Evening Headlines
Bloomberg:
- Spain Bankers Backing EU Aid Highlight Doubts on State Finances. Spain should seek European money to rescue its failed lenders, said Banco Santander SA Chairman Emilio Botin, joining a growing number of bankers who question whether the government can manage the task on its own. Botin, the 77-year-old head of Spain’s biggest bank, said 40 billion euros ($50 billion) in European Union funds for nationalized banks, including the Bankia group, would be enough to resolve the industry’s crisis. Banco Sabadell (SAB) SA Chairman Josep Oliu has said EU funds for weaker lenders “could be a solution,” while Bankinter SA (BKT) Chief Executive Officer Maria Dolores Dancausa said Spain may have no choice. “Using the mechanisms for assistance from Europe or the IMF is the best option and more and more the banking industry is taking that view,” said Juan Carlos Ureta, chairman of Renta 4 Banco SA, a Spanish bank and investment services company. “There is the risk of a possible stigma and that is why it’s so important to stress that it’s only some institutions that are in difficulties while the industry as a whole is healthy.”
- G-7 Officials to Speak on Europe Today Ahead of Summit. Finance ministers and central bank governors from the Group of Seven countries will hold a call today to discuss the European debt crisis. “We do have continuing discussions,” Canadian Finance Minister Jim Flaherty told reporters yesterday in Toronto. He said G-7 members would have more talks today ahead of a summit of leaders from the Group of 20 in two weeks and later said in Ottawa that officials would discuss “the situation in Europe,” without elaborating about the call. Markets have been bracing for further deterioration in Spain’s banking industry and a possible Greek departure from the 17-member euro area as the region’s leaders wrangle over the details of support for the currency bloc. G-7 members are “concerned about the unstable situation in the current global economy and we need to share these concerns in some way,” Japanese Finance Minister Jun Azumi said at a press conference in Tokyo today, while declining to comment on whether a call would take place.
- Tiananmen Protesters Gather In Hong Kong In Remembrance. Tens of thousands of people gathered for a candlelight vigil on a humid night in Hong Kong to remember victims of the government crackdown at Tiananmen Square 23 years ago and demand freedom to protest in mainland China. Demonstrators with megaphones competed with each other for the attention of the crowds who swirled around them in Victoria Park, vowing not to forget the crackdown, in which hundreds of protesters were killed. Some wore shirts bearing the image of jailed Nobel Peace Prize winner Liu Xiaobo while others chanted demands that the Chinese leaders who sent troops to break up the protests in 1989 be held accountable.
- China Wall Hit By Global Banks With 2% Market Share.
- Netanyahu Says Iran Sanctions Have Had No Effect, Bild Reports. Israeli Prime Minister Benjamin Netanyahu said the sanctions of the European Union and the U.S. against Iran have so far had no effect on the country’s atomic program, Bild reported today, citing an interview. The Iranian atomic program “hasn’t slowed down by a millimeter,” Netanyahu said, according to the German newspaper.
- FedEx(FDX) Retires 24 Jets to Cut Costs as U.S. Shipments Fall. FedEx Corp. (FDX), operator of the world’s biggest cargo airline, retired 24 jet freighters to cut capacity in the U.S. domestic Express division as shipping volumes drop.
- Oil Tankers Squeezed as Rates Drop to Lowest Since ’97: Freight. Aframaxes, already this year’s worst- performing oil tankers, are poised for the lowest annual rates in at least 15 years as Europe’s economic stagnation curbs demand, the region’s most-accurate shipping analysts said. The 800-foot vessels will make about $12,000 a day in 2012, the least since 1997, said Anders Karlsen, an analyst at Nordea Markets in Oslo.
- BlackRock’s(BLK) Doll to Retire as Chief Equity Strategist. BlackRock Inc. (BLK) (BLK), the world’s biggest money manager, said Chief Equity Strategist Robert Doll will retire next month.
- JPMorgan(JPM) Will Report $4.2 Billion Trading Loss, ISI Forecasts. JPMorgan Chase & Co., the largest U.S. bank, may report a $4.2 billion second-quarter trading loss in its chief investment office, according to an estimate by International Strategy & Investment Group Inc.
- Goldman Sachs(GS) Said to Eliminate Positions as Profit Outlook Dims.
- All Eyes on Turnout in Wisconsin Recall Vote. The down-to-the-wire gubernatorial recall election, the most expensive race in Wisconsin history, has boiled down to this: Will Republicans or Democrats deliver more of their voters to the polls Tuesday?
- Germany Pushes EU Bank Oversight. German Chancellor Angela Merkel on Monday suggested that European Union leaders consider putting the largest banks in the 27-nation bloc under direct European supervision, opening the door to more centralized oversight of the region's financial sector. The German proposal, which echoes a similar call from European Central Bank President Mario Draghi last week, comes as the region's leaders are trying to rebuild confidence in Europe's battered banking sector.
- Call Made for a Bigger Wall on Street. A Wall Street regulator is pushing to extend conflict-of-interest curbs to include analysts and investment bankers who work in the giant market for debt offerings. Such controls already exist for Wall Street firms dealing with stocks. But the Financial Industry Regulatory Authority plans to submit by year-end proposed rules for debt, said a spokeswoman. The rules could force firms to build firewalls between investment bankers who pitch debt offerings and research analysts who follow companies issuing the debt.
