North American Investment Grade CDS Index 109.95 bps +2.20%
European Financial Sector CDS Index 121.54 bps +7.82%
Western Europe Sovereign Debt CDS Index 143.35 bps +4.84%
Emerging Market CDS Index 234.60 bps +.92%
2-Year Swap Spread 18.0 unch.
TED Spread 18.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .15% unch.
Yield Curve 212.0 +2 bps
China Import Iron Ore Spot $147.50/Metric Tonne +.34%
Citi US Economic Surprise Index -59.0 unch.
10-Year TIPS Spread 1.60% +1 bp
Overseas Futures:
Nikkei Futures: Indicating -24 open in Japan
DAX Futures: Indicating +14 open in Germany
Portfolio:
Slightly Higher: On gains in my Retail and Tech long positions
Disclosed Trades: None
Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is just mildly bearish as the S&P 500 is trading well off its lows despite a sharp euro decline, rising cds and weakness in overseas stocks. On the positive side, Utility, Internet, Software, Disk Drive, Networking and I-Banking stocks are especially strong, rising .5%+. Tech shares have outperformed throughout the day again, with the MS Tech Index rising +1.0%. The Libor-OIS and TED spreads continue to trend lower. The 10-year yield is rising +4 bps to 2.61%. The S&P GSCI Ag Spot Index is rising another +.58%. Oil continues to trade poorly. Another downleg lower in the commodity is likely over the coming weeks. On the negative side, Education, Medical Equipment, Telecom, Coal, Alt Energy, Oil Tanker, Energy, Oil Service, Gold and Steel shares are especially weak, falling more than 1.0%. Cyclicals are underperforming. The European Investment Grade CDS Index is rising +3.11% to 105.66 bps. The Spain sovereign CDS Index is rising +5.0% to 227.2 bps, the Greece sovereign cds is gaining +3.2% to 896.67 bps and the Ireland sovereign cds is rising +4.79% to 297.45 bps. The major averages remain somewhat resilient given the news over the last few days. The recent outpeformance by the tech sector is also a positive for the broad market. However, the recent surge in key credit default swap indices is troublesome. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain-hunting and buyout speculation.
Banks Lead Increase in European Bond Risk on U.S. Economy 'Double Whammy'. Banks led an increase in the cost of insuring against default on corporate bonds as investors bet slowing U.S. growth will hurt Europe’s recovery. The Markit iTraxx Financial Index of credit-default swaps on the senior debt of 25 European banks and insurers rose 5.5 basis points to 136.5, heading for a third weekly increase, according to JPMorgan Chase & Co. at 11 a.m. in London. “All the data point to a slowdown in the U.S., and the Philly Fed points to a much stronger slowdown, even in negative territory,” said Philip Gisdakis, a Munich-based strategist at UniCredit SpA. “We are concerned that neither the European economy, nor European credit markets can decouple from these developments.” The Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings increased 12 basis points to 511 and the investment-grade Markit iTraxx Europe Index of 125 companies climbed 3.75 basis points to 114.75, JPMorgan prices show.
Oil Trades Near 6-Week Low as U.S. Jobless Claims Prompt Recovery Concerns. Crude oil fell to a six-week low as rising U.S. jobless claims bolstered concern that the economic recovery in the biggest oil-consuming nation is faltering. Oil slipped as much as 1.7 percent a day after the Labor Department said weekly claims for unemployment benefits climbed to the highest level since November. Total U.S. inventories of crude and fuel reached the highest level since at least 1990 last week, according to an Energy Department report on Aug. 18. “We took out our recent lows because of more bad U.S. economic news,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “Inventories are at 20-year highs, and the prospects for demand growth are fading. Prices are still too high given the fundamentals.” U.S. gasoline demand was little changed in July as high unemployment and increasing prices curbed consumption, according to the American Petroleum Institute. Total deliveries of the fuel averaged 9.257 million barrels a day last month, compared with 9.26 million in July 2009, the industry-funded group reported today. It was the second-lowest July demand number since 2003.
Euro Drops to Five-Week Low Versus Dollar as Weber Cites ECB Liquidity Plan. The euro fell to the lowest level in five weeks against the dollar after European Central Bank council member Axel Weber said the region’s economy may need help from the central bank through the end of the year. The shared currency dropped to the least since July 1 versus the Swiss franc after Weber told Bloomberg Television the ECB should assist banks to prevent year-end liquidity tensions. “They’re interpreting the comments as suggesting there is more ambiguity about how the ECB will respond down the road,” said Steven Englander, head of Group of 10 currency strategy at Citigroup Inc. in New York. “They’re nervous that the pragmatism may disappear down the road and that is generating that move in the euro.” The euro fell 1.1 percent to $1.2683 as of 10:36 a.m. in New York, after touching $1.2673, the weakest since July 13.
