Evening Headlines
Bloomberg:
- Greek Sovereign Default Would Be a 'Tragedy,' Papandreou Says. Greece’s Prime Minister George Papandreou renewed the country’s pledge to return to international capital markets as soon as possible and ruled out any plans to restructure debt. “We are not going to default,” Papandreou said yesterday during an interview with Betty Liu at the New York Stock Exchange. “Default would be a tragedy.”
- Recovery Deniers Just Got Mugged by Reality: Caroline Baum. This just in: The recession that started in December 2007 ended in June 2009, according to the official arbiter of the U.S. business cycle. That will come as a surprise to the 14.9 million unemployed, especially the 6.2 million who have been jobless for 27 weeks or more. It won’t offer encouragement to the 1.1 million discouraged workers who stopped looking for jobs because they don’t think there are any. Nor will it resonate with the 8.9 million who are working part-time for economic reasons -- the primary reason being, the economy stinks. For the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), designating the trough month for the recession means just one thing: “Any future downturn of the economy would be a new recession,” not a continuation of the old one, according to yesterday’s press release.
- Fed Under Pressure to Avoid Creating Confusion Over Potential for Easing. Federal Reserve officials debating whether to boost stimulus are under pressure to avoid creating confusion among investors about any new effort to spur the U.S. recovery. The Federal Open Market Committee, which meets today, triggered a stock selloff with its last statement on Aug. 10 as investors took it as a signal the economy will falter. The Standard & Poor’s 500 Index tumbled 7.1 percent during the two weeks following the statement after reaching a three-month high on Aug. 9.
- Most Hedge Funds Should Escape New Swaps Regulation in U.S., ISDA Says. Most hedge funds and money managers shouldn’t fall under new derivatives rules being written by U.S. regulators, according to the International Swaps and Derivatives Association, a trade and lobbying group. The Commodity Futures Trading Commission and the Securities and Exchange Commission are responsible for writing the new rules governing $615 trillion in over-the-counter derivatives. They should find hedge funds and money managers don’t meet the criteria of a firm that “maintains a substantial position in swaps,” using leverage that creates “substantial counterparty exposure,” ISDA said today. That’s how the new law defines the so-called major swap participant. “Very few, if any, investment funds should qualify,” ISDA said today in a letter to the CFTC and SEC.
- TransCanada Oil-Sands Pipeline to Gulf May Add 12,000 Jobs, Chief Says. TransCanada Corp.’s 2,000-mile pipeline linking Alberta’s oil sands with Gulf Coast refiners may add at least 12,000 jobs and provide a stable fuel source for the U.S., Chief Executive Officer Russell Girling said. Efforts to stop the $7 billion Keystone XL project because lawmakers say developing tar sands may release more greenhouse gases than other types of oil production will result in the crude being redirected from the U.S., Girling said. “Permitting our pipeline will not impact the development of oil sands,” Girling said today in a telephone interview. “The oil sands will be developed in any event.” TransCanada’s proposal has been faulted by U.S. lawmakers such as Henry Waxman, chairman of the House Energy Committee, and questioned by the U.S. Environmental Protection Agency. Without Alberta’s oil, the U.S. will need more crude from countries less friendly to its interests than Canada, Girling said. Canada is now the biggest U.S. source of imported oil.
- HP(HPQ) and Oracle(ORCL) Resolve Litigation on Hurd Employment. Hewlett-Packard Co. and Oracle Corp. said they resolved litigation over the appointment of Mark Hurd as a president of Oracle and reaffirmed the long-term partnership between the two companies.
- Oil Supplies Hit Five-Week Low in Survey on Enbridge Halt: Energy Markets. U.S. crude-oil supplies probably fell to a five-week low after an Enbridge Energy Partners LP pipeline, the largest linking Canada and the U.S. Midwest, shut for eight days following a leak, a Bloomberg News survey showed. Inventories slipped 1.6 million barrels, or 0.4 percent, in the seven days ended Sept. 17 from 357.4 million a week earlier, according to the median of 14 analyst estimates before an Energy Department report tomorrow.
- Goldman(GS) Shareholder a Loser to CD Rates When Blankfein Earned $125 Million. Goldman Sachs Group Inc.’s stock is one of the best-performing financial shares in the past decade and beat the S&P 500 Stock Index, helping to explain Lloyd C. Blankfein’s $125 million in cash bonuses during the period. Some investments did even better. One-year certificates of deposit earned an average rate of 3.17 percent in the last 10 years, beating the 2.78 percent annual total return on Goldman Sachs stock. Buying a 10-year Treasury note in mid-September 2000 would have yielded 5.8 percent annually.
- Net Neutrality Activists Target Google(GOOG) as Talks Heat Up. Net neutrality activists and left-leaning interest groups are launching an online advertising campaign targeting Google co-founders Larry Page and Sergey Brin for the company’s recently announced agreement about web traffic delivery with Verizon Communications.
