Dow rose 109, advancers ahead of decliners 2-1 & NAZ gained 28. The MLP index ended up only 3 to the 249s & the REIT index inched up a fraction to 283. Junk bond funds were mixed while Treasuries barely budged. Oil was about even & gold declined before the Federal Reserve starts a 2-day
meeting as investors weighed when the central bank will taper asset
purchases.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Yahoo
Detroit's default & debt-restructuring plan are precedent-setting in the US municipal market, Moody's said, because the city is looking to bondholders, as well as labor unions & pensioners, to share the pain. On Fri, the city defaulted on a $39.7M payment on certificates of participation & presented a plan to restructure its finances. "The restructuring plan is unconventional and precedent-setting in the municipal market. It builds a strong case for insolvency, girding the city for a tough fight with creditors of all types," Moody's said in a statement. The proposal by Emergency Manager Kevyn Orr calls for unsecured creditors to take a pro rata share of $2B of new limited recourse participation notes, which would be issued to replace approximately $11B of unsecured obligations. "The substantial reduction offered to unsecured creditors, the extent of the city's financial stress and the complexity of the city's debt add to the uncertainty of many classes of debt ultimately recovering their investment," the rating agency added. Much of Detroit's debt is insured. Syncora Holdings said that its wholly owned unit Syncora Capital Assurance received notice of the default & confirmed its pledge to pay bondholders according to contractual terms. On Fri, 2 of the insurers, National Public Finance Guarantee (MBI), & Assured Guaranty (AGO), had already confirmed that bondholders will be reimbursed. Moody's also said the plan is unusual as it proposes similar treatment of various debt security types. It noted that Orr did not propose a plan for creditors who are considered secured, such as the debt of the city's water & sewer enterprises or the city's general obligation debt, which is enhanced by state aid and claims relative to interest rate swaps. However, the latter are subject to negotiations. "The plan appears to treat the general obligation and pension obligation certificates similarly, which would be a break from tradition," Moody's said. S&P, which on Fri downgraded the city, said it was sure to cut the rating further.
Detroit Default, Restructuring Plan Break New Ground: Moody's Reuters
Google resolved a shareholder lawsuit blocking a long-delayed stock split, clearing the way for it to issue a new class of non-voting shares this year. The class-action, alleged that co-founders Larry Page & Sergey Brin engineered the stock split in a way that unfairly benefits them while shortchanging the rest of the company's shareholders. GOOG denied the allegations & maintained that the proposed stock split announced 14 months ago would benefit shareholders by ensuring that Page & Brin would preserve the power that has enabled them to make the same kinds of bold bets on technology that has helped increase the company's market value by more than $260B during the past nine years. The split calls for a new class of "C'' stock with no voting power to be issued for each share of an existing category of "A'' voting stock. The structure is designed to ensure that Page & Brin retain control over the company, even though they only currently own about 15% of the stock (combined). CEO Page & Brin (who oversees special projects in the company's secret X Lab) hold 56% of Google's voting power through a "B'' class of stock that gives them 10 votes per share. By creating a new class of non-voting shares, GOOG will be able to keep rewarding other employees with more stock & financing potential acquisitions of stock without undermining the voting power of Page & Brin. The settlement still requires final court approval after shareholders have an opportunity to file any further objections. The stock has had a good run & was up 11 today.
Google settles suit, clears way for stock split AP
Photo: Bloomberg
Apple received as many as 5K requests for customer information from US law enforcement authorities amid widening revelations of gov data collection. 9-10K accounts or devices were specified in the requests between Dec 1 & May 31, the company said. Facebook (FB) & Microsoft (MSFT), a Dow stock, said they received thousands of warrants for data from gov entities during H2 of 2012. “Like several other companies, we have asked the U.S. government for permission to report how many requests we receive related to national security and how we handle them,” Apple said. “We have been authorized to share some of that data, and we are providing it here in the interest of transparency.” AAPL said it hadn’t heard of PRISM until Jun 6 when news organizations asked it questions. Requests came from federal, state & local authorities & included both criminal & national security matters, it said. Police investigations into crimes such as robbery were the most-common form of request, it said. No gov agency has direct access to AAPL servers & it doesn’t store data related to customers’ location, map searches or Siri requests in any identifiable form, the company said. Conversations over the iMessage & FaceTime functions are protected by end-to-end encryption, which means only the sender and receiver can see or read them, & AAPL can’t decrypt the data, the company said. Nobody knows where all this will lead. AAPL stock went up $2.
