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Monthly Archives: April 2013

FAA Orders Inspections on $BA’s 737 Aircraft

“Federal aviation regulators on Monday will order special inspections and, if needed, replacement of improperly manufactured parts on more than 1,000 Boeing Co.BA +0.41% 737 jets that could cause pilots to lose control.

Industry officials said the directive is unusual because it applies to factory defects potentially affecting such a large number of planes, particularly relatively new versions of the most widely used jetliner flown by carriers world-wide.

The Federal Aviation Administration’s safety mandate covers certain corrosion-prone pins used to attach movable tail panels to the jetliner’s fuselage.

The order was prompted by “reports of an incorrect procedure used to apply the wear and corrosion protection surface coating” to the affected parts, which the agency determined could result “in premature failure” of the attachments and potentially “loss of control of the airplane,” the directive says.

The suspect parts, which haven’t caused any accidents, help secure so-called horizontal stabilizers that control the up-and- down movement of the nose.

The directive takes effect in late May and gives airlines various compliance times based on the age of aircraft and other factors. The compliance deadlines are far enough ahead that they aren’t expected to have an impact on airline schedules…..”

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Citi: The Commodity Super Cycle Is Dead

“The super cycle in commodities has come to an end, according to researchers at Citi, who downgraded several mining stocks on Monday as metals prices have continued to decline since the start of the year….”

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$DISH Offers $25.5 Billion for $S

Source

“NEW YORK (AP) — Dish Network is offering to buy Sprint Nextel Corp. in a cash-and-stock deal it values at $25.5 billion, saying its bid is superior to that of Japanese phone company SoftBank.

Sprint’s stock jumped in premarket trading Monday.

Dish, an Englewood, Colo. satellite television company, said that its transaction includes $17.3 billion in cash and $8.2 billion in stock.

Sprint stockholders would receive $7 per share, which is a 13 percent premium to its Friday closing price of $6.22. This includes $4.76 per share in cash and 0.05953 Dish shares per Sprint share.

Softbank is seeking approval from U.S. authorities for its $20 billion purchase of a 70 percent stake in Sprint Nextel Corp. that would be Japan’s biggest foreign acquisition ever.

Dish Network Corp. said that its offer is a 13 percent premium to the existing SoftBank proposal.”

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G-20 Meeting To Provide Fireworks Over How to Handle EU Debt Crisis

“European Union nations are set to clash over plans to centralize the handling of failing banks, asGermany warned that the bloc is running out of road to adopt crisis-fighting measures under its current treaties.

German Finance Minister Wolfgang Schaeuble told his EU counterparts at a meeting in Dublin April 12-13 that there isn’t enough of a basis in the EU’s current rulebook for building a common authority and fund for bank failures. Other nations, including France, Luxembourg, andDenmark, are urging swift progress on putting in place a resolution system, amid concerns that treaty changes would cause unacceptable delays….”

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Until Today, Stocks Continue to Decouple From Bonds

“Capitulating bears and overseas buyers are drowning out every other concern for American stocks, pushing the Standard & Poor’s 500 Index (SPX) to successive records even after the biggest drop in Treasury yields since June.

The Standard & Poor’s 500 Index closed at all-time highs twice last week and hasn’t traded more than 1.8 percent away from its record in the 23 days since March 11, according to data compiled by Bloomberg. The 2.1 percent advance over that period came as rates on 10-yeargovernment bonds tumbled 0.36 percentage point to as low as 1.7 percent. Plunges of that size coincided with losses of 4.6 percent for equities since 2010…..”

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Lehman International Creditors May Be Repaid in Full, PwC Says

“Creditors to Lehman Brothers International Europe may be repaid in full after administrators settled disputes with some of the failed investment bank’s affiliates, increasing the size of expected future recoveries.

A recent agreement with a Lehman affiliate has freed up an additional $9.1 billion of assets, which will be distributed later this year, according to an e-mailed statement from PriceWaterhouseCoopers LLP. LBIE is planning a second dividend to unsecured creditors, as well as a first distribution to client money claimants this month.

