Bloomberg:
- Banks Lead Increase in European Bond Risk on U.S. Economy 'Double Whammy'. Banks led an increase in the cost of insuring against default on corporate bonds as investors bet slowing U.S. growth will hurt Europe’s recovery. The Markit iTraxx Financial Index of credit-default swaps on the senior debt of 25 European banks and insurers rose 5.5 basis points to 136.5, heading for a third weekly increase, according to JPMorgan Chase & Co. at 11 a.m. in London. “All the data point to a slowdown in the U.S., and the Philly Fed points to a much stronger slowdown, even in negative territory,” said Philip Gisdakis, a Munich-based strategist at UniCredit SpA. “We are concerned that neither the European economy, nor European credit markets can decouple from these developments.” The Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings increased 12 basis points to 511 and the investment-grade Markit iTraxx Europe Index of 125 companies climbed 3.75 basis points to 114.75, JPMorgan prices show.
- Oil Trades Near 6-Week Low as U.S. Jobless Claims Prompt Recovery Concerns. Crude oil fell to a six-week low as rising U.S. jobless claims bolstered concern that the economic recovery in the biggest oil-consuming nation is faltering. Oil slipped as much as 1.7 percent a day after the Labor Department said weekly claims for unemployment benefits climbed to the highest level since November. Total U.S. inventories of crude and fuel reached the highest level since at least 1990 last week, according to an Energy Department report on Aug. 18. “We took out our recent lows because of more bad U.S. economic news,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “Inventories are at 20-year highs, and the prospects for demand growth are fading. Prices are still too high given the fundamentals.” U.S. gasoline demand was little changed in July as high unemployment and increasing prices curbed consumption, according to the American Petroleum Institute. Total deliveries of the fuel averaged 9.257 million barrels a day last month, compared with 9.26 million in July 2009, the industry-funded group reported today. It was the second-lowest July demand number since 2003.
- Euro Drops to Five-Week Low Versus Dollar as Weber Cites ECB Liquidity Plan. The euro fell to the lowest level in five weeks against the dollar after European Central Bank council member Axel Weber said the region’s economy may need help from the central bank through the end of the year. The shared currency dropped to the least since July 1 versus the Swiss franc after Weber told Bloomberg Television the ECB should assist banks to prevent year-end liquidity tensions. “They’re interpreting the comments as suggesting there is more ambiguity about how the ECB will respond down the road,” said Steven Englander, head of Group of 10 currency strategy at Citigroup Inc. in New York. “They’re nervous that the pragmatism may disappear down the road and that is generating that move in the euro.” The euro fell 1.1 percent to $1.2683 as of 10:36 a.m. in New York, after touching $1.2673, the weakest since July 13.
- Billionaire Kenneth Fisher Recommends Buying Equities as Pessimism Surges.
Wall Street Journal:
- The Lockerbie Bomber and Scotland's Disgrace. A political stunt freed a mass murderer and brought needless grief to many in the U.S. Today in Tripoli, one year after his release from a Scottish jail, Abdelbaset Ali Megrahi is a free man. This is a scandal that cruelly taunts the bereaved of Lockerbie and outrages decent opinion within the United States, where most of his 270 victims came from.
- ShoreBank Managers Ready if Seized. Chicago Bank with Obama Ties Could Be Closed by FDIC; Executives Could Buy Some Assets. A consortium of the biggest U.S. banks has agreed to support the bid with $125 million to $150 million, these people said. If ShoreBank is closed, the Federal Deposit Insurance Corp. would strip out the bad loans and sell the clean assets to the bank-backed management team.
- Elliott Seeks Emergency Court Order Over Leaked Investor Letter.
- Textbooks Up Their Game. Inkling Adapting College Best Sellers for iPad, Capitalizing on Interactive Features.
- Mortgage Bailout: Government Spin Accelerates. I don't envy the folks over at Treasury and HUD who, month after month, are forced to report lackluster statistics on the Administration's mortgage bailout and find something positive to say about them. Unfortunately they painted themselves into a corner by inventing a "Housing Scorecard" this summer, which only forces them to report more troubling numbers.
- Irish, Peripheral Euro-Zone CDS Spreads Widen. The spread on five-year Irish CDS widened to 295 basis points from 275 on Thursday, according to data provider Markit. Markit said the Irish spread has never seen 300 basis points. The Greek CDS spread widened 30 basis points to 835, while Spain widened 10 basis points to 223, Portugal widened 10 basis points to 275 and Italy widened 13 basis points to 201.
- Goldman's(GS) Glowing. Bank's commodities business to deliver uranium. Goldman Sachs is about to go nuclear. The gold-plated investment bank, run by CEO Lloyd Blankfein, is making a concerted push into the delivery of uranium for the first time, adding to its high-powered commodities platform. The vaunted investment bank is predicting a big boom in the development of a new generation of nuclear-powered plants -- fueled by uranium -- over the next several years. Goldman has spent years building up its commodities platform, which trades energy derivative contracts. It also owns subsidiaries that buy and sell the physical commodities, such as oil and natural gas, that are the basis for those contracts. Russia has expressed a strong appetite for uranium stockpiles. Recently, state-owned nuclear company ARMZ acquired a 50-percent stake in Canadian uranium mining company Uranium One for $610 million.
