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CBOE Settles With the SEC Over “Systemic Breakdowns” in Regulating Naked Shorting

“The Securities and Exchange Commission widened its crackdown on a controversial practice known as “naked shorting” by charging the Chicago Board Options Exchange with “systemic breakdowns” in the exchange’s regulatory and compliance functions.

The CBOE agreed to pay a $6 million fine and implement major reforms to settle the SEC’s charges. This is the first time an exchange has been assessed a fine for violations related to its regulatory oversight role, according to the SEC. (You can read the SEC’s press release here.)

The settlement follows a decision Monday by an SEC judge to fine a former Maryland banker accused by the SEC of engaging in billions of dollars in naked short trades. The Charles Schwab owned brokerage optionsXpress and its former chief financial officer were also penalized for violating laws aimed at banning naked shorting.

A naked short trade occurs when a trader sells a stock he does not own and does not intend to borrow to deliver to the buyer. An SEC rule known as Reg SHO is meant to ban the practice, which the SEC regards as abusive and harmful to markets….”

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PIMCO Estimates a 60% Chance of Recession in 3-5 Years

“High debt levels have raised the chances of a global recession in the next three to five years to more than 60 percent, said Pimco, which manages the world’s largest bond fund.

The world economy goes through a recession about every six years and the frequency of global recessions tends to rise when global indebtedness is high and falling compared with when indebtedness is low and rising, Pacific Investment Management Co (Pimco) said in a note published on its website late Tuesday.

“Given that the last global recession was four years ago, and also given that the global economy is significantly more indebted today than it was four years ago, we believe there is now a greater than 60 percent probability that we will experience another global recession in the next three to five years,” Saumil H. Parikh, a managing director and generalist portfolio manager at Pimco said in the note.

The U.S. had a debt to GDP ratio of about 101.6 in 2012, up from 99.4 in 2011. Japan, the world’s third largest economy after China and the U.S., has a debt to GDP ratio of more than 200 percent….”

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Apollo Tyres of India Buys $COO for $2.5 Billion

“Combination Creates World’s Seventh-Largest Tire Company with $6.6 Billion in Revenue


GURGAON, India & FINDLAY, Ohio–(BUSINESS WIRE)– Apollo Tyres Ltd (NSE: ApolloTYRE) and Cooper Tire & Rubber Company (NYS: CTB) today announced the execution of a definitive merger agreement under which a wholly-owned subsidiary of Apollo will acquire Cooper in an all-cash transaction valued at approximately $2.5 billion. Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Cooper stockholders will receive $35.00 per share in cash. The transaction represents a 40% premium to Cooper’s 30-day volume-weighted average price.

This strategic combination will bring together two companies with highly complementary brands, geographic presence, and technological expertise to create a global leader in tire manufacturing and distribution. Apollo, founded in 1972, has an international reputation for high performance tires across a portfolio of well-known premium and mid-tier brands, including the flagship Apollo brand and Vredestein. Cooper, the 11th-largest tire company in the world by revenue, was founded in 1914 and today supplies premium and mid-tier tires worldwide through renowned brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon.

The combined company will be the seventh-largest tire company in the world and will have a strong presence in high-growth end-markets across four continents. With a combined $6.6 billion in total sales in 2012, the combined company will have a full range of brands and greater ability to satisfy customer needs worldwide….”

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$RMBS Pops 9% as They Settle Litigation Suit With Hynix

Rambus Inc. (RMBS) said it settled its patent litigation with SK Hynix Inc. (000660) and signed a license agreement for the South Korean memory-chip maker to use its technology.

“This is a milestone agreement for both companies that puts years of legal disputes behind us and gives us the opportunity for collaboration,” Rambus Chief Executive Officer Ron Black said yesterday in a statement.

The five-year agreement with SK Hynix will bring in $12 million a quarter, according to the statement.

A federal judge in San Jose, California, last month ordered Rambus to pay $250 million to SK Hynix for destroying documents in their litigation. Rambus, based in Sunnyvale, California, won a $349 million judgment on its patent-infringement claims in 2006.

Representatives of SK Hynix didn’t immediately respond to an e-mail seeking comment on a licensing accord….”

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$GOOG, $MSFT, and $FB Request Transparency From the Government in a Bid to Distance Themselves

“Three of the largest Internet companies called on the U.S. government to provide greater transparency on national security requests on Tuesday, as they sought to distance themselves from reports that portrayed the companies as willing partners in supplying mass data to security agencies.

In similarly worded statements released within hours on Tuesday, Google,Microsoft and Facebook all asked the U.S. government for permission to make public the number and scope of data requests each receives from security agencies.

