Wednesday, May 12, 2010

Today's Headlines

  • Spanish Bank Bond Risk Drops as Zapatero Unveils Deficit Plans. The cost of insuring against default on Spain’s largest banks fell to the lowest in three weeks after Prime Minister Jose Luis Rodriguez Zapatero announced measures to cut the country’s deficit. Credit-default swaps on Banco Santander SA, Spain’s biggest lender, declined 35 basis points to 130, the lowest since April 20, according to CMA DataVision prices. Contracts on Banco Bilbao Vizcaya Argentaria SA fell 31.5 basis points to 148, indicating an improvement in the perception of credit quality. Spain will reduce public-sector wages 5 percent this year and freeze them in 2011 in response to calls from European finance ministers for deeper budget cuts as part of an almost $1 trillion aid package for the region’s most indebted nations. Zapatero’s deficit reduction plan triggered a 22 basis-point decline in the country’s sovereign default swaps to 139. “Some serious steps in the right direction have been taken,” said Jose Mosquera, a Madrid-based manager at the Breogan Global Financials Fund. Contracts on Caja Madrid, Spain’s second-largest savings bank, declined 2 basis points today to 410 and Banco Pastor SA’s contracts fell 10 basis points to 365, according CMA prices. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings dropped 25 basis points to 462, according to Markit Group Ltd. prices on Bloomberg. The Markit iTraxx Financial Index of 25 banks and insurers was down 11 at 124.
  • AIG(AIG) Reviewing Possible Recovery in Goldman(GS) Trades. American International Group Inc. attorneys are reviewing whether the company may recover funds tied to transactions with Goldman Sachs Group Inc., the insurer’s chief executive officer said. “We have fine lawyers, we are looking at all of the activities that occurred,” CEO Robert Benmosche said today at AIG’s annual meeting in New York after a shareholder asked about transactions with Goldman Sachs. “To the extent we find anything that was done wrong, or any harm to AIG that should not have happened, our legal staff will take appropriate actions.”
  • India's Gold Demand May Halve in Festival on Prices. Gold demand in India, the world’s biggest consumer of the precious metal, may drop 50 percent during this year’s Akshaya Tritiya festival because of rising prices, trading company RiddiSiddhi Bullions Ltd. said. Demand may decline to 20 metric tons during the festival, compared with last year’s 40 tons, Prithviraj Kothari, director of the Mumbai-based company, said today in a phone interview.
  • Crude Oil Declines in New York After U.S. Stockpiles Increase. Crude oil declined in New York after a U.S. government report showed that inventories climbed for the 14th time in 15 weeks. Supplies of crude oil gained 1.95 million barrels to 362.5 million, the Energy Department said. Stockpiles at Cushing, Oklahoma, where the New York-traded West Texas Intermediate oil grade is stored, rose to a record. Crude oil for June delivery fell 89 cents, or 1.2 percent, to $75.48 a barrel at 12:16 p.m. on the New York Mercantile Exchange. Inventories at Cushing increased 784,000 barrels to 37 million, the second straight week supplies reached the highest level since the department began reporting on supplies at the hub in April 2004. “There was another build at Cushing, which should put downward pressure on crude,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York.
  • BP(BP) Lowers 'Top Hat' Oil Containment Dome in Gulf. BP Plc lowered its smaller “top hat” oil-containment dome to the floor of the Gulf of Mexico, advancing its second attempt to funnel oil from a leaking well to a ship on the surface.
  • IBM(IBM) to Spend $20 Billion on Takeovers Through 2015. International Business Machines Corp. Chief Executive Officer Sam Palmisano, seeking to boost earnings by focusing on software and services, said he plans to spend $20 billion on acquisitions in the next five years. Operating earnings will jump to at least $20 a share by 2015 from $11.35 or more this year, helped by cost savings and software demand, Palmisano said in a meeting with investors in New York today. The company also predicted sales growth that beat analysts’ estimates, sending the stock higher.
  • Arizona Immigration Law Backed by Most Americans, Survey Finds. Almost three-quarters of Americans support a provision of a new Arizona immigration law that requires people to produce documents verifying they are in the U.S. legally, a survey said. About 73 percent of those polled by the Washington-based Pew Research Center for the People & the Press said they approve of the plan, while 23 percent said they disapproved, according to the survey released today. About 67 percent said they agree with letting police detain anyone who can’t verify their legal status, compared with 29 percent who disapproved. When asked if police should be allowed to question anyone they think may be in the country illegally, about 62 percent said they approved and 35 percent disapproved. More than half, 59 percent, said they supported the new Arizona law as a whole, while 32 percent said they don’t support the legislation.
  • Inventories at retailers including Macy's(M) are not rising fast enough to keep up with sales and that may lead to greater gains in orders, production, trucking volumes and overall economic growth. Macy's inventory-to-sales ratio dropped 8.7% in the first quarter compared with a year earlier, the biggest decrease since the three months ended September 2006. "Lower inventories mean any new demand is going to mean a lot of production," said Zach Pandl and economist at Nomura Securities Intl. in NY. "Retailers underestimated the rebound in consumer spending and now find themselves playing catch up in a very big way."

