news25may11
COMMODITIES
Brazil seeks to curb volatile ethanol prices; a solution could involve government intervention. FT
Aluminum - LME is due to take further steps this week to address warehousing bottlenecks that critics say have unfairly allowed aluminium to be locked up and helped inflate prices. Reuters
China faces worst drought in 50 yrs - the government will ramp up the release of water from the Three Gorges Dam in an effort to tackle a drought in southern China. FT
POT - CEO says India unlikely to halt imports despite price dispute. India, one of the largest importers of the form of potassium, has said it may halt imports of potash unless the South Asian nation gets a one-year deal with the price set at least 10 percent less than the spot price - Bloomberg
USA
Short Interest [per Bloomberg] Short interest in the SP500 for the period ending 5/13
increased 2.23%. The most notable increases in short interest were Industrials (+11.07%) Healthcare (+5.77%) and Consumer Staples (+5.01%) while only 2 sectors reported a decline in short interest - Consumer Discretionary (dn. 1.97%) and Energy (dn. 0.16%) Largest Increases: NOC, RRD, NVLS, TYC, PNW, OI, BAX, MUR, MHS, AXP Largest Decreases: EMN, DVA, SRE, PLL, AGN, JCI, HP, CF, COV
Blankfein's Fate in Hands of DOJ - DOJ is probing statements Blankfein made before a Senate committee in ’08. If the probe continues, it could result in Blankfein being forced to step down as CEO by the board. Some on Wall St think the situation w/Goldman could play out similar to Citi a decade ago when the co’s then CEO Sandy Weill reigned as CEO after Citi paid a large fine for its role in the equity research scandal. DJ
Banks face $17B in suits over foreclosures - state AGs during foreclosure settlement talks on Tues threatened banks w/~$17B+ worth of civil lawsuits unless a deal is reached. The figure wouldn’t cover potential billions more in claims from federal agencies. The banks had proposed a figure of $5B while the agencies and AGs are seeking ~$20B. WSJ
CRI - Berkshire Partners increases stake to 13.2% from 11.4% and changes filing to a 13D from Form 4/13F; Berkshire intends to communicate w/CRI concerning options to enhance shareholder value… discussion may include engaging with CRI on a review of its strategic activities, assessment of its organization, management of its balance sheet and the pursuit of other corporate transactions (including new financings or a “going-private” transaction).
As Housing goes, so goes economy. NYT
GE - GE Capital is selling its A$5 billion ($5.3 billion) Australia and New Zealand mortgages books to Pepper Homeloans - Reuters
FDIC’s qtrly banking report - falling provisions has been a big tailwind for bank earnings (but investors are now looking more for top line/loan growth and on this front the trends are weaker - revs fell in Q1 for only the second time in 27 yrs of data!).
EUROPE
Greecewill have to reschedule its debts - says Vince Cable, UK business secretary. Cable has become the first UK cabinet minister to admit his view that Greece will have to reschedule. Cable doesn’t think further budget cuts were the answer. "You can't just deal with this by cutting, cutting, cutting - it's wrong, and it does not work. Attacking the debt, and dealing with it in a more pragmatic way, is the way out of this”. The Guardian.
ASIA
China Considers Rules Allowing Risk Hedging - China's banking regulator has circulated among financial institutions draft rules that would for the first time allow banks to use credit derivatives to hedge against risky assets - DJ
Chinese Yuan - Traded back towards its highest levels after the PBOC set the reference rate 0.14% stronger to 6.4949/USD, in the biggest increase since Jan. 14th. Bloomberg
MEA
Fighting Spurs Fears of War in Yemen - country is slowly descending into an outright civil war - WSJ
Sudanslides towards another civil war - Sudan appears to be sliding toward a new conflict between the Arab-dominated north and the Christian-animist south which voted overwhelmingly to secede in a historic January referendum - UPI
Libya - South Africa’s president will visit Libya on May 30 to discuss “exit strategies” for the Qadaffi regime - AFP
Turkey ditches Assad, calls off participation in Gaza flotilla - Turkey has dropped support for the Asaad government - "Turkish Prime Minister Tayyip Erdogan has secretly ordered his government officials to dump Ankara's ties with Damascus with all speed and allowed Syrian opposition leaders to meet in Anatolia on May 31-June 2 on ways to topple Bashar Assad" Debka
Ahmadinejad of Iran will not be attending next month’s OPEC meeting. The move “appeared to signify a retreat by the president in his power struggle with the nation’s supreme leader” - NYT