Each of the companies, and several others, have come under scrutiny following disclosures in The Guardian and Washington Post newspapers of their role in a National Security Agency data collection program named Prism….”

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Au Falls Agains on Extended Chinese Holiday

“SINGAPORE (Reuters) – Gold fell for a second straight day on Wednesday as a holiday in China deprived the metal of a strong support base and as investors worried about global central banks scaling back their easy-money policies.

The Bank of Japan’s (BoJ) move on Tuesday to refrain from taking fresh steps to calm turbulence in the domestic bond market, and Standard & Poor’s upgrade of the U.S. credit outlook on Monday indicated that the global economy was on track for a recovery, hurting bullion’s appeal as a hedge against inflation.

“The sentiment is still bearish,” said a trader in Sydney. “Since there is no China today, we can expect gold to fall again towards $1,365.”

China, which is on a three-day holiday for the Dragon Boat festival, has been a key support for gold prices during Asian hours as its demand continues to be strong. The No. 2 bullion consumer has, to an extent, overshadowed concerns about slowing demand in India, the biggest gold buyer, traders have said.

China’s gold imports from Hong Kong touched an all-time high in March as buyers scrambled to buy bullion, and the surging appetite caused a supply shortage in April. Premiums for gold bars in China also touched record highs last month.

“With the Chinese out until Thursday, the market is lacking a key stabilising factor, and we continue to see little support for gold at least until their return,” ANZ analysts wrote in a note.

Spot gold fell 0.3 percent to $1,375.1 an ounce at 0642 GMT, after a 0.5 percent drop the day before as equity and commodity markets were rattled by the BOJ standing pat….”

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Black Gold Falls on Expectations of Rising Inventories

“West Texas Intermediate traded near its lowest closing level in three days amid signs of expanding U.S. supplies and as the International Energy Agency trimmed demand estimates for OPEC’s crude.

WTI fluctuated after losing 0.4 percent yesterday to settle at its lowest price since June 6. U.S. Energy Department data today may show crude inventories in the world’s largest oil-consuming nation dropped 1.5 million barrels last week, according to a Bloomberg News survey. The IEA trimmed forecasts for the amount of oil OPEC needs to supply in the second half of the year on signs of slower Chinese growth.

“Gloomier overall sentiment is weighing on prices,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “There was not much positive for the market in today’s IEA report. The supply risks, however, should further support the prices.”

WTI for July delivery traded 2 cents lower at $95.36 a barrel in electronic trading on the New York Mercantile Exchange as of 12:12 p.m. London time, after declining as much as 92 cents to $94.46. The volume of all futures traded was 12 percent below the 100-day average. The contract lost 39 cents to close at $95.38 yesterday.

IEA Assessment

Brent for July settlement gained 25 cents to $103.21 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $7.86 to WTI. The spread narrowed for a fifth day yesterday to close at $7.58.

The Organization of Petroleum Exporting Countries will need to provide an average of 29.8 million barrels a day in the second half of the year, the IEA said today in its monthly market report, trimming the forecast in its previous report by 200,000 barrels a day. That would require OPEC to cut output by 1.1 million barrels from the 30.9 million it pumped in May, according to the IEA. The agency kept its estimates for global oil demand for this year unchanged…..”

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M&A Keeps European Markets From Falling for a Third Day

“European stocks advanced, snapping a two-day decline, as merger and acquisition activity outweighed concern that central banks will taper stimulus measures. U.S. futures climbed while Asian shares were little changed.

Kabel Deutschland Holding AG jumped 8.4 percent after Vodafone Group Plc confirmed that it approached the German company about a takeover. British Sky Broadcasting Group Plc rose 1.9 percent as analysts said News Corp. may make another offer for the company. Severn Trent Plc (SVT) tumbled the most since July 2009 after a consortium of investors dropped their bid for the water utility.

The benchmark Stoxx Europe 600 Index (SXXP) gained 0.5 percent to 293.26 at 11:45 a.m. in London. The gauge has still lost 5.6 percent since May 22 amid speculation the Federal Reserve will taper its bond-buying program that helped drive the measure to its highest level since June 2008.

“I’ve been waiting for M&A for so long; companies have strong balance sheets so that they have the wherewithal to do it, but it’s whether they have the confidence,” Kevin Lilley, a fund manager at Old Mutual Asset Managers U.K. in London, which oversees about $6.1 billion, said in a telephone interview. “I would expect to see more activity in the coming months.”

