Tuesday, September 18, 2012

Today's Headlines

Posted by Gary .....at 2:56 PM

Bloomberg:
  • Ford(F) Leads European Car Sales Drop as German Demand Falls. Ford Motor Co. led the steepest decline in European car sales in six months as the region’s economic woes hurt demand in Germany. Industrywide car registrations fell 8.5 percent from a year earlier to 722,483 vehicles in August, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. Ford’s European sales dropped 29 percent, and the company accounted for 6 percent of the region’s deliveries compared with 7.7 percent in August 2011. The European car market has shrunk for 11 consecutive months as governments grapple with a sovereign-debt crisis, and the ACEA is forecasting a 17-year low for full-year sales. Registrations in Germany, Europe’s biggest economy, fell 4.7 percent. The European car-market decline last month was the biggest since a 9.2 percent contraction in February. Italy’s car registrations plunged 20 percent, while sales in France dropped 11 percent. Across the region, eight-month sales fell 6.6 percent to 8.59 million cars. Registrations in July fell 7.5 percent to 972,860 vehicles, the ACEA also said today. “We’ll probably see a continued weakness in southern Europe and in addition to that an accelerated weakness in France and Germany,” Arndt Ellinghorst, a London-based analyst at Credit Suisse Group AG, said today by phone. “That would be a big problem next year as Germany and France are more profitable than Italy and Spain.” The ACEA compiles sales figures from the 27 European Union countries plus Switzerland, Norway and Iceland. The group forecast on June 6 that industry sales in the region will shrink 7 percent this year to the least since 1995 and 21 percent below the 2007 peak. The market is likely to drop 9 percent this year and 3 percent in 2013 before recovering in 2014, Goldman Sachs said Sept. 12.
  • European Stocks Decline for Second Day; Akzo Nobel Falls. European stocks declined the most in two weeks as investors bet that the rally in the Stoxx Europe 600 Index (SXXP) to a 15-month high overshot the economic outlook and prospects for corporate earnings. Akzo Nobel NV (AKZA), the world’s largest paintmaker, tumbled the most in one year after saying Chief Executive Officer Ton Beuchner will go on sick leave. Aviva Plc (AV/) slid 4 percent after analysts downgraded the stock. PSA Peugeot Citroen and Fiat SpA led a gauge of European automakers lower after a report showed car sales slumped in August.
  • PBOC Inflation Focus Halves Rate-Cut Bets in Swaps: China Credit. Swap traders have halved expectations for the scale of China's interest-rate cuts in the coming year as policy makers signal concern that global monetary easing will reignite inflation. The derivatives reflect bets the PBOC will lower its one-year deposit rate of 3% by 44 basis points, compared with expectations a month ago for a 90 basis point reduction, according to Bloomberg.
  • Uniqlo, Aeon Shut China Stores as Island Spat Escalates. Japan's Fast Retailing Co. (9983) and Aeon Co. (8267) shuttered stores in China, the world’s second-biggest economy, as a territorial dispute and the anniversary of the Japanese invasion prompted thousands to protest in Beijing, Shanghai and other cities.
  • Anti-Japan Protests Raise Risks for China’s Leadership Transfer. Demonstrations across China against Japanese businesses and property pose a growing risk for the country’s leaders as the economy slows and the Communist Party prepares for a once-a-decade transition of power. With growth in danger of reaching a 22-year low, ousted Politburo member Bo Xilai’s case still pending public resolution and the biggest diplomatic spat with Japan since 2005, any uncontrolled protests risk undermining authority before the handover. Thousands waved flags and brandished Mao Zedong portraits yesterday at Japanese diplomatic posts in Beijing and Shanghai in a sign of public fury over a territorial dispute. “They do not want things to get out of control; there will be more attempts to contain the protests,” said Joseph Cheng, a political science professor at the City University of Hong Kong. The portraits of Mao “are implicit criticisms of the present leadership,” he said. Bo Xilai championed resurrection of Mao slogans before his downfall as Chongqing party boss this year.
  • China’s Stocks Fall on Concern Japan Tensions May Hurt Economy. China’s stocks fell, capping the biggest two-day drop in almost six months, on concern escalating tensions with Japan over a territorial dispute will hurt trade and deepen an economic slowdown. Guangzhou Automobile Group Co., which has ventures with Japanese automakers including Toyota Motor Corp., slid to a record low as a Chinese industry association said some dealerships that sell Japanese cars shut after outlets were attacked. Chengdu Galaxy Magnets Co., which derived two-thirds of revenue from Japan, dropped to the lowest this month. Zijin Mining Group Co. and Jiangxi Copper Co. led a gauge of material producers to the biggest slump among 10 industry groups. “Historically, whenever there’s unrest nearby, stocks will decline because of the uncertainty,” Zhang Gang, a strategist at Central China Securities Holdings Co., said by phone in Shanghai today. “With no new stimulus from the central bank, investors are negative and stocks keep going down.” The Shanghai Composite Index (SHCOMP) slumped 0.9 percent to 2,059.54 at the close, the lowest close since Sept. 6, while the CSI 300 Index (SHSZ300) declined 1 percent to 2,235.24.
