Corporate Spreads Show Strain, Swaps Soar, Returns Dwindle: Credit Markets. The failure of European leaders to contain the region’s debt crisis with a bailout of Ireland has driven relative borrowing costs in the global corporate bond market to a 12-week high. Investors demand an extra 1.77 percentage points in yield to own company bonds instead of government debt, the most since Sept. 8, Bank of America Merrill Lynch index data show. The premium European banks pay in the currency swaps market to borrow in dollars more than doubled in the past three weeks to the highest level since May as the cost to protect against losses on their bonds jumped to a 20-month high. Global debt markets are showing signs of strain amid concern a sell-off in euro-region bond markets will force leaders to bail out more nations, impose losses on creditors and cause the global economy to slow. Company bonds lost 1.04 percent in November, the worst performance since losing 4.44 percent in October 2008, Bank of America Merrill Lynch’s Global Broad Market Corporate index shows. “There’s definitely more fear in the market than we had a couple of weeks ago,” said Eric Stein, a money manager who helps oversee $54.2 billion in fixed-income assets at Eaton Vance Management in Boston. “We need a real sustainable solution. These kind of ad hoc Band-Aid measures aren’t really going to do anything to help Europe over the long term and investors are more and more realizing that.” In London, the Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 3.5 basis points to 117, the highest since Sept. 23, Markit prices show. In emerging markets, relative yields rose 11 basis points to 273 basis points, the widest since Oct. 4 on a closing basis, according to JPMorgan Chase & Co. index data. Spreads have widened 31 basis points since the end of October. Concern that Spain will fail to close Europe’s third- highest deficit has driven up financing costs for the nation’s lenders. Relative yields on euro-denominated Spanish bank bonds rose 141 basis points to 385 basis points in November -- the biggest monthly jump on record, according to data compiled by Bank of America Corp. Swaps on Spain jumped 13 basis points yesterday to a record 364 on a closing basis, according to CMA. Contracts on Italy, Portugal and Ireland also jumped to records. Signs of strain are showing up in the interest-rate swaps market. The difference between the rate to exchange floating-for fixed-interest payments for two years and the comparable- maturity Treasury yield, known as the swap spread, widened 3.98 basis points to 28.13 basis points, the most since July. The European crisis also is causing a surge in the premium European banks pay to borrow in dollars in the swaps market. The price of two-year cross-currency basis swaps between euros and dollars reached minus 50.6 basis points yesterday, the largest effective premium for dollar borrowing in swaps since May, according to data compiled by Bloomberg. The gap has widened from minus 30.3 basis points on Nov. 22. “People perceive credit risk much higher in European counterparties,” Douglas Borthwick, head of foreign-exchange trading at Stamford, Connecticut-based Faros Trading LLC, said in an interview. The increase in swap rates is “extremely aggressive, and what that means is that essentially over the last three or four days, credit departments have gone around saying we need to adjust your credit with local names,” he said.
Contagion May Force EU to Expand Arsenal to Fight Debt Crisis. Investors’ no-confidence vote in the aid package for Ireland may force European policy makers to expand their arsenal to fight the debt crisis threatening to tear the euro apart. Options outlined by economists at Societe Generale SA and Barclays Capital include: Boosting the 750 billion-euro ($975 billion) temporary rescue fund or turning it into an asset- buying program; cutting interest rates on bailout loans; issuing joint bonds for the 16 euro nations or flooding the economy with cash from the European Central Bank. All would be unprecedented, and none of Europe’s political leaders -- dominated by German Chancellor Angela Merkel -- has indicated the steps are being considered. Earlier this year, they struggled to cobble together the measures that investors and economists now say are proving inadequate to safeguard the euro and keep speculators at bay.
European Contagion Spreads to Region's Core as Belgian Bond Yields Surge. Europe’s sovereign crisis is spreading to the heart of the 16-nation bloc as investors question Belgium’s ability to cut the euro region’s third- highest debt load, overshadowing its economic performance. The extra yield investors demand to hold Belgian 10-year bonds instead of benchmark German bunds of similar maturity widened to 139 basis points at 5.10 p.m. yesterday in Brussels, the most since at least 1993. The cost of insuring Belgian government bonds rose to a record for a second day, according to CMA prices of credit-default swaps. The European Union’s 85 billion-euro ($111 billion) rescue package for Ireland has failed to quell market turmoil as investors shift their focus from peripheral states to countries such as Belgium, whose capital is home to the EU’s political institutions. “Belgium has moved to the foreground as investors ask themselves ‘who’s next?’ to ask for help,” said Carsten Brzeski, an economist at ING Groep NV in Brussels and a former European Commission official. Six months after the Greek rescue exposed flaws in the euro’s makeup and fueled doubts whether 16 countries belong in the same currency union, investors remain unconvinced. In Belgium, seven political parties involved in coalition talks are still sparring over whether to grant more fiscal autonomy for the country’s regions. Its public debt is approaching 100 percent of gross domestic product and 65 billion euros of bonds and bills are due to mature next year, according to data compiled by Bloomberg.
