Bloomberg:
- Bank Debt Riskiest to Junk Bonds Since '05 on Sovereign Concern. Subordinated financial bonds are the riskiest in almost six years relative to corporate junk debt in Europe on concern investors will be forced to share in the cost of bailing out profligate governments. Credit-default swaps on the Markit iTraxx Subordinated Financial Index tied to bonds of 25 European banks and insurers jumped 4.5 basis points to 314.5, according to JPMorgan Chase & Co. The measure of swaps on the debt of companies with mostly high-yield ratings fell 9 basis points to 448, and the gap between the two risk gauges is the narrowest since March 2005. Investors are speculating European policy makers will be unable to contain the region’s worsening deficit crisis and that banks, the biggest holders of their debt, will be saddled with losses. Anglo Irish Bank Corp.’s subordinated bonds were valued as low as 18.25 percent of face value at an auction to settle credit-default swaps today. Swaps on the Markit iTraxx Crossover Index of mostly junk companies dropped 9 basis points to 448, according to JPMorgan prices at 11:30 a.m. in London. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell 1 basis point to 104.75, JPMorgan prices show. The Markit iTraxx Financial Index of swaps on senior debt of 25 banks and insurers declined 0.5 basis points to 154.
- U.S. Initial Jobless Claims Fell 17,000 to 421,000 Last Week. The number of workers filing first- time claims for unemployment insurance payments fell last week in the U.S., showing the labor market continues to improve. Applications for jobless benefits decreased to 421,000, less than the median forecast of economists surveyed by Bloomberg News, from a revised 438,000 the prior week, Labor Department figures showed today. The four-week moving average, a less-volatile measure, dropped to the lowest level in more than two years. The four-week moving average fell to 427,500, the lowest since August 2008, from 431,500. The number of people continuing to collect jobless benefits fell by 191,000 in the week ended Nov. 27 to 4.09 million. They were forecast to fall to 4.24 million. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, dropped to 3.2 percent in the week ended Nov. 27, the lowest in two years, today’s report showed.
- Household Worth in U.S. Rose by $1.2 Trillion in 3rd Quarter. Household wealth in the U.S. rose by $1.2 trillion in the third quarter as share prices jumped in response to an improving economy. Net worth for households and non-profit groups increased to $54.9 trillion from $53.7 trillion in the previous three months, according to the Federal Reserve’s Flow of Funds report issued today in Washington. American families also cut debt for a 10th consecutive quarter.
- Dollar Climbs After Fitch Cuts Ireland's Ratings. The dollar climbed against the euro after the credit ratings agency Fitch slashed Ireland's debt rating, saying its big bailout showed its debt crisis was worse than had been known. The move highlighted the euro region's problems and prompted traders to resume selling euros. The European Union bailed out Ireland because of its soaring borrowing costs following the rescue of Greece in May. Investors are nervous that Portugal or Spain may be next, and that the current 750 billion euro fund would not be big enough to rescue Spain.
- Dell(DELL) in Talks to Buy Compellent(CML) for About $876 Million to Add Data Storage. Dell Inc., the world’s third-largest personal-computer maker, is in exclusive talks to buy Compellent Technologies Inc. for about $876 million, a discount to the data-storage maker’s current market value. Dell would acquire all of the outstanding common stock of Compellent for $27.50 apiece in cash, the companies said today in a statement. That’s 18 percent less than yesterday’s closing price for Compellent. The stock had almost doubled in the past two months before today on speculation it will get bought.
- Citigroup(C) Adds Hedge-Fund Service Amid Scrutiny, Regulation. Citigroup Inc., the third-biggest U.S. bank, said its prime finance business is starting a consulting service for hedge funds amid increased scrutiny from investors and new requirements from regulators.
- Gold Futures Rebound as Drop From Record Price Spurs Demand From Investors. “The bottom line is that investors are losing faith in paper money,” said Lannie Cohen, the president of Capitol Commodity Services Inc. in Indianapolis. “Gold will continue to act as the currency of choice.” Gold futures for February delivery rose $1.50, or 0.1 percent, to $1,384.70 at 11:25 a.m. on the Comex in New York. “If you were in Europe, you’d be buying gold to preserve your wealth,” Cohen said. The metal priced in euros reached a record on Dec. 7 as Europe’s debt woes spurred demand.
- Most Americans Say They're Worse Off Since Obama Took Office, Poll Shows. More than 50 percent of Americans say they are worse off now than they were two years ago when President Barack Obama took office, and two-thirds believe the country is headed in the wrong direction, a Bloomberg National Poll shows. The survey, conducted Dec. 4-7, finds that 51 percent of respondents think their situation has deteriorated, compared with 35 percent who say they’re doing better. Americans have grown more downbeat about the country’s future in just the last couple of months, the poll shows. The pessimism cuts across political parties and age groups, and is common to both sexes. Sixty-six percent say the nation is headed in the wrong direction. That’s up from 62 percent who felt that way in an October poll and is the worst reading since the Bloomberg National Poll began in September 2009.
- Kim Jong Il Meets Chinese Diplomat for Talks Over Korea, Reaches Consensus. North Korean leader Kim Jong Il and China’s top diplomat “reached important consensus” today on issues of the Korean peninsula, where tensions have heightened since the North’s attack on South Korean soil. Kim met with State Councilor Dai Bingguo in Pyongyang today and had “frank and in-depth talks,” China’s Foreign Ministry said on its website, without providing details. The two discussed “ways to further solidify cooperative relations,” the state-run Korean Central News Agency reported.