Apple Received U.S. Government Requests for Data on Up to 10,000 Accounts
The bankruptcy for Detroit sends a chilling message to the stock market. If the US recovery was stronger, maybe it could have helped the city to muddle by, especially with the automakers doing well. There will be losses by the debt holders, even after insurance claims are paid. Other municipalities have defaulted in recent years, but this has to be the biggest. While not the biggest problem for the stock market, it still hurts. Meanwhile stocks saw selling in the PM, led by the high yield sectors. Markets are very nervous while they wait for Big Ben to speak & define what's next for the stimulus program.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.00% | |
U.S. 2-year |
0.26% | |
U.S. 10-year |
2.16% |
| CLN13.NYM | Crude Oil Jul 13 | 97.90 |  0.05 (0.1%) |
Photo: Yahoo
Detroit's default & debt-restructuring plan are precedent-setting in the US municipal market, Moody's said, because the city is looking to bondholders, as well as labor unions & pensioners, to share the pain. On Fri, the city defaulted on a $39.7M payment on certificates of participation & presented a plan to restructure its finances. "The restructuring plan is unconventional and precedent-setting in the municipal market. It builds a strong case for insolvency, girding the city for a tough fight with creditors of all types," Moody's said in a statement. The proposal by Emergency Manager Kevyn Orr calls for unsecured creditors to take a pro rata share of $2B of new limited recourse participation notes, which would be issued to replace approximately $11B of unsecured obligations. "The substantial reduction offered to unsecured creditors, the extent of the city's financial stress and the complexity of the city's debt add to the uncertainty of many classes of debt ultimately recovering their investment," the rating agency added. Much of Detroit's debt is insured. Syncora Holdings said that its wholly owned unit Syncora Capital Assurance received notice of the default & confirmed its pledge to pay bondholders according to contractual terms. On Fri, 2 of the insurers, National Public Finance Guarantee (MBI), & Assured Guaranty (AGO), had already confirmed that bondholders will be reimbursed. Moody's also said the plan is unusual as it proposes similar treatment of various debt security types. It noted that Orr did not propose a plan for creditors who are considered secured, such as the debt of the city's water & sewer enterprises or the city's general obligation debt, which is enhanced by state aid and claims relative to interest rate swaps. However, the latter are subject to negotiations. "The plan appears to treat the general obligation and pension obligation certificates similarly, which would be a break from tradition," Moody's said. S&P, which on Fri downgraded the city, said it was sure to cut the rating further.
Detroit Default, Restructuring Plan Break New Ground: Moody's Reuters
Google resolved a shareholder lawsuit blocking a long-delayed stock split, clearing the way for it to issue a new class of non-voting shares this year. The class-action, alleged that co-founders Larry Page & Sergey Brin engineered the stock split in a way that unfairly benefits them while shortchanging the rest of the company's shareholders. GOOG denied the allegations & maintained that the proposed stock split announced 14 months ago would benefit shareholders by ensuring that Page & Brin would preserve the power that has enabled them to make the same kinds of bold bets on technology that has helped increase the company's market value by more than $260B during the past nine years. The split calls for a new class of "C'' stock with no voting power to be issued for each share of an existing category of "A'' voting stock. The structure is designed to ensure that Page & Brin retain control over the company, even though they only currently own about 15% of the stock (combined). CEO Page & Brin (who oversees special projects in the company's secret X Lab) hold 56% of Google's voting power through a "B'' class of stock that gives them 10 votes per share. By creating a new class of non-voting shares, GOOG will be able to keep rewarding other employees with more stock & financing potential acquisitions of stock without undermining the voting power of Page & Brin. The settlement still requires final court approval after shareholders have an opportunity to file any further objections. The stock has had a good run & was up 11 today.
Google settles suit, clears way for stock split AP
Google (GOOG)
Photo: Bloomberg
Apple received as many as 5K requests for customer information from US law enforcement authorities amid widening revelations of gov data collection. 9-10K accounts or devices were specified in the requests between Dec 1 & May 31, the company said. Facebook (FB) & Microsoft (MSFT), a Dow stock, said they received thousands of warrants for data from gov entities during H2 of 2012. “Like several other companies, we have asked the U.S. government for permission to report how many requests we receive related to national security and how we handle them,” Apple said. “We have been authorized to share some of that data, and we are providing it here in the interest of transparency.” AAPL said it hadn’t heard of PRISM until Jun 6 when news organizations asked it questions. Requests came from federal, state & local authorities & included both criminal & national security matters, it said. Police investigations into crimes such as robbery were the most-common form of request, it said. No gov agency has direct access to AAPL servers & it doesn’t store data related to customers’ location, map searches or Siri requests in any identifiable form, the company said. Conversations over the iMessage & FaceTime functions are protected by end-to-end encryption, which means only the sender and receiver can see or read them, & AAPL can’t decrypt the data, the company said. Nobody knows where all this will lead. AAPL stock went up $2.
Apple Received U.S. Government Requests for Data on Up to 10,000 Accounts
Apple (AAPL)
The bankruptcy for Detroit sends a chilling message to the stock market. If the US recovery was stronger, maybe it could have helped the city to muddle by, especially with the automakers doing well. There will be losses by the debt holders, even after insurance claims are paid. Other municipalities have defaulted in recent years, but this has to be the biggest. While not the biggest problem for the stock market, it still hurts. Meanwhile stocks saw selling in the PM, led by the high yield sectors. Markets are very nervous while they wait for Big Ben to speak & define what's next for the stimulus program.
Dow Jones Industrials
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