Thursday, April 14, 2011

Today's Headlines


  • Greek, Portuguese Yields Surge to Record as Schaeuble Raises Restructuring. Greek and Portuguese bonds led a slump in the securities of Europe’s most indebted nations amid mounting investor concern that some may be forced to restructure their debts. The declines pushed the yields on Greek and Portuguese 10- year bonds to euro-era records after German Finance Minister Wolfgang Schaeuble said that Greece may need to renegotiate its debt burden if an audit in June questions its ability to pay creditors. Standard & Poor’s head of European sovereign ratings, Moritz Kraemer, said the risk of such an event has risen. Greek two-year yields climbed the most since January 27. “Schaeuble’s comments bring the prospect of restructuring back onto the table,” said Peter Chatwell, a fixed-income strategist at Credit Agricole Corporate & Investment Bank in London. “It gives the market plenty of time to fret. If we have to wait until June, there’s the prospect of event risk in the future, which leaves the market open to speculation and spread- widening.” The yield on 10-year Greek debt jumped 36 basis points to 13.27 percent as of 4:38 p.m. in London, the highest since at least 1998 when Bloomberg began collecting the data. The two- year note yield surged as much as 103 basis points to 17.96 percent. Portuguese 10-year yields added 14 basis points to 8.88 percent, after reaching 8.89 percent, the most since at least 1997. Two-year note yields were 26 basis points higher at 9.31 percent. Yields on 10-year Spanish debt rose nine basis points to 5.32 percent, while the yield on Irish securities of a similar maturity jumped 25 basis points to 9.34 percent.
  • Geithner Says U.S. Has More Room to Increase Taxes Without Harming Economy. “We have the capacity, with very modest changes in tax reform” to improve the country’s fiscal position without hurting future growth, Geithner said. The changes the Obama administration is seeking pose “no plausible risk” to how the economy grows, he said at an event in Washington.
  • U.S. Jobless Claims Unexpectedly Jump. More Americans unexpectedly filed first-time claims for unemployment insurance last week, reflecting greater-than-normal volatility at the end of the quarter. Applications for jobless benefits rose 27,000 in the week ended April 9 to 412,000, the most in two months, Labor Department figures showed today in Washington. Economists projected claims would be little changed at 380,000, according to the median estimate in a Bloomberg News survey. The four-week moving average, a less volatile measure, rose to 395,750 from 390,250. The unemployment rate among people eligible for benefits, which tends to track the national jobless rate, fell to 2.9 percent in the week ended April 2 from 3 percent the prior week.
  • Wholesale Prices in U.S. Rise .7%, Led by Energy, Trucks, Passenger Cars.
  • Ackermann Is 'Dangerous,' Ex-IMF Economist Johnson Tells TAZ. Deutsche Bank AG (DBK) Chief Executive Officer Josef Ackermann is “one of the most dangerous bank managers in the world” because he’s sticking to the company’s high profitability target, Simon Johnson, a former chief economist at the International Monetary Fund, was cited as saying by German newspaper Die Tageszeitung. The target of pretax return on equity of 25 percent is only possible because Ackermann knows Deutsche Bank poses systemic risk and would be rescued by taxpayers, Johnson said in the interview, according to an article on the newspaper’s website dated April 13.
  • Obama's Money Pump for 2012 Re-Election Campaign Primed by Chicago Friends. Les Coney, an executive vice president at Chicago-based Mesirow Financial, will take a seat at two of three hometown events Barack Obama is scheduled to headline today as the president kicks off fundraising for a re- election bid that might cost as much as $1 billion.
  • CFTC's Proposal to Change Futures Margin System May 'Kill' Brokerage Model. The Commodity Futures Trading Commission may require margin changes in futures markets that could wipe out billions of dollars of interest income at brokers. The CFTC has proposed divvying up margin payments of individual swaps users at clearinghouses rather than allowing accounts to be treated as one pool by banks representing multiple customers. Futures markets now allow banks to pool all their customer accounts together when settling a day’s margins. The swaps plan may be used for futures margin, too, said CFTC Commissioner Scott O’Malia. “It’s being considered,” he said in an interview yesterday.
  • California Begs Texas for Job-Creating Recipe With Growth Trading Places. When California Lieutenant Governor Gavin Newsom begins meetings in Austin with Hardee’s hamburgers chief Andrew Puzder, local Chamber of Commerce Chairman Bobby Jenkins and Texas Governor Rick Perry, it’s because the most- populous state lingers in a funk, even as the U.S. pulls out of the deepest recession in half a century. The world’s eighth-largest economy has lagged in job growth since California-based lenders such as Countrywide Financial Corp. led America into the housing bust. Unemployment in the state is 12.2 percent, more than a third higher than the national average. While signature industries such as technology, trade and tourism have rebounded, construction and government employment are weak or falling. Newsom is one of two California Democrats in the talks starting today on how the Lone Star State created 165,000 jobs over the past three years, while California, with the country’s largest workforce, lost 1.15 million, according to the trip’s organizer, Assemblyman Dan Logue, a Republican from Linda.
  • Plosser Says Fed Should Adopt Inflation Target as Stimulus Exit Approaches. Federal Reserve Bank of Philadelphia President Charles Plosser said the U.S. central bank should set a numerical inflation target to promote price stability as it prepares to withdraw record monetary stimulus. “The apparent strengthening of the U.S. economy suggests that, in the not-too-distant future, monetary policy will have to begin reversing course from a very accommodative policy stance,” Plosser, 62, said today in the text of remarks at the annual Hyman P. Minsky conference in New York, organized by the Levy Economics Institute of Bard College. “As we choreograph that exit, I believe that the Fed should do all it can to underscore its commitment to maintaining price stability,” said Plosser, who votes this year on the policy-setting Federal Open Market Committee. Plosser has said the central bank should consider removing record monetary stimulus in 2011 before inflation flares.
  • Spanish Government Suspends Subsidies for 304 Solar-Power Installations.

