Today's Headlines
Bloomberg:
- ECB Changes Collateral Rules as It Seeks to Boost Lending.
The European Central Bank altered its collateral rules for refinancing
banks and said it’s looking at ways to boost lending to small- and
medium-sized enterprises. The Frankfurt-based ECB will reduce the risk
premium, or haircut, applicable to asset-backed securities to 10 percent
from 16 percent, according to an e-mailed statement today. It’ll
also lower the quality threshold for six ABS classes that are
subject to loan-level reporting requirements to two A- ratings
from two AAA ratings. At the same time, the central bank will
tighten rules for retained covered bonds so the total effect on
eligible collateral will be “overall neutral,” it said.
- European Stocks Rise to Six-Week High as Publicis Climbs.
European stocks climbed to a six-week high as Publicis (PUB) Groupe SA
posted increased profit, London Stock Exchange Group Plc reported higher
revenue and fewer Americans than forecast filed jobless-benefit claims.
Publicis, the world’s third-biggest advertising company, advanced 3.4
percent and LSE surged to a five-year high. Banca Popolare di Milano
Scrl, Italy’s oldest cooperative bank, and Spain’s Bankinter SA led a
rally in financial companies. Ericsson (ERICB) AB, the largest maker of
wireless-network equipment,
and Nokia Oyj, the Finnish mobile-phone maker, retreated more
than 2.5 percent as sales missed estimates. The Stoxx Europe 600 Index rose 0.9 percent to 299.76 at
the close, the highest level since May 31.
- Russia Stocks Drop as Putin Opponent Gets Five Years in Prison. Russian shares sank the most in a
month after a court sentenced Alexey Navalny, an opposition
leader who spearheaded the biggest protests against President
Vladimir Putin’s 13-year-rule, to prison. The benchmark Micex Index (INDEXCF) declined as much as 2.1 percent
from its intraday peak today, reversing gains after the
decision. The gauge slid 1.1 percent to 1,416.63 by the close in
Moscow, the most since June 20. The volume of shares traded was
52 percent above the 30-day average, data compiled by Bloomberg
show, while 10-day price swings rose to 20.501, the most since
June 27.
- Crude Reaches 15-Month High. WTI
for August delivery gained $1.34, or 1.3 percent, to $107.82 a barrel
at 12:28 p.m. on the New York Mercantile Exchange after climbing to
$108.04, the highest intraday level since March 2012. The volume of all
futures traded was 19
percent above the 100-day average for the time of day. Prices
are up 12 percent this month.
- Copper Drops as China Home Prices, U.S. Jobs Damp Stimulus Bets. Copper fell to a one-week low in New
York as signs of rising home prices in China and an improving
job market in the U.S. damped prospects for further economic
stimulus in the two largest metal-using countries.
A report today showing price gains last month in 69 of 70
Chinese cities may limit room for the government to spur
economic growth, said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million.
- Larry Summers's Billion-Dollar Bad Bet at Harvard. Despite an impressive resume that includes stints as Treasury Secretary
and chief economist of the World Bank, there is a very good reason
Summers shouldn't be in charge of monetary policy: He seems to have
trouble with interest rates.
- UnitedHealth(UNH) Profit Rises on Member Gains as Costs Slow. UnitedHealth
Group Inc. (UNH), the biggest U.S. health insurer, reported
second-quarter profit that beat analysts’ estimates, as a Brazilian
acquisition and gains in
U.S. plans swelled enrollment by 25 percent.
Fox News:
- IRS lawyer testifies that political appointee's office involved in Tea Party screening. A veteran IRS lawyer testified on Thursday that officials from a
Washington office led by a political appointee intervened in the
screening of Tea Party applications, saying publicly for the first time
the IRS chief counsel's office was involved in the controversial
program. Carter Hull, a recently retired tax law specialist, gave his
first-hand account during testimony before the House Oversight and
Government Reform Committee.
MarketWatch:
CNBC:
- House flipping is back, flourishing again. "It's a perfect storm for flipping right now in many parts of the
country because home prices are bouncing off the bottom," said Daren
Blomquist, vice president at RealtyTrac. "That is something that
flippers can catch on the coattails of and ride that wave as long as it
lasts."
