Bloomberg:
- Iraq Militants Finding Support in Seized Towns Raise Attack Risk. Grievances among Iraq’s majority Sunni population against the Shiite-led government have offered the militants, known as ISIL, the opportunity to secure a base inside Iraq as well as the territory they control in Syria. The group’s fighters took over Mosul and other Iraqi towns this week, as violence escalated 11 years after the U.S.-led invasion to depose Saddam Hussein. The step toward a mini-state will heighten the risk of terrorism in the region and elsewhere, said Evan Kohlmann, senior partner at Flashpoint Partners in New York. “Every acre of territory that ISIL seizes control of, particularly in its homeland, now gives it added leverage and power to recruit and train individuals to carry out attacks not just inside of Iraq but in foreign countries,” Kohlmann said.
- Carney Sees Housing Debt Risk as Rate Increases Near. Mark Carney said rising U.K. mortgage debt may threaten Britain’s recovery as he signaled interest rates might start to rise earlier than anticipated. While investors don’t see the Bank of England’s benchmark rate increasing until next April, the central bank governor said it “could happen sooner than markets currently expect.” Higher borrowing costs could stretch over-leveraged households and undermine financial stability, he said. The warning came as Chancellor of the Exchequer George Osborne said the BOE’s Financial Policy Committee will get new powers to curb mortgage lending as a surging housing market raises concern about a potential bubble.
- BOJ Sticks With Easing as Analysts Delay Calls for Extra Action. The Bank of Japan maintained record stimulus as Governor Haruhiko Kuroda strives to boost inflation that remains short of a 2 percent target. The central bank will continue to expand the monetary base at a pace of 60 trillion yen to 70 trillion yen ($688 billion) per year, it said in a statement today in Tokyo, in line with estimates of all 33 economists in a Bloomberg News survey.
- Asian Stocks Retreat as Oil Rises on Iraq; Yuan Advances. Asian stocks fell, with the benchmark regional index heading for the first back-to-back loss in three weeks, and oil advanced to the highest level since September as violence in Iraq threatens supplies. China’s yuan headed for its biggest weekly advance in 2 1/2 years. West Texas Intermediate oil rose 0.7 percent to $107.29 a barrel by 10:46 a.m. in Tokyo. The MSCI Asia Pacific Index (MXAP) slipped 0.6 percent after yesterday retreating from its highest close since 2008. The Topix index fell 0.7 percent and the yen dropped from the strongest this month before a Bank of Japan meeting ends today. The yuan extended the week’s advance to 0.6 percent and New Zealand’s dollar was within 2 U.S. cents of a record.
- Oil Rallies as Extremist Advance in Iraq Threatens Crude Supply. Futures rose as much as 1.1 percent in New York, extending a 2 percent rally yesterday, the most in two months. Militants linked to al-Qaeda, who captured the northern city of Mosul this week, moved south toward Baghdad as Iraqi Oil Minister Abdul Kareem al-Luaibi speculated that U.S. planes may bomb the nation’s north. The member of the Organization of Petroleum Exporting Countries pumped 3.3 million barrels a day last month, data compiled by Bloomberg show. “There’s potential for disruption to spread around the Middle East and we’re talking about significant amounts of daily supply,” Michael McCarthy, a chief strategist at CMC Markets in Sydney who predicts Brent may climb to $125 a barrel if there’s an attack on Baghdad. “The market got concerned about potential disruption in Libya; Iraq is a much more serious situation.” WTI for July delivery gained as much as $1.15 to $107.68 a barrel in electronic trading on the New York Mercantile Exchange and was at $107.33 at 11:35 a.m. Sydney time.
- Copper Falls to Six-Week Low as China Probe Dims Outlook. Copper fell to the lowest in six weeks in New York amid concern that use of the metal as collateral will slow amid an investigation into warehousing at China’s Qingdao port.
- Subprime Trading Like It's '07 in Car-Loan Bonds: Credit Markets. In response to rising default rates on subprime U.S. auto loans, bond investors are deciding the best thing to do is pile into securities backed by the debt. In the market where auto loans to people with spotty credit are bundled into bonds, the difference in yield between the lowest-rated securities and the safest has narrowed to the least since August 2007, according to Wells Fargo data. Demand for the bonds is translating into cheap funding for lenders, allowing them to make even more loans though payments more than 60 days late are on the increase. Investors are turning to riskier debt to boost returns as stimulus measures from central banks around the world suppress interest rates.
- Iraq Scrambles to Defend Baghdad. Iran Says Forces Join Battle Against Advancing Sunni Insurgents Threatening Capital, Holy Cities. Iraq's government girded to protect the capital from advancing insurgents, as Iranian security officials said their forces had joined the battle on Baghdad's side and the U.S. weighed military assistance, including airstrikes. Iraq edged closer to all-out sectarian conflict as Kurdish forces took control of a provincial capital in the oil-rich north on Thursday and Sunni militants threatened to march on two cities revered by Shiite Muslims and the capital.
- Islamist Militants Aim to Redraw Map of the Middle East. Governments Under Siege as ISIS Seeks to Impose Vision of Single Radical Islamist State.
- Hedge Funds Get Stung by Slow Markets. Louis Bacon and Paul Tudor Jones Are Among Prominent Investors Losing Money on Bad Bets. Some of the biggest investors on Wall Street are losing money with wrong-way bets in markets around the globe, a surprising black eye amid a rise in stock and bond prices. Hedge-fund managers including Paul Tudor Jones, Louis Bacon and Alan Howard are among those who have misread broad economic and financial trends. Some have lost money as Japanese stocks fell, while others have been upended by the surprising resilience of U.S....
- Univision Held Preliminary Sale Talks with CBS, Time Warner. Univision's Owners, Searching for an Exit, Are Asking for More Than $20 Billion for Broadcaster.
