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That should be interesting bedtime reading
LOL: MTL +3.78%, X +2.86%, FCX +2.60%, GDX +2.04%, PALM +1.93%, DELL +1.72%, LINE +1.39%, BAC +1.31%, AMZN +1.38%, AAPL +1.15%, EK +1.88%, GE +0.96%, SPY +1.05%, GOLD +0.99%, RIMM +0.87%, BIDU +0.74%, SBUX +0.37%, PFE +0.17%, HAS +0.12%,
just a few that are generally fun to trade options
COMPUTER Stocks PM: ORCL +1.82%, DELL +1.34%, AAPL +1.18%, INTC +1.29%, CSCO +1.20%, HPQ +0.92%, IBM +0.75%, MSFT +0.72%
BRAZIl Green PM: GOL +4.78%, SID +4.29%, PBR +3.69%, EWZ +3.43%, GGB +3.23%, CZZ +2.07%, VALE +4.25%, TAM +4.93%,
ALUMINUM Green PM: CENX +3.14%, ACH +3.07%, AA +1.99%
EXCHANGES pm: NYX +4.71%, NDAQ +1.39%, CME +1.15%
SOLARS Green PM: JASO +3.21%, YGE +3.15%, WFR +2.72%, TAN +2.55%, SOLF +2.43%, CSIQ +2.65%, LDK +2.29%, STP +2.22%, FSLR +1.65%, ENER +0.11%
OIL Stocks PM: JOYG +3.12%, UCO +2.29%, THC +2.02%, OIH +1.67%, USO +1.40%, OIL FUTURES +0.95% (72.56)
INDEX PM: QLD +2.98%, SPY +1.0%, DIA +0.81%
CASINOS Green PM: MGM +2.14%, LVS +2.38%, WYNN +2.19%
REGIONAL Banks PM: HBAN +2.18%, ZION +1.72%, RF +0.96%
URANIUM Stocks PM: BHP +3.0%, URE +2.05%, CCJ +1.94%
STEEL PM: MT +4.31%, STLD +3.10%, AKS +3.05%, X +2.97%, NUE +1.95%, XME +1.93%, MTL +4.96%
AGRO Runners PM: IPI +5.33%, DE +2.84%, AGU +1.99%, MOO +2.09%, MOS +1.065%, POT +2.16%, SEED +2.89%, JJG +0.93% (AG ETF), UCO +2.69%, SYT +1.94%
>>FUTURES PM: OIL +1.20%: $72.75, DXY -.4%: 80.115, EURO +0.54%: $1.3745, GOLD +1.18%: $1,075.1, COPPER +1.4435: $2.95, SILVER +1.193%: $15.265,
>>CZZ +2.07% pm, $8.40, fyi
>>ASTM -17.06% PM, .18c, yikes
>>TOP % GAINERS PM: CTIC +32.81%, CERS +16.34%, ADCT + 7.81%, SQNM +5.08%, JASO +4.36%, VALE +4.37%, VECO +3.88%, GOLD +3.76%, JOYG + 3.12%, CTSH +3.98%, ETFC +2.01%, PBR +3.80%, BUCY +3.49%, ATPG +2.92%, FCX +2.99%, LOW +2.90%, S +2.85%, EK +2.75%, AMD +2.83%, RNO +2.65%, NOK +2.20%, HAL +2.28%, DRYS +2.47%, AA +2.07%, FITB +2.02%, PALM +1.93%, APWR +2.11%, DDSS +1.06%, F +2.10%, AMGN +1.98%, AMZN +1.69%, SIRI +1.40%, JDSU +1.60%, ORCL +1.82%, C +1.69%...
Scroll down for both screens:
>>NASD TOP VOL ACTIVES PM: CTIC, ERTS, QQQQ, QGEN, AMGN, AAPL, ASML, YRCW, ETFC, SIRI, CERS, ASTM, QCOM, CSCO, SQNM, RIMM, AMZN, IRSN, INTC, EVEP, DRYS, GOLD, VOD, LCAV, JASO, JDSU, FITB, CONN, DDSS, ORCL, MSFT, PALM, AIXG, ZBRA, CTSH, ATPG, ESLR, VECO, DCTH, DVAX, GOOG, ACAS, BRCM, HBAN, JOYG, APWR, ACLI, XOMA, ARMH, CRXX...
>>FUTURES Climbing, Oil up 1.5%, Euro up, Commodities up...eom
BL: Sugar Shortage May Turn Acute in Third Quarter on Demand From U.S., Mexico
By Thomas Kutty Abraham
Feb. 9 (Bloomberg) -- A global sugar shortage, which drove prices to the highest level in three decades, may peak in the third quarter this year on demand from the U.S., Mexico, India and Pakistan, according to U.K.-based Tropix Capital Management.
“As we enter the second quarter, we enter the inter-crop period for South Brazil when export supply is minimal,” Sean Diffley, founder of the hedge fund and former head of sugar trading at ED&F Man Holdings Ltd., said by email. “Countries like Russia will return to the market in force. The acutest part of the deficit may not be apparent until the third quarter.”
India, China, Indonesia, Pakistan, Egypt and Russia are among countries planning to buy sugar to cool domestic prices, worsening a deficit that may reach 11.92 million tons in the year ending April 30, up from 8.32 million tons predicted in October, Kingsman SA said yesterday. The shortfall may be 5 million to 6 million tons this season, according to Tropix.
“The world stocks-to-use ratio should reach 20 year lows in the second half of this year,” said Diffley, who worked for 16 years at ED&F Man, one of the biggest sugar trader.
India, the biggest user, may need to import an extra 2.5 million to 3 million tons this season to meet a 7 million ton deficit, according to Kingsman. Pakistan, Asia’s third-biggest user, plans to purchase 1.25 million tons by June. The country “apparently bought 100,000 tons” from Cargill Inc. in the past few days, Michael McDougall, a Newedge USA senior vice president said yesterday in a report from an industry event in Dubai.
