Goldman Sachs(GS), JPMorgan(JPM), Deutsche Bank(DB) Said to Be Among Underwriters on AIG(AIG) Stock Sale. Bank of America Corp., JPMorgan Chase & Co., Goldman Sachs Group Inc. and Deutsche Bank AG were picked to manage the sale of the U.S. Treasury Department’s 92 percent stake in insurer American International Group Inc., said a person with direct knowledge of the decision. The banks will split the biggest share of fees from handling the first disposal of part of Treasury’s 1.66 billion AIG shares, said the person, who declined to be identified because an announcement hasn’t been made.
China Needs Urgent Guidance on Euro Debt Risk, Yu Yongding Says. China should urgently seek guidance on whether its holdings of “euro periphery debt” will be affected by any restructuring, said Yu Yongding, a former adviser to the Chinese central bank. “Until such clarification is provided, or the eurozone comes up with a permanent resolution mechanism, China should give no commitment to support the eurozone through direct government bond purchases -- this simply risks throwing good money after bad,” Yu wrote in the Financial Times today.
Mortgage Spreads Tumble From 15-Month High as Rates Steady: Credit Markets. Relative yields on government-backed mortgage bonds that guide U.S. home buyers’ borrowing costs have tumbled from the highest in 15 months as interest rates become less volatile. Fannie Mae’s current-coupon 30-year fixed-rate mortgage securities yielded 0.79 percentage point more than 10-year Treasuries as of 5 p.m. today in New York, according to data compiled by Bloomberg. The spread, which reached 0.99 percentage point last month, would be at the narrowest since August if it fell below 0.75 percentage point. Investors in the $5.2 trillion agency mortgage-backed securities market are less concerned about how quickly the underlying debt will be repaid as interest rates settle at higher levels. That’s keeping mortgage rates lower than they might be otherwise. A Barclays Capital index measuring expectations for rate volatility, based on so-called swaption prices, has fallen 5.8 percent since Dec. 15. “The basics of mortgage math tell you mortgage-backed securities should do well in an environment of declining volatility,” said Ken Hackel, the head of securitized product strategy at CRT Capital Group LLC, a broker based in Stamford, Connecticut.
U.S. in Debt Crisis Without Spending Cuts, Pimco's Kashkari Says. The U.S. may face a debt crisis without action to limit federal spending, according to Neel Kashkari, a former Treasury official who headed the taxpayer- funded $700 billion Troubled Asset Relief Program. “Our debt is now starting to get away from us,” Kashkari, a managing director at Pacific Investment Management Co., said in an interview on Bloomberg Television’s “InBusiness” with Margaret Brennan. “Indicators in the Treasury market are flashing caution.” Kashkari said confidence in Treasuries may plunge as the central bank continues to print money to buy bonds and as the U.S. government fails to tackle a more than $1.2 trillion budget deficit. “To the extent that we continue to issue record levels of Treasuries year after year, after year, it’s inevitable that foreign buyers will begin to look elsewhere,” said Kashkari, 37, who is based in Newport Beach, California. Total U.S. public debt was more than $14 trillion at the end of 2010, a 72 percent increase during five years. Foreign holdings of U.S. Treasuries have dropped from 55.4 percent of outstanding debt in May 2008 to 49.7 percent in November, according to Bloomberg data.
Volcker Rule Should Be 'Robust,' Financial Oversight Panel Says. Regulators should carry out a “robust implementation” of the Volcker rule by forcing banks to wind down or sell trading desks that don’t comply with the law, the U.S. Financial Stability Oversight Council said. Government agencies should require banks to perform “quantitative analysis to detect potentially impermissible proprietary trading,” the council said in a study released at its meeting in Washington today. Regulators should also require banks to “implement a mechanism that identifies” which trades are initiated by customers, according to the study.