- More Loans Come With Few Strings Attached. It's almost summertime, and the lending is easy. Companies with junk ratings, ranging from designer fashion house Kate Spade & Co. to nut specialist Diamond Foods Inc., have been borrowing cash with few strings attached. Lending to weaker companies on easy terms is becoming more and more common as investors' appetite for...
- The Iraq Debacle. An extended civil war is likely. A terrorist caliphate is possible. The magnitude of the debacle now unfolding in Iraq is becoming
clearer by the day, with the terrorist army of the Islamic State of Iraq
and al-Sham, or ISIS, marching ever closer to Baghdad. On Tuesday the
al Qaeda affiliate captured Mosul, a city with a population greater than
Philadelphia's, a day later it took Tikrit in the Sunni heartland, and
on Thursday ISIS commanders announced they plan to attack the Shiite
holy cities of Najaf and Karbala.
No one should underestimate the danger this presents to the stability of...
- US left fragile government to rule Iraq, says ex-commander. The man who once led U.S. forces in Iraq and the mother of the first Navy SEAL to die in the war both fear the government the US put in place may not be able to withstand the jihadist insurgency bearing down on Baghdad. While Al Qaeda-inspired militants take control of key Iraqi cities in a fast-moving insurgency, threatening violence to all who oppose their vision of an Islamic state, retired Lt. Gen. Ricardo Sanchez called the deteriorating situation "depressing" and "unfortunate" -- but not surprising. "Because of the lack of focus on reconciliation and ensuring that a quality military was built with the capability to defend the nation, it’s not unexpected," said Sanchez, who served as the top commander of U.S. troops in Iraq from June 2003 to July 2004.
- Oil spike fears rise as stability in Iraq unravels. Iraq has become an important swing player with big promise in the global energy market, and the widening conflict has experts worried any supply disruptions could lead to a sharp oil price spike.
- Intel(INTC) raises Q2 revenue outlook on stronger-than-expected business PC demand. Chipmaker Intel on Thursday raised its outlook for the second quarter and the full year, citing stronger-than-expected demand for personal computers used by businesses.
- Oil could rise another $15: Oppenheimer expert. Crude oil is surging on news of the geopolitical crisis in Iraq, but the spike might not even be close to over, according to Oppenheimer senior energy analyst Fadel Gheit.
- "X" Marks The "Irrational" Spot. (graph)
- Spanish Government Goes Digging For GDP, Asks Brothels: "How Many Services Do Your Hookers Provide?"
- The Unsettling Truth About Iraq That Obama Doesn't Want To Hear. The government in Baghdad has lost control of Iraq. Extremists from the al-Qaeda offshoot ISIS have blurred the border to Syria, captured Iraq's second largest city, and advanced toward the capital. Kurds have taken Kirkuk, an oil-rich city in the northeast that borders Iraqi Kurdistan. Iran is deploying Revolutionary Guard forces to fight ISIS. And, according to current and former U.S. officials, the administration of President Barack Obama indirectly facilitated the mayhem. "Top State Department officials long argued that the civil war in Syria was the root cause of ISIS's rise because it gave them a haven in which to operate and recruit," Adam Entous and Julian Barnes of The Wall Street Journal report. For the last two years, the main criticism on Obama's policy toward Syria has been that the "United States, rather than read the signals early on and arm the Syrian opposition when it was making substantial gains, allowed a vacuum to form and then fretted when that vacuum was filled by jihadists." Filkins notes the Obama and Maliki governments discussed keeping a residual force of American troops in Iraq as noncombat advisors to provide stability, but negotiations fell apart "in no small measure because of a lack of engagement by the White House." Obama then left Syria to fester, which eventually led to ISIS consolidating territory across Syria and Iraq while the militants gained experience, lured new recruits, captured weaponry, made territorial advances, indoctrinated Syrian children, and piled up cash. President Obama, for his part, said Wednesday that the world is "less violent than it has ever been."
- Google(GOOG) Will Soon Take On Apple(AAPL), Samsung With A New Service Called 'Google Fit' [Report].
- Spooked by probes, pharma executives ask: should I leave China? China's crackdown on corruption in the pharmaceutical sector has frightened foreign executives so much that some fear they could be jailed and have asked their lawyers if they should leave the country for six months. Others are thinking of going for good.
- Finisar(FNSR) forecasts lower-than-expected profit, shares fall. Finisar Corp, a maker of fiber optic components used in network communication equipment, forecast current-quarter profit well below expectations, citing higher capital expenditures in China. Finisar shares fell about 22 percent in extended trading on Thursday.
- U.S. quietly moves detainees out of secretive Afghanistan prison. The Obama administration has quietly repatriated a dozen detainees from a small U.S. military prison in Afghanistan, moving a modest step closer toward winding down the United States' controversial post-9/11 detainee system.
- Mosul governor calls for fragmentation of Iraq. Exclusive: Atheel al-Nujaifi, the governor of Mosul, calls for fragmentation of Iraq and establishment of an Arab Sunni army to fight ISIS.
- None of note
- Asian equity indices are -.75% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 105.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 77.25 +2.0 basis points.
- FTSE-100 futures -.45%.
- S&P 500 futures -.01%.
- NASDAQ 100 futures +.11%.
Earnings of Note
Company/Estimate
- None of note
8:30 am EST
- PPI Final Demand for May is estimated to rise +.1% versus a +.6% gain in April.
- PPI Ex Food & Energy for May is estimated to rise +.1% versus a +.5% gain in April.
- Preliminary Univ. of Mich. Consumer Confidence for June is estimated to rise to 83.0 versus 81.9 in May.
- None of note
- The China retails sales/industrial production reports could impact trading today.
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