Bloomberg:
- Islamists Call New Rallies in Fraught Climate of Mubarak Release. An alliance of Islamist groups backing Mohamed Mursi called for its first mass marches in days to demand the ousted president’s return, even as authorities were rounding up their leaders and putting them behind bars. The rallies are to take place against a political backdrop made even more fraught by the release of longtime autocrat Hosni Mubarak from prison yesterday. It was a stunning development for many who took part in the 2011 uprising that toppled him, and some critics say Egypt’s current leadership, installed by the military, is out to reprise the police state Mubarak once led. Mubarak, said to be ailing, was wheeled on a gurney yesterday to a helicopter that flew him to a nearby military hospital at a time when the country he once led is reeling over the army’s removal of the Muslim Brotherhood’s Mursi. About 1,000 people died in clashes touched off when security forces stormed two pro-Mursi protest camps on Aug. 14, and Mubarak’s release threatens to inflame the political crisis.
- ICBC to Lead China’s Biggest Banks in Posting Slower Profit Gain. Industrial & Commercial Bank of China Ltd., the world’s most profitable lender, and its three largest local rivals are set to post the slowest earnings growth since 2010 as China’s economy falters and bad loans jump. The four banks, among the world’s nine biggest by market value, will probably report combined second-quarter net income of 207 billion yuan ($34 billion), an increase of 10 percent from a year earlier, according to the median estimate of 11 analysts surveyed by Bloomberg News. Profit at the four largest U.S. banks climbed 35 percent to $20.2 billion.
- Fukushima Clouds Abe’s Bid to Start Nukes for Recovery: Economy. Radiation spreading from Japan’s crippled Fukushima plant threatens to derail Prime Minister Shinzo Abe’s efforts to revive nuclear power and deliver the lower energy prices needed to power his economic reforms. As Abe prepares for a trip tomorrow to the Middle East where he will promote sales of nuclear technology, the atomic industry at home is reeling. Japan’s nuclear regulator said this week that a new radioactive water leak was the most serious incident at the Fukushima Dai-Ichi plant since the March 2011 accident that devastated the site.
- Asian Stocks Rise, Paring Weekly Slide, on Economic Data. Asian stocks rose, paring the benchmark equity gauge’s biggest weekly decline in two months, after reports from Europe to the U.S. boosted confidence in the economic recovery and the yen weakened against the dollar. Asia’s largest carmaker Toyota Motor Corp. (7203), which gets about 75 percent of sales outside Japan, climbed 3.6 percent as the yen touched its lowest level in nearly three weeks against the dollar. BHP Billiton Ltd. (BHP) rose 1.1 percent in Sydney after copper jumped overnight. Amada Co., a Japanese maker of metal-cutting machines, jumped 5.1 percent after a report that its operating profit will rise by 150 percent. The MSCI Asia Pacific Index advanced 1.3 percent to 131.33 as of 9:48 a.m. in Hong Kong as nine of the 10 industry groups on the gauge climbed.
- Ford(F) Says U.S. Loses as Yen Lets Japan Keep Excess Capacity. Ford Motor Co., stepping up criticism of Japan’s auto industry, said a weaker yen lets carmakers led by Toyota Motor Corp. (7203) keep open plants that are producing a vehicle glut and threatening U.S. job growth. Production for automakers including Ford is constrained in North America as U.S. sales rise, Joe Hinrichs, Ford’s president of operations in the region, said in an interview. At the same time, the weaker yen is supporting exports from Japan, which IHS Automotive estimates has 2 million vehicles of excess capacity. “The industry is growing and capacities are a little tight in North America,” Hinrichs said from Dearborn, Michigan, where Ford is based. “Where is the extra available capacity going to come from? If Japan’s one of those places, in lieu of more manufacturing in the U.S., the American worker does lose in that proposition.” His comments build on remarks by Chief Executive Officer Alan Mulally, who in June said Japan was manipulating its currency, and reflect a threat that Ford sees to continuing its recent growth in the U.S.
- Rubber Climbs to 3-Month High on Weaker Yen. Rubber for delivery in January on Tokyo Commodity Exchange gained as much as 2.0 percent to 271.2 yen a kilogram ($2,741 a metric ton), the highest level for a most-active since May 29. Futures traded at 270.8 yen at 11:40 a.m., heading for the third weekly advance.
- Rebar Rises. Rebar for January delivery gained as much as 1.4 percent to 3,820 yuan ($624) a metric ton before trading at 3,813 yuan at 10:30 a.m. local time. The contract fell by 1.1 percent this week before today.
- Moody’s Mulls Downgrade of Biggest Banks as U.S. Support Wanes. Moody’s Investors Service may cut debt ratings on at least four of the six largest U.S. banks because the government could be less likely to ensure their survival in a crisis. Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Wells Fargo & Co. may be downgraded, Moody’s said today in a statement. Bank of America Corp. and Citigroup Inc. are under review, with the direction of any rating change uncertain, Moody’s said. Bank of New York Mellon Corp. and State Street Corp. were already under review, Moody’s said.
