- Spain Said to Accelerate EU Bank Bailout After Collateral Limits. Spain is about to receive an emergency disbursement from the 100 billion-euro ($123 billion) bailout of its financial system because of restrictions the European Central Bank imposed on bank borrowing, according to a person familiar with the matter. The ECB last month imposed limits on how much it will lend banks against government-guaranteed bonds. The rule change meant Spain had to ditch a plan for nationalized lender Bankia group to get a loan from the Frankfurt-based central bank, said the person, who asked not to be named because the matter is private.
- Morgan Stanley(MS) Cuts Emerging-Market Stocks Target, Raises Cash. Morgan Stanley cut its 2012 forecast for emerging-market stocks amid concern the global economy will grow less than estimated and after the benchmark gauge rallied as much as 11% from this year's low in June. Morgan Stanley reduced its year-end estimate for the MSCI Emerging Markets Index by 7 percent to 1,130, compared with 1,210 previously. The brokerage also cut its targets for the MSCI Asia Pacific excluding Japan Index by 6% to 500, and the Hang Seng China Enterprises Index by 9% to 12,200. "We take some profits after the recent rally and scale back our fully invested overweight equities position, raising cash from zero to 4%," Morgan Stanley analysts led by Jonathan Garner wrote today. The brokerage recently cuts its 2012 and 2013 growth estimates for China and South Korea along with major advanced and emerging economies.
- Sliding Investment in China Signals Confidence Waning. Foreign direct investment in China fell to the lowest level in two years in July, fueling concern that waning confidence in the nation’s growth prospects may restrain any economic rebound. Investment declined 8.7 percent from a year earlier to $7.58 billion, the eighth drop in nine months and the smallest inflow since July 2010. The Ministry of Commerce released the data at a briefing in Beijing today. Chinese financial institutions sold a net 3.8 billion yuan ($600 million) of foreign currency last month, indicating capital is flowing out as property curbs and weakness in exports slow growth and the yuan weakens.
- Love Limbo in Shanghai as Curbs Freeze Singles From Home Market. Shanghai last year started limiting locals to owning two homes, while families among the city’s 9 million non-local residents were capped at one. Unmarried non-locals, who had been able to buy as long as they proved a year or more of tax payments, are now being frozen out altogether after the city toughened implementation of the curbs following Chinese Premier Wen Jiabao’s vow in July to “unswervingly” contain prices.
- Chinese Stocks Swing Between Gains, Losses on Wen Comments, FDI. China’s stocks swung between gains and losses as concern the economic slowdown is deepening after a report showed foreign direct investment dropped offset comments from Premier Wen Jiabao that there is more room to adjust monetary policy. Tsingtao Brewery Co. (600600), China’s second-biggest brewery by volume, declined 2.3 percent after earnings missed analysts’ estimates. Citic Securities Co. led gains for brokerages after the China Securities Journal said China will expand margin financing for equities. Wen said that while easing inflation allows more room to alter monetary policy, downward pressure on the economy remained “relatively large.”
- Japan Arrests 14 for Landing on Island Claimed by China. Japan arrested a group of Hong Kong activists for landing on an island claimed by both Japan and China in the latest episode of a dispute that has strained relations between Asia’s two biggest economies. The 14 activists may be deported, Kyodo News reported, without saying where it got the information. Japan summoned the Chinese ambassador to lodge a complaint, Chief Cabinet Secretary Osamu Fujimura said in Tokyo yesterday. He and Prime Minister Yoshihiko Noda said the men would be treated “strictly according to Japanese law.”
- Ecuador Says U.K. Threatens Embassy ‘Assault’ to Seize Assange. Ecuador accused the U.K. of threatening to “assault” its embassy in London and arrest Wikileaks’ founder Julian Assange, who is seeking asylum in the South American nation. The U.K. has sent a letter to the embassy warning that it would enter the compound if Assange is not handed over to local authorities, Ecuador’s Foreign Minister Ricardo Patino told reporters in Quito today.
- Freddie-Fannie Push Bank Bad Debt Cost to $84 Billion. Fannie Mae and Freddie Mac have expanded efforts to get refunds on soured mortgages, boosting the cost of faulty home loans and foreclosures at the biggest U.S. banks since 2007 to at least $84 billion. Bank of America Corp. (BAC), Wells Fargo & Co. (WFC), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Ally Financial Inc. (ALLY), set aside almost $3 billion to buy back bad home loans in the first half of 2012, according to data compiled by Bloomberg. Regional lenders including SunTrust Banks Inc. (STI) disclosed at least $1.3 billion of added costs, exceeding their total for all of 2011.
