Bloomberg:
- Spain’s Bad Bank Begins 15-Year Suicide With Bull Sale. Spain’s Sareb, set up last year to acquire 90 billion euros ($116 billion) of soured real estate assets at a discount from rescued lenders, is preparing its first sale, known as ‘Project Bull,’ to test the beleaguered property market’s ability to attract investors.
- Nobel Laureate Phelps Warns Against EU as Iceland Abandons Talks. Nobel Laureate Edmund Phelps warned against the dangers of European Union membership as Iceland became the latest nation to question the sense of affiliation with a bloc mired in economic crisis. Iceland’s new government said yesterday it will halt its EU bid and drop the previous coalition’s goal of euro adoption. Prime Minister-elect Sigmundur Gunnlaugsson, whose Progressives won last month’s vote together with the Independence Party, said he doesn’t want to join a bloc in crisis as his own economy recovers. According to Phelps, the decision will spare Iceland many of the risks plaguing the EU.
- JPMorgan(JPM) to Daiwa See Rate Rise Amid Slower Growth: China Credit. Economists are forecasting that the People's Bank of China is more likely to raise interest rates than cut them in the coming year, even as they slash growth projections for the world's second-largest economy. Eight of 15 analysts surveyed by Bloomberg News this month project an increase in the benchmark deposit rate by the end of June 2014, compared with two who see a reduction. The government "seems to have become more tolerant" of weaker growth, UBS AG says, as Premier Li Keqiang grapples with credit expansion and price gains seen approaching the official target. The gap between two- and 10-year yields has narrowed to an 18-month low of 38 basis points, suggesting the market is anticipating a slowdown without stimulus. The similar gap in India, which is expanding at its slowest pace in a decade, is 11 basis points.
- China Rule Changes May Halt Copper-Financing Deals, Goldman(GS) Says. New rules from China's State Administration of Foreign Exchange, effective from June, are likely to end commodity-financing deals, Goldman says in e-mailed report. An end to Chinese copper financing deals would be bearish for prices, Goldman says. Goldman sees downside risks to six-month $8,000/ton forecast, analysts say in report. Goldman unwinds long September copper recommendation, according to report. The LME market may need to "carry" as much as 250,000 tons of additional physical copper over one to three months, Goldman says.
- Asian Stocks Drop on China PMI, Fed Stimulus Concerns. Asian stocks declined, with the regional benchmark index heading for its biggest drop in five weeks, after China’s manufacturing output unexpectedly contracted and amid speculation the Federal Reserve may soon wind back stimulus. Jiangxi Copper Co. (358), China’s biggest producer of the metal, dropped 2.5 percent in Hong Kong. Westpac Banking Corp. slipped 4.2 percent, leading Australian lenders lower. Fast Retailing Co., a clothier that has nearly 11 percent weighting on the Nikkei 225, gained 3.9 percent on speculation sales at Japanese retailers will increase after a report showed foreign visitors last month climbed almost a fifth. The MSCI Asia Pacific Index declined 1.1 percent to 141.87 as of 11:56 a.m. in Tokyo, heading for its biggest drop since April 18. Almost four shares fell for each that rose on the gauge.
- Rubber Declines Most in 3 Weeks as Drop in Oil Reduces Appeal. Rubber declined the most in three weeks as a slump in oil reduced the appeal of the commodity as an alternative to synthetic products used in tires. The contract for delivery in October lost as much as 2.7 percent, the most since May 2, to 282.5 a kilogram ($2,732 a metric ton). Futures traded at 283.8 yen on the Tokyo Commodity Exchange at 10:28 a.m., extending losses for the most-active contract to 6.2 percent this year.
- Copper Falls Most in a Week on China Manufacturing Contraction. Copper dropped the most in a week along with other industrial metals after a report showed manufacturing in China, the world’s biggest metals consumer, is contracting for the first time in seven months. Copper for delivery in three months declined as much as 2.7 percent, the most since May 14, to $7,276.25 a metric ton on the London Metal Exchange and was at $7,310 at 11:47 a.m. in Seoul. The contract for September delivery fell 1.7 percent to 52,690 ($8,617) yuan a ton in Shanghai, while futures for July delivery declined 2 percent to $3.3135 a pound on the Comex.
- Rebar Drops After China’s Manufacturing Unexpectedly Contracts. Steel reinforcement-bar futures declined after data showed an unexpected contraction in China’s manufacturing this month, hurting the outlook for bulk commodities. Rebar for delivery in October dropped as much as 1.2 percent to 3,551 yuan ($579) a metric ton on the Shanghai Futures Exchange and traded at 3,565 yuan at 10:49 a.m. local time. The price has lost 11 percent this year.
