“The European Central Bank may refrain from cutting interest rates any further after its pledge to buy government bonds lowered borrowing costs and boosted confidence that the euro area can emerge from recession next year.

ECB policy makers meeting in Frankfurt today will hold the benchmark rate at a record low of 0.75 percent, according to 56 of 61 economists in a Bloomberg News survey. They will leave the rate there through 2013 and into 2014, a separate survey shows. A month ago, the median forecast was for a rate cut next year.”

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“(Reuters) – President Dilma Rousseff’s government has pulled out all the stops to persuade Brazilianbanks to lend more – pushing interest rates to an all-time low, leaning on state-run lenders, and even publicly shaming the industry for its high profits.

Yet banks have generally gone in a different direction, slashing costs as a way to protect their bottom lines from Rousseff’s offensive.

Many private-sector banks are cutting jobs and outsourcing services as profitability falls to multi-year lows. Even some state-run banks have indicated they may follow suit. Credit growth, meanwhile, has remained stagnant.

“The sector is naturally focusing on efficiency as part of a ‘new normal’ – banks in Brazil are changing dramatically,” Marcial Portela Álvarez, chief executive of Banco Santander Brasil SA (SANB11.SA), said at a recent event. “Cost efficiency is at the core of those changes.”

Bank sector austerity has stung Latin America’s largest economy. Activity in the financial sector shrank 1.3 percent in the third quarter as banks adjusted to the changes Rousseff has imposed since April.

Bank struggles were a drag on gross domestic product, which grew just 0.6 percent in the third quarter, less than half the pace analysts had expected. That put Brazil on track for second straight year of below-trend growth.

Government officials describe the problems as a painful but necessary transition after years in which they say banks got far too fat because of the highest interest rates among the world’s top 20 economies. Banks’ return on equity, a gauge of how much a bank earns per dollar of shareholder money invested, surpassed those of other sectors by a large margin in the past decade.

For years, bankers paid little attention to efficiency since borrowers were charged average annual lending rates above 40 percent and government debt yielded fabulous returns.

Banks in Brazil face high overhead largely due to the low average maturity of their loan books, rigid labor costs and high taxes.

As a result, they lagged global peers in cost efficiency. Expenses in Brazil represented 6 percent of assets last year, compared with 3 percent in the United States and 1.5 percent in Europe, according to Goldman Sachs Group Inc estimates….”

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[youtube://http://www.youtube.com/watch?v=Ro44GBR7VQo 450 300]

Rumor has it that vodka sales are skyrocketing on the news….

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“Billionaire Alisher Usmanov, who made more than $1 billion investing in Facebook Inc. (FB), is now avoiding the U.S. and focusing on China, where the company holds stakes in online-commerce companies.

The valuations of U.S. technology companies are too high to justify making new investments, Ivan Streshinskiy, chief executive officer of the company that manages Usmanov’s assets, USM Advisors LLC, said in an interview at Bloomberg’s headquarters in New York.”

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“Take a moment to consider some of the financial choices you’ve made in recent years. Do you have a consistent approach to your money, either by playing it safe or having a willingness to take risks? Or do you not have a set philosophy, and instead make your financial decisions independently of each other?

In economics, classical theory holds that we have consistent risk preferences, regardless of the precise decision, from investments to insurance programs and retirement plans. But studies in behavioral economics indicate that people’s choices can vary greatly depending on the subject matter and circumstances of each decision.

Now a new paper (PDF) co-authored by an MIT economist brings a large dose of empirical data to the problem, by looking at the way tens of thousands of Americans have handled risk in selecting health insurance and retirement plans. The study, just published in the American Economic Review, finds that at most 30 percent of us make consistent decisions about financial risk across a variety of areas.”

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“A top government economist has concluded that the high-speed trading firms that have come to dominate the nation’s financial markets are taking significant profits from traditional investors.

The chief economist at the Commodity Futures Trading Commission, Andrei Kirilenko, reports in a coming study that high-frequency traders make an average profit of as much as $5.05 each time they go up against small traders buying and selling one of the most widely used financial contracts.

The agency has not endorsed Mr. Kirilenko’s findings, which are still being reviewed by peers, and they are already encountering some resistance from academics. But Bart Chilton, one of five C.F.T.C. commissioners, said on Monday that “what the study shows is that high-frequency traders are really the new middleman in exchange trading, and they’re taking some of the cream off the top.”

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“Hedge funds invested in Greek debt are poised to be winners after European policy makers flinched and raised the price for how much the recession-stricken country would pay to buy back its bonds.

Hedge funds drove up prices for Greek sovereign debt last week after determining that European finance ministers would back off a pledge to pay no more than about 28 percent of face value to retire the nation’s bonds. Money managers correctly wagered that not enough bondholders would participate at that level to get the deal done. That would put at risk bailout funds that Greece needs to stave off economic collapse.