The Lockerbie Bomber and Scotland's Disgrace. A political stunt freed a mass murderer and brought needless grief to many in the U.S. Today in Tripoli, one year after his release from a Scottish jail, Abdelbaset Ali Megrahi is a free man. This is a scandal that cruelly taunts the bereaved of Lockerbie and outrages decent opinion within the United States, where most of his 270 victims came from.
ShoreBank Managers Ready if Seized. Chicago Bank with Obama Ties Could Be Closed by FDIC; Executives Could Buy Some Assets. A consortium of the biggest U.S. banks has agreed to support the bid with $125 million to $150 million, these people said. If ShoreBank is closed, the Federal Deposit Insurance Corp. would strip out the bad loans and sell the clean assets to the bank-backed management team.
Textbooks Up Their Game. Inkling Adapting College Best Sellers for iPad, Capitalizing on Interactive Features.
CNBC:
Mortgage Bailout: Government Spin Accelerates. I don't envy the folks over at Treasury and HUD who, month after month, are forced to report lackluster statistics on the Administration's mortgage bailout and find something positive to say about them. Unfortunately they painted themselves into a corner by inventing a "Housing Scorecard" this summer, which only forces them to report more troubling numbers.
MarketWatch:
Irish, Peripheral Euro-Zone CDS Spreads Widen. The spread on five-year Irish CDS widened to 295 basis points from 275 on Thursday, according to data provider Markit. Markit said the Irish spread has never seen 300 basis points. The Greek CDS spread widened 30 basis points to 835, while Spain widened 10 basis points to 223, Portugal widened 10 basis points to 275 and Italy widened 13 basis points to 201.
New York Post:
Goldman's(GS) Glowing. Bank's commodities business to deliver uranium. Goldman Sachs is about to go nuclear. The gold-plated investment bank, run by CEO Lloyd Blankfein, is making a concerted push into the delivery of uranium for the first time, adding to its high-powered commodities platform. The vaunted investment bank is predicting a big boom in the development of a new generation of nuclear-powered plants -- fueled by uranium -- over the next several years. Goldman has spent years building up its commodities platform, which trades energy derivative contracts. It also owns subsidiaries that buy and sell the physical commodities, such as oil and natural gas, that are the basis for those contracts. Russia has expressed a strong appetite for uranium stockpiles. Recently, state-owned nuclear company ARMZ acquired a 50-percent stake in Canadian uranium mining company Uranium One for $610 million.
Price Hikes in Fa$hion Next Year. Every day, the general manager of the Umgee USA apparel brand receives price quotes from the Chinese vendors who stitch his trendy dresses and tops, which end up at stores from Forever 21 to Macy's. "Some of it is more expensive over there!" said Stan Park. "Every day I get an e-mail from China saying 'This costs so and so.' It's just not worth it." Park and others have solved the problem of rising sourcing costs from China by making much of their product domestically in hubs like Los Angeles. But for larger brands that require the big volume that only China can supply, rising prices are a reality. "Apparel prices are going to go up. It's as simple as that," said Perry Ellis Chief Executive George Feldenkreis, who said a rise of up to 10 percent will be seen next year. "The American consumer will have to accept it." That is hard to swallow for retailers big and small, who have been battling erratic sales trends this year amid high unemployment and lingering financial insecurity.
Paulson Protege Pellegrini to Return Outside Money. Paolo Pellegrini, the former Paulson & Co. portfolio manager credited with the hugely successful subprime mortgage investment strategy that put that firm on the map, plans to return outside capital in his hedge fund, just 10 months after opening that vehicle to investors. In a letter to investors today, Pellegrini said he decided to stop managing outside money because of the “additional work” required on the fund due to his bearish outlook on the economy. So far, that strategy has not proven nearly as profitable as the one that helped earn Paulson triple-digit returns in 2007. The PSQR fund lost 3.16% in the first half. “While my views on global economies haven’t changed, I’ve concluded that substantial additional work is required to position the Fund to profit consistently from those views,” Pellegrini wrote. He said that, if he accepts outside capital into the fund again, he would honor current investors’ high-water marks.