China Drought
China, the biggest consumer after India, may have a deficit of 3.3 million tons this year after drought and cold weather cut yields, the Guangxi Bulk Sugar Exchange Center said last month. Thailand, the second-biggest exporter, may produce 7.2 million tons in the year started in November, less than the forecast.
“There’s a real rationale to be invested in sugar, at least until March,” when the Brazilian harvest begins, Hussein Allidina, head of commodity research at Morgan Stanley, said in an interview in Dubai. Prices will extend gains as a deficit was expected to last through the season ending Sept. 30, he said.
Sugar output in Brazil, the top producer, may increase by as much as 4.4 million tons to 35.3 million tons in 2010-2011, as growers boost planting to take advantage of record prices, Plinio Nastari, president of research firm Datagro, said in an interview on Feb. 7 in Dubai. The global sugar market may have a surplus of 1.5 million tons next year, he said.
“The forward sugar curve already reflects the assumption that Brazilian production will rebound significantly,” Diffley said. “If we see another rainy harvesting period we may not see the surplus in 2010-11 that analysts are assuming is a given.”
‘Fundamental Backing’
Raw-sugar futures for March delivery gained as much as 2.6 percent to 27.28 cents a pound in after-hours electronic trading on ICE Futures U.S., and were at 27.27 cents at 2:44 p.m. Mumbai time. Prices fell 12 percent last week, the biggest weekly drop since October 2008.
“During the last great sugar bull-run, the market often paused for breath and consolidated for weeks before pushing sharply higher,” said Diffley. “We believe that sugar’s rally has a sound fundamental backing.”
Sugar had its biggest annual advance since 1974 last year as heavy rains and drought pared harvests in Brazil and India, the largest growers. Futures reached 30.4 cents on Feb. 1, the highest since January 1981.
“The last time around when prices rose above 30 cents, it stayed at that level for six months,” Jonathan Drake, head of sugar business at Cargill Inc. said in an interview. “Going by history, prices are going to stay high for at least six months. High prices will also be accompanied by greater volatility.”
To contact the reporter on this story: Thomas Kutty Abraham in Dubai at tabraham4@bloomberg.net
Last Updated: February 9, 2010 04:18 EST
BL: Toyota Extends Global Recalls to 437,000 Hybrids to Repair Faulty Brakes
By Yuki Hagiwara and Makiko Kitamura
Feb. 9 (Bloomberg) -- Toyota Motor Corp. will recall 437,000 hybrid cars globally to fix faulty braking systems on four models, including the Prius, adding to almost 8 million vehicles the company is repairing for separate defects.
The world’s biggest carmaker will halt sales of SAI and Lexus HS250h sedans and Prius plug-in hybrids, said President Akio Toyoda, speaking at a Tokyo press conference.
The action threatens to further tarnish Toyota’s reputation as a leader in gasoline-electric hybrids, a technology it plans to offer on all models. Toyota, grappling with its worst recall crisis, has lost about $31 billion in market value since Jan. 21, when it began taking back millions of vehicles for defects linked to unintended acceleration.
“The Prius is synonymous with hybrids and therefore, given the scale, the recalls can erode consumers’ trust in these cars,” said Tatsuya Mizuno, director of Mizuno Credit Advisory in Tokyo. “The damage to Toyota is huge as the Prius was such a high profile model.”
In Japan, Toyota will call back 223,068 vehicles to repair computers in anti-lock brake systems, according to a notice filed to Japan’s Transport Ministry today. The vehicles to be repaired include 199,666 2010 Prius hybrids, 10,820 SAIs, 12,423 Lexus HS250h cars and 159 Prius plug-in hybrids, according to the filing to the ministry.
Best-Selling Model
“We will redouble our commitment to quality,” Toyoda, 53, said in Tokyo today. “I would like to apologize again to our customers who are worried about Toyota’s quality and safety.”
When the latest version of the Prius came out, Toyoda called it the “future of Toyota cars.” The Prius was Japan’s top-selling vehicle last year.
Toyota has recalled almost 8 million vehicles on five continents to repair defects that have been linked to unintended acceleration. Those recalls may cut demand for the company’s vehicles by 100,000 units, Toyota said last week.
The carmaker faces at least 34 lawsuits filed on behalf of customers in the U.S. and Canada seeking a range of damages from loss of car value to a return of profits. It also faces at least 12 lawsuits brought by individuals claiming deaths or injuries caused by uncontrollable acceleration.
Moody’s Investors Services placed Toyota’s Aa1 senior unsecured long-term rating on review for possible downgrade today. Problems with Toyota cars and recalls may have “longer term impacts,” affecting pricing power and market share in key markets, Moody’s said in a statement.
Profit Forecast
The company on Feb. 4 predicted a return to profit in the fiscal year ending March 31, even as it said recalls may cost 100 billion yen ($1.1 billion). The full-year net income forecast of 80 billion yen takes into account recalls for flaws linked to unintended acceleration, though it doesn’t include potential Prius recalls, Toyota said at the time.
Toyota also said it will recall about 133,000 Prius 2010 models and 14,550 Lexus HS250h hybrids in the U.S. to update software in the vehicle’s anti-lock brake system. No other Toyota, Lexus, or Scion vehicles are involved in this, Toyota said in a statement.
‘Own Words’
Toyoda plans to travel to the U.S. and “will try to explain with my own words,” he said. Toyoda must provide a “proper report” in the U.S. and the recalls must not cause a “foreign-relations problem,” Japan’s Transport Minister Seiji Maehara told reporters today. Maehara said he will meet with U.S. ambassador to Japan John Roos tomorrow to discuss Toyota.
“Toyota is finally taking measures,” said Mamoru Kato, an analyst at Tokai Tokyo Research Center in Nagoya, Japan. “This is fueling optimism that Toyota is moving in a clear direction to avoid further consumer anxiety.”