Hedge Funds Short Clean Power as Goldman Reduces Stake in Superconductor. Hedge funds increased short selling in U.S. renewable energy stocks to the highest level in a year, boosting bets against First Solar Inc. and Tesla Motors Inc. as government support for low-polluting technologies faltered. Seventeen percent of the freely traded shares of the 35 U.S. stocks in the WilderHill New Energy Index are sold short, compared with 16 percent in October and 15 percent in August, data compiled by Bloomberg show. That’s almost four times the 4.4 percent short ratio of the Standard & Poor’s 500 index. In the run-up to this week’s global climate talks in Mexico, short sellers targeted makers of wind turbines, solar panels and electric cars whose sales also were undermined by cash-strapped European governments cutting subsidies. Goldman Sachs Group Inc. and Deutsche Bank AG trimmed long positions in renewable-energy shares in the third quarter, filings show.
Guidepoint Subpoenaed by Massachusetts Officials Over Hedge Fund Relation. Guidepoint Global LLC, a research firm that links investors with experts, was subpoenaed by Massachusetts Secretary of the Commonwealth William F. Galvin in connection with its relationship to a hedge fund in the state.
Nevada Rating Outlook Cut to Negative by Moody's as Gaming Revenues Fall. Nevada’s outlook was lowered to negative from stable by Moody’s Investors Service, citing a $3 billion budget gap and an unexpected decline in the gaming industry, “a sector that was previously believed to be recession proof.”
Citigroup(C) Said to Discuss Hiring Former White House Budget Director Orszag. Citigroup Inc., recovering from its $45 billion bailout in 2008, is in advanced talks to hire former White House Budget Director Peter Orszag, people with knowledge of the matter said. Orszag, 41, may take a job in the New York-based firm’s investment-banking division, the people said, declining to be identified because the discussions are private. Orszag, an economist trained at Princeton University and the London School of Economics, helped shape U.S. economic stimulus during the financial crisis and overhaul the health- care system. The youngest member of President Barack Obama’s cabinet, he spent 18 months as White House budget director, stepping down in July. He previously served as economic adviser to President Bill Clinton and was a staff member of Clinton’s Council of Economic Advisers. Orszag’s tenure at the Clinton White House overlapped with Citigroup’s former executive-committee chairman, Robert Rubin, who served as Treasury secretary from 1995 to 1999. In 2006, when Rubin, 72, helped to found an economic research group at the Brookings Institution called the Hamilton Project, Orszag was named its first director. Obama, then a senator from Illinois, spoke at the project’s unveiling.
U.S. Treasury Envoy to Visit Spain as Bonds, Portugal Show Contagion Risk. The U.S. Treasury Department said its top international official will visit Madrid, as Spanish and Italian bond spreads rose to euro-era records and Standard & Poor’s said it may cut Portugal’s debt ratings. Lael Brainard, the undersecretary for international affairs, will meet this week with senior government officials in Madrid, Berlin and Paris to “discuss economic developments in Europe as well as our longer-term work to advance our shared agenda on strong and sustainable global growth,” the Treasury said in a statement yesterday.