The MSCI Asia Pacific Index rose 0.1 percent today, after a rout that wiped out about $400 billion from the value of global equities yesterday. Contracts on the Standard & Poor’s 500 Index futures advanced 0.5 percent after the equity gauge fell for a second day.

German Hearing

Germany’s top court continues its two-day hearing to address the European Central Bank’s Outright Monetary Transactions program and the European Stability Mechanism. The ECB’s top two German officials yesterday gave opposing evidence at the Federal Constitutional Court in Karlsruhe as judges consider the legality of the OMT bond-buying program….”

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India Takes in the Lion’s Share of Inflows Out of All BRIC Markets

“Indian stocks are outperforming their BRIC peers by the most ever as investment from abroad defies outflows from other major emerging markets.

The CHART OF THE DAY shows the ratio of the S&P BSE Sensex Index versus the MSCI BRIC Index reached the highest since Bloomberg started tracking the data in December 1994. The Sensex rose 0.1 percent this year through June 10, compared with losses of between 11 percent and 16 percent for the Hang Seng China Enterprises Index, Russia’s Micex Index andBrazil’s Ibovespa. The bottom panel shows India’s net foreign equity inflows of $15.3 billion are the highest ever for the year-to-June 7 period.

Overseas investors pumped $221 million into Indian shares last week, according to data compiled by Bloomberg. That compares with outflows of $5 billion from emerging equities in the five days to June 5, the most since August 2011, Morgan Stanley said, citing EPFR Global. Investors pulled some $1.5 billion from Chinese equities, $530 million from Brazil and $360 million from Russia during the period, Morgan Stanley said.

“I’d attribute this more to the poor performance of Brazil, China and Russia rather than good performance of India,” said Peter Elston, head of Asia Pacific strategy at Aberdeen Asset Management in Singapore. “China has been struggling with containing a credit-fuelled investment binge, Russia with a weak oil price, and Brazil with inflation. It should be noted that in the case of India, inflation has been falling.”

Overseas investors continued to plow funds into Indian stocks last week even as a plunge in the rupee to a record low triggered concern that energy prices may rise in a nation that imports about 80 percent of its oil. Foreign funds sold more than $1 billion of the nation’s corporate and sovereign bonds in the same period, the most ever….”

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The Aussie Dollar Bounces on Oversold Conditions

Australia’s dollar rebounded from the lowest level in almost three years as a technical indicator signaled recent selling was overdone.

The Aussie snapped a three-day slide after tumbling 9.2 percent since the end of March, set for the biggest quarterly decline since the period ended September 2011. The currency advanced after a private report showed that Australia’s consumer confidence recovered in June after slumping the most in 17 months. New Zealand’s kiwi dollar climbed.

There are “probably quite a few people who’ve got short the Australian dollar near the lows yesterday, and they’re now suffering a painful squeeze,” said Ray Attrill, the global co-head of foreign-exchange strategy in Sydney at National Australia Bank Ltd. “At the moment, there’s the potential for a squeeze up to 95 or 96” U.S. cents, he said. A short position is a bet that an asset’s price will fall.

The Australian currency gained 0.4 percent to 94.65 U.S. cents as of 5:05 p.m. in Sydney from yesterday, when it touched 93.26, the lowest since Sept. 14, 2010. It earlier climbed as much as 0.8 percent. The New Zealand dollar rose 0.4 percent to 79.02 U.S. cents after earlier rallying as much as 0.6 percent….”

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Indonesia Raises Rates on Overnight Deposits

Bank Indonesia raised the rate it pays lenders on overnight deposits and said it’s ready to buy government debt in the secondary market as Governor Agus Martowardojo moves to boost confidence in the rupiah weeks after taking charge.

The central bank raised the deposit facility rate, also known as the Fasbi, by a quarter of a percentage point to 4.25 percent effective today, it said in a statement after a board meeting yesterday. The increase is a preemptive step to maintain stability after the rupiah weakened and Bank Indonesia will ensure sufficient liquidity in the market, it said….”

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Japan Adjusts Bailout Reforms to Includes Brokerage and Insurance Firms to Be Rescued

Japan’s parliament endorsed changes in legislation dealing with failed financial institutions as part of efforts by regulators worldwide to avoid a repeat of the global financial crisis.

The passed amendments, proposed by the Financial Services Agency, allow brokerages and insurers to join banks in being eligible for emergency capital from the state-run deposit insurance agency. The Upper House today also approved so-called bail-in rules that impose losses on investors of failing financial institutions to reduce taxpayers’ burden. The vote was broadcast live through the Internet.