Ballmer, Blankfein Among CEOs Invited to Meet with Obama, Hu. Chief executives from Microsoft Corp.(MSFT) and Goldman Sachs Group Inc.(GS) will be among the corporate leaders the Obama administration is bringing together tomorrow for a meeting with Chinese President Hu Jintao aimed at expanding U.S. business interests in China. CEOs Steve Ballmer of Microsoft and Lloyd Blankfein of Goldman will be joined by General Electric Co.(GE) chief executive Jeffrey Immelt, Jim McNerney of Boeing Co.(BA) and 10 other U.S. business leaders for the meeting, the administration announced. Also invited to meeting are Westinghouse Electric Corp. CEO Aris Candris; former Sybase Inc. chief executive John Chen; Coca-Cola Co. chief executive Muhtar Kent; DuPont Co. CEO Ellen J. Kullman; Greg Page, CEO of Cargill Inc.; John Thornton, chairman of HSBC Holdings Plc North American division; David Rubenstein, co-founder and managing director of Carlyle Group; Paul Otellini, Intel Corp. CEO; and Dow Chemical Co. CEO Andrew Liveris.
Ireland Wields Stick Forcing Bank Bondholders to Accept Pain: Euro Credit. Irish Finance Minister Brian Lenihan is about to inflict more pain on bank investors. Unless they take it, analysts say worse may follow. Junior bondholders in Dublin-based Allied Irish Banks Plc will decide this week on an offer to buy back more than $5 billion of subordinated debt at 30 percent of face value. Analysts at BNP Paribas SA recommend investors accept the package or risk getting “the stick” after the government passed laws allowing it to reduce payments to bondholders. “The draconian powers granted to the Irish finance minister in December is a game-changer for subordinated bondholders in Irish banks,” said Ivan Zubo, a London-based credit analyst at BNP Paribas. “Clearly, there is a risk that the more drastic powers could be used if Allied Irish needs more capital in the future.”
Wall Street Journal:
Chinese Firm to Invest in North Korea. Company's $2 Billion Pledge Would Mark One of Largest Deals With Neighbor; Pact Was Signed After Yeonpyeong Shelling. A Chinese firm has signed a letter of intent to invest $2 billion in a North Korean industrial zone, representing one of the largest potential investments in Kim Jong Il's authoritarian state and a challenge to U.S. policy in the region.
Thor Enters the High-Frequency Trading Arms Race. Institutional investors may finally have a hammer to use against the high-frequency traders who have allegedly been poaching their trades. A new trading technology from RBC Capital Markets called “Thor” – publicly rolling out this month – could help counteract the ability of high-frequency traders to pick off the orders of other investors. Of course, many expect the HFT crowd to start working on a counter-Thor strategy straight away.
Cargill to Give Up Mosaic(MOS) Stake in $24.3 Billion Deal. Agribusiness giant Cargill Inc. said it plans to give up its majority stake in fertilizer company Mosaic Co. in a transaction worth about $24.3 billion. The move could make Mosaic, a leading seller of potash and phosphate, a more attractive takeover target. The transaction also foretells a significant reordering of Cargill, a closely held company that is one of the largest but least-known U.S. corporations.
Health Care Repeal Won't Add to the Deficit. A close examination of CBO's work and other evidence undercuts this budget-busting argument about repeal and leads to the exact opposite conclusion, which is that repeal is the logical first step toward restoring fiscal sanity. Federal finances are buckling under the weight of unaffordable entitlement programs. So what is the primary aim of the ACA? Open-ended entitlement expansion: to more people at greater expense than anytime since the 1960's. If CBO is right, 32 million people will be added to the health entitlement rolls, at a cost of $938 billion through 2019, and growing faster than the economy or revenues thereafter. How, then, does the ACA magically convert $1 trillion in new spending into painless deficit reduction? It's all about budget gimmicks, deceptive accounting, and implausible assumptions used to create the false impression of fiscal discipline.