- China Puts at 15-Month Low: Options. The cost of protecting against a further drop in Chinese stocks fell to the lowest level in 15 months. Puts with an exercise level 10% below the Hang Seng China Enterprise Index cost 1.26 times more than calls betting of a 10% rally, according to data on one-month options compiled by Bloomberg. The price relationship known as skew touched 1.13 on Aug. 10, its lowest level since April 2011.
- Dish Network Said to Plan Nationwide Satellite Broadband. Dish Network Corp. is preparing to introduce a nationwide broadband-Internet service using a satellite from sister company EchoStar Corp. (SATS), according to three people familiar with the situation. The EchoStar 17 satellite, launched into orbit July 5, can support download speeds of 15 megabits per second, although introductory nationwide packages will probably offer rates of 5 megabits so the system can take on more capacity, said one of the people, who declined to be named because the plans are private. Dish and EchoStar can handle about 2 million new Internet customers with the service, the person said.
- U.S. Oil-Safety Rule Seen Costing Drillers $131 Million. The U.S. Interior Department issued a final drilling-safety rule aimed at lowering the risks of offshore oil and gas exploration after the 2010 BP Plc (BP/) spill in the Gulf of Mexico.
- Applied Materials(AMAT) Predicts Sales Below Estimates. Applied Materials Inc. (AMAT), the world’s largest producer of chipmaking equipment, forecast fiscal fourth-quarter sales that may fall short of analysts’ estimates as some customers rein in expansion plans. Sales in the current period will fall 25 percent to 40 percent from the prior quarter, the company said today in a statement, indicating revenue of as little as $1.41 billion. Analysts on average estimated revenue of $1.95 billion, according to data compiled by Bloomberg.
- Lebanon Militia Kidnaps Syrians. Group Says It Has Taken 40 Hostages, as Saudis Warn Citizens to Leave Country; U.N. Cites Crimes Against Humanity. Syria's conflict sent shocks throughout the Middle East on Wednesday, with militiamen in neighboring Lebanon saying they had taken more than three dozen Syrian nationals and a Turkish man hostage, while several regional governments urged their citizens to immediately leave Lebanon. Inside Syria, government jets razed homes and reportedly killed nearly two dozen people in a rebel-held town in the country's north. In Geneva, a United Nations commission held Syria's government and affiliated militia responsible for crimes against humanity, including for an attack that left scores of villagers dead in May. Shiite Muslim militiamen in Beirut, Lebanon's capital, said Wednesday they had taken some 40 people—Syrians and a Turkish national—into captivity since the previous day. Dressed in military fatigues and brandishing assault rifles, masked gunmen from Lebanon's powerful Meqdad family demanded the release of a kinsman they said had been snatched inside Syria on Monday by fighters from the rebel Free Syrian Army. The militia members vowed to target Qatari, Saudi and Turkish nationals as well.
- Apple's(AAPL) New Front in Battle for TV. Apple Inc. is in talks with some of the biggest U.S. cable operators about letting consumers use an Apple device as a set-top box for live television and other content, according to people familiar with the matter. The talks represent Apple's most ambitious crack at infiltrating the living room after years of trying. Apple doesn't appear to have reached a deal with any cable operators. One obstacle may be the reluctance of operators to let Apple establish a foothold in the television business.
- Secondary Trading in Fund Stakes to More Than Double in 2013 -Simplify. With restriction on trading investments in hedge funds and private equity loosening, investors are increasingly turning to the secondary market to trade these private-fund interests, and the notional value of these trades is expected to more than double to $146 billion next year from an expected $65 billion this year, according to Simplify LLC, a provider of trading and risk products to investors.
- Illegal Immigrants Flock to Youth Program. Armed with foreign birth certificates, school records and proof they have grown up in the U.S., tens of thousands of young illegal immigrants across the country applied Wednesday to a program that could allow them to remain in the country and work legally.
- Bank Deal Rankles Regulators. New York's Settlement With U.K.'s Standard Chartered Raises Tensions Overseas.
- China Bets Sour for Heavy Equipment Firms. Construction-equipment makers that pinned much of their hopes for sales growth on China this year have been left high and dry. Investment from companies including Caterpillar Inc., CAT -0.30% Volvo AB and Komatsu Ltd., 6301.TO +3.32% has poured into China in recent years. But the country has cut back on infrastructure projects, leading to weak demand for new equipment. Slowing economic gains, reduced government spending on construction and higher interest rates have all hurt sales.
- 'Taxmageddon' May Wallop Home Sellers. Bischoff: The tax bill from selling a home could jump more than 50% next year for some sellers.
- Gunmen Have Attacked And Entered A Pakistani Air Force Base Thought To House Nuclear Weapons.
