U.S. Payrolls Rose Less-Than-Estimated 54,000 in May; Jobless Rate Is 9.1% (Bloomberg)
Payrolls increased by a less-than-projected 54,000 last month, after a revised 232,000 gain in April that was smaller than initially estimated, Labor Department figures showed today in Washington. The median forecast in a Bloomberg News survey called for payrolls to rise 165,000. The jobless rate climbed to the highest level this year from 9 percent a month earlier. These are pretty bleak numbers,” said Julia Coronado, chief economist for North America at BNP Paribas. “Some of the engines of hiring just went away. Combined with the slowdown in consumer spending, it raises concern that the slowing in hiring could be with us for a while.”
Greenspan 'Scared' Over Deficit; Calls For Debt Ceiling Rise (CNBC)
In an interview with this morning, the former central bank chief described himself as a "small government, free-market economist" who nonetheless believes that in order to raise revenue and close the debt gap, 1990s-era taxes must be reinstituted. It's a measure, he said, of how serious the problem has become. "The fact that I am in favor of going back to the Clinton tax structure is merely an indicator of how scared I am of this debt problem that has emerged and its order of magnitude," he said.
A Trader, an F.B.I. Witness, and Then a Suicide (DealBook)
In a Manhattan courtroom last week, federal prosecutors played for a jury a secretly recorded telephone conversation between two Wall Street traders exchanging stock tips. Two days later, one of those traders, Ephraim G. Karpel, hanged himself in his Fifth Avenue office, according to a law enforcement official. Mr. Karpel was never charged with any wrongdoing, and until last week his name had not emerged in connection with the government’s vast investigation of insider trading. Yet while working for a New York commodities firm, he had agreed in 2008 to cooperate with federal authorities, and for about a year he taped conversations with fellow traders, according to two people with direct knowledge of the matter who insisted on anonymity to discuss it. “The government’s investigation changed his life forever and was his unraveling,” Fran Karpel, his wife, said in a telephone interview.
Groupon’s $540 Million Loss May Daunt Investors (Bloomberg)
Yet, with marketing costs rising faster than sales, Groupon may not make money fast enough to warrant the $25 billion valuation it was said to be contemplating in March, said Pat Becker Jr., a portfolio manager at Becker Capital Management Inc. “Companies have to have profitability or a compelling case for a path to profitability,” said Becker, whose Portland, Oregon-based firm manages $2.5 billion. “We also look for barriers to entry and we just don’t see that in this particular business.”
Analyst: Don't Believe The Doom On Housing (CNBC)
“The decline is mainly because the mix of homes sold has changed in favor of distressed sales, which typically sell with a 'foreclosure discount.' Non-distressed properties (sold by voluntary sellers) have already started to stabilize,” said Ajay Rajadhyaksha, the co-head of US fixed income strategy at Barclays Capital said in a research note on Friday. “As voluntary sales pick up in the summer, the mix of homes should change again in the next few months, in favor of non-distressed sales. As a result, the aggregate index of home prices should stop declining and could even go up,” he added.
Greece to Impose Deeper Austerity for New Rescue (Reuters)
Prime Minister George Papandreou on Friday will present his side of the deal, a medium-term budget plan, when he meets the chairman of euro zone finance ministers - the people who must stump up much of the planned new funding along with the IMF. In Athens leftists staged a protest at the finance ministry, hanging a huge banner across the building to denounce policies which they said would "turn workers into modern slaves."
Gartman Sells 50% of Gold Holding After Decline, Says Further Drop Likely (Bloomberg)
"For the first time in a very, very long while, we are a good deal more nervous than we have been about the trend,” Gartman said in his Suffolk, Virginia-based Gartman Letter. “We fear that yesterday’s sharp break that took gold down to $1,520 in the veritable twinkling of an eye was the harbinger of even more severe weakness that might soon develop.”
Libya bet $1bn on SocGen shares (FT)
Documents seen by the FT show the transaction – the Libyan Investment Authority’s biggest investment in five years – had lost 72 per cent of its value by the middle of last year. The LIA entered into the transaction in early March 2008, barely a month after Jerome Kerviel’s €50bn of rogue trades left the bank with losses of €5bn.
Treasury to sell remaining Chrysler stake to Fiat (Reuters)
The Treasury said on Thursday it reached an agreement to sell its remaining 6 percent equity stake in Chrysler to Italy's Fiat (FIA.MI) in a deal that will net Washington $560 million.
