Wall Street Breakfast: Must-Know News 12 comments
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- FDIC to tap banks for $36B. Sources say the FDIC will propose U.S. banks prepay three years of regular assessments to top off its shrunken deposit insurance fund at a meeting this morning to discuss proposals (see calendar below). The move would give the FDIC another $36B (3 times $12B), while banks would not be required to report the expense until the fee was actually due. Bankers have complained upfront fees could weaken banks just as their balance sheets are starting to recover. After the failure of 95 lenders, the fund now stands at about $10.4B. Some worry the FDIC's newfound creativity in fundraising raises red flags about the agency's viability.
- World Bank pres. trash talks dollar. The dollar's days as the unchallenged reserve currency are numbered as the euro and the Chinese renminbi assume bigger roles, World Bank president Robert Zoellick said Monday. Zoellick's speech was unusually provocative, arguing the U.S. and its cronies could no longer dominate the world economy. He also criticized President Obama’s plan to put the Fed in charge of monitoring and reducing systemic risk, arguing the Treasury, which reports to Congress, should be leading the charge: "It will be difficult to vest the independent and powerful technocrats at the Federal Reserve with more authority." (read Zoellick's full speech)
- CNOOC eyes large Nigeria stake. Sources say Chinese state-owned oil company CNOOC (CEO) is in talks with Nigeria to buy a large stake in some of Africa's richest oil blocks, at a possible value of $30B. A successful buy would put CNOOC in competition with western oil majors with a strong presence in the area (TOT, RDS.A, CVX, XOM). Industry sources say it's no secret China has an eye on Nigeria, but that the size reported is surprising.
- BofA sued for billions over Merrill. Five pension funds are leading a class-action suit seeking billions of dollars in damages from Bank of America (BAC) over the Merrill Lynch takeover, Ohio AG Richard Cordray said after filing a complaint in Manhattan federal court. The suit also goes personally after BofA CEO Kenneth Lewis, former Merrill chief John Thain, other executives and the board.
- iPhone trio. Vodafone (VOD) announced it will sell Apple's (AAPL) iPhone in the U.K. and Ireland starting early 2010. The announcement comes one day after France Télécom's (FTE) Orange got the go-ahead to sell the iPhone in the U.K., ending O2's (TEF) two-year exclusive contract.
- Flu fever. Amid rising concern about the threat of flu pandemics, three big drugmakers announced deals that give them rights to new flu vaccines, increasing their exposure to one of pharma's brightest, but riskiest, segments. The largest deal was Abbott Laboratories' (ABT) €4.5B acquisition of Belgian conglomerate Solvay's (SVYSY.PK) drug unit, which includes a vaccine-making business. Johnson & Johnson (JNJ) paid $441M for an 18% stake in Crucell NV (CRXL) in order to jointly develop vaccines, while Merck (MRK) said it obtained marketing rights to CSL's seasonal flu vaccine for an undisclosed sum. Investors responded warmly to Abbott's move, with shares up 2.6% Monday.
- Heads roll at Sequenom. Shares of Sequenom (SQNM) plunged 45% in after-hours trading after the company fired its CEO, Harry Stylli, and senior VP of R&D, Elizabeth Dragon, and also said it secured the resignation of CFO Paul Hawran, following its internal investigation into the mishandling of test data of its prenatal Down syndrome treatment. The company "failed to put in place adequate protocols and controls for the conduct of studies" Chairman Harry Hixson said. "This is a significant setback and the company will face challenges." Besides throwing the company into disarray, the abrupt upheaval is likely to push testing back to 2011.
- Warner Music, YouTube coming to terms. Sources say Warner Music Group (WMG) and YouTube (GOOG) are close to settling their licensing dispute, a deal that would return Warner's music videos to YouTube after a nine-month hiatus. The proposal would give Warner the right to sell ads that run next to its videos and receive the bulk of the revenue, a formula Google has used to resolve a number of recent disputes with content owners looking for greater monetization.
- UBS wants out of gov't scheme. UBS's (UBS) U.S. wealth management unit, Paine Webber, isn't a core part of the bank's operations, but UBS won't sell it at fire-sale prices, CEO Oswald Gruebel says. "We've had a lot of inquiries from potential buyers but it wouldn't make sense to sell at current valuations." UBS bought Paine Webber in 2000 for about $10B. Gruebel also told the FT he's looking to sever ties with the Swiss government by buying its way out of a 'bad bank' scheme, an about-face from a statement on Aug. 27, and that he hopes to return to health within a year. Separately, UBS said Fiat CEO Sergio Marchionne and Shell CEO Peter Voser will be leaving its board.
- Opel deal nowhere near done. GM's planned sale of Opel to a group led by Magna International (MGA) faces fresh uncertainty after Spain urged European regulators to investigate the agreement, and Germany's Free Democrats, consistent critics of the deal, are poised to clinch a powerful position in Germany's new government. The deal has run into steady fire from Magna customers and European governments alike. "Overall, this deal is not as near to completion as many people are trying to present," one auto analyst says.
- Midwest activity declines. The Chicago Fed's National Activity Index fell to -0.90 in August, from -0.56 in July. Three of the four categories of indicators made negative contributions, but production and income were positive for the second straight month. Meanwhile the Dallas Fed's factory outlook showed the first signs of bottoming, with a near zero reading. Shipments and new orders turned positive, while other components improved but remained negative.
Today's Markets
Hong Kong led Asia higher Tuesday, but Europe stocks are under some pressure and stock futures are showing modest losses.
- Asia: Nikkei +0.91% to 10,100. Hang Seng +20.6% to 21,013. Shanghai -0.33% to 2,755. BSE +0.96% to 16,853.
- Europe at midday: London -0.4%. Paris -0.5%. Frankfurt -0.6%.
