Bloomberg:
- BOJ Refrains From Adding to Stimulus as Recovery Signs Seen. The Bank of Japan refrained from adding to unprecedented monetary stimulus and raised its assessment of the economy, referring to a recovery for the first time since before a record 2011 earthquake. Governor Haruhiko Kuroda’s board stuck with an April pledge to expand the monetary base by 60 to 70 trillion yen ($709 billion) per year, a statement released in Tokyo today showed. The decision was in line with the forecasts of all 20 economists surveyed by Bloomberg News. The economy is starting to recover moderately, the central bank said. Economic gains increase the odds of Kuroda holding fire for the rest of this year, after a Bloomberg News survey this week showed analysts abandoning predictions for further easing in October.
- Australian Unemployment Rises to 2009 High in Challenge for Rudd. Australia’s unemployment rate rose to the highest since 2009, underscoring the challenge newly-installed Prime Minister Kevin Rudd faces as he crafts a re-election pitch centered on economic management. The jobless rate rose to 5.7 percent in June, the highest since September 2009 and up from a revised 5.6 percent a month earlier, the statistics bureau said in Sydney today.
- Stocks Rally on Bernanke as Metals Soar Amid Dollar Slump. Asian stocks, Treasuries and metals rose, while the dollar retreated after Federal Reserve Chairman Ben S. Bernanke said the world’s biggest economy will continue to need stimulus. The yen climbed against the greenback as the Bank of Japan kept its bond-buying program unchanged. The MSCI Asia Pacific Index advanced 1.7 percent to 134.65 at 12:18 p.m. in Tokyo.
- Rajoy Punishes Exporters Sustaining Spain's Economy: Euro Credit. Aliberico SL survived Spain's economic crisis by expanding sales of aluminum panels in the U.S., Brazil and Morocco. Prime Minister Mariano Rajoy's plan to raise corporate taxes may undermine the company's efforts. "The fiscal pressure is intense, Clemente Gonzalez Soler, CEO and founder of the Madrid-based manufacturer, said in a telephone interview. "The changes mean a loss of competitiveness for Spanish companies just at the moment when we need to export more."
- Juncker Says His Luxembourg Government Will Resign Tomorrow. Luxembourg Prime Minister Jean-Claude Juncker, the European Union’s longest-serving head of government, said he’ll resign tomorrow after he was implicated in a probe into spying by his security service. Juncker, 58, who led the group of euro-area finance ministers until January, is stepping down after his socialist party coalition ally called for early elections. The move came after a July 5 report to Parliament that said Juncker is “politically responsible” for failing to inform lawmakers of “irregularities and supposed illegalities” by the State Intelligence Service.
- Brazil Raises Rate to 8.5% as Inflation Undermines Growth. Brazil’s central bank raised borrowing costs by half a percentage point for a second straight meeting, as the fastest inflation in 20 months undermines economic growth and fuels social unrest. The bank’s board, led by President Alexandre Tombini, today voted unanimously to raise the benchmark Selic rate by 50 basis points to 8.50 percent, as forecast by all 51 economists surveyed by Bloomberg. “The committee considers that this decision will contribute to put inflation on a decline and assure that this trend will persist next year,” policy makers said, according to their statement posted on the central bank’s website. The statement was virtually identical to their May 29 communique. Rising prices helped spark the largest street protests in decades last month that also saw President Dilma Rousseff’s approval ratings plunge by almost half. Above-target inflation has undercut months of government stimulus by reducing consumer confidence and curbing retail sales and industrial output. After a quarter-point rate increase in April, policy makers doubled the pace in May and reiterated warnings that the outlook for inflation remains unfavorable. “The diffusion of inflation remains widespread,” Andre Perfeito, chief economist at Gradual Investimentos, said by phone from Sao Paulo before today’s decision. “A higher Selic also seeks to boost credibility after the government implemented a loose fiscal policy.”
