Bloomberg:
- Why Putin Has 2006 Flash Before His Eyes After Sanctions. With the world watching if U.S. and European sanctions over Ukraine usher in a new Cold War, the showdown first risks sparking a return to capital controls in Russia after they were dismantled eight years ago. President Vladimir Putin’s government scrapped capital controls in 2006, becoming the only one of the biggest emerging economies to allow unrestricted flows of money across borders. If the Ukrainian conflict worsens, tripwires may be set off in case the ruble weakens 15 percent or the country’s international reserves fall about $100 billion, according to Russian economic institutes that advise the government.
- Abenomics Charm Fades as Yields Signal Headwinds: Japan Credit. Japan’s bond investors are mirroring voters in turning away from Prime Minister Shinzo Abe. The nation’s implied forward yield, an indicator of traders’ expectations for the 10-year note rate in 2016, fell to 1.62 percent on July 29. That’s the lowest since the Bank of Japan announced record stimulus in April 2013, suggesting reduced bets that an improving economy will depress demand for the safety of sovereign debt.
- Argentina Debt Dilemma Spotlights Knotted World of Default Swaps. Whenever the knotted world of credit-default swaps is pushed to the forefront in a financial crisis, conspiracy theories abound. Argentina is no exception. Argentine Economy Minister Axel Kicillof described a group of so-called holdout creditors this week as “vulture funds” after failing to reach a restructuring agreement with them. Kicillof specifically directed his ire at credit swaps, a market, he said, that clouds the motives of creditors while leading to “the most wretched speculative capitalism that exists.” “When they present a solution you don’t know if it’s something you can believe at the negotiating table or if there’s something else that you’ll never know about happening outside that gives them greater benefits,” Kicillof told reporters at a July 30 news conference.
- China Rongsheng Sees Wider Loss on Sluggish Ship Orders. China Rongsheng Heavy Industries Group Holdings Ltd. (1101), the country’s second-largest private shipbuilder, said it expects losses in the first half to widen after customers canceling orders forced it to cut production. The Shanghai-based company expects a “significant increase” in the net loss for the six months that ended in June compared with a year earlier, according to a filing to the Hong Kong Exchange yesterday. The shipbuilder cited its “conservative operation strategies” for the slump after customers changed orders as global demand stayed sluggish.
- Asian Stocks Extend Global Rout Amid Earnings Concerns. Asian stocks dropped, extending the biggest global rout in six months that saw the Dow Jones Industrial Average wipe out this year’s gains in one session amid weaker earnings and credit-market concerns. Skymark Airlines Inc. sank 7.7 percent after Japan’s third-largest carrier said it may go out of business should it have to pay Airbus Group NV a penalty for canceling the planned purchase of six A380 superjumbos. Samsung Electronics Co. fell 1.7 percent in Seoul after UBS AG cut its rating on the stock. Sony Corp. rose 5.7 percent in Tokyo as the maker of PlayStation game consoles posted a surprise first-quarter profit. The MSCI Asia Pacific Index (MXAP) fell 0.5 percent to 148.07 as of 10:17 a.m. in Tokyo, heading for its first weekly loss in three weeks.
- Commodities Cap Biggest Monthly Decline Since May 2012. Commodities had the worst monthly performance in more than two years, led by losses for crops including soybeans and wheat on signs of bigger supplies. The Bloomberg Commodity Index of 22 raw materials fell 5 percent in July to 127.91, the biggest loss since May 2012. Corn had the largest drop since 2011, and cotton posted for the longest losing streak in three years.
- WTI Falls After Biggest Monthly Drop in Two Years; Brent Slides. West Texas Intermediate dropped for a fifth day after capping the biggest monthly decline in more than two years amid concern a prolonged shutdown of a Kansas refinery will reduce crude demand. Brent slid in London. Futures slid as much as 0.5 percent in New York, extending a 6.8 percent loss in July.
- Israel, Hamas Agree to 3-Day Cease-Fire. Will Hold Talks in Egypt on More Lasting Solution. Israel and Hamas agreed to a three-day cease-fire in the Gaza conflict with the hope of forging a more lasting peace. U.S. Secretary of State John Kerry and U.N. Secretary-General Ban Ki-moon announced the truce, set to begin Friday morning, in a joint statement issued in New Delhi. A spokesman for Hamas, the Islamist group that rules Gaza, confirmed that all militant factions in the Palestinian territory had agreed to suspend violence. Israeli Prime Minister Benjamin Netanyahu's office confirmed the agreement. Israel, Hamas and other Palestinian factions would travel to Cairo immediately for negotiations aimed at building the cease-fire into a more lasting truce, the U.S. and U.N. said. During the pause, Israel won't pull back its forces inside Gaza.