Wall Street Journal:
LME: Trader Holds Up to 80% of Exchange Copper Stocks. Up to 80% of London Metal Exchange's copper stocks are held by a single trader, according to the exchange's daily warrant banding report. The dominant position holder owns between 50% and 80% of the 355,750 metric tons currently held in LME listed warehouses. This amounts to more than 177,875 metric tons of copper, worth about $1.5 billion. "That's a big market, it's not too easy to get that kind of material, that much tonnage," said a U.S.-based physical metal trader. It is unusual for one trader to hold such a large amount of exchange-warehoused stocks as it gives the participant greater control over the amount of copper available to fill futures contracts. With more than half the stock held by one participant, physical traders may find it difficult to borrow metal stored in a particular location and may help lift premiums for key storage hubs. The dominant holder is raising the cost of copper for prompt delivery compared to metal delivered three-months out. Cash copper is trading at a $60 per metric ton surcharge to metal for three-month delivery. The surcharge was just $40 a few days ago, but has increased as the dominant position emerged, traders said. Copper traders have been bracing for a metal supply squeeze since October, when three separate companies announced plans for physical copper exchange-traded funds. These funds would let investors trade shares listed on a stock exchange and backed by LME grade metal held by the trust. The three trusts include the 61,800 metric ton J.P. Morgan Physical Copper Trust, 121,200 metric ton Blackrock iShares Copper Trust and an as-yet-unspecified sized product from ETF Securities. While both Blackrock and ETF Securities plan to back their products with LME warrants, J.P. Morgan's trust will house the copper off the exchange and is thus a less likely candidate. However, any one of the three trusts could potentially hold the dominant warrant position, traders said. "I just can't see why anyone other than an ETF would want something like that," said a U.S. based physical trader.
Plans for New EU 'Stress Tests' Spur Squabbling. European officials are planning a new round of bank "stress tests" designed to be more rigorous than last summer's widely criticized exams, but the effort is already beset by squabbling and the possibility that the test results won't become public. While some European leaders are pushing for next year's tests to be broader and more transparent than last summer's exercise, the agency that will oversee the tests says it might opt to not publicly disclose the results.
Some U.S. Money Funds Exposed to European Banks. Some of the largest U.S. money-market funds hold billions of dollars in securities issued by Spanish and Italian banks, highlighting the risk that further deterioration in Europe could have broad impact. Many European banks have long been dependent on investors for funding because their deposit base is too small relative to their loans outstanding. U.S. money-market funds have been a major source of that cash. Money-market funds in the U.S. hold about $400 billion of their $2.8 trillion in assets in foreign banks, according to J.P. Morgan.
Google(GOOG) Set to Launch E-Book Venture. Google Inc. is in the final stages of launching its long-awaited e-book retailing venture, Google Editions, a move that could shake up the way digital books are sold. The long-delayed venture—Google executives had said they hoped to launch this summer—recently has cleared several technical and legal hurdles, people close to the company say. It is set to debut in the U.S. by the end of the year and internationally in the first quarter of next year, said Scott Dougall, a Google product management director.
Comcast(CMCSA) Disputes Level 3's(LVLT) Accusations. Comcast Corp. defended its move to ask Level 3 Communications Inc. to pay for delivering more Internet traffic across its network in a letter to the Federal Communications Committee, rebutting Level 3's charge that it was erecting a "toll" to its network.
Why the Spending Stimulus Failed by Michael J. Boskin. New economic research shows why lower tax rates do far more to spur growth.
In Iraq, a Very Busy Iran. U.S. Cables Depict Tehran's Extensive Efforts to Further Its Interests Next Door.
China Manufacturing Activity Jumps to 7-Month High. China's factories revved up production in November, but a big jump in input prices also pointed to more inflationary pressure in the pipeline and a need for more monetary tightening. The official purchasing managers' index (PMI) rose to a seven-month high of 55.2 in November from 54.7 in October, the China Federation of Logistics and Purchasing said on Wednesday. The reading compared with the median forecast of 54.7 in a Reuters poll of 11 economists. While a rise in output and export orders helped power the rise, the biggest increase came in the sub-index for input prices, which climbed to 73.5 from 69.9 a month earlier. "The main problem for the economy is still inflation," said Jun Ma, China economist at Deutsche Bank in Hong Kong.
Business Insider:
Even Fewer People Are Watching Eliot Spitzer's Show This Month. Time does not seem to be doing ParkerSpitzer any favors. According to Nielsen, in its second month the program dropped in both total viewers (506,000 to 453,000) and in the 25-54 demographic (145,000 to 129,000). Perhaps needless to say the show also clocked in fourth in the 8pm time slot for the month of November, behind FNC, MSNBC and HLN in both categories. It gets worse. The program also dropped by double digits over the same time period last year: the show is down 35% in total viewers and down 28% in the 25-54 demographic from its predecessor Campbell Brown.
Without Much Fanfare, The HSKAX Is Back To August 2007 "Quant Implosion" Levels. (graph) While everyone knows that it was two and a half decades of imbecilic monetary policy courtesy of the Monstro [sic] that caused the credit bubble, few things were as much of a direct proximal cause of the market crash as the August 2007 quant collapse. And few indices tracked the obliteration of the M/N quant landscape that followed as well as the HSKAX (below). Well, after two years of painful grinding (for the market neutrals), the HSKAX is back to the same level to which it plunged in that week in early August 2007.
