Thursday, December 12, 2013

Today's Headlines

  • Peugeot Plunges After Announcing $1.5 Billion Currency Hit. PSA Peugeot Citroen fell as much as 11 percent after saying 2013 profit will take a 1.1 billion-euro ($1.5 billion) hit from currency swings and savings from a General Motors Co. alliance will be less than planned. The partnership’s annual cost reductions will only reach $1.2 billion in 2018, 40 percent less than originally announced and two years later than targeted, they said. The two dropped plans to cooperate on subcompact vehicles.
  • Putin Says Russia’s Economic Slowdown Caused by Domestic Factors. Russian President Vladimir Putin said that his country’s economic slowdown is being caused by domestic reasons rather than a spillover from a global downturn. “Of course we are experiencing the consequences of the global crisis, but we have to say openly: the main reasons for the slowdown aren’t external but domestic,” Putin said today in Moscow in his annual state of the nation speech.
  • European Bonds Fall on Praet Comments Amid Fed Taper Speculation. European government bonds fell, led by Spain and Italy, after European Central Bank policy maker Peter Praet said the region’s banks may reduce purchases of sovereign debt to lower their risk profile. Spanish five-year yields climbed the most in five weeks.
  • European Stocks Fall Amid U.S. Sales, Job-Claims Reports. European stocks fell to a two-month low as investors weighed U.S. retail-sales and jobless-claims data to gauge whether the Federal Reserve will decide next week to pare stimulus. John Wood Group Plc plunged the most since July 2011 after saying 2014 earnings before interest, taxes and amortization at its engineering unit may drop by about 15 percent. PSA Peugeot Citroen tumbled 7.6 percent after disclosing a charge of about 1.1 billion euros ($1.5 billion) in its auto operations and cutting its savings estimate from a partnership with General Motors Co. Ziggo NV surged to a record after Liberty Global Plc revived talks to acquire the company. The Stoxx Europe 600 Index dropped 1 percent to 310.24 at the close, for its lowest level since Oct. 9.
  • Treasury Five-Year Yields Climb as Retail Sales Exceed Estimates. U.S. five-year note yields reached the highest level in almost three months as Treasures declined after data showed retail sales rose more than forecast in November, adding to bets the Federal Reserve will soon reduce bond buying amid an improving economy.
  • Aluminum Leads Drop in Metals on U.S. Budget, Stimulus Outlook. Aluminum prices in London fell for the first time in a week, pacing losses among industrial metals, amid prospects for a U.S. budget accord and speculation that the Federal Reserve will scale back monetary stimulus. “That’s a very big deal for base metals because these markets have been inflated artificially by the Fed printing money,” Fain Shaffer, the president of Infinity Trading Corp. in Indianapolis, said in a telephone interview. Aluminum for delivery in three months dropped 1.4 percent to $1,791 a metric ton at 5:51 p.m. on the London Metal Exchange. The price rose in the previous four sessions, the longest rally in 10 weeks. Tin, lead and nickel also dropped.
  • Gold Falls Most in 10 Weeks on Fed Stimulus Outlook; Silver Sags. Gold capped the biggest drop in 10 weeks in New York amid concern that the Federal Reserve will reduce its bond buying as U.S. lawmakers reached a budget agreement. Silver and palladium also tumbled. A two-year U.S. budget accord is on track to win passage in Congress. American retail sales in November climbed 0.7 percent in November, the most since June, government figures showed today. The Fed may begin cutting stimulus at its Dec. 17-18 meeting, according to 34 percent of economists surveyed Dec. 6 by Bloomberg, up from 17 percent on Nov. 8.
  • VIX Trader Buys $5.1 Million in Call Options to Bet on 50% Rally. An investor bought $5.12 million in call options that will be profitable if the Chicago Board Options Exchange Volatility Index (VIX) jumps at least 50 percent in the next four months. The trader purchased 40,000 April calls on the VIX with a strike price of 22 for $1.28 each, according to Trade Alert LLC. The bullish volatility bet was the biggest single block of options to change hands on U.S. exchanges, the research firm said. It accounted for about 9 percent of VIX trading, data compiled by Bloomberg show.
  • BlackRock’s(BLK) Fink Says Limits on Bank Leverage May Go Too Far. BlackRock Inc. (BLK:US) Chief Executive Officer Laurence D. Fink said limits on risk-taking by banks may go too far and undermine efforts by the Federal Reserve to boost the economy. “I am alarmed right now it may have unintended consequences,” Fink said today during a webcast organized by BlackRock. “There’s a possibility we’re going to be going too far with leverage ratios.”
Wall Street Journal: 
  • House Budget Vote Nears as Tensions Rise. Move Comes as Boehner Escalates Attack on Conservative Groups. The House was set to vote later Thursday on a two-year budget deal, as opposition in both parties appeared to fall short of threatening passage and Speaker John Boehner doubled down on his criticism of outside conservative groups.
  • Mexico Congress Passes Historic Energy Bill. Mexico's Congress voted amid fistfights and shouts of "treason" to end the 75-year monopoly of the state-owned oil firm PetrĂ³leos Mexicanos. The landmark bill aims to open the door for foreign oil giants to return to one of the world's biggest energy markets for the first time since 1938.
  • EU Plan Has Creditors Taking Bigger Hit for Failed Banks. Deal Reached That Aims to Reduce Cost to Taxpayers in Case of a Bailout. The European Union has agreed on a plan that aims to slash the costs to taxpayers of bank bailouts by putting bondholders—and in extreme cases, depositors—on the line when banks fail.
Chicago Tribune:
  • Carriers, FCC near deal to make it easier to unlock cell phones. U.S. wireless carriers are hammering out the final details of a deal with the Federal Communications Commission to adopt new policies to make it easier for consumers to "unlock" their mobile phones for use on a competitor's network. The agreement, expected soon, would ensure that providers notify customers about the eligibility of their  unlocking -- by text message, for example -- and could also cover some pre-paid phones, industry sources say. The deal would also require carriers to process or deny unlocking requests within two business days, according to FCC's earlier guidance.
  • Cisco(CSCO) cuts long-term revenue growth target to 3-6 pct. Cisco Systems Inc on Thursday cut its longer-term revenue growth target to a range of 3 percent to 6 percent per year from its previous range of 5 percent to 7 percent. Chief Financial Officer Frank Calderoni cited macro-economic pressure in emerging markets, conservative customer budgets and service provider market dynamics for the change.
Financial Times:
  • German probe into gold and silver market rigging. Germany’s financial regulator has demanded documents from Deutsche Bank(DB) as part of an investigation into potential manipulation of gold and silver prices. The probe from the German watchdog comes as regulators around the world step up their scrutiny of benchmarks after the recent Libor interbank lending scandal led to hefty fines for banks.
  • AMD(AMD) slashes desktop CPU prices. AMD has implemented comprehensive price cuts for its desktop processors, including FM2 socket A4 5300/4000 CPUs, sold in China and North America to counter Intel's(INTC) reduced-priced Pentium and Celeron models, according to industry sources. The price cuts, which range up to 30% for some models, are also being implemented to usher in AMD's next-generation Kaveri APUs slated for release in January 2014, the sources indicated.

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