Wednesday, July 27, 2016

Today's Headlines

  • FBI Chief Warns ‘Terrorist Diaspora’ Will Come to the West. Hundreds of terrorists will fan out to infiltrate western Europe and the U.S. to carry out attacks on a wider scale as Islamic State is defeated in Syria, FBI Director James Comey warned. “At some point there’s going to be a terrorist diaspora out of Syria like we’ve never seen before,” Comey said Wednesday in New York. “We saw the future of this threat in Brussels and Paris,” said the head of the Federal Bureau of Investigation, adding that future attacks will be on “an order of magnitude greater.” Comey’s blunt warnings echo those of Republican presidential nominee Donald Trump, who has scoffed at Obama administration efforts to defeat Islamic State extremists in Syria and Iraq. Nonetheless, the FBI chief’s comments reflect a consensus among U.S. intelligence officials that the group inevitably will strike out abroad as it continues to lose ground militarily under attack from a U.S.-led coalition.
  • Merkel Refugee Policies Face Renewed Criticism After Attacks. Chancellor Angela Merkel faced renewed criticism of her handling of the refugee crisis in the wake of four attacks in Germany in the span of a week that have unsettled the public. Lawmakers from her governing coalition, as well as politicians from parties on the political fringe, argued the assaults show her refugee policies aren’t working and have made the country less safe, breaking with the relative unity shown by the political and media establishment in the immediate aftermath. They pushed for speedy government action to step up security. "The refugee debate will take on a new dimension because of these recent attacks,” Mark Hauptmann, a lawmaker from Merkel’s Christian Democratic Union, said in an interview. “If you look at the suspects, you will see that most of them radicalized themselves over the past two years. Now just imagine what will happen with those 1.3 million refugees who entered Germany last year. This will not end well."
  • Syria Cuts Off Rebel-Run East Aleppo as 275,000 People Trapped. Syrian government forces seized control of the last rebel supply routes into eastern Aleppo city on Wednesday, in what a monitoring group said was their most significant advance in the province since 2013. The siege of eastern districts of Aleppo, Syria’s former commercial capital, has prompted the United Nations humanitarian chief to call for a weekly 48-hour humanitarian pause as an estimated 275,000 civilians remain trapped. Food supplies could be exhausted by mid-August, he said. The city has been divided between government and opposition forces since 2012, with clashes intensifying in recent weeks. The surge in fighting has cast a pall over efforts to revive a broader cease-fire and resume talks on a political solution to the five-year conflict. Officials from the U.S. and Russia, which support opposing sides in Syria’s war, met in Geneva on Tuesday.
  • China Stocks Tumble on Report of Wealth Management Product Curbs. (video) Chinese stocks slumped the most in six weeks as a report about possible curbs on wealth management products added to concern that regulatory efforts to reduce risks in the financial system will limit flows into equities. The ChiNext Index of small-company shares sank 5.5 percent, the most since June 13, while the Shanghai Composite Index fell 1.9 percent. The Shenzhen Composite Index lost 4.5 percent. China’s banking regulator is considering tightening curbs on the nation’s $3.6 trillion market for WMPs, the 21st Century Business Herald reported, citing people it didn’t identify. Authorities may set a limit on how much WMPs can invest in equities and “non-standard assets” such as loans, the report said. “There’s an obvious trend that the regulators want to strengthen market monitoring and lower the use of leverage in financial markets to control risks,” said Dai Ming, a fund manager at Hengsheng Asset Management Co. “Under such circumstances, ChiNext is especially vulnerable, given its high valuations and the recent gains.”
  • Morgan Stanley(MS) Says China Remains as Key Risk to India Investors. India has overtaken China as the world’s fastest-growing major economy, but its northeastern neighbor remains the biggest risk for investors in rupee assets, says Morgan Stanley Investment Management. A case in point: the local market’s reaction to Brexit. The rupee dropped more than 1 percent to 67.97 per dollar on June 24 when it was announced the U.K. had voted to quit the European Union. It has since rebounded to trade slightly stronger than where it was before the referendum, though it remains down almost 5 percent since China devalued the yuan on Aug. 11. “The risks to India are from the East and not from the West,’’ according to Ruchir Sharma, head of emerging markets and chief global strategist at the firm. “Look at what’s happening post the Brexit. The panic has subsided very quickly and markets are back to where they were before the Brexit. In contrast, see what happened to sentiment and the economy when China had problems in August last year and again in January and February this year.’’ China’s slowdown could impact India as Asia’s biggest economy has been the largest contributor to global growth this decade, said Sharma, who made the Bloomberg Markets 50 Most Influential list last year. Any further yuan depreciation risks exporting China’s deflation to developing-nation currencies, he said. The country is also India’s biggest trading partner.
