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Monthly Archives: November 2012

A German Citizens Group Sues the ECB Over Bond Buying Plan,

“The European Central Bank was sued over its proposal to buy unlimited bonds from debt-laden countries to regain control of interest rates in nations that make up the monetary union.

A group, which currently includes 5,217 plaintiffs and is led by activist group Zivile Koalition e.V., filed the lawsuit on Nov. 12 with the European Union General Court, the 27-nation EU’s second-highest tribunal. The Luxembourg-based court’s press office confirmed the lawsuit, which seeks to block the ECB’s Outright Monetary Transactions program announced on Sept. 6.

“The ECB’s policy violates its own statutes and has an immediate influence on monetary stability in the euro area,” Beatrix von Storch, the group’s spokeswoman, said in an e-mailed statement today.

The case is the sixth to reach the EU’s two top courts challenging the Frankfurt-based ECB on euro-area-related decisions. Earlier this year, a group of more than 200 Italian retail investorsfiled a lawsuit to overturn an ECB decision they claim meant the bank avoided losses on Greek debt that private bondholders had to endure in a restructuring.”

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$ALU Considers Selling Patents to Raise Cash

Alcatel-Lucent SA (ALU), the French phone- equipment maker considering asset sales to bolster its finances, is weighing a disposal of some secondary patents as the company seeks ways out of a streak of quarterly losses and a shrinking cash pile, its chief financial officer said.

“We can look to monetize that portfolio through licensing, through limited sales if those patents aren’t part of our core and a few other things,” Paul Tufano said yesterday in an interview at a conference organized by Morgan Stanley in Barcelona. “We look at all of the above.”

Alcatel-Lucent, based in Paris, has almost 30,000 patents and 15,000 patent applications pending, Tufano said.

“It’s a broad variety of technologies that we cover,” he said. “It will be hard to find a company with as broad a patent portfolio as ours, so I think it’s very attractive and there’s a lot of interest and there could be a lot of interest from a lot of different sources.” ”

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Hong Kong’s GDP Falls More Than Expected, Government Lowers Growth Guidance

Hong Kong’s economy expanded less than estimated in the third quarter as export gains stalled and retail sales rose at a slower pace. The government also cut its forecast for full year growth.

Gross domestic product rose 1.3 percent from a year earlier in the third quarter, the government said today. That compared with the 1.7 percent median forecast in a Bloomberg News survey of 16 analysts and 1.2 percent in the three months through June. The economy grew 0.6 percent from the previous quarter on a seasonally adjusted basis.

Hong Kong’s economy is set for its weakest annual expansion since the global financial crisis, adding to challenges for Hong Kong’s new Chief Executive Leung Chun-ying as he grapples with capital inflows that are stoking property prices and testing the local currency’s peg to the U.S. dollar. Financial SecretaryJohn Tsang said on Nov. 11 that the trade-reliant economy may enter recession if its major partners show a loss of growth momentum or signs of contraction.

“The biggest drag on Hong Kong’s economy is external trade,” said Lily Lo, a Hong Kong-based economist at DBS Group Holdings Ltd. “There is as yet no clear data or evidence pointing to a sharp rebound in key western export markets.” ”

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The Aussie Dollar Touches Three Month Lows

“Australia’s dollar was 0.1 percent from a three-week low as risk appetite waned after stocks fell globally yesterday amid mounting geopolitical tension over the Gaza strip and signs of economic slowdown worldwide.

The so-called Aussie held two days of losses after the International Monetary Fund said in a statement yesterday there is scope for the Reserve Bank of Australia to ease more if warranted by the economy. The RBA held its benchmark interest rate unchanged at 3.25 percent on Nov. 6. The Australian and New Zealand dollars headed for weekly gains against the yen on speculation Japanese elections next month will hand power to an opposition party that advocates more monetary stimulus.

“The pressure is still on the downside for the Aussie,” said Lee Wai Tuck, currency strategist at Forecast Pte in Singapore. “There are concerns about the global economy slowing and euro zone risks. The RBA is likely to open the door for more easing, if not in December, maybe next year in February.””

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The Nikkei’s Giddiness May Be Overblown as Time Constraints and Recession Looms

“Prime Minister Yoshihiko Noda’s decision to call an election in December may inhibit the government’s ability to stimulate an economy that’s sliding toward its third recession in four years.

Compiling an extra budget soon will be “difficult” as lawmakers cannot debate spending with the Diet dissolved, Economy Minister Seiji Maehara said this week. Stimulus using reserve funds won’t be enough to support the economy, he said inTokyo today. Drafting of next fiscal year’s main budget may be delayed, Finance Minister Koriki Jojima said this week.