Transactions involving Greek bonds “increased by the day” after it became clear that the buyback was going to happen, with hedge funds accounting for most of the purchases, said Zoeb Sachee, the London-based head of European government bond trading at Citigroup Inc.

“If all goes according to plan, everybody wins,” Sachee said. “Hedge funds must have bought lower than here. If it isn’t successful, Greece risks default and everybody loses.” ”

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“The Reserve Bank of Australia cut its benchmark interest rate to the half-century low set during the 2009 global recession as hiring falters and an elevated currency hurts industries such as manufacturing and tourism.

Governor Glenn Stevens and his board reduced the overnight cash-rate target by a quarter percentage point to 3 percent, the central bank said in a statement in Sydney today. The sixth cut in the past 14 months was predicted by 20 of 28 economists surveyed by Bloomberg. The rate matches the level reached from April-October 2009 that was the lowest since 1960.”

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See how your taxes will be effected if we go over the cliff…

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$ORCL is paying next year’s dividend this month…

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“This Great Graphic was on Barry Ritholtz’s Big Picture blog. It originally was from Morgan Stanley’s Adam Parker. It notes that nearly 90% of this year’s earnings growth of the S&P 500 companies can be traced to 2% or 10 companies.

There seems to be two industries represented and Big Oil is not one of them. It is finance with 6 of the top 10, but if you allow the inclusion of GE (due to GE Finance), finance accounts for 70%. Technology is the other industry, led by Apple, IBM and Western Digital….”

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None of the stocks appear to be trading higher on their news…..

“Japanese companies increased capital spending more than economists predicted in the three months to September, indicating a contraction in the world’s third-largest economy may be short-lived.

Capital spending excluding software rose 2.4 percent in the period from a year earlier, after rising 6.6 percent in the previous quarter, the Ministry of Finance said in Tokyo today. Economists surveyed by Bloomberg had forecast a 1 percent gain.”

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“Greece offered 10 billion euros ($13 billion) to buy back bonds issued earlier this year as the bailed-out nation attempts to cut a debt load that may threaten future international aid.

Greek bonds rallied after the so-called modified Dutch auction was announced today by the Athens-based Public Debt Management Agency. PDMA offered an average maximum purchase price for the bonds maturing from 2023 to 2042 of 34.1 percent, based on information in the statement. The offer runs until 5 p.m. London time on Dec. 7.”

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“Former European Central Bank policy maker Nout Wellink said Spain can’t realistically expect officials to narrow the bond spread with Germany to as little as 200 basis points, as he predicted “execution problems” with the ECB’s bond program.

If Prime Minister Mariano Rajoy envisages “that the maximum difference with the Germans is 200 basis points, then he makes a mistake,” Wellink, the former Netherlands central bank governor who retired from the post in 2011, said in a Bloomberg Television interview on Nov. 30. “Two hundred basis points seems to me too much” to hope for, he said.”

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“TOKYO—European Central Bank policy maker Christian Noyer said the bank’s latest bond-buying program has had a significant effect in lowering borrowing costs for euro-zone countries and stemming concerns about the currency union’s future.

“It is bearing fruit, but it is probably too early to declare a final victory so we need to be attentive and see the development,” said Mr. Noyer, who is an ECB Governing Council member and governor of the Bank of France.

Speaking in an interview in Tokyo on Saturday, Mr. Noyer also said he is confident about the euro zone’s prospects for recovery in 2013 after a bruising period of economic contraction and rising unemployment this year.

Mr. Noyer also said that the current relative strength of the euro and yen indicates weaknesses in other advanced economies, and that the debate in the U.S. about the impending fiscal cliff shouldn’t obscure the need for longer-term steps to consolidate the world’s largest economy.

After concerns about a breakup of the euro zone pushed up interest rates in countries including Italy and Spain, the ECB announced its bond-buying program in September. The program calmed jumpy financial markets and pushed down bond yields in Italy and Spain, both struggling with hefty public and private debt.

Under the program, the ECB has said it is prepared to buy unlimited government bonds with a maturity of one to three years from the secondary market to lower borrowing costs, if the target country is following a euro-zone-approved bailout plan.”

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“Record-low rates are driving a gusher of new corporate debt this year, but investors should be careful because the quality of those bonds has peaked, experts say.

The amount of investment grade and high-yield corporate bonds issued so far this year is already at a record $1.2 trillion, according to Thomson Reuters IFR. And corporate treasurers are rushing to issue more debt before the end of the year, when tax laws are likely to change.

This week alone, there has been about $35 billion in investment grade deals, including Disney [DIS  49.405    -0.315  (-0.63%)  ], Shell [RDS.A  67.00    0.11  (+0.16%)   ], and Costco [COST  104.10    2.22 (+2.18%)   ]. That puts the November total at about $125 billion, the second highest monthly amount ever, according to IFR.”

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