- The Inventory-Sales Ratio Is Sending An Ominous Signal For The Economy.
- AUSTRIA: 'Europe Can Only Function If Each Country Has Its Own Currency'.
- Ken Langone BLOWTORCHES Eliot Spitzer, Calling Him A 'Spoiled Kid' Looking For Attention.
- Early Reviews Of Microsoft's Windows 8 Are Not Good.
- Paul Ryan Propels The Romney Ticket To Leads In Crucial Virginia And Ohio.
- Fed's Fisher Reluctant To 'Bail Out White House' With More QE.
- Spot The Looming Crisis.
- Why QE Is Not Working.
- Cisco(CSCO) Beats Earnings Estimates, Hikes Dividend. Cisco Systems reported earnings and revenue that beat analysts' expectations during what its CEO said was an "unusually strong quarter" and also raised its dividend by 75 percent on Wednesday.
- Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows Mitt Romney attracting support from 47% of voters nationwide, while President Obama earns the vote from 43%. Four percent (4%) prefer some other candidate, and seven percent (7%) are undecided. Romney’s lead is a bit larger when leaners are included.
- Qatar Tells Citizens to Leave Lebanon. Qatar has urged its citizens to leave Lebanon immediately, the state news agency reported on Wednesday, after a spate of kidnappings by gunmen belonging to a Lebanese Shi'ite clan who also threatened to target Qataris. "Due to unstable security situation, Qatar's embassy in Beirut has urged Qatari nationals to leave Lebanon immediately," the news agency said.
- Fed's Kocherlakota-no impact from rate cut on reserves. Cutting the rate paid to banks on the excess reserves they stash at the U.S. central bank would do little to encourage lending because the rate is already so low, a top Federal Reserve official said on Wednesday. The Fed now pays banks interest of a quarter of a percent on excess reserves kept at the central bank, and some policymakers have suggested that cutting the rate further could prompt banks to lend more of that money out.
- Agilent(A) results miss, sees weak fourth-quarter. Electronics testing equipment maker Agilent Technologies Inc (A.N) forecast a weak fourth quarter after falling demand from its manufacturing and aerospace customers hit quarterly profit, sending its shares down 8 percent in extended trade.
- Romney Supporter Paul Singer Backs Tougher Bank Regulations. Hedge fund manager Singer wants more stringent capital requirements, regulation that require more transparency from banks on liabilities, off-balance-sheet instruments, citing his quarterly letter to investors in Singer's Elliott Associates. Singer called Dodd-Frank "ill-conceived," says it could cause financial "black hole." Opaque, large, highly leveraged financial institutions had key rose in financial crisis, Singer told the FT.
- U.S. Export-Import Bank to Make Record $5Billion in Australian Loans. THE battle between the US and China for economic supremacy in Australia has escalated after the US government's Export-Import Bank revealed it would make a record $5 billion in cheap loans to projects here this year, a move that highlights the $1 trillion investment relationship between Australia and the US.
- Hong Kong Chief Executive Leung Chun-ying said the city will take measures to curb speculation in the housing market. The government will seek to prevent "over-expansion" of bank credit to the residential market, Leung said. It may ask banks to raise the minimum downpayment requirement for mortgages on investment properties, Leung said.
- Mountain of bad debt in banks. Non-performing loans at mainland lenders rise for a third quarter, by 4.15pc, as growing number of struggling firms default in 'biggest financial risk' to economy.
- China Should Observe Effects of Policies Before RRR Cut. China should observe the impact of previously introduced economic policies, which are now beginning to take effect, as policymakers determine if it is time to cut the reserve requirement for lenders, according to a commentary published on the front page of the Financial News newspaper by a reporter named Niu Juanjuan.
- None of note
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 150.0 +2.0 basis points.
- Asia Pacific Sovereign CDS Index 124.75 -.75 basis point.
- FTSE-100 futures +.27%.
- S&P 500 futures +.19%.
- NASDAQ 100 futures +.28%.
Earnings of Note
8:30 am EST
- Initial Jobless Claims are estimated to rise to 365K versus 361K the prior week.
- Continuing Claims are estimated to fall to 3300K versus 3332K prior.
- Housing Starts for July are estimated to fall to 756K versus 760K in June.
- Building Permits for July are estimated to rise to 769K versus 755K in June.
10:00 am EST
- Philly Fed for August is estimated to rise to -5.0 versus -12.9 in July.
- None of note
Other Potential Market Movers
- The Fed's Kocherlakota speaking, Eurozone CPI data, Bloomberg Economic Expectations Index for August and the weekly Bloomberg Consumer Comfort Index could also impact trading today.