Facebook Flop Riles Goldman(GS) Clients. It was supposed to be Wall Street's hottest tech deal in years: the private offering of as much as $1.5 billion in shares of Facebook Inc. And it was a coup for the company's adviser, Goldman Sachs Group Inc., the most envied firm on the Street. Goldman bankers burned up the phone lines in the first week of January, pushing many of their best American clients to invest in the deal. And then, on Sunday and Monday, those same advisers were on the phone with those same clients with some bad news. They wouldn't be getting any Facebook shares after all. Now, Goldman has a very different mission to execute: soothing a legion of irate investors.
U.S. Firms Decry China's Heavy Hand. Alleged Bias by Regulators Is Likely to Be Contentious Issue Between Two Countries. Almost one half of U.S. businesses surveyed in Shanghai complained of discrimination by domestic regulators, contradicting an assertion by Chinese President Hu Jintao that the playing field is level. The issue of alleged bias against U.S. companies is likely to be a major point of contention during Mr. Hu's visit to the U.S., which began Tuesday. The U.S. is expected to push for greater market access to help narrow a huge trade imbalance in China's favor.
IBM(IBM) Shares Rise as Results, Outlook Top Forecasts. IBM's quarterly profit blew past Wall Street estimates, and a pick-up in services contracts raised hopes that global companies were confident enough to spend more on technology. The multinational tech firm reported quarterly net income of $5.3 billion, or $4.18 per share, compared with $4.8 billion, or $3.59 per share, a year earlier. Analysts on average expected earnings per share of $4.08, according to Thomson Reuters I/B/E/S. IBM shares(IBM), which closed at $150.65 in regular Tuesday trade, rose more than 2 percent after-hours.
MarketWatch:
China Strengthens Rare-Earth Regulation. China has drawn-up national planning regions for rare-earth and iron mines to strengthen government regulation over the development of the metals.
Business Insider:
Apple(AAPL) Crushes Earnings, Ships 7.3 Million iPads. Apple just put up a monster quarter, and investors should send the stock upwards Wednesday, erasing today's doubts about Steve Jobs' health. Apple's Q1 EPS was $6.43, beating by a mile, and representing $6 billion in profit. Revenue was massive too, at $26.7 billion, beating consensus by more than $2 billion.
iPads Are Already 7% of Global PC Market. Apple(AAPL) sold 7.3 million iPads in Q4. According to SAI's Matt Rosoff, citing IDC estimates, the global PC market is about 100 million units a quarter. That means that, in its third quarter of existence, Apple's iPads already have ~7% of the global PC market. Wow! Now let's fast forward a few years. At this rate, in a few years, iPads will account for, say 25%, of the global PC market--especially after Apple works the price down to $199 and every middle-class household has a couple of them just lying around. And Android-based tablets will probably account for another huge chunk of the market. With that much of the global personal computing market running on something other than Windows, the rest of Microsoft's monopoly control of the desktop and desktop apps will collapse. Windows will become just another platform. Now do you understand why people are so excited about Apple? Now do you understand why people are worried about Microsoft?
