Evening Headlines
Bloomberg:
- Spanish Crisis Threatens Second Front as Catalonia Rates Rise. Prime Minister Jose Luis Rodriguez Zapatero may face a second front in his battle to contain Spain’s fiscal crisis as borrowing costs for the country’s regional governments climb. Catalonia, which accounts for a fifth of Spanish gross domestic product, has been shut out of public bond markets since March and the extra yield it pays over national government debt has almost tripled this year. Galicia, in the northwest, has asked to freeze payments of debt it owes the central government and the Madrid region postponed a bond sale last month. Spain’s regions, which borrowed at similar rates to the central government before the global credit crisis started in 2007, are key players in Zapatero’s drive to get his budget in order and push down the country’s borrowing costs. They control around twice as much spending as the state, employ more than half of all public workers and piled on debt during the recession. “If investors focused more on the problems in the regions, they would be less optimistic on Spain’s central government debt, and see that the rally in July was a bit overdone,” said Olaf Penninga, who helps manage 140 billion euros ($182 billion) at Rotterdam-based Robeco Group, and sold Spanish bonds last year. “If the central government has to help the regions it would aggravate an already bad situation.”
- Fed Embraces Japan-Style Tools With Floor on Securities. The Federal Reserve’s decision to sustain the current level of its assets intensifies the focus of the central bank on policy tools similar to those used with little impact by Japan last decade.
- Cisco(CSCO) Sales Miss Estimates on Sluggish Corporate Spending. Cisco Systems Inc., the largest maker of networking equipment, forecast sales this quarter that missed analysts’ estimates as companies rein in spending because of the sluggish economy. The stock dropped 7.9 percent.
- Crude Falls a Third Day on Signals Growth will Slow, Rise in Stockpiles. Oil fell for a third day in New York as U.S. fuel stockpiles rose more than forecast, adding to signs of slowing economic growth in the world’s biggest crude consumer. Oil has slumped 5.1 percent in the past three days after the Energy Department said gasoline supplies climbed, reaching the highest level for the weekly reporting period in at least 10 years. Distillate stockpiles increased to the highest since January 1983. “The U.S. inventory report was bearish, showing that there wasn’t much of a summer driving season again,” said Victor Shum, a senior principal at consultants Purvin & Gertz Inc. in Singapore. “Global economic concerns are becoming the top of mind issue so we’ve seen equities pull back. China is showing signs of weakness in growth.” Crude oil for September delivery dropped as much as 90 cents, or 1.2 percent, to $77.12 a barrel in electronic trading on the New York Mercantile Exchange.
- U.S. Dollar May Rise by Year-End Like Euro After Crisis, Mizuho Trust Says. The dollar may rise above 90 yen by year-end as its 8.5 percent drop this year boosts U.S. exports and eases concerns about economic growth, much like the euro’s rebound from the debt crisis, said Mizuho Trust & Banking Co. The dollar may rise above 90 yen by year-end as its 8.5 percent drop this year boosts U.S. exports and eases concerns about economic growth, much like the euro’s rebound from the debt crisis, said Mizuho Trust & Banking Co.
- China's Yuan Slides Most in Seven Weeks on Slowdown Signs, Dollar Advance. The yuan dropped the most in seven weeks as concern the global economic recovery is faltering drove the dollar higher and fueled speculation Chinese policy makers will restrict gains to protect exports.
- Nikkei 225 Enters Bear Market as Yen Strengthens on Concerns Over Recovery. Japanese stocks fell, dragging the Nikkei 225 Stock Average into a bear market, as the yen trading near a 15-year high against the dollar threatened to dent export earnings.
- Foreclosure Crisis Spreads Across U.S. as Defaults Jump in Idaho, Illinois. Home foreclosures are climbing in the Northwest and Midwest, areas that had earlier dodged the worst of the mortgage crisis, according to real estate data firm RealtyTrac Inc. With 14.6 million Americans out of work and consumer spending declining, further weakness in housing could push the economy back into recession, former Federal Reserve Chairman Alan Greenspan said Aug. 1. Foreclosure rates in Utah, Idaho, Illinois and Colorado rose in the second quarter compared with a year earlier, and rank among the 10 highest in the country. The number of homes seized by lenders at least doubled in 19 states and more than tripled in seven of them, according to Irvine, California-based RealtyTrac.
