Bloomberg:
- Syrian Chemical Weapons Agreement Faces Major Obstacles. Syria must disclose the complete details of its chemical weapons and related facilities by next Saturday, a critical test of whether President Bashar al-Assad will comply with the U.S.-Russian accord on finding, securing and eliminating his toxic armaments. The plan agreed upon by Russia and the U.S. is to follow a “tightly fixed schedule” that envisions international monitors taking control of Syria’s chemical weapons until they can be destroyed or removed from the country by mid-2014, a timetable that will be difficult to meet even if Assad’s regime cooperates. There are gaps in what officially is called a “framework” that add to the uncertainties about whether it will deliver as promised by U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov. If Assad fails to comply, President Barack Obama will again confront the issue of whether to use U.S. military force. “It’s a wait-and-see game at this point,” said Faiza Patel, a former official at the Organization for the Prohibition of Chemical Weapons, the international body that oversees the Chemical Weapons Convention banning such arms.
- No Faith in Stocks Stops China Effort to Cool Housing. Matthew Zhou and his wife spent 1.6 million yuan ($261,000) to buy a two-bedroom apartment last month in eastern Shanghai after seeing no potential for long-term returns in China’s financial markets. “Home prices keep rising, so I’d rather buy a place now than put the money in the stock market,” said Zhou, a 30-year old information technology engineer at a state-controlled bank in Shanghai, who plans to leave the home empty while the couple live with her parents. Gains in equities “could never outpace the growth of home prices,” he said. The willingness of people like Zhou to shun other investments in favor of property shows why residential prices have defied a more than three-year-long government campaign to rein them in and is among the forces crippling efforts by the central government to deal with an expanding housing bubble.
- China Reins in Popular Voices With New Microblog Controls. Chinese microblogger Dong Rubin mused to his 45,000 followers last month that he might face arrest amid a government crackdown on Internet rumors. On Sept. 10, he was detained for misreporting the worth of his business. Dong joined a group of people who had gone online to criticize government-sanctioned projects or voice political opinions and wound up in detention on unrelated allegations. This year, Dong opposed plans for an oil refinery in the southern city of Kunming where he lives, a project that spurred street protests.
- Record Rout in Government Banks as Buffers Drop: Corporate India. Shares of India’s state-run banks are trading near record-low valuations as concern grows about narrowing risk buffers and rising bad loans. Indian Bank, United Bank (UNTDB) of India Ltd. and Union Bank of India, have fallen more than 55 percent this year to Sept. 12, the most among the nine government banks that are leading declines for India’s 40 bank stocks. Shares of the nine lenders are all trading below the value of their assets amid lower-than-average capital adequacy levels and bad loan ratios that are about double those of private-sector lenders.
- Singapore Banks on Asean Lure as Job Crunch Raises Angst. Singapore is counting on Southeast Asia’s economic boom to lure investment as the island’s clampdown on foreign labor raises wage costs and makes it difficult for companies to fill positions.
- Loans to Emerging Markets Jumped Most on Record, BIS Report Says. Banks increased lending in developing nations by the most on record in the first quarter, helping to double the share of interbank loans going to emerging markets, the Bank for International Settlements said. Foreign lending to developing nations rose 8.4 percent, or $267 billion, in the three months ended March 31 from the quarter before, the Basel, Switzerland-based institution said in its quarterly report released today. Loans in Brazil, China and Russia contributed 85 percent to the growth, according to banks reporting to BIS. Cross-border credit to developed nations fell 1.5 percent.
- China’s Stocks Swing Between Gains and Losses; Airlines Slump. China’s stocks swung between gains and losses as property developers and coal companies advanced, whike banks and airlines declined. China Coal Energy Co. led gains for coal producers after sales volumes increased. Shanghai Waigaoqiao Free Trade Zone Development Co. rallied 10 percent. China Eastern Airlines Corp., the second-biggest domestic carrier, slid 3.8 percent after valuations jumped to a one-year high last week. Shanghai Pudong Development Bank Co. fell 3.4 percent.
