Wednesday, July 31, 2013

Today's Headlines

Posted by Gary .....at 3:17 PM
Bloomberg:
  • Rail Debt Costs Surge as Li Steps Up Investment: China Credit. Borrowing costs for China's state-owned railway company are rising the fastest in two years just as Premier Li Keqiang vows to accelerate network expansion in an economy set to grow at the slowest pace in 12 years. The yield on 10-year rail debt surged 23 basis points last month to 5.32% in Shanghai, the biggest increase since August 2011, ChinaBond data show. The rate on similar-maturity government bonds climbed 21 basis points to 3.73%.   
  • Germany’s Retail Sales Unexpectedly Declined in June. German retail sales (GRFRIAMM) unexpectedly declined in June, suggesting that doubts about Europe’s economic recovery weighed on consumer spending. Sales adjusted for inflation and seasonal swings dropped 1.5 percent from May, when they rose 0.7 percent, the Federal Statistics Office in Wiesbaden said today. Economists predicted an increase of 0.2 percent, according to the median of 25 estimates in a Bloomberg News survey. Sales fell 2.8 percent from a year earlier. 
  • German Jobless Holds Near Low as Euro Region at Record: Economy. Germany’s unemployment rate held near a two-decade low, potentially buoying support for the government before September elections, while the rate in the euro area stayed at a record high. The number of people out of work in Germany decreased by a seasonally adjusted 7,000 to 2.93 million in July and the adjusted jobless rate was unchanged at 6.8 percent, according to the Nuremberg-based Federal Labor Agency today. The rate in the 17-nation euro area was 12.1 percent in June, unchanged from a revised figure for May, the European Union’s statistics office said in Luxembourg.
  • European Stocks Are Little Changed After U.S. GDP Report. European stocks were little changed, with the Stoxx Europe 600 Index completing its biggest monthly gain since October 2011, as a report showed the U.S. economy expanded at a faster-than-expected pace. Anheuser-Busch InBev NV jumped 6.9 percent after the maker of Stella Artois lager posted earnings that beat estimates. Invensys Plc added 1.1 percent after Schneider Electric SA agreed to buy the company for 3.4 billion pounds ($5.2 billion). The Stoxx Europe 600 Index added 0.1 percent to 299.58 at the close of trading London, after earlier climbing as much as 0.4 percent and dropping as much as 0.5 percent.
  • Fed Keeps $85 Billion QE Pace, Sees Risk of Disinflation. The Federal Reserve said it will maintain its $85 billion in monthly bond purchases and persistently low inflation could hamper the economic expansion. “The committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington. Chairman Ben S. Bernanke and his colleagues are debating when employment gains will be sufficient to warrant tapering bond buying that has swelled the Fed’s balance sheet to a record $3.57 trillion. Some policy makers have said the purchases, aimed at fueling growth and reducing 7.6 percent unemployment, risk creating asset-price bubbles. The statement contained no new language on the conditions for maintaining the current pace of asset purchases. The Fed repeated the pledge it has used since September that it will continue the purchases until the U.S. labor market outlook has improved substantially.
  • Commodity-Linked Structured Note Sales Slump to Nine-Year Low. Banks are selling the least structured notes tied to commodities in nine years as investors shun the securities amid a slowdown in China’s economy and the prospect of the U.S. Federal Reserve winding down stimulus. Global issuance in the first half of the year fell to about $2 billion, 41 percent lower than the same period of 2012 and the least since 2004 with securities linked to oil and gold among the biggest losers, according to a report from Barclays Plc. In the U.S., banks sold $689.6 million of the securities in the same period, the lowest since at least 2010, and have added $70.9 million this month through July 30, according to data compiled by Bloomberg. 
  • Crude Heads for Best Month Since August on U.S. GDP. WTI for September delivery rose $1.51, or 1.5 percent, to $104.59 a barrel at 1:57 p.m. on the New York Mercantile Exchange. Futures traded at $103.57 before the supply report. The volume of all futures traded was 4.7 percent below the 100-day average for the time of day. Prices have climbed about 8.3 percent this month.
  • Fed’s Debit-Card Swipe-Fee Rules Rejected by U.S. Judge. The Federal Reserve disregarded the Congress’s intent in deciding how much banks can charge merchants for debit-card transactions, a judge ruled, handing a victory to retailers who challenged the fees as being too high. U.S. District Judge Richard Leon in Washington ruled today that the Fed considered data it wasn’t allowed to use in setting a 21-cent cap on debit-card transaction fees under the Dodd-Frank law. Leon said the rule, in effect since October 2011, would remain in place until the Fed drafts new regulations or interim standards.