- Climate-Change Fight Shifting to Western US Coal Mines. Western U.S. coal producers are increasingly coming under fire by environmental groups that see a chance to fight climate change by curbing output from the nation's largest coal basin. For years environmentalists have lobbied for tougher limits on the emissions of heat-trapping gases blamed for climate change from power plants, vehicles and other direct sources. But the collapse of federal climate-change legislation in recent weeks and growth of coal exports to Asia is leading some groups to look past the smoke stacks and aim to quash emissions by stymieing production of fuel.
- Grim Voter Mood Turns Grimmer. Americans are growing more pessimistic about the economy and the war in Afghanistan, and are losing faith that Democrats have better solutions than Republicans, according to a new Wall Street Journal/NBC News poll.
- Investors Reload The Guns On Euro. Hedge funds surprised by the euro's recent advance once again are turning bearish on the common currency, which tumbled Wednesday against the dollar. For much of the year, the hot trade on Wall Street was wagering against the euro and the debt of various European countries. When bonds issued by Greece, Italy, Spain and other nations fell in price amid pangs of worry in the spring, some funds posted huge profits. In recent weeks, however, as economic prospects in the bloc of nations that use the euro appeared to improve, and Greece and other nations pursued austerity measures, the euro staged a startling rally. The turnaround hurt hedge funds clinging to bearish positions and prompted others to trim their trades. "You can't be dogmatic, you have to be respectful of the market," said William Allen, a New Jersey hedge-fund manager who cut bearish euro positions to limit losses. Now, he said, it is time to bet against the euro again. He isn't alone in the view.
- Illegal Immigrants Estimated to Account for 1 in 12 U.S. Births.
- Washington vs. Paul Ryan. What happens when a politician is more honest than his critics.
- Most Americans Favor Keeping All Bush Tax Cuts for Now. Most Americans would go along with temporarily extending the Bush tax cuts for all taxpayers, including the wealthy, until the economy recovers, a new NBC News/Wall Street Journal survey has found. That finding represents encouraging news for Republicans as they prepare for a fall battle over tax cuts in advance of mid-term elections.
- Hedge Funds Looking for 5-10% Correction, Says Scaramucci.
- Its Network Technology Feeds A Digital World Hungry For Speed. Riverbed Technology (RVBD) understands.
CNNMoney:
engadget:
Wenweipo:
- China National Petroleum Corp., the country's state oil company, has banned the word "monopoly" from all its public statements and communications. CNPC, as the company is called, has a vocabulary list with as many as 100 words that must only be used with caution "to accurately direct public opinion," citing a list circulating the internet.
- India May Ban Key BlackBerry Services. India may temporarily ban messenger and enterprise e-mail services offered on BlackBerry phones should the device maker Research In Motion(RIMM) and mobile phone service providers fail to address concerns raised by security agencies, citing an official.
Citigroup:
- Upgraded (EBAY) to Buy, target $28.
- Rated (AAPL), (GOOG), (IBM) and (NTAP) Outperform.
- Asian equity indices are -1.25% to -.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 126.0 +7.0 basis points.
- Asia Pacific Sovereign CDS Index 118.0 +4.25 basis points.
- S&P 500 futures -.24%.
- NASDAQ 100 futures -.49%.
Earnings of Note
Company/Estimate
- (EAT)/.46
- (EL)/.29
- (KSS)/.81
- (WEN)/.05
- (JWN)/.66
- (NVDA)/.11
- (BYI)/.56
- (ADSK)/.27
- (DV)/.81
8:30 am EST
- The Import Price Index for July is estimated to rise +.3% versus a -1.3% decline in June.
- Initial Jobless Claims are estimated to fall to 465K versus 479K the prior week.
- Continuing Claims are estimated to fall to 4535K versus 4537K prior.
- None of note
- The Fed's Duke speaking, the $16 Billion 30-Year Treasury Bond Auction, Goldman Sachs Utility Conference, Jefferies Industrial Conference and the BofA Specialty Pharma Conference could also impact trading today.
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