Bloomberg:
- EU Pledges 'Maximum Transparency' on Stress Tests. European officials pledged “maximum transparency” on bank stress tests when they publish results bank by bank this month. “The results will be published on July 23 on a consolidated basis, that is, at group level, including foreign branches and subsidiaries,” a European Commission spokeswoman in Brussels said by phone today, clarifying earlier comments by Belgian Finance Minister Didier Reynders. Belgium currently holds the rotating European Union presidency. National authorities may publish further data related to cross-border bank subsidiaries about two weeks later, she said. “It is clear we want to go to maximum transparency,” Reynders told a joint news conference with EU Commissioner Olli Rehn, who said there was “strong unanimity” among nations on the need for transparency.
- A benchmark indicator of corporate credit risk in the U.S. fell to a three-week low as stocks rallied and European officials pledged "maximum transparency" on bank stress tests being published this month. Credit-default swaps on the Markit CDX North America Investment Grade Index declined 3.3 basis points to a mid-price of 108.6 basis points as of 12:16 pm in NY. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings decreased 1.3 basis points to 115.4.
- Portugal's Credit Rating Cut Two Notches at Moody's. Portugal had its credit rating cut two levels to A1 at Moody’s Investors Service on prospects for weak economic growth and a growing debt burden after the government allowed its budget deficit to balloon. “The Portuguese government’s financial strength will continue to weaken over the medium term,” Moody’s said in a statement today, adding that the outlook is stable. “The Portuguese economy’s growth prospects are likely to remain relatively weak unless recent structural reforms bear fruit over the medium-to-longer term.” Portuguese bonds extended declines after the rating cuts, with the yield on the benchmark 10-year bond rising 7 basis points to 5.50 percent. That widened the yield premium investors demand to buy the Portuguese bond over comparable German debt by 4 basis points to 284 basis points.
- Tyco Electronics(TYC) to Buy ADC(ADCT) for About $1.25 Billion. Tyco Electronics Ltd., the world’s biggest maker of electronic connectors, agreed to buy ADC Telecommunications Inc. for about $1.25 billion to add broadband equipment that helps companies connect to the Internet. Tyco Electronics will pay $12.75 a share, or 44 percent more than Eden Prairie, Minnesota-based ADC’s closing stock price yesterday, according to a statement today. The purchase will bolster Tyco Electronics’ profit by 14 cents a share in the first year, the Schaffhausen, Switzerland-based company said.
- Oil Increases Most in a Month as U.S. Equities Advance on Alcoa. Crude oil gained the most in a month in New York as U.S. equities jumped after Alcoa Inc.’s earnings topped analysts’ estimates. Oil rose as much as 3.2 percent amid speculation the report by Alcoa, the first company in the Dow Jones Industrial Average to issue second-quarter results, signaled broader economic growth.
- U.S. Appeals Court Strikes Down FCC Indecency Policy. A federal appeals court in New York struck down the U.S. Federal Communications Commission’s indecency policy, saying it violates the First Amendment right to free speech because it’s “unconstitutionally vague.” The court considered the agency’s censure of “fleeting expletives” on live television shows. The U.S. Supreme Court ruled last year in a challenge to the policy by media companies that the “pervasiveness of foul language” and the “coarsening to public entertainment” justified the commission’s more stringent regulation of broadcast programs.
- Mortgage-Bond Yield Spreads Approach Lowest Level on Record. Yields on Fannie Mae and Freddie Mac mortgage securities that guide U.S. home-loan rates approached record lows relative to Treasuries as evidence of climbing borrowing costs and homeowners’ refinancing difficulties reduce concern that supply will increase. Fannie Mae’s current-coupon 30-year fixed-rate mortgage bonds narrowed 0.04 percentage point to about 0.64 percentage point more than 10-year Treasuries as of 12:15 p.m. in New York, according to data compiled by Bloomberg. The gap reached 0.59 percentage point on March 29, two days before the Federal Reserve ended its buying of $1.25 trillion of home-loan debt.
- Imports Point to Pickup in U.S. Spending, Morgan Stanley Says. “With much of the upside surprise in imports in a surge in capital goods, the outlook for domestic investment looks even stronger,” David Greenlaw and Ted Wieseman, Morgan Stanley economists in New York, said in a note to clients. The pickup in business investment meant the world’s largest economy probably grew at a 4.4 percent rate excluding trade and inventories, more than they previously projected and the best performance by that measure since the first quarter of 2006. American companies bought 5.5 percent more capital goods in May, the biggest gain since March 2006, today’s report showed. The increase was led by growing demand for computers, drilling equipment, industrial machines and engines. Greenlaw and Wieseman bumped up their second-quarter forecast for the increase in business spending on equipment and software to 21 percent at an annual rate from 18 percent, which would make it best biggest gain since the first three months of 1998.
