Evening Headlines
Bloomberg:
- Fed Gave Banks Crisis Gains on Secretive Loans as Low as .01%. Credit Suisse Group AG (CS), Goldman Sachs Group Inc. (GS) and Royal Bank of Scotland Group Plc (RBS) each borrowed at least $30 billion in 2008 from a Federal Reserve emergency lending program whose details weren’t revealed to shareholders, members of Congress or the public. The $80 billion initiative, called single-tranche open- market operations, or ST OMO, made 28-day loans from March through December 2008, a period in which confidence in global credit markets collapsed after the Sept. 15 bankruptcy of Lehman Brothers Holdings Inc. Units of 20 banks were required to bid at auctions for the cash. They paid interest rates as low as 0.01 percent that December, when the Fed’s main lending facility charged 0.5 percent. “This was a pure subsidy,” said Robert A. Eisenbeis, former head of research at the Federal Reserve Bank of Atlanta and now chief monetary economist at Sarasota, Florida-based Cumberland Advisors Inc. “The Fed hasn’t been forthcoming with disclosures overall. Why should this be any different?”
- AIG(AIG) Falls as Treasury Seeks Additional Capital for 'High-Risk Proposition'. American International Group Inc. (AIG) fell to the lowest since August as investors bet that losses at the company’s largest unit will discourage buyers of the stock in future government offerings. AIG dropped $1.18, or 4 percent, to $28.28 at 4:01 p.m. in New York Stock Exchange composite trading. The U.S. Treasury Department disposed of 200 million shares yesterday at $29 each. AIG sold 100 million shares, raising $2.9 billion, according to a statement from the company. The transactions leave the government with a 77 percent stake.
- Freescale Seeks IPO at 47% Discount to Buyout Price After Stock-Price Cut. Freescale Semiconductor Holdings Ltd. is selling shares at a 47 percent discount to what private equity owners paid after cutting the price range in its initial public offering by 17 percent.
- Australia Home Loan Delinquencies Jump to Record on Rate Rises, Fitch Says. Australian home loan delinquencies jumped to the highest on record in the first quarter, driven by Christmas spending, a November interest rate increase, and recent natural disasters, Fitch Ratings said. Mortgages more than 30 days overdue rose to 1.79 percent of the nation’s residential mortgage backed securities in the quarter ended March 31, from 1.37 percent in the previous three months, according to the London-based ratings firm. The number of “low-doc” loans more than 30 days late climbed to a record 6.74 percent from 5.7 percent, according to the report.
- SEC Investigates Hybrids for Insider Trading. U.S. regulators are examining whether investors made illegal trades in Fifth Third Bancorp. (FITB)’s trust preferred securities after the volume of transactions spiked 54-fold before the bank said it would redeem the instruments, a person with knowledge of the inquiry said.
HSBC, Goldman(GS) Held $355 Million of Libya Funds. HSBC Holdings Plc (HSBA) and Goldman Sachs Group Inc. (GS) are among banks that held funds for Libyan leader Muammar Qaddafi’s government investment fund, according to a document published by advocacy group Global Witness. - Platinum Surplus Jumping After Japan Quake. The global platinum surplus may jump eightfold after Japan’s worst earthquake slashed car production, reducing the country’s demand to the lowest level in 28 years, said the nation’s top refiner. Supply will probably outpace demand by as much as five metric tons this year, compared with a surplus of 600 kilograms last year, Shinya Kitaoka, trading section chief at Tanaka Kikinzoku Kogyo K.K., said in an interview. The world palladium shortage may be cut by half, he said.
- IRS Scrutinizes Gifts of Real Estate. The Internal Revenue Service has a low-profile but sweeping effort under way to use state land-transfer records for evidence of omissions in reporting gifts of real estate to family members.
- Edwards' Lawyers in Plea Talks. Justice Department prosecutors and lawyers for former Sen. John Edwards made last-ditch efforts Wednesday to reach a plea agreement that could avert felony charges over alleged campaign-finance violations, people familiar with the matter said. If the talks fail, the prosecutors are expected to seek a grand-jury indictment against Mr. Edwards within days, these people said.
- Euro Surges on News Chinese White Knight to Make Repeat Appearance, Attempt to Bail Out Europe for Second Time ( Just as Unsuccessfully).
- No Retreat on Medicare. Republican lawmakers reaffirmed Wednesday their embrace of a controversial Medicare overhaul despite an electoral setback, ensuring the federal health program will remain a divisive issue through the 2012 election. Republicans responded to Democrat Kathy Hochul's Tuesday victory in a traditionally Republican New York Congressional district by saying they needed to attack the Democrats' Medicare position more forcefully, rather than back off their own plan. "We need to make it a choice between a do-nothing approach that will ultimately destroy Medicare, and life-saving reforms," said Rep. Tom Cole (R., Okla.). Added Rep. Cliff Stearns (R., Fla.): "It's a wake-up call on how you frame it. It obviously wasn't framed right."
