Wednesday, May 29, 2013

Today's Headlines

  • ECB Warns Financial Weakness Could Break Best Lull in Two Years. The European Central Bank said weakness in the euro-area economy and the fragility of the region’s banks risk ending what it describes as the calmest period in financial markets since 2011. “The main message is that financial stability has improved since the last issue,” ECB Vice President Vitor Constancio said today in Frankfurt as he presented the ECB’s twice-yearly Financial Stability Review. “But the situation remains fragile. The year 2012 was not good at all for banks.” “Particularly vulnerable are banks that are confronted with a significant deterioration of asset quality with high and rising non-performing loan levels,” the ECB said in the report. “Continued and prompt progress in proactively tackling bank balance sheet problems is required.”
  • German Unemployment Increased Four Times Forecast in May. German unemployment rose more than four times as much as economists estimated in May as the euro area’s sovereign debt crisis and a long winter took their toll on Europe’s largest economy. The number of people out of work climbed a seasonally adjusted 21,000 to 2.96 million, the Nuremberg-based Federal Labor Agency said today. That’s the fourth straight monthly gain. Economists predicted an increase of 5,000, according to the median of 35 estimates in a Bloomberg News survey.
  • Hollande Says EU Can’t Dictate French Economy Policy, Monde Says. President Francois Hollande said the European Commission isn’t in a position to decree French economic policy, Le Monde reported. The commission isn’t there to “dictate what we have to do,” Hollande was quoted as saying by the newspaper. “We have to respect our European commitments on deficit reduction,” he said, according to the report. “As for structural reform, it’s up to us and us alone to decide what path to take to obtain the objective.”
  • European Stocks Fall on Concern Fed Will Pare Stimulus. European stocks fell, after the Stoxx Europe 600 Index rallied the most in a month, on concern that the U.S. Federal Reserve will reduce debt purchases as the world’s biggest economy strengthens. PSA Peugeot Citroen declined 4.2 percent following a French newspaper report that Europe’s second-biggest automaker may sell new shares to raise cash. Evraz Plc fell to a record low after Stoxx Ltd. said it will remove the commodity producer from its benchmark Stoxx 600 next month. Hennes & Mauritz AB dropped 2.5 percent as Goldman Sachs Group Inc. recommended investors sell the shares. The Stoxx 600 retreated 1.9 percent to 302.5 at the close of trading.
  • Latin America Disappoints After Squandering Commodity Boom. Latin America is disappointing investors, economists and businesses with slower-than-forecast growth as waning commodity prices and strong currencies hit nations that failed to diversify and become more competitive. The five biggest investment-grade markets in the region -- magnets for foreign capital as rich countries stalled --expanded below projections or show signs of weakness. Mexico’s and Brazil’s gross domestic product missed estimates in a Bloomberg survey. Economists polled by Brazil’s central bank cut the country’s 2013 outlook this week for the second time in seven days, anticipating the worst three-year period in a decade.
  • Lumber Futures Fall Most in 17 Months as Output Rebounds. Lumber futures fell the most in 17 months on speculation that North American mills from Texas to Alberta are boosting output
  • Copper Declines on German Jobs Data, IMF's China Forecast. Copper futures fell for the third time in four sessions after German unemployment rose more than expected and the International Monetary Fund cut its forecast for economic growth in China, the world’s top metal consumer
  • Rosengren Says Significant Fed Accommodation Still Needed. Federal Reserve Bank of Boston President Eric Rosengren said the Fed should press on with record stimulus to speed economic growth, reduce 7.5 percent unemployment and boost inflation running below 2 percent. “While we have seen some improvement in labor market conditions, significant accommodation remains appropriate at this time,” Rosengren said today in remarks prepared for a speech in Minneapolis. “Core inflation remains at the very low end of recent experience, and the unemployment rate is close to the cyclical peaks of the past two recessions.”
  • Technology Puts Reach Five-Year Low. The cost of options hedging against losses in U.S. technology shares fell to an almost five-year low. Puts with an exercise price 10% below the Technology Select Sector SPDR Fund cost 6.45 points more than calls betting on a 10% gain, according to three-month data compiled by Bloomberg. The price relationship known as skew slid to 5.19 on May 22, the lowest level since October 2008.
Wall Street Journal:
  • OPEC Axes Production Monitoring Committee. OPEC has decided to ax a key committee that monitored its members' compliance with oil production targets and made recommendations on output policy, people familiar with the matter told The Wall Street Journal Wednesday.
Fox News:
  • UN gets new info on alleged chemical weapons use in Syria. Britain said Thursday it has sent a letter to Secretary-General Ban Ki-moon with new information on three further incidents of alleged chemical weapons use by the Syrian government. Britain's U.N. Ambassador Mark Lyall Grant said his government has continued to provide new information to the secretary-general and the head of the U.N. team Ban appointed to investigate alleged chemical weapons attacks in Syria.
  • House Republicans challenge Holder testimony on reporter surveillance. Top Republicans on the House Judiciary Committee openly challenged Attorney General Eric Holder on Wednesday over his testimony two weeks ago in which he claimed to be unaware of any "potential prosecution" of the press, despite knowing about an investigation that targeted a Fox News reporter
Zero Hedge:
Business Insider:
New York Times:
  • Smithfield(SFD) to Be Sold to Chinese Meat Processor. Shuanghui International of China agreed on Wednesday to buy the American meat processor Smithfield Foods for about $4.7 billion, in one of the biggest moves by a Chinese company into the United States to date. It will likely draw close government scrutiny over Chinese food standards, especially amid a number of incidents like a recent scare over bird flu. Though Smithfield has argued that the deal is meant to sell American pork outside of the country and not import Chinese products, regulators are likely to ensure that the company does not lower its quality standards. Shuanghui, also known as Shineway, is China’s largest pork producer and is owned in part by an investment firm run by Goldman Sachs(GS).
  • Google(GOOG) Overhauls Gmail to Take On E-Mail Overload.
  • Volcker warns on limits of U.S. Fed's easy money. Former Federal Reserve Chairman Paul Volcker on Wednesday waded into the debate over when to reduce today's ultra-easy U.S. monetary policies, arguing that the benefits of bond-buying are "limited and diminishing" and warning that central banks are too often late in removing stimulus. 
  • Brazil economic growth disappoints again. Brazil's economic growth fell short of forecasts once again in the first quarter as President Dilma Rousseff's numerous stimulus packages failed to aid manufacturers while consumers, frightened by rising inflation, grew more conservative. Even a record corn and soy harvest and a rebound in investment were not enough to avoid disappointing gross domestic product growth of just 0.6 percent compared with the fourth quarter, according to government data released on Wednesday. Analysts expected 0.9 percent growth.
  • Brazil will not tolerate high inflation -Finmin Mantega.
  • Luxury spending drives Michael Kors(KORS) profit. Upscale accessories maker Michael Kors Holdings Ltd reported a better-than-expected quarterly profit as shoppers spend more on luxury goods, and the company said it would double the number of its stores in Europe, where its sales are booming. The company, formed and owned by fashion designer Michael Kors, has grown at a blistering pace since it went public in 2011, underlining shoppers' appetite for luxury items even in a tough economy.
Die Welt:
  • Draghi Loses Support in ECB Executive Board. ECB Executive Board members Joerg Asmussen and Yves Mersch oppose ABS purchases, citing central bank officials. Bundesbank President Jens Weidmann also against ABS-purchase program. Mersch is against any further use of non-standard measures.
  • EU's Ottinger Says Europe Needs a Revamp. European Energy Commissioner Guenther Oettinger is concerned about the economic situation within the European Union, citing Oettinger at an event in Brussels. Oettinger says Brussels hasn't fully realized how bad the situation is, he said. Says especially France isn't prepared; needs a pension reform, longer working life time, less govt spending. Says is concerned about countries like Bulgaria, Romania, Italy that are hardly governable. Says Germany is about to lose part of its competitiveness through minimum wage, women quota, childcare subsidy, its no to fracking. Says Germans are hypocritical, import Russian gas with no concern for environment, but don't want fracking at home, they should at least test it, he said.
  • Hong Kong Govt Won't Be Worried If Home Prices Fall 20%. Recent signs showing property market stabilizing is short term, and the govt wouldn't be concerned if prices fell 20%, citing govt officials. Interest rates will definitely climb in the future, dragging down property prices, the official said. The govt doesn't expect huge amount of negative assets cases like in 1998 and 2003, should property prices drop as much as 40% in the long term, the report said.

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