the US market than feature phones,” he said.
  • H1N1 Pandemic Call to be Reviewed. A group of outside experts will scrutinize the World Health Organization's response to the swine flu outbreak and will likely examine whether the term "pandemic" was appropriate for what turned out to be a mild disease, the World Health Organization said Monday. The review starting later this month will be conducted by around 30 scientists and public health officials, and their initial findings will be presented to member states by WHO director general Margaret Chan in May, a senior official told reporters in Geneva.

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