- Futures: Dow -0.1% to 9716. S&P -0.2% to 1057. Nasdaq -0.4%. Crude -0.7% to $66.36. Gold -0.3% to $990.90. Treasurys are flat. Euro -0.3% vs. dollar. Yen +0.6%. Pound +0.6%.
Tuesday's Economic Calendar
- Tuesday's economic calendar:
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
9:30 SEC panel on short selling, Day 1
9:35 Business Roundtable's Q3 CEO Survey
10:00 FDIC Board meeting to discuss restoration plan for Deposit Insurance Fund
10:00 Dallas Fed's Fisher reports on the economy
10:00 Consumer Confidence
10:00 State Street Investor Confidence
5:00 PM ABC Consumer Confidence Index
7:00 PM Philly Fed's Plosser speaks on the Fed's role in the economy - Notable earnings before Tuesday's open: WAG
- Notable earnings after Tuesday's close: DRI, JBL, MDRX, MU, NKE, WOR, ZZ
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The second option being discussed involves having the banks loan the FDIC money. Bair seems to be neutral on this concept, compared to banks who despise the idea of the upfronts. Bair has said she'll only borrrow from treasury as a last, last resort. The concept of banks extending credit to other banks via a loan to the FDIC deposit fund is probably the least unpalatable to both parties.
We've been USD bears for a long period of time but we're expecting an upside stampede during the coming weeks.
Not a great time for markets correlated to the dollar carry trade and that's also being confirmed in our other models.
-Stocks down (50% crash next 5 months starting with a projected 22% crash into October 13th)
-Bonds up (minimum target for the 30YR is 130.30 but we think new all-time highs are coming)
-USD spiking higher during October
-Crude Oil crashing during October and back through 36 into year-end
-Gold down into October 900-880 target.
You can read articles about our 50% crash call and follow all of these forecasts in real-time on Twitter through October 11th by following the links below.
bit.ly/yVBgt
bit.ly/l3hv8
How can you call vaccines risky when Congress has already preemptively bailed the drugmakers out ? Big pharma no longer has ANY risk other than losing money if they don't sell. Under current law, any person killed, crippled or made sick by a vaccine can only sue for damages in "vaccine court" and if they win, the TAXPAYERS pay the damages.
Worse, because of shortages this year, vaccine peddlers are "extending" (diluting) vaccines to make them go farther. The adjuvitants used to dilute the vaccines are NOT tested for use in humans. Some of them are known carcinogens.
See Dr. Joseph Mercola's article for complete info at mercola.com.
Add to that the fact that two states have made vaccinations MANDATORY. If you refuse, they can force you into quarantine until the threat is over.
The land of the free and home of the brave is crumbling under massive government overregulation that favors big business over individual rights.
"I have spent most of my life as a Democrat. I recently have seen fit to follow another course. I believe that the issues confronting us cross party lines. Now, one side in this campaign has been telling us that the issues of this election are the maintenance of peace and prosperity. The line has been used, "We've never had it so good."
But I have an uncomfortable feeling that this prosperity isn't something on which we can base our hopes for the future. No nation in history has ever survived a tax burden that reached a third of its national income. Today, 37 cents out of every dollar earned in this country is the tax collector's share, and yet our government continues to spend 17 million dollars a day more than the government takes in. We haven't balanced our budget 28 out of the last 34 years. We've raised our debt limit three times in the last twelve months, and now our national debt is one and a half times bigger than all the combined debts of all the nations of the world. We have 15 billion dollars in gold in our treasury; we don't own an ounce. Foreign dollar claims are 27.3 billion dollars. And we've just had announced that the dollar of 1939 will now purchase 45 cents in its total value.?"
Times this by ten now.
The Chinese are issuing another block of yuan denominated government bonds, via Hong Kong. Earlier issues met with mixed results, but the fact they keep going to the well says something.
Enjoy the bull whilst he's roaring, but be ready for the sprint away from the market which is coming.
Great! They are welcome to it. For too long China has gotten a free ride internationally, with foreign ire directed at US companies and citizens. Speaking as a former military attache, let the Chinese, with few resources of their own, deal with the kleptocrats in Burma, Nigeria, Sudan et al.
Add to massive Canadian oil and US natural gas the recent finds offshore Brazil, the probability that impending bankruptcy will make Mexico's PemEx more willing to share oil in exchange for technology and skill, and the probability that Venezuela's Chavez, having proven himself to be just another bag of empty hot air and will soon be gone, and this hemisphere will have enough oil, gas and coal to watch from the sidelines as China learns what its like to depend upon distant nations for its essential energy. Dare to dream...
On Sep 29 09:26 AM JG Savoldi wrote:
> Per the World Bank's dollar statement--interesting that bearishness
> is so intense just at the time our model has become very bullish.
>
>
> We've been USD bears for a long period of time but we're expecting
> an upside stampede during the coming weeks.
>
> Not a great time for markets correlated to the dollar carry trade
> and that's also being confirmed in our other models.
>
> -Stocks down (50% crash next 5 months starting with a projected 22%
> crash into October 13th)
>
> -Bonds up (minimum target for the 30YR is 130.30 but we think new
> all-time highs are coming)
>
> -USD spiking higher during October
>
> -Crude Oil crashing during October and back through 36 into year-end
>
>
> -Gold down into October 900-880 target.
>
> You can read articles about our 50% crash call and follow all of
> these forecasts in real-time on Twitter through October 11th by following
> the links below.
>
> bit.ly/yVBgt
> bit.ly/l3hv8
PS: I like the new spell checker feature.
Zoellick is saying what everyone already knows. But the timeframe is murky and no one is jumping in to take over reserve currency status, although the Euro could be it within 20 years.