Tuesday, March 26, 2013

Today's Headlines

Bloomberg:  
  • Slovenia’s New Cabinet Under Pressure to Avoid Cyprus Fate. Slovenia’s six-day-old government is being urged to prevent the nation becoming the euro region’s next bailout battleground. Prime Minister Alenka Bratusek’s Cabinet must quickly carry out a plan to revamp the country’s ailing lenders, the central bank said yesterday. The former Yugoslav nation needs about 3 billion euros ($3.9 billion) of funding this year, while banks need 1 billion euros of fresh capital, the International Monetary Fund said last week. Slovenian banks such as Nova Ljubljanska Banka d.d. are struggling with surging bad loans that equal a fifth of economic output, fueling investor concern that it may be next to seek aid
  • French Consumer Sentiment Drops on Stalled Economy, Unemployment. French consumer confidence dropped in March as a stalled economy and rising unemployment discouraged spending. A household sentiment index dropped to 84 this month from 86 in February, national statistics office Insee said today in an e-mailed statement. Economists expected a reading of 86, according to the median of 16 forecasts gathered by Bloomberg. 
  • Sarris Muffles Calls for Cyprus’s Exit From Euro Area. Finance Minister Michael Sarris sought to muffle calls for Cyprus to weigh a precedent-setting exit from the euro to ease the economic pain inflicted by the country’s 10 billion-euro ($13 billion) bailout. The option of eventually pulling out of the currency was floated yesterday by a Nobel prize winner now advising the government, Christopher Pissarides, and Nicholas Papadopoulos, head of the parliament’s finance committee.
  • Dallas Fed Favoring Reduced Asset Purchases on U.S. Recovery. Dallas Fed President Richard Fisher said he’d like the U.S. to reduce its mortgage-backed security purchases program amid signs that the economy will probably grow at about 3 percent by the end of the year. “I’m personally in favor of tapering back our mortgage- backed security purchases,” Fisher told reporters today at a conference in Abu Dhabi.
  • Home Prices in 20 U.S. Cities Climb by Most Since June 2006The S&P/Case-Shiller index of property values in 20 cities climbed 8.1 percent in January from the same month in 2012 after rising 6.8 percent in the year ended in December, the group said today in New York. The increase exceeded the 7.9 percent median forecast by economists in a Bloomberg survey. 
  • Grain-Shipping Rates End Longest Rally Since ’03 as Demand Slows. Rates for Panamax ships carrying grains ended their longest rally in a decade amid speculation demand temporarily declined before holidays starting at the end of this week. Earnings for the vessels, which also carry coal, slid 0.5 percent to $9,632 a day, according to the Baltic Exchange in London today. Rates rallied every day from Feb. 6 to yesterday, the longest advance since 2003. The Baltic Dry Index, a wider measure of commodity-shipping prices, also fell, as did three of the four vessel types in the gauge. 
  • WTI Crude Advances to Five-Week High. WTI for May delivery climbed $1.08, or 1.1 percent, to $95.89 a barrel at 2:02 p.m. on the New York Mercantile Exchange after rising to $96.08, the highest intraday level since Feb. 20. Prices are up 4.4 percent in 2013. The volume of all futures traded was 7.4 percent above the 100-day average for the time of day.
  • Facebook’s(FB) Zuckerberg Said to Explore Forming Political Group. Facebook Inc. Chief Executive Officer Mark Zuckerberg is exploring the formation of a political advocacy group that would focus on topics such as immigration, the economy, education and scientific research funding, according to a person familiar with the matter. Zuckerberg is considering establishing the group with others in the technology community, according to the person, who asked not to be identified because the plans haven’t been made public.
  • Audit Faults Stimulus-Backed $1.5 Billion U.S. Clean-Coal Effort. Poor management has hampered a U.S. program to develop technology to capture carbon-dioxide emissions, the Energy Department inspector general said in a report that raises new questions about a clean-energy initiative backed by the 2009 economic stimulus. In total, the Energy Department received $1.5 billion in the American Recovery and Reinvestment Act to invest in technology that responds to climate-change risks.
Wall Street Journal:
  • North Korea Is Running Out of Threats. When North Korea tosses out another threat of violence against one of its neighbors or the U.S., it’s become routine to describe it as an escalation of Pyongyang’s rhetoric. That description captures the fact that North Korea makes a lot of threats without following through. But is there a point where it’s not even appropriate to call new threats an escalation?
MarketWatch:
  • EU to extend CDS probe to ISDA trade group. The European Union Tuesday widened the scope of its ongoing probe into credit default swaps, or CDS, to include the International Swaps and Derivatives Association (ISDA), an organization of financial institutions that deals in over-the-counter trading of derivatives. The European Commission said it had found "preliminary indications" that ISDA may have been part of a coordinated effort of investment banks to delay or prevent exchanges from entering the credit derivatives business. "Such behavior, if established, would stifle competition in the internal market in breach of EU antitrust rules," the Commission said in a statement.
Fox News:
  • N. Korea puts artillery forces at top combat posture in latest threat on S. Korea, US. North Korea's military warned Tuesday that its artillery and rocket forces are at their highest-level combat posture in the latest in a string of bellicose threats aimed at South Korea and the United States. Seoul's Defense Ministry said it hasn't seen any suspicious North Korean military activity and that officials were analyzing the North's warning. Analysts say a direct North Korean attack is extremely unlikely, especially during joint U.S.-South Korean military drills that end April 30, though there's some worry about a provocation after the training wraps up. North Korea's field artillery forces — including strategic rocket and long-range artillery units that are "assigned to strike bases of the U.S. imperialist aggressor troops in the U.S. mainland and on Hawaii and Guam and other operational zones in the Pacific as well as all the enemy targets in South Korea and its vicinity" — will be placed on "the highest alert from this moment," the statement said. Kim will eventually be compelled to do "something provocative to prove the threats weren't empty," Lee said.
  • California county administrator to get $423,644 a year -- after retirement. When local California official Susan Muranishi retires from her job in a couple of years, she’s going to be walking away with a fat paycheck -- $423,664 a year – for the rest of her life. Muranishi, an Alameda County administrator, makes $301,000 in annual base pay. But in addition to that, the San Francisco Chronicle reports she'll also receive:  
CNBC: 
  • Has Wealth Inequality in US Sparked Fed's Interest? Recently, the Federal Reserve has also taken a greater interest in the topic. And some analysts are asking whether financial inequality in the U.S. might soon become part of the Fed's decision-making process
  • Cyprus Jitters: How It Could Still Go Wrong. "France is teetering between a core and a troubled peripheral country; if it slips into the latter category, then the troubled euro zone countries will outweigh the core and the euro will be doomed," he said. Bill Blain, senior fixed income broker at Mint Partners, feared the current state of Europe's banks after recent revelations saying that Monday's comments from Dijsselbloem probably creates the worst capital funding environment since 2008. "Let's just assume Europe's banks go back to square one," he said in a research note.
Zero Hedge:
Business Insider:
HedgeCo.Net:
  • Study: The Impact Of The Obamacare Tax On Hedge Funds. The NII tax clearly is imposed on the carried interest (i.e.incentive allocation) of a hedge fund manager. The Obamacare legislation had hedge fund managers specifically in mind when it included income from “trading in financial instruments” in the types of income expressly subject to the NII tax. There do not appear to be significant planning opportunities for hedge fund managers to avoid the NII tax on their incentive allocations, except to the extent they have side pockets containing real estate or private equity assets of the types noted below.
Reuters: 
  • Berlusconi ally says parties still far apart after Italy vote. A senior official in Silvio Berlusconi's centre-right party said on Tuesday there were still wide differences with the centre-left which must be overcome this week or Italy will have to go back to the polls after last month's deadlocked election. "What I can tell you is that our positions are still very distant from each other, and if they remain distant in the next 48 hours we will affirm that the only way is to go back to vote," People of Freedom (PDL) party secretary Angelino Alfano told reporters after talks with centre-left leader Pier Luigi Bersani.
  • Chill in car sales spreads to northern Europe. Snow is piled high on the cars in a deserted dealership in Berlin, and it is not just the stubborn wintry weather that is gnawing at salesman Mustafa Kosak, shivering at his desk in a portable office. "Sales were drastically down in January, February; sometimes we are happy just to cover our overheads," said Kosak, 38, wrapped up in a big overcoat. The chill in cars sales has spread from southern Europe, where the worst of the euro zone debt crisis is crippling economies, to the north, including the region's biggest car market, Germany. New car sales have dropped 10 percent in 2013 so far this year in Germany, nearly 30 percent in the Netherlands and 14.8 percent in Sweden.
  • FOREX-Euro flat but vulnerable as Cyprus concerns continue. The euro steadied versus the dollar on Tuesday, holding above a four-month low hit the previous day, but remaining vulnerable to fears Cyprus's banking problems may make investors shun euro zone assets or withdraw money from banks in countries like Spain and Italy.
Telegraph:
  • Mr Yen cautions on Japan's 'unsafe' debt trajectory. Japan's public debt has reached worrying levels and could lead to a bond buyers' strike unless the government brings the budget deficit under control, the country's top currency official has warned. "A debt ratio of 245pc of GDP is not really safe, and it is not happening because we are investing," said Takehiko Nakao, Japan's 'Mr Yen' or vice finance minister in charge of the exchange rate. Mr Nakao said the scope for further fiscal stimulus is running out and the country must restore public finances to a sustainable path by the middle of the decade. "We can't continue to expect people to lend money to us," he told The Daily Telegraph.
The West Australian:
  • Bank of Spain sees economy shrinking further this year. Spain's economy will sink deeper into recession this year, the Bank of Spain said on Tuesday, sending a stark message to the government as it prepares to revise its own growth forecast. In its annual update of economic forecasts, the central bank said it saw Spain's economy shrinking by 1.5 percent in 2013 following a 1.4 percent contraction last year as austerity continues to exacerbate the effects of a burst property bubble. The central bank's new estimate is well below the official forecast for a 0.5 percent contraction in GDP, although the government is widely expected to revise the 2013 figure downwards in April.

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