TechCrunch:
Industry Insiders Say Online Video Advertising Is Reaching a "Frenzy Point". With the flood, comes the feast. Advertising dollars are pouring into online video. Some of the largest online video ad networks are seeing revenue growth accelerating this quarter, and expect the fourth quarter to be even bigger. “Last year we grew 40%, this year we are growing 90%,” says Keith Richman, CEO of Break Media. He expects Break’s total revenues in the third quarter, which include more than just video advertising, to be well above $10 million for the first time. Tremor Media, which is one of the largest video ad networks and second only to Hulu in the number of video ads it serves, is also seeing a doubling of ad revenues. “It has reached a frenzy point over last three quarters.” CEO Jason Glickman tells me. “We see television dollars moving to online video,” he declares.
The Sacramento Bee:
Schwarzenegger Budget Plan Would Borrow From CalPERS. Gov. Arnold Schwarzenegger has privately proposed borrowing $2 billion from the state's giant pension fund to help bridge California's $19 billion budget deficit. The plan would take the money as an advance against future savings from pension cuts, according to sources close to the negotiations who would not be identified because of the sensitive nature of the talks.
Rasmussen Reports:
Reid Now Nearly Tied With Pelosi In Terms of Unfavorability. In addition to becoming competitive in his bid for reelection in Nevada, Senate Majority Leader Harry Reid is now nearly tied with House Speaker Nancy Pelosi when it comes to unpopularity among voters nationwide. A new Rasmussen Reports telephone survey of Likely Voters across the country finds that 56% have at least a somewhat unfavorable opinion of Reid, while 59% feel the same way about Pelosi. The good news for Reid that these figures include 47% with a Very Unfavorable opinion of Pelosi, while just 38% hold a Very Unfavorable opinion of him. Twenty-six percent (26%) have a favorable opinion of the Nevada Democrat, but that includes just five percent (5%) with a Very Favorable view. Thirty-four percent (34%) regard the San Francisco congresswoman favorably, with 13% Very Favorable toward her.
BofA(BAC) and Visa(V) to Test Cell Phone Payments. Bank of America Corp, the largest U.S. consumer bank, and Visa Inc, the world's largest payment processor, plan to begin a test program next month that lets customers use smartphones to pay for purchases in stores. The program, to run from September through the end of the year in the New York area, is the biggest step yet by the two companies toward creating a "digital wallet" with a host of financial capabilities built into the latest, most sophisticated mobile phones.
Financial Times:
Sinochem Pays 'Close Attention' to Potash(POT). Sinochem, the Chinese-state owned chemical group, said on Friday it would “pay close attention” to BHP Billiton’s $39bn hostile bid for PotashCorp, and added that it was “interested in overseas potash investment opportunities”. The comments by Li Qiang, spokesman for Sinochem, are the first signs of interest from Beijing. Rival interest from China in the Canadian fertiliser company is expected to disrupt BHP’s bid, which so far is uncontested at $130 per share. Mr Li told the Financial Times that Sinochem and PotashCorp had a relatively good co-operative relationship. “We are very attentive to what happens to them,” he said, declining to comment on whether the Chinese group could launch a counter bid. “We have heard these market rumours, but we cannot make a comment on them.” Sinochem, China’s fourth-largest oil and gas company, has been on a buying spree. The group spent $3bn on a stake in a Brazilian oilfield in May and acquired UK-listed Emerald Energy for $875m last year. It also launched a $2.3bn takeover bid for Australian fertilizer company Nufarm, last year although the deal failed.
Le Figaro:
France's finance ministry is working on the hypothesis that the country's GDP growth in 2011 will be about 2%. That compares with the government's current forecast for growth of 2.5%.
Fuel Supplies Hitting Two-Year High May Send Oil Below $70: Energy Markets. The biggest U.S. petroleum stockpiles in two decades are leading oil bears to predict further price declines that may lead OPEC to restrict production. Inventories of oil and fuel products rose to 1.13 billion barrels last week, the highest level since the Energy Department began keeping combined weekly data in January 1990, according to a report Aug. 18. Oil has fallen 9.8 percent since reaching a three-month high on Aug. 3. The U.S. economic recovery is showing increasing signs of slowing growth and demand for fuel products has declined 6 percent to 19.7 million barrels a day since the recession began in December 2007, according to the Energy Department. Oil may fall below $70 a barrel in coming months for the first time since June, according to Michael Lynch, president of Strategic and Economic Research in Winchester, Massachusetts. The declines may prompt OPEC to clamp down on members exceeding their quotas, said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London. Inventories of distillate fuel, which include diesel and heating oil, jumped to their highest levels since 1983, climbing 1.07 million barrels to 174.2 million. “That’s what has been keeping a lid on prices,” said London-based Wittner. “We are a full year into the recovery from recession and stocks are still as high as they were a year ago.” Crude supplies were 3 percent higher last week from a year earlier. OPEC cut production by the most in its 50-year history at the end of 2008 when it lowered targets by 4.2 million barrels a day, capping output at 24.845 million. Compliance with the cut weakened in July as Nigeria and the United Arab Emirates pumped more, according to International Energy Agency data. The 11 members with quotas increased production by 190,000 barrels a day to 26.8 million last month, implying compliance of 53 percent, the Paris-based IEA said in an Aug. 11 monthly report, down from 72 percent a year earlier. Supplies from all 12 nations, including Iraq, grew by 220,000 barrels a day to average 29.2 million. Distillate stocks in the U.S. will continue to rise as nations in European economic growth falters, Lynch said. “Distillate has not been this high in years, especially seasonally, reflecting essentially the downturn and the fact that diesel-fuel use has plummeted around the world,” he said. “We usually ship it to Europe and elsewhere, but they have huge inventories now too.”
