Bloomberg:
- Obama Faces Toughest Foreign Policy Challenge in Syria. President Barack Obama faces the toughest foreign policy dilemma of his administration as he decides how to respond after concluding that Syria’s regime used chemical weapons against innocent civilians. Obama “believes there must be accountability for those who would use the world’s most heinous weapons against the world’s most vulnerable people,” Secretary of State John Kerry said today. White House press secretary Jay Carney told reporters that Obama “has not made” a decision on what action to take. The issue is coming to a head after the U.S. and other nations, including the U.K. and France, concluded that Syrian forces launched a chemical weapons attack on a Damascus suburb last week that opposition groups say killed 1,300 people. Obama previously warned that such action would cross his “red line.” “Barack Obama’s administration is in a grave predicament, much of its own making,” Richard Haass, president of the Council on Foreign Relations in New York, said in a blog posting on the council’s website. “A president of the U.S. cannot say something crosses a red line and then go on conducting business as usual.”
- Obama 2008 Anti-War Stance Strained by Drumbeat to Act on Syria. Among the pivotal moments of Barack Obama’s political career was an October 2002 speech challenging the tide of public opinion to oppose war with Iraq. His anti-war stance helped him win the Democratic nomination in 2008, and later the White House. Now, inside the Oval Office, Obama confronts the possibility of embroiling the U.S. in another Mideast conflict, as he considers how to respond to evidence that the Syrian government used chemical weapons against civilians. “There’s a level of irony,” in Obama’s dilemma, said Tad Devine, a Democratic strategist and an adviser on the 2004 presidential campaign of John Kerry, who’s now Obama’s secretary of state.
- Tepco’s ‘Whack-a-Mole’ Means Government Takes Over in Fukushima. Japan’s government will lead “emergency measures” to tackle radioactive water spills at the wrecked Fukushima nuclear plant, wresting control of the disaster recovery from the plant’s heavily criticized operator, Tokyo Electric Power Co. (9501) “We’ve allowed Tokyo Electric to deal with the contaminated water situation on its own and they’ve essentially turned it into a game of ‘Whack-a-Mole,’” Trade Minister Toshimitsu Motegi told reporters last night in Fukushima. “From now on, the government will move to the forefront.”
- Yen Rises on Haven Demand Amid Emerging-Market Rout; Aussie Down. The yen climbed against all of its 16 major counterparts as a selloff in emerging markets boosted demand for haven assets. Asian shares fell amid a freefall in the currencies of India and Indonesia, and as tensions in Syria escalated. The yen strengthened 0.3 percent to 98.24 per dollar as of 12:24 p.m. in Tokyo from yesterday, when it gained 0.2 percent. It added 0.2 percent to 131.39 per euro, after a 0.3 percent rise the previous session. The dollar was little changed at $1.3375 per euro. The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major peers, was also little changed at 1,027.83. It reached 1,031.37 on Aug. 22, the most since Aug. 2. India’s rupee slumped 1.5 percent to 64.3075 per dollar yesterday, approaching the record low of 65.56 reached on Aug. 22. Indonesia’s rupiah touched 10,900 against the dollar today, the weakest since April 2009.
- Philippine Stocks Sink to 2-Month Low on State Spending Concern. Philippine Long Distance Telephone Co. (TEL), the nation’s biggest company by market value, sank to a six-week low while Aboitiz Equity Ventures Inc. (AEV) slumped 6.8 percent. SM Investments Corp. (SM), owner of the nation’s largest shopping-mall operator and biggest grocery chain, fell to the lowest level in eight months. The Philippine Stock Exchange Index (PCOMP) lost 4.4 percent to 5,889.82 as of 11:35 a.m. in Manila, heading for the lowest close since June 25 after being shut yesterday for a holiday. About 60,000 people gathered in the Philippine capital yesterday to protest the misuse of public funds after a government report this month found discretionary budgets from 2007 to 2009 were spent on dubious projects.
- Asian Stocks Fall as U.S. to Hold Syria Accountable. Asian stocks fell, with the regional benchmark index poised to snap a two-day gain, after U.S. Secretary of State John Kerry said the president will hold Syria’s government accountable for using chemical weapons. Toyota Motor Corp. (7203), Asia’s biggest carmaker and the heaviest-weighted stock on the MSCI Asia Pacific Index, lost 0.6 percent in Tokyo. Billabong International Ltd., an Australian surfwear company, slumped 10 percent after it posted a loss more than three times its market value and said its core brand was worthless. Tokyo Electric Power Co. jumped 10 percent after the government said it would take over the handling of radioactive water spills at the Fukushima Dai-Ichi nuclear plant. The MSCI Asia Pacific Index fell 0.1 percent to 131.43 as of 12:22 p.m. in Tokyo, with five shares declining for every three that rose on the gauge.