Study Points to Windfall for Goldman(GS) Partners. Goldman Sachs executives have long been among the most richly paid on Wall Street in the best of times. They are now poised to reap a windfall that was sown in the dark days of the financial crisis in 2008. Nearly 36 million stock options were granted to employees in December 2008 — 10 times the amount issued the previous year — when the stock was trading at $78.78. Since those uncertain days, Goldman’s business has roared back and its share price has more than doubled, closing on Tuesday at nearly $175. The documents illustrate just how much wealth the partnership owns and has cashed out over the years. Goldman has almost 860 current and former partners, the documents show. In the last 12 years, they have cashed out more than $20 billion in Goldman shares and currently hold more than $10 billion in Goldman stock. Goldman is on track to pay out $17.5 billion in compensation for last year. While that is down from the record $20.19 billion in 2007, it’s up more than a billion from 2009. Lloyd C. Blankfein, Goldman’s chief executive, for example, has cashed in a total of $93.8 million in shares since 1999, a number that captures both known stock sales since he became an officer at Goldman, and sales not individually reported since before he was required to disclose such transactions. In the eight years since becoming a senior executive in 2002, Mr. Blankfein has sold $42.5 million, roughly 45 percent of the total over the years. As of August, Mr. Blankfein and his family owned 2.03 million shares worth about $355 million if they had been cashed out on Jan. 14. Over all for the partnership, the stock sales amount to around $24 million on average for each partner since the 1999 initial public offering — a conservative estimate since the documents do not capture every sale by a Goldman partner, or shares sold as part of the public offering. Pay packages also include cash salaries and bonuses, and this analysis does not include the billions of dollars Goldman has paid in those categories. In December 2008, just three months after the bankruptcy of Lehman Brothers brought the financial system to the brink, Goldman awarded the nearly 36 million stock options. The number approved by Goldman’s board dwarfed not only the previous year’s grant of 3.5 million options, but also exceed the entire amount of options previously outstanding. The December 2008 options grant was disclosed as required, but received scant attention at the time.
AppleInsider:
Apple(AAPL) Commits $3.9 Billion to Secret Long Term Component Contracts. Apple's chief operations executive Tim Cook revealed that the company had entered into long term component supply contracts worth $3.9 billion over the next two years. Cook noted that the secret deals were a "fantastic" use of the company's cash reserves, which have now grown into a $59.7 billion stockpile. When asked what components were involved in those long term commitments, Cook answered, "I don't want to give it out, because I view it as a competitive… something I don't want our competition knowing."
TheMacObserver:
Apple(AAPL) Huge in China - Asian Mac, iPhone, iPad Sales Boom. It turns out that Apple is big in China, and sales of Mac, iPhone, and iPad boomed throughout the Asia-Pacific region during the December quarter. Apple reported Tuesday that the company did US$2.6 billion in the “Greater China” market (China, Hong Kong, Taiwan) for Q1 — for context, that’s more than four times what the company did in that area for all of fiscal 2010 (quarter ending in September of 2010), meaning that Apple has arrived in the world’s largest market in a big way. Apple also identified the Korean and Japanese markets as areas of strong growth. iPhone sales doubled in Japan year-over-year, and overall revenue was up 83% over the prior year in the country. Apple didn’t provide specific numbers for Korea, but the company said that both iPad and iPhone are doing very well in that market. It wasn’t just iOS devices leading the Apple charge in Asia, however, as Mac sales did very well in the region, too. “We experienced strong sales growth in each of our geographic segments,” Mr. Oppenheimer said, “with over 50% growth in both the Asia-Pacific region and Japan. The growth was fueled primarily by strong demand for the new MacBook Air, which was launched in October, as well as continued strong sales of MacBook Pro.” Tim Cook added that Mac sales were up 67% in Asia, and 56% in Japan. This compares to 23% growth around the globe for Apple’s Mac business, which itself far outpaced the global PC industry. Apple’s Mac sales in Asia outside of Japan have historically been very low, meaning the company has a lot of room for growth in the area, even more so than in the U.S.
LA Times:
California Cities Race to Shield Funds From State. As Jerry Brown seeks to kill redevelopment agencies, officials move to protect the groups' money. They see a raid by Sacramento, while the state says the funds are needed to protect vital services. A revolt by city officials against Gov. Jerry Brown's proposal to abolish municipal redevelopment agencies is rapidly spreading across the state. Over the last several days, officials in Long Beach, Pasadena, Palm Springs and numerous other cities have hastily called special meetings to discuss transferring billions of dollars from their redevelopment agencies to city control to keep the money out of the state's reach. The move is an attempted end-run around Brown's proposal to scrap redevelopment and allow school districts, counties and the state to take the billions in property tax dollars the agencies now collect to improve blighted areas.