“To be able to advise ordinary unsecured creditors that we now have a reasonable chance of eventually repaying their claims in full, marks a significant milestone,” Tony Lomas, lead administrator at PwC, said in the statement. “We do expect to pay a second, significant dividend to creditors in the near future, taking us another step towards this new target.”

The administrators have already returned 13.6 billion pounds ($20.9 billion) in cash and securities to clients with funds deposited at the defunct brokerage, PwC said in the statement. Lehman International made its first interim distribution to unsecured creditors in November, paying 25.2 pence on the pound, or about 7 billion pounds, for 1,582 claims, PwC said at the time.

Lehman failed in September 2008, filing the biggest bankruptcy in U.S. history, because of too much debt and risky real estate investments, according to an examiner’s report. The former bank is still liquidating and trying to cut claims more than four years after its collapse.

Claims on Affiliates….”

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Banks Drop Off IsdaFix Panel Amid Rate-Rigging Probes

“Banks are leaving the panel that sets ISDAFix, the benchmark for the $379 trillion swaps market, as regulators probe suspected manipulation of the rate.

HSBC Holdings Plc (HSBA)Europe’s largest bank by assets, and Japan’s Mizuho Financial Group (8411) stopped contributing to the ISDAFix dollar rate between November and January, and haven’t been replaced, documents on the International Swaps and Derivatives Association’s website show. The industry group didn’t give any reason for the lenders’ departure.

Firms are pulling out of rates such as the London interbank offered rate, Euribor and ISDAFix on growing concern that they may face lawsuits, fines and criminal penalties if found to have engaged in wrongdoing. Without data from a large number of firms, benchmarks risk becoming unrepresentative and losing the confidence of the market, said Owen Watkins, a former regulator at the U.K.’s Financial Services Authority.

Banks across the industry are “concerned about the regulatory scrutiny and they don’t see any upside,” said Watkins, who’s now a lawyer at Lewis Silkin LLP in London. “If it continues, the authorities would look to compel institutions to provide quotes, either through regulation or statute.”

Regulators including the U.S. Commodity Futures Trading Commission and the U.K.’s Financial Conduct Authority, one of the FSA’s successors, are working on a set of principles to govern all financial benchmarks after they fined Barclays Plc (BARC)UBS AG (UBSN) and Royal Bank of Scotland Group Plc more than $2.5 billion for rigging Libor. The CFTC has issued subpoenas to brokers at ICAP Plc (IAP) and as many as 15 banks amid allegations ISDAFix was rigged, Bloomberg News reported on April 8….”

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Comical: EU Warns Hungary Over Consolidation of Power

“The European Commission stepped up pressure on Hungary over Prime Minister Viktor Orban’s consolidation of power, calling on the government to heed its warnings about the erosion of the rule of law in the nation.

“Based on a first legal analysis, the commission has serious concerns over the compatibility” of the most recent constitutional amendment with the 27-nation bloc’s laws and values, the European Union executive said in a statement today. Once the legal analysis is finalized, the commission said it will take steps “where relevant” to start infringement procedures against Hungary, which could lead to a court case.

Lawmakers last month backed a constitutional amendment to curtail judicial authority, limit campaign ads in private media, restrict the definition of a family to marriage and allow the criminalization of homeless people who live on the streets, all of which the Constitutional Courthas vetoed in past decisions. The move underscored concern for the rule of law and checks and balances in Hungary, where Orban wields a two-thirds parliamentary majority.

“I strongly appeal to you and to your government to address these concerns and to tackle them in a determined and unambiguous way,” European Commission President Jose Barroso said in a letter to Orban, according to the commission statement.

The showdown with the EU threatens to affect Hungary’s finances after the foreign ministers of Germany, Denmark, Finland and the Netherlands last month pushed to impose EU funding cutson member states that violate the bloc’s democratic values.

Independent Institutions…”

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G-20 To Tell Samurai Abe to Take it Easy

Japan will be reminded of its pledge not to drive down the yen when Group of 20 finance chiefs meet this week for the first time since the world’s third- largest economy intensified its campaign to defeat deflation.