- Rebar Falls Most in a Month as China Construction Activity Slows. Steel reinforcement-bar futures in Shanghai declined by the most in almost a month on concern that slowing purchases for construction projects may reduce demand. Rebar for delivery in January on the Shanghai Futures Exchange retreated as much as 1 percent, the most since July 29, to 3,776 yuan ($617) a metric ton and was at 3,784 yuan at 10:05 a.m. local time.
- Rubber Declines From 3-Month High as Stronger Yen Reduces Appeal. Rubber dropped from a three-month high as Japan’s currency appreciated, cutting the appeal of yen-based futures that entered a bull market yesterday. Rubber for delivery in January on Tokyo Commodity Exchange fell as much as 0.7 percent to 275 yen a kilogram ($2,800 a metric ton) and traded at 275.6 yen at 10:43 a.m.
- Calling Lethal Attack 'a Moral Obscenity,' Kerry Begins Making Case for U.S. Action. In harsh, uncompromising language, Secretary of State John Kerry began laying out the U.S. case for possible military action against Syria, saying there was undeniable evidence that chemical weapons had been used in a deadly attack against a rebel enclave and that it was "a moral obscenity." Obama administration planning now centers on carrying out any U.S. and allied strikes on Syria as part of a coalition with the backing of the North Atlantic Treaty Organization and the Arab League, rather than the United Nations, U.S. and European officials said. Such a route could raise international law concerns but would let the administration avoid a potentially protracted diplomatic fight at the U.N. with Russia, President Bashar al-Assad's main backer on the Security Council.
- Debt Drags on China's Growth. Interest Costs Leave Companies With Less Cash to Invest; the Case of Shougang Group. As worries over China's debt problem mount, the burden of paying off those loans could be the trigger that tips runaway credit into slower economic growth and financial stress. Few areas illustrate the problems better than the old industrial sector, where state-owned steel plants and cement kilns continue to borrow and expand even as overcapacity grows. With debts high and profits low, some companies, such as state-owned steel giant Shougang Group, are using new loans to repay old ones, according to Dagong Global Credit Rating Co.
- Return of the McMansion. Developers Tailor New Housing Stock to Well-Heeled Buyers as Credit Rules Squeeze First-Timers. The average size of a new home now exceeds the lofty levels reached during the housing boom, the latest indication that the new-home market is catering more to older, more affluent buyers and less to younger and first-time buyers.
- Zero Worship: Credit-Card Firms Compete With No-Interest Transfers. Hunt for Customers Pushes Banks to Revive Terms That Were the Rage in the 1990s. U.S. credit-card companies, hungry for new customers as many Americans continue to shun debt, are pumping up a popular promotion that can be risky for both lenders and consumers. Financial companies that issue plastic are flooding mailboxes and email accounts with offers that allow new customers to transfer their existing credit-card balances from other institutions without paying interest for as long as two years.
- John H. Cochrane: The Danger of an All-Powerful Federal Reserve. 'Macroprudential' policy thinkers want central banks to micromanage the entire financial system. Interest rates make the headlines, but the Federal Reserve's most important role is going to be the gargantuan systemic financial regulator. The really big question is whether and how the Fed will pursue a "macroprudential" policy. This is the emerging notion that central banks should intensively monitor the whole financial system and actively intervene in a broad range of markets toward a wide range of goals including financial and economic stability.
Zero Hedge:
Business Insider:
Evening Recommendations
- None of note
- Asian equity indices are -2.0% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 161.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 126.75 -1.5 basis points.
- FTSE-100 futures -.32%.
- S&P 500 futures -.08%.
- NASDAQ 100 futures unch.
Earnings of Note
Company/Estimate
- (RGS)/.12
- (DCI)/.45
- (TIF)/.74
- (MOV)/.32
- (BWS)/.22
- (SAFM)/2.66
- (DSW)/.79
- (WMS)/.31
- (DY)/.46
9:00 am EST
- The S&P/CS 20 City MoM SA for June is estimated to rise +1.0% versus a +1.05% gain in May.
- Richmond Fed Manufacturing Index for August is estimated to rise to 0.0 versus -11.0 in July.
- Consumer Confidence for August is estimated to fall to 79.0 versus 80.3 in July.
- None of note
- The Fed's Williams speaking, 2Y Treasury auction, weekly retail sales reports and the Germany IFO Business Climate Index could also impact trading today.
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