Toyota rose 2.9 percent to 3,375 yen at the close of trading in Tokyo. The stock has declined 19 percent since Jan. 21.
The U.S. Transportation Department is also investigating reports of Prius brake failures. The department’s National Highway Traffic Safety Administration received 124 reports from consumers, including four saying crashes occurred with two “minor” injuries, according to an investigation document.
Sudden acceleration of Toyota vehicles has been linked to 19 deaths in the last decade, according to Henry Waxman, the U.S. House of Representatives’ Energy and Commerce Committee chairman.
Toyota Motor Europe said it will recall 52,903 Prius cars in Europe to modify software used to manage the anti-lock brake system. The Toyota City, Japan-based carmaker said last week it modified braking software on newly built Priuses in late January.
DiCaprio, Wozniak
The model, driven by U.S. actor Leonardo DiCaprio and Apple Inc. co-founder Steve Wozniak, is the world’s best-selling hybrid car. Toyota has sold 197,000 units of the latest version in Japan and 103,200 in the U.S., according to the company.
Toyota has been investigating reports that Prius owners driving at low speeds on bumpy or icy roads may experience moments where the car continues to coast for about a second after the brakes are applied, because of the anti-lock brake system. The carmaker has said it received complaints about Prius brakes through dealers starting in the last few months of 2009.
Toyota said today it stopped shipments of the Lexus HS250h and SAI hybrids from a factory in southern Japan to inspect their braking systems.
The vehicles included in today’s recall are Prius hybrids built between April 20, 2009, and Jan. 27, plug-in Prius hybrids built between Nov. 25, 2009, and Feb. 5, SAI hybrids built between Oct. 2, 2009, and Feb. 8, and Lexus HS250h hybrids built between June 10, 2009, and Feb. 8.
To contact the reporters on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net
Last Updated: February 9, 2010 05:41 EST
BL: Euro, Oil, Copper Gain on Greece Aid Speculation; U.S. Index Futures Rise
Euro Rallies on Greek Aid Speculation; U.S. Futures Advance
By Justin Carrigan
Feb. 9 (Bloomberg) -- The euro rallied and emerging-market stocks recovered from the worst three-day slide in a year on speculation Greece will get European help to tackle its budget deficit. U.S. stock-index futures advanced.
The euro strengthened 0.6 percent against the dollar at 7:28 a.m. in New York, snapping four days of declines, and ended a three-day drop against the yen. The MSCI Emerging Markets Index added 1 percent after falling 6.1 percent in the past three sessions. Futures on the Standard & Poor’s 500 Index increased 0.7 percent. Greece’s ASE Index rose 2.9 percent, rebounding from four days of losses.
European Union leaders will discuss Greece’s plans to reduce the region’s biggest deficit when they meet Feb. 11, and European Central Bank President Jean-Claude Trichet’s decision to leave a meeting of policy makers in Sydney one day early fanned speculation that officials will agree on aid. European Commission President Jose Barroso said investors would be wrong to bet against the euro.
“The markets are smelling a deal for Greece, and for that reason, we’re seeing some stabilization,” said Robin Marshall, director of fixed income in London at Smith & Williamson Investment Management, which oversees about $20 billion. “It’s hard to see there not being one, given the potential fallout and contagion effect.”
Yen, Pound
The 16-nation currency climbed as much as 0.7 percent against the dollar, its biggest gain since Jan. 11. The euro appreciated 1 percent versus the yen and 0.6 percent compared with the British pound.
Greek banks led the gains in European stocks as National Bank of Greece SA, the nation’s biggest lender, surged 3.6 percent in Athens, while Alpha Bank AE jumped 6.9 percent. The 10-year Greek government bond rose, with the yield falling 9 basis points to 6.67 percent.
Taiwan shares led the advance among major emerging markets, with the benchmark Taiex index climbing 2 percent. Developing- nation currencies strengthened, led by a 0.7 percent advance in South Korea’s won against the dollar and a 1 percent increase in Poland’s zloty versus the euro.
The gain in U.S. futures indicated the S&P 500 may rebound from yesterday’s 0.9 percent drop. The Dow Jones Industrial Average closed yesterday below 10,000 for the first time since November on concern deteriorating European government finances will hurt economies elsewhere.
European Stocks
The MSCI World Index of 23 developed nations’ stocks added 0.1 percent, ending four days of losses. Europe’s Dow Jones Stoxx 600 Index climbed 0.1 percent. Swatch Group AG rallied 6 percent in Zurich as the maker of Omegas posted better-than- estimated earnings.
Gains in Europe were limited as Unibail-Rodamco SE, Europe’s largest shopping-center owner, dropped 5.3 percent in Paris after saying the recession curbed growth in rental income. SAS AB plummeted 22 percent in Stockholm as the owner of the Nordic region’s largest airline reported a loss. The MSCI Asia Pacific Index added 0.3 percent, gaining for the first time in four days. Nissan Motor Co. rose 2.4 percent after predicting a return to profit this fiscal year, scrapping an earlier loss estimate.
Treasuries fell for the first time in four days as the government prepared to sell record-tying amounts of three-, 10- and 30-year bonds this week, starting with $40 billion of 2013 notes today. The yield on the 10-year note rose 4 basis points to 3.60 percent.
Copper advanced 1.1 percent to $6,519.75 a metric ton in London, leading gains in industrial metals. Gold for immediate delivery added 1 percent to $1,073.35 an ounce. Crude oil advanced 1.1 percent to $72.69 a barrel in New York trading.
To contact the reporter for this story: Justin Carrigan in London at jcarrigan@bloomberg.net
Last Updated: February 9, 2010 07:41 EST
That's what I'm watching too...when these bounce, it should be a gooooood bounce :)
Do you think CVH will go?
Good Morning!