IBD:
Chipmaker's Vintage Products Power Phones, Cars and Industry. Such high-end packages are driving the current recovery in auto sales, analysts say. No wonder it's also helping the bottom line of Analog Devices (ADI), whose microchips power such features.
CNN Money:
Oil Execs: Drilling Ban Will Hurt for Years. Drilling activity in the Gulf of Mexico will remain light in the years ahead, despite the fact that the ban on drilling there has been lifted, according to a survey of oil executives released Tuesday. Nearly 70% of industry executives expect drilling activity in the Gulf to remain below 2009 levels until at least 2012, according to a survey by BDO, a Chicago-based accounting and consulting firm. Some say it will never return to 2009 levels.
'Flash Crash' Fixes Delayed at U.S. SEC - Sources. U.S. securities regulators are having trouble crafting permanent rules to prevent future stock market flash crashes because fixes are so complicated and rule makers are overburdened from financial reform, sources said on Tuesday.
OmniVision(OVTI) Sees Strong Q3, Shares Rise. OmniVision Technologies Inc forecast a strong third quarter as it expects to gain from the demand for smartphones and its new image sensors, sending its shares up 5 percent in extended trade.
Financial Times:
Bank of America(BAC), JPMorgan(JPM) and other banks may be required to buy back more mortgages that failed to meet underwriting standards, citing an interview with Dominic Frederico, CEO of Assured Guaranty Ltd. "This saga of mortgage dislocation has a lot more chapters to play," Frederico said. "I think we're at the tip of the iceberg."
Telegraph:
Portugal Banks Face 'Intolerable' Risk Unless Austerity Measures Are Implemented.Failure to consolidate the public finances will put the country's banks in danger, the Bank of Portugal said in a report, which followed Prime Minister Jose Socrates last week pushing through an austerity budget. The Portuguese government says no bail-out is needed, but markets are already pointing the finger at the country as the next to follow Greece and Ireland in requesting a rescue package. "The risk will become intolerable if we do not see the implementation of measures that consolidate public finances in a credible and sustainable way," the central bank said.
The Guardian:
WikiLeaks: Interpol Issues Wanted Notice for Julian Assange. WikiLeaks founder Julian Assange facing growing legal problems around world. The WikiLeaks founder, Julian Assange, is tonight facing growing legal problems around the world, with the US announcing that it was investigating whether he had violated its espionage laws. Assange's details were also added to Interpol's worldwide wanted list. Dated 30 November, the entry reads: "sex crimes" and says the warrant has been issued by the international public prosecution office in Gothenburg, Sweden. "If you have any information contact your national or local police." It reads: "Wanted: Assange, Julian Paul," and gives his birthplace as Townsville, Australia.
Les Echos:
France currently deserves its AAA credit rating and the outlook on the rating is stable, Standard & Poor's President Deven Sharma said in an interview. Every rating can change with new circumstances, he said, when asked if France could lose the rating.
Evening Recommendations Citigroup:
Rated (DSW) Buy, target $45.
Rated (ANF) Buy, target $57.
Rated (GPS) Sell, target $20.
Rated (URBN) Sell, target $32.
Rated (ROST) Sell, target $60.
Rated (AEO) Buy, target $21.
Rated (CHS) Buy, target $16.
Susquehanna:
Rated (VMW) Positive, target $100.
Rated (INFA) Positive, target $50.
Rated (CPWR) Positive, target $13.
Rated (RHT) Positive, target $52.
Rated (CRM) Positive, target $175.
Rated (TIBX) Positive, target $25.
Night Trading
Asian equity indices are -.25% to +1.0% on average.
Asia Ex-Japan Investment Grade CDS Index 123.0 +5.0 basis points.
Asia Pacific Sovereign CDS Index 118.0 +4.5 basis points.
The ADP Employment Change for November is estimated at 70K versus 43K in October.
8:30 am EST
Final 3Q Non-Farm Productivity is estimated to rise +2.3% versus a prior estimate of a +1.9% gain.
Final 3Q Unit Labor Costs are estimated to fall -.2% versus a prior estimate of a -.1% decline.
10:00 am EST
ISM Manufacturing for November is estimated to fall to 56.5 versus 56.9 in October.
ISM Prices Paid for November is estimated at 71.0 versus 71.0 in October.