Russia Opening Iran Nuclear Plant Advances Goal to Play Power-Broker Role. Russia will switch on Iran’s first nuclear power plant tomorrow as the government seeks to bolster its global influence by acting as a power broker between the U.S. and its European allies and the Persian Gulf nation. Rosatom Corp., the state-run Russian company building the plant at Bushehr in southern Iran, plans to open it after repeated delays over 15 years of construction. Iran, under United Nations sanctions because of concern it is concealing a nuclear weapons program, will become the first Middle East country to produce atomic energy when Bushehr goes online. “As long as there’s an Iran problem, the West will need Russia,” said Rajab Safarov, head of the Center for Contemporary Iranian Studies in Moscow. “And Russia will feel like an important geopolitical player.”
BP(BP) Refuses Requests for Documents, Transocean Says. BP Plc fired back at Transocean Ltd. in a dispute over the withholding of information about possible causes of the Gulf oil spill. James Neath, BP’s associate general counsel, said an Aug. 18 letter from a Transocean attorney asserting BP wasn’t releasing critical data contained “many false and misleading assertions.” “Given its content and tone, your letter is nothing more than a publicity stunt evidently designed to draw attention away from Transocean’s potential role in the Deepwater Horizon tragedy,” Neath wrote Steven Roberts, the Transocean attorney, in a response yesterday.
August M&A Augurs Revival as Companies Tap $3 Trillion of Cash. Companies sitting on almost $3 trillion in cash are starting to spend it, putting what is typically the slowest month for mergers and acquisitions on course to be the busiest this year. Intel Corp.’s purchase of security-software maker McAfee Inc. yesterday brings the total value of announced takeovers to $174.7 billion, setting the pace for August to surpass March as the biggest month for deals this year, according to data compiled by Bloomberg.
Wall Street Journal:
Potash(POT) Explores Other Bidders. Potash Corp. of Saskatchewan Inc., the target of a hostile $38.6 billion bid from BHP Billiton, is exploring alliances with an array of global companies—from petrochemical and agri-business multinationals to Chinese sovereign banks—that could cobble together competing offers, people familiar with the matter said. Sovereign wealth funds, Chinese banks or other national financial institutions could provide the funding for a global consortium that makes a counter-offer to keep the world's largest fertilizer maker out of the hands of mining giant BHP, these people said.
Giuliani Says Mosque 'Divisive'. Former Mayor Rudy Giuliani is characterizing the proposed mosque and Islamic cultural center near Ground Zero as "divisive," saying Thursday that the organizers' plans are breeding hate rather than healing wounds. "All this is doing is creating more division, more anger, more hatred," Mr. Giuliani said during an interview on NBC's "Today" show. "The reality is that right now, if you are a healer, you do not go forward with this project. If you're a warrior you do," declared Mr. Giuliani, the New York official most closely associated with the Sept. 11, 2001, terrorist attack on the World Trade Center. The remarks put him squarely at odds with his successor, Mayor Michael Bloomberg, the proposed mosque's most outspoken advocate. Mr. Giuliani, a former U.S. attorney and a Republican candidate for president in 2008, said the organizers have "every right" to build the center two blocks from the site of the fallen Twin Towers. "The question is, should they build it?" he said. "Are they displaying the sensitivity they claim by building it?" Mr. Giuliani, who served as mayor from 1994 through 2001, argued that the project, if built, would "horribly offend" the people most directly affected by the terrorist attacks: the families of the victims. He also took direct aim at the imam behind the center, Feisal Abdul Rauf, accusing him of "selling sensitivity" and questioning whether his motives are genuine.
