IBM(IBM) Bond Sale Signals Rally Strengthening as Ford Raised: Credit Markets. International Business Machines Corp. raised $1.5 billion at the lowest interest rate on record as the credit rally that began in June extended into August on investor confidence the economy won’t slip back into recession. “Even though the economy isn’t working to its fullest capacity, a lot of investors are feeling that if companies are capable of turning in decent earnings, then they’re able to manage themselves to this low-growth environment,” said Arthur Tetyevsky, chief U.S. credit strategist at Gleacher & Co. in New York. Borrowers sold $12.9 billion of U.S. corporate bonds yesterday, according to data compiled by Bloomberg. Citigroup Inc. issued $3 billion of notes, following July sales by Goldman Sachs Group Inc. and JPMorgan Chase & Co.
Slowing steel demand in China, the world's largest consumer of the metal, led 40% of mills in the nation to cut output or put plants on maintenance, Luo Bingsheng, vice chairman of the China Iron & Steel Association said today.
Greece Passes First Deficit-Reduction Test as Budget Challenges Increase. Greece’s austerity drive may pass its first test this week as a European Union-led mission prepares to dole out more rescue funds for a government trying to cut the euro-region’s second-biggest budget gap and weather a recession. In approving the second tranche of a three-year, 110 billion-euro ($145 billion) bailout, the EU and International Monetary Fund are likely praise Greece’s progress and say that more work is needed to lock in the gains, economists said. Greece is battling the highest inflation rate in the 27-nation EU, revenue is trailing targets and the EU and IMF forecast the economy will shrink as much as 4 percent this year. Prime Minister George Papandreou has raised taxes, cut wages and overhauled the state-run pension system, while braving months of strikes against the measures that helped shrink the budget gap by 45 percent in the first half. Sustaining the effort and qualifying for another 9 billion euros of EU-IMF funds will be complicated by a recession that has been deepened by his steps.
Dendreon's(DNDN) $93,000 Cancer Drug Price Must Be Paid by U.S., Doctors Say. Dendreon Inc.’s $93,000 price tag for its Provenge prostate cancer treatment must be covered under the rules of the U.S. Medicare health plan, according to a letter submitted by the American Society of Clinical Oncology. The Centers for Medicare & Medicaid Services, the government agency that determines which treatments will be reimbursed, is required by the Social Security Act to pay for all cancer drugs approved by U.S. regulators, the cancer society said in a public letter submitted to the agency. Provenge won marketing rights in the U.S. in April, becoming the first drug designed to train the body’s immune system to fight cancer.
Genzyme(GENZ) Said to Talk With Sanofi After Getting Buyout Bid. Genzyme Corp., the world’s largest maker of medicines for genetic diseases, has begun takeover talks with Sanofi-Aventis SA after receiving a proposal from the French drugmaker last weekend, according to a person with knowledge of the matter. The talks between Genzyme, of Cambridge, Massachusetts, and Paris-based Sanofi are ongoing, said the person, who declined to be identified because the discussions are private. Genzyme’s shareholders are looking for an offer above $80 per share, the person said. Genzyme rose as much as 2.5 percent in extended trading after the close of the Nasdaq Stock Market.
Treasury Two-Year Yields Fall to Record on Bets Fed Plans to Spur Growth. Treasury two-year yields extended their decline to record lows as traders bet the Federal Reserve will introduce additional measures to keep borrowing costs low as soon as its next meeting on Aug. 10 to boost the economy. Ten-year notes rose, snapping a decline from yesterday, before a government report that analysts said will show personal income and spending cooled in June, a sign the economy is slowing. The London interbank offered rate, which banks pay for dollar loans, is tumbling partly because of speculation the Fed will start buying bonds again, Anthony Crescenzi of Pacific Investment Management Co. said in a report. “More and more people are looking for additional easing at the meeting,” said Tomohisa Fujiki, an interest-rate strategist at BNP Paribas Securities Japan Ltd. in Tokyo.