Michele Bachmann: Health Care Repeal Vote Isn't a 'Check Box'. Rep. Michele Bachmann stood with a band of House Tea Party members in front of the Capitol Tuesday and vowed to unravel the sweeping health reform law that passed last year, saying the repeal vote tomorrow is more than just a “check the box off” moment. “We aren’t going to just check the box off and say we had one vote and we’re going to move on to other topics,” Bachmann said. “We’re staying full square behind the repeal of Obamacare and our commitment to defund it moving forward,” she said, citing the “arrogance” and “close-mindedness” of President Barack Obama, Democratic leader Nancy Pelosi (D-Calif.) and their party in passing the bill last March.
John Boehner Gets Big Poll Bump. The new House speaker’s favorability rating spiked to 42 percent — or nearly double the 22 percent of respondents who view him unfavorably. The new rating is eight points higher than just after the mid-term election and represents a 15-point jump since earlier in the fall, according to Gallup. House Minority Leader Nancy Pelosi isn’t seeing the same fortunes. Her unfavorable ratings have stayed constant at 54 percent, while just 33 percent find her favorable — a bump of four points. Just 25 percent of Americans polled find Senate Majority Leader Harry Reid (D-Nev.) favorable, and 41 percent unfavorable.
Reuters:
Cree(CREE) Shares Fall as Profit, Outlook Miss Estimates. LED lighting maker Cree Inc reported a 47 percent rise in quarterly profit, but its sales, profit and current quarter outlook fell short of expectations because of lower sales in Asia, sending its shares down nearly 16 percent in after-hours trading.
Western Digital(WDC) Q2 Profit Beats Street; Shares Up. World's No. 2 hard-drive maker Western Digital Corp surprised investors with its market-topping results, indicating hard-drive sales remained robust despite concerns of tablets eating into PC sales. The company's shares, which have been among the worst performers on the S&P 500 index in 2010, rose 5 percent to $35.60 in trading after the bell.
NuVasive's(NUVA) Spine Surgery Method Gets More Cover. n">Medical devices maker NuVasive Inc (NUVA.O) said Cigna Corp (CI.N) and Humana Inc (HUM.N) have joined other major insurance providers who have included its spine surgery procedure in their coverage. They were up 4 percent at $29.08 in extended trading.
Obama Pressured to Speak Out on China Human Rights. U.S. President Barack Obama came under increasing pressure on Tuesday to publicly speak out against Beijing's harsh treatment of political and religious dissidents during a state visit this week by Chinese President Hu Jintao. Dissidents representing China's minority Uighurs, Tibetans, imprisoned democracy advocates and opponents of forced abortion all urged Obama to address their concerns both publicly and privately during Hu's four-day state visit, which began on Tuesday evening. Congressman Chris Smith, who chairs a House of Representatives panel on human rights, said it would be "almost unthinkable" for a Nobel Peace laureate like Obama to meet with "a political leader responsible for jailing another laureate and not demand publicly for their fellow laureate's release."
Thomson Reuters Survey: US MDs Fear Healthcare Reform. "When asked about the quality of healthcare in the U.S. over the next five years, 65 percent of the doctors believed it would deteriorate with only 18 percent predicting it would improve," Thomson Reuters, parent company of Reuters, said in a statement. HHS has predicted that 32 million Americans who do not currently have health insurance will receive it under healthcare reforms. When asked where most of these newly insured people would get care, 55 percent of the doctors said a nurse practitioner or physician assistant would provide care. As for patients, 57 percent of doctors predicted the impact of the changes will be negative, 27 percent said they would be positive and 15 percent forecast a neutral effect. "The National Physicians Survey tells us that physicians have not been enlisted in the healthcare reform process," said David Shrier, chief executive officer of HCPlexus. "The message they've taken from healthcare reform appears to be 'Do more with less.' Doctors are telling us they feel disenfranchised and overburdened," Shrier added in a statement. "Our present survey suggests that greater attention should be paid to understanding the present opinions of the health care provider constituency before proceeding down a path of reform. Without the physicians supporting change it will be difficult to accomplish," the report concludes.