Construction Spending for October is estimated to fall -.3% versus a +.5% gain in September.
10:30 am EST
Bloomberg consensus estimates call for a weekly crude oil inventory drawdown of -1,150,000 barrels versus a +1,029,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +300,000 barrels versus a +1,913,000 barrel gain the prior week. Distillate inventories are expected to fall by -1,100,000 barrels versus a -541,000 barrel decline the prior week. Finally, Refinery Utilization is expected to rise +.4% versus a +1.5% gain the prior week.
2:00 pm EST
Fed's Beige Book.
Afternoon:
Total Vehicle Sales for November are estimated to fall to 12.1M versus 12.25M in October.
Upcoming Splits
None of note
Other Potential Market Movers
The Fed's Yellen speaking, Fed's Tarullo speaking, Fed's Fish speaking, Challenger Job Cuts Report for November, weekly MBA Mortgage Applications report, (TAP) analyst meeting, (XEL) investor meeting and the Piper Jaffray Healthcare Conference, CSFB Tech Conference, Jefferies Energy Conference, CSFB Aerospace/Defense Conference and the Citi Basic Materials Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and automaker shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
North American Investment Grade CDS Index 98.90 bps +.91%
European Financial Sector CDS Index 150.08 bps +7.60%
Western Europe Sovereign Debt CDS Index 195.17 bps +2.36%
Emerging Market CDS Index 246.23 bps +5.16%
2-Year Swap Spread 29.0 +3 bps
TED Spread 15.0 +1 bp
Economic Gauges:
3-Month T-Bill Yield .15% unch.
Yield Curve 235.0 +2 bps
China Import Iron Ore Spot $167.80/Metric Tonne +.66%
Citi US Economic Surprise Index +22.40 +3.0 points
10-Year TIPS Spread 2.09% -4 basis points
Overseas Futures:
Nikkei Futures: Indicating +27 open in Japan
DAX Futures: Indicating +34 open in Germany
Portfolio:
Slightly Lower: On losses in my Biotech and Technology long positions
Disclosed Trades: Added (IWM)/(QQQQ) hedges, added to my (EEM) short
Market Exposure: Moved to 75% Net Long
BOTTOM LINE: Today's overall market action is just mildly bearish as the S&P 500 trades slightly lower, despite rising eurozone sovereign debt angst and China inflation fears. On the positive side, Food, Homebuilding, Restaurant, Retail, Wireless, Telecom, Gold, Oil Service and Energy shares are especially strong, rising more than .5%. (XLF) has held up well throughout the day despite euro bank weakness and worries over WikiLeaks. The 10-year yield is falling -2 bps to 2.80%. The euro currency continues to trade very poorly. Copper is rising +1.29% despite euro weakness. Weekly retail sales rose +3.2% this week versus a +2.6% gain the prior week. This is the best showing since the first week of June. On the negative side, Education, Alt Energy and Internet shares are under meaningful pressure, falling more than 2.0%. Tech sector stocks are relatively weak today. The Spain sovereign cds is climbing +4.19% to 365.04 bps, the Japan sovereign cds is rising +9.6% to 70.76 bps, the Belgium sovereign cds is gaining +10.8% to 202.61 bps and the Italy sovereign cds is rising +8.61% to 268.21 bps. Moreover, the US Municipal CDS Index is surging +4.92% to 200.0 bps and other key cds indices continue their recent sharp moves higher. While the euro financial sector cds index has soared of late, it is still below levels seen during May/June. Given the ongoing jump in eurozone debt angst, recent equity gains, China inflation fears, insider trading scandals, rising Korean peninsula tensions and financial sector Basel III concerns, the broad market continues to remain resilient, which is a big positive. However, the situation in Europe is getting very close to the point that any further deterioration will have a significantly negative impact on global indices. I expect US stocks to trade mixed-to-lower into the close from current levels on rising euro sovereign debt angst, US municipal debt worries and China inflation fears.
EU Faces More Bailouts as Euro Contagion Spreads to Portugal: Euro Credit. The failure of the Irish rescue to stem a selloff across euro-region bond markets may spell more bailouts to come, starting with Portugal. The costs to insure Portuguese debt against default rose to a record today and Spanish bonds extended declines today after sliding the most since the euro’s debut yesterday, highlighting investor concerns that officials lack the tools to contain a debt crisis threatening the currency’s survival. The extra yield that investors demand to hold Italian debt over German 10-year bonds rose to the highest in more than 13 years. “We are barely halfway through the current crisis in the euro zone,” Paul Donovan, deputy head of global economics at UBS AG in London, said in an interview with Ken Prewitt and Tom Keene on Bloomberg Radio’s “Bloomberg Surveillance” program. “Unless we can see a further significant decline in bond yields in Portugal, the market is going to expect another bailout. And then market attention will turn to Spain.”
