Italian and Spanish Bond Yields Relax as Greek Deal is Expected This Weekend

“Spanish bonds rose for a second day amid speculation European officials are closing in on an agreement to grant a second bailout to Greece.

Italian bonds also advanced. The European Central Bank will swap its Greek bonds for new ones by Feb. 20, euro-area officials said. The exchange may pave the way for a private- sector debt reduction and convince the region’s finance ministers to agree to provide an aid package when they meet that day in Brussels. Debt from Italy and Spain outperformed benchmark German bunds.

“The market seems to be trying to get itself into a better place in terms of anticipating some good news” on Greece, said Eric Wand, a fixed-income strategist at Lloyds Bank Corporate Markets in London. “The periphery is marginally more positive, Spain is recovering a bit.”

The Spanish 10-year bond yield dropped six basis points, or 0.06 percentage point, to 5.27 percent at 12:35 p.m. London time. The 5.85 percent security due in January 2022 rose 0.445, or 4.45 euros per 1,000-euro ($1,317) face amount, to 104.385. Italy’s 10-year yield declined four basis points to 5.61 percent.

Spain’s 10-year bonds headed for a weekly advance amid increasing confidence that Greece will manage to restructure its debt without triggering contagion to other markets. Finance chiefs will probably approve the rescue package along with a debt exchange designed to cut its obligations, as long as Greece meets conditions for its bailout, three German officials said yesterday.

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“Gilead Sciences Inc. (GILD), which bought Pharmasset Inc. (VRUS) for $10.8 billion last year to gain an experimental hepatitis C drug, dropped as much as 20 percent in early trading after some patients on that medicine relapsed after stopping therapy.

Gilead fell $11.10 to $43.71 as of 7:37 a.m. in trading before markets opened in New York. Shares of the Foster City, California-based company had gained 39 percent in the last 12 months before today.

Among eight patients with hepatitis C genotype 1 in a clinical trial, six had a viral relapse within four weeks after stopping a 12-week treatment with the medicine, GS-7977, plus ribavirin, Gilead said today in a statement. The two other patients are two weeks out from stopping treatment, and haven’t relapsed, the company said.

“Gilead announced what is unquestionably bad news,” Mark Schoenebaum, an analyst with ISI Group in New York, wrote in a note to clients today. The results could mean this kind of therapy “isn’t going to be enough in genotype 1 patients.”

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“CME Group Inc. (CME) has made a bid for the London Metal Exchange as the world’s largest metals futures market plans a meeting next week to consider offers, according to a person with knowledge of the situation.

The price CME Group offered wasn’t disclosed, said the person, who declined to be identified because negotiations are private. A purchase of the LME by Chicago-based CME Group would add to its metals that trade through the Comex, where futures based on gold, silver and copper are traded.

LME’s board will review the bids in a Feb. 23 meeting. LME Chief Executive Officer Martin Abbott had set Feb. 15 as a deadline for takeover bids that will be reviewed by a special committee. NYSE Euronext (NYX) submitted an expression of interest in the LME, another person familiar with the matter said.

The main obstacle to any deal may be regulatory approval after the European Union earlier this month rejected the proposed merger ofDeutsche Boerse AG (DB1) and NYSE Euronext. In the past 15 months, $37 billion in proposed exchange industry takeovers failed.

The LME is considering ending its independence after record trading volumes attracted multiple bidders for the exchange that handles about 80 percent of global trade in metals futures. It may be valued at $1.3 billion, according to Diego Perfumo, an exchanges analyst at Equity Research Desk, a hedge-fund adviser in Greenwich, Connecticut.

Possible Buyers

Other bidders for the LME may include Deutsche Boerse, IntercontinentalExchange, and Hong Kong Exchanges and Clearing Ltd., according to Perfumo…”

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Your fucking dead!

The Euro is @ 1.318 up 0.005

Dollar

CNBC reports that the data shows no real deflation….

“Italian anti-mafia prosecutors said they seized a record $6 trillion of allegedly fake U.S. Treasury bonds, an amount that’s almost half of the U.S.’s public debt.

The bonds were found hidden in makeshift compartments of three safety deposit boxes in Zurich, the prosecutors from the southern city of Potenza said in an e-mailed statement. The Italian authorities arrested eight people in connection with the probe, dubbed “Operation Vulcanica,” the prosecutors said.

The U.S. embassy in Rome has examined the securities dated 1934, which had a nominal value of $1 billion apiece, they said in the statement. Officials for the embassy didn’t have an immediate comment.