Financial Times:
China's Best Way Forward. China May See 'Significantly Lower' Growth, Yu Writes. China may see "significantly lower, if more sustainable" growth in the next four years as its economy shifts from "export and investment-driven growth to a more balanced patter," Yu Yongding, former adviser to the Chinese central bank, writes. China must be prepared to make "short-term sacrifices," such as asset price adjustments and temporary job cuts to guarantee long-term stability, he writes. "Failure to cool the economy and a "hard landing" would "shake confidence in emerging markets, and set back the global recovery," Yu writes.
GE(GE) to Sign Slew of China Deals. General Electric(GE), the largest US industrial group, is signing a series of deals with China this week in energy, rail and aviation as it drives to improve its disappointing performance in the Chinese market.
Economic Daily News:
Taiwan Semiconductor Manufacturing Co. may raise capital expenditures by 36% to $8 billion this year, citing people from equipment companies.
Shanghai Securities News:
China's State Council revised rules giving it the power to oversee the implementation of property taxes in China, citing the rules. This change may pave the way for local property taxes.
China Securities Journal:
China's Ministry of Finance may announce a property tax plan for the cities of Shanghai and Chongqing before the start of the National People's Congress in March.
China Daily:
China's rising property prices will hurt the country's urbanization and exacerbate the income gap between rich and poor, citing Li Daokui, an adviser to the People's Bank of China said.
Evening Recommendations Wells Fargo:
Rated (MRK) and (PFE) Outperform.
Night Trading
Asian equity indices are -.25% to +1.0% on average.
Asia Ex-Japan Investment Grade CDS Index 107.50 -.75 basis point.
Asia Pacific Sovereign CDS Index 112.50 +2.0 basis points.
Housing Starts for December are estimated to fall to 550K versus 555K in November.
Building Permits for December are estimated to rise to 554K versus 530K prior.
Upcoming Splits
(TEF) 3-for-1
Other Potential Market Movers
The weekly retail sales reports, weekly MBA mortgage applications report and the (SPW) analyst day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and commodity shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
North American Investment Grade CDS Index 83.26 -.28%
European Financial Sector CDS Index 160.0 bps +.59%
Western Europe Sovereign Debt CDS Index 191.50 bps -.69%
Emerging Market CDS Index 197.42 -.51%
2-Year Swap Spread 23.0 +1 bp
TED Spread 16.0 unch.
Economic Gauges:
3-Month T-Bill Yield .14% unch.
Yield Curve 277.0 +2 bps
China Import Iron Ore Spot $181.40/Metric Tonne +.33%
Citi US Economic Surprise Index +48.20 +4.2 points
10-Year TIPS Spread 2.38% +4 bps
Overseas Futures:
Nikkei Futures: Indicating +77 open in Japan
DAX Futures: Indicating +8 open in Germany
Portfolio:
Higher: On gains in my Medical, Ag, Tech, Biotech and Retail long positions
Disclosed Trades: Added to (AAPL) long, took profits in another long
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades slightly higher, despite recent equity gains, China inflation fears, US muni worries, disappointing (C) results and a pullback in (AAPL). On the positive side, Education, Restaurant, Construction, Biotech, Medical, Internet, Ag, Alt Energy and Defense shares are especially strong, rising more than 1.0%. (IYR) has outperformed throughout the day. The Nasdaq's resilience is impressive considering the (AAPL) decline. Copper is rising +.28%. The 10-year yield is stable at 3.35%. The Citi US Economic Surprise Index is now at the highest level since Feb. 9th of last year. The Italy sovereign cds is falling -1.74% to 205.73 bps and the UK sovereign cds is falling -7.46% to 66.71 bps. The Western Europe Sovereign CDS Index is now -28 bps off its record high set on January 11. A key benchmark for DRAM pricing, which has been in a downtrend, is surging +28.6% today. On the negative side, Airline, Tobacco and Bank shares are under meaningful pressure, falling more than 1.0%. The Japan sovereign cds is rising another +1.29% to 85.55 bps and the Emerging Markets Sovereign CDS Index is gaining +2.4% to 192.33 bps. Moreover, the US sovereign