Obama Appoints Geithner, Lew to Negotiate on Tax Cuts. President Barack Obama said he asked Treasury Secretary Timothy Geithner and budget office director Jack Lew to lead negotiations with congressional Republicans on extending Bush-era tax cuts. Obama said after meeting with Republican and Democratic congressional leaders at the White House that both sides agree action is needed to extend tax cuts to middle-income families before the end of the year even as they remain divided on tax rates for the wealthiest Americans.
Consumer Confidence Rose in November to a Five-Month High. Confidence among U.S. consumers rose in November to the highest level in five months and a gauge of business activity unexpectedly climbed, signaling the recovery is taking hold heading into 2011. The Conference Board’s sentiment index increased to 54.1, exceeding the median forecast in a Bloomberg News survey, figures from the New York-based research group showed today. Another report today showed housing remained the American economy’s weak link. The S&P/Case-Shiller index of home values in 20 cities climbed 0.6 percent in September from the same month in 2009, the smallest gain since January, the last time prices declined year over year. The gauge fell 0.8 percent from the prior month after adjusting for seasonal variations, the biggest drop since April 2009. Factories, which helped lead the economy out of the recession, are still bolstering the expansion. The Chicago ISM’s business barometer rose to 62.5 in November, exceeding even the highest estimate of economists surveyed by Bloomberg.
Italy-Germany 10-Year Yield Spread Reaches 200 Points, Widest Since 1997. Italian and Spanish government bonds fell, driving the extra yield investors demand to hold the securities instead of German bunds to euro-era records, as Europe’s debt crisis intensified. The drop pushed the yield spread between 10-year Italian securities and similar-maturity German debt to more than 2 percentage points for the first time since 1997. The Belgian yield premium over bunds reached a record after its borrowing costs rose at a sale of 2.8 billion euros ($3.7 billion) of treasury bills. The cost of insuring debt for Italy, Spain, Portugal and Ireland surged to records, stocks and the euro slid and U.S. Treasuries advanced. “Contagion risk is still high on the agenda,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “Nobody wants to expose themselves to any peripheral risks.” The Italian 10-year bond yield rose a sixth day, gaining three basis points to 4.68 percent at 4:34 p.m. in London, after reaching 4.88 percent earlier today. The 3.75 percent security due in March 2021 fell 0.26, or 2.60 euros per 1,000-euro face amount, to 92.89. The spread with 10-year German bonds increased to as much as 212 basis points, a euro-era record.
U.S. Retail Sales Rise 3.5% as Shoppers Snap Up Deals. Weekly retail sales rose in the week ended Nov. 27 as shoppers flocked to the Black Friday sales with renewed confidence following the economic downturn. Sales climbed 0.5 percent from the preceding week, the International Council of Shopping Centers and Goldman Sachs Group Inc. said today in a statement. Sales at stores open at least a year rose 3.5 percent from a year earlier. The results don’t include online sales.
'Real Bad' Cash Jam May Force Michigan Towns to Borrow or Default by March. Cities and towns across Michigan have had property-tax collections plunge as much as 20 percent in the past year, the steepest drop since a 1994 state tax rewrite, forcing scores of communities to choose by March whether to borrow to pay bills or risk default on bonds. The municipalities rely on property taxes for as much as 60 percent of their revenue, according to the Michigan Municipal League. State support that typically makes up an additional 20 percent to 35 percent of city budgets has been slashed by almost a third in the past year, during the longest recession since the 1930s.
Gold Advances as Concern European Debt Crisis May Worsen Increases Demand. Gold in New York rose the most in a week as Europe’s escalating debt woes boosted demand for the precious metal as a haven asset. The dollar climbed today to a 10-week high against the euro. Investor concern has shifted to burgeoning debt in Spain and Portugal after European governments bailed out Ireland and Greece. Gold has risen 26 percent this year, touching a record $1,424.30 an ounce on Nov. 9. “Gold is moving higher predominantly on the continued fear of debt contagion in Europe,” said Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago. Gold futures for February delivery rose $18.10, or 1.3 percent, to $1,385.60 an ounce at 11:29 a.m. on the Comex in New York. The price is up 2.1 percent in November, heading for the fourth straight monthly gain.