State Republicans buoyant as candidate filing opens
Published Mon, Feb 08, 2010 02:00 AM
Modified Mon, Feb 08, 2010 05:24 AM
BY JIM MORRILL - The Charlotte Observer
Rarely have N.C. Republicans seen so much interest in running for office.
Dozens of prospective candidates have come to orientation sessions put on by House Republicans. Interest in congressional and local races also is high.
"You're going to see a huge number of candidates file on the Republican side because they smell blood in the water," says political analyst JohnDavis of Raleigh.
Filing for offices from the U.S. Senate to county commissioner opens today across North Carolina and runs through Feb. 26. The May 4 primaries are less than three months away.
The races take place against backdrops that seem to favor Republicans.
The GOP has enjoyed high-profile successes in Virginia, New Jersey and Massachusetts. Despite personal appeals from President Barack Obama, voters in each state rejected the candidates he backed.
In North Carolina, which Obama narrowly carried, a survey last month by Raleigh's Democratic-leaning Public Policy Polling found only 44 percent of voters like the job he's doing.
The coming elections follow the worst budget year and one of the highest tax increases in North Carolina history. And they take place as federal grand juries investigate a former Democratic governor and former U.S. senator.
Chris Hayes, a senior analyst with the CivitasInstitute, a conservative think tank, says his polls reflect those dynamics.
"You're getting a huge number of Democrats, especially those whose only voting participation was 2008, saying they're not going to vote in 2010," he says. By contrast, enthusiasm among Republicans is "sky high."
"They're chomping at the bit to get out and vote."
jmorrill@charlotteobserver.com or 704-358-5059
http://www.newsobserver.com/politics/national/story/326937.html
AS: How Murtha's Death Could Make It Harder to Pass a Health Care Bill
By Philip Klein on 2.8.10 @ 3:55PM
As the Capitol reacts to the death of Jack Murtha and remembers his legacy, it's worth pointing out that the news will make it even harder for House Speaker Nancy Pelosi to secure the 218 votes needed to pass health care legislation.
Back in November, the House passed its health care bill by a narrow 220 to 215 margin, with 39 Democrats voting against it. Since then, the one Republican who voted for it -- Joseph Cao -- has indicated that he would not support the bill a second time around given the weaker language on abortion in the Senate version. In addition, Florida Rep. Robert Wexler already retired prematurely. Factor in Murtha's death today, and Pelosi is down to 217 votes. This doesn't even take into account the pro-life Democrats led by Bart Stupak who are prepared to vote "no." While there's been talk that Pelosi had some votes in reserve the first time around, the point is that those members felt they needed to vote against the bill -- and the political environment has deteriorated substantially for Democrats since then.
With Murtha's death, the Cook Political Report has now moved his Pennsylvania district to the "toss up" category. If Republicans can field a good candidate and gain the seat, it would further reinforce the fears among Democrats in swing districts and make them less likely to jump on board with Pelosi. Chris Cillizza suggests the most likely date for the special election would be May 18. The special election to replace Wexler is scheduled for April 13, and is expected to go Democrat.
UPDATE: Another complicating factor is Rep. Neil Abercrombie. The Hawaii Democrat announced early last month that he would resign Feb. 28 run for governor. However, in his statement announcing his resignation, he said that he had ensured Pelosi that he’d be around to continue supporting the health care bill. Back when he made that statement, Scott Brown hadn’t won yet, and thus the end of this month seemed like plenty of time to finalize the health care bill. Now that the timeline has been pushed back, perhaps he’d postpone the effective date of his resignation if Pelosi still needed his vote.
UPDATE II: An earlier version of this post suggested that Democrats would be unable to pass the bill with 217 votes, but as a reader points out there's still the theoretical chance of passing it 217-216. So I changed the wording.
http://spectator.org/blog/2010/02/08/how-murthas-death-could-make-i
wws| 2.8.10 @ 8:44PM
"I've never killed a man, but I've read many an obituary with a great deal of satisfaction."
— Clarence Darrow
That's a pretty good prediction...there could well be a 'bounce' tomorrow unless the Portuguese situation worsens
Calls on the VIX seem like a good bet, imho
FT: TV crews camped outside the FT
By James Mackintosh
Published: February 9 2010 02:00 | Last updated: February 9 2010 02:00
FTDotComment (James Mackintosh): How to tell when a state is not yet fully confident in the financial markets: it blames the international media reporting on its financial problems for the financial problems themselves.
Italy has long rated the opinions of the FT's Lex column as newsworthy items in themselves. And a Portuguese minister went on the record last year to attack a Lex headline, of all things (Pigs in muck, which suggested Spain, Greece, Portugal and Italy risked "turning into bacon"). Now the Spanish are getting worried. Two TV crews camped outside the FT's London offices yesterday in an attempt to intercept Elena Salgado, the economy minister, who was due to meet reporters and editors, which they see as an effort to give the FT a dressing down for being muy crítico of Spain (the crews stood outside the front door while the Spanish car arrived at the back, so they had to run to get distance shots).
How is it newsworthy that she's visiting journalists? Well, the Spanish papers are running it as one of their main stories, on the basis that the FT has raised the possibility of Spain having to leave the eurozone (although Lex raised the idea yesterday that Germany could solve the problems in the single currency region by leaving).
What would be newsworthy would be for her to summon Paul Krugman, the New York Times columnist. He identified Spain, rather than Greece, as the eurozone's weak link last week, prompting Salgado to lash out. "Maybe there is a lack of comprehension about what the euro means for our economies," Salgado said on Spanish radio.
Ironic that this came shortly after Krugman was being approvingly quoted by José Sócrates, prime minister of Portugal, caught alongside Spain in the unfortunate acronym wars, for saying "deficits saved the world".
My guess as to why the FT is the target: the real news is that Salgado is meeting London's investors in Spain's sovereign debt in an effort to convince them that the government's much-criticised plan to cut the budget deficit is enough to avoid a full-blown Greek-style crisis. But the embassy didn't want to upset these talks by having film crews show her walking into a fund manager such as Pimco, as it would set the discussions off on the wrong note. So instead they leaked the time of her meeting at the FT to give them something to film and talk about.