- Syrian Army Advances Signal Assad May Survive for Years. Syria’s President Bashar al-Assad, whose government was last year described as close to collapse by groups ranging from the North Atlantic Treaty Organization to the armed opposition, may remain in power for years to come. “The regime is still in place, strong and not going anywhere,” Julien Barnes-Dacey, a senior policy fellow at the European Council on Foreign Relations, said in an interview. Widespread predictions of his demise reflected an “unwillingness to assess the regime’s strength, wishful thinking, a desire for a swift end, and a failure to recognize this is a civil war.”
- Detroit ‘Crushing’ Debt Among First City Overhauls, Orr Says. Detroit’s bond payments are “crushing” the city by hindering spending on public safety and are among the first liabilities that need to be addressed, emergency financial manager Kevyn Orr said. “The debt service that the city can’t bear is crushing it under its weight,” Orr said at a luncheon in New York for the bankruptcy and reorganization group of the UJA-Federation of New York, a Jewish philanthropic organization. “First order of business is to get a hold of our balance-sheet issues.”
- Fed Leaves Market Guessing. Bernanke Signals Cautious Tack on Bond Buying; Meeting Minutes Blur Picture. In a day of conflicting messages from the Federal Reserve that roiled financial markets, Chairman Ben Bernanke left some straightforward new clues about the central bank's plans for its $85 billion-a-month bond-buying program. The Fed could take a first step toward reducing the program at one of its "next few meetings," Mr. Bernanke said, but he cautioned that he was reluctant to move prematurely or aggressively. The comments, given at a congressional hearing Wednesday, gave markets a dose of clarity for a few hours, though a subsequent release of minutes from the Fed's April 30-May 1 Fed policy meeting added to investor anxiety about the Fed's plans. The minutes disclosed that some officials were prepared to start pulling back the program as early as the Fed's next meeting in June, though the group as a whole, too, expressed hesitance.
- China Falls Short on Efforts to Rebalance. Beijing Continued to Spend in 2012, New Economic Details Show, Missing Promised Shift Toward Consumer-Driven Growth. A more detailed look at China's economic performance in 2012 shows it tipped further off balance, relying more than ever on credit-fueled investment, a trend it had tried to rein in. A further tilt toward capital spending flies in the face of Beijing's goals to shift to a consumption-driven economic model and threatens to add to a mounting debt problem, exacerbate industrial overcapacity that is dragging down profits, and produce more empty "ghost cities." China's economy also showed signs of losing momentum in May.
- The Unaccountable Executive. If the President doesn't run the government, then who does?
- Lamar Alexander: Kathleen Sebelius, Meet Oliver North. Is the Department of Health and Human Services engaged in a domestic Iran-Contra? Major news outlets in recent days have reported that U.S. Department of Health and Human Services Secretary Kathleen Sebelius is raising money from the private sector—including from health-care executives—for use by a private entity that is helping to implement ObamaCare. The entity, Enroll America, is run by a former White House aide.
- IRS official who refused to testify facing more scrutiny over scandal, past. The IRS official who refused to testify at a House hearing Wednesday has become a key focus of the congressional investigations into the IRS practice of singling out conservative groups. Now under the protection of her lawyers and the Fifth Amendment, Lois Lerner is facing a maelstrom of controversy. Members of Congress are calling her evasive, and question why she didn't reveal the program sooner -- plus her history at the Federal Elections Commission is coming under scrutiny.
- Nikkei Skids 4% After Weak China PMI. Japan's Nikkei, together with the rest of regional stock indices, were sharply lower on Thursday after a preliminary survey of China's manufacturing sector raised alarm bells while fears grew that the U.S. Federal Reserve may withdraw its bond buying sooner than expected. The index was up 2 percent earlier in the day.
- Deleveraging, Releveraging And Finding The New Saturation Point. Getting back to the question, “How long have we been deleveraging?” – I’ll answer “zero years.” As in, what deleveraging? We haven’t even gotten started yet.
New York Times:
- Holder Letter on Counterterror Strikes Against U.S. Citizens. The day before President Obama’s planned speech on drone policy, Attorney General Eric H. Holder Jr. wrote a letter to members of Congress acknowledging the deaths of four Americans, including Anwar al-Awlaki, in counterterrorism strikes “outside of areas of active hostilities.” Though these strikes had long been the subject of press reports about the administration’s use of drones, the letter marks the first time the classified operations have been publicly acknowledged.
