Opening Bell: 05.05.11

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Fed Presidents Signal Record Stimulus Won't Be Removed Soon (Bloomberg)
Eric Rosengren, president of the Federal Reserve Bank of Boston, and San Francisco’s John C. Williams followed the lead taken by Fed Chairman Ben S. Bernanke, who signaled last week that policy makers will keep stimulus in place after ending large-scale bond purchases in June. “Right now we’re pretty far away from our targets, and right now we’re keeping monetary policy accommodative,” Rosengren, 53, said yesterday in an interview with Bloomberg News. “It’s very appropriate given how far we are from our targets.”

Traders Exit High-Speed Lane (WSJ)
Companies that use fast-trading, computer-driven strategies, which were painted by some as culprits of the collapse, have curtailed trading. So, too, have many long-term investors, for whom the trauma of that May 6 afternoon was the final straw after a decade of stock-market turmoil. In their absence, trading volume and volatility have plunged, further deterring high-frequency traders.

A Lack of Supply Feeds Rise in Munis (WSJ)
Yields on a benchmark of highly rated 10-year general-obligation bonds, backed by a government's taxing authority, have fallen to 2.79% from 3.21% at the start of the year, according to Thomson Reuters. Meanwhile, the cost of insuring against default by some of the most financially troubled states also has dropped…A major driver of the dropping yields, which move opposite to price, is the lack of new supply, which hit an 11-year quarterly low in the first quarter. That slowdown has prompted many investors and bankers to caution it is too early to size up whether the market could absorb any significant uptick in bond issuance.

Claiming Fraud in A.I.G. Bailout, Whistle-Blower Lawsuit Names 3 Companies (NYT)
The lawsuit, filed by a pair of veteran political activists from the La Jolla area of San Diego, asserts that A.I.G. and two large banks engaged in a variety of fraudulent and speculative transactions, running up losses well into the billions of dollars. Then the three institutions persuaded the Federal Reserve Bank of New York to bail them out by giving A.I.G. two rescue loans, which were used to unwind hundreds of failed trades…The lawsuit names A.I.G., Goldman Sachs and Deutsche Bank as defendants, but not the Fed.

Facebook and Google mull Skype deals (Reuters)
Facebook Chief Executive Mark Zuckerberg has been involved in internal discussions about buying Skype, according to one of the sources. Another source said Facebook had reached out to the Luxembourg-based company about forming a joint venture.Google has also held early talks for a joint venture with Skype, the second source said.

Mexican central bank buys 100 tonnes of gold (FT)
The purchase, reported in monthly data published by Mexico’s central bank, is the latest in a series of large gold buys by emerging market economies intent on diversifying reserves away from the faltering US dollar. China, Russia and India have acquired large amounts of gold in recent years, while Thailand, Sri Lanka and Bolivia have made smaller purchases…Mexico bought 93.3 tonnes of gold in February and March, according to the central bank, in a haul valued at $4.5bn at current prices and equivalent to 3.5 per cent of annual mined output.

Hero dog helped snare Osama (The Sun)
Heavily armoured hounds — equipped with infrared night-sight cameras — have been used in the past by the top-secret unit. The war dogs wear ballistic body armour that is said to withstand damage from single and double-edged knives, as well as protective gear which shields them from shrapnel and gunfire…Wearing oxygen masks, the pooches have been trained to jump from aircraft at 25,000ft, before seeking out insurgents in hostile environments.

GM Profit Triples (WSJ)
GM said net income rose to $3.2 billion, or $1.77 a share, from $865 million or $0.55 a share. Operating profit, reflecting the strength of its core automotive business, increased to $2 billion from $1.7 billion. Revenue increased 15%, to $36.2 billion, from $31.5 billion.

Government Joins Bowl-Game Brawl (WSJ)
The Justice Department sent a letter Tuesday to the National Collegiate Athletic Association stating that "serious questions continue to arise" over whether the Bowl Championship Series—the sport's much-criticized method for choosing a champion—complies with antitrust laws. The letter also asks why major-college football doesn't have a playoff, when so many other college sports do; what steps the NCAA has taken to create a playoff; and whether the NCAA has determined that aspects of the BCS system are unfair.

Bank of America to Triple Number of Mortgage Help Centers (NYT)
The bank, which will announce the plan on Thursday, will focus on regions hit especially hard by the rising tide of homeowners struggling to make their mortgage payments. Seven locations will open in California and three in the Detroit area; other centers will be unveiled in St. Louis, Newark, Philadelphia and Tucson, among other cities…Additional centers may open later this year, the bank said. Counselors fluent in languages including Spanish, Korean, Vietnamese and Russian will be available for non-English speaking customers…Most of the counselors in the new centers will be transferred from other areas of the mortgage business, like sales and originations, which have slowed with the decline in mortgage demand.

Brazil Banks Beat Wall Street as Itau Shows JPMorgan Who Rules (Bloomberg)
Foreign firms pursuing investment-banking fees in Brazil, where an emerging middle class and rising commodity prices are propelling one of the world’s fastest-growing economies, face stiff competition. Local players have a greater capacity to finance deals, improved relationships with investors, experienced executives and the ability to provide services once offered only by large global banks.

Indian stocks suffer worst losing streak in 10 years (FT)
Mumbai’s BSE Sensex index fell for a ninth-consecutive session, its longest losing streak in a decade, on concerns over the impact of rising costs on corporate earnings. The BSE Sensex index fell 1.1 per cent to 18,266.79, taking its losses since Monday’s 50 basis point interest rate increase by the Reserve Bank of India to 4 per cent. Over the nine consecutive losing sessions, the index has fallen 6.8 per cent.

Charges, rising costs hit Societe Generale results (MarketWatch)
The group reported a profit of 916 million euros ($1.36 billion), compared to €1.06 billion a year earlier, driven by a €239 million accounting charge as improving spreads on the group’s own debt make it theoretically more expensive to buy back. The bottom line was below the €1.12 billion consensus forecast of analysts polled by Dow Jones Newswires.

Citi Hires UBS Banker (DealBook)
Kevin Cox, formerly head of Americas investment banking at UBS, is joining Citigroup as co-chairman of global industrials banking.

Dalai Lama suggests Osama bin Laden's death was justified (LA Times)
As a human being, Bin Laden may have deserved compassion and even forgiveness, the Dalai Lama said in answer to a question about the assassination of the Al Qaeda leader. But, he said, "Forgiveness doesn't mean forget what happened. … If something is serious and it is necessary to take counter-measures, you have to take counter-measures."

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