Yellen snowed out: Ed’s Daily Notes for February 13th   3 comments

Bad news for Janet Yellen fans: Her testimony before the Senate Banking Committee today has been postponed due to the weather. Try not to shed too many tears…

Fox News: Congress approves debt-ceiling increase, sends bill to president’s desk

The Senate on Wednesday approved an increase in the nation’s debt limit, sending the legislation to President Obama’s desk as party leaders opted to avert another standoff over the government’s deficit spending.

…The hastily called vote comes after the House, a day earlier, approved the increase, with no strings attached. The decision by Speaker John Boehner marked a retreat from Republicans’ past practice of demanding concessions — spending cuts, or other provisions — in exchange for raising the debt limit.

In case you were wondering, here is a description of the bill (from Fox News also):

The Temporary Debt Limit Extension Act will suspend the nation’s borrowing cap until March 15, 2015. Under the bill, on March 16, 2015, the debt limit will be reinstated and reset to include money borrowed up to that point. As of Feb. 8, the debt limit was set at $17.2 trillion. By March 15, 2015, when the debt limit will automatically reset under this bill, the debt subject to the limit should be above $18 trillion.

So by next March, the U.S. government will owe about $60,000 for every man, woman, and child in this country. Congratulations Americans! Your representatives just cost you another $2,700. But you can afford it, right?

Bloomberg: Spain Said to Ask Banks to Accept Losses on Loans for Highways

Spain’s government is asking banks including Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA to accept losses on about 3.5 billion euros ($4.8 billion) of debt backed by highways, three people familiar with the matter said.

Officials discussed their proposal with the lenders that financed eight failed highways at a meeting yesterday, said the people, who asked not to be named because the talks are private. Officials, who also invited the owners of the concessions to the talks, are asking banks to accept haircuts to reduce the potential cost for taxpayers, the people said. They didn’t specify the size of the proposed write-down.

The government has been searching for a formula to rescue about 364 miles of insolvent highway concessions owned by builders including Ferrovial SA (FER), Sacyr SA (SCYR) and Actividades (ACS) de Construccion y Servicios SA. The taxpayer is on the hook for at least part of their liabilities under a 1972 law governing public concessions.

As a Banco Santander (SAN) shareholder, I am not pleased about this. However, Santander can easily afford it, even if this is politically spineless on the part of Spain’s government.

Bloomberg: Comcast Said to Agree to $44 Billion Time Warner Cable Deal

Comcast Corp. (CMCSA) agreed to acquire Time Warner Cable Inc. for about $44 billion, combining the largest two U.S. cable companies in an all-stock deal, according to four people familiar with the matter.

Here is why I am interested in this story:

“This leaves Comcast as the sole king of the cable hill, with John Malone and Charter hitting a brick wall in their hopes of becoming a close number-two,” Richard Greenfield, an analyst with BTIG LLC, said by e-mail. “This is a game changer for Comcast.”

…Charter is unlikely to match Comcast’s bid and is willing to study any assets Comcast would sell, one of the people said. Comcast will volunteer to divest about 3 million subscribers of the combined company to keep its market share below 30 percent and is willing to sell them to Charter, another person said.

Stamford, Connecticut-based Charter may still have a chance to make a final offer if the agreement with Comcast calls for Time Warner Cable to pay a breakup fee should the deal fall through, one person said.

Charter is owned by Liberty Media (LMCA), which is the company attempting to buyout Sirius XM (SIRI). John Malone was trying to acquire Sirius in order to juice his cash flow, so he could buy Time Warner.

Now that Time Warner is likely off the market, that leaves the Sirius acquisition up in the air. My guess is Sirius will give Malone a counter-offer, probably in the $4-4.50 range. Malone may decide to walk at that point. Even if he accepts the offer, I expect Sirius will do better without the weight of Liberty Media’s stock price weighing on it. Either way, this looks like a win-win for Sirius owners.

Bloomberg: Australian Unemployment Jumps to 10-Year High; Aussie Drops

Australia’s unemployment rate climbed to the highest level in more than 10 years in January, spurring traders to pare bets on an interest-rate increase and sending the Aussie to its biggest drop in almost three weeks.

The jobless rate rose to 6 percent from 5.8 percent, the statistics bureau said in Sydney. The median estimate was an increase to 5.9 percent in a Bloomberg News survey of economists. The number of people employed fell by 3,700.

The softer-than-expected jobs report damped expectations the Reserve Bank of Australia will switch to tighter policy amid surging property prices, rising building approvals and a forecast acceleration in growth and inflation. Toyota Motor Corp., General Motors Co. and Ford Motor Co. have said they’re closing plants and shedding jobs in Australia as high production costs and a strong currency render them uncompetitive.

While I would avoid Australian investments for now, they definitely deserve a place on a watchlist.


Posted February 13, 2014 by edmcgon in Federal Reserve, News, Politics, Stocks

3 responses to “Yellen snowed out: Ed’s Daily Notes for February 13th

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  1. Spain is incredible … on the one hand they say to accept losses on loans for highways, on the other hand they are going to build an aircraft-carrier with Turkey (yes, with Turkey …)
    This is even too crazy to be fiction.

  2. Ed- I am also a shareholder of SAN, and like it’s nice dividend, but concerned about their future. Are you holding onto your shares?

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