Wall Street Journal:
Fed Mulls Symbolic Shift. Federal Reserve officials will consider a modest but symbolically important change in the management of their massive securities portfolio when they meet next week to ponder an economy that seems to be losing momentum. Officials to Consider Putting More Money Into Bond Market as Recovery Wavers. The issue: Whether to use cash the Fed receives when its mortgage-bond holdings mature to buy new mortgage or Treasury bonds, instead of allowing its portfolio to shrink gradually, as it is expected to do in the months ahead. Any change—only four months after the Fed ended its massive bond-buying program—would signal deepening concern about the economic outlook. If the Fed's forecast deteriorates significantly, it could also be a precursor to bigger efforts to pump money into the economy. Moving to stop the Fed's portfolio from shrinking would prevent monetary policy from slightly tightening in the face of a weakening recovery. The central bank's $2.3 trillion portfolio has nearly tripled in size since 2007. Buying new bonds with this stream of cash from maturing bonds—projected at about $200 billion by 2011—would show the public and markets that the Fed is seeking ways to support economic growth. It could also be a compromise that rival factions at the Fed support, as officials differ about whether and how to address a subpar recovery. Officials in the Fed's anti-inflation camp aren't convinced the economy is slowing significantly and are wary of taking new actions. Others are eager to consider new steps to address recent signs of a slowdown and persistent high unemployment. Fed officials aren't yet prepared to take the larger step of resuming large-scale purchases of mortgage-backed securities or U.S. Treasurys. But they are holding open that option if the economy deteriorates. Private forecasters generally expect real GDP to grow by an annual rate of about 2¾% in the second half of 2010. If the picture deteriorates and they forecast growth falling below 2%, the Fed would be more likely to act.
Dual Role in Housing Deals Puts Spotlight on Deutsche(DB). Federal probes of the collapsed mortgage-bond boom are shedding light on how Wall Street firms sometimes created securities and sold them to one set of investors, while advising others to bet against them. One firm that was a major player in mortgage securities, Deutsche Bank AG, illustrates a pattern investigators are looking at. While creating and selling mortgage securities to some of its clients, the big German bank was not only advising other clients to bet the other way, but also sometimes doing so itself. A Deutsche trader helped create an index that made it easy to bet against housing, and the bank itself then used the index to do just that.
CNBC:
Gold Miner Kinross(KGC) to Buy Red Back for $7 Billion. Gold miner Kinross Gold said it will buy the 91 percent of Red Back Mining that it does not already own for around $7 billion to create one of the world's largest gold miners.
Upcoming 'Kill' Attempt Might Do the Trick Alone: BP(BP). After insisting for months that a pair of costly relief wells were the only surefire way to kill the oil leak at the bottom of the Gulf of Mexico,BPofficials said Monday they may be able to do it just with lines running from a ship to the blown-out well a mile below.
Small Business Optimism Plunges: Firms See Lower Spending and More Layoffs Ahead. (graphs) The latest Wells Fargo/Gallup small business survey is out and it's UGLY. In keeping with other indications that the state of small business is very bad, the survey indicates a level of pessimism about future results that's worse even that during the worst of the crisis. What's more, small firms seem lower spending, lower cash flows, and lower headcount in the future.
Leak Suspect Had Been Disciplined at Least Twice Before Arrest. The leading suspect in the leaking of thousands of military documents to WikiLeaks had been disciplined at least twice in the previous three years but maintained his security clearance.
TheAppleBlog:
Report: Apple(AAPL) to Take Top Spot in Portable Computing Market Share. A new report suggests the iPad is behind Apple’s unprecedented growth in portable computers, defined as notebooks, netbooks, and tablets. Apple took third place in worldwide market share for the second quarter of 2010, and is on a trajectory to become number one as soon as the end of the year.
Rasmussen Reports:
Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 26% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-three percent (43%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -17 (see trends).
Politico:
Ethics Office Details Charges Against Maxine Waters. An independent ethics office accused Rep. Maxine Waters of violating House conflict-of-interest rules by intervening on behalf of a minority-owned bank in which her husband held $250,000 worth of stock, according to a report released Monday by the House ethics committee as part of its preparation for a "trial" of the California Democrat. The report, written in August 2009 by the Office of Congressional Ethics, became the basis of a full-scale investigation of Waters by the ethics committee. A special bipartisan investigative panel of the committee has found "substantial reason to believe" that Waters violated House rules. Waters, the No. 3 Democrat on the Financial Services Committee, has vehemently denied any wrongdoing. She is choosing to go to trial rather than admit violating ethics rules through a plea.