- Price Hikes in Fa$hion Next Year. Every day, the general manager of the Umgee USA apparel brand receives price quotes from the Chinese vendors who stitch his trendy dresses and tops, which end up at stores from Forever 21 to Macy's. "Some of it is more expensive over there!" said Stan Park. "Every day I get an e-mail from China saying 'This costs so and so.' It's just not worth it." Park and others have solved the problem of rising sourcing costs from China by making much of their product domestically in hubs like Los Angeles. But for larger brands that require the big volume that only China can supply, rising prices are a reality. "Apparel prices are going to go up. It's as simple as that," said Perry Ellis Chief Executive George Feldenkreis, who said a rise of up to 10 percent will be seen next year. "The American consumer will have to accept it." That is hard to swallow for retailers big and small, who have been battling erratic sales trends this year amid high unemployment and lingering financial insecurity.
- Nobody Wants to Bail Out Newspapers, Especially Not Readers.
- Oh Look, The Social Security Trust Fund Has Lost Track of $25 Billion.
- Nevada Sets New High For Unemployment at 14.3%.
MSN Money:
FINalternatives:
- Paulson Protege Pellegrini to Return Outside Money. Paolo Pellegrini, the former Paulson & Co. portfolio manager credited with the hugely successful subprime mortgage investment strategy that put that firm on the map, plans to return outside capital in his hedge fund, just 10 months after opening that vehicle to investors. In a letter to investors today, Pellegrini said he decided to stop managing outside money because of the “additional work” required on the fund due to his bearish outlook on the economy. So far, that strategy has not proven nearly as profitable as the one that helped earn Paulson triple-digit returns in 2007. The PSQR fund lost 3.16% in the first half. “While my views on global economies haven’t changed, I’ve concluded that substantial additional work is required to position the Fund to profit consistently from those views,” Pellegrini wrote. He said that, if he accepts outside capital into the fund again, he would honor current investors’ high-water marks.
- Industry Insiders Say Online Video Advertising Is Reaching a "Frenzy Point". With the flood, comes the feast. Advertising dollars are pouring into online video. Some of the largest online video ad networks are seeing revenue growth accelerating this quarter, and expect the fourth quarter to be even bigger. “Last year we grew 40%, this year we are growing 90%,” says Keith Richman, CEO of Break Media. He expects Break’s total revenues in the third quarter, which include more than just video advertising, to be well above $10 million for the first time. Tremor Media, which is one of the largest video ad networks and second only to Hulu in the number of video ads it serves, is also seeing a doubling of ad revenues. “It has reached a frenzy point over last three quarters.” CEO Jason Glickman tells me. “We see television dollars moving to online video,” he declares.
- Schwarzenegger Budget Plan Would Borrow From CalPERS. Gov. Arnold Schwarzenegger has privately proposed borrowing $2 billion from the state's giant pension fund to help bridge California's $19 billion budget deficit. The plan would take the money as an advance against future savings from pension cuts, according to sources close to the negotiations who would not be identified because of the sensitive nature of the talks.
- Reid Now Nearly Tied With Pelosi In Terms of Unfavorability. In addition to becoming competitive in his bid for reelection in Nevada, Senate Majority Leader Harry Reid is now nearly tied with House Speaker Nancy Pelosi when it comes to unpopularity among voters nationwide. A new Rasmussen Reports telephone survey of Likely Voters across the country finds that 56% have at least a somewhat unfavorable opinion of Reid, while 59% feel the same way about Pelosi. The good news for Reid that these figures include 47% with a Very Unfavorable opinion of Pelosi, while just 38% hold a Very Unfavorable opinion of him. Twenty-six percent (26%) have a favorable opinion of the Nevada Democrat, but that includes just five percent (5%) with a Very Favorable view. Thirty-four percent (34%) regard the San Francisco congresswoman favorably, with 13% Very Favorable toward her.
Reuters:
- BofA(BAC) and Visa(V) to Test Cell Phone Payments. Bank of America Corp, the largest U.S. consumer bank, and Visa Inc, the world's largest payment processor, plan to begin a test program next month that lets customers use smartphones to pay for purchases in stores. The program, to run from September through the end of the year in the New York area, is the biggest step yet by the two companies toward creating a "digital wallet" with a host of financial capabilities built into the latest, most sophisticated mobile phones.
- Sinochem Pays 'Close Attention' to Potash(POT). Sinochem, the Chinese-state owned chemical group, said on Friday it would “pay close attention” to BHP Billiton’s $39bn hostile bid for PotashCorp, and added that it was “interested in overseas potash investment opportunities”. The comments by Li Qiang, spokesman for Sinochem, are the first signs of interest from Beijing. Rival interest from China in the Canadian fertiliser company is expected to disrupt BHP’s bid, which so far is uncontested at $130 per share. Mr Li told the Financial Times that Sinochem and PotashCorp had a relatively good co-operative relationship. “We are very attentive to what happens to them,” he said, declining to comment on whether the Chinese group could launch a counter bid. “We have heard these market rumours, but we cannot make a comment on them.” Sinochem, China’s fourth-largest oil and gas company, has been on a buying spree. The group spent $3bn on a stake in a Brazilian oilfield in May and acquired UK-listed Emerald Energy for $875m last year. It also launched a $2.3bn takeover bid for Australian fertilizer company Nufarm, last year although the deal failed.
Le Figaro:
- France's finance ministry is working on the hypothesis that the country's GDP growth in 2011 will be about 2%. That compares with the government's current forecast for growth of 2.5%.
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