- June Budget Deficit in U.S. Narrowed to $68.4 Billion. The U.S. government posted a smaller budget deficit in June compared with the same month last year as the economic recovery brought in more tax revenue. The excess of spending over receipts fell to $68.4 billion last month from $94.3 billion in June 2009, according to a Treasury Department report issued today in Washington. It was the 21st consecutive shortfall. For the fiscal year to date, the budget deficit totaled $1 trillion compared with $1.42 trillion during the prior year to date. Even as the economy recovers from the deepest recession since the 1930s, the budget deficit is forecast to reach a record $1.6 trillion this fiscal year as the government funds efforts to revive growth and employment. Corporate tax receipts were up 30 percent for the fiscal year to date to $133 billion from the same period in 2009. Individual income tax collections are down 4.4 percent year to date to $655.4 billion. Spending for the entire government for June increased 3.2 percent from the same month a year earlier to $319.5 billion. Spending by the Defense Department year to date rose to $499.1 billion from $472.8 billion in 2009. Outlays by the Social Security Administration increased to $564.2 billion for the fiscal year to date from $544.7 billion. Spending by the Department of Health and Human Services, which administers the Medicare and Medicaid programs, climbed to $631.4 billion.
Wall Street Journal:
- Crash Data Suggest Driver Error in Toyota Accidents. The U.S. Department of Transportation has analyzed dozens of data recorders from Toyota Motor Corp. Vehicles involved in accidents blamed on sudden acceleration and found that at the time of the crashes, throttles were wide open and the brakes were not engaged, people familiar with the findings said.
- U.S. Detains 12th Person in Russian Spy Probe. Authorities are detaining a 12th, previously undisclosed person implicated in the federal probe that busted a Cold War-style Russian spy ring, according to a U.S. official familiar with the matter.
- General Electric(GE) CEO Jeffrey Immelt said on CNBC the government needs to be focused on creating jobs, and that the country needs to get certain issues, like financial regulation behind it.
- Venezuela May Exceed Saudi Arabia in Oil Reserves.
- Bear-Market Sentiment Is Back: Fund Survey. Investor expectations for economic growth and profit have double-dipped, according to Bank of America-Merrill Lynch's latest fund survey. The survey released Tuesday found that fund managers turned bearish in their outlook on the global economy and corporate earnings for the first time since February 2009. Investors said they were more concerned about the outlook for US stocks now than at any other point since November 2006.
- Retailers' Weekly Sales Rise 3.2%: Survey. Chain-store sales for the week ended July 10 rose 3.2% from the year-earlier period, according to a survey released Tuesday by the International Council of Shopping Centers and Goldman Sachs.
- A Strong Wall of Worry. Market Timers Became More Bearish in Wake of Last Week's Rally. Last week the stock market had its best week in a year. And yet you'd never know it by reviewing investment advisors' outlooks: At the end of the week they were collectively no more bullish than they were at the beginning. Their skepticism in the face of the rally is a bullish omen, according to contrarian analysis.
- Small-Business Lending Is Down, but Reasons Still Elude Experts. The chairman of the urged banks and regulators on Monday to help the nation’s small businesses get the loans they needed to create jobs. He also acknowledged that economists could not agree on why such lending has contracted substantially over the last two years. Small businesses — those having fewer than 500 employees — employ half of all Americans and account for about 60 percent of gross job creation. Federal data indicate that lending to such companies fell to below $670 billion in the first quarter of this year from more than $710 billion in the second quarter of 2008.
Zero Hedge:
InvestmentNews:
- Jeffrey Saut: The Call of the Week. In a past life I wrote fundamental research on container board companies. Currently, those companies are raising prices, which only happens when demand warrants. Then too, rail traffic is increasing and diesel fuel consumption is rising, another metric that is inconsistent with a double-dip recession. Moreover, the number of Manhattan apartment rentals doubled in 2Q10 on a YoY basis, while office vacancies in U.S. metro areas fell in 2Q10 vs. 1Q10 for its first drop since 2007. Ladies and gentlemen, these are NOT the metrics of a double-dip recession! Meanwhile, since 2008 there has been almost NO difference between the forward PE of the S&P 500 Growth and Value composite indices. Obviously, this favors growth versus value, which is why I have been emphasizing Technology in these missives.
- Confidence in Obama Reaches New Low, Washington Post - ABC News Poll Finds. Public confidence in President Obama has hit a new low, according to the latest Washington Post-ABC News poll. Four months before midterm elections that will define the second half of his term, nearly six in 10 voters say they lack faith in the president to make the right decisions for the country, and a clear majority once again disapproves of how he is dealing with the economy. Just 26 percent of registered voters say they are inclined to support their representative in the House this fall; 62 percent are inclined to look for someone new. Those most likely to vote in the midterms prefer the GOP over continued Democratic rule by a sizable margin of 56 percent to 41 percent. Economic worries continue to frame the congressional campaigns. Almost all Americans rate the economy negatively. Only about a quarter of all Americans think the economy is improving. Just 43 percent of all Americans now say they approve of the job Obama is doing on the economy, while 54 percent disapprove. Both are the worst, marginally, of his presidency. Even a third of Democrats give him negative marks here. And overall, intensity runs clearly against the president on the issue, with twice as many people rating him strongly negative as strongly positive. On the question of Obama's leadership, 42 percent of registered voters now say they have confidence that he will make the right decisions for the country, with 58 saying they do not. On the issues tested in the poll, Obama's worst ratings come on his handling of the federal budget deficit, where 56 percent disapprove and 40 percent approve. Obama's overall standing puts him at about the same place President Bill Clinton was in the summer of 1994, a few months before Republicans captured the House and Senate in an electoral landslide.