- Bears Who Won Big During Finance Crisis Are Growling Again. Singer and Lippmann Are Among Hedge-Fund Managers Wary of the Potential for Prices to Fall. Many of the Wall Street money managers who made billions by anticipating the U.S. housing bubble see more trouble on the horizon. Unlike before the crisis, when those traders were mostly united against subprime mortgages, the wagers vary this time. Some are against U.S. junk bonds, while others are targeting European sovereign debt. The...
- Junk Bonds Sink on Fears Rally Will End as Economy Picks Up. U.S. Junk-Bond Funds Post $1.48 Billion Weekly Outflow. Investors retreated from risky corporate debt on Thursday, sending prices tumbling and deepening fears of an end to a long rally in junk bonds.
- Apollo Global Starts New Hedge Fund to Short Junk Bonds. Private-Equity Firm to Launch With External Money This Fall.
- Leaving U.S. Allies Adrift as Chaos Rises by Joseph Lieberman. In Eastern Europe, Asia and the Middle East, America's friends are on the defensive and increasingly feeling alone. When I was getting into politics in Connecticut a long time ago, an
experienced politician counseled me: Be loyal to your friends and people
who have supported you. Take care of them whenever you can. You should
also try to convince people who opposed you in the last election to
support you in the next election, but never do that by being disloyal to
your friends or you will end up without anybody you can depend on when
you need help. I have been thinking of that wise counsel as numerous crises threaten the world's...
Business Insider:
CNN:
Reuters:
- Tesla(TSLA) expects to boost 2015 output to more than 60,000. Tesla Motors Inc, the California-based maker of luxury electric cars, said it expects to build more than 60,000 cars in 2015, after spending heavily
this year to update and expand its Fremont assembly plant.
The initial response from investors was mixed, with shares rising, falling, then climbing again after Musk's call with analysts. They closed at $223.30, down 2.5 percent, in regular trading.
- Expedia(EXPE) profit rises on higher hotel, flight bookings. Online travel agency Expedia Inc reported better-than-expected quarterly results, driven by higher hotel and flight bookings. Expedia shares rose as much as 4 percent to $82.65 after the bell on Thursday.
- Third straight week of outflows from high-yield funds: Lipper. US high-yield funds have seen a third consecutive week of outflows, Lipper reported on Thursday, with US$1.476bn being pulled out of the asset class. For the three weeks ended 7/30, the total outflow is $5.536bn.
- LinkedIn forecasts strong qtr, driven by hiring business. Corporate networking site LinkedIn Corp forecast better-than-expected adjusted profit and revenue in the current quarter, helped by a rapid rise in its hiring business. Shares of the company rose as much as 15 percent to $208 in extended trading.
- None of note
- Asian equity indices are -1.0% to -.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 108.5 +5.0 basis points.
- Asia Pacific Sovereign CDS Index 75.0 +4.0 basis points.
- FTSE-100 futures -.25%.
- S&P 500 futures +.30%.
- NASDAQ 100 futures +.37%.
Earnings of Note
Company/Estimate
- (AXL)/.71
- (MT)/.20
- (BKW)/.23
- (CBOE)/.50
- (CVX)/2.67
- (CLX)/1.35
- (HLT)/.19
- (PG)/.91
- (RUTH)/.20
- (WY)/.35
8:30 am EST
- The Change in Nonfarm Payrolls for July is estimated at 230K versus 288K in June.
- The Unemployment Rate for July is estimated at 6.1% versus 6.1% in June.
- Average Hourly Earnings for July are estimated to rise +.2% versus a +.2% gain in June.
- Personal Income for June is estimated to rise +.4% versus a +.4% gain in May.
- Personal Spending for June is estimated to rise +.4% versus a +2% gain in May.
- The PCE Core for June is estimated to rise +.1% versus a +.2% gain in May.
- The Final Markit US Manufacturing PMI for July is estimated to rise to 56.5 versus a prior estimate of 56.3.
- Final Univ. of Mich. Consumer Confidence for July is estimated to rise to 81.8 versus a prior estimate of 81.3.
- The ISM Manufacturing for July is estimated to rise to 56.0 versus 55.3 in June.
- ISM Prices Paid is estimated at 58.0 versus 58.0 in June.
- Construction Spending for June is estimated to rise +.5% versus a +.1% gain in May.
- Total Vehicle Sales are estimated to fall to 16.7M versus 16.92M in June.
- None of note
- The Fed's Fisher speaking and Eurozone PMI report could also impact trading today.
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