The market meltdown following Lehman Brothers Holdings Inc.’s 2008 collapse prompted authorities around the world to bolster preparedness for financial turmoil. The Basel Committee on Banking Supervision, which sets international banking rules, has proposed that creditors contribute to shoring up firms’ finances before public money is used in the event of a crisis….”

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Asian Markets Fall on Fears That Stimulus is Over, Europe Trying Desperately to Avoid Carnage

“Asian stocks fell, extending a rout that wiped out about $400 billion from the value of global equities yesterday, amid concern that central banks from Tokyo to Washington are increasingly reluctant to add stimulus.

Toyota Motor Corp., the world’s largest carmaker, retreated 1.8 percent in Tokyo after the yen yesterday gained the most in three years. Hyundai Merchant Marine Co. (011200) plunged 15 percent in Seoul after North Korea called off talks yesterday on a joint industrial zone. Nomura Real Estate Master Fund Inc. (3285), Japan’s largest initial public offering this year, fell 6.2 percent in its debut.

The MSCI Asia Pacific Index was little changed at 131.65 as of 8:44 p.m. in Tokyo, with about two shares falling for each that advanced. Markets in China, Hong Kong, Taiwan and the Philippines were shut for holidays.

“There’s lots of confusion around the world at present about what central bank policy means for the outlook of the global economy, earnings and valuations,” Matthew Sherwood, Sydney-based head of market research at Perpetual Ltd., which manages about $25 billion, said by e-mail. “The Fed is likely to continue to be ambiguous about its next step, probably because it’s not sure. This will see markets continue to be volatile.”

The MSCI gauge fell 8.9 percent through yesterday from this year’s high on May 20 on speculation that an improving U.S. economy will lead the Federal Reserve to scale back record stimulus. In May, Fed Chairman Ben S. Bernanke said policy makers could reduce the pace of bond buying should there be sustained improvement in the U.S. economy….”

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Market Update

U.S. equities found a pitfall that got underway in Asia and then spread to Europe after the Bank of Japan failed to pour more gasoline on the stimulus fire.

We did have an amazing paring of losses over the past hour briefly going positive for a tick or two.

Financials lead the negativity putting in the worst performance, while commodities also remain weak due to a slowdown in China.

The markets seem to have a problem breaking out above 1640 S&P, but seem to hold the 1620 level for now. Soon come,  longer term direction will be had once the markets decide how to deal with tapering possibilities.

Market update

2 4 2sday

[youtube://http://www.youtube.com/watch?v=XJoZe5vkxws 450 300] [youtube://http://www.youtube.com/watch?v=oZdiXvDU4P0 450 300]


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$NWSA Shareholders Approve Breakup

“News Corp.’s shareholders on Tuesday voted to advance the media company’s plans to split off its publishing assets into a separate publicly traded entity and rename the remaining TV and film-focused business 21st Century Fox.

At a meeting in New York, shareholders easily approved three amendments to News Corp.’s certificate of incorporation that position the company to complete the separation on June 28, News Corp. Chairman Rupert Murdoch said at the meeting.

Following the separation, the new print media company, which will take the name News Corp., will have assets including The Wall Street Journal, New York Post, and Times of London, plus book publisher HarperCollins. 21stCentury Fox will house the Fox broadcast and cable networks and the 20th Century Fox studio, among other properties.

Shares in the two companies will begin trading separately on July 1.

Mr. Murdoch said the separation will “enable us to respond more rapidly to fast-evolving markets.” Mr. Murdoch will continue as chairman and CEO of 21st Century Fox and will become executive chairman of the print media spin-off. The Murdoch family will effectively control both companies.

News Corp.’s board approved the separation late last month. As part of the deal, shareholders will get one share of the new publishing-focused company for every four shares of News Corp. they now own.

The move has been popular with investors who believe the print businesses are a drag on the growing media and entertainment assets. News Corp.’s stock is up about 45% since the company announced the separation nearly a year ago.

Mr. Murdoch and other News Corp. executives have sought to persuade investors that despite the long-term challenges of the publishing and newspaper world—most notably, the continuing shift of advertising from print to online— the print media assets can thrive in a separate company….”

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$GOOG Completes its Acquisition of Waze

“We’ve all been there: stuck in traffic, frustrated that you chose the wrong route on the drive to work. But imagine if you could see real-time traffic updates from friends and fellow travelers ahead of you, calling out “fender bender…totally stuck in left lane!” and showing faster routes that others are taking.

To help you outsmart traffic, today we’re excited to announce we’ve closed the acquisition of Waze. This fast-growing community of traffic-obsessed drivers is working together to find the best routes from home to work, every day.

The Waze product development team will remain in Israel and operate separately for now….”

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