  • Air France Braced for Slump as Terror Spree Weighs on Travel. (video) Air France-KLM Group warned that political and economic uncertainties are weighing on travel demand, with the carrier especially worried about France’s standing as a tourist hotspot after a succession of terrorist attacks that have spanned Paris to the Riviera. Europe’s largest airline said Wednesday there is “special concern about France as a destination” amid the Islamic State-inspired killings, with inbound flows on long-haul routes set to fall at least 10 percent this summer. Fuel savings that helped lift operating profit 77 percent in the second quarter are also about to be eaten up by a fare decline as passenger numbers slide. “If the question is do we see a deteriorating environment, the answer is yes,” Chief Financial Officer Pierre-Francois Riolacci said in a phone briefing. “As the months have gone by we’ve seen a significant drop in demand for inbound travel to Europe, especially France. This pressure is happening in the context of capacity growth that is very high for the summer season.”
  • Canada Housing Agency Sees Strong Vancouver Risks for First Time. Vancouver’s market is showing “strong” signs of problematic conditions, Canada’s housing agency said Wednesday, weighing in after curbs on the market imposed by the British Columbia and federal governments to avoid a crash. Canada Mortgage & Housing Corp. raised Vancouver’s risk rating to its highest level, from “moderate” in April and “weak” in January. The west coast city is at risk from overvaluation, price acceleration and demand that’s outstripping supply, the Ottawa-based agency said. Rapidly rising prices in Canada’s largest cities may soon drag the entire national market into the strongly problematic category, the housing officials said.
  • Europe Stocks Hit One-Month High After LVMH, Santander Earnings. European stocks broke out of their torpor after ending little changed for four straight days. Earnings announcements from companies including LVMH Moet Hennessy Louis Vuitton SE, Telecom Italia SpA and and Banco Santander SA helped push the Stoxx Europe 600 Index up as much as 0.8 percent before it pared its gain to 0.4 percent amid a slide in oil.
  • Fed Says Risks Have Diminished as It Leaves Main Rate Unchanged. The Federal Reserve left interest rates unchanged while saying risks to the U.S. economy have subsided and the labor market is getting tighter, suggesting conditions are getting more favorable for an increase in borrowing costs. “Near-term risks to the economic outlook have diminished,” the Federal Open Market Committee said in its statement Wednesday after a two-day meeting in Washington, before repeating language from June that the panel “continues to closely monitor” inflation and global developments. Job gains were “strong” in June and indicators “point to some increase in labor utilization in recent months,” the Fed said.
  • Democrats Ignored Cybersecurity Warnings Before Theft. The Democratic National Committee was warned last fall that its computer network was susceptible to attacks but didn’t follow the security advice it was given, according to three people familiar with the matter. The missed opportunity is another blow to party officials already embarrassed by the theft and public disclosure of e-mails that have disrupted their presidential nominating convention in Philadelphia and led their chairwoman to resign. Computer security consultants hired by the DNC made dozens of recommendations after a two-month review, the people said. Following the advice, which would typically include having specialists hunt for intruders on the network, might have alerted party officials that hackers had been lurking in their network for weeks -- hackers who would stay for nearly a year. Instead, officials didn’t discover the breach until April. The theft ultimately led to the release of almost 20,000 internal e-mails through WikiLeaks last week on the eve of the convention.
  • Apple’s(AAPL) Earnings Point to Technology Lag Behind Rivals: Chart. 
  • C. H. Robinson(CHRW) Tumbles Most in 18 Months as Trucking Rates Sag. C.H. Robinson Worldwide Inc. fell the most in 18 months after the arranger of freight shipments said a decline in revenue that weighed on second-quarter results continued into July. Sales dropped 6.9 percent to $3.3 billion in the quarter, compared with analysts’ average estimate of $3.44 billion. Intermodal revenue plunged 22 percent as volumes decreased 13 percent, the company said Wednesday on a conference call.
Wall Street Journal:
Fox News:
Zero Hedge:
  • IS says it's behind attack that killed 44 in northern Syria. A twin bombing struck a crowd in a predominantly Kurdish town in northern Syria on Wednesday, killing 44 people and wounding dozens more, Syria's state-run news agency and Kurdish media reported. The Islamic State group claimed responsibility for the attack.
  • SHUT DOWN IN TURKEY TODAY: -18 TV channels -3 news wires -23 radio channels -45 newspapers -15 magazines -30 journalists arrested

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