- Bernanke: Too early to tell when tapering will start. "We have not changed policy. We are not tightening policy," Bernanke
said during the question and answer session. He added that none of what
the Fed has communicated about winding down its bond purchases implies
tighter policy any time soon. Bernanke again tried to draw the distinction between paring back bond
purchases and raising interest rates, implying that policy will remain
accommodative even if the Fed ends quantitative easing since rates will
remain near zero.
- Jobless claims drop sharply, raise hopes for labor market. Initial claims for state unemployment benefits fell by 24,000 to a
seasonally adjusted 334,000, the Labor Department said on Thursday.
- Tight lending may be getting too loose: BB&T CEO. (video) Loan underwriting, tightened dramatically after the 2008 financial
crisis, is about halfway back to the "too liberal" standards before the
Great Recession, BB&T Chairman and CEO Kelly King warned on CNBC on
Thursday. In a "Squawk Box" interview following better-than-expected earnings from the regional bank, King
said he's "little concerned" that lending standards have been "coming
back faster" than he had expected. "I have been doing
this for 41 years now," he said. "Usually, we go in a 10-year cycle of
memories from the bad times to forget all the bad loans and start making
bad loans again."
Zero Hedge:
Washington Post:
- Why adjustable-rate mortgages are hot again.
In 2006, ARMs made up a quarter of home loan applications. Since
September 2008, applications for ARMs have held a market share of only a
few percentage points. But in May and June there was steady growth in ARMs to as
high as 7.5 percent the week ending June 28, most recently hitting
7.2 percent the week ending July 12, according to the Mortgage Bankers
Association. The recent spike in interest rates, driven by concern
about the Federal Reserve Board’s monetary policy intentions, has
encouraged some borrowers to find lower rates in the ARM market, where
previously they would have been happy with a 15- or 30-year fixed-rate
loan, according to analysts and home mortgage experts.
San Francisco Examiner:
- San Mateo County housing market flattens, but prices continue to climb. After a meteoric recovery, San Mateo County's residential real estate
market might be flattening, but that has not driven down prices, which
remain high, according to a recent report. Sales of new homes in the county are down by 10 percent since May,
and there were 14 percent fewer listings in June, according to the
report by MLS Listings. The slower rate of home sales may be
attributed to climbing mortgage
rates and buyers exhausted from bidding on multiple properties at a time
and often losing the bids, said James Harrison, CEO of MLS Listings.
The cooling market has not frozen home prices, which continue to rise
sharply — up 6 percent in the past month, and 22 percent since June
2012, according to the MLS Listings report. "It's a great time to sell, and anyone who is thinking about doing
it, should do it now," said Susan Tanner, a real estate broker with
Dreyfus Properties.
Reuters:
Financial News:
Reuters:
Lloyd's List Asia:
- Crunch time for China - Special Report. IF ANYONE doubted that largescale economic decisions from Beijing rumble
quickly through China’s shipbuilding industry, China Rongsheng Heavy
Industries’ troubles should convince them otherwise.
CCTV:
- China 1H Economy is in 'Reasonable Range', Citing Premier Li. China's 1H economy is stable, citing Premier Li Keqiang.
Xinhua:
- China
Jan.-June Rail Cargo Volume Drops -2.8% Y/Y. China's Jan.-June rail
cargo volume fell to 1.94b tons, according to statistics from China
Railway Corporation.
2 comments:
Europe, VGK, led World Stock, VT, US Stocks, VTI, Nation Investment, EFA, and Small Cap Nation Investment, IFSM, higher. Countries rising strongly included the Greece, GREK, Italy, EWI, Ireland, EIRL, Spain, EWP, Nikkei, NKY, Canada, EWC and the UK, EWU.