cds is jumping +18.6% today and has risen 4.41% over the last five days to 52.23 bps. The broad market continues to trade very well overall given recent headwinds. One of my longs, (GOOG) is hitting a new multi-year high today on above-average volume. I still see meaningful upside in the shares from current levels and the stock remains one of my core holdings in the tech sector. (AAPL) reports after the close today. I would use any short-term meaningful weakness related to further Jobs' angst, traditionally conservative guidance, profit-taking and new shorting to add to my long position. I still see significant upside in (AAPL) shares from current levels. I expect US stocks to trade modestly higher into the close from current levels on more economic optimism, technical buying, buyout speculation, diminishing eurozone debt fear, earnings optimism and short-covering.
EU Pledges Tougher Stress Tests, Seeks Bonus Curbs. Europe’s next wave of bank stress tests will be tougher than exams last year, taking sovereign- debt risk and liquidity into account, the region’s financial- services chief said. “We need more stringent and more reliable tests,” European Union Financial Services Commissioner Michel Barnier told reporters following a meeting of EU finance ministers in Brussels today. “There was a general agreement that they should be marked by total transparency taking into account sovereign risk.”
EU Seeks Stronger Safety Net as AAA Nations Mull Cost. Germany pushed back at European Union calls for a rapid reinforcement of the safety net for debt-strapped countries, saying the rally in southern European bond markets buys time to craft a new strategy. German Finance Minister Wolfgang Schaeuble said there is no urgent need to act, eyeing a late-March deadline to strengthen the 750 billion-euro ($1 trillion) rescue fund, hammer out a permanent anti-crisis tool and tighten fiscal rules for the 17- nation euro area. “We still have a continuing crisis,” EU Economic and Monetary Commissioner Olli Rehn told reporters after the bloc’s finance ministers met in Brussels today. “We’ve had some respite in the last couple of days, but we cannot afford any kind of self-complacency.”
International Buying of Long-Term U.S. Assets Climbs More Than Estimated. Global demand for U.S. stocks, bonds and other financial assets rose in November from a month earlier as purchases from private investors offset a record level of sales from foreign government buyers, the Treasury Department reported. Net buying of long-term equities, notes and bonds totaled $85.1 billion during the month, the highest since August, compared with net buying of $28.9 billion in October, according to data released today in Washington. Net foreign purchases of equities were $13.3 billion in November after net purchases of $16.0 billion in October. Investors purchased a net $4.7 billion in U.S. corporate debt in November after buying $1.1 billion in October.
Gold Advances as This Month's Drop Stokes Demand From Individual Investors. Gold rose in New York as this month’s price drop stoked demand from individual investors for bars and U.S. Mint coins. Australia’s Perth Mint reported stronger demand as prices fell below $1,400 an ounce, Barclays Capital analyst Suki Cooper said in an e-mail today. Gold for February delivery added $7.70, or 0.6 percent, to $1,368.20 an ounce at 12:11 p.m. on the Comex in New York.
Corn Futures Climb to 3-Month High on Rising Demand for Shrinking Supply. Corn futures rose, extending a rally to a 30-month high, as buyers snapped up supplies from shrinking stockpiles. Output in the U.S., the world’s largest grain exporter, dropped 4.9 percent last year, leaving supply before the 2011 harvest at the lowest in 15 years, the Department of Agriculture said last week. The agency also cut its forecast for global inventories to 127 million metric tons, the lowest since 2007. “Prices have not risen high enough to slow demand,” said Greg Grow, the director of agribusiness for Archer Financial Services Inc. in Chicago. “The attitude among consumers is that you have to buy the breaks to accumulate tightening inventories.” Corn futures for March delivery jumped 8.5 cents, or 1.3 percent, to $6.5725 a bushel at 10:24 a.m. on the Chicago Board of Trade.