Wall Street Journal:
  • China Changes How It Reports GDP. The National Bureau of Statistics is bringing China’s gross domestic product data closer to international standards, but will likely ignite some controversy along the way. On Friday, the bureau is scheduled to issue economic data for the first quarter, and for the first time it will include a measure known as the quarter-on-quarter seasonally adjusted annualized rate of growth of gross domestic product.
  • CFOs: Revenue Surge Needed to Boost Hiring. Despite double-digit gains in corporate earnings over the past six quarters, it would take much stronger-than-expected revenue growth for businesses to be comfortable adding employees, according to a new survey.
  • Apple(AAPL) Poaches Microsoft's(MSFT) Datacenter GM.
Business Insider:
Charlotte Observer:
  • TVA Settlement Resolves N.C. Bad-Air Claims. The Tennessee Valley Authority today agreed to a $3 billion to $5 billion cleanup of its coal-fired power plants in three states, resolving claims North Carolina made in a 2006 lawsuit. The Environmental Protection Agency announced the settlement of Clean Air Act violations at 11 power plants in Alabama, Kentucky and Tennessee. It requires TVA to install new or upgraded pollution controls that will reduce smog and acid rain-forming emissions by more than two-thirds. The independent federal utility will also spend $350 million on clean energy projects, including $11.2 million for N.C. energy-efficiency and electricity demand-reducing programs. TVA will also pay a $10 million fine. The settlement goes beyond the terms of a federal judge's 2009 order that settled North Carolina's lawsuit against TVA.
  • China Wealth Fund Denies Reports of Spanish Bank Investment. China Investment Corp, the country's sovereign wealth fund, on Thursday denied reports that it was studying a $9 billion investment in Spanish banks. "The reports are groundless and are not in line with the truth," a CIC official, speaking on the condition of anonymity, told Reuters.
  • Dollar Slides Across the Board as Rate View Weighs. The dollar fell on Thursday in choppy trading and further losses were seen as likely, hurt by reported central bank selling amid a backdrop of low U.S. interest rates that were not expected to rise any time soon. Recent U.S. economic numbers, including jobless claims and retail sales, have come in on the soft side, which kept intact expectations the Federal Reserve's $600 billion asset-buying program would stay in place until June. The ICE Futures' dollar index dropped to a fresh 16-month low at 74.617 .DXY. At midday, it was down 0.2 percent at 74.827. The euro, in contrast, remained supported by the prospect of higher interest rates in the euro zone despite the re-emergence of peripheral debt issues.
  • US, Allies See Libyan Rebels in Hopeless Disarray. Too little is known about Libya's rebels and they remain too fragmented for the United States to get seriously involved in organizing or training them, let alone arming them, U.S. and European officials say. U.S. and allied intelligence agencies believe NATO's no-fly zone and air strikes will be effective in stopping Muammar Gaddafi's forces from killing civilians and dislodging rebels from strongholds like Benghazi, the officials say. But the more the intelligence agencies learn about rebel forces, the more they appear to be hopelessly disorganized and incapable of coalescing in the foreseeable future. U.S. government experts believe the state of the opposition is so grave that it could take years to organize, arm and train them into a fighting force strong enough to drive Gaddafi from power and set up a working government. The realistic outlook, U.S. and European officials said, is for an indefinite stalemate between the rebels -- supported by NATO air power -- and Gaddafi's forces.
USA Today:
  • US Internet Ad Revenue Hit Record in 2010. U.S. Internet advertising revenue hit a record $26 billion in 2010, boosted by the popularity of online videos and social media. A PricewaterhouseCoopers report commissioned by the Interactive Advertising Bureau found that last year's ad revenue grew 15% from 2009. The previous record was in 2008, when full-year revenue hit $23.4 billion. The report, released Wednesday, said fourth-quarter advertising revenue also hit a record, at $7.4 billion. That's up 19% from the fourth quarter of 2009. The previous record was in the third quarter of 2010, at $6.5 billion. The most popular ad format was search, which represented 46%, or $12 billion, of the year's total revenue. Display-related ads accounted for 38%, or $9.9 billion, of 2010 ad revenue. That category includes banner ads, digital video ads and sponsorships. The third-largest Internet ad category is classifieds, which accounted for $2.6 billion, or 10% of 2010 revenue. PricewaterhouseCoopers partner David Silverman said more time spent online, fueled by the popularity of digital videos and social media, has helped fuel the ongoing advertising growth. The report estimated 2010 mobile advertising revenue to be between $550 million and $650 million in the U.S. This is the first time it estimated mobile ad revenue.
  • Germany's Federal Network Agency said the government's decision to idle the country's seven oldest nuclear reactors for a three-month safety review could cause power supply bottlenecks in the fall and winter.
Valor Economico:
  • Brazil's central bank is creating a group to monitor food prices because there's demand-driven pressure on inflation.
Folha de S.Paulo:
  • The Brazilian government sees a possibility of the benchmark inflation exceeding the country's target as early as May. Brazil consumer prices may exceed the 6.5% upper-limit of the government's target next month, ahead of a previous estimate that the breach would occur between July and August.
  • China supports "reasonable" changes to the UN Security Council to make it more "representative" of developing countries, especially in Africa, citing a statement from Hong Lei, a foreign ministry spokesman.

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