04/01/2013
DAILY NEWSLETTER
Recap: Wednesday’s Recap Stocks cut losses after news that the U.S. House of Representatives scheduled a session for Sunday, even as Treasury debt prices rose on continued "fiscal cliff" worries. The yen hit a two-year low on expectations of aggressive monetary stimulus. Oil prices eased, while gold gained in thin, choppy trading.
To cut government spending and help delay bumping up against the nation's $16.4 trillion debt ceiling, the Treasury is set to suspend issuance of state and local government series securities -- known as "slugs". Investments in a government employee pension fund will also be suspended, along with some other measures, but no dates have yet been given for other steps. Without any action, Treasury said the government will reach the ceiling on Dec. 31. "These extraordinary measures ... can create approximately $200 billion in headroom under the debt limit," Treasury Secretary Timothy Geithner wrote in a letter to congressional leaders on Wednesday. Slugs are special low-interest Treasury securities offered to state and local governments to temporarily invest proceeds from municipal bond sales. They have been suspended several times over the last 20 years to avoid hitting the debt ceiling.
Spain's troubled lender Bankia, formed last year in a merger of provincial savings banks, is to receive 18 billion euros from the European Union by Friday, to be followed by a capital increase in the first half of January that will wipe out most of the equity investments of 350,000 shareholders. Bankia had negative equity of 4.2 billion euros, Spain's bank rescue fund said on Wednesday. How much shareholders will lose will be known when the capital increase takes place in January following discussions with EU authorities, a source close to the Bank of Spain said.
The worst of the euro zone sovereign debt crisis is over, according to German Finance Minister Wolfgang Schaeuble, whose comments on the subject are to be published on Friday in the daily newspaper Bild. Schaeuble said governments in heavily indebted countries such as Greece have recognized that the crisis that began in Athens three years ago will only be overcome by implementing bitter reform measures.
Stocks finished lower for a fourth day but recovered most of the session's losses just before the closing bell when the House of Representatives said it would come back to work this weekend with the aim of avoiding the "fiscal cliff.” The CBOE VIX volatility index jumped above 20 for the first time since July, climbing around 4 percent in another sign of growing concern. However, It was last down by 1 percent. Stocks in the materials and the financial sectors, which are more vulnerable to the economy's performance, took the brunt of the selling. Shares in Bank of America fell 0.6 percent, while Freeport-McMoRan Copper & Gold fell 0.7 percent. The Dow was down 0.14 percent, the S&P 500 Index was down 0.12 percent and the Nasdaq was down 0.14 percent.
The yen fell to a more than two-year low against the dollar on expectations Japan's new government will push for aggressive monetary stimulus, while the U.S. currency was broadly higher on uncertainty about fiscal talks in Washington. Traders said speculators and hedge funds were increasingly looking to sell yen for dollars. The dollar was last up 0.5 percent at 86.05 yen. The euro was up 0.14 percent at $1.3242. The euro rose 0.6 percent to 113.96 yen. "Investors are looking to see whether the Bank of Japan will ease at its next policy meeting in January, and if it doesn't ease aggressively enough, then the new government could come, which would hurt the BoJ's independence," TD's Osborne said. "There's limited scope for a yen rebound while the Abe government continues to threaten BoJ independence," he said.
Apple CEO's pay package drops 99 pct from 2011 Tim Cook has finally made it to the top at Apple, but in his first full year as CEO his pay package shrank about 99 percent. Cook was awarded total compensation of $4.17 million in 2012, down from $378 million in 2011, Apple said in a federal filing on Thursday. The 2012 compensation package for Cook, who took over as chief executive in August 2011, also seemed a pittance compared with his 2010 pay, which was 14 times higher, when the executive served as chief operating officer. The maker of the iPhone and iPad noted that Cook will not receive any stock awards for 2012 after he was given about $376.2 million in stock awards the year before. The 2012 package includes a salary of $1.4 million and a no equity bonus of $2.8 million, according to the filing. Cook's base salary actually increased compared with the $900,000 he earned in 2011.