Reuters:
House Subcommittee Chair Backs Comcast(CMCSA) - NBC Deal. A lawmaker who chairs the U.S. House of Representatives' communications subcommittee is urging regulators to approve Comcast Corp's purchase of a controlling stake in NBC Universal, as long as consumers still have access to a wide array of video programing.
Reversal of Fortune as Falcone's Hedge Fund Drops. In the span of seven months, hedge fund manager Philip Falcone has gone from being one of the industry's better performers to one of its worst, according to new industry data. As of July 15, Falcone's Harbinger Capital Partners Offshore Fund I was down 10.7 percent, ranking the New York-based fund manager one of the industry's 20 worst performers, according to HSBC. Harbinger began the year with bang, with the offshore fund registering a 4.42 percent gain as of Jan. 15. And the fund was in positive territory up until a few weeks ago. Over the course of the year, the portfolio's assets under management have been nearly cut in half, falling from $6.7 billion to $3.8 billion as of mid-July. The firm also has a pool of hard-to-sell assets called a side-pocket with about $2 billion which lost roughly 14 percent in the first seven months of the year.It is not clear what has caused the big reversal of fortune at Harbinger. Several calls for comment to the firm were not immediately returned.
Global Credit Conditions Improved in July - Kamakura. The number of companies globally that are at risk of defaulting on their debt fell again in July, continuing a global trend that has seen most companies improve their credit profile, risk management firm Kamakura Corp said on Monday.
Economic Times:
BlackBerry to Open Code for Security. Research in Motion Ltd.(RIMM) agreed for the first time to allow Indian security agencies to monitor its Blackberry services in a bid to avoid a government ban, citing telecom dept. documents. The company offered to share technical codes for corporate e-mail services and open access to all consumer e-mails within 15 days.
Securities Times:
China's central bank in October may increase the amount of reserves the nation's banks are required to keep, citing officials from the banking industry.
Evening Recommendations Citigroup:
Reiterated Buy on (VRSN), lowered target to $36.
Night Trading
Asian equity indices are -.50% to +.75% on average.
Asia Ex-Japan Investment Grade CDS Index 109.0 -10.0 basis points.
Asia Pacific Sovereign CDS Index 111.0 -5.5 basis points.
Personal Income for June is estimated to rise +.2% versus a +.4% gain in May.
Personal Spending for June is estimated to rise +.1% versus a +.2% gain in May.
The PCE Core for June is estimated to rise +.1% versus a +.2% increase in May.
10:00 am EST
Factory Orders for June are estimated to fall -.5% versus a -1.4% decline in May.
Pending Home Sales for June are estimated to rise +4.0% versus a -30.0% decline in May.
Afternoon
Total vehicle sales for July are estimated to rise to 11.6M versus 11.08M in June.
Upcoming Splits
None of note
Other Potential Market Movers
The weekly retail sales reports, ABC Consumer Confidence reading, (NATI) Investor Conference and the (GLW) Investor Luncheon could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day
North American Investment Grade CDS Index 100.78 bps -3.91%
European Financial Sector CDS Index 93.83 bps -5.81%
Western Europe Sovereign Debt CDS Index 112.33 bps -2.25%
Emerging Market CDS Index 206.40 bps -3.35%
2-Year Swap Spread 17.0 unch.
TED Spread 30.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .14% unch.
Yield Curve 240.0 +5 bps
China Import Iron Ore Spot $136.30/Metric Tonne unch.
Citi US Economic Surprise Index -34.10 +3.3 points
10-Year TIPS Spread 1.84% +7 bps
Overseas Futures:
Nikkei Futures: Indicating +165 open in Japan
DAX Futures: Indicating +9 open in Germany
Portfolio:
Higher: On gains in my Biotech, Medical, Technology and Retail long positions
Disclosed Trades: Added to my (MOS) long, took profits in another long
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is very bullish as the S&P 500 breaks up through its 200-day moving average despite weaker manufacturing gauges in the US/China. On the positive side, Gaming, REIT, Construction, HMO, Bank, Computer, Steel, Ag, Oil Service, Energy and Coal stocks are especially strong, rising 3.0%+. (IYR)/(XLF) have traded well throughout the day. The S&P GSCI Ag Spot Index is rising another +1.2% today. Copper also continues to trade well, rising another +2.34%. Lumber is jumping another +2.8%. The European Investment Grade CDS Index is falling -5.6% today to 94.33 bps. The Hungary sovereign debt cds is dropping -3.8% to 319.44 bps and the US Muni CDS Index is falling another -4.33% to 198.88 bps. On the negative side, gold and hospitals shares are substantially underperforming. The 10-year yield is only rising +5 bps, which isn't as much as I would have expected given the magnitude of today's equity rally, which is a mild negative. I suspect investment manager performance angst will begin to surface again pretty soon, which could lead to further near-term gains after a brief pause. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less economic fear, technical buying, mostly positive earnings reports, diminishing financial sector pessimism and bargain-hunting.