- Dollar Sinks as Asian Stocks Rise on Summers; Crude Slips. The dollar weakened against all its major peers while Asian stocks climbed with U.S. index and Treasury futures as Lawrence Summers withdrew his bid to become Federal Reserve chairman. Crude oil fell after the U.S. and Russia agreed on a plan to eliminate Syria’s chemical weapons. The Bloomberg U.S. Dollar Index dropped 0.5 percent at 10:41 a.m. in Hong Kong and the greenback slumped 1 percent against the Australian dollar. Standard & Poor’s 500 Index (SPX) futures jumped 1 percent and the MSCI Asia Pacific Excluding Japan Index gained 1.2 percent with Japanese markets closed. Ten-year Treasury futures rose 0.8 percent and Australian bond yields dropped as much as 15 basis points.
- Rebar Futures Decline to Six-Week Low as Mills Increase Output. Steel reinforcement-bar futures in Shanghai dropped for a fifth day, slipping to the lowest level in more than six weeks, on concern that increased production by steel mills will weigh on prices. Rebar for delivery in January on the Shanghai Futures Exchange fell as much as 0.4 percent to 3,643 yuan ($595) a metric ton, the lowest intra-day level since Aug. 1. Futures traded at 3,644 yuan at 11:30 a.m. local time, down 8.6 percent this year. The building material lost 1.8 last week.
- Gold Bulls Cut Wagers as Goldman Sees More Losses: Commodities. Speculators got less bullish on gold, selling long contracts at the fastest pace this year as prices fell the most in almost three months on prospects for less central-bank stimulus. Goldman Sachs Group Inc. said the retreat has further to go. The net-long position held by hedge funds and other large speculators fell 16 percent to 84,929 futures and options in the week ended Sept. 10, U.S. Commodity Futures Trading Commission data show. Long holdings dropped 10 percent, the most since December, and short bets increased 9.8 percent. The net-bullish position across 18 U.S.-traded commodities slid 4.1 percent, with investors adding to bearish wagers on wheat and corn.
- Merkel Ally FDP Defeated a Week Before Federal Vote. Germany’s Free Democratic Party said it will step up its campaign to remain Chancellor Angela Merkel’s coalition ally after a state election defeat one week before the national vote. Support for the FDP fell to 3 percent in Bavarian regional elections today from 8 percent five years ago, bouncing the party out of the state legislature, according to separate projections by public broadcasters ARD and ZDF. “This is without a doubt a serious defeat for the FDP,” FDP head Philipp Roesler told reporters in televised remarks. “But from now it’s about Germany. This result is a wake-up call to all liberals in Germany”.
- Victory on Summers Emboldens Liberals as New Fights Loom. Chest-thumping by liberals after Lawrence Summers‘s decision to withdraw from consideration as the next chairman of the Federal Reserve could have broad implications, not just on the central bank but also for how Democrats maneuver during looming budget fights. A number of Democrats and liberals quickly called Mr. Summers’s move a victory for their cause, and they tried to leverage the decision to pressure President Barack Obama to nominate Fed vice chairman Janet Yellen to the post.
- Fed to Meet Amid Trio of Threats to Economy. Central Bank Faces Rising Rates, Turmoil Abroad, Budget Fight at Home.
- Syria Deal Draws Fire From Key Republicans. Key Republican lawmakers condemned a U.S.-Russia deal to force Syria to give up its chemical weapons as a feeble exercise that won’t rid the regime of its arsenal and that gives Moscow dangerous new power in the Middle East.
- Floods Still Wreaking Havoc in Colorado. After three days of flooding, rain continued to soak parts of Colorado on Sunday, and the National Weather Service warned of possible flash floods in rural areas and big cities including Denver and Boulder. Across the state, officials had confirmed four fatalities; two more people were presumed dead and hundreds remained stranded or unaccounted for.
- Why the Russians Can't Be Trusted in Syria. Moscow isn't even complying with a commitment to destroy its own chemical weapons.
Marketwatch.com:
- Are China reform hopes fizzling out? Commentary: Policy moves signal backward steps.
- Standoff in Philippines may worry some investors. A deadly standoff in Zamboanga City in the southern Philippines is resurrecting worries about that region’s stability and might even take away from the whole country’s reputation as one of Asia’s hottest economies.
Fox News:
- State Department’s Benghazi review let senior officials off the hook, report finds. The State Department review of the Benghazi terror attack let senior officials off the hook for the policy decisions that led to sub-standard security at the U.S. compound in eastern Libya, according to a draft House committee report obtained by Fox News. The nearly 100-page report concludes that the State Department’s internal review board -- called the Accountability Review Board, or ARB -- was flawed. The report by Republicans on the House Oversight and Government Reform Committee alleges the board’s probe was not comprehensive, its interviews were not thorough, and the investigation itself may have been damaged by conflicts of interest.
