Late-Night Headlines
Bloomberg:
- China’s industrial output growth accelerated on record loans and stimulus spending. Industrial production climbed 10.8 percent in July from a year earlier after a 10.7 percent advance in June. Urban fixed- asset investment for the seven months to July 31 rose 32.9 percent. Consumer prices fell 1.8 percent last month. The statistics bureau released the figures at a briefing today in Beijing. Policy makers are wrestling with how to avert property and stock bubbles and bad loans after first-half lending tripled to $1.1 trillion as banks backed the government’s stimulus package. The gain in industrial output was less than the 11.5 percent median estimate of 23 economists. Producer prices dropped a record 8.2 percent, compared with a 7.8 percent fall in the previous month.
- The euro is poised to test support levels of $1.4077 and $1.4007 after its “poor weekly close” against the dollar, according to a Citigroup Inc. technical analysis report. “Euro-dollar is at risk of at least testing the 55-day moving average at $1.4077,” technical strategists Tom Fitzpatrick in NY and Shyam Devani in London “A breach of that on a close basis would suggest a test of $1.3832 in the short term.”
- AT&T Inc.(T) says there will be life after the iPhone. As time ticks down on the biggest U.S. phone company’s exclusive rights to carry the Apple Inc.(AAPL) device, it is looking beyond mobile phones for growth. The company’s next bet may be a camera, electronic-book reader or dog-tracking collar, executives of its wireless unit said in interviews last week.
- Goldman Sachs Group Inc.(GS) was ordered by a federal judge to turn over the employment records of Sergey Aleynikov, the former Goldman computer programmer charged last month with stealing sophisticated trading software. U.S. District Judge Paul Crotty in Manhattan today told Goldman that it must provide the court with Aleynikov’s job application, peer reviews, performance reviews and any complaints filed against him as a Goldman employee. Goldman lawyer Matt Friedrich argued that parts of his personnel file were proprietary information while Aleynikov’s attorney, Sabrina Shroff, said she needs the files to negotiate with prosecutors. The proprietary code, worth millions of dollars, lets the firm do “sophisticated, high-speed and high-volume trades on various stock and commodities markets,” prosecutors said in court documents. Facciponti said a person misusing the code might be able to “manipulate markets.”
- James Hoffa, president of the International Brotherhood of Teamsters, is bracing for what he called the “embarrassment” of a potential strike by his own employees. Hoffa, in a letter to officers of the union, warned that contract negotiations with workers in the Washington office “are not going well.” The workers “refuse to acknowledge the current economic conditions,” he said. Hoffa wrote that the union members “have a right to take strike action, and their union knows the embarrassment that such an event would create.” The Teamsters represent U.S. truck drivers, airline employees, workers in the solid waste industry, and other workers.
- Manhattan office leasing rose last month as tenants took advantage of lower rates, CB Richard Ellis Group Inc. said. Midtown landlords leased 1.58 million square feet of space, 50 percent more than in June and more than the five-year monthly average of 1.32 million, Los Angeles-based CB Richard Ellis, the largest publicly-traded commercial property broker, said in a report. The net amount leased when accounting for space given up by tenants was 420,000 square feet, the first increase of the year. “July is traditionally a slower time for leasing activity,” said Peter Turchin, a CB Richard Ellis executive vice president, on a conference call. “And if you talk to people, it seems there are more deals being worked on.”
Wall Street Journal:
- Obama’s Tone-Deaf Health Campaign. The president shouldn’t worry about the protestors disrupting town hall meetings. He should worry about the Americans who have been sitting at home listening to him.
- Much to their dismay, Americans learned last year that they “owned” Fannie Mae and Freddie Mac. Well, meet their cousin, Ginnie Mae or the Government National Mortgage Association, which will soon join them as a trillion-dollar packager of subprime mortgages. Taxpayers own Ginnie too.