HSBC, BNP Earnings Spur Drop in Bank Swaps to Three-Month Low. HSBC Holdings Plc and BNP Paribas SA led a decline in the cost of insuring bank bonds to the lowest level in three months after posting profits that beat analysts’ estimates, easing concern of a global economic slowdown. The Markit iTraxx Financial Index of credit-default swaps linked to 25 banks and insurers fell 3 basis points to 112.5, near the lowest since April 21, according to JPMorgan Chase & Co. at 12:30 p.m. in London. HSBC, Europe’s biggest bank, and BNP Paribas are the latest companies to exceed profit forecasts in what Deutsche Bank AG strategist Jim Reid called a “blockbuster earnings season.” Credit-default swaps on London-based HSBC fell 1 basis point to 81 and contracts on BNP Paribas, France’s largest lender, declined 3 to 84, according to data provider CMA. Higher bank profits also helped fuel a rally in corporate credit, with the Markit iTraxx Europe Index of 125 companies with investment-grade ratings down 3 basis points at 102, the lowest since May 13. The Markit iTraxx Crossover Index of credit-default swaps on 50 companies with mostly high-yield credit ratings declined 12.5 basis points to 466.5.
U.S. Economy: Manufacturing Slowed in July as Orders Cooled. The manufacturing rebound that propelled the U.S. out of the recession cooled in July, reflecting a slowing in orders and production. The Institute for Supply Management’s manufacturing gauge dropped to 55.5 last month, exceeding the median forecast of economists surveyed by Bloomberg News, from 56.2 in June. The ISM’s new orders measure dropped to 53.5, the lowest level since June 2009, from 58.5. The measure was as high as 65.7 in May. The group’s production gauge decreased to 57 from 61.4.
Bernanke Says U.S. Consumer Spending to Accelerate. Federal Reserve Chairman Ben S. Bernanke said rising wages will probably spur household spending in the next few quarters, even as weak job gains drag down consumer confidence. While the U.S. has “a considerable way to go” for a full recovery, “rising demand from households and businesses should help sustain growth,” Bernanke said today in a speech in Charleston, South Carolina. “We are maintaining strong monetary policy support for the recovery,” he said in response to an audience question, without discussing any further action the Fed could take to aid growth. The remarks signal Bernanke and his colleagues, when they meet in Washington next week, will stop short of making major changes in their policy statement or taking new steps to lower interest rates and reduce unemployment, said John Ryding, a former Fed researcher. Consumer spending, which accounts for about 70 percent of the economy, “seems likely to pick up in coming quarters from its recent modest pace,” Bernanke said. “Further action still has a pretty high hurdle to get over,” said Ryding, co-founder and chief economist at RDQ Economics LLC in New York. “The status quo on policy remains.”
A gauge of U.S. corporate credit risk fell to the lowest in more than two months as manufacturing slowed less than economists had forecast, spurring investor optimism that the economy may avoid a double-dip recession. The Markit CDX North American Investment Grade Index declined 4.31 basis points to a mid-price of 100.08 basis points, the lowest since May 12, as of 12:37 pm in NY, according to Markit Group.
Soybeans, Corn Rise as Drought Slashes Grain Output in Russia. Soybean and corn prices jumped to the highest level since January as drought slashed grain production in Russia and parts of Europe, boosting demand for supplies from the U.S., the world’s biggest producer and exporter. Soybean futures for November delivery rose 12.25 cents, or 1.2 percent, to $10.1725 a bushel at 10:20 a.m. on the Chicago Board of Trade. Earlier, the price reached $10.295, the highest level for a most-active contract since Jan. 11. In July, the oilseed jumped 11 percent, the most since May 2009. Corn futures for December delivery gained 6 cents, or 1.5 percent, to $4.1275 a bushel. Earlier, the price reached $4.18, the highest level since Jan. 12. In July, the price advanced 8.9 percent, the most since February.