Luckily for the embassy, the TV crews I chatted with were utterly unaware that they had the wrong target: they thought it was a major event to have a government minister visit a newspaper office, rather than the everyday occurrence it is.
Perhaps there is a real story, though: Salgado cried off at the last minute, sending her officials instead. Spin this in two ways and it is interesting (although note I have no evidence for either - perhaps she's washing her hair):
1. She's deliberately snubbing the FT as punishment
2. The crisis is so bad she hasn't got time to see the FT
So far it is unclear whether the Spanish press has picked one of these stories.
EDIT: Having cried off, she then turned up anyway. Good news for the Spanish economy? Bad news? Or just that it didn't take as long as she thought to catch up on the market's negative reaction to the country's plan to borrow nearly €77bn this year?
www.ft.com/dotcomment
.Copyright The Financial Times
http://www.ft.com/cms/s/0/7ac5a358-1519-11df-ad58-00144feab49a.html
HedgeWeek: Threat of regulation puts pressure on US CDS markets
Mon, 08/02/2010 - 11:38
The threat of increased regulation in the US financial services sector kept widening pressure firmly on US corporate credit default swap markets throughout the end of January, according to a report by GFI Group.
While initial moves at the start of the year were tighter, more challenging political rhetoric, combined with greater concerns that the People’s Bank of China might start to tighten monetary policy sooner than had been anticipated, encouraged more creditors to buy protection.
GFI says this is perhaps understandable following the solid credit rally through the latter half of 2009. Banks and brokers saw the most significant deterioration in risk, with consumer staples names also seeing pronounced widening pressure. Although typically viewed as more defensive, the staples group started moving wider from low absolute levels.
European credit markets quickly reversed a bullish end to 2009, with the iTraxx rallying off tights of 65bps to close the month at 83bps, back above the 80bps level that had proved such strong support in the fourth quarter.
The bearish tone was set by the financials index which pushed out from 63bps to 90bps, closing the month near the widest premium to the main corporate iTraxx since the indices were first created over 5 years ago.
Banks were the focus; more specifically it was the Greek, Spanish, Portuguese and Italian banks that drew most concern – a direct result of increased default risk being priced in to the sovereign CDS of those more highly indebted eurozone nations. By the end of the month, sovereign and financial concern had spread to the incumbent telcos and utilities of the same nations.
In Asia, much of the focus remained with the Japanese sovereign contract through January, with Standard & Poor’s downgrading their Long-Term Credit Rating Outlook to negative from stable. Specifically, S&P highlighted their concerns that the political administration in Japan lacked a sufficiently credible plan to improve the fiscal position of the country.
Elsewhere in the region spreads also moved wider, driven by concerns over growth in China, and also due to contagion from the Japanese sovereign. Volumes remained most heavily concentrated in the Japanese blue-chips, as well as macro instruments.
Sovereign risk was the watch word at the turn of the year, and concern over sovereign default in Western Europe continued to rise throughout January, according to GFI. Mounting budget deficits, accounting discrepancies and hesitant political action drove the Western European SovX to new highs, and a premium to the corporate iTraxx.
Greece captured the headlines, though Portugal and France moved more in percentage terms over the month. Spain and Germany were also not that far behind, as credit traders suggested that trouble in Greece is an EU-wide problem, and FX traders sold Euro as a direct result.
Elsewhere, sovereign risk was better contained, though the Ceemea SovX did trade ten per cent wider from creation, two weeks into January. In Latin America, Brazil led the widening, though modest in comparison with activity in Europe, whilst Venezuela was narrower on the month. S&P raised their outlook on Venezuelan debt after the country devalued its currency early in January.
GFI Group is a provider of wholesale brokerage, electronic execution and trading support products for global financial markets.
http://www.hedgeweek.com/2010/02/08/33827/threat-regulation-puts-pressure-us-cds-markets
WSJ: European Default-Risk Index at Fresh High
By MARK BROWN
FEBRUARY 8, 2010, 10:20 P.M. ET
LONDON—A key measure of default risk for developed-nation European sovereigns was set to close at a fresh high Monday, driven by further weakness in Greek, Portuguese, and Spanish credit default swaps.
The move comes as market participants look ahead to Thursday's meeting of European Union heads of state. Many market participants are looking to see if EU nations will declare some kind of direct or indirect financial support for the country, one the most highly indebted in Europe. Concerns over its high annual deficit relative to the size of its economy are spreading to other countries whose economies have been hard hit.
The SovX Western Europe index, which lets investors buy or sell default insurance on a basket of 15 sovereigns, was at 1.125 percentage point late in the European day, according to index owner Markit, compared with Friday's closing level of 1.06 percentage point. The index moved above a full percentage point for the first time on Thursday.
Portugal's sovereign CDS were at 2.42 percentage point, Greece's were at 4.30 percentage point, and Spain's at 1.73 percentage point, Markit data showed. All were wider compared with Friday's closing levels.
That means the annual cost of insuring €10 million ($13.7 million) of Portuguese government debt against default for five years was €242,000, while it was €430,000 for Greek debt and €173,000 for Spanish debt. CDS are derivatives that function like a default insurance contract for debt.
"These three were the main underperformers in the SovX index today," Suki Mann, credit strategist at Société Générale SA, said in a note. "The Greece/Portugal/Spain story has taken on the role of the driving force for sentiment towards risky assets."
The cost of insuring the debt of euro-zone members with large budget deficits has been rising this year, as they come under pressure to cut deficits and on worries about their borrowing costs. CDS moves, which are highly visible and widely watched, can become a barometer of investor worries than itself can generate more anxiety, spilling over to other markets.
Some have noted that the swaps sometimes suggest that countries are headed for a default though yields on bonds issued by those countries don't indicate such a dire outcome.