States Weigh Cap-and-Trade Market Spanning North America. California, New Mexico and 10 U.S. Northeastern states may try to create a North American carbon market on their own now that President Barack Obama has given up on cap-and-trade legislation that stalled in Congress. The emissions-trading system would be based on a planned carbon market in California, the most populous state, and an existing regional cap-and-trade program for power plants in the Northeast, according to state environmental officials. Three Canadian provinces have also shown interest in a cross-border carbon-trading system, the officials said.
ECB Tried to Force Ireland Into Bailout, Minister Says. European Central Bank officials tried to force Ireland to seek a bailout earlier this month and European officials are now trying to do the same to Portugal, Irish Justice Minister Dermot Ahern said. “Clearly there were people from outside this country who were trying to bounce us in as a sovereign state, into making an application, throwing in the towel before we had even considered it as a government,” he told Irish state broadcaster RTE in an interview today. “And if you notice, they are doing the same with Portugal now.” Asked about who was pressuring Ireland, he said “quite obviously people from within the ECB.”
Spain Banks Face Funding Hurdle Amid Bailout Threat. Spain’s banks may struggle to refinance about 85 billion euros ($111 billion) in debt next year as costs surge on concern continental Europe’s fourth- biggest economy may need an Irish-style bailout. “There’s a universal dumping of Spain going on,” said Andrea Williams, who helps manage about 623 million pounds ($968 million), including shares in Banco Santander SA, at Royal London Asset Management. “The fear is that Portugal, Spain and Italy are now in line after what happened in Ireland.”
Senate Backs Biggest Food-Safety Overhaul in 70 Years. The U.S. Food and Drug Administration would gain more power to police food companies under the bill that passed today in a 73-25 vote. The measure, backed by the food industry, public- health groups and consumer advocates, adds inspections and lets the FDA force recalls, rather than relying on companies to voluntarily remove contaminated foods from store shelves.
JPMorgan(JPM) Gives Bankers iPads, Signaling Danger to RIM(RIMM). JPMorgan Chase & Co. will give its investment bankers iPads to provide an additional mobile tool as Apple Inc. expands its domain to Wall Street, threatening Research in Motion Ltd. in a market it traditionally dominated. “We believe there are real benefits in our working environment that can be realized using this device - as well as the personal productivity and enjoyment that come as part of the package,” two managing directors at New York-based JPMorgan said in an e-mail obtained by Bloomberg News. Apple is building on its momentum in the tablet space, leveraging its 95 percent market share to expand from its traditional consumer base into the corporate market as RIM readies a rival device, the BlackBerry PlayBook.
Wall Street Journal:
Did New Rules Worsen Pay Situation? A study prepared for an influential shareholder group says rule changes meant to revamp Wall Street's pay culture have been negative, concluding that pay practices at six U.S. banks and securities firms have "worsened" since the financial crisis. The report, set to be released Tuesday and commissioned by the Council of Institutional Investors, which represents about 130 pension funds, contends that financial firms still tie too much of their compensation to short-term results and have increased salaries to offset the impact of recent regulatory curbs on pay.
Miners Dig In For a Fight. The phosphate mined for more than a century here in central Florida to make fertilizer has yielded thousands of jobs and countless harvests around the world. But environmental groups are arguing in federal court that the cornucopia extracts too high a price.
iGate(IGTE) Seeks Up to $700 Million Via Debt to Fund Patni Bid. Software services company iGate Corp. (IGTE) is looking to raise up to $700 million to help fund its joint bid with Apax Partners LLP to take control of rival Patni Computer Systems Ltd. (532517.BY), two people familiar with the matter said Tuesday.
Lukoil Eyes 150,000 B/D From Iraq W Qurna-2 In 2013. OAO Lukoil Holdings (LKOH.RS), Russia's largest non-state oil producer, aims to produce 150,000 barrels a day at Iraq's supergiant West Qurna Phase 2 in January 2013, a person familiar with the project said Tuesday.
Portugal's Banks Pile Up Sovereign Debt. Portuguese banks are buying their government's debt at a fast pace, a move that could pose a risk to institutions that so far have weathered the financial crisis better than many. According to the Portuguese Central Bank, the country's financial institutions, including banks, have together invested €17.91 billion ($23.5 billion) in the country's public debt as of September, up 87% from €9.58 billion a year ago. Since the beginning of the year, the exposure has risen 77%.