- Rubber Rebounds From Two-Week Low as Oil’s Rally Boosts Appeal. Rubber climbed from the lowest level in two weeks after oil in New York surged to a 15-month high, boosting the appeal of the commodity as an alternative to synthetic products used in tires. Rubber for delivery in December on the Tokyo Commodity Exchange advanced as much as 2.1 percent to 239.5 yen a kilogram ($2,408 a metric ton) and traded at 239.2 yen at 10:23 a.m. Futures reached the lowest settlement since June 27 yesterday.
- Rebar Rises to Highest in Eight Weeks as China’s Stocks Rally. Steel reinforcement-bar futures in Shanghai advanced to the highest in more than eight weeks after a rally in the local stock market buoyed sentiment. Rebar for delivery in January on the Shanghai Futures Exchange rose as much as 0.7 percent to 3,663 yuan ($597) a metric ton. That’s the highest since May 14 for a most-active contract. Futures traded at 3,645 yuan at 10:05 a.m. local time.
- Crude-by-Rail Profits Fall as WTI-Brent Narrows: Energy Markets. Profits from shipping oil by rail are shrinking as U.S. and global benchmarks converge to the narrowest since 2010, making pipeline deliveries more attractive and slowing the demand for train cargoes like the one that derailed and exploded in Quebec.
- Weak Trade Points to China Slowing. Premier Repeats Commitment to Avoid Fresh Stimulus Despite Falling Exports and Cooling Growth. Chinese Premier Li Keqiang has repeated his commitment to steer clear of stimulus for the world's second-largest economy, even as the government reported contracting exports, amid concern about a continuing general slowdown. Coming after a raft of disappointing data in April and May, June's weak trade results added to fear that economic growth in the second quarter continued to slow.
- Corporate Insiders Shift From 'Buy' to 'Sell' as Bankruptcy Nears. One day in September 2011, Wall Street analysts trundled into the spacious lobby at the Livonia, Mich., plant of a company called A123 Systems Inc. to view a slide presentation describing a rosy outlook for the maker of lithium batteries.
- Pig virus migrates to US, threatens pork prices. Pork prices may be on the rise in the next few months because of a new virus that has migrated to the U.S, killing piglets in 15 states at an alarming rate in facilities where it has been reported.
- Economists Dial Down Estimates for Growth. The nation's economic growth pace may have fallen below 1% in the second quarter, several economists said, after wholesalers' inventories declined in May.
- SEC Clears Way for Entrepreneurs to Tweet, Blog About Unregistered Shares. Business Owners Are Planning Marketing Blitzes After SEC Action on Unregistered Shares.
- Henninger: Big Government Implodes. ObamaCare's failures are not the only sign of a great public crack-up.
- Did Justice Department support anti-Zimmerman protests after Martin shooting? A conservative watchdog group accused the Justice Department of helping manage the "pressure campaign" last year against George Zimmerman in the wake of the Trayvon Martin shooting, citing documents that show an obscure agency spent thousands assisting local demonstrations. The little-known agency, the Community Relations Service, is described by the Justice Department as their "peacemaker" for community conflicts over race. The protests last spring over Martin's death certainly qualified as such a conflict. But while the department claims its "peacemaker" agency does not "take sides" in such disputes, Judicial Watch said the documents and public accounts show otherwise.
CNBC:
- Sharp Jump in US Gasoline Seen Within Days. Gasoline is expected to jump 10 to 20 cents per gallon in the next several days, as rising oil prices and peak driving season create a perfect storm for higher prices.
- Yum(YUM) Earnings Slide as China Sales Take a Hit. Yum Brands, parent company of KFC, reported a 16-percent decline in quarterly earnings on Wednesday as sales in China fell sharply.
- Don't Rely on Business Investment to Spur Recovery. Capital expenditure across the world is expected to decline this year and next, according to a new report by rating agency Standard & Poor's (S&P), which warned that hopes of it driving an economic recovery were unfounded.
