Monday, July 15, 2013

Tuesday Watch

Evening Headlines 
Bloomberg:
  • Wealth Products Threaten China Banks on Ponzi-Scheme Risk. Zhang Defa hurried into an Industrial & Commercial Bank of China Ltd. branch in Shanghai on a sizzling July afternoon breathlessly looking for the manager. The day before, Zhang had received a text message saying the bank was selling a 37-day wealth-management product with a 5 percent expected annualized return, principal guaranteed. He was too late. The offer, requiring a minimum of 500,000 yuan ($81,000), had sold out in less than three hours. Zhang would have netted 2,534 yuan in just five weeks. “This is crazy, but where else can I put my money without losing sleep these days?” said Zhang, 61, a retired engineer who has been moving cash out of his savings accounts into such investments for more than a year. “The return is fairly decent, and more importantly, I know my money is safe at a government-owned bank. Even if the bank runs out of the money, the government won’t.”
  • China Widens Drugmaker Probe as Glaxo Bribery Charges Outlined. China is investigating at least four multinational drugmakers as it widens its probe of GlaxoSmithKline Plc (GSK), according to a lawyer in Hong Kong whose firm advises companies on cross-border anti-corruption. The investigations point to an increased targeting of the pharmaceutical industry in corruption probes as the world’s most populous country faces rising health-care costs and seeks to lower drug prices. While the drugmakers are being examined by local regulators, the results may draw added questions from officials in Beijing and scrutiny by the U.S. government under the Foreign Corrupt Practices Act. 
  • ADB Trims Developing Asia’s Growth Forecasts on China Slowdown. Growth in developing Asia will be weaker than initially estimated this year and next amid a slower expansion in China and lackluster export demand from advanced nations, the Asian Development Bank said. The region’s gross domestic product will probably increase 6.3 percent in 2013 and 6.4 percent next year, the Manila-based lender said in a report today. In April, it forecast expansion of 6.6 percent this year and 6.7 percent in 2014.
  • India joins Brazil to China as emerging markets cut liquidity. India stepped up efforts to help the rupee after its plunge to a record low, raising two interest rates in a move that escalates a tightening in liquidity across most of the biggest emerging markets. The Reserve Bank of India increased the marginal standing facility and the bank rate to 10.25 per cent from 8.25 per cent, it said in a statement on its website late yesterday.
  • RBA Says Rate Appropriate After Aussie Drop; Currency Gains. Australia’s central bank said the currency’s decline and past interest-rate cuts meant its policy setting was appropriate even as it maintained room for future reductions, according to minutes of its July 2 meeting. “Given the exchange rate adjustment that was occurring, and with the substantial degree of monetary stimulus already in place, members assessed the current stance of policy to be appropriate,” the Reserve Bank of Australia said today in Sydney in minutes of the meeting at which it held the cash rate steady. The RBA said the inflation outlook was “slightly higher” due to the Aussie’s recent drop.
  • China’s Stocks Fall as Developers Slump on Tightening Concerns. China’s stocks fell, led by real-estate developers, on concern the government will introduce property curbs to stem increases in home prices. Hangzhou Binjiang Real Estate Group Co. slid 2.4 percent after the China Securities Journal said Hangzhou city may start a property tax trial. Agricultural Bank of China Ltd. dropped 0.8 percent as 258.6 billion shares sold during its initial public offering became tradable today.
  • Asia Stocks Rise on Earnings Optimism as Rupee NDFs Jump. Asian stocks rose, following U.S. equities higher, as Citigroup Inc. (C)’s better-than-estimated results fueled optimism over company earnings and investors weighed the outlook for China. The yen held at a one-week low versus the dollar, while corn futures rebounded. The MSCI Asia Pacific Index of regional stocks added 0.4 percent by 10:24 a.m. in Tokyo, rising for the first time in three days.
  • Rubber Reaches One-Week Low as China’s Slowdown Reduces Demand. Rubber fell to a one-week low as concerns grew that demand from China, the largest consumer, may weaken after data showed the nation’s economy slowed for a second quarter. Rubber for delivery in December on the Tokyo Commodity Exchange lost as much as 2.1 percent to 233.5 yen a kilogram ($2,335 a metric ton) and was at 234.6 yen at 9:57 a.m. after a holiday yesterday. Futures extended last week’s 2.7 percent loss, the first weekly drop since the five days through June 14
  • Cintas(CTAS) 4Q net income rises but outlook disappoints. Uniform supplier Cintas Corp. said Monday that its fiscal fourth-quarter net income rose 9 percent, but it gave a tepid outlook for the current year due in part to the health care overhaul. Cintas said the federal government's Affordable Care Act could cause some customers to delay hiring decisions, which would affect demand for uniforms. Cintas provides uniforms for a wide range of businesses in North America, as well as other products like entrance mats, restroom supplies, first aid and fire protection products.
Wall Street Journal: 
  • Mexico Captures Head of 'Zetas' Cartel. Arrest Marks an Important Victory for the New Administration of President Enrique Peña Nieto. The Mexican government Monday said its navy captured the leader of the country's most violent drug-trafficking organization, an important victory for the new administration of Mexican President Enrique Peña Nieto.
  • China Falters in Effort to Boost Consumption. Growth in Urban Households' Disposable Income Slows, Hindering Beijing's Plan to Cut Emphasis on Unreliable Exports. China's push to get consumers to open their wallets more and refocus the economy on domestic consumption is stalling, contributing to lower growth in the second quarter.
  • Mort Zuckerman: A Jobless Recovery Is a Phony Recovery. More people have left the workforce than got a new job during the recovery—by a factor of nearly three. In recent months, Americans have heard reports out of Washington and in the media that the economy is looking up—that recovery from the Great Recession is gathering steam. If only it were true. The longest and worst recession since the end of World War II has been marked by the weakest recovery from any U.S. recession in that same period.
Fox News:
  • Senate heads for showdown as Reid demands GOP approve nominees -- or else. Senate Majority Leader Harry Reid issued an ultimatum to Republicans on Monday to confirm at least seven presidential appointees or face a controversial rule change that could drain their power. A late night meeting attended by nearly every senator failed to produce an agreement to resolve the dispute. After the hour-long session, Democratic Senate leaders reaffirmed that a key vote on the issue was scheduled for Tuesday morning.
Zero Hedge:
Business Insider: 
  • ZIMMERMAN JUROR: This Case Wasn't About Race. That juror pointed out that Martin was supposedly stopping, turning, and "cutting through the back" yards of the gated community where the teen's dad lived. She believes Zimmerman would have treated anybody who acted that way in the same manner — regardless of that person's race. "I think he just profiled him because he was the neighborhood watch, and he profiled anybody who came in and acted strange," she told Cooper.
Reuters:
Telegraph:
  • On public finances, Britain is still living in cloud-cuckoo land. Asked at the Spring meeting of the International Monetary Fund whether he thought austerity had gone too far, Anders Borg, Sweden’s finance minister, said there was really only one way to avoid painful fiscal consolidation for countries with very high debt and that was never to get yourself into such a mess in the first place.
BBC:
AFR:
  • Queensland Treasurer Warns of Ratings Downgrade. The Australian state of Queensland may face a downgrade to its credit rating, citing Treasurer Tim Nicholls. A downgrade may come if taxation revenue and mining royalties don't recover, citing Nicholls.
China Daily:
  • China June-July Daily Rail Cargo Volume Unchanged. China's daily rail cargo volume was 8.36m tons on average in the month ended July 15, citing China Railway Corp.
China Securities Journal:
  • China Can Tolerate Slower Growth. China can tolerate slower economic growth in order to implement structural adjustment and reforms, according to a front-page editorial. The 7.5% y/y growth in 2Q is obviously higher that the "lower limit," the editorial says. GDP growth lower than 7% in a given quarter, or even year, won't affect China's long-term goal, it said. China should promote interest rate liberalization and income distribution reform. China should also push forward long-term policies to curb the property market, according to the editorial.
Apple Daily:
  • China's Richest Village in Jiangsu May Fail. Huaxi village in eastern Chinese province of Jiangsu, so-called the nation's richest village, may fail as most of its factories are empty, citing its own investigation.
Securities Times:
  • GlaxoSmithKline(GSK) is a victim of unspoken rules in china's medical industry that drugmakers give money to increase the incomes of doctors and hospitals, according to a front-page commentary.
Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are -.75% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 141.0 -6.0 basis points.
  • Asia Pacific Sovereign CDS Index 107.75 -3.0 basis points.
  • FTSE-100 futures +.02%.
  • S&P 500 futures -.04%.
  • NASDAQ 100 futures -.02%.
Morning Preview Links

Earnings of Note

Company/Estimate
  • (SCHW)/.19
  • (CMA)/.70
  • (KO)/.63
  • (DFRG)/.19
  • (MOS)/1.15
  • (GS)/2.89
  • (JNJ)/1.39
  • (IBKR)/.22
  • (CSX)/.47
  • (YHOO)/.30
  • (URI)/1.00
  • (PKG)/.63
  • (HCSG)/.19 
Economic Releases
8:30 am EST
  • The CPI for June is estimated to rise +.3% versus a +.1% gain in May.
  • The CPI Ex Food & Energy for June is estimated to rise +.2% versus a +.2% gain in May.
9:00 am EST
  • Net Long-term TIC Flows for May are estimated at -$25.0B versus -$37.3B in April.
9:15 am EST
  • Industrial Production for June is estimated to rise +.3% versus unch. in May.
  • Capacity Utilization for June is estimated to rise to 77.7% versus 77.6% in May.
  • Manufacturing Production for June is estimated to rise +.2% versus a +.1% gain in May. 
10:00 am EST
  • The NAHB Housing Market Index for July is estimated to fall to 51 versus 52 in June.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's George speaking, Germany ZEW Econ Sentiment Index, Eurozone/UK inflation data and the weekly retail sales reports could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by real estate and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 75% net long heading into the day.

1 comment:

theyenguy said...

Thanks for the Business Insider report that relates The next financial crisis will come with a crisis of faith.


Let them eat diktat, is Authoritarianisms call. There will be no populist leader rising to resolve the soon coming economic crisis; rather there will be one familiar with Authoritarianism's policy of diktat and schemes of debt servitude coming to rule the Eurozone, as foretold in Daniel 8:23-25. This leader is also presented in Revelation 13:5-10, as the New Pharaoh, who will be accompanied by the New Prophet, Revelation 13:11-17, who will together eventually introduce the charagma money system, that is the 666 credit system, where all will be required to take the Mark, in order to buy or sell, Revelation 13:18.