Wall Street Journal:
  • Deepwater Horizon Well Failed Key Test. House Energy and Commerce Committee Chairman Henry Waxman said Wednesday that BP PLC (BP)officials told House investigators that the Deepwater Horizon well did not pass a key pressure test the morning of the April 20 explosion.
Bloomberg Businessweek:
  • Moody's(MCO) Downgrades $28 Billion of Greek Securities. Moody’s Investors Service lowered 22 billion euros ($28 billion) of Greek bonds backed by loans to consumers and companies as the country adopts austerity measures to qualify for European aid, leaving the notes under review for further downgrades. The cuts “were prompted by Moody’s expectations of significant pool performance deterioration due to the stressed economic environment in Greece as well as increased operational risk due to the weakened financial strength of Greek banks,” the New York-based ratings company said today in a statement.
  • Is China's Housing Bubble About to Burst? Lost in the storm around Greece's debt problems, have been reports out of China indicating a slowdown in that country's real estate market. “As investors focus on Greece, there may be another story just as dangerous taking shape in Asia,” said Nick Chamie, global head of emerging markets research at RBC Capital Markets. “Anecdotal data suggests a correction in Chinese commercial and residential property markets may have already started or it could materialize in the coming months.”
NY Times:
  • Eastern Europe, Seeking Energy Security, Turns to Shale Gas. The industrial Lublin and Podlasie basins of southeastern Poland are becoming major attractions for global energy giants hoping to tap into new sources for Europe. Companies like Exxon Mobil, ConocoPhillips and Chevron have signed deals or are in negotiations for concessions from the Polish government to explore the region for shale gas, one of the most promising but elusive sources of energy on the planet.
Business Insider:
Lloyd's List:
  • Iranian crude-oil storage at sea totals a record 42.5 million barrels, citing estimates from the Lloyd's Marine Intelligence Unit, which tracks vessels. 21 VLCCs and 1 suezmax vessel are being used for storage.
Tech Trader Daily:
  • Intel Holds 6.5% Micron Stake After Close of Numonyx Deal. Intel (INTC) today disclosed that it holds a 6.5% stake in memory chip maker Micron Technology (MU). The stake results from the completion late last week of Micron’s acquisition of Numonyx from Intel, STMicro and Francisco Partners. Intel holds 64.2 million Micron shares; in the deal, Micron issued 138 million shares.
The Detroit News:
  • Ford(F) Holds Tight to Police Market. Despite new challenges from rival automakers, the head of Ford Motor Co.'s(F) police program is confident her company will continue to dominate the market because Ford is giving its customers what they want. And what police departments now want is not one, but two pursuit-rated vehicles.
L.A. Times:
Rasmussen Reports:
  • Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 28% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-one percent (41%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -13 (see trends).
  • Republicans: Where's the Democrats' Budget? House Republicans bashed their Democratic colleagues Wednesday morning for foot-dragging on the annual budget resolution, accusing the majority of failing the American people by not laying out a fiscally responsible way to govern. “It is astonishing to House Republicans, and we believe it will be a profound disappointment to millions of Americans, when they learn that this Democrat majority for the first time since the enactment of the budget act has abdicated its responsibility to do a budget,” House Republican Conference Chairman Mike Pence of Indiana said after the weekly meeting of his party.
  • Kerry Unveils US Climate Bill, Obama Supports. U.S. Senator John Kerry ratcheted up the fight to pass legislation to combat global warming on Wednesday, unveiling a bill as the Gulf of Mexico oil disaster complicates the measure's already slim chances of passage. Kerry, a Democrat, and Senator Joseph Lieberman, an independent, took the wraps off their bill, but a Republican supporter was conspicuously absent.
  • Greece's biggest unions decided to hold a new 24-hour strike on May 19 to protest government austerity measures.

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