Asian hedge funds hit hard in May (Reuters)
Asian hedge funds may have lost up to two-thirds of their year-to-date gains in May alone, with strategies such as macro and CTA, which bet on long-running market trends, hit hardest, said Matt Pecot, head of Credit Suisse's prime broking unit in Asia-Pacific.
Byron Wien Buys in S&P 500 Decline as Laszlo Birinyi Sees Stock Volatility (Bloomberg)
The biggest retreat in the Standard & Poor’s 500 Index since August is creating a buying opportunity for investors willing to withstand declines that may reach 10 percent, according to Blackstone Group LP’s Byron Wien…“The economy is not as bad as it looks right now. Corporate profits will be good, very good. People are asking me, ‘Do you still think the market can get to 1,500 by the end of the year?’ I do.”
SEC Probes China Auditors (WSJ)
The SEC has publicly indicated it was examining accounting and disclosure issues regarding Chinese companies that engaged in "reverse mergers," which allow companies to list on U.S. exchanges without as much regulatory scrutiny as an initial public offering. People familiar with the matter say the investigation also includes auditors, which hadn't previously been known.
Bank Margin Opens Investors to Error (WSJ)
After rebounding sharply in 2009 and outpacing the broader market for much of last year, a nearly 15% performance gap has opened between the Standard & Poor's 500 stock index and the KBW Bank Index since the start of 2011. And even with valuations back at levels of last fall, there is little sign of respite for U.S. banks. They are battling on multiple fronts. One immediate risk comes from the continued fall in interest rates, evidenced by this week's decline in the 10-year U.S. Treasury yield to less than 3%. Yields on shorter-term government debt also have fallen, with the two-year-note yielding 0.45%, compared with 0.61% a month ago. That piles the pressure on banks' net interest margins, or the difference in what it costs to borrow and what they can earn from lending or investing. Deposit costs are already negligible and can't be cut further. So when lending and investing rates come down, banks get squeezed.
Nomura Cut Top 10 Executives’ Pay 38% After Earnings Slump (Bloomberg)
The securities firm reduced total compensation for its top 10 executives to 899 million yen ($11 million) for the year ended March 31, from 1.45 billion yen a year earlier, the documents posted on Nomura’s website showed.
Probe Deepens of Alleged Inside Trades at FDA (WSJ)
A federal inquiry into insider trading at the Food and Drug Administration, which has focused on an agency chemist who was charged in March, is expanding to look at other government employees, according to people familiar with the matter. Cheng Yi Liang, a longtime chemist at the FDA, and his son Andrew, who didn't work at the agency, were charged March 29 by the Department of Justice and the Securities and Exchange Commission with trading stocks of drug companies in advance of agency approval decisions.
U.K. Banks Cut 103,000 Jobs Since 2008 (Bloomberg)
The U.K.’s five-largest banks including Royal Bank of Scotland Group Plc (RBS) and Lloyds Banking Group Plc (LLOY) have eliminated more than 103,000 jobs since 2008, with more to come. That’s about 11 percent of their combined global workforces from the end of 2008 through 2010, according to Bloomberg data based on company filings. At least 34,500 of the cuts were made in Britain.
Hedge Funds Keep Gaining Assets Despite Lagging Performance (Barrons)
Hedge funds had gained an average 2.8% in 2011 through May, according to a new report by Channel Capital’s HedgeFund.Net research group. By contrast, the S&P 500 (SPY) was up by nearly 3% on the year during that same period. The report also listed total industry assets at $2.6 trillion at the end of April, up 2.3% from the previous month. Performance accounted for the majority of the asset increase although net investor allocations were positive for a 10th-straight month.
Zynga Said to Be Close to Hiring Goldman Sachs to Lead IPO, Extend Credit (Bloomberg)
Zynga Inc. is in talks to have Goldman Sachs Group Inc. (GS) lead its initial public offering and provide a credit line of more than $1 billion to help make acquisitions, said a person with knowledge of the matter.
Fearsome lawn ornament shot dead by cops (MSNBC)
When an alligator was spotted near a suburban Kansas City pond, local police decided they were taking no chances: They would shoot the fearsome creature from a distance with a rifle. But the alligator took the first shot to the head without batting an eyelid, and then the second one bounced off. At that point, the officers realized the animal was not a bulletproof beast; rather, it was just a concrete lawn ornament, The Associated Press reported Thursday.