The Small Error That Could Ruin Dem's Health Care Efforts. Conservative foes of the Affordable Care Act want the federal courts to smother the new health care law in its crib. They've argued that Democrats failed to erect the proper safeguards to protect the legislation from being stricken down entirely by the courts. And when a Virginia district court judge rules in the coming days on the Constitutionality of the law's insurance mandate, he'll also have to decide whether none, some, or all of the law must go with it. The obscure term of art here is "severability."
Google(GOOG) is Said to be Poised to Buy Groupon. Google is near a deal to acquire Groupon, the pioneering online discounter, for as much as $6 billion, people with direct knowledge of the matter told DealBook on Monday.
Wiretaps Said to Widen Insider Treading Inquiry. Secret, court-approved wiretaps put in place more than two years ago are now being used by prosecutors in a widening inquiry of securities fraud and insider trading involving hedge funds and consultants that provide industry research, according to court documents and interviews with people close to the investigations.
Why Hasn't WikiLeaks Been Put Out of Business?So now we know what it takes to get everyone to realize how damaging WikiLeaks is to U.S. foreign policy. When WikiLeaks released nearly half a million documents undermining U.S. war efforts in Iraq and Afghanistan earlier this year, it was met with a collective yawn. And it was hard to find more than a just few top officials in the United States or abroad who complained when the site released raw footage of a shooting video taken from a U.S. helicopter in Iraq. What's the big deal? After all, those were unpopular wars. But now that the site has started releasing what it promises to be 250,000 diplomatic cables, suddenly, the entire world is up in arms. Examples:
Politico:
EPA: More Renewable Fuels Required. The Obama administration Monday increased the amounts of ethanol and other renewable fuels it wants to see as part of the nation’s gasoline supply, but a senior official took aim at the practice. Responding to a congressional mandate, the Environmental Protection Agency will require that 13.95 billion gallons of transportation fuel comes from renewable sources in 2011, or about 8 percent of domestic gasoline and diesel supplies.
Strong Showing in Anti-Earmark Vote. Thirty-nine senators voted Tuesday in support of a three-year moratorium on appropriations earmarks, the strongest showing ever by opponents of the current process and a potential game changer in the year-end budget debate. Seven Democrats backed the proposal, and the party leadership will have to decide now whether to strip out or weaken draft language in an omnibus spending bill that currently sets aside billions for home-state projects.
Reuters:
CFTC to Unveil Position Limit Plan Dec. 16: Source. The U.S. futures regulator intends to unveil on December 16 its long-awaited revised plan to limit speculative positions held by commodity traders, a source with direct knowledge of the matter said on Monday.
Baltic Index Falls, China PMI Survey Awaited. The Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, fell for a fourth session on Tuesday as slower cargo business kept pressure on the larger capesize market. The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, fell 2.14 percent, or 46 points, to 2,099 points. "The capes can find a support only if the Chinese start restocking again, which I don't see happening in the immediate future," said Georgi Slavov, head of dry research and structured products at ICAP Shipping.
AP:
AP-CNBC Poll: Cut Services to Balance the Budget. To ease surging budget deficits, Americans prefer cutting federal services to raising taxes by nearly 2-1 in a new poll. An Associated Press-CNBC Poll showed widespread anxiety about budget shortfalls exceeding $1 trillion a year. Eighty-five percent worry that growing red ink will harm future generations — the strongest expression of concern since AP polls began asking the question in 2008. Fifty-six percent think the shortfalls will spark a major economic crisis in the coming decade.
Les Echos:
The French government is preparing a plan to cut subsidies for solar energy. French Prime Minister Francois Fillon will meet ministers in two days to discuss a possible lowering by about 10% in the price paid by Electricite de France SA for solar power and a cap on the annual volume of installations.
Irish Independent:
IMF Chief: Yes You Can Bounce Back. THE head of the IMF mission in Ireland last night insisted the country can bounce back from the economic crisis -- but outlined a swathe of painful measures that must be taken. And he warned that further losses at the Irish banks could be uncovered, possibly in the area of tracker mortgages and small business loans. In an exclusive interview with the Irish Independent, the IMF's Ajai Chopra also insisted Ireland would be able to afford to pay back the crippling multi-billion-euro loans it received in bailout funds.
Xinhua:
China's consumer price index probably increased 4.7% on year in November, accelerating from October's 4.4% gain, citing a Bank of Communications report.