The financial fraud uncovered by the Italian prosecutors in Potenza includes two checks issued through HSBC Holdings Plc (HSBA) in London for 205,000 pounds ($325,000), checks that weren’t backed by available funds, the prosecutors said. As part of the probe, fake bonds for $2 billion were also seized in Rome. The individuals involved were planning to buy plutonium from Nigerian sources, according to phone conversations monitored by the police…”

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“Japanese stocks rose after the yen fell to a four-month low as investment banks including Goldman Sachs Group Inc. projected the currency will continue to slide, and U.S. economic reports beat expectations, boosting the outlook for exporters.

Honda Motor Co. (7267), a carmaker that gets almost 85 percent of its sales abroad, rose 2.4 percent. Nikon Corp. (7731), a camera maker that counts on Europe for 23 percent of its revenue, climbed 3.9 percent as optimism rose that Greece will secure a debt bailout. Inpex Corp. (1605), Japan’s top oil explorer by market value, jumped 4.8 percent after crude prices advanced.

The Nikkei 225 Stock Average rose 1.6 percent to 9,384.17 at 3 p.m. in Tokyo, its highest close since Aug. 4. The broader Topix Index gained 1.3 percent to 810.45, with a weekly gain of 4 percent. More than twice as many shares rose as fell on the equity gauge. “

Good news for Britain; perhaps Europe will climb out of their woes and not drag the world into a murder hole….

“Alibaba Group Holding Ltd. (ALIBABZ) plans to privatize its Alibaba.com Ltd. (1688) unit in a deal that may value the Hong Kong-listed company at as much as $8.7 billion, according to two people with knowledge of the matter.

China’s biggest e-commerce company, which owns more than 72 percent of Alibaba.com, may offer a price close to the HK$13.50 a share at which the stock was sold in a 2007 initial public offering, one person said, asking not to be identified because the information is private. That’s 55 percent above Alibaba.com’ 20-day moving averagethrough Feb. 8, after which its shares were suspended.

At the IPO price, buying the 28 percent it doesn’t already own will cost Alibaba Group about $2.4 billion, according to data compiled by Bloomberg. John Spelich, a Hong Kong-based spokesman for Alibaba Group, declined to comment.

Hong Kong Economic Times reported yesterday that Alibaba Group may offer HK$13.50 a share, citing people it didn’t identify.

The privatization is being planned with Alibaba.com’s shares down 44 percent in the 12 months before trading was halted. The IPO was priced a day before the Hang Seng Index climbed to a record on Oct. 30, 2007. Since then, the index has dropped 32 percent, according to data compiled by Bloomberg….”

Read more here

“The European Central Bank is swapping its Greek bonds for new ones to ensure it isn’t forced to take losses in a debt restructuring, three euro-area officials said.

The Frankfurt-based ECB is exchanging its Greek bonds for bonds of an identical structure and nominal value, the only difference being that they would be exempt from so-called collective action clauses, the officials said late yesterday on condition of anonymity. One said the bonds have a face value of about 50 billion euros ($65 billion). An ECB spokesman declined to comment. Giorgios Zanias, chairman of the Council of Economic Advisors to the Greek Finance Ministry, didn’t respond to calls to his mobile phone.

The move may be completed by Monday, the officials said. That could pave the way for a private-sector bond swap that aims to slice about 100 billion euros off Greece’s debt as the embattled nation struggles to stave off default. Euro-area finance ministers convene in Brussels on Feb. 20 to discuss a second bailout for Greece that includes a debt-swap agreement.

An exemption from collective action clauses, or CACs, would mean the ECB would not have to participate should the Greek government impose involuntary losses on bondholders. That may occur if not enough private creditors agree to a voluntary swap….”

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Asia

Europe

Futures

Currencies

Commodities

LIBOR, EURIBOR, 10 year yields for Italy, Spain, France, and Germany

It’s that time of year again!  On last night’s Late Show with David Letterman, the cover model of this year’s Sports Illustrated Swimsuit Issue was revealed to be America’s own Kate Upton.  While we’re all familiar with the Super Bowl Indicator, have you ever heard of the  Sports Illustrated Swimsuit Issue Indicator?  The Swimsuit Issue Indicator says that the US equity markets perform better in years where an American appears on the cover of Sports Illustrated’s annual issue as opposed to years when a non-American appears on the cover. The table below highlights the annual performance of the S&P 500 since 1978.

Read the rest here.

NBA teams overlooked Jeremy Lin for the same reason so-called experts first ignore stocks, business pioneers and anything else that defies expectations.

“We are just not as smart as we think we are,” said Bill James, the statistician and author who inspired Billy Beane of “Moneyball” fame to choose baseball players by new standards.

Lin’s rise from scrub to a Knicks savior has provided a lesson in valuation far beyond sports. He went undrafted after college and was cut twice before the season. Yet he scored more points in his first five starts than any player in NBA history while leading the Knicks to seven straight victories.

How could this have happened?

Those paid to secure the top talent missed the signs of Lin’s worth for years. But if Apple could fire Steve Jobs, then it makes sense that the metrics by which we measure a basketball player could fail as well, experts told The Huffington Post.