  • Kids’ IPhone Hopes Dashed as Americans Pare School Spending. U.S. households are planning to shell out an average of 7.8 percent less for this year’s back-to-school shopping season because of the bumpy economic recovery, the National Retail Federation says. The potentially lackluster spending is one more signal that consumers are conflicted about the strength of the recovery and the stability of their buying power. That means retailers will have to keep prices low and offer exclusive products to fare well during the important back-to-school season, second only in importance to the year-end holiday season. Total back-to-school spending may total $26.7 billion this year, the Washington-based NRF said July 18. That translates to an average of about $634.78 on apparel, shoes, supplies and electronics for parents with school-age children, down from $688.62 last year, the group said. “There is no question that the economy still has a tight grip on Americans’ spending decisions,” NRF Chief Executive Officer Matthew Shay said on a conference call. “People are finding ways to get by.” 
  • Obama Calls Summers Criticism Unfair. President Barack Obama told House Democrats that former Treasury Secretary Larry Summers -- a potential candidate for Federal Reserve chairman -- is being unfairly criticized, lawmakers said after a private meeting with the president. “He took a minute to stand up for Larry Summers,” said Representative Brad Sherman of California. Obama told Democrats he hadn’t made a decision about whom to appoint as Fed chairman though he said Summers was being unfairly criticized, Sherman said today. Representative John Larson, a Connecticut Democrat, said the president “hasn’t begun the process but he was, I thought, very adamant in his defense of the service Larry Summers has provided.” Representative John Lewis of Georgia said the president “was very defensive, I would say, of Summers and saying that Summers had played a very critical role early in the administration.” 
  • SodaStream(SODA) Rallies Most Since May After Raising Outlook. SodaStream International Ltd. (SODA), the Israeli maker of home soda machines, surged the most in 11 weeks after boosting its revenue outlook for 2013 and reporting second-quarter earnings that beat analysts’ estimates. Shares of the Airport City, Israel-based company jumped 15 percent to $67.10 at 10:08 a.m. in New York. The advance pared the stock’s retreat in July to 8 percent, the biggest slump since October.
Fox News: 
  • US not into electric cars, but feds gave company $100M for charging stations, watchdog says. A California company was given more than $100 million in taxpayer funds by the federal government – with few strings attached – to establish a network of electric car charging stations that is fraught with problems, according to a government audit. All this, despite weak demand by the American public for electric cars. While President Obama has pledged to get 1 million electric cars on U.S. roads by 2015, a new report by the Department of Energy’s inspector general found that Americans’ aversion to electric vehicles and loose department supervision led to stalling the charging network – which cost taxpayers more than $135 million.
  • Republicans press new FBI director on Benghazi probe.
CNBC:
  • Soros takes large Herbalife(HLF) stake, shares spike. The hedge fund battle over Herbalife intensified on Wednesday as George Soros has taken a large long position in the nutritional supplements maker, according to sources. Soros' position in Herbalife is one of his top three holdings, sources said. 
  • Company pensions in peril as shortfalls hit record. Young workers may want to start counting on something other than company pensions to fund their retirements. It turns out that the plans of S&P 500 companies are underfunded to the tune of $451.7 billion, a number that has grown some 27 percent in just the last year alone, according to data released Wednesday by S&P Dow Jones Indices. While firms have plenty of cash to cover older workers currently on the payroll or in pension plans, that may not be the same once the younger generation gets ready to stop working.
Zero Hedge: 
Business Insider: 
New York Times:
  • New Siemens Chief Sees Weakness in China. The newly named chief executive of Siemens has promised to restore stability to the company that symbolizes German engineering and electronics prowess. But he also issued a warning that could bode ill for the euro zone economy: Don’t count on China.
Townhall.com:
Reuters:
  • Honda first-quarter profit lower than expected, cautious on emerging markets. Honda Motor Co (7267.T) announced a lower than expected 5.1 percent rise in quarterly operating profit after sales in Japan dropped following the end of subsidies and as it lagged behind rivals in selling profitable SUVs and pickups in the U.S. 
  • Brazil cenbank intervenes 3 times as real hits 4-yr low. Brazil's central bank intervened three times in the foreign exchange market on Wednesday as it tried to halt a currency slide that took the real to its weakest level in over four years, potentially adding to inflation pressures. The interventions came right after the real slid to as much as 2.3022 per dollar, its weakest since April 1, 2009, suggesting that policymakers are ready to put up a fight to stop the currency from weakening past the psychologically-relevant mark of 2.3 per dollar.
  • Big funding gaps and not enough FDI in emerging markets. Big balance of payment deficits and low levels of bricks-and-mortar direct investment make South Africa, Turkey, Ukraine and India the developing countries most vulnerable to a "sudden stop" in foreign capital flows.
Telegraph:

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