Copper Rises to Three-Month High as China May East Tightening. Copper prices rose to a three-month high on speculation that China’s government may cut back on policies aimed at slowing economic growth. Copper futures for September delivery rose 5.9 cents, or 1.8 percent, to $3.3705 a pound at 10:35 a.m. on the Comex in New York. Earlier, the price touched $3.3735, the highest for a most-active contract since April 30. Today’s gain would leave the metal up 0.7 percent this year.
Ford(F) Debt Raised by S&P on Improved Image With Public. Ford Motor Co.’scredit rating was raised two levels by Standard & Poor’s because of expectations the company will remain profitable and signs that customers have a better impression of the automaker’s vehicles. The rating was raised to B+, the fourth level below investment-grade, from B-, S&P said today in a statement. The outlook is positive. Ford has “substantial” cash balances and likely will continue to generate free operating cash flow, the ratings firm said. The retail market has an “improved perception” of Ford’s vehicles and its efforts to introduce more fuel-efficient models in the next few years, S&P said.
Funds Provide Inadequate Disclosure on Derivatives, SEC Says. U.S. regulators said mutual funds aren’t telling investors enough about why they use derivatives, with some funds providing “generic” disclosures and others failing to explain how the products affect performance. Regulators said they are concerned that the use of derivatives has increased in the mutual-fund industry without shareholders comprehending the risks or investment strategies.
BlackRock's(BLK) Doll Sees U.S. Stocks Returning 8% a Year. U.S. stocks will return 8.1 percent a year and the Standard & Poor’s 500 Index will almost double by 2020 after its first losing decade made American equities appear cheap, BlackRock Inc. Vice Chairman Robert C. Doll said. The S&P 500, which closed at 1,101.6 on July 30, will rise 85 percent to 2,034 by the decade’s end, Doll said in a statement today. U.S. equity returns will outpace those of other developed nations because of attractive valuations, stronger economic growth, shareholder-friendly management practices and more serious problems in other economies, Doll said.
Wall Street Journal:
U.S. Plans to Name North Korea's Partners. U.S. officials in charge of new sanctions against North Korea on Monday said they will name and shame banks and businesses in other countries that help Pyongyang with illegal activities.
BP(BP) to Begin First Phase of Killing Damaged Well. BP PLC is poised to start the latest attempt to kill a damaged deepwater well in the U.S. Gulf of Mexico by flooding it with thousands of barrels of drilling mud, an executive said Monday.
Global Chip Sales Rose 7.1% in Second Quarter. Global chip sales edged up 0.5% in June from a month earlier, contributing to 7.1% growth in the second quarter from the prior quarter. Meanwhile, gains for the month and quarter from last year were 49% and 45%, respectively, reflecting growth in a broad range of markets from an industry slowdown in the first half of last year.
Glimcher, Blackstone to Buy Hawaii's Pearlridge Center. A partnership between shopping-mall owner Glimcher Realty Trust and buyout firm Blackstone Group LP has agreed to buy Pearlridge Center, one of the largest malls in Hawaii, for $242 million, according to people familiar with the talks.
CNBC:
Better-Than-Expected Earnings Should Help Stocks: Cohen. Corporate earnings in the US and Europe have been "dramatically better than expected" and may give average investors more confidence in stocks, Abby Joseph Cohen, chief market strategist at Goldman Sachs, told CNBC Monday.
Economist: V-Shaped Recovery Won't Go W-Shaped. The chances of a double-dip recession in the developed world are very weak despite a fall in global business confidence, according to researchers at Barclays Capital.
The New Ford(F) Has Learned to Think Small. Ford Motor Co., long known for pickups and SUVs, will emphasize cars, crossovers and fuel-efficient engines in the next few years. The company wants to be the fuel economy leader, and federal mpg standards are rising. Ford launched the Fiesta subcompact this summer and will introduce a redesigned Focus compact early next year. The Fiesta and Focus are the first U.S. vehicles from the One Ford plan. Under the plan, each region has global responsibility for certain models. For example, designers and engineers in Dearborn, Mich., will continue to work on trucks and crossovers that can be adapted worldwide. The Europeans are designing small cars.