  • Brazil Finance Chief Blasts QE3 as Damaging for Emerging Markets. Brazil’s finance chief blasted the latest round of U.S. monetary easing, saying that the Federal Reserve’s resumption of asset purchases could damage growth in emerging markets. Finance Minister Guido Mantega, who coined the term “currency war” in 2010 to describe advanced economies’ use of monetary policy to boost exports, said the Fed’s open-ended plan to purchase assets will erode the competitiveness of Brazilian manufacturers by weakening the U.S. dollar. A decline in the dollar also cuts into the value of Brazil’s foreign currency reserves, he said. “QE3 is a worry of ours,” Mantega told reporters in Paris following a meeting with his French counterpart, Pierre Moscovici.
  • S&P 500 Puts Reach Three-Year Low: Options. Bearish options on the S&P 500 have dropped to the cheapest level in more than three years. Puts protecting against a 10% decline in the S&P 500 cost 7 points more than calls betting on a 10% increase, according to one-month data compiled by Bloomberg. The price relationship known as skew fell to 6.4 on Sept. 14, the lowest level since April 2009.
  • FedEx Cuts(FDX) Forecast as Economy Hurts Premium Shipping. FedEx Corp. (FDX), operator of the world’s largest cargo airline, cut its annual profit outlook as a weakening economy spurs shippers in the U.S. and overseas to switch to cheaper delivery options. Earnings for the year ending in May will be $6.20 to $6.60 a share compared with a previous forecast of $6.90 to $7.40, the Memphis, Tennessee-based company said today. That excludes potential benefits from cost cuts currently under review. FedEx, an economic bellwether because it ships goods from financial documents to electronics, pared its forecast for U.S. expansion next year to 1.9 percent from a June prediction of 2.4 percent. It trimmed its forecast for global growth this year and next to 2.3 percent and 2.7 percent, down from 2.4 percent and 3 percent, respectively. “Fundamentally what’s happening is that exports around the world have contracted and the policy choices in Europe, the U.S. and China are having an effect on global trade,” Chief Executive Officer Fred Smith said on a conference call. “Over the last few months, exports and trade have gone down at a faster rate than GDP has.” In the Express segment, FedEx’s largest by sales, operating margin slipped to 3.1 percent in the three months through August from 4.4 percent a year earlier. Revenue from domestic shipments in the U.S. grew 2 percent per package as higher rates eased the effects of a 5 percent drop in average daily volume. Unfavorable currency exchange rates and lower fuel surcharges pulled revenue per package down 4 percent in international exports, eroding a 1 percent increase in average daily volume. Express profit dropped 28 percent to $207 million, the company said. “The global trading economy is still the largest single economy in the world,” Smith said. “But over the last several months, particularly as we went into this fiscal year, it’s been disappointing. It’s reflective of the low growth in the U.S., contraction going on in Europe” and the effect those issues are having on Chinese exports, he said. Simultaneously, increasing fuel prices have “had very big implications on the way people think about supply chains, whether they move things by ocean or move things by air,” he said.
  • Escape of 131 Mexican Inmates Near U.S. Prompts Border Alert. At least 131 Mexican inmates escaped through a tunnel at a prison across from Eagle Pass, Texas, prompting local officials to alert the U.S. border patrol and detain the prison’s director and security chief. Eighty-six of the inmates from the prison had been charged with federal crimes, Coahuila’s state government said in a statement last night. Authorities are investigating whether inmates had a firefight with police after their escape, state prosecutor Hector Ramos said in an interview on Milenio TV. Police lowered the number of fugitives today to 131 from 132. “The state’s combined police forces are carrying out continued operations,” Ramos said last night. “We’ve alerted U.S. authorities, who immediately deployed border patrol speed boats.”
Wall Street Journal:
  • Kabul Attack Sparked by Video Kills 12. A suicide bomber in Kabul struck a minivan packed with employees of an American aviation firm working for the U.S. government, killing at least 12 people, in an attack that an insurgent group claimed was payback for the anti-Islam video posted on YouTube. The bombing on Tuesday was the deadliest targeting foreign civilians in over a decade of war. Afghan officials said eight South Africans, one Kyrgyz citizen and at least three Afghan civilians were killed in the 6:30 a.m. blast on the road to Kabul airport. Another 11 people were wounded.
  • Mortgage Lending Slid to 16-Year Low in 2011. Mortgage lending continued to drop off last year in the U.S., falling to a 16-year low as the housing market struggled to recover and refinancing activity slowed, U.S. regulators said Tuesday. The number of home loans issued tumbled 10% in 2011 to 7.1 million, the lowest level reported under the Home Mortgage Disclosure Act since 1995. Mortgages for purchasing a home fell about 5%, while refinancings contracted by 13% despite a pickup late in the year as 30-year mortgage rates fell to around 4%.
Barron's:
  • Builder Confidence, Goldman Report Can’t Lift Homebuilders. Homebuilders are feeling better than they have since 2006 about the market for new single-family homes, the National Association of Home Builders reported today. An index tracking sentiment rose to 40 in September from 37, its fifth straight month of gains. That said, NAHB Chairman Barry Rutenberg raised concerns about tight credit conditions and higher prices for building materials cooling the recovery. “Given the fragile nature of the housing and economic recovery, these are significant red flags,” he said in a statement.
MarketWatch:
CNBC.com:

Business Insider:

Zero Hedge:

New York Times:

  • Spain Sells Debt Amid Questions Over Bailout. Spain took advantage of improved bond-market sentiment in the euro zone to sell government debt Tuesday, but questions still lingered over whether, or when, it will seek European help to lower its borrowing costs.

LA Times:

  • Northrop(NOC) to shed nearly 600 jobs. Responding to proposed Pentagon budget cuts, Northrop accepts buyouts from about 590 workers in its aerospace unit, most of whom are in Southern California. In another wallop to Southern California's aerospace industry, defense giant Northrop Grumman Corp. said it is preparing to trim its payroll by nearly 600 workers. Responding to billions of dollars in proposed Pentagon budget cuts, Northrop confirmed it has accepted buyouts from about 590 employees in its aerospace division. Most employees participating in the voluntary buyout program, which began in July, will leave by the end of September. The rest will remain as long as Dec. 14.
  • Japanese businesses close in China in face of protests. Japanese factories, restaurants, mini-marts and clothing retailers across China closed en masse Tuesday as protests continued in nearly 100 cities over a territorial fight between the two nations centered on some uninhabited islands near Taiwan. Nissan, Honda, Toyota and Mazda suspended operations at some plants, as did Sony. Hundreds of 7-Eleven shops run by a Japanese company were shuttered, as were dozens of outlets of the popular Gap-like Japanese clothing chain Uniqlo. Eateries serving Japanese food -- even those with Chinese owners and staff -- closed as well, shaken by weekend demonstrations that saw protesters overturning Japanese cars, looting businesses and setting factories on fire.

IFLR:

InvestmentNews:

  • Why Ben Bernanke Needs To Go. The economy's failure to respond sufficiently to traditional monetary and fiscal stimuli raises many questions.

Townhall.com:

  • NBC News: Obama Administration Not Telling the Truth on Benghazi Security Lapses. I'm somewhat mystified by the Obama administration and campaign's continued attempts to convince Americans that the deadly raid on our consulate in Benghazi was not premeditated. They're obviously trying to shield the president from political fallout for the horrifically inadequate security measures at our outpost there, but contradictory evidence is mounting. Libyan officials and eyewitnesses have described the nature of the attack as clearly pre-planned, and US Senators briefed on the matter have drawn similar conclusions.

Rasmussen Reports:

  • Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows Mitt Romney attracting support from 47% of voters nationwide, while President Obama earns 45% of the vote. Four percent (4%) prefer some other candidate, and three percent (3%) are undecided.

Reuters:

  • Dallas Fed's Fisher says QE3 may not be effective. The Federal Reserve's aggressive stimulus program to tackle unemployment will probably be less effective because other factors were standing in the way of job creation, a top Fed official said on Tuesday. The Fed announced last week that it would inject $40 billion into the economy each month through purchases of mortgage-linked debt, until it saw a sustained upturn in the weak jobs market. Dallas Fed President Richard Fisher told CNBC that while he understood the logic behind the third round of bond purchases, or quantitative easing, he was doubtful it would work. "I would argue that it is less impactful right now because you have other things inhibiting businesses from making decisions on capex and employment," Dallas Fed President Richard Fisher told CNBC. "I would like to see people going out and build and commit to capex that's job creating in the United States and have some more immediate effect. I don't think this program will have much efficacy.
  • Euro drops from 4-month high on Spain uncertainty.
  • Bad loans, deposits increase stress on Spain's banks.
  • Syrian rebels battle Assad forces near Turkish border. Syrian rebels battled government forces along the Turkish border on Tuesday in an attempt to seize a border crossing into its northern neighbour, which has backed the 18-month-old uprising against President Bashar al-Assad.

Telegraph:

Handelsblatt:

  • UBS's Weber Says ECB Bond Plan May Fuel Renewed Market Turmoil. UBS AG Chairman and former European Central Bank Governing Council member Axel Weber said the ECB's record-low interest rates and new bond-purchase plan may fuel "new financial market tensions," citing a speech delivered in Basel. Weber said the new program will not solve the crisis and instead cause new problems.

El Pais:

  • EU's Alumina Says Spain Faces Risks Delaying Bailout. EU Competition Commissioner Joaquin Almunia says Spain faces growing risks as it delays making a decision about Spain's bailout, citing comments by Almunia in Amsterdam.

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