Write to Mark Brown at mark.brown@dowjones.com
http://online.wsj.com/article/SB10001424052748703630404575052743617779382.html?mod=WSJ-WorldMarkets-LeadStory
BL: Biggest Bubble in History Is Growing Every Day
Published on 02-08-2010
Source: Bloomberg
Real estate, stocks, credit. China sure has its share of bubbles. Oddly, little attention is paid to the biggest one of all.
China’s currency reserves grew by more than the gross domestic product of Norway in 2009. Its $2.4 trillion of reserves is a bubble all its own, one growing before our eyes with nary a peep out of those searching for the next big one.
The reserve bubble is actually an Asia-wide phenomenon. And we should stop viewing this monetary arms race as a source of strength. Here are three reasons why it’s fast becoming a bigger liability than policy makers say publicly.
One, it’s a massive and growing pyramid scheme. The issue has reached new levels of absurdity with traders buzzing about crisis-plagued Greece seeking a Chinese bailout. After all, if economies were for sale, China could use the $453 billion of reserves it amassed last year to buy Greece and Vietnam and have enough left over for Mongolia.
Countries such as the U.S. used to woo the Bill Grosses of the world to buy their debt. Now they are wooing governments. Gross, who runs the world’s biggest mutual fund at Pacific Investment Management Co., is still plenty important to officials in Washington. He’s just not as vital as the continued patronage of state asset managers in places like Beijing.
Next Step
You have to wonder what folks at the International Monetary Fund are thinking these days. Their aid packages tend to come with messy requirements, such as “get your economy in order.” China’s are merely about scoring resources or geopolitical points. We have already seen China throw lifelines to Wall Street giants, including Morgan Stanley. Entire countries seem like the natural next step.
China’s huge arsenal of reserves is increasing its global influence. The trouble is, China is trapped in an arrangement of its own making. As China and other Asian nations buy more and more U.S. Treasuries, it becomes harder to unload them without causing huge capital losses. And so they keep adding to them.
“This is a titanically large foreign-exchange trade,” says David Simmonds, London-based analyst at Royal Bank of Scotland Group Plc. “It’s the biggest one history has ever seen and there’s nowhere for these reserves to go.”
China aims to diversify out of U.S. Treasuries into other assets and commodities. The question that governments are grappling with is which markets are deep enough to absorb China’s riches? Gold? Oil? Euro-area debt? The Madoff family’s next Ponzi scheme?
Ending Badly
The challenge for China alone is like trying to park an Airbus A-380 super-jumbo in a Volkswagen. Like all pyramid schemes, there’s no easy end in sight and things could end badly. If the dollar collapses, panicked selling by central banks looking to limit losses would shake global markets more than the U.S. credit crisis has.
Two, reserves are dead money. The wisdom of currency stockpiling came from the chaos of 1997. Speculators sensed authorities in Thailand were sitting on few reserves, and they were right. Their attack on the Thai baht set the stage for an Asian meltdown. Governments spent the 2000s determined not to repeat the mistake.
Asian economies have too much of a good thing on their hands. In July 2007, on the 10th anniversary of Thailand’s devaluation, Asian Development Bank President Haruhiko Kuroda said the accelerating accumulation of reserves was a major concern for the region. Too bad nobody listened to him.
Vast Sums
These huge sums of money could be used to improve infrastructure, education, health care and reducing carbon emissions. Never before have we seen such a misallocation of such vast resources. Asia can do better with its money.
Three, reserves add to overheating risks. When policy makers buy dollars, they need to sell local currency, increasing its availability and boosting the money supply. Next they sell bonds to mop up excess money in economies. It’s an imprecise science that often leads to accelerating inflation. The strategy works out to be an expensive one.
The stakes are rising fast. The risks in Asia are skewed firmly in the direction of inflation. The focus is now on central banks to see if they will pull liquidity out of economies with higher interest rates. More attention should be on how reserve management is working at odds with that goal.
Central banks face a difficult task. They must withdraw excess liquidity without devastating their economies and running afoul of politicians. Only now is Asia finding out how some of its economic-protection tactics are amplifying the challenge.
Asia has been holding down currencies to support exports for more than a decade. It’s silly to ignore the side effects of that strategy for the region’s economies.
Think about how Dubai shook the global economy, or how the mere hint that Chinese growth may dip below 8 percent inspires panic. These disappointments pale in comparison with the turbulence that may come from Asia’s biggest bubble popping.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
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To contact the writer of this column: William Pesek in Singapore at wpesek@bloomberg.net
http://www.blacklistednews.com/news-7332-0-13-13--.html
BLN: What Do Rising Sovereign Credit Default Swaps Mean?
Published on 02-08-2010
Source: Washington's Blog
Here are the CDS of Greece, Portugal, Spain and the U.S.:
Rolfe Winkler argues that - in the short-run - the PIIGS countries (Portugal, Ireland, Italy, Greece and Spain) will slash their budgets and get bailed out by the EU.
Simon Johnson thinks that the weakening Euro caused by the PIIGS' woes will hurt American exports (weaker Euro equals stronger dollar), and could lead to problems for leading global banks.
Other commentators fear that the PIIGS' crisis has as much potential as a financial "contagion" as the subprime meltdown and the failure of Lehman.
But for the long-term view, we need a little more perspective. One of the world's leading economic historians - Harvard professor Niall Ferguson - says:
Iran Tankers Idle in Persian Gulf as Oil Declines Before OPEC
By Alaric Nightingale
Feb. 9 (Bloomberg) -- Iran, OPEC’s second-largest crude producer, has at least three supertankers idling in the Persian Gulf, as oil prices decline five weeks before the group’s next meeting, vessel-tracking data show.
The tankers, each bigger than the Chrysler Building, have been almost stationary for at least four weeks, according to data from the ships collected by AIS Live Ltd. The depth of the 2-million-barrel vessels sitting in the water indicates they are loaded. The amount of oil stored may expand because signals from two more idled tankers shows they are partially loaded or empty.