As G-20 finance ministers and central bankers prepare to convene this week in Washington, theU.S. Treasury is saying it will press Japan to refrain from competitive devaluation and European governments are urging it not to become too reliant on fiscal and monetary stimulus.

The yen has fallen against all 16 of its most-traded peers since April 4 when the Bank of Japan (8301) surprised investors by doubling monthly bond purchases and setting a two-year horizon for achieving its goal of 2 percent inflation. The salvo leaves foreign policy makers coupling praise for the effort to boost stagnant economic growth with concern it may come at the expense of their exporters if the yen keeps sliding.

“Yen moves have been too rapid for the U.S. to applaud Japan’s battle to end deflation,” said Yasuhide Yajima, chief economist at NLI Research Institute Ltd. in Tokyo, an affiliate of Nippon Life Insurance Co., Japan’s biggest life insurer. “Japan will have to show fiscal plans and means to strengthen growth to make it clear it’s not depending only on weakening the yen to revive the economy.”

Currency Report

The yen rose against all but one of 16 major counterparts today after a report showed Chinese growth unexpectedly slowed in the first quarter, fueling demand for haven assets. The Japanese currency added 0.2 percent to 98.22 per dollar as of 12 p.m. in Tokyo after earlier touching 97.63, the strongest since April 8…..”

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China Stocks Fall Like a Boxed Stock

“Poor retail sales and GDP data sent Chinese stocks down 10% in a session.

China’s stocks fell, dragging the Shanghai Composite (SHCOMP) Index down by 10 percent from its February high, as data on the nation’s economic growth and industrial production missed estimates.

Construction machinery maker Zoomlion Heavy Industry Science and Technology Co. slumped to a 15-month low after forecasting lower profit. Cosco Shipping Co. (600428), a unit of China’s biggest shipping company, lost 3.9 percent after reporting a loss. Zijin Mining Group Co. sank 5.6 percent, leading gold producers lower, after the metal’s futures dropped by the 5 percent daily exchange limit in Shanghai.

The Shanghai Composite fell 1.1 percent to 2,181.94 at the close, its lowest level since Dec. 24. The economy grew 7.7 in the first quarter from a year earlier, the National Bureau of Statistics said today, less than the 8 percent median forecast in a survey of 41 economists. Industrial production rose 8.9 percent in March, the report showed. That compared with the 10.1 percent median economist forecast.

“These figures are pretty bad,” said Dai Ming, a fund managerat Hengsheng Hongding Asset Management Co. in Shanghai, which manages $190 million. “The current stock prices haven’t fully reflected lower-than-expected economic data and the market has room for further declines.”

The CSI 300 Index retreated 1 percent to 2,436.82. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong slid 1.8 percent. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, fell 0.5 percent in New York yesterday.

Economic Data

The Shanghai index has fallen 10 percent from a Feb. 6 high amid concern steps to coolproperty prices will drag on economic growth. Valuations on the gauge dropped to 8.9 times projected 12-month earnings on April 12, the lowest level since Dec. 13 and less than the seven-year average of 15.8, data compiled by Bloomberg show…”

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WTI & Brent Seep Into a Bear Crack

Okay not bear market territory exactly, but it feels like it given recent price action.

Brent crude fell to its lowest level in nine months and West Texas Intermediate dropped below $90 a barrel, as economic growth unexpectedly eased in China, the world’s second-largest crude consumer.

Brent declined as much as 2.2 percent to its weakest since July 13. China’s gross domestic product in the first quarter rose 7.7 percent from a year earlier, according to the National Bureau of Statistics. That compares with the 8 percent median forecast in a Bloomberg survey and 7.9 percent in the prior quarter. The World Bank cut its forecast for the nation’s economic growth. Nicolas Maduro was elected president of Venezuela, OPEC’s third-biggest oil producer.

“This simply confirms the picture of a slowing economy” inChina, said Guy Wolf, Global Head of Market Analytics at Marex Spectron Group in London, who predicts Brent may fall as low as $85 this quarter. “Globally, the picture is not healthy.”