- Roach Says China Should 'Aggressively' Quell Inflation to Help Consumers. China should move “aggressively” to crack down on inflation to help the nation become a more consumption-driven economy, said Stephen Roach, non-executive chairman at Morgan Stanley Asia Ltd. “The longer government policy makers wait to address inflation, the tougher it will be to deal with” structural changes, Roach told reporters in Hong Kong today. “My advice is move quickly and aggressively to deal with inflation, so that you can get on with the most important transition in China, which is stimulating internal private consumption.”
- Ron Paul, Author of 'End the Fed,' to Lead Fed Oversight Panel. Representative Ron Paul, Texas Republican and author of “End the Fed,” will take control of the House subcommittee that oversees the Federal Reserve.
- Life Expectancy in the U.S. Drops for First Time Since 1993. Life expectancy of Americans fell for the first time in 15 years, as the nation’s oldest adults died from heart disease, cancer and respiratory ailments, according to a report by the National Center for Health Statistics. Based on data from 2008, the latest available, life expectancy in the U.S. fell 36.5 days from 2007 to 77.8 years, according to the report released today.
- SEC Considering Curbs on Algorithms Blamed for May 6 Crash, Official Says. The Securities and Exchange Commission is considering whether to require automated trading programs known as algorithms to run risk checks that prevent errant executions, according to David Shillman, an associate director in the agency’s division of trading and markets. Regulators are concerned algorithms could act “too aggressively,” causing a security’s price to move rapidly, Shillman said. Safety checks could prevent algorithms, which execute larger trades by slicing them into pieces, from destabilizing markets. The SEC says an algorithmic trade of futures that gave no regard to prices or timing helped drive the May 6 crash that erased $862 billion from the value of U.S. equities in less than 20 minutes. The SEC is considering whether there should be a “throttle on an algorithm that prevents overly aggressive moves without checks on price or time,” Shillman said at an Investment Company Institute conference in New York today. Another idea regulators are evaluating is whether “baseline qualifications” should be required for individuals who design and use trading algorithms. Shillman said this is a separate issue from the notion of a throttle.
- Citigroup(C) Names Obama's Orszag Vice Chairman of Investment Bank. Citigroup Inc., the biggest bailout recipient among U.S. banks during the financial crisis, hired former White House Budget Director Peter Orszag to be vice chairman of its investment-banking division.
- Chubb(CHB) Plans to Buy Back 30 Million Shares in Insurer's Biggest Repurchase. Chubb Corp., the insurer of commercial property and high-end homes, said it will repurchase 30 million shares, the company’s biggest buyback, after raising its forecast for full-year profit. The repurchase program equals almost 10 percent of the 304.9 million Chubb shares outstanding as of Sept. 30 and would cost about $1.8 billion at the Warren, New Jersey-based company’s $58.70 closing price yesterday. Chubb’s largest buyback announced before today was in December 2007 when the company said it would repurchase 28 million shares.
- Mortgage Rates Hit Six Month High, Threatening Housing. Rates on fixed mortgages rose for the fourth straight week this week, hitting 4.61 percent. The surge could slow refinancings and further hamper the housing market.
- Government, Fannie Mae Considering Help for Housing Investors.
Zero Hedge:
New York Post:
- Hulu's in a Netflix(NFLX) Headlock. Netflix's muscle-flexing deal yesterday with Disney not only reinforces the fact that it is a programming distributor to be reckoned with, it is also forcing rival Hulu to reconfigure its business plan, sources tell The Post. Hulu CEO Jason Kilar must either step up and acquire additional distribution rights to compete head-to-head with Netflix or drop its fee and focus on free offerings, the sources said.
- House Dems Reject Tax Deal. The House Democratic Caucus voted to oppose President Barack Obama’s tax plan, throwing into flux weeks of negotiations on an issue that has turned many congressional Democrats against the White House. Oregon Rep. Peter DeFazio offered a resolution in a closed Democratic caucus meeting Thursday morning that said Democrats would oppose the bill in its current form.
- China, HK Should Rein in Property Prices - IMF Paper. China and Hong Kong need to implement more measures to rein in the threat of property bubbles forming in certain sectors of their markets, the International Monetary Fund said in a working paper citing the views of economists. China and Hong Kong, and many other markets in Asia including Singapore and India, face asset bubble threats, especially in the property sector, from strong economic growth and cheap money flowing in from the West driven by ultra-easy monetary policies. "The mass-market segment in a few large cities such as Shanghai and Shenzhen, and the luxury segment in Beijing and Nanjing appear to be increasingly disconnected from fundamentals," the IMF said in the paper released on Friday. "(Cooling prices) will require an increase in real interest rates, a higher carrying cost of homeownership (such as can be achieved by a broad-based property tax), and, in the case of China, broad financial market development to alternative investment vehicles to housing."
- Moody's May Cut Some Portuguese Banks' Ratings.
- Mexican Newspaper: Chávez's family has $137 million in US accounts. According to DEA reports, Venezuela’s presidential family holds five bank accounts in the United States. La Razón reported that "under the umbrella of power, the Venezuelan president's family has a life style that includes jewelry, cars, travels and even weapons, in contrast to Chávez's anti-capitalist discourse."
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