- The brutal recession is opening up the landscape to vulture investors as never before. New data show that distressed-debt deals -- in which creditors use their debt positions to seize ownership of troubled companies -- are running close to double the pace of 2008. Some 140 of the deals have been struck during 2009, compared with 102 transactions for all of last year, according to data provider Dealogic. The deals are valued at $84.4 billion altogether, dwarfing the $20 billion figure from 2008.
President Barack Obama will spend the week trying to convince Americans with health insurance that legislation in Congress would benefit them, holding three town-hall meetings, a venue where Democrats have faced loud complaints. The Democratic National Committee, taking its cues from the White House, said it is mobilizing supporters to attend local meetings that have been dominated by health-overhaul opponents. Organizing for America, Mr. Obama's grass-roots advocacy group, has started sending locally targeted emails to notify supporters when their lawmaker is holding an event in their town.
MarketWatch.com: After years of boom followed by years of bust, the U.S. economy is likely settling into a extended period of slow, steady, boring growth, according to a top forecaster. "It looks like we are in a turning phase," said Jim O'Sullivan, an economist for UBS, who's been predicting since December that a "slow recovery" would take hold in the second half of the year. Now, he says, he's starting to see signs of "positive feedback loops" in the economy, in which positive numbers lead to more positive numbers.
CNBC.com:
The worst is over for the housing market, as low interest rates and strong demand are bringing stabilization to the pressured sector, said Patrick Lashinsky, President and CEO of ZipRealty. "We've gotten supply better under control, new homebuilders aren't putting as many homes on, we've got demand in a good place, [and] interest rates are in a good position," Lashinsky told CNBC.
- August will be a make-or-break month for the drive to revamp health care, as members of Congress use the recess to either sell the need for an overhaul to voters or continue criticism of the insurance industry, the chief of the insurers' main lobbying arm said Monday. Karen Ignagni, president of America's Health Insurance Plans, told editors and reporters from The Associated Press that if lawmakers use their break to vilify her industry, "members of Congress will come back to Washington without a strong sense that health care reform is doable. And that would be a lost opportunity. We think health care reform is going to be won or lost in August." Hoping to buttress support for their effort to reshape health care, President Barack Obama and his Democratic allies have targeted the insurance industry with some of their sharpest barbs. Ignagni said such attacks are designed as a distraction as the health care debate becomes more contentious, saying, "When polls are slipping, people turn to tried-and-true tactics." Ignagni said a federally run plan would drive insurance companies, hospitals and doctors into bankruptcy, leaving only the government to provide coverage, often called single payer. Obama and other Democrats say they have no intention of setting up such a system. "It is a very short step to a single payer, and that's what this whole discussion is about," she said. Despite Democrats' claims that private insurers would continue to compete for business, "the reality is it's never going to work that way," she said. Months ago, the insurance industry proposed easing several of its longtime restrictions, like refusing to issue policies to many sick people or charging them higher rates. In exchange, the industry wants health care legislation to require that nearly all individuals purchase insurance coverage -- a proposal that would bring insurance companies millions of new customers and which Democrats support. Democratic lawmakers have held numerous town-hall meetings that have been disrupted by unruly opponents. Democrats have said many of the disturbances have been instigated by industry-backed groups, but Ignagni said, "None of those people you've seen on TV are ours."
IBD:
- Now under new management and creative talent, Chico's FAS (CHS) seems to be getting some of its groove back.
Business Week: Anybody who was still wondering if Facebook had noticed the rapid rise of Twitter need wonder no more. Today, Facebook announced it’s buying FriendFeed, the news- and information-sharing service founded by four ex-Google engineers. The move is a blatant acknowledgment by the huge social networking service that Twitter, with at least 45.5 million unique visitors a month, has stolen a significant chunk of mindshare from Facebook lately.
CNNMoney.com:
- Down the drain: $1.2 trillion. That's half of the $2.2 trillion the United States spends on health care each year, according to the most recent data from accounting firm PricewaterhouseCoopers' Health Research Institute. What counts as waste? The report identified 16 different areas in which health care dollars are squandered. But in talking to doctors, nurses, hospital groups and patient advocacy groups, six areas totaling nearly $500 billion stood out as issues to be dealt with in the health care reform debate. Doctors ordering tests or procedures not based on need but concern over liability or increasing their income is the biggest waste of health care dollars, costing the system at least $210 billion a year, according to the report. The problem is called "defensive medicine."
Politico:
- Three leading Republican governors on Monday defended the heated exchanges and vigorous protests taking place at health care town hall events across the country. “I think you see a heightened emotion and passion and, you say anger, because people are scared,” said Hawaii GOP Gov. Linda Lingle, during a conference call with reporters organized by the Republican Governors Association. “You’re talking about hundreds of billions of dollars in cuts in spending on Medicare, and that’s why you see members of the AARP separated from their leadership on this issue, because they’re scared,” the Hawaii governor said. “The heightened anger is out of fear for what it’s going to mean for their lives and the lives of their families.”
USA Today.com:
- Hundreds of thousands of "clunkers" headed for scrappers may cause already rising prices for used cars to head even higher, dealers and market analysts warn. The popular cash-for-clunkers program, extended by Congress last week with $2 billion more in federal incentives, requires that all the old fuel guzzlers traded in are scrapped — not resold. That means up to 750,000 vehicles will never find their way into the hands of another owner. Many are at the end of their useful lives, but others, with years of life left in them, normally would be resold. "Those are the cars that lower-income families need," says Geoff Smartt, owner of Smartt Cars in Caldwell, Idaho. The clunker program could cause prices to rise 5% to 10% more, especially for vehicles worth $4,500 or less, says Alec Gutierrez, senior market analyst for Kelley Blue Book. "It's going to drive prices up of some of the most affordable vehicles we have on the road." Sen. Tom Coburn, R-Okla., called that provision "nuts" during debate in the Senate last week. He said that in his state, one trade-in had less than 10,000 miles on the odometer. "We're going to destroy the opportunity for somebody less fortunate to have that automobile," he said. Used car dealers agree. They say fewer older cars are at auction. Too few older cars at reasonable prices could put some dealers out of business, says Tim Swift, general manager of the Corry Auto Dealers Exchange, an auction operation for dealers in Corry, Pa."It's was tough finding them before, and now, it's even worse," says Mike Williams, owner of Auto Wise in Shelbyville, Ky. "The $3,000-to-$5,000 car is just gone."
Reuters:
- NASA plans to use $50 million of federal economic stimulus funds to seed development of commercial passenger transportation service to space, agency officials said on Monday. Aspiring spaceship operators will have 45 days to submit proposals, which will be competitively evaluated. Awards for the Commercial Crew Development program are expected to be announced before the end of September.
- Lone Star Funds joined other big private equity names in opposing proposed U.S. rules for investments in failed banks, as a designated period for public comment on the draft regulations comes to an end on Monday. The Federal Deposit Insurance Corp (FDIC) kicked up a storm last month when it proposed tough guidelines for private investors seeking to buy failed banks, suggesting such groups should have to maintain higher capital levels and support the banks they buy. The proposed guidelines have drawn critical comments from many investors who argue that they unfairly place an onerous burden on them and warn that the rules, if finalized as they are, would chill private investments in banks.
- Renewable energy leaders on Monday said the United States is moving too slowly to turn the economy green, despite support of the administration of President Barack Obama. Executives from wind and solar, and other industries in the expanding world of "cleantech" argued utilities should be required to buy much more renewable energy and warned that unless the federal government closes a hole in climate legislation, the energy can't reach homes that need it. Former President Bill Clinton and others called for more loan guarantees and federal spending on efficiency while speaking at the National Clean Energy Summit sponsored by Senate Majority Leader and Nevada Democrat Harry Reid.
Financial Times:
- The Federal Reserve Bank of New York is aggressively hiring traders as its seeks to manage its burgeoning securities holdings, making the central bank one of Wall Street’s most active recruiters of financial talent. The New York Fed – the arm of the US central bank that implements its monetary policy – plans to increase the staff in its markets group to 400 by the end of the year – up from 240 at the end of 2007. The Fed has been buying fixed-income securities at such a rate that its assets have more than doubled to $2,000bn in the past year, leading the central bank to conclude that it needs more people to monitor the markets and to manage its credit risks.
- At a recent meeting with senior military staff, James Jones, Barack Obama’s national security adviser, warned that any request for more US troops in Afghanistan would prompt a presidential “WTF” moment. WTF, in the highly acronymic Pentagon culture, literally means “whisky tango foxtrot”. But in practice it means: “What the f***?” Having already “surged” an additional 21,000 troops to Afghanistan bringing US forces up to a peak of 68,000, Mr Obama could be forgiven for responding with expletives. At a time when the US president is under acute pressure to rein in a huge US fiscal deficit and when the Pentagon is severely overstretched, another hefty troop request would be hard to satisfy. Yet it would be even harder to turn down. Having sacked David McKiernan, the previous military commander in Afghanistan, and replaced him with David McChrystal, Mr Obama is beholden to the thinking on the ground. Gen McChrystal, an expert in the troop-intensive ways of fighting counter-insurgencies, is readying a much-awaited assessment report, which is expected to include a request for at least another 10,000 troops. In fact, there are credible rumors that Gen McChrystal could even be planning to ask for as many as 20,000 to 30,000 more. Any such request would be likely to get the backing of David Petraeus, the head of Central Command, which oversees Afghanistan, and author of the counter-insurgency troop surge in Iraq. It would also meet with the approval of most experts, who point out that the ratio of troops to population in Afghanistan is too low to guarantee success.
TimesOnline:
- Britain’s financial markets regulator is ready to resist American-led pressure for tighter controls on trading in the London oil market. It is understood that the Financial Services Authority (FSA) invited up to 30 market participants, including traders, banks and funds, to a private meeting last Wednesday to discuss transparency and regulation in the oil market. The meeting was held as the Commodity Futures Trading Commission (CFTC), the FSA’s American equivalent, held a hearing in Washington that is expected to result in the introduction of stricter rules in the American energy futures market, including new limits on trading positions. No formal statement was issued by the FSA, but industry analysts said that delegates, including those from the FSA, had expressed opposition to making similar moves in Britain.
MailOnline:
- The bank where Tony Blair is an adviser is the target of an unprecedented probe involving billions of pounds of customers' funds, the Daily Mail can disclose. JP Morgan Chase, whose chief executive Jamie Dimon last year recruited the former prime minister as an adviser, is being investigated by the City's watchdog, the Financial Services Authority for allegedly failing to keep track of £8.5billion of clients' money. The FSA has called in a top firm of accountants to examine the bank's London activities after evidence emerged that JP Morgan had mixed customers' funds with its own.
Late Buy/Sell Recommendations
Citigroup:
- Upgraded (CELL) to Buy, target $9.
- Upgraded (SAT) to Buy, target raised to $21, Added to Top Picks Live list.
Night Trading
Asia Ex-Japan Inv Grade CDS Index unch.
Morning Preview
US AM Market Call NASDAQ 100 Pre-Market Indicator/Heat Map Pre-market Commentary Pre-market Stock Quote/Chart Global Commentary WSJ Intl Markets Performance Commodity Futures Top 25 Stories Top 20 Business Stories Today in IBD In Play Bond Ticker Economic Preview/Calendar Earnings Calendar
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Earnings of Note
Company/EPS Estimate
- (CREE)/.16
- (CLWR)/-.34
- (WRC)/.48
- (FOSL)/.20
- (AMAT)/-.08
Economic Releases
8:30 am EST
- 2Q Preliminary Non-farm Productivity is estimated to rise 5.5% versus a 1.6% gain in 1Q.
- 2Q Preliminary Unit Labor Costs are estimated to fall 2.5% versus a 3.0% gain in 1Q.
10:00 am EST
- Wholesale Inventories for June are estimated to fall .9% versus a .8% decline in May.
Upcoming Splits
Other Potential Market Movers
BOTTOM LINE: Asian indices are slightly higher, boosted by technology and insurance shares in the region. I expect US
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