EBay(EBAY) Options Trading Most Bearish in Seven Years Before Earnings Results. EBay Inc. options traders are making the most bearish bets in seven years on the owner of the largest online-commerce marketplace, which analysts say will rally, before the company reports quarterly results tomorrow. The ratio of outstanding puts to sell EBay stock versus calls to buy rose to 1.23-to-1 last week, the highest since July 2003. The total open interest for puts increased 15 percent in the past month to a two-year high of 465,492 contracts.
Xilinx(XLNX) Short Selling Climbs to a 25-Month High Before Release of Earnings. Short sellers have increased bets against Xilinx Inc.’s stock to the highest level in 25 months as the company, which reports quarterly results tomorrow, rallied to prices last seen in March 2005. Bearish wagers against the San Jose, California-based company rose to 14 percent of shares outstanding, the most since October 2008, according to data compiled by Data Explorers, a New York-based research firm.
Wall Street Journal:
UN Sees Risk of Double-Dip Recession as Europe Pursues Austerity. The United Nations said the pursuit of austerity measures by a number of European countries could push the euro zone back into recession in 2011, with the U.S. and Japan facing a smaller risk of a renewed downturn.
CDMA iPhone Shipments Could Top 12 Million in '11. Apple's CDMA-compatible iPhone isn't on the market yet, but estimates for the number of units shipping in 2011 are apparently on the rise. Pegatron, the Taiwan-based company that is manufacturing the CDMA iPhone for Apple to sell through Verizon, is expecting to ship 12 million to 15 million units in 2011, component makers told DigiTimes. That's up from previous internal estimates of 10 million CDMA iPhones for 2011, the Taiwan-based tech news site reported Tuesday. Piper Jaffray analyst Gene Munster recently pegged the number of iPhones Verizon would sell the first year at 9 million, which is below Pegatron's first estimate.
Politico:
Senator Kent Conrad Won't Seek Reelection. North Dakota Sen. Kent Conrad will not seek reelection in 2012, handing Republicans a prime opportunity for a pick-up in a red-leaning state. “After months of consideration, I have decided not to seek reelection in 2012. There are serious challenges facing our State and nation, like a $14 trillion debt and America’s dependence on foreign oil. It is more important I spend my time and energy trying to solve these problems than to be distracted by a campaign for reelection,” Conrad said.
U.S. Architecture Billings Highest Since Nov. '07. An index of spending on U.S. architecture services, a leading indicator of nonresidential construction activity, reached its best level since November 2007 last month, suggesting a U.S. building recovery is gaining traction, an architects' trade group said on Wednesday. The December architecture billings index rose more than 2 points last month to 54.2, from 52.0, reflecting increasing demand for design services, according to the American Institute of Architects. A separate index of new project inquiries was up 1.2 points to 62.6, on a scale where any number above 50 indicates rising demand. "This is more promising news that the design and construction industry is continuing to move toward a recovery," said AIA Chief Economist Kermit Baker.
Oil Trader Takes Control of 10 North Sea Cargoes. Oil trader Hetco has taken control of the first eight North Sea Forties crude oil cargoes loading in February and two Brent cargoes, giving it significant influence over the spot market, trade sources said on Tuesday.
The euro has lost an average of 22% of its purchasing power since the introduction of European Monetary Union in 1999, citing a poll that Allianz SE conducted. The purchasing power of one euro fell to about 82 cents in Germany, slightly below 81 cents in France, 76 cents in Italy and 71 cents in Spain.