- Pentagon Weighs Firing Thousands Under 2014 Spending Cuts. The Defense Department may have to fire at least 6,272 civilian employees if automatic cuts known as sequestration slice $52 billion from its fiscal 2014 budget, according to a Pentagon planning document. Additional budget analysis is “likely to produce further reductions” as the services focus on shrinking their contract labor forces, according to a Pentagon “execution plan” obtained by Bloomberg News. The job cuts, although less than 1 percent of the non-uniformed workforce, would mark an escalation from the unpaid leave mandated under sequestration in the current fiscal year.
- JPMorgan(JPM) Sub-New Normal Growth Seen Confronting Next Fed Chief. The next chairman of the Federal Reserve faces an alarming possibility: the new normal for the economy is even worse than advertised. The long-run potential growth rate for GDP has slid to around 1 3/4 percent per year, from an average rise in GDP of 2 1/2 percent since 1990, according to economists at JPMorgan Chase & Co., the largest U.S. bank by assets. That would be the lowest level since World War II and below the 2 percent mark that PIMCO pegged as the new normal for the economy.
- GOP Plans Spending Bill to Avoid Shutdown. Sidestepping Conservatives' Call to Cut Health-Law Funding, House Leaders Set Up Debt-Limit Fight for Later This Year. House Speaker John Boehner said Thursday GOP leaders were crafting a strategy that could avert a September showdown with Democrats over government funding levels by deferring the toughest budget issues to later in the fall, when lawmakers face a deadline to raise the debt ceiling.
- U.S. Weighs Plans to Punish Assad. Possible Military Responses Are Refined After Poison Gas Claims. The U.S. began refining its military options for possible strikes in Syria, officials said, and initiated diplomatic efforts to craft an international response to allegations that Syria's government killed over 1,100 civilians with chemical weapons.
- Doctors Face New Scrutiny Over Gifts. New Health Law Calls for Increased Disclosures. U.S. doctors are bracing for increased public scrutiny of the payments and gifts they receive from pharmaceutical and medical-device companies as a result of the new health law.
- CFTC Moves to Rein In High-Speed Traders. Regulator Aims to Increase Oversight of Computer Trading. Federal commodities regulators are preparing to take their first big step toward reining in high-speed computer trading and subjecting it to tougher oversight.
- Central-Bank Moves Blur the View. Emerging Markets' Efforts to Defend Their Currencies Stokes Confusion. Central banks from Indonesia to Turkey to Brazil are stepping up efforts to fight steep declines in their currencies and protect vulnerable economies as investors pull cash from emerging markets. The escalating role policy makers are playing in the foreign-exchange market injects new uncertainty into financial markets. Investors already are struggling to absorb a rapidly changing outlook for global economic growth and the potentially imminent end to the Federal Reserve's easy-money policies. These measures to support local markets are a sharp reversal from much of the past two years, when some of these same emerging-market central banks were trying to tame excessive currency appreciation.
- Rivkin and Casey: The True Lesson of the IRS Scandal. There should be less federal regulation of political speech.
- Education bus tour pulls Obama away from Mideast crises. President Obama’s two-day bus tour touting his revamped education plan has raised questions about his priorities as the Middle East convulses with violence and political upheaval. On the same morning Obama traveled to address students at the University of Buffalo, Egypt’s deposed former leader Hosni Mubarak was released from jail, four rockets were fired near Israel and global powers bickered at the U.N. over how to respond to an alleged deadly chemical gas attack in Syria. Sen. John McCain, R-Ariz., issued a blistering statement Thursday morning in response to the latest violence in Syria. "American credibility in the Middle East has never been lower," he said. The Republican National Committee, meanwhile, derisively dubbed the Obama trip the "lame duck" bus tour.
- Muslim Brotherhood's bid to scapegoat Christians failing, say Egyptians. As their nation descends into violent chaos, Egyptians are increasingly blaming the Muslim Brotherhood, despite attempts by the Islamist group to scapegoat Christians and the military, according to several sources who spoke to FoxNews.com from Cairo. “The Muslim Brotherhood has lost all sympathy with their points due to their violence,” said a Long Island, N.Y., Egyptian-American, who is in a Cairo suburb for a family wedding.
CNBC:
- As Nasdaq gets another black eye, industry under scrutiny. Wall Street's latest trading fiasco is not expected to have a lingering impact on the market, but it certainly dealt a longer term blow to the Nasdaq's reputation.
- Gap(GPS) revenue beats as same-store-sales rise 5%. Gap reported revenue that beat market expectations on Thursday as same-store sales rose 5 percent. The retailer also raised its quarterly dividend to 20 cents from 15 cents a share.
- It Was AAPL After All. (graph)
Business Insider:
New York Times:
LA Times:
- Why get off welfare? Poor people aren't stupid. If they can get more from the government than they can from a job, they aren't going to work.
