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Thursday, September 20, 2012

Spain Holds Most Successful Bond Sale since January on ECB Plan

High demand for Spanish bonds pushed borrowing costs down today at an auction of three- and 10-year bonds. Spain sold a total of €4.8 billion in bonds, above its €4.5 billion target, making it the most successful auction since January. While data released today by Markit Economics shows business activity in the euro area contracted for a 12th month in 13, pointing to a continued economic slump in the region, the plan presented two weeks ago by the European Central Bank seems to have reassured investors. The sale of a new benchmark three-year bond also signals that Spain may be preparing to ask the ECB for help, as the central bank said it will be buying shorter maturities from investors as part of its rescue program. The nation has so far been reluctant to request a bailout package as the government fears the harsh conditions the ECB said it would impose in exchange for aid. Meanwhile in Greece, negotiations between the three-party government coalition failed to lead to an agreement on the additional €11.5 billion euro spending cuts demanded by the nation’s three last-resort lenders, the ECB, the European Union, and the International Monetary fund (the Troika).

Syria’s Assad Warn Rebels “Will Not Be Victorious”

Syria President Bashar al-Assad said today the opposition forces, to which he refers as terrorists, “will not be victorious” against his regime. In the same interview with Egyptian weekly magazine Al-Ahram Al-Araby, he also said the “door to dialogue remains open.” Assad reiterated that foreign intervention in the civil war that is tearing his country apart will not be welcome, adding “the West does not appreciate the axis of resistance against Zionism advocated by Syria.” Assad refers to Iran, Syria, and Lebanon-based militant group Hezbollah as the “axis of resistance” against Israel. Meanwhile, the Syrian army bombed a Palestinian refugee camp in Syria’s capital Damascus. An airstrike by the Assad regime also hit a crowded gasoline station, killing at least 30 people in the province of Raqqa at the north of the country. Separate reports indicate an army helicopter fell. While the state media says it was an accident, rebels say they shot it down.

BSkyB Deemed “Fit and Proper” to Own Broadcast License by U.K. Regulator

U.K. competition regulator for the media industry Ofcom ruled today on BSkyB, the broadcasting company owned by Australian Magnate Rupert Murdoch, saying it is a “fit and proper” owner of broadcasting licenses. This is a victory for the Murdoch camp, handed to them over a year after the phone-hacking scandal that led to the demise of tabloid News of the World. Ofcom, which opened the review of BSkyB on July 6, 2011, did criticize Murdoch’s son James for his handling of the scandal, saying he “repeatedly fell short of the conduct to be expected of as a chief executive and chairman.” News of the World was owned by News Group Newspaper, which itself belonged to News International, but the regulator found no evidence of misconduct by BSkyB, and left the decision of keeping James Murdoch as a non-executive director to the company’s board and shareholders. In response to the criticism, BSkyB expressed disagreement “with certain of the report’s statements about James Murdoch’s prior actions as an executive and director, which are not at all substantiated by evidence.”

Somalia: Blast in Mogadishu Kills 15 People

A suicide bomber attacked a restaurant in Somalia’s capital Mogadishu today, killing at least 15 people. The restaurant, a popular place in the center of town, is often frequented by journalists and government officials. This is the latest incident in the war-torn country, where militants of the group Al Shahab have been attempting to overthrow the government. Al Shahab is suspected of being linked to Al Qaeda. The restaurant, which was owned by Somalis who returned from Britain, is one of the few businesses founded by nationals who left Somalia for a long time and came back. Al Shahab has been active for two decades, losing terrain in recent years and resorting to terrorist attacks. This incident comes a week after an assassination attempt against newly elected President Hassan Sheikh Mohamud, of the Peace and Development Party, that killed three soldiers.

U.S. Economy and Job Market Show Enduring Weakness

Three reports published today show that the U.S. economy is still fighting to recover. The Labor Department said jobless applications fell by 3,000 last week to 382,000. As an indication, a strong job market would require them to fall below 375,000. Separately, the Federal Reserve of Philadelphia announced its regional manufacturing index for September remained below zero for a fifth consecutive month, indicating further contraction. Finally, the Conference Board’s Leading Economic Index fell 0.1 percent in August, after a 0.5 increase in July and a 0.5 percent drop in June. The conference board also said consumer confidence dropped last month, presaging weak domestic demand for goods and services. Many companies are still reluctant to hire because of the looming “fiscal cliff”: should Congress not reach a budget deal before the end of this year, spending cuts and tax increases will be triggered. Last week the U.S. Federal Reserve announced a third round of bond purchases in an effort to boost the job market, but Fed Chairman Ben Bernanke warned it wouldn’t be a “panacea,” and urged Congress to act.

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