U.S. Presses China on Pakistan Flood Aid. The U.S. has increased its aid commitment to flood-ravaged Pakistan to $150 million from $90 million, Secretary of State Hillary Clinton told the United Nations General Assembly on Thursday, as Richard Holbrooke, the U.S. special envoy to Pakistan and Afghanistan, called on China to do more. "I think the Chinese should step up to the plate," Mr. Holbrooke told a small group of reporters after an event at the Asia Society in New York designed to draw attention to the devastating floods. "They always say that Pakistan is their closest ally, and vice versa."
Emerging-Market Hedge Funds Saw $1.5 Billion in 2Q Outflows - Research Firm. Hedge funds that invest in emerging markets recorded net outflows of $1.5 billion during the second quarter of this year, marking the seventh quarter of net redemptions the group has seen in the last eight quarters, an industry research firm said Thursday.
A Year On, Bomber's Release Spurs Calls. U.S. senators ratcheted up pressure on the Scottish government over its decision to release the convicted Lockerbie bomber one year ago Friday, sending letters to U.K. and Scottish leaders demanding an array of medical, legal and diplomatic documents related to the release. The request marked the strongest and most specific U.S. call for documents following the Aug. 20, 2009, release of Abdel Baset al-Megrahi, the only person convicted of the 1988 bombing of a Pan Am airliner as it flew over the Scottish town of Lockerbie.
CNBC:
Housing Double Dip Is Not Just Tax Credit Hangover. You need only look at a report today from California-based MDA Data Quick, headlined, "Bay Area July Home Sales Down Sharply." Sales in San Francisco in July fell to the lowest level in 15 years, down 19 percent from June and down nearly 23 percent from July of 2009. It was also one of the largest monthly drops recorded. Blame it on the end of the tax credit? I don't think so.
Hewlett-Packard(HPQ) Earnings, Revenue Match Expectations. Hewlett-Packardreported a quarterly profit that rose from last year and was in line with preliminary results that the company announced earlier this month, as server and personal computer sales helped results. For fiscal 2010, HP repeated its forecast from two weeks ago, predicting non-GAAP earnings of $4.49 to $4.51 a share on revenue of $125.3 billion to $125.5 billion. "It's a great quarter coming off an awful quarter last year," said Martin Reynolds, an analyst at Gartner. "Revenues are down from the second quarter, which certainly suggests the recovery trajectory is slowing. "Looking ahead, they're going to start running against tougher comparisons and potential currency pressures, so we're cautiously optimistic for the second half of the year. Although there are troubling signs, we think the technology industry will remain robust," Reynolds said. HP shares were less than 1 percent lower in extended trading Thursday.
Dell's(DELL) Results Beat Forecasts, But Gross Margin Falls. Dell beat Wall Street's profit and revenue estimates in the second quarter and said it expected demand for PCs among corporate customers to remain steady in the coming months. But the company's gross profit margin lagged Wall Street expectations and its shares fell in after-hours trading. During a conference call with the media on Thursday, Dell Finance Chief Brian Gladden said the results were impacted by "sequential component inflation."
U.S. is Said to Assure Isreal a Nuclear Iran Isn't Imminent. The Obama administration, citing evidence of continued troubles inside Iran’s nuclear program, has persuaded Israel that it would take roughly a year — and perhaps longer — for Iran to complete what one senior official called a “dash” for a nuclear weapon, according to American officials. White House officials said they believe the assessment has dimmed the prospect that Israel would pre-emptively strike against the country’s nuclear facilities within the next year, as Israeli officials have suggested in thinly veiled threats.
Hefty Paychecks for Vernon Officials Rival Those in Bell. The ex-city administrator who now serves as a legal consultant earned seven figures in each of the last four years, records show. Others in Bell's neighboring city got $570,000 to $800,000 last year. Bell isn't the only city that has paid huge salaries: In neighboring Vernon, a former city administrator who now serves as a legal consultant has topped the $1-million mark for each of the last four years, records show. Eric T. Fresch was paid nearly $1.65 million in salary and hourly billings in 2008, when he held the dual jobs of city administrator and deputy city attorney, according to documents obtained by The Times through the California Public Records Act. Described by city officials as an experienced finance attorney, Fresch was paid nearly $1.2 million last year, records show. Through July 31 of this year, he has earned about $643,000 as "outside legal counsel." Other highly compensated employees include Donal O'Callaghan, who was paid nearly $785,000 last year as city administrator and director of light and power, overseeing Vernon's city-owned utility. He now earns $384,000 a year overseeing capital projects for the utility after stepping down July 20 as city administrator. Former City Atty. Jeffrey A. Harrison earned $800,000 last year and City Treasurer/Finance Director Roirdan Burnett made $570,000