- GOP Super PAC Takes Aim at McAuliffe, Car Company. The group today posted online 688 pages of emails between Virginia Economic Development Partnership officials and GreenTech Automotive, an electric car company founded by McAuliffe that sought to locate in Virginia in 2009.
Reuters:
- DryShips(DRYS) posts another loss, expects rates to remain weak. DryShips Inc, a drybulk shipper and offshore contract driller, posted a sixth straight quarterly loss and said it did not expect charter rates to improve this year. Shares of DryShips, considered to be a bellwether stock for the industry, fell as much as 7 percent in aftermarket trade.
- London hedge funds ‘mapped’ by G8 protesters. A number of London-based hedge funds including Man Group and Brevan Howard have been targeted by an anti-capitalist group ahead of the G8 summit next month. The group, Stop G8, has drawn up an “action map” of what they call the “hiding places of power in the West End”, which highlights potential targets for protesters.
- BRICS risk 'sudden stop' as dollar rally builds. The stock of capital flowing into emerging markets has doubled from $4 trillion to $8 trillion since the Lehman Crisis, chasing a catch-up growth story that looks tired and has largely sputtered out in Brazil, Russia and South Africa.
- Help-to-Buy may fuel house price bubble that hurts first-time buyers, says IMF. The Government’s Help-to-Buy cheap loans scheme may turn out to be counterproductive by fuelling a house price bubble that locks potential buyers out of the market, the International Monetary Fund has warned.
- Ford(F) to pull out of Australian manufacturing. Ford has announced it will close its manufacturing operations in Broadmeadows and Geelong in October 2016, with the loss of 1200 jobs. Ford Australia president Bob Graziano announced the closure on Thursday after Ford recorded a $141 million after-tax loss for 2012 and losses of almost $600 million over five years. He cited the high cost of doing business in Australia, which was larger than that in Asia and Europe. “The business case did not stack up,’’ he said.
- China Air Pollution Curb Plan to Be Submitted. A national air pollution prevention and control plan may be submitted to China's State Council in near-term, citing Yang Tiesheng, an official at the Ministry of Industry and Information Technology.
- China Evaluates Result of Property Curbs. Chinese policy makers are evaluating result of current property curbs and may adjust policies, citing a recent meeting of the real estate industry. China may expand property tax trials to several new cities this year, China Securities Journal reported May 20th.
- Investors just gave Galaxy Securities $1 billion to make China’s bad debt problem worse. China Galaxy Securities Co., which is majority owned by one of China’s sovereign wealth funds, raised $1.07 billion in its Hong Kong IPO today—capital that will go toward building up its margin financing and securities lending businesses, its core money-spinners. Many are hailing the event as a revival of Hong Kong’s moribund IPO market, and that may be. But Galaxy’s prospectus tells another story too: Over-regulation of China’s stock market is warping incentives for its brokerages.
- None of note
- Asian equity indices are -2.0% to -.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 103.0 +1.5 basis points.
- Asia Pacific Sovereign CDS Index 87.0 +2.0 basis points.
- FTSE-100 futures -1.06%.
- S&P 500 futures -.44%.
- NASDAQ 100 futures -.33%.
Earnings of Note
Company/Estimate
- (HRL)/.49
- (QSII)/.27
- (AAP)/1.62
- (PDCO)/.62
- (RL)/1.29
- (TTC)/1.17
- (GME)/.40
- (ROST)/1.07
- (GPS)/.69
- (SHLD)/-.69
- (CRM)/.11
- (P)/-.10
- (WSM)/.37
- (DLTR)/.57
- (GCO)/.87
8:30 am EST
- Initial Jobless Claims are estimated to fall to 345K versus 360K the prior week.
- Continuing Claims are estimated to fall to 3000K versus 3009K prior.
- Preliminary Markit US PMI for May is estimated to rise to 51.2 versus 52.1 in April.
- The House Price Index for March is estimated to rise +.8% versus a +.7% gain in April.
- New Home Sales for April are estimated to rise to 425K versus 417K in March.
- Kansas City Fed Manufacturing for May is estimated to rise to -4 from -5 in April.
- None of note
- The Fed's Bullard speaking, Spanish 10Y auction, Eurozone Services PMI, UK GDP/Retail Sales reports, 10Y TIPS auction, China Business Sentiment Index, BoJ's Kuroda speaking, weekly EIA natural gas inventory report and the weekly Bloomberg Consumer Comfort Index could also impact trading today.
No comments:
Post a Comment