- About Those Gold Shorts.... (graph)
- What Happens Next? (graph)
New York Times:
- Diverging Debate at Fed on When to End Stimulus. The Federal Reserve Chairman, Ben S. Bernanke, said on Wednesday that the Fed was likely to extend the centerpiece of its campaign to bolster the economy — keeping short-term interest rates close to zero — even as it prepares to wind down another key stimulus program that faces mounting internal opposition.
Reuters:
- Ackman may struggle to raise $1 billion in less than 10 days. Hedge fund manager William Ackman's strong returns have made him into one of Wall Street's biggest managers, but even he may struggle to raise $1 billion in the next week for a single stock fund whose target he won't identify, say investors. One of his clients, the Public Employees Retirement Association of New Mexico, which first invested with Ackman's Pershing Square Capital Management in 2010, has already said it will take a pass on the new special investment vehicle, unwilling to hand over so much cash for such a long time.
Financial Times:
Telegraph: - US banks to shuffle assets over leverage rules. US banks believe they will be able to meet a new regulatory requirement on debt levels by shuffling assets between their subsidiaries and using other “optimisation” strategies to reduce the amount of leverage they report. “We’re going to be able to pull a lot of levers,” said an executive at a large US bank on Wednesday, a day after bank regulators proposed a new “leverage ratio” to limit the industry’s reliance on debt.
- Senator raises US food security fears in Smithfield(SFD) deal. The largest-ever Chinese takeover of a US company came under scrutiny in Washington after a group of bipartisan lawmakers said Shuanghui’s proposed $4.7bn purchase of Smithfield, the pork producer, raised unsettling questions about American food security and economic fairness. “Smithfield might be the first acquisition of a major food and agricultural company, but I doubt it will be the last,” Debbie Stabenow, the Democratic senator from Michigan who heads the powerful agriculture committee, said before the hearing.
- The wheels are coming off the whole of southern Europe. Europe’s debt-crisis strategy is near collapse. The long-awaited recovery has failed to take wing. Debt ratios across southern Europe are rising at an accelerating pace. Political consent for extreme austerity is breaking down in almost every EMU crisis state. And now the US Federal Reserve has inflicted a full-blown credit shock for good measure.
- Shopping malls glut in China might create real estate bubble. "Compared with the residential market, the commercial real-estate market is more likely to face bubbles," a vice chairman of a Hong Kong-listed real-estate firm told the China Business News. According to real-estate services company DTZ, the total floor area for new shopping malls slated to open in Shanghai during the second half of this year will reach 2.49 million square meters. In comparison, the total floor area of retail property transactions from the year 2000 to June 2013 was pegged at 10.9 million square meters. As of 2011, there were 2,812 shopping malls in China. By 2015, the number will grow to 4,000, according to the China Chain Store and Franchise Association.
Susquehanna:
- Rated (TRIP) Negative, target $50
- Rated (PCLN) Positive, target $1,080.
- Rated (GOOG) Positive, target $1,090.
- Rated (LNKD) Positive, target $232.
- Rated (P) Positive, target $25.
- Rated (AMZN) Positive, target $370.
- Asian equity indices are +.5% to +2.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 156.50 +4.0 basis points.
- Asia Pacific Sovereign CDS Index 118.75 +4.75 basis points.
- FTSE-100 futures +1.74%.
- S&P 500 futures +.99%.
- NASDAQ 100 futures +.95%.
Earnings of Note
Company/Estimate
- (OZRK)/.57
- (PGR)/.41
- (CBSH)/.71
8:30 am EST
- The Import Price Index for June is estimated unch. versus a -.6% decline in May.
- Initial Jobless Claims are estimated to fall to 340K versus 343K the prior week.
- Continuing Claims are estimated to rise to 2955K versus 2933K prior.
- The Monthly Budget Statement for June is estimated at $115.0B versus -$59.7B in May.
- None of note
- The Fed's Tarullo speaking, BoJ decision/Kuroda press conference, USDA Crop report, weekly EIA natural gas inventory report, Bloomberg US Economic Survey for July and the weekly Bloomberg Consumer Comfort Index could also impact trading today.
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