- The end of the con in China: Andy Xie. Commentary: Days of easy growth are over. Now it’s time for reforms.
- China plans for potential Greek euro exit: report.
- Starbucks(SBUX) Is Buying This San Francisco Bakery For $100 Million.
- Sergey Brin's Team Working On Secret Projects Is Much Bigger Than We Imagined.
- Get Ready For The Biggest Mac Refresh Of All Time.
- IrrAUSional Exuberance. (graphs) While Australian bank credit spreads are rising dramatically in the last few months and the ASX 200 index has dropped significantly (though remains 27% above its 2009 lows), nowhere is the levered bet on China's ongoing dominance and growth writ larger than in the massive number associated with Australian Miners' Capex in the last few years.
- Record Number Of US Households On Foodstamps. (graph)
- And Now, Courtesy of Bridgewater... It's Italy's Turn.
- Progressive American Think Tank Begs Bernanke To Bail Out Spain.
- Egan-Jones Cuts UK's Sovereign Credit Rating. Rating agency Egan-Jones cut the credit rating for the United Kingdom by one notch to "AA-" with a negative outlook from "AA," the latest in a string of European sovereign downgrades from the agency.
- Facebook(FB) comments, ads don't sway most users: poll. Four out of five Facebook Inc users have never bought a product or service as a result of advertising or comments on the social network site, a Reuters/Ipsos poll shows, in the latest sign that much more needs to be done to turn its 900 million customer base into advertising dollars. The online poll also found that 34 percent of Facebook users surveyed were spending less time on the website than six months ago, whereas only 20 percent were spending more.
NY Post:
NY Times:
- Europe's Fade Becomes Drag on U.S. Sales. As the European crisis intensifies, a growing number of companies in the United States are warning investors that sales in the region are slowing and could get much worse.
Reuters:
- Citadel Accuses Jump Trading of Stealing Secrets. Citadel, one of the world's largest hedge fund managers, has accused a rival Chicago high-frequency trading firm of stealing its trading programs. It said in a court petition that at least one its former employees stole trading algorithms and brought them to Jump Trading, a firm that employs 325 people in Chicago, London and Singapore. Citadel is using an unusual legal strategy to try to glean information from Jump - it is petitioning an Illinois state court for documents before filing a lawsuit, a move that is legal in that state. Jump Trading said in a motion to dismiss late last month that the hedge fund's request is frivolous and an effort to win competitive information through the courts.
- US Senator Urges Obama to Replace Commodities Chief. A U.S. senator called on President Barack Obama on Monday to replace the chairman of the chief derivatives regulatory agency with an official who will crack down more quickly on speculation in oil and other commodities markets.
- CFTC Delays Broker Conflict-of-Interest Rule. The U.S. futures regulator on Friday delayed by 60 days the compliance date for a rule that seeks to boost the independence of research analysts at futures brokers, heeding a last-ditch plea for relief from the industry.
- There is no solution to EMU that does not make matters worse for Germany. Where now for Economic and Monetary Union? Like some Leninist vanguard, the answer from policymakers in the eurozone and their willing dupes posing as serious and intelligent commentators is "forward!"
- Global slump alert as world money contracts. The latest data show that the real M1 money supply – cash and overnight deposits – for China, the eurozone, Britain and the US has been contracting since the early Spring. Any further falls risk a full-blown global recession.
- Asia's $6.4 trillion in foreign reserves a threat to stability. The relentless build-up of foreign reserves by China and Asia's export Tigers has become a threat to financial stability and risks setting off inflation across the region, the Bank for International Settlements has warned.
- The China Banking Regulatory Commission has discovered an inconsistency in loan classification data reported by banks, citing an official from the regulator. Some categories of problematic loans have surged, including an "obvious" increase in overdue and special-mention loans, while non-performing loan ratios have declined over the past few months, the official said.
- Chinese Commerce Minister Chen Deming said a slowdown in the nation's economy is within normal scope and the expected adjustment target, citing an interview.
- None of note
- Asian equity indices are -.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 206.0 -4.5 basis points.
- Asia Pacific Sovereign CDS Index 173.25 +4.0 basis points.
- FTSE-100 futures n/a.
- S&P 500 futures +.28%.
- NASDAQ 100 futures +.34%.
Earnings of Note
Company/Estimate
- (UNFI)/.56
- (BOBE)/.74
- (ULTA)/.53
10:00 am EST
- The ISM Non-Manufacturing Composite for May is estimated at 53.5 versus 53.5 in April.
Upcoming Splits
- None of note
Other Potential Market Movers
- The Fed's Fisher speaking, Fed's Bullard speaking, Fed's Evans speaking, ECB's Asmussen/EU's Rehn/IMF's Lagarde speaking, Bank of Canada rate decision, RBA rate decision, weekly retail sales reports, Stephens Investment Conference, JPMorgan Industries Conference, Citi Energy Conference, Needham Internet Conference, Piper Jaffray Consumer Conference, Goldman Sachs Healthcare Conference, (SCG) analyst day and the (PMCS) analyst day could also impact trading today.
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