LA Times:
Other California Cities Stuck With the Tab for Bell Officials' Massive Pensions. Under the state's arcane, convoluted public pension system, Bell will pay a fraction of the city manager and police chief's pensions. Former employers and other cities will bear the brunt of the cost. The unfolding story of the high salaries paid to municipal officials in Bell has delivered a surprise twist to taxpayers in Glendale, Simi Valley, Ventura and several other Southern California cities — they're on the hook for the pension bills. More than half of former city manager Robert Rizzo's $600,000-a-year pension will be spread among 140 small cities and special districts such as Norco, La Cañada Flintridge and Goleta that are in the same pension liability pool as Bell. The rest would be shouldered by his former employers, Hesperia and Rancho Cucamonga, according to estimates made by The Times and reviewed by pension experts. In the case of its former police chief, Randy Adams, Bell escapes nearly all the costs of his estimated $411,300-a-year pension. Under CalPERS rules, the city is responsible for just 3% of that because he only worked there for one year. Taxpayers in Glendale, Simi Valley and Ventura would have to pick up the rest.
Bespoke Investment Group:
Country Default Risk. Default risk for sovereign debt has declined quite a bit since the start of July when equity markets here in the US made their correction lows. Below we highlight the default risk as measured by 5-year credit default swap prices for a large number of countries as well as four US states that have the highest default risk. The left side is sorted by percent change since July 2nd, and the right side is sorted by CDS price (highest to lowest).
Chicago Sun-Times:
A New Headache for Giannoulias? Another Rezko Loan. His family bank lent $22.75 million, in newly uncovered deal. By February 2006, businessman and political fixer Tony Rezko was already politically radioactive, caught up in a federal investigation that would see him criminally charged by the end of that year. News reports had linked Rezko, a key adviser and campaign fund-raiser for then-Gov. Rod Blagojevich, to shady deals involving state pension funds -- among the crimes that ultimately would send him to prison. This was the Tony Rezko who, looking for millions of dollars for a massive South Loop development, turned to Broadway Bank, owned by the family of Alexi Giannoulias. Giannoulias, the Democrat now running for U.S. Senate, had left his post as a senior loan officer at the Chicago bank in late 2005 to mount a successful campaign for Illinois state treasurer, though he still held an ownership stake in the bank. Rezko's company asked. And Broadway Bank came through.
Mining Weekly:
Ivory Coast to Triple Gold Output by 2015. Ivory Coast will triple gold output by 2015 to about 20 t/y as three new mines start up, including Randgold Resources' Tongon development, a government official told Reuters. The West African state, the world's top cocoa grower and a modest producer of oil, is eager to diversify its economy in part by developing its mining sector which now makes up just 1% of gross domestic product. "From here to 2015, production of gold in Ivory Coast will be at least 20 t/y because of the new mines," Mbe Adou, general director of mines and geology said in an interview late on Friday on the sidelines of an industry conference.
57% Say Health Care Plan Bad For Country, 59% Favor Repeal. Voter pessimism towards the new national health care bill has reached an all-time high, while the number of insured voters who feel it will force them to switch their coverage is up 11 points from early last month. A new Rasmussen Reports national telephone survey finds that 57% of Likely U.S. Voters say the recently passed health care law will be bad for the country. That’s the highest level of pessimism measured since regular tracking began following Congress' passage of the law in late March. Thirty-two percent (32%) say the health care plan will be good for the United States.
Politico:
Republican Party Eyes Choking Healthcare Law Funding. Republicans may not be able to repeal the Democrats’ health care reform law next year, but they’re eyeing the next best thing: Deny the Obama administration the money it needs to implement the law. GOP candidates across the country are running on a promise to repeal the law. But simply winning the House and the Senate wouldn’t get them there; they’d need to corral two-thirds majorities to overcome what would be an almost certain veto from President Barack Obama. Resigned to that fact, Republicans are now readying a campaign trail message that voters should grant them the power of Congress’s purse strings so that they can choke off funding for the law. “Our goal remains to repeal the bill and replace it, but, clearly, with the president’s veto pen, we’re going to have to take interim steps,” said Rep. Kevin Brady of Texas, the top House Republican on the Joint Economic Committee.