- Is the Fed setting the stage for another financial crisis — in Asia? The side effects of quantitative easing are coming to the fore. Central bankers "always knew it was extremely risky," says The Guardian's Heather Stewart, "but judged that the price of a prolonged slump across the rich world was greater than the threat of inflating unsustainable bubbles in the world's financial markets." But bubbles are what appear to have formed, with a lot of that new, easy money finding its way to higher-yielding bonds in emerging nations."If you are tired of earning a piddling 2 percent on your U.S. Treasury bonds," explains Neil Irwin of The Washington Post, "a rate pushed low by the fact that the Fed has been buying them, then making 5 percent on your money in Indonesian bonds or 7 percent from Indian bonds looks pretty good, even with the greater risk attached."
- Brazil central bank launches $60 bln currency intervention. Brazil's central bank announced a currency-intervention program on Thursday that will provide $60 billion worth of cash and insurance to the foreign-exchange market by year-end, a move aimed at bolstering the country's currency, the real, as it slips to near five-year lows against the dollar.
- Crashing markets spell trouble for India's privatisation plans. The collapse of the rupee is derailing India's hopes of raising more than $6 billion from the sale of stakes in state-run firms, jeopardising a key plank of Finance Minister P.Chidambaram's blueprint to reverse the country's economic malaise. Investor confidence has evaporated amid fears over the rising cost of funding India's gaping current account deficit, prompting New Delhi to delay plans to raise much-needed funds through partial privatisations, finance ministry sources said.
- Autodesk(ADSK) forecasts disappointing 3rd qtr, shares fall. Autodesk Inc forecast third-quarter results below analysts' estimates as it anticipates lower demand for its computer-aided design (CAD) software used in construction, manufacturing and engineering industries. The company's shares fell as much as 5.6 percent in extended trading.
- Aeropostale(ARO) forecasts another loss, to speed up store closings. Teen apparel retailer Aeropostale Inc on Thursday forecast a deep third quarter loss, and said the highly promotional environment that has led it to cut prices and decimated earnings would continue in the back-to-school shopping period. Shares were down 8.2 percent at $10.07 in after-hours trading. They closed down 1.6 percent on Thursday.
Financial Times:
Telegraph:- Emerging markets central banks’ emergency reserves drop by $81bn. Central banks in the developing world have lost $81bn of emergency reserves through capital outflows and currency market interventions since early May, even before renewed turmoil in emerging markets. The figure, which excludes China, is equal to roughly 2 per cent of all developing country central bank reserves, according to Morgan Stanley analysts, who compiled the data from central bank filings for May, June and July.
- The financial crisis that refuses to go away. Emerging markets such as Brazil, India and Turkey have an outbreak of the jitters, and it’s hard to see a happy outcome.
- Emerging market rout threatens wider global economy. The $9 trillion (£5.8 trillion) accumulation of foreign bonds by the rising powers of Asia, Latin America and the emerging world risks going into reverse as one country after another is forced to liquidate holdings to shore up its currency, threatening to inflict a credit shock on the global economy.
- “Brazil close to experience its own Subprime,” says IMF economist in interview. According to Pedro Videla, a consultant to the IMF, the World Bank and a professor at the Iese School of Economics and Business, in Spain, Brazil failed miserably to make structural changes to increase productivity at a time of strong economic growth, and now, he says, the country may pay the price for its mistake. “Now, everyone is very concerned that there is a Brazilian subprime” he said in an interview to Estado de Sao Paulo.
Liquidity crunch a
catalyst for big China slowdown – analysts
The mini liquidity crunch is the early warning sign of a substantial
economic correction long overdue, amid rising leverage and a broken
growth model, say bearish analysts.
While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3222433/Liquidity-crunch-a-catalyst-for-big-China-slowdownanalysts.html?copyrightInfo=true
China Daily:While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3222433/Liquidity-crunch-a-catalyst-for-big-China-slowdownanalysts.html?copyrightInfo=true
- China Researcher Warns of Liquidity Problems in 2H. China's high-leveraged economy may have increasing liquidity problems if a slowdown in outstanding funds gets worse in 2H, citing Liu Yuhui, a researcher at the Chinese Academy of Social Sciences. China is becoming more vulnerable to an external shock given its heightened debt and signs of faltering productivity, citing Liu.
- China should conduct antitrust investigations into auto and petroleum industries because of monopoly behavior, reporter Wang Yingchun said in a front-page commentary.
- China 2H Industrial Output Faces Downward Pressure. China's 2H industrial output may grow about 9%, according to a joint report by China Development Bank, NDRC's State Information Center and Shanghai Securities News published by the newspaper.
- None of note
- Asian equity indices are unch. to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 162.0 -4.0 basis points.
- Asia Pacific Sovereign CDS Index 131.5 -.25 basis point.
- FTSE-100 futures +.47%.
- S&P 500 futures +.14%.
- NASDAQ 100 futures +.23%.
Earnings of Note
Company/Estimate
- (ANN)/.65
- (FL)/.47
- (HIBB)/.38
10:00 am EST
- New Home Sales for July are estimated to fall to 487K versus 497K in June.
- None of note
- The Final German Q2 gdp report, Canadian inflation report and the Fed Jackson Hole Day 2 could also impact trading today.
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