Monday, June 17, 2013

Today's Headlines

  • China Policy Bank Cuts Bond Sale Goal by 31% Amid Crunch. Agricultural Development Bank of China Co. scaled back the size of two bond offerings tomorrow by 31 percent as the worst cash crunch in at least seven years curbs demand for the securities. The Beijing-based policy bank said it will sell up to 8 billion yuan ($1.3 billion) of three-year notes, down from 13 billion yuan previously, according to a statement on ChinaBond, the nation’s biggest debt clearing house today. An issue of five-year debt was reduced to 10 billion yuan from 13 billion yuan. The lender has options for each tenor that would allow the original issuance targets to be met, the statement said. The seven-day repurchase rate, a gauge of interbank funding availability, has averaged 6.03 percent in June, the most since the National Interbank Funding Center began compiling a weighted average in 2006.
  • European Stocks Advance as Investors Weigh Fed Policy. European stocks rose to a one-week high, rebounding from their longest streak of weekly losses in 14 months, as investors awaited this week’s Federal Reserve meeting for signs on the pace of stimulus reduction. Telefonica SA (TEF), Europe’s most indebted telephone company, climbed 2.4 percent after a report that AT&T Inc. had been keen to acquire the company. ABB Ltd. (ABBN) advanced 2.6 percent after the world’s largest supplier of power grids named a new chief executive officer. Saipem SpA plunged to a four-year low after cutting its 2013 guidance for the second time in six months. The Stoxx Europe 600 Index rose 0.7 percent to 293.25 at the close, for the first back-to-back gains this month.
  • Calpers Commodity Holdings Declined 5.5% in April to $1.214B. The California Public Employees’ Retirement System, the largest U.S. pension fund, reported the value of its commodity holdings fell 5.5 percent in April from the previous month. The fund held $1.214 billion in commodities as of April 30, the most-recent data available, or 0.5 percent of the total assets listed at $263.944 billion, according to a monthly report posted on the fund’s website for today’s investment committee meeting. That’s down from $1.284 billion on March 31, or 0.5 percent of total assets of $257.395 billion. Commodities were the worst-performing asset class in the portfolio during the 12 months through April, dropping 9.8 percent, according to the report. All other asset groups increased, with a total fund return of 13.4 percent.
Wall Street Journal: 
  • Snowden Says Obama’s Failed Promises Motivated Leaks. In response to a reader question about the president, Mr. Snowden wrote: “Obama’s campaign promises and election  gave me faith that he would lead us toward fixing the problems he outlined in his quest for votes. Many Americans felt similarly. Unfortunately, shortly after assuming power, he closed the door on investigating systemic violations of law, deepened and expanded several abusive programs, and refused to spend the political capital to end the kind of human rights violations like we see in Guantanamo, where men still sit without charge.’’
  • U.K. Prosecutors Likely to File Libor-Manipulation Charges. British prosecutors plan to file criminal fraud charges against former UBS AG and Citigroup Inc. trader Tom Hayes for allegedly trying to manipulate benchmark interest rates, according to people familiar with the plans. The planned charges, which could be filed by the U.K.'s Serious Fraud Office as soon as Tuesday in London, represent the first effort by British authorities to seek criminal penalties against someone they allege was involved in manipulation of the London interbank offered rate, or Libor.
  • Ford(F) to Add Back Dashboard Buttons After Complaints. Ford Motor Co. is going back to buttons and knobs. Punished by third-party quality reports because of the difficulty of using its touch-screen multimedia system, called MyFord Touch, the auto maker will reprise tuning and volume knobs for the radio as it redesigns existing models, a top Ford executive said. It is a reversal for Ford, which has been a first-mover with installing mobile-phone-based technologies, voice recognition and touch screens in its vehicles. The systems have been a big selling point for Ford with its vehicles, but also have dragged down its reputation for quality.
  • Economists Wary as Fed's Next Forecast Looms. The Wall Street Journal's monthly survey of private-sector economists shows that forecasters on average expect the economy to grow 2.3% this year and 2.8% next year. The Fed is more optimistic. Its latest growth projections, made in March, average closer to 2.6% for 2013 and closer to 3.2% for 2014. At the conclusion of its two-day policy meeting on Wednesday, the Fed will release its updated projections of growth, inflation and unemployment.
Fox News: 
  • IRS supervisor in DC scrutinized Tea Party groups' cases. A Washington-based IRS supervisor acknowledged she was personally involved in reviewing Tea Party applications for tax-exempt status as far back as 2010, Fox News confirms -- a detail that further challenges the agency's initial claim that the practice of singling out those groups was limited to a handful of employees in Ohio. 
  • Bank of America(BAC) Paid Bonuses to Foreclose: Lawsuit. Bank of America routinely denied qualified borrowers a chance to modify their loans to more affordable terms and paid cash bonuses to bank staffers for pushing homeowners into foreclosure, according to affidavits filed last week in a Massachusetts lawsuit.
  • Deals for Industries, Immigrants Tucked in Senate Bill. Foreign retirees could live in the United States for longer periods each year if they agree to make hefty cash investments in real estate. Overseas snowboard instructors could enter the USA under visas now reserved for athletes, and beach resorts could hire more lifeguards and groundskeepers from abroad. The massive immigration overhaul working its way through the Senate is peppered with benefits like these for specific industries and immigrant groups — even as it aims to tackle three core policy objectives: creating a path to citizenship for 11 million immigrants in this country illegally, strengthening border security and increasing enforcement of laws that guard against the employment of undocumented workers.
Zero Hedge:
Business Insider:
Financial Times:
  • European Car Market Won't Grow Until 2019, Study Shows. Car sales in western Europe to drop to 12m in 2014 from 13.2m last yr, citing a report from AlixPartners. Europe will need to cut capacity by >2m vehicles by 2019 to have sustainable level of use. 42 of 100 biggest auto plants in Europe will be running at >75% capacity this yr vs 60 in 2011.
  • Fed likely to signal tapering move. Ben Bernanke is likely to signal that the US Federal Reserve is close to tapering down its $85bn-a-month in asset purchases when he holds a press conference on Wednesday, but balance that by saying subsequent moves depend on what happens to the economy.
  • Balancing Germany's federal budget takes priority over additional spending in next legislature, CSU head and Bavarian Prime Minister Horst Seehofer said.
Restructuring: Flowers slams Europe over inaction