Constraints on government action add extra pressure for loosening by the Bank of Japan (8301) to spur growth, counter deflation and weaken the yen. Opposition leader Shinzo Abe’s call yesterday for unlimited easing had a bigger effect on the currency than the central bank’s most recent easing on Oct. 30, sending the yen to a six-month low against the dollar.

“There’s a risk that the recession which should be for two quarters could last for three or even four,” said Junichi Makino, chief economist in Tokyo at SMBC Nikko Securities Inc., a unit ofJapan’s second-largest bank by market value, citing the risk of budget delays.

Noda will dissolve the lower house of parliament today after the upper house passed a bill to issue bonds to finance spending for the rest of this fiscal year, following a months- long impasse that left the government weeks away from running out of money. The election will be held on Dec. 16.”

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CEO of $DDD Promises to Cut the Dicks off SeekingAlpha Shit Talkers

CEO: “We reaffirm the accuracy of our public filings and accounting methods in all respects, and are pursuing legal remedies to hold those responsible parties accountable for what appears to be malicious, irresponsible and self-serving articles. We look forward to discussing, fact-checking and clarifying these inaccuracies…”

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The Senate Seeks to Reduce the Deficit Through More Spending

Senate Democrats, feeling confident from their net gain of two seats in last week’s election, say any deficit-reduction package negotiated in the coming weeks must include stimulus measures.

Read the rest here.


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DEUTSCHE BANK: The Fed’s QE Program Isn’t Powerful Enough To Offset A ‘Fiscal Hurricane’

“Federal Reserve Chairman Ben Bernanke has acknowledged the importance of stock prices to the efficacy of quantitative easing.

In a speech given last month in Indianapolis, Bernanke said, “Lower interest rates also put upward pressure on the prices of assets, such as stocks and homes, providing further impetus to household and business spending.”

Deutsche Bank macro strategist Alan Ruskin thinks that may be understating the case. In a note to clients, he writes, “In the end, there is little doubt that as bond yields have approached a lower bound, the Fed is heavily dependent on other channels to ease financial conditions, from credit spreads, to equities and a weak USD.”

Ruskin calls the “equity channel” of “particular importance” to the Fed.

And with a lot of uncertainty weighing on markets due to the potential for a “fiscal hurricane” to materialize, Ruskin says the Fed’s QE3 program could be “very exposed.”

Ruskin writes:”

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$PG Announces a Pink Slip Program Above the Current 10% Reduction by 2016, Company May Also Increase Share Buyback Plan

“CINCINNATI (Reuters) – Procter & Gamble plans to trim more non-manufacturing jobs through 2016, on top of a 10 percent reduction target it should meet this year, as the largest household-products maker tries to reinvigorate what has become a sluggish organization.

P&G also said it may increase stock repurchases to $6 billion from $4 billion.

P&G remains on track to eliminate about 5,700 non-manufacturing jobs by the end of the current fiscal year that will end in June. It now plans to reduce another 2 percent to 4 percent of its non-manufacturing jobs each year during fiscal 2014, 2015 and 2016.

“These are all continued steps in the right direction, but we wish they had taken bolder ones like even more aggressive cost-cutting,” said Sanford Bernstein analyst Ali Dibadj, who was attending P&G’s bi-annual analyst meeting in Cincinnati on Thursday.

Shares of P&G, a component of the Dow Jones industrial average <.DJI>, were down about 44 cents at $66.08 in late morning trading on the New York Stock Exchange.”

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$BA Says 737 Outlook is Upbeat

“NEW YORK (Reuters) – Boeing Co said on Thursday it settled on a “firm concept” for its new 737 MAX jet, and chose Honeywell International Inc and Rockwell Collins Inc to supply new systems for the new plane.

The Chicago-based company also said it expected to see further increases in production rates for the single-aisle 737, its best-selling jet.

Boeing said it has decided on a “firm concept,” finalizing some basic design parameters for the 737 MAX and expects it to use 13 percent less fuel, compared to the current 737s. The plane would include new LEAP-1B engines from CFM International, which combines resources from Snecma, a unit of the Safran Group of France, and General Electric Co .”

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$BP Settles U.S. Oil Spill Case for $4.5 Billion

“HOUSTON/WASHINGTON (Reuters) – BP Plc will pay $4.5 billion in penalties and plead guilty to felony misconduct in the Deepwater Horizon disaster, which caused the worst offshore oil spill in U.S. history.

