- BMW Denied in China Seen Signaling Outlook Dimming for Carmakers. Bayerische Motoren Werke AG (BMW)’s failure to win government approval to expand a factory in China is fueling concern global automakers could find it increasingly difficult to win regulatory approval on projects in the country. Shares of BMW partner Brilliance China Automotive Holdings Ltd. (1114) fell the most in almost four weeks in Hong Kong yesterday after China’s Ministry of Environmental Protection said it sent back an application, citing inadequate wastewater analysis and the plan’s failure to meet government anti-pollution targets.
- China Iron-Pore Production Jumps 10.7% in June, Near Record.
- Brazilian Real Falls to Four-Year Low, Stoking Inflation Concern. Brazil’s real dropped to a four-year low, adding to concern accelerating inflation will undermine efforts to stimulate Latin America’s largest economy. Swap rates rose on speculation the central bank will maintain the pace of increases in borrowing costs even as a report showed inflation slowed. The real has tumbled 11 percent in the past three months, the biggest drop among 24 emerging-market dollar counterparts tracked by Bloomberg. The depreciation pushes up the price of imports and threatens to further fuel inflation, which helped spark nationwide street protests last month. “The central bank seems to have a blank check to combat inflation,” Daniel Cunha, the chief economist at XP Investimentos in Sao Paulo, said in a telephone interview. “The fight against inflation seems to have greater weight than economic growth.”
- What Happens If the BRICs Sink Like One? In the case of India and Brazil, I think the answer is “sad, with regional implications.” Growth in those countries has pulled millions of people out of dire poverty, but many remain. And solid economic growth in any large country has regional spillover effects through migration and trade. But these are still economies where agriculture plays an outsized role. Brazil’s growth has been driven by agricultural exports such as soy and beef, while India’s GDP is still measurably affected by the monsoon, which drives crop yields. A growth slowdown in an agricultural economy may play havoc with individual commodity prices, but it doesn't have, say, the enormous impact on global manufacturing networks that a Chinese slowdown would have.
- Deutsche Bank(DB) to Cut Assets $332 Billion as Profit Slides. Deutsche Bank AG (DBK), continental Europe’s biggest bank, said it will shrink its balance sheet by 250 billion euros ($332 billion), joining Barclays Plc (BARC) and UBS AG (UBSN) in seeking to comply with stricter capital rules. Deutsche Bank will reduce leverage by changing the way it accounts for derivatives and by winding down a 73 billion-euro portfolio of assets, Chief Financial Officer Stefan Krause told investors on a conference call today. Krause announced the plan after the bank said net income slid 49 percent to 334 million euros, missing the average 767.6 million-euro estimate of nine analysts.
- VW First-Half Profit Drops on Weak European Car Demand. Volkswagen AG (VOW) reported a 12 percent decline in first-half profit as Europe’s biggest automaker spends money to roll out new models and the economic slump in its home region saps demand for new cars.
- European Stocks Advance as EDF, Alcatel-Lucent Rally. European stocks advanced as investors weighed corporate earnings from Electricite de France SA to Barclays Plc and the Federal Reserve began a two-day policy meeting. EDF, Europe’s biggest power generator, and Alcatel-Lucent (ALU) SA, a French maker of phone equipment, jumped more than 7 percent as profit beat analysts’ estimates. Barclays sank the most in 13 months after announcing a rights offering and saying income fell. K+S AG, Europe’s largest potash producer, plunged 24 percent as OAO Uralkali ended a deal that controlled supplies of the fertilizer ingredient from the former Soviet Union. The Stoxx Europe 600 Index added 0.1 percent to 299.43 at the close of trading, as two stocks rose for every one that fell.
- Crude Drops to Three-Week Low as U.S. Growth May Slow. WTI for September delivery declined $1.46, or 1.4 percent, to $103.09 a barrel at 12:57 p.m. on the New York Mercantile Exchange. It fell to $102.78 in intraday trading, the lowest price since July 9. The volume of all futures traded was 3.8 percent below the 100-day average for the time of day. Prices are up 6.8 percent in July, set for a second monthly gain.
- Fed Decision-Day Guide From QE Tapering Guidance to Dissents. Here’s what to look for when the Federal Open Market Committee releases a statement at 2 p.m. tomorrow after a two-day meeting in Washington. Unlike last month, the policy-making panel will not release economic forecasts, and Chairman Ben S. Bernanke will not be briefing the press afterwards.
- Achuthan Says U.S. Economy Has Faltered Since Last Recession. U.S. economic growth has been lacking since the last recession, said Lakshman Achuthan, the Economic Cycle Research Institute co-founder who maintains that the U.S. reverted to a slump last year. “Growth is not there,” Achuthan said, speaking on Bloomberg Television with Tom Keene and Sara Eisen. The section of the population aged 35 to 54 “has lost almost 1 million jobs since the recovery began,” he said. Achuthan today reiterated his view that a recession began last year and that data will eventually show this. In a previous interview with Bloomberg Television on March 7 he said he was basing his opinion on the “stall speed” in gross domestic income in 2012, and on the weakness in indicators such as output and income.