The Organization of Petroleum Exporting Countries, accounting for about 40 percent of global supply, meets March 17 in Vienna to discuss production quotas after raising output in eight of the last 10 months. Two years ago, Iran used as many as 14 tankers to store oil when purchases by refiners declined.
“We are entering the season when there should be some low demand from Japan, which is a big user of Iranian crude,” Olivier Jakob, managing director of Zug, Switzerland-based oil consultant Petromatrix GmbH, said by phone. “When you have some floating storage, from Iran or from pure traders, it always adds a bit to the feeling there’s spare capacity available.”
Seifollah Jashnsaz, managing director of the National Iranian Oil Co., and the company’s manager of international affairs, Ali Asghar Arshi, didn’t immediately respond to phone calls. Deputy Oil Minister Hossein Noghrekar Shirazi declined to comment. Mohammad Ali Khatibi, Iran’s OPEC governor, referred calls to NIOC because he isn’t responsible for oil marketing.
Cushing, Oklahoma
If full, the three tankers’ combined capacity of about 6 million barrels is equal to 19 percent of all the crude the U.S. Energy Department estimates is stored in Cushing, Oklahoma, the pricing point for benchmark West Texas Intermediate oil.
The 1,100-foot Haraz has floated off the United Arab Emirates since Jan. 2 and the Huwayzeh arrived in the same area Jan. 10. The Najm has been near Iran since Jan. 4, according to the data from AIS Live, owned by Lloyd’s Register-Fairplay. Two other ships are in the area and may have partial loads or be preparing to store. The Dadgar has been near Iran since Jan. 1 and the Honar arrived in the area on Jan. 21.
Other Iranian tankers are also idled. The Nesa has been off Malta since December and the Davar off Benin in West Africa since November. The ships’ drafts indicate they’re both loaded. As well as being used for Iranian crude, the vessels are also leased out.
Crude Weakens
Crude prices have fallen for four weeks, the longest losing streak since July, on concern that European efforts to reduce budget deficits will curb growth just as their economies start to rebound. A faltering recovery may bolster the U.S. dollar and prompt the sale of commodities. Oil for March delivery traded at $71.66 a barrel on the New York Mercantile Exchange yesterday, 10 percent lower than at the start of the year.
Crude rose 82 percent in the last 12 months and the International Energy Agency expects global demand to expand 1.7 percent this year, after two annual contractions.
As Iran’s cargoes sit, oil companies and banks are selling crude stored on tankers into the market. The number of ships involved in the “contango” trade, named after the term used to describe a market where future commodity prices are higher than today, declined 16 percent last month, according to data from London-based E.A. Gibson Shipbrokers Ltd. The amount of crude tied up in storage fell 25 percent last week, Morgan Stanley said in a Feb. 7 report.
Crude-Oil Spread
The trade makes money as long as the difference between energy contracts exceeds the costs of ship rental, insurance and financing. A year ago, the spread between the first and sixth Brent crude-oil contracts traded on the London-based ICE Futures Europe exchange was 12 percent. It’s now 4 percent. The return of stored cargoes suggests the trade is less profitable and traders anticipate a further narrowing of the spread.
Iran may have a surplus of high-sulfur crude as refineries that process the fuel prepare to shut down for maintenance. The discount on Iran Heavy crude compared with Oman and Dubai petroleum widened to 65 cents a barrel, from 41 cents at the end of last year, according to data compiled by Bloomberg. World oil supply is sufficient to meet demand during the first half of this year, Iran’s OPEC governor, Khatibi, said yesterday.
Storing crude on tankers ties up vessels and bolsters rental rates. Iran’s storage in 2008 contributed to a tripling in the cost of chartering supertankers. Daily charter rates on the Saudi Arabia-to-Japan route, the industry’s benchmark, advanced 5.3 percent to $42,349 this year. Frontline Ltd., the world’s biggest operator of the vessels, needs $32,900 a day to break even.
To contact the reporter on this story: Alaric Nightingale in London at Anightingal1@bloomberg.net
Last Updated: February 8, 2010 19:01 EST
BL: Oil, Copper, Sugar Are Top Commodity Picks, Morgan Stanley Says
By Thomas Kutty Abraham
Feb. 9 (Bloomberg) -- Copper, crude oil and sugar are the top picks among commodities, with the three set to gain on increasing emerging-market demand and supply constraints as the global economy recovers, according to Morgan Stanley.
Oil is “by far is our biggest bet among commodities,” Hussein Allidina, head of commodity research, said in an interview. “Copper remains the best pick among base metals as it has all the factors supporting oil.”
The Reuters/Jefferies CRB Index of 19 raw materials slumped to the lowest since October last week on concern that swelling government deficits in European nations may restrain growth in the region and spur a rise in risk aversion worldwide. The declines presented a buying opportunity, Allidina said.
“I’m optimistic, and I don’t think the EU contagion will unfold,” Allidina said yesterday in Dubai, where he’s attending a conference. “If the situation in the European Union can be addressed without any contagious effect, commodities will continue to perform well.”
European leaders will meet on Feb. 11 to discuss the outlook, including in Greece, which has a deficit of 12.7 percent of gross domestic product, more than four times the region’s ceiling. The Dow Jones Industrial Average closed yesterday below 10,000 for the first time since November amid concern that European government finances will harm the recovery.
‘Augurs Well’
Still, rising demand and supply constraints will help to boost commodity prices, Allidina said. Economic growth of 6.5 percent in emerging markets “augurs well” for oil demand, and the Organization of Petroleum Exporting Countries may need to raise output in the second-half of 2010, he said.
Oil for March delivery traded at $71.57 a barrel, 32 cents weaker in after-hours on the New York Mercantile Exchange at 8:25 a.m. in Singapore. Prices tumbled to a seven-week low of $69.50 on Feb. 5 amid the commodity selloff.