The settlement includes a $1.256 billion criminal fine, the largest such levy in U.S. history, the company said on Thursday. Analysts said the deal let BP put its focus back on oil production, though at least one member of Congress questioned whether it would hurt states’ chances for civil penalties.

The April 2010 explosion on the Deepwater Horizon rig in the Gulf of Mexico killed 11 workers. The mile-deep Macondo oil well then spewed 4.9 million barrels of oil into the Gulf over 87 days, fouling shorelines from Texas to Florida and eclipsing in severity the 1989 Exxon Valdez spill in Alaska.”

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Market Update

Markets reluctantly fall 0.5%. Feels like were due for a bounce of some sort, but what will be the catalyst ? It certainly is not oversold conditions and with profits to be taken before a potential tax change it is likely we will see more selling.

Gold and oil have reversed their upside gains. The Yen remains extremely strong against the dollar while the Euro hangs in marginally positive territory.

Market update

3 D heat map

S&P A/D Line

[youtube://http://www.youtube.com/watch?v=pDdeOncpD5E 450 300]

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China’s Communist Party Anoints New Leaders

“HONG KONG (CNNMoney) — China’s ruling Communist Party named seven men to its powerful Politburo Standing Committee Thursday in a highly orchestrated ceremony that emphasized party unity and held out little immediate prospect of bolder economic reforms.

The ritual, which took place in Beijing amid heavy security, caps the 18th Communist Party National Congress. The selection of the seven, who can serve for a decade, provides a glimpse into the thinking of party officials and contains hints about government priorities as well as the political machinations behind the choice of China’s next generation of leaders.”

Full article and video

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Pew Survey: Most Americans Believe Fiscal Cliff Deal Is Unlikely

“The public is skeptical President Barack Obama and congressional Republicans can reach a deal by the end of 2012 to avert the fiscal cliff, according to a new survey from Pew Research Center and The Washington Post.

Most Americans believe the automatic spending cuts and tax increases triggered by lack of a deal would have a mostly negative effect for both the broad economy (62 percent) and their own personal finances (60 percent).

The survey, conducted Nov. 8 through Nov. 11 among 1,000 adults, showed about half of those polled (51 percent) believe the two sides will not reach an agreement, while only 38 percent said they will. If no deal is reached, more would blame congressional Republicans than President Obama (53 percent vs. 29 percent, respectively).”

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Buffett: ‘Resilient Economy’ Can Survive Fall over Cliff

“President Barack Obama should insist on a tax increase for the wealthy, even if that triggers a leap off the fiscal cliff, says legendary investor Warren Buffett.

The economy can survive a two-month period to reach an agreement over the $607 billion in tax increases and spending cuts now set for Jan. 1, he tells CNN.

“We’re not going to permanently cripple ourselves,” says the Berkshire Hathaway CEO. “We have a very resilient economy. The fact that [lawmakers] can’t get along for the month of January is not going to torpedo the economy.”

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Regulators Suspend $JPM’s Energy Trading Unit


“WASHINGTON—U.S. energy-market regulators Wednesday handed J.P. Morgan Chase JPM -1.91% & Co.’s energy-trading unit a six-month suspension from some of its activities in electricity markets, the latest in a string of clashes with Wall Street.

The Federal Energy Regulatory Commission cited false information it has said the company submitted as part of a probe into alleged market manipulation.

It was a rare move for the commission and another signal that it is trying to assert itself as a regulatory heavy hitter. The agency, which oversees transmission lines and natural-gas pipelines, also recently proposed a record penalty of nearly $470 million against Barclays BARC.LN +1.24% PLC for alleged market manipulation. Barclays denies the charges.

The last time the commission took away a company’s market privileges broadly, rather than in limited geographic areas, was when it revoked the privileges of Enron Corp., a FERC official said.”

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Gapping Up and Down This Morning

Gapping up

ACRX +25%, NTAP +10.3%, ZIOP +6.8%, PETM +6%, ANW +5.7%, GOLD +2.8%,

DB +2.2%, SZYM +1.3%, PCP +1%, GNC +1%, HMY +1%, CVS +0.9%, CTSH +2.3%,

ESRX +0.9%

Gapping down

VELT -23%, DMND -17.9%, APPY -16.3%, SB -15.5%, DRYS -9.1%, VRNG -4.6%, VGR -3%,

ROC -2%, WSM -0.9%, LTD -0.9%, WLT -2.2%, CVC -1.1%

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