Monday (01/09/12) Mid-Day Market Report

Mid-Day Market Action

US: Dow: 12376.12 (0.13%), S&P 500: 1279.32 (0.12%), NASDAQ: 2676.46 (0.08%)
Europe: CAC: 3127.69 (-0.31%), DAX: 6017.23 (-0.68%), FTSE: 5612.26 (-0.67%).
Asia:Australia: 4105.40 (-0.08%),China: 2225.89 (2.81%),Hong Kong: 18865.72 (1.45%),India: 4742.80 (-0.09%),Japan: 8390.35 (-1.17%),Korea: 1826.49 (-0.91%),Singapore: 2691.28 (-0.90%),
Metals: Gold: 1615.90 (-0.06%), Silver: 29.02 (1.19%), Copper: 3.42 (-0.48%)
Energy: Crude Oil: 100.57 (-0.97%), Natural Gas: 3.02 (-1.37%)
Agriculture: Corn: 6.53 (1.48%), Soya Bean: 12.23 (2.80%), Wheat: 6.40 (1.48%).
Currency: EUR/USD: 1.2739 (0.1748%), GBP/USD: 1.5426 (-0.0008%), USD/JPY: 76.8678 (-0.1299%)
10 year US Treasury: 1.933% (-0.024)

Market News Update

U.S. stocks fluctuate before earnings: U.S. stocks were little changed, following last week’s advance in the Standard & Poor’s 500 Index, as leaders discussed shoring up the euro and investors awaited the start of the fourth-quarter earnings season. http://money.cnn.com/2012/01/09/markets/markets_newyork/index.htm?iid=HP_LN

Treasury prices rally: Treasury prices turned up on Monday, pushing yields down slightly. Yields on 10-year notes, which move inversely to price, fell 4 basis points to 1.93%, after rising to 1.99% before Wall Street opened. Bonds were under slight pressure in pre-opening trade, after German Chancellor Angela Merkel and French President Nicolas Sarkozy said they made progress on a pact to toughen budget rules across the euro zone. http://online.wsj.com/article/SB10001424052970204257504577150601775228784.html?mod=WSJ_Markets_MIDDLETopStories

Gold trading flat: Gold futures prices are near unchanged levels in subdued early U.S. trading Monday. The European Union sovereign debt crisis is once again creeping to the front burner of the market place, which has traders and investors in an extra cautious mood to start the trading week. http://online.wsj.com/article/SB10001424052970204257504577150623201884602.html?mod=WSJ_Markets_MIDDLTopStories

Oil prices fall: Oil dropped a third day as German industrial output declined, signaling that growth in Europe’s largest economy may have stalled, and as concern eased that Iran will block crude shipments from the Persian Gulf. http://www.reuters.com/article/2012/01/09/us-markets-oil-idUSTRE7AD06820120109

Swiss national bank chief resigns: Swiss National Bank Chairman Philipp Hildebrand resigned with immediate effect on Monday, saying he could not prove he had been unaware of a controversial currency trade made by his wife and wanted to protect the integrity of the central bank.

http://www.bloomberg.com/news/2012-01-09/hildebrand-quits-as-swiss-national-bank-chief-after-wife-s-currency-trade.html

Company News Update

Ford Motor Company (F) unveiled new, fully redesigned versions of its popular Fusion mid-sized sedan at theDetroit auto show. The new line-up will include Ford’s first plug-in hybrid sedan.
Alcoa (AA) said on Monday it plans to scale down operations at three aluminum smelters inItaly andSpain to tighten expenses as metal prices continue to fall. Alcoa was the strongest blue-chip stock, rising 2.5% as investors awaited the aluminum company’s fourth-quarter results.
Netflix (NFLX) launched in the United Kingdom and Ireland on Monday in a strategic move that directly competes with Amazon-owned (AMZN) Lovefilm by providing a range of movies and shows available for instant download.
The world’s largest video-game retailer, GameStop (GME) disclosed on Monday a surprise slump in 2011 holiday sales due to weak Wii game sales, but the video-game retailer is sticking to its financial guidance.
Idenix Pharmaceuticals Inc. (IDIX) and Achillion Pharmaceuticals Inc., developers of hepatitis C drugs, rose on speculation they may follow Inhibitex Inc. (INHX) and Pharmasset Inc. (VRUS) as acquisition targets.
Broadcom Corp. (BRCM) rallied 2.8 percent after Deutsche Bank AG said soft fourth-quarter results for chipmakers create a buying opportunity for the shares.
Costco Wholesale Corp. (COST) lost 2.5 percent after Sanford C. Bernstein & Co. cut its rating for the warehouse-club chain.

Hedge Fund News Update

Hedge funds raised their wagers on higher commodity prices by the most since July 2010 after signs of accelerating U.S.growth bolstered optimism that demand for raw materials will strengthen. Money managers expanded their combined net-long positions across 18 U.S.futures and options by 25 percent to 671,915 contracts in the week ended Jan. 3, Commodity Futures Trading Commission data show. Bullish bets on cotton rose the most since April 2009 and those on coffee doubled. Crude-oil holdings reached a three-week high.
Hedge funds that exited oil markets late last year have begun boosting bullish bets as tensions with Iran and reports of U.S. economic growth sent crude to the highest price since May.
Former Soros Fund Management LLC trader John Zwaanstra plans to return outside capital in Penta Investment Advisers Ltd., the Asia-focused hedge fund he set up in 1998.
Deutsche Bank and Financial Risk Management (FRM) today announced a partnership to launch the industry’s first hedge fund seeding managed account platform.
IMQubator, backed by APG, asset manager for the biggest Dutch pension fund, has teamed up with Hong Kong-based Synergy Fund Management to provide capital to hedge funds inAsia to start up or accelerate fundraising.
A former partner at Eton Park International, the London arm of $14bn hedge fund firm Eton Park Capital Management, is preparing to launch a new hedge fund.
Hedge funds last year had their worst outing since 2008, underperforming the stock market amid record volatility, Europe’s debt woes and a worsening U.S.economy. Hedge fund managers struggled to generate alpha, or gains above market indices. Hennessee Group, an adviser to hedge fund investors, said today that its Hennessee Hedge Fund Index dropped 4.3% in 2011, compared to a flat performance for the S&P 500. It was the second year in a row that hedge funds failed to beat equity indices.
Rising cross-asset correlation has made it harder for hedge funds to generate alpha. An analysis shows correlation between the S&P 500 and US Treasury bills hit a 13-year low in 2011. Extreme levels of cross-asset correlation have made it more difficult for hedge funds to generate positive returns in 2011, according to Stuart Rosenthal, CEO of Factor Advisors, an asset manager specializing in spread-trading strategies.
Bermuda-based fund administrator, Butterfield Fulcrum Group (BFG), which was acquired by Glenn Henderson and Tim Calveley, partnered by private-equity form BV Investment Partners in May last year, has grown from strength to strength since and is currently in the process of hiring 12 new employees having signed up 36 new clients already this month. The company has taken advantage of the demise of Citi Hedge Fund Services, Citco Fund Services and CACEIS Investor Services (Bermuda) Ltd, who have all cut jobs inBermuda over the past year.