New York oil futures will rise to $95 a barrel by the end of the year as demand recovers, Allidina said on Jan. 25. Declining crude stockpiles and an improving global economy will boost oil to an average of $100 in 2011, he said then.
Mohammad Ali Khatibi, Iran’s OPEC governor, said yesterday that global oil supply is enough to meet demand in the first half. OPEC has left output levels unchanged since December 2008, when it announced the largest supply cut in the group’s history as world demand collapsed amid the financial crisis. OPEC next meets on March 17 to consider supply targets.
“There’s a real rationale to be invested in sugar, at least until March” when the Brazilian harvest begins, Allidina said. The sweetener will extend gains as a deficit was expected to last through the season ending Sept. 30, he said.
The global sugar deficit may expand 43 percent to 11.9 million metric tons in the year to April 30, compared with an October forecast of 8.3 million tons, Switzerland-based Kingsman SA said yesterday. Raw sugar reached a 29-year high on Feb. 1 after more than doubling in 2009 as bad weather cut production in Brazil and India, the top producers.
Among other farm products, corn will be a better bet than soybeans as Argentina and Brazil are set to harvest bumper crops, he said. “Soy will bleed and one should be short,” he said.
To contact the reporter on this story: Thomas Kutty Abraham in Dubai at tabraham4@bloomberg.net
Last Updated: February 8, 2010 20:37 EST
BL: Crude Oil to Rise to $75, Then Revisit Lows: Technical Analysis
By Yee Kai Pin
Feb. 9 (Bloomberg) -- Crude oil is poised to rise to $75 a barrel, recouping a week’s losses, before the market revisits chart support around $70, said National Australia Bank Ltd.
Oil, which has slumped 14 percent in the past four weeks, will gain strength from “a bit of psychology” because the market has fallen too far and too fast for traders who make short-term bets, according to Gordon Manning, a Sydney-based technical analyst at Australia’s third-largest bank. While a rally is possible in the coming week, prices are probably set to decline further, he said.
“In the short term, I can see oil popping back up to about $75, then it could go back to $70,” Manning said today in a telephone interview. “These markets have resistance levels where they can run to, but still keep within a downward bias.”
Crude oil fell for a fourth week last week as concerns that Greece, Spain and Portugal may struggle to contain budget deficits drove the euro lower against the dollar, damping the investment appeal of commodities. The contract for March delivery on the New York Mercantile Exchange traded at $71.55 a barrel, down 34 cents, at 10:27 a.m. Singapore time. Futures have lost 9.8 percent in 2010.
Prices slipped to $69.50 a barrel in floor trading on Feb. 5, the lowest since Dec. 15. This level will present technical support as long as the market doesn’t settle below it, according to Manning, who correctly predicted on Feb. 2 that oil would rise above $78 before pulling back.
“Sixty-nine dollars was pretty important on a daily close basis and we sort of nudged around that and we’ve bounced,” he said. “I’m inclined to favor a bit of a bounce in the short term.”
Oil’s current “choppy phase” could favor short-term traders, Manning said. Prices have moved in a $14.45-a-barrel range this year, narrower than the $49.30 band in 2009 and $114.87 in 2008.
“We’re going to have a fair bit of reasonable, manageable volatility here,” he said. “Sideways stuff, if you’re a short- term trader, can actually be quite good.”
To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net
Last Updated: February 8, 2010 21:29 EST
http://www.bloomberg.com/apps/news?pid=20601080&sid=aQtay99662pQ
BL: Yen, Dollar Fall as Return of Trichet Spurs Speculation Over Greece Plan
Yen, Dollar Decline on Speculation Europe Will Assist Greece
By Yoshiaki Nohara and Ron Harui
Feb. 9 (Bloomberg) -- The yen and dollar declined on speculation European officials will agree to assist Greece in tackling its fiscal deficit, reducing demand for the two currencies as a refuge.
The euro rallied from near an 11-month low versus the yen as European Central Bank President Jean-Claude Trichet left a central bankers’ meeting in Sydney a day early, sparking speculation policy makers will help Greece address its budget deficit. The yen declined for a third day against the dollar on speculation that Japanese companies sold the currency.
“Investors may get excited today over ECB President Trichet leaving a central bankers conference a day early,” said David Forrester, a currency economist at Barclays Capital in Singapore. “Investors may begin to think that a policy measure directed at Greece’s fiscal situation is potentially in the works. The market appears to be waiting on further news before deciding to buy the euro back or sell it further.”
The euro rose to 122.27 yen as of 12:39 p.m. in Tokyo from 121.81 yen in New York yesterday. It touched 120.71 yen on Feb. 5, the weakest level since Feb. 24. Japan’s currency declined to 89.43 per dollar from 89.26. The dollar fell to $1.3674 per euro from $1.3649.
Trichet will today depart a symposium organized by the Reserve Bank of Australia to mark its 50th anniversary, in order to attend a gathering of European Union leaders, ECB spokeswoman Regina Schueller said.
Greece’s Budget Woes
The budget woes of Greece threaten to overshadow the Feb. 11 summit, called to lay the groundwork for a 10-year economic program to strengthen the EU’s competitiveness in the face of an aging population and challenges from China.
The yen weakened against all of its 16 major counterparts on the prospect that Japan’s importers are buying foreign currencies to settle their bills.
“Importers and those who have long positions are selling the yen,” said Hideaki Inoue, chief manager of foreign- exchange and financial products trading at Mitsubishi UFJ Trust & Banking Corp. in Tokyo. “This may be a short-lived position adjustment.” A long position is a bet an asset will rise.
The euro also strengthened against the greenback as its 14-day relative strength index versus the dollar was at 24.7 today, below the 30 threshold that indicates the currency may have fallen too fast and is poised to gain.
To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.
Last Updated: February 8, 2010 22:51 EST