- A 62% Top Tax Rate? by Stephen Moore. Democrats have said they only intend to restore the tax rates that existed during the Clinton years. In reality they're proposing rates like those under President Carter.
- NetApp(NTAP) Results Top Forecasts; Shares Bounce. NetApp shares jumped in extended-trading Wednesday after the company posted quarterly results that exceeded analysts' expectations and raised its outlook for the current quarter.
- US Default 'More Likely Than in Indonesia'.
- Why Microsoft(MSFT) Is So Messed Up: Toxic Environment and Bad Managers.
- MSNBC Has Suspended Ed Schultz for 'Unacceptable' Remarks About Laura Ingraham. During his show Schultz referred to Ingraham as a "right-wing slut" and a "talk slut." And believe it or not it actually sounds worse when you listen to it.
- Congress Paid Millions In Staff Bonuses Amid Federal Budget Crisis.
- Fukushima Reactor 1 Drywell Reading Hits All Time High 204 Sieverts/Hour.
- Presenting DSK's Brand New $14 Million Tribeca House Arrest Palace. (pics)
- Bill Clinton: NY Win Is No Excuse On Medicare. Bill Clinton had a word of warning on Wednesday for fellow Democrats: Don't get too cocky about voters' rejection of Paul Ryan's Medicare plan.
- NY Fed Probing Goldman Sachs(GS) Mortgage Servicing Unit. The Federal Reserve Bank of New York is investigating whether Goldman Sachs' mortgage servicing arm did not conduct proper reviews before denying borrowers the option to lower their payments under a government loan modification programme.
- Chanos Negative on First Solar(FSLR), Vestas(VWS).
- Big U.S. Banks Face More Exposure to State Laws.
- Greece Risks 'Return to Drachma'. Greece will have to ditch the euro unless it agrees tougher austerity measures, said a senior Greek official, delivering the strongest warning yet from a European insider as to what is at stake.
- China's declining working age population will cause a "remarkable" slowdown in China's economic growth in the next 10 years, according to Peng Wensheng, chief economist at China International Capital Corp. The labor pool is expected to fall "sharply" in absolute terms in the next two to three years, Peng wrote.
- China's industrial output growth is expected to slow in coming months as companies continue to destock and power shortage restrains production, Xu Ce, a researcher with the State Information Center, wrote in a commentary.
- Chinese President Hu Jintao agreed to economic aid worth about $100 million for North Korea, including corn and fertilizer, when he met North Korea leader Kim Jong Il in Beijing yesterday.
- Shanghai banks' worst-quality loans, those categorized as losses, increased both as a ratio and in absolute terms in the first quarter, citing the China Banking Regulatory Commission's local bureau. They made up 18 percent of all bad loans, up 3.3 percentage points, it said.
- A cash shortage among Chinese banks may reduce the chances the monetary authority will raise lenders' reserve requirement ratios in the near term, citing traders. Money market rates may stay high and overall cash shortgage is unlikely to ease next month.
- None of note
- Asian equity indices are -.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 110.0 +.5 basis point.
- Asia Pacific Sovereign CDS Index 115.50 +.5 basis point.
- S&P 500 futures +.20%.
- NASDAQ 100 futures +.15%.
Earnings of Note
Company/Estimate
- (PDCO)/.51
- (QSII)/.62
- (OVTI)/.64
- (RUE)//.29
- (TIF)/.57
- (BIG)/.68
- (GCO)/.47
- (BCSI)/.32
- (FRED)/.24
- (HNZ)/.72
8:30 am EST
- Advance 1Q GDP is estimated to rise +2.2% versus a prior estimate of a +1.8% gain.
- Advance 1Q Personal Consumption is estimated to rise +2.8% versus a prior estimate of a +2.7% gain.
- Advance 1Q GDP Price Index is estimated to rise +1.9% versus a prior estimate of a +1.9% gain.
- Advance 1Q Core PCE is estimated to rise +1.5% versus a prior estimate of a +1.5% gain.
- Initial Jobless Claims for this week are estimated to fall to 404K versus 409K the prior week.
- Continuing Claims are estimated to fall to 3700K versus 3711K prior.
- None of note
- The G8 Summit in France, 7-Year Treasury Notes Auction, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, the Sterne Agee Tech Conference, (HNZ) analyst day, (ITRI) investor day, (ITMN) analyst meeting, (SYMC) analyst day and the (RMBS) analyst day could also impact trading today.
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