Evening Headlines
Bloomberg:
Bloomberg:
- Soaring Debt Has U.S. Companies as Vulnerable to Default as 2008. U.S. companies have taken on so much debt that they’re at least as vulnerable to defaults and downgrades as they were leading up to the 2008 financial crisis, according to a report by S&P Global Ratings Tuesday. Corporate leverage in the U.S., excluding financial firms, is at the highest level in 10 years, driven by a combination of low interest rates and slowing profits, S&P analysts Jacob Crooks and David Tesher wrote. This has resulted in record leverage ratios across a universe of 2,200 companies, they wrote. Junk-rated firms are particularly at risk because the credit cycle may have peaked and future tightening in interest rates could shut the spigot on new borrowings right when the companies would want to refinance their debt. “With the level of leverage that we’re seeing, some of these more-peripheral stressed sectors are going to experience some challenges to obtain new financing as well as refinancing,” Tesher said in an interview. “It’s not a question of if, it’s a question of when.”
- Japan’s Plunging Jobless Rate Is All About Aging, not Abenomics. Labor-market rules crimp wage gains and damp inflation. As Prime Minister Shinzo Abe sees it, Japan’s tight labor market is a key success of his economic strategy: the unemployment rate is the lowest in 21 years and the job-to-applicant ratio is the highest in 25 years. Analysis of data over a longer period indicates that the nation’s aging and declining population is the driving force, and that while more than 1 million new jobs have been created since Abe came to power in late 2012, labor-market rules mean most of the change is in non-permanent, lower-paying positions. Hisashi Yamada, the chief economist at the Japan Research Institute, said that what he sees is a shrinking workforce, rather than something positive, such as growing demand.
- Billionaire’s Fund Predicts Prolonged Slump in India Home Sales. Billionaire Uday Kotak’s property fund is predicting a prolonged slump in India’s residential markets as home prices near record levels have crimped affordability, driving sales down. Residential markets across cities have slowed down, with the National Capital Region, comprising Delhi and its surrounding areas, being most hurt, according to Vikas Chimakurthy, senior executive director of the Kotak Realty Fund, which manages $1.47 billion in property assets. Those areas, including Gurgaon in Haryana and Noida in Uttar Pradesh, will be the last to recover, he said.
- Oil Falls as Supply Glut Seen Shrinking Slower Than Expected. (video) Oil fell as U.S. production was seen stronger than expected through 2017. Futures fell 0.6% percent in New York after rising to a two-week high Monday. The Energy Information Administration raised its U.S. crude production forecast through 2017 in a monthly short-term energy outlook. While crude and gasoline inventories are expected to have declined last week, they will remain at the highest seasonal level in at least two decades.
- E-Mails by Clinton Aides Show State Department-Foundation Links. Newly released e-mails from a top aide to Hillary Clinton show evidence of contacts between Clinton’s State Department and donors to her family foundation and political campaigns. The e-mails released Tuesday by the conservative group Judicial Watch included a 2009 exchange in which Doug Band, a senior staff member at the Clinton Foundation, told a top Clinton aide at the State Department that it was “important to take care of” an individual, whose name was redacted. Huma Abedin, the State Department aide, replied that “personnel has been sending him options.”
- Hedge Funds All In on VIX Plunge as S&P 500 Hovers Near Record. Professional speculators are making record bets in volatility markets that U.S. stocks will keep rallying. Hedge funds and other big traders tracked by the Commodity Futures Trading Commission have pushed net short positions on CBOE Volatility Index futures to 115,000 contracts, the most since 2013, data compiled by Bloomberg show. Shorting volatility is effectively a bet equity prices will rise since the VIX and stocks move in opposite directions 80 percent of the time.
- Renaissance, Viking Gain in July as Hedge Funds Extend Rebound. Jim Simons’s $32 billion Renaissance Technologies and Andreas Halvorsen’s Viking Global Investors posted gains in July as the hedge fund industry extended its rebound from the worst start to a year on record. Renaissance’s Institutional Equities Fund, a quantitative strategy that has been among the top performers this year, rose 3.1 percent, boosting its year-to-date return to 17 percent, according to a person familiar with the matter. Viking Global, the $30 billion hedge fund that wagers on and against stocks, gained 3 percent in July, paring this year’s losses to 3.1 percent. Hedge funds on average rose 1.7 percent last month, according to Chicago-based Hedge Fund Research Inc., the fifth straight month of gains. The post-Brexit recovery in equity and credit markets, a surge in gold, and a decline in global bond yields helped the industry bounce back from a 2.6 percent loss in the first two months of the year.
- Disney(DIS) Reshapes TV With $1 Billion Streaming Deal, ESPN Online. (video)
Wall Street Journal:
- Justice Department Expected to Find Unconstitutional Practices Within Baltimore Police Department. Consent decree could lead to major changes in a police force under fire since Freddie Gray’s 2015 death.
Zero Hedge:
- Bank Of England Suffers Stunning Failure On Second Day Of QE: "Goodness Knows What Happens Next Week".
- Chinese Bond Yields Tumble To 2009 Lows As Spooked Investors Rush Out Of Potential Defaults. (graph)
- China Food Inflation Looms As Ag Output Set To Plunge Most In 50 Years Amid Historic 'La Nina'.
- An Unsolvable Math Problem: Public Pensions Are Underfunded By As Much As $8 Trillion.
- Forget The Fed’s 0.25%, Short-Term Rates Have Already Risen By 1% For The Real World.
- Give People A Universal Income To Keep Them Quiet While Global Government Grows.
- Why The Father Of The Orlando Mass-Shooter Was Sitting Behind Hillary.
- WTI Slides After Unexpected Large Crude Build. (graph)
- Worst Productivity Data In 37 Years Sends S&P, Nasdaq To Record Highs. (graph)
Bild:
Earnings of Note
Company/Estimate
10:00 am EST
- Greece Has Implemented Only 13% of Agreed-on Reforms. Newspaper cites internal study by Athens-based research institute INERP CEO Panagiotis Karkatsoulis.
- China Runs 'Large-Scale' Check on Banks' Key Businesses. China Banking Regulatory Commission issued circular in July ordering checks on financial institutions' key businesses, including deposits, loans, bills, interbank business and wealth management products, citing people familiar with the matter.
- Asian equity indices are -.50% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 114.25 unch.
- Asia Pacific Sovereign CDS Index 44.75 -.25 basis point.
- Bloomberg Emerging Markets Currency Index 73.35 +.13%.
- S&P 500 futures -.08%.
- NASDAQ 100 futures -.10%.
Earnings of Note
Company/Estimate
- (JD)/-.12
- (KORS)/.74
- (RL)/.89
- (WEN)/.09
- (CTRP)/-.01
- (FLO)/.26
- (SHAK)/.13
10:00 am EST
- JOLTS Job Openings for June are estimated at 5500 versus 5500 in May.
- The Monthly Budget Statement for July is estimated at -$115.0B versus -$149.2B in June.
- None of note
- The China Money Supply data, New Zealand central bank decision, OPEC Monthly Update, $23B 10Y T-Note auction, weekly MBA mortgage applications report, CSFB Gaming/Lodging/Leisure/Restaurant conference, Canaccord Growth Conference, (JBLU) July traffic data, (BWLD) analyst day and the (EXC) analyst day could also impact trading today.
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