Oil, USO, rose 1.4%, causing the energy sectors to rise strongly
Small Cap Energy, PSCE 2.2
Energy Production, XOP 1.8
Exxon Mobil, XOM, 1.0, to close at 94.38
Energy Service, OIH 1.2 and IEZ 1.2
Sectors rising strongly included
Health Care Provider, IHF 2.1
Transportation, XTN 1.3
Global Industrial Producer, FXR 1.3
Bevreages, PBJ 1.2
Aerospace, PPA 1.0
Small Cap Industrial, PSCI 1.0
Industrial, XLI 1.0
Small Cap Pure Value, RZV 0.7
Retail, XRT 0.6
Global Consumer Discretionary, RXI 0.6
Interest bearing sectors rising strongly included
Leveraged Buyoust, PSP 1.1
Industrial Office REITS, FNIO, 1.0%, ReaI Estate, IYR 0.6, Small Cap Real Estate, ROOF, 0.7%
Utilities, XLU 0.8
Utilities, DBU 0.5
National Bank of Greece, NBG, soared 9.1%, Deutsche Bank, DB, rose 2.4%, taking European Financials, EUFN 1.8, higher, causing Europe, VGK, to rise 0.8%.
Regional Banks, KRE 1.8
Investment Bankers, KCE 1.5
Too Big To Fail Banks, RWW 1.5
Stock Brokers, IAI 1.3
The National Bank of Greece, NBG, led Global Financials, IXG, higher; banks rising strongly included NBG, BPOP, RF, BAC, RBS, SMFG, DB, BCS, CS and UBS.
Semiconductors, SMH -2.1%, with TSM -8.9%, INTC -3.7 and DIOD -2.9
Taiwan, EWT, dropped 2.7%, as Semiconductor Manufacturer, TSM, dropped 8.9%, and Semiconductor Equipment Manufacturer, ASX, dropped 2.4%
Aggregate Credit, AGG, traded lower, as the Interest Rate on the US Ten Year Note, ^TNX, rose to close at 2.53%. Junk Bonds, JNK, and Ultra Junk Bonds, UJB, traded higher with stocks.
The reason for the strong rise in the National Bank of Greece, NBG, and European Financials, EUFN, was the news that Troika has finally laid down the law so as to speak and demand that Greece annul the constituonal right to state employment and begin some limited level of dismissals, being privitizatons, impose some austerity measures, as well as commence some improvement in tax collection.
Robet Stevens of WSWS writes The New Democracy (ND)-PASOK government is to vote through cuts agreed after the recent review of Greece’s austerity measures by the “troika” of the European Union, European Central Bank and International Monetary Fund. Receipt of £5.8 billion in further loans from the troika requires the government to pass the legislation, which will enforce the firing of tens of thousands of public sector workers, including teachers, hospital staff and municipal workers.
According to Bloomberg, a European Union official said that senior euro-area financial officials are to hold a discussion July 24 to determine whether Greece qualifies for further loans from the €240 billion ($314 billion) overall loan agreement.
The omnibus legislation, which the troika specified had to become law by July 19, contains 109 articles including privatisations, health sector spending and taxation changes. The legislation centres on the firing of 4,000 state employees this year, including teachers, broadcasting workers, public building caretakers and municipal police officers. A further 15,000 are to be sacked by the end of 2014 and 25,000 placed in a mobility scheme (4,200 of these by the end of July and 12,500 transfers this year).
Those being dumped into the scheme include 1,000 hospital staff, move that will wreak further havoc on already devastated public health provision. The scheme is a euphemism for firing workers. They will have an eight-month period on 75 percent of their salaries. After that period, they are forced to accept any job offered to them, or, if no place is available for them in another part of the public sector, as is almost certain, they will be made redundant.
The Financial Times welcomed the troika/government proposals, declaring this week, “Greece’s civil service cull heralds break with the past.”
Stating that the “game was up” for public sector workers, the FT said, “While dismissals this year will amount to less than one percent of the civil service payroll, they send a message that a longstanding taboo on firing public sector workers has been broken, according to Kyriakos Mitsotakis, the newly appointed minister for public administration, who worked for the consultants McKinsey before entering politics.”
Even these measures are not enough, with the FT complaining, “Even though jobs for life are no longer guaranteed, procedures for sacking can be long drawn-out. About 6,000 state employees whose temporary contracts have ended, including janitors, cleaners and gardeners, are being paid in full while they contest their dismissal in the courts. The government has agreed to settle all such disputes this year.”
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