“The human tendency is to think in terms of a model,” said Andrew Lo, a professor of finance at the MIT Sloan School of Management. “We have a model for what a basketball player should look like, be like and act like. It’s the same for what a good firm model or stock might look like. Occasionally, our preconceived notions are shattered.”

Read the rest here.

The detail in the decal was so small that the Vermont state trooper cleaning his patrol car had to get face to face with it to confirm that what he saw was really what he thought he saw.

The trooper, not identified by police, noticed that the one of the spots on the cow depicted on the state seal was oddly shaped.

Then it hit him: He was looking at a pig.

So he immediately reported it.

As police began looking into the matter, they learned that about 30 other police cruisers had the porcine-shaped spot on their decals too.

So how did the pig — often used as a derogatory term for police —  get there in the first place?

As it turns out, the emblems are printed by prison inmates with the corrections department’s print shop, which also makes the state’s stationary and license plates.

Inmates working there seem to have pulled a prank that Vermont police are not finding very funny.

Read the rest here.

Pot predicament: Can marijuana use actually save lives on the road?

Kathryn Hawkins

Proponents of legalizing marijuana have long argued that criminalization of the drug causes more problems than it solves. For instance, taxpayers spend between $7.5 billion and $10 billion a year on arresting and prosecuting Americans for marijuana-related crimes. Supporters of legalized marijuana maintain that this money would be better spent cracking down on violent criminals.

Now, pro-legalization backers have yet another point in their favor: According to a new study from the University of Colorado-Denver, the 16 states that have legalized medical marijuana have seen an average 9 percent drop in traffic deaths since their medical marijuana laws took effect. The study analyzed data from 1990 through 2009.

“We went into our research expecting the opposite effect,” says study co-author Daniel Rees, a professor of economics at the University of Colorado-Denver. “We thought medical marijuana legalization would increase traffic fatalities. We were stunned by the results.”

When it comes to traffic safety, can marijuana really save lives?

Read the rest here.

By Mark Hulbert

CHAPEL HILL, N.C. (MarketWatch) — Worried about the future of the NBA market — otherwise known as the “nothing but Apple” market?

You’re not alone. Many worry about the overall market’s health when more and more of the heavy lifting is being done by just a relatively few stocks like Apple AAPL +0.36%  .

And I fully expected to become worried too as I set out to investigate that concern for this column. But that is not what I found.

Consider first the data. During the week ending Feb. 3, two weeks ago, 16.4% of the issues on the NYSE hit a new 52-week high — which represents the highest level this percentage has reached over the last six months. Last week, this percentage contracted to 11.7%, even as the Dow Jones Industrial Average DJIA +0.96%   was itself hitting a new 52-week high.

That is the contraction that has some commentators worried.

But now consider what Ned Davis Research found upon trying to correlate the weekly new-high data with bull market peaks. They found that there typically is a long lag time between when the percentage of stocks hitting new weekly highs reaches its peak and when the bull market finally tops out.

In fact, the firm found that in no case over the last five decades did a bull market top out before a peak was reached in the percentage of weekly new highs. And, furthermore, the average lag time between a peak in that percentage and the bull market’s top was more than 33 weeks — nearly eight months.

So even if the percentage of NYSE stocks hitting weekly new highs peaked out at 16.4% earlier this month, the historical data would not warrant an immediate concern that the market was about to keel over dead.

Read the rest here.

Why?

It is a fascinating glimpse into the Human (or is it American?) Psyche — and I am very curious about it:

By: Gene Sperling

2/16/2012

​ Today, we learned that each of the Big Three automakers posted a yearly profit for 2011. For the first time since 2004, all of those companies are operating in the black.

But those aren’t the only milestones we’ve seen recently in the resurgence of the American auto industry. Or in the comeback of the American manufacturing sector.

The January 2012 jobs report released earlier this month included another little-noticed milestone. The number of auto industry jobs added since GM and Chrysler emerged from bankruptcy after June 2009 now exceeds 200,000 — marking the strongest period of auto jobs growth since the late 1990s. That positive trend is particularly strong in the motor vehicle and parts manufacturing sector, which has added 121,900 jobs – a nearly 20 percent increase – since June 2009. And that growth is particularly notable given that some experts estimated that at least 1 million jobs could have been lost if GM and Chrysler had been liquidated.

This trend isn’t unique to the auto sector – we have also gained over 400,000 manufacturing jobs in the past two years. Of course, there’s still more work to be done. While both the auto industry and the broader manufacturing sector have shown job growth, we still need to go much further to fully recover from the aftermath of the financial crisis. But these new milestones are certainly welcome news and represent a testament to the success of the tough but necessary choices made to retool and revitalize the American auto industry.

Gene Sperling is the Director of the National Economic Council

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