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  • Brazil Govt Sees Serious Confidence Crisis. Govt recognizes that Brazilian and overseas investors continue to lack confidence in the country. Changing economic policy is no longer enough to regain confidence. Members of govt see need for President Dilma Rousseff to announce commitment to strengthen public accounts. Finance Minister Guido Mantega and Treasury Secretary Arno Augustin have had images tarnished by series of artifices used to reach fiscal targets. Govt expects effect of real's decline on prices in Brazil to be small for 4 reasons: GDP growth below expectations in 2013, tightening monetary policy, which tends to discourage price adjustments, falling commodities prices and reduced indexation of rates for energy/telecoms to exchange rate.
Echoing fears that European policymakers remain in a state of cognitive dissonance – recognizing the need for root-and-branch overhaul of peripheral banks, but backtracking on joint liability plans – Christopher Flowers, the legendary FIG investor who now runs the £2.3 billion ($3.5 billion) private equity group JC Flowers, sounded the alarm over the negative sovereign-bank feedback loop. In a shot across the bows of market bulls, who cite the return of capital flows to weaker eurozone states, Flowers issued a stark warning: "There is a scenario where we have a Lehman-type event: we wake up some Thursday and a big country is in trouble. "And the ECB will have to decide to support banks x, y, z. And then the ECB will, in fact, decide to own bank x, y, z.

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