Zero Hedge:
Business Insider:Wall Street All-Stars:
New York Times:
- Tax Increase Proposal Raises Fear of a Slowdown in Japan. What could possibly go wrong? A plan to raise taxes at the worst conceivable moment, economists warned.
Reuters:
Messaggero:- Inflation adds to headaches for Indian central bank chief's first meeting. When he holds only his first policy review this week, India's new central bank chief has to confront what may well prove to be the biggest challenge of his time in office.
- Portugal's next bailout review could drop the compliments. Portugal's leaders have generally done what their international lenders have advised, setting a pattern of government compliance and official praise. This week's bailout inspection could be different.
- Obama will deal on budget, not on debt limit -ABC interview. President Barack Obama, in an interview broadcast on Sunday, blamed conservative Republicans for a stalemate on the budget and insisted that while he is willing to haggle over taxes and government spending, he will not make a deal would that would impose conditions on increasing the nation's debt limit.
- EU officials pile pressure on Italy to keep government afloat. European Union officials warned Italy on Sunday not to let politics ruin recovery prospects and upset debt markets in a week that could signal the end of Erico Letta's fragile five-month-old government.
- EU to Be Rigorous on Italy Budget Plan, Barroso Says. EU Commission president says in an interview that Italian govt's 2013 budget will be rigorously analyzed by EU. Italy is being encouraged to meet its targets, Barroso said.
- Italian Senator Was Asked to Help Form New Government. Robert Calderoli of opposition Northern League refused to help build a new majority, citing senator. Approaching Calderoli shows PM Enrico Letta's PD party seeks to build new majority without former PM Silvio Berlusconi's PDL. Italy Senate vote on Berlusconi may occur by Oct. 15.
- Italy's Economic Reforms Have Disappointed: EU's Rehn Says. EU Economic and Monetary Affairs commissioner said missed reform opportunities have hurt economic growth and employment. Says he is confident govt will respect 2013 budget targets. Says political stability is of primary importance. Says recent data shows Italian economy remains relatively weak, without clear sign of recovery.
- Letta Says Property Tax Will Be Collected If Govt Falls. Italian PM says no coalition party wants to be responsible for eventual govt collapse, citing Enrico Letta's comments at political rally yesterday. Letta says annual budget will be written by EU officials if govt fails.
- Germany's Roesler Says Spain Must Continue Budget Cuts. German Vice Chancellor Philipp Roesler says Spain must keep cutting its budget deficit and pushing through reforms to boost economic growth as concerns about the country's indebtedness persist.
- Former ECB Head Trichet Sees New Crisis Without Reforms. Jean-Claude Trichet says in interview that governments and private sector must use respite provided by central banks to improve budgets, structural reforms, prudential rules, risk controls.
- Italy's Baretta Says Luxury Homes May Be Taxed More in 2013. Italian finance undersecretary says in an interview that resources needed to meet 2013 deficit targets.
- Poll Shows Japan Tax Increase to Curb Consumer Spending. 56% of respondents plan to cut household spending if gov't raises consumption tax to 8% in April from 5% now, citing own poll.
Shanghai Securities News:
- China Outstanding Local Govt Debt About 15-18t Yuan now, citing China's Chengxin rating co. executive vice president Yan Yan.
Weekend Recommendations
Barron's:- Bullish commentary on (ABX), (CSC), (X), (LUV), (APA), (KSS), (CST), (PAY) and (SNI).
- Asian indices are +.50% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 135.0 -5.0 basis points.
- Asia Pacific Sovereign CDS Index 115.25 +3.5 basis points.
- FTSE-100 futures +1.09%.
- S&P 500 futures +1.11%.
- NASDAQ 100 futures +1.06%.
Earnings of Note
Company/Estimate
- None of note
8:30 am EST
- Empire Manufacturing for September is estimated to rise to 9.0 versus 8.24 in August.
- Industrial Production for August is estimated to rise +.4% versus unch. in July.
- Capacity Utilization for August is estimated to rise to 77.9% versus 77.6% in July.
- Manufacturing Production for August is estimated to rise +.4% versus a -.1% decline in July.
- (CGNX) 2-for-1
- (AFOP) 2-for-1
- The Bank of Australia minutes, Eurozone CPI data and the Morgan Stanley Industrials/Autos Conference could also impact trading today.
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