President Obama's Climate 'Plan B' in Hot Water. President Barack Obama’s ‘Plan B’ for tackling global warming is under attack in the courts and on Capitol Hill. Through federal lawsuits, two conservative attorneys general, a major coal company and the U.S. Chamber of Commerce are leading the charge to overturn the Environmental Protection Agency’s ability to write its own climate rules. Key coal-state Democrats and nearly all Republicans are also unified in their bid to slow down the EPA via legislation — and they’re determined to force a series of votes on the issue before the next big suite of rules start kicking in next January. “You attack it at all fronts,” Sen. Lisa Murkowski (R-Alaska), a leading advocate for stopping the EPA, told POLITICO. “You go the judicial route. You go the legislative route. I think this is important to make sure we are looking at all avenues.”
Judge Greenlights Health Reform Suit. In the first substantive legal ruling on President Barack Obama’s health care reform law, a federal judge has rejected the Justice Department’s request to dismiss a lawsuit from Virginia’s state government challenging the reform’s requirement that individuals purchase health insurance. U.S. District Court Judge Henry Hudson ruled that enough factual issues were in dispute in the case to allow the suit, brought by Virginia Attorney General Ken Cuccinelli, to go forward against the health care reform law, Obama’s signature legislative accomplishment.
USA Today:
Rating Sag for Obama's Handling of Wars. War-weary Americans are losing faith in President Obama's handling of conflicts in Afghanistan and Iraq, contributing to his lowest approval ratings since taking office. Barely one in three Americans favor Obama's management of the war in Afghanistan, a new USA TODAY/Gallup Poll shows. Forty-one percent support his handling of the war in Iraq, a new low for Obama. Overall, those surveyed Tuesday through Sunday disapproved of the way Obama is handling his job by a 53%-41% ratio, by far his lowest ratings since January 2009.
Reuters:
Hedge Fund Noster Shorts Banks After Stress Tests.Hedge fund Noster Capital has begun shorting five European banks because it believes last month's stress tests were too weak and that problems over their sovereign debt holdings have not gone away. Managing partner Pedro de Noronha told Reuters he had put short positions on a basket of five banks -- Barclays (BARC.L), UBS (UBSN.VX), Intesa Sanpaolo (ISP.MI), UBI (UBI.MI) and BBVA (BBVA.MC) -- because the stress tests did not assume difficult enough conditions.
US Tells China Not to Exploit Sanctions on Iran. Washington has told China to stop taking advantage of the UN sanctions regime against Iran by seizing opportunities left by departing European companies. China last month condemned moves by the European Union to ratchet up sanctions against Tehran’s nuclear programme by hitting transport, energy and finance. Iran is the third biggest oil supplier to China, and Beijing is investing heavily in the Islamic republic’s energy fields and refineries.
Caixin Online:
Combined new loans in the four Chinese major banks, including Agricultural Bank of China, were 236 billion yuan, down from 356 billion yuan a year earlier, citing industry data.
Iraq Oil Report:
American Base in Basra on Frontline of Oil Boom. Oil executives buzz in and out of this American base, the former British base connected to the Basra airport, some for meetings with officials, some staying the night – or longer. The American mission in Basra, Iraq’s oil capital, is perhaps unlike that of any U.S. outpost in the world: to ensure the world’s largest oil companies have as few problems as possible as they start work on Iraqi oil contracts that could see the country become the largest producer ever. Of the 18 firms that formed winning consortiums for 11 oil development deals over the past year, only two were American companies. Yet the U.S. military presence in Iraq and the State Department has been ordered to help. “U.S. government policy at this time is that the USG in Iraq should assist in facilitating the mobilization of these companies without regard to the nationality of the companies,” said Kenneth Thomas, head of the energy and transportation section of the Basra Provincial Reconstruction Team, a U.S. Embassy initiative. “If more American companies come into Iraq, we will of course assist them in any way we can.” For the Americans – and the British, who maintain a consulate on the base and rent space to the two British oil companies awarded deals – it’s a hyper-inclusive distillation of their goals around the globe: sow peace through the free market.
