Friday, December 13, 2013

Today's Headlines

  • China Pledges to Tackle Local Government Debt Amid Reform. China’s leaders pledged to tackle local government debt next year while creating a stable economic and social environment to promote reforms. The government will maintain continuity and stability in its macro-economic policies in 2014 and stick to a prudent monetary policy and proactive fiscal policy, China Central Television reported, citing a statement from the annual Central Economic Work Conference that ended yesterday.
  • Chinese Stock Index Falls for Fourth Day Before Policy Targets. China’s benchmark stock index fell for a fourth day, capping a weekly decline, before the government announces economic growth targets for next year. China Oilfield Services Ltd. (601088) and ZTE Corp. dropped at least 1 percent, leading energy and phone stocks to the biggest declines among industry groups. Cosco Shipping Co., a unit of the biggest shipping group, advanced 1.3 percent as a benchmark of commodity shipping rates climbed for a 14th day. The Shanghai Composite Index (SHCOMP) dropped 0.3 percent to 2,196.08 at the close.
  • European Stocks Are Little Changed as Peugeot Shares Slip. European stocks were little changed, with the Stoxx Europe 600 Index posting a second weekly drop, as investors awaited next week’s Federal Reserve meeting, and as gains in AstraZeneca Plc (AZN) offset PSA Peugeot (UG) Citroen’s slide. AstraZeneca rose to a six-month high after a diabetes pill from the company and Bristol-Myers Squibb Co. won the backing of a U.S. advisory panel. Peugeot slumped the most in five years as General Motors Co. said it is selling its entire stake in the French carmaker. RSA Insurance Group Plc plunged 7.2 percent after its Chief Executive Officer Simon Lee resigned as an investigation into accounting practices at its Irish unit forced the company to increase reserves. The Stoxx 600 fell 0.2 percent to 309.75 at the close of trading.  
  • WTI Oil Falls to One-Week Low on Fuel Storage. West Texas Intermediate crude dropped to the lowest level in more than a week as falling demand boosted fuel inventories and on concern that the Federal Reserve will curb stimulus. Prices slid as much as 1.3 percent.
  • Kids Living in Basements Drag On U.S. Services Spending: Economy. The U.S. economy is suffering a service interruption. Consumer spending on services -- everything from rents and water bills to health care and haircuts -- is a laggard as the economy has recovered from the worst recession since the Great Depression. Such expenditures adjusted for inflation have risen 6.3 percent since mid-2009, compared with a 34 percent surge in outlays on durable goods such as automobiles and appliances, according to data from the Commerce Department in Washington.
Wall Street Journal: 
  • China Turns Over Corporate Audit Documents to U.S. Regulators. Related to a Sweeping Probe of U.S.-traded Chinese Firms. Chinese authorities have turned over more audit documents to U.S. regulators regarding U.S.-traded Chinese companies, audit firms disclosed in legal filings, part of a sweeping U.S. probe of suspected instances of accounting fraud. Audit documents regarding at least six Chinese companies trading on U.S. exchanges now have been either turned over to U.S. regulators or are “in the pipeline” to be furnished to the U.S., the audit firms said in filings in an administrative proceeding pending before the Securities and Exchange Commission. As recently as July, only one company’s documents were definitively known to have been turned over.
  • Monte dei Paschi Impasse Puts Rescue at Risk. Bank's Largest Shareholder Says It Will Vote Against $4.1 Billion Capital Increase. A clash between the management of Banca Monte dei Paschi di Siena BMPS.MI -3.28% SpA and the bank's largest shareholder threatens to throw into chaos a plan to raise cash needed to stave off its full nationalization. The Monte dei Paschi foundation, a charitable group that is the Siena-based bank's biggest shareholder with a 34% stake, is in financial straits due to the lender's troubles, as well as the foundation's attempts to keep control of Italy's third-largest financial institution.
Fox News:
  • Chinese naval vessel tries to force U.S. warship to stop in international waters. A Chinese naval vessel tried to force a U.S. guided missile warship to stop in international waters recently, causing a tense military standoff in the latest case of Chinese maritime harassment, according to defense officials. The guided missile cruiser USS Cowpens, which recently took part in disaster relief operations in the Philippines, was confronted by Chinese warships in the South China Sea near Beijing’s new aircraft carrier Liaoning, according to officials familiar with the incident.Arrest made in attempt to bomb Wichita airport, FBI says.
  • Arrest made in attempt to bomb Wichita airport, FBI says. An individual was arrested Friday morning for allegedly trying to bomb the Wichita Mid-Continent Airport in Kansas, authorities said. The federal complaint alleges that the man arrested worked at the airport as an aviation technician and believed he was driving a vehicle loaded with explosives. He was going to use his airport access card to gain access to secure areas in the airport, the FBI said. He planned on dying in the explosion, authorities said.
Business Insider:
the hedgefund journal:
  • HFR: Hedge fund launches fall. New hedge fund launches declined to the lowest level in nearly three years in the third quarter, while the number of hedge fund liquidations rose to the highest level since the fourth quarter of 2012, according the latest HFR Market Microstructure Industry Report, released by HFR. The trends in launches and liquidations occurred in Q3 as US regulators proceeded toward approval of the Volcker Rule (which was approved this week), while launch trends have not been significantly impacted by the recent relaxation of hedge fund marketing restrictions associated with the JOBS Act.
  • U.S. FHA says facing $1.3 billion capital shortfall. The Federal Housing Administration, which recently received an infusion of funds from the U.S. Treasury to cover projected losses, said an audit of its finances has found it still faces an expected $1.3 billion capital shortfall. 
  • Europe faces moment of truth on banks, with flawed defences. Europe's banks face a moment of truth next year when health checks will spell out the repairs they need. The trouble is that fixing them could require cash-strapped governments to borrow more, often from the very banks that need their help.
  • Fed pullback concern boosts dollar, pressures stocks. The U.S. dollar touched a five-year high against the yen and rose against the euro on Friday, while global equity indexes slipped on growing concerns the U.S. Federal Reserve could surprise investors by scaling back its stimulus as early as next week.
USA Today:
  • Bank of America(BAC) advises China default contracts to hedge debt storm. Chinese bond yields have already risen to the highest in a decade yet markets remain “complacent” about the implications. Bin Yao, the bank’s credit strategist in Asia, said Chinese bond yields have already risen to the highest in a decade as the authorities seek to rein in rampant growth of the M2 money supply and excess credit, yet markets remain “complacent” about the implications.
The Globe and Mail:
Restructuring: Flowers slams Europe over inaction

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  • Ottawa to designate crude oil as highly dangerous. The federal government will, for the first time, designate crude oil a highly dangerous substance and introduce tougher safety and testing measures for shipping oil by rail, Transport Minister Lisa Raitt has told The Globe and Mail.
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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