Monday, August 20, 2012

Today's Headlines

Posted by Gary .....at 2:55 PM

Bloomberg:
  • European Stocks Fall as Bundesbank Criticizes Bond Plan. European (SXXP) stocks fell as Germany’s Bundesbank criticized a European Central Bank plan to lower the region’s sovereign yields through bond purchases, highlighting the rift among policy makers over ways to end the debt crisis. Lonmin Plc (LMI) slid 4.6 percent on reports it may raise $1 billion in a rights issue after operations at its biggest mine were halted amid deadly violence, the Sunday Times reported. Bankia (BKIA) SA fell 4.6 percent.
  • Spain May Raise Income Tax Again, Reduce Pensions, El Pais Says. Spain may raise income tax again and cut expenditure on pensions in order to meet its budget deficit target and avert a bailout, El Pais reported, citing unidentified people in the government. Government tax revenue, needed to reduce Spain’s deficit to 6.3 percent of gross domestic product by year end, has fallen despite increases in value added tax and personal income tax earlier this year, El Pais said.
  • Iran Would Have ‘Crushing Response’ to Israel Attack, Mehr Says. Iran’s military is at the highest level of alert and will respond to any attack by Israel with a “crushing response,” the state-run Mehr News agency reported, citing Defense Minister Ahmad Vahidi. His remarks came after Tel Aviv-based Haaretz newspaper said on Aug. 10 that Israeli Prime Minister Benjamin Netanyahu and Defense Minister Ehud Barak are considering bombing Iran’s nuclear facilities before U.S. elections on Nov. 6. “There are intense disputes among the Zionist regime’s officials, and such statements are worthless,” Mehr cited Vahidi as saying. “The Zionists are even afraid of their own shadow, so they try to cover up their despair with making noise and waging psychological war.”
  • Chicago Fed National Activity Index for July Falls Again. Following is the text of the Chicago Fed’s National Activity Index from the Federal Reserve Bank of Chicago. The index’s three-month moving average, CFNAI-MA3, decreased slightly from -0.18 in June to -0.21 in July--its fifth consecutive reading below zero. July’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend.
  • Oil-Tanker Losses Persist on Declining Middle East Crude Exports. Losses for the biggest oil tankers hauling Middle East crude to Asia, the industry’s benchmark route, persisted amid declines in export cargoes. Very large crude carriers on the Saudi Arabia-to-Japan voyage are losing $6,083 daily, figures from the Baltic Exchange in London showed today, less than $6,383 on Aug. 17. The vessels, each able to haul 2 million barrels of oil, were earning $41,093 a day at this year’s high in April. Seaborne oil trade growth is expected to remain “weak” during the next 18 months, according to an e-mailed report from Oslo-based RS Platou Markets AS. VLCC returns reached the lowest level in at least four years on July 23. The VLCC fleet is poised to expand by 6.9 percent this year, exceeding 4.7 percent demand growth, according to data from Clarkson Research Services Ltd., a unit of the world’s largest shipbroker.
  • Crop Outlook Dimming as July Heat Compounded Drought Damage. U.S. corn farmers hurt by the worst drought in a generation probably will harvest smaller crops than the government forecast this month, based an analysis of dry spells in the past 42 years. In the five drought years since 1970, farmers on average harvested 85.4 percent of the acres planted, U.S. Department of Agriculture data show. That’s below the 90.6 percent that the USDA predicted for this year on Aug. 10, when the agency cut its output forecast by 17 percent following the hottest July since 1936.
  • Apple(AAPL) on Track to Top Microsoft(MSFT) Record Closing Market Cap. Apple Inc. (AAPL) rose as much as 2.6 percent to a record on optimism that the next version of the iPhone will meet with high demand, gaining a higher intraday market capitalization than Microsoft Corp. (MSFT), the previous U.S. record holder. The increase in Apple’s shares gave it a market value of $623.1 billion. That compares with $620.6 billion, the record intraday value reached by Microsoft on Dec. 30, 1999 during the Internet heyday, according to data compiled by S&P Dow Jones Indices.
  • Calpers Defends Pension Benefits While Risking Losses. The California Public Employees’ Retirement System, the largest U.S. pension, is defending government workers against criticism of their benefits even while it risks losses as municipalities, faced with rising retirement costs, file for bankruptcy. The $239.1 billion fund is the largest creditor in bankruptcy cases filed by two California cities, Stockton and San Bernardino, since the end of June, with a total of $290.8 million at stake.
  • UN Monitors Exit Syria as Brahimi Describes Civil War. United Nations monitors prepared to leave Syria today after the failure of their four-month mission, while the organization’s newly appointed envoy described the country’s conflict as a civil war. The 173-strong UN mission ended work yesterday and the last military observer will depart by Aug. 24, Edmond Mulet, assistant secretary general for peacekeeping operations, said after the Security Council decided not to renew its mandate on Aug. 16.
Wall Street Journal:
  • Capping Yields a Major Threat to Germany. Capping yield spreads between peripheral debt and German benchmark yields is a disastrous idea that would backfire on the ECB, if it were to go down such a road. Once Spanish yields reach their maximum spread, savvy investors will sell German bonds instead, which will not affect the spread between Spanish and German bonds, but have the unintended consequence of shifting the yield curves higher for all of Europe. Investors limited to selling peripheral debt will sell core debt; what is to lose? — German bunds trade at a negative yield. The trade of a lifetime if the ECB were to proceed in this manner is to sell German and French debt and watch as Europe creates one more scheme doomed to not only fail, but make things worse.
  • Spain, Greece and ECB All Pose Threat to Euro Now. The euro is sitting on a three-legged stool and all three of the legs could snap at any time. Greece’s deficit position is deteriorating even more rapidly than expected with Athens once again seeking an extension to its budget-cutting plans. Spain is still in a stand-off with the European Central Bank, hoping that by delaying a formal request for a bailout the country will be able to avoid any new onerous austerity measures. And the third leg is the ECB itself, with its proposal for using government bond purchases to help cap the funding costs of weaker debtor nations in the euro zone.
MarketWatch:
  • Medical tax stirs debate over artificial joints. Medical-device manufacturers raise concerns over health-care surcharge. The many baby boomers considering hip or knee replacements in the coming years are likely to have to pay more to get them. The question is, How much more? And could the problems stretch beyond a higher price tag?
CNBC.com:

Business Insider:

Zero Hedge:

Absolute Return + Alpha:

  • Obama Adds Hedge Fund Bundlers. At least 25 people involved in hedge funds are fundraising for Barack Obama, according to an analysis of names released by the campaign for the second quarter.

Gallup:

Rasmussen Reports:

Reuters:

  • ECB says bond-buy speculation is misleading. Over the weekend, German magazine Der Spiegel said the ECB is considering setting interest rate thresholds for any purchases of struggling euro zone country's bonds so that it would buy such bonds if their interest rates exceeded a certain premium over German bonds. The European Central Bank on Monday sought to quash speculation about the shape its planned bond-buying program will take, saying that it is misleading to talk about decisions not yet taken. "It is absolutely misleading to report on decisions, which have not yet been taken and also on individual views, which have not yet been discussed by the ECB's Governing Council, which will act strictly within its mandate," an ECB spokesman said. "As far as recent statements by government officials are concerned, it is also wrong to speculate on the shape of future ECB interventions. Monetary policy is independent and undertaken strictly within the ECB mandate."
  • Maersk sees 3 pct drop in Asia-Europe volumes-paper. The head of Maersk Line, the world's biggest container shipping company and a unit of Danish group A.P. Moller-Maersk, told Lloyd's List newspaper that container exports from Asia to Europe are likely to drop 3 percent this year. In its half-year report on Aug. 14, Maersk had said it expected a decline in inbound European volumes this year, but did not put a figure on the drop. "In 2012, growth rates have come down across the board," Maersk Line Chief Executive Soren Skou was quoted telling the shipping newspaper. "If lines keep piling on capacity, we are heading straight for a new rate war." Maersk expects zero growth overall in the Asia-Europe container market this year, with eastbound volumes likely to grow by around 6 percent, Lloyd's List said. But that will not compensate for an expected 3 percent drop in the larger westbound volumes, it said. "The Danish line's own internal forecasts will make grim reading for the whole industry, with north-south as well as east-west trades weakening," Lloyd's List said. "Only the intra-Asia market is still looking robust."
  • Copper falls on euro zone disappointment, China worry. Copper fell on Monday on disappointment over lack of progress in solving the euro zone crisis and fears that top commodities consumer China will step up a campaign to curb inflation in the metals-intensive housing sector. Denting optimism, the European Central Bank poured cold water on a weekend report in German magazine Der Spiegel that said its new crisis fighting plan could include buying euro zone countries' bonds if their borrowing costs breached certain levels. Markets were also disappointed that Friday's comments from German Chancellor Angela Merkel supporting ECB efforts to address the crisis had not been followed up with concrete plans at the weekend.
  • Fitch sees US local gov't downgrades outpacing upgrades. Fitch Ratings said on Monday a mix of soft property taxes and high labor costs will keep weighing on cities, counties and other local governments and produce more downgrades than upgrades for local bond issuers. "Inflexible labor contracts with onerous provisions or external arbiters that severely impede fiscal adjustments remain a key local government credit concern," Fitch said in a statement. "Local government revenues have not been rebounding as overall property tax revenue, linked on a lagged basis to real estate values, continue to drag in many locations."
  • Holiday over for France's Hollande as hard times bite. As post-election euphoria wanes, French President Francois Hollande returns from vacation under pressure to show that beyond dismantling the legacy of his predecessor he can act decisively at home while grappling with recession in Europe. Awaiting him are the crisis that still haunts the euro zone, fragile relations with German Chancellor Angela Merkel, and French political opponents who accuse him of sunning himself on the beach while Syria slides into chaos.
  • Lowe's(LOW) misses estimates, lags Home Depot(HD). Lowe's Cos Inc reported weaker-than-expected quarterly sales and earnings and cut its profit outlook for the year as the world's No. 2 home improvement chain lost market share to larger rival Home Depot. The results came just days after Home Depot Inc beat Wall Street profit estimates with the help of cost controls and market share gains, and raised its earnings forecast. Lowe's shares fell 4.3 percent to $26.67 in early trading.

Telegraph:

Xinhua:

  • China's stockpiles of crude for commercial use rose to the highest level in at least 31 months in July, data from the official Xinhua News Agency show. Supplies of crude, excluding emergency reserves, climbed 3.1% at the end of July compared with June for a fifth monthly gain, according to Xinhua's China Oil, Gas & Petropchemicals newsletter today. That puts inventories at 32.28 million metric tons, the most since January 2010, when Bloomberg started compiling data.

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