- NYC Mayor to Impose Job Freeze. New York City Mayor Michael Bloomberg will impose a citywide hiring freeze as his administration begins to take more aggressive steps to deal with a multibillion budget deficit in the upcoming fiscal year, people familiar with the mayor's decision confirmed Monday night.
- Turkey Questions Sanctions on Iran. Turkey's president questioned the effectiveness of sanctions as a tool to curb Tehran's nuclear ambitions and indicated his country's relations with Israel won't improve until the Jewish state apologizes for its deadly May raid on a flotilla trying to reach Gaza.
- Obama Hints at High-Level Changes. President Barack Obama raised the prospect of changes to his economic team Monday, saying his over-worked staffers were "going to have a whole range of decisions about family that'll factor into" their career decisions.
- A Tale of Two Recoveries. The state of the economy after a year of 'rebound.'
- New Hedge Funds Lack Fuel for Big Launches. A lot of traders are prepping new funds, but start-up capital is scarce.
- Ad Prices May Spike Under Yahoo(YHOO), Microsoft(MSFT) Deal, Report Says.
- Morgan Stanley's(MS) McVey Looking to Cut Equity Exposure.
- The PIIGS Are Being Crucified On A Eurotrash Gold Standard. (charts)
- The "Deleveraging" Deception. There is wide agreement among economists and the financial media that our lackluster economic performance stems from continued "deleveraging" among consumers and businesses. Although it is certainly true that after decades of overly speculative borrowing, individuals and corporations are paying down debt, rebuilding their savings, and generally repairing their respective balance sheets. But these activities cannot be faulted for our economic malaise. In fact, as a country, we haven't deleveraged at ALL. All the moves made by the private sector have been vastly outpaced by the federal government's efforts to add leverage to the economy. The net result is that we are much more indebted now than we were before the recession began; as a result, we are digging ourselves even faster into debt.
- Munger Tells 25 Million Americans to "Suck It In", And to "Thank God for Bank Bailouts" as Berkshire(BRK/A) Benefits From $95 Billion of TARP Funding.
- Bank of America(BAC) Cutting 5% of Capital Markets' Personnel, Firing 400 Employees Globally, Many More to Come...Er...Go.
Rasmussen Reports:
Reuters:
- Senators Warn Insurers On Premium Increases. Two Democratic senators are demanding more transparency about premium increases from health insurers and warning them against blaming higher rates on a newly passed reform law. Senate Finance Committee Chairman Max Baucus of Montana and Commerce Committee Chairman John Rockefeller of West Virginia said they sent a letter to the five largest health insurers by enrollment registering their concerns over increases for next year. The letters were sent to WellPoint Inc, UnitedHealth Group Inc, Aetna Inc, Health Care Services Corp and Cigna Corp.
- China Guizhou Orders Aluminum Smelters to Cut Output. Power-hungry smelters in Guizhou, one of China's major primary aluminium producing provinces, have been ordered to cut production, in efforts to help meet Beijing's target to reduce energy intensity, smelter officials said on Monday. The move may temporarily shut 30 percent of around 850,000 tonnes of operating annual capacity in the southwestern province, cutting some 80,000 tonnes of metal production between September and December.
- Gulf States in $123 Billion US Arms Spree. The Arab states of the Gulf have embarked on one of the largest re-armament exercises in peacetime history, ordering US weapons worth some $123bn as they seek to counter Iran’s military power. A package of US arms worth more than $67bn for Saudi Arabia accounts for the largest single component of this military build-up, providing a huge boost to the American defence industry.
- China's real-estate developers should price homes "reasonably" or face tougher tightening measures, citing Zhu Zhongyi, vice chairman of the China Real Estate Association.
- Shanghai is cracking down on real estate developers and property agents collaborating to manipulate home prices.
- China plans to increase its minimum wage by at least 20% annually in the next five years, more than doubling it by 2015, citing Huang Mengfu, a government adviser.
- China may announce property tax measures before or after the National Day holidays in October which takes place from Oct. 1 to Oct. 7.
RBC Capital:
- Rated (OC) Outperfrom, target $31.
- Rated (DNDN) Outperform, target $50.
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 121.0 -4.0 basis points.
- Asia Pacific Sovereign CDS Index 112.50 +2.0 basis points.
- S&P 500 futures -.18%.
- NASDAQ 100 futures -.06%.
Earnings of Note
Company/Estimate
- (AZO)/5.45
- (FDS)/.80
- (CAG)/.39
- (PRGS)/.18
- (CTAS)/.37
- (ADBE)/.49
- (DRI)/.77
- (CCL)/1.47
8:30 am EST
- Housing Starts for August are estimated to rise to 550K versus 546K in July.
- Building Permits for August are estimated to fall to 560K versus 565K in July.
- The FOMC is expected to leave the benchmark fed funds rate at .25%.
- None of note
- The weekly retail sales report, ABC consumer confidence reading, UBS Life Sciences Conference, (SWKS) analyst meeting and the Goldman Sachs Communacopia Conference could also impact trading today.
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