- Home Prices Jump, but Headwinds Build. Rising Mortgage Rates, Potential for More Supply Threaten Pace of Gains Shown in Two Indexes. Home prices during the first half of 2013 posted their largest gain since the housing boom peaked seven years ago, but rising mortgage rates and the potential for more supply could eventually slow the run-up. Nationally, home values rose by 5.8% in June from one year ago, according to Zillow Inc., the real-estate website, the largest gain since 2006. So far this year, prices are up 2.7%, the strongest year-to-date gain in June since 2005.
- Goodyear's(GT) Net More Than Doubles. Goodyear Tire & Rubber Co.'s GT +9.45% second-quarter net income more than doubled on higher profit in all of its regions, including Europe where many auto-related companies continue to struggle. The largest U.S.-based tire maker also slightly raised its full-year outlook, now expecting operating profit on the higher end of its forecast of $1.4 billion to $1.5 billion.
Fox News:
- Gov't Knows Best? White House creates 'nudge squad' to shape behavior. The federal government is hiring what it calls a "Behavioral Insights Team" that will look for ways to subtly influence people's behavior, according to a document describing the program obtained by FoxNews.com. Critics warn there could be unintended consequences to such policies, while supporters say the team could make government and society more efficient. While the program is still in its early stages, the document shows the White House is already working on such projects with almost a dozen federal departments and agencies including the Department of Health and Human Services and the Department of Agriculture.
- Appeals court rules against NYC soda ban. Another court ruling has taken the fizz out of New York City's ban on big, sugary sodas. A New York appeals court on Tuesday ruled that the city Board of Health exceeded its legal authority and acted unconstitutionally when it tried to put a size limit on soft drinks served in city restaurants.
- Look out below! Work more, get less in Obamacare 'cliff'. Be careful you don't fall off the Obamacare "cliff" when the boss asks you to put in some overtime. Working more could ultimately mean thousands of dollars less for you under a quirk in the new health-care law going into effect this fall. This could prompt some people to cut back on their hours to avoid losing money. "Working more can actually leave you worse off," the price-comparison site ValuePenguin.com notes in a new analysis. "It's sort of an absurd scenario," said Jonathan Wu, ValuePenguin.com's co-founder. "It's something for people to be aware of."
- Shares in fertilizer makers plunge on price shock. Russia's Uralkali has dismantled one of the world's largest potash partnerships by pulling out of a venture with its partner in Belarus, a move it expects will cause global prices to plunge by 25 percent.
- What earnings season is saying about road ahead. Were it not for a robust financial sector, profit on the S&P 500 would be tracking negative 1.6 percent, according to Bank of America Merrill Lynch consensus estimates.
- Spain: Fiesta or Siesta? (graph)
- Everything's Great! Except... (graphs)
IBD:
alpha:
- Hedge Fund Ads May Have to Wait to Advertise. Despite the passage of the JOBS Act, hedge funds who trade commodities or derivatives may not be able to market to the public yet.
- Coach Inc(COH) sees weakness in North America; two more executives leave. Coach Inc on Tuesday again reported soft sales at its North American stores as it continued to face tough competition for handbag shoppers, and the leather goods maker announced the departures of two more executives. Shares of New York-based Coach, which is known for its Poppy handbags, fell 6.2 percent to $54.25 in premarket trading.
- METALS-Copper falls to 3-week low on fears of gloomy China data. Copper slid to its weakest in nearly three weeks on Tuesday as expectations of weak manufacturing data from top consumer China dimmed prospects for growth in metals demand. Benchmark copper on the London Metal Exchange (LME) lost 2.1 percent to close at $6,735 a tonne, the lowest since July 10.
- US biotech stocks ride wave of investor euphoria. Biotechnology companies are raising money at the fastest rate since the dotcom boom, underscoring the renewed appetite for one of Wall Street’s riskiest bets despite the high chance that the investments will turn sour.
- Swedish warning. (graph) The hard data is in. Sweden's GDP fell by 0.1pc in the second quarter, astonishing everybody who relies on soft PMI confidence surveys. Year-on-year growth has been just 0.6pc, half the level expected, and Sweden is supposed to be a star performer in Europe. By the way, this is what Sweden's manufacturing PMI has been doing:
Echoing fears that
European policymakers remain in a state of cognitive dissonance –
recognizing the need for root-and-branch overhaul of peripheral banks,
but backtracking on joint liability plans – Christopher Flowers, the
legendary FIG investor who now runs the £2.3 billion ($3.5 billion)
private equity group JC Flowers, sounded the alarm over the negative
sovereign-bank feedback loop.
In a shot across the bows of market bulls, who cite the return of
capital flows to weaker eurozone states, Flowers issued a stark warning:
"There is a scenario where we have a Lehman-type event: we wake up some
Thursday and a big country is in trouble.
"And the ECB will have to decide to support banks x, y, z. And then the
ECB will, in fact, decide to own bank x, y, z.
Vedomosti:- Russia Has 70,000 Railcars Idled as Cargoes Drop. The country's largest railcar operators asked Russian Railways to limit supply of idled railcars making them available at certain stations only, citing letter from operators.
- China May Adjust Consumption Taxes This Year. China is studying a reform plan for consumption taxes and may introduce measures geared towards energy-saving consumption this year, citing Jia Kang, director of the Finance Ministry's fiscal science research center.
- China Listed Bank Profit Growth May Slow. Chinese listed banks may see net income growth slowing to around 8% this year, citing a report released by the China Banking Association today.
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