Brent for May settlement, which expires today, fell as much as $2.28, or 2.2 percent, to $100.83 a barrel on the London- based ICE Futures Europe exchange, and traded at $101.04 at 9:42 a.m. local time. The more-active June future dropped $1.97 to $101.07 a barrel. The front-month European benchmark grade was at a premium of $11.88 to WTI futures.

WTI for May delivery decreased as much as $2.83, or 3.1 percent, to $88.46 in electronic trading on the New York Mercantile Exchange, the lowest since Dec. 24. It was at $89.13 a barrel at 9:46 a.m. London time. The volume of all futures traded was 237 percent above the 100-day average.

Growth Moderation….”

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China GDP Misses Estimates, Commodities and Stocks Get Slammed

“Stocks dropped and commodities fell to a nine-month low after China’s economic growth unexpectedly slowed in the first quarter. U.S. equity-index futures declined, while the yen strengthened.

The MSCI All-Country World Index slid 0.5 percent at 9:55 a.m. in London, with the Shanghai Composite Index capping a 10 percent retreat from this year’s peak. Standard & Poor’s 500 Index futures lost 0.5 percent. The S&P GSCI gauge of 24 raw materials dropped 1.2 percent, led by gold and silver, which dropped more than 6 percent. Oil sank below $90 a barrel and copper retreated to an eight-month low. Japan’s currency appreciated for a third day against the dollar, advancing 0.3 percent to 98.09.

China’s economic growth lost momentum as factory output weakened last month, according to data from the National Bureau of Statistics in Beijing. A report from the Federal Reserve Bank of New York may show manufacturing in the region expanded for a third month in April. Citigroup Inc. and Charles Schwab Corp. are scheduled to report earnings today.

China’s data are confirming the underlying concern about its economic outlook,” said Koji Toda, the chief fund manager at Resona Bank Ltd. in Tokyo, which oversees about 15 trillion yen ($153 billion). “Profit-taking is dominating the market as it seems like the yen won’t weaken beyond 100 per dollar soon.”

The Stoxx Europe 600 Index fell 0.9 percent as a gauge of basic-resources producers slid to the lowest level since October 2011. Randgold Resources Ltd., a miner of the precious metal in West Africa, and Kazakhmys Plc, Kazakhstan’s biggest copper producer, lost more than 6 percent in London trading.

Metal Producers…”

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Privacy is Dead

[youtube://http://www.youtube.com/watch?v=TEdasNdp8C8 450 300]

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Stocks Decouple From Price Correlation, History Suggests a Correction

“Asset price correlations across a wide spectrum of industries and asset classes are meaningfully lower than the last few months. ConvergEx’s Nick Colas note that this is something completely unexpected: we’ve approached a “Normal” capital market over the last 30 days.

 

S&P 500 sector correlations are below 80% relative to the index, foreign stocks are 77-87% correlated to U.S. stocks, and even domestic high yield corporate bonds are 56% dancing to their own tune.

 

However, before we run off celebrating the return to a stock-picker’s market, it is worth noting one statistical point worth your time: when industry sector correlations have dropped below 80% from 2010 to the present…”

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Bears Ask When Will Equities Join the 11 Ongoing Crashes ?

“The stock market is not crashing yet, but there are lots of other market crashes happening in the financial world right now.  Just like we saw back in 2008, it is taking stocks a little bit of extra time to catch up with economic reality.  But almost everywhere else you look, there are signs that a financial avalanche has begun.  Bitcoins are crashing, gold and silver are plunging, the price of oil and the overall demand for energy continue to decline, markets all over Europe are collapsing and consumer confidence in the United States just had the biggest miss relative to expectations that has ever been recorded.  In many ways, all of this is extremely reminiscent of 2008.  Other than the Bitcoin collapse, almost everything else that is happening now also happened back then.   So does that mean that a horrible stock market crash is coming as well?  Without a doubt, one is coming at some point.  The only question is whether it will be sooner or later.  Meanwhile, there are a whole lot of other economic crashes that deserve out attention at the moment.

The following are 11 economic crashes that are happening RIGHT NOW…”

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