Wednesday, July 25, 2012

Today's Headlines

Posted by Gary .....at 3:10 PM

Bloomberg:
  • Merkel Ally Says Greece May Need Debt Cut To Stay In Euro. Greece may need a second debt restructuring to stay in the euro, a leading political ally of Chancellor Angela Merkel said. The comments by Norbert Barthle, the Christian Democratic Union’s parliamentary budget spokesman, are the first indication by a senior German official that additional help for Greece may be forthcoming to avert the market turmoil that would be triggered by its exit from the 17-nation currency region. “We should try to keep Greece in the euro zone,” Barthle said by phone today. If action is needed to do so, “not just taxpayers but also private creditors would again be involved in helping Greece, but under strict conditionality,” as under the first restructuring, he said. “Greece must fulfil the terms of its bailout and terms of privatisation.”
  • German Business Confidence Fell More Than Forecast in July. German business confidence fell more than economists forecast in July to the lowest in more than two years as the worsening sovereign debt crisis damped the outlook for economic growth and company earnings. The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 103.3 from 105.2 in June. That’s the third straight decline and the lowest reading since March 2010. Economists predicted a retreat to 104.5, according to the median of 35 forecasts in a Bloomberg News survey.
  • Soros-Backed Group Urges ECB Action, Bank Union to End Crisis. Ending the euro-zone debt crisis requires greater political union and European-level banking insurance as well as more aggressive action by the European Central Bank, a band of economists said. The report by the Institute for New Economic Thinking, a research institute founded by billionaire investor George Soros, rejected calls for permanent joint debt issuance, nor did it endorse fiscal transfers between the 17 members of the currency zone.
  • China May Boost Tax On Existing Homes, Securities Says. China may increase the transaction tax on existing homes as the country sends out inspection teams to check on the implementation of property policies, China Securities Journal reported, without saying where it got the information. If China’s home prices continue to rise in coming months and inspection teams find problems, the possibility of new curbs can’t be ruled out, the newspaper reported, citing an unidentified person. Raising transaction taxes for existing homes may come first, according to the report, which didn’t provide additional details. “Prices and sales for existing homes certainly rebounded stronger than first homes,” said Zhao Zhenyi, a Shanghai-based property analyst at Industrial Securities Co. “Sentiment of those landlords played a big role in the market. The government will closely monitor the home and land market before they issue new tightening policies.”
  • US New Home Sales Fall to 350K, 5-Month Low. Americans bought fewer new homes in June after sales jumped to a two-year high in May. The steep decline suggests a weaker job market and slower growth could make the housing recovery uneven. The Commerce Department said Wednesday that sales of new homes fell 8.4 percent last month from May to a seasonally adjusted annual rate of 350,000. That's the biggest drop since February 2011. Sales in the Northeast plunged 60 percent in June to the lowest level since November.' sales remain well below the 700,000 annual rate that economists equate with healthy markets.
  • China May Refrain From More Easing, IMF Official Says. China may refrain from stepping up its monetary stimulus or increasing spending because measures now in place are sufficient to support growth, the International Monetary Fund’s top official in the nation said. Authorities will probably maintain the “status quo” after already shifting their monetary stance to a “more neutral or accommodating one” and may forgo expanding this year’s budget, Il Houng Lee, 54, the IMF’s senior resident representative in China, said in an interview yesterday in the fund’s Beijing office.
  • China’s Stocks Fall to 2009 Low on Property Curbs, IMF Comments. Chinese stocks fell to their lowest level since 2009 as the International Monetary Fund said the country’s economy faces significant downside risks and investors speculated the government won’t loosen property curbs. A gauge of real estate companies slumped 1.9 percent, led by Poly Real Estate Group Co. (600048), as the government said it will send teams across the nation to check that housing curbs are being implemented and the China Securities Journal said transaction charges on the sales of homes may increase. Kweichow Moutai Co. (600519), China’s biggest producer of baijiu liquor by market value, paced gains by consumer-staples producers on earnings optimism. “Property stocks are facing increasing policy risks,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages about $120 million. “If there are new measures to curb the property market, that’ll limit room for macro policy easing.”
  • China’s CIC Has Worst Overseas Performance in 2011 on Growth. China’s sovereign wealth fund said it will invest with a longer-term focus after it posted a 4.3 percent loss on its overseas holdings last year because of declines in global commodity prices. Net income at the $482.2 billion fund, with a resources- heavy portfolio, fell to $48.4 billion in the year ended Dec. 31, Beijing-based China Investment Corp. said in its annual report released yesterday on its website. The overseas investment performance was the worst since the fund was set up in 2007.
  • Caterpillar(CAT) Raises Forecast as Construction Demand Climbs. Caterpillar Inc. (CAT), the largest maker of construction and mining equipment, raised its full-year earnings forecast as increasing demand from North American builders and overseas miners bucks an economic slowdown.
  • Singapore Says Growth May Fall Below 1%; MAS Boosts Reserves. Singapore’s growth may fall below 1 percent should the U.S. and Chinese economies slump and the European crisis worsen significantly, the central bank said as it bolstered reserves to counter market turmoil. The island’s current gross domestic product growth forecast of 1 percent to 3 percent is based on assumptions that there is no recession in the U.S., no significant escalation of the euro zone crisis and no hard landing in China, Monetary Authority of Singapore Managing Director Ravi Menon said today. “If one or more of these assumptions do not pan out, Singapore’s GDP growth could dip below 1 percent this year,” Menon said in a briefing in the city state as the central bank released its annual report. “Growth momentum is clearly slowing.”
  • Former Citigroup(C) CEO Weill Says Banks Should Be Broken Up. Sanford “Sandy” Weill, whose creation of Citigroup Inc. (C) ushered in the era of U.S. banking conglomerates a decade before the financial crisis, said it’s time to dismantle the nation’s largest lenders. “What we should probably do is go and split up investment banking from banking,” Weill, 79, said today in an interview on CNBC. “Have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.”
Wall Street Journal:
  • Stock Research, For a Select Few. A growing group of Wall Street salespeople and brokers has created a shadow stock-research business that caters to big, fast-money traders but isn't available to retail investors.
  • China Shifts Course, Lets Yuan Drop. China's central bank is starting to guide the yuan downward against the dollar after two years of trying to boost its value, reflecting concern in Beijing over China's slowing economy and risking a political fight with the U.S.
  • U.K. Quarterly Growth Contracts Sharply. The U.K.'s economy suffered a much larger contraction than expected in the second quarter, heightening questions about the pace and effectiveness of the government's austerity program and fueling the broader debate across Europe about how to tackle the Continent's economic woes.
  • For Cities, Default May Not Be Last Resort. Some cash-strapped U.S. cities are walking away from their financial obligations, exposing potential risks in the municipal-bond market.
  • Drought Will Raise Food Prices Next Year, USDA Says.
  • Lies, Damned Lies, and China's Economic Statistics. China's statisticians get a tough press. After all, it was Europe, not China, whose fudged public finance data helped usher in the latest round of global financial turmoil. The biggest corporate fraud in recent memory isn't China's Sino-Forest, but America's Enron. But a secretive single-party state claiming rapid growth as the rest of the world hovers on the brink of recession naturally arouses suspicion.
CNBC.com:

Business Insider:

Zero Hedge:

Washington Post:
  • Geithner quiet on Barclays’ admission of rigging Libor. Treasury Secretary Timothy F. Geithner has said that he sounded the alarm four years ago to regulators about problems with the benchmark interest rate known as Libor. But Geithner, who was then head of the Federal Reserve Bank of New York, did not communicate in key meetings with top regulators that British bank Barclays had admitted to Fed staffers that it was rigging Libor, according to people familiar with the matter. Instead, regulators at the Commodity Futures Trading Commission and the Justice Department worked largely without the Fed’s help to build a case against Barclays. That work has culminated in a massive scandal rocking the banking industry on both sides of the Atlantic.

Rasmussen Reports:

  • Long-Term Optimism About U.S. Economy Falls to New Low. Confidence that the U.S. economy will recover in the next five years has fallen to its lowest level since early 2009. Short-term confidence isn't much better. A new Rasmussen Reports national telephone survey of American Adults shows that just 31% believe the U.S. economy will be stronger in one year. Thirty-five percent (35%) predict a weaker economy by next year, and 18% more say it will be about the same. Seventeen percent (17%) are not sure.

Reuters:

Financial Times:
  • Pork and Chicken Set to Join List of Luxuries. Pork and chicken will join beef on the menu of expensive meats as drought and US ethanol policy combine in a corn “disaster”, the head of the world’s largest pork producer has said. The cost of the main ingredients in animal feed, corn and soyameal, have set records this month as the worst drought in half a century and extreme heat damages crops in the US, the world’s main surplus producer.

Telegraph:

Frankfurter Rundschau:

  • German Finance Minister Wolfgang Schaeuble may limit private investors' access to hedge funds, citing draft legislation. Owning stakes in hedge funds would be allowed only for professional investors, adding that private investors would still be able to hold shares in funds of hedge funds.

Kathimerini:

  • Greek Economy to Shrink 6.2% This Year. Greece's government expects the economy to contract 6.2% this year compared with an initial forecast of 4.8%. The economy will shrink .9% next year and expand 2% in 2015, the report said.

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