Bloomberg:
- China Stocks World’s Worst Losing $748 Billion on Slump. Four years after China’s growth helped lead the global economy out of a recession and won the admiration of luminaries from billionaire George Soros to Nobel laureate Joseph Stiglitz, the nation’s stock market has lost more money for investors than any other in the world. The Shanghai Composite Index (SHCOMP), which doubled in 10 months through August 2009 as the government poured $652 billion of stimulus into building roads, railways and housing, has tumbled 43 percent from its high, destroying $748 billion in market value. Only Greece’s ASE Index (ASE) has fallen more in percentage terms.
- Black Holes at China's Shadow Banks. When I speak of cracks in China’s institutional foundation, I’m thinking in large part of China’s banking system -- which as far as I can tell, isn’t really a banking system the way that we think of it.
- Ringgit Falls Most in 3 Weeks, Bonds Drop on Fitch Outlook Cut. Malaysia’s ringgit declined the most in three weeks and bonds extended losses after Fitch Ratings cut the nation’s credit outlook to negative from stable, citing rising debt levels and a lack of budgetary reform. The currency dropped to a three-year low and 10-year bond yields climbed to the highest since April 2011 after Fitch said in a statement yesterday that Malaysia’s public finances are its “key rating weakness.” The shrinking current-account surplus and $2.9 billion of sovereign debt maturing today raises the risk of capital outflows, putting the ringgit on course for its worst month in more than a year.
- HTC Slumps After Forecasting Sales Drop. HTC Corp. (2498), Taiwan’s biggest smartphone maker, slumped to its lowest in almost eight years in Taipei trading after forecasting an eighth consecutive decline in quarterly sales amid intensifying competition. The stock dropped 6.7 percent to NT$159.5 as of 9:05 a.m., the lowest level since November 2005. Revenue will be as much as NT$60 billion ($2 billion) in the three months ending September, the Taoyuan, Taiwan-based company said in a statement yesterday. That missed the NT$72.7 billion average of 21 analysts’ estimates compiled by Bloomberg.
- Asian Stocks Pare Losses Ahead of Fed Policy Statement. Asian stocks pared losses as a rally fell in Chinese shares offset a drop in Japan before U.S. economic growth data and the conclusion of a Federal Reserve policy meeting. HTC Corp., Taiwan’s biggest smartphone maker, tumbled 6.7 percent after forecasting an eighth consecutive decline in quarterly sales amid intensifying competition. Kurita Water Industries Ltd. dropped 6.8 percent in Tokyo after the supplier of water-treatment equipment reported lower first-quarter profit. SoftBank Corp. (9984) climbed 3.2 percent after the Japanese carrier that bought Sprint Corp. posted profit that beat estimates. The MSCI Asia Pacific Index dropped 0.1 percent to 133.70 as of 12:04 p.m. in Tokyo, paring a loss of 0.4 percent earlier.
- Rubber Pares Monthly Gain Ahead of U.S. Growth Data, Fed Meeting. Rubber pared the first monthly gain in six ahead of U.S. economic growth data and a policy statement by the Federal Reserve today. The contract for delivery in January fell as much as 2.1 percent to 238.7 yen a kilogram ($2,435 a metric ton) on the Tokyo Commodity Exchange and was at 242.6 yen at 11:52 a.m. Prices gained 2.7 percent this month, paring losses this year to 20 percent.
- Gold Climbs as Investors Await Fed Statement; Silver Advances. Gold advanced as investors awaited the conclusion of U.S. Federal Reserve policy makers’ meeting today for signals on whether the Fed may start reducing its unprecedented stimulus program in the coming months. Bullion for immediate delivery rose as much as 1 percent to $1,339.74 an ounce, and was at $1,336.65 at 10:02 a.m. in Singapore. Prices have advanced 8.3 percent in July, snapping a run of three monthly losses and heading for the best gain since January 2012.
- Spain Weighs Home Demolitions as Wrecking Crews on Alert. The volume of properties for sale, combined with an expected drop in the population, will prevent the residential property market from recovering anytime soon. As many as 2.27 million homes may either be on the market already or in the pipeline, including up to 400,000 that are being developed, RR de Acuna estimates. Home prices have dropped about 35 percent since their peak in 2007, according to RR Acuna estimates based on home valuation data, said Rodriguez de Acuna. Prices may keep falling for at least a further five years, taking total declines from the top of the market to the bottom to 50 percent, he said.
- Iran May Reach Nuclear Breakout Ability by Middle of Next Year. Iran may achieve the “critical capability” to process low-enriched uranium into fuel for a nuclear weapon without detection by international inspectors by mid-2014, according to a report by a research group. Iran would reach this capability by acting on plans to install thousands of additional enrichment centrifuges at its Natanz and Fordow sites, according to David Albright, a former nuclear inspector, and Christina Walrond of the Washington-based Institute for Science and International Security.
- Afghan Army Needs U.S. Help After Next Year, Pentagon Reports. Afghanistan’s security forces can’t go it alone after the planned departure of U.S. combat troops at the end of next year, the Pentagon said in its latest assessment of the war effort. “Substantial training, advising and assistance, including financial support” will be needed to address “ongoing shortages,” including the inability of Afghan security forces to operate and sustain complex battlefield technologies, air operations and logistics, according to the report issued yesterday. It also cited a gap in fielding units to clear roadside bombs, the primary killer of Afghan forces.
- Banks Commodity Business Drawing Sharper U.S. Regulator Scrutiny. U.S. financial regulators will boost scrutiny of banks’ commodities holdings and use their authority to pursue evidence of fraud and manipulation, the heads of two agencies told lawmakers.
- Half of Sleeping TSA Workers Get Little Punishment: GAO. The U.S. Transportation Security Administration isn’t consistent in disciplining workers accused of misconduct, penalizing some with little evidence while not imposing minimum sanctions on others, an audit concluded. Half of workers accused of sleeping on the job received less than the lowest penalty called for by agency policies, the Government Accountability Office said in a report released today. The House Homeland Security Committee is holding a hearing tomorrow on how the agency disciplines employees.
- Summers Hedges His Doubts on Fed's Bond Buying. Potential Bernanke Successor Holds Nuanced Views on Monetary Policy. Lawrence Summers, a leading candidate to be the next Federal Reserve chairman, likely wouldn't beat a rapid retreat from the easy-money policies pursued by Ben Bernanke if he gets the job. A close reading of Mr. Summers's columns and speeches, as well as conversations with people familiar with his thinking and a June interview with him, show that Mr. Summers has been skeptical about the benefits of the Fed's huge bond-buying programs, known as "quantitative easing," but that he also has said he sees few harmful side effects stemming from them.
- Accenture(ACN) in Talks to Buy Booz & Co. An Acquisition Would Beef Up Strategy and Operations Consulting.
- Banks Face More Suits Over Swaps. Lenders Accused of Anticompetitive Practices. Two financial institutions filed lawsuits alleging large banks have had an unfair stranglehold on the $25 trillion credit-default-swaps market, adding to a pile of complaints about antitrust violations in derivatives. An affiliate of MF Global Holdings Ltd. filed a proposed class-action lawsuit Monday in an Illinois federal court alleging 11 banks engaged in anticompetitive practices, including blocking the company from becoming a clearing broker for swaps.
- Scott Gottlieb: How ObamaCare Hurts Patients. The 340B program was meant to help about 90 hospitals buy drugs to treat the poor. Now 1,675 hospitals qualify. President Obama promised to mend the failings in the American health-care system, and yet for cancer treatment, ObamaCare is taking a rotten feature of the old system and making it worse.
- Obama's 'Grand Bargain' With Obama. He proposes tax reform with higher taxes and not much reform.
- Obama doubles down on low-ball Keystone jobs claim despite fact-check criticism. President Obama doubled down Tuesday on his claim that the Keystone XL oil pipeline would create just a handful of jobs, despite being hammered by Republicans and fact-checkers alike for the claim.
- China national audit to focus on new debt: report. China's national audit of central and local government debt, announced on Sunday, will focus on new borrowing, the 21st Century Business Herald reported. An investigation by China's National Audit Office will cover debt taken out since 2011, the newspaper said Wednesday, citing exclusive sources. The audit will catalogue the amount, structure, source and purpose of the borrowing and is due to be completed by October. The NAO will also try to get a handle on the multiplicity of channels used by local governments to access capital, including high-cost borrowing through trust companies and banks' wealth management products, the paper said. Illegal borrowing by the lowest levels of the Chinese government hierarchy, townships and villages, will also come under scrutiny.
- Zombie economy overshadows fed meeting. GDP data Wednesday is expected to show a slow-moving, zombie-like economy, as the Fed meets for a second day.
- Official data to signal more pain for Chinese factories. China's closely-watched official manufacturing purchasing managers index (PMI), due out on Thursday, is expected to show factory activity contracted for the first time in 10 months as the world's second largest economy suffers a deepening slowdown.
Business Insider:
New York Times:
- OpenTable(OPEN) Begins Testing Mobile Payments. OpenTable, the world’s largest online reservation service, lets users book a restaurant reservation with its smartphone app or Web site. Now the company is getting ready to take the next step and let diners pay for the meal with its app, too.
- Spain on the way back … to stagnation. Even if the economy only contracts by 0.1 percent, having shrunk by 0.5 percent in the first quarter, economists have warned that while the slump may be coming to an end, sustainable growth is a long way off. The central bank expects output to be flat over the next 12 months and says the economy remained very sensitive to adverse shocks, particularly on the fiscal side.
- China underwhelms with salvo to slim bloated industry. China's edict to more than 1,900 companies to shut excess production capacity by September is the latest effort to slim down bloated industries, but in the key steel, aluminum and cement sectors the cuts are just a fraction of their surpluses. Broader efforts, including credit curbs, raising environmental standards and energy efficiency will help slow the expansion of these sectors, but Beijing's push towards industry consolidation will be slow to materialize, analysts said.
- Japan July manufacturing PMI shows growth at 4-month low. Japanese manufacturing activity in July grew at the slowest pace in four months in a sign that firms are curbing production due to slowing growth in exports. The Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 50.7 in July from 52.3 in June.
- Symantec(SYMC) gains as hacking worries bring in more business. Symantec Corp, the maker of Norton anti-virus software, posted better-than-expected quarterly results as customers used more of its security products in the wake of a series of hacking attacks, sending the company's shares up 4 percent.
Financial Times:
Yonhap News:- Carlyle prepares boom-era securities sale. Carlyle Group is preparing a second European collateralised loan obligation in as many months as it seeks to tap resurgent investor appetite for a financial instrument widely shunned since the financial crisis. The US-based asset manager is speaking to investors about issuing a CLO similar to the €350m one it issued in June, according to a person familiar with the situation.
- N. Korea warns joint S. Korea-U.S. military drill will fuel tensions. North Korea warned Wednesday that a joint South Korea-U.S. military drill scheduled for mid-August will once again fuel tensions on the Korean Peninsula. The annual Ulchi Freedom Guardian (UFG) exercise, which aims to improve the defensive posture of the two allies against potential attacks by the North, is slated to take place in South Korea next month.
- Japan to Cut Budget Deficit by 8t Yen Over Next 2 Years. Japan
will cut budget deficit by 8t yen by FY 2015, assuming a proposed sales
tax increase is implemented as scheduled, without attribution. Cabinet
to present mid-term fiscal plan in early August. Govt plans to cut
budget deficit to 15t yen in FY 2015 from 23t yen in FY 2013.
- Beijing 1H Tourist Numbers Drop -14.3% on Year. Tourists coming to China's capital city of Beijing dropped -14.3% in 1H from yr ago to 2.14m, citing the Beijing Municipal Bureau of Statistics.
- China May Set Carbon Tax Rate Over 10 Yuan/Ton. China may set carbon tax rate at more than 10 yuan per ton, with plan under discussion by the National People's Congress, citing a person familiar with the matter.
- Amid Arab Spring chaos, Al Qaeda takes its chance. Now more than ever before, Al Qaeda seems to be making a comeback as governments lose control.
- None of note
- Asian equity indices are -1.0% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 142.0 unch.
- Asia Pacific Sovereign CDS Index 110.50 +1.75 basis points.
- FTSE-100 futures +.18%.
- S&P 500 futures +.11%.
- NASDAQ 100 futures +.05%.
Earnings of Note
Company/Estimate
- (AGCO)/1.81
- (EXC)/.54
- (PCG)/.73
- (HUM)/2.47
- (CMCSA)/.63
- (AMT)/.90
- (ENR)/1.31
- (HES)/1.40
- (H)/.30
- (MA)/6.29
- (PSX)/1.81
- (ALL)/.98
- (WMB)/.14
- (CBS)/.72
- (MAR)/.57
- (LRCX)/.71
- (RGR)/1.18
- (MET)/1.33
- (MUR)/1.53
- (IPI)/.20
- (MCHP)/.54
- (WFM)/.37
- (BKW)/.19
- (SPW)/.65
- (JNY)/-.12
- (BMC)/.79
- (PZZA)/.69
8:15 am EST
- The ADP Employment Change for July is estimated to fall to 180K versus 188K in June.
- The 2Q Employment Cost Index is estimated to rise +.4% versus a +.3% gain in 1Q.
- Advance 2Q GDP is estimated to rise +1.0% versus a +1.8% gain in 1Q.
- Advance 2Q Personal Consumption is estimated to rise +1.6% versus a +2.6% gain in 1Q.
- Advance 2Q GDP Price Index is estimated to rise +1.0% versus a +1.2% gain in 1Q.
- Advance 2Q Core PCE is estimated to rise +1.0% versus a +1.3% gain in 1Q.
- The ISM Milwaukee for July is estimated to rise to 52.0 versus 51.55 in June.
- The Chicago Purchasing Manager for July is estimated to rise to 54.0 versus 51.6 in June.
- Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,450,000 barrels versus a -2,825,000 barrel decline the prior week. Gasoline inventories are estimated to fall by -1,500,000 barrels versus a -1,389,000 barrel decline the prior week. Distillate inventories are estimated to rise by +450,000 barrels versus a -1,227,000 barrel decline the prior week.
- (CSWC) 4-for-1
- The Eurozone Unemployment Rate, China Manufacturing PMI, weekly MBA Mortgage Applications report and the Credit Suisse Gaming/Lodging/Leisure/Restaurants Conference could also impact trading today.
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