- GOP Poised to Grab Control at State Levels. Democrats in danger of losing legislatures. Democratic leaders already braced for losses in November in congressional and gubernatorial races may be looking at grief on yet another front: A record number of state legislatures could change party control this year, with Democrats at risk of losing their majorities in more than 20 state chambers, according to a comprehensive analysis. Electing state lawmakers will be especially important this year because the party that controls at least one chamber of the legislature typically wins a seat at the table - and a veto - in the once-a-decade redrawing of congressional districts after the 2010 census.
- Hedge Funds Take Aim at Apple(AAPL). This Apple(AAPL) action on the heels of the Consumer Reports
iPhone 4 downgrade is a dream scenario for hedge funds ahead of the July 20 earnings report. There is no better money making opportunity than the Apple slingshot. Apple's pristine balance sheet, exponential growth opportunity, and innovative future product pipeline give hedge fund's confidence that this stock will always bounce back after being beaten down. As a result they use any and all resources to beat it down when they can.
Lloyd's List:
- Owners State to Idle Ships as Dry Bulk Deliveries Hit Record. THE dry bulk market crisis deepened today as capesize owners began to idle their ships, rates dipped below breakeven levels on some routes and fresh forecasts emerged of a record deluge of new ships for delivery in 2011.
Reuters:
- Stress Tests Include 23% Greek Debt Haircut - Source. EU regulators will apply a 23 percent haircut on Greek sovereign debt held in banks' trading books in stress tests conducted across the 27-nation bloc, a banking source said on Tuesday.
- German Banks to Pass Stress Test - Bank Sources. Preliminary results show that German banks including the state-controlled landesbanks are on track to pass the European stress test, several people close to the 14 German lenders said.
- Fed Says Credit Somewhat Looser in Last 3 Months. Hedge funds and private equity firms had an easier time raising capital in the last three months, but the market for asset-backed securities remains crippled, according to a new Federal Reserve survey. The Fed's first-ever Senior Credit Officer Opinion Survey, released on Tuesday, suggests financial markets are still fragile because banks are reluctant to lend. But it also shows conditions are improving, if slowly.
- Applied Materials(AMAT) Sees Positive Demand Trends. Applied Materials Inc (AMAT) said on Tuesday that demand for its products and those of its customers had successfully withstood broader economic woes. The world's largest producer of chip-making gear said unemployment problems in the United States and currency issues in Europe had so far had little impact on its business.
- California Pizza(CPKI) Ups Q2 Profit View, Shares Jump. California Pizza Kitchen Inc (CPKI), which is seeking a buyer or a restructuring, raised its second-quarter earnings view on quarterly sales, and its shares jumped nearly 7 percent.
Financial Times:
- Greece scrapped plans to refinance 12-month securities today and will auction only six-month treasury bills, citing Petros Christodoulou, who heads the country's debt management agency. It's Greece's first attempt to raise money on the capital markets since agreeing to a $139 billion bailout package with the EU. The change of plan was made because of concern that investors would want exceptionally high rates of return and hurt confidence in Greece's economy and debt markets.
- Struggling Illinois Eyes $900 Million Bond Sale. The cash-strapped state of Illinois on Wednesday will set terms for a bond sale as it seeks to borrow nearly $900m in a test of investor appetite for troubled US local issuers. States and municipalities, which raise money in the $2,800bn municipal bond market have come into the global spotlight after several years of budget deficits and worries about global public finances. “The state of Illinois is currently the poster child for all the market concerns about the State budget deficit and inadequate public pension funding in the US,” said Triet Nguyen, a municipal bond trader at Ziegler, a Chicago-based broker dealer. Illinois has nearly $5bn in unpaid bills and its pensions system is funded at about 50 per cent, the worst such ratio of the 50 states. Its inability to tackle these fiscal problems in its latest budget led to credit ratings downgrades and a rise in the cost to insure its debt against default to the highest for any US state.
- Rumors About OLED iPad Resurface. Apple reportedly plans to launch its second-generation iPad, using 5.6-inch and 7-inch OLED panels, as soon as in the fourth quarter of 2010 with Compal Electronics having a chance to receive the orders, according to sources from component makers. The new 5.6- and 7-inch iPads will mainly target the e-book reader market, separating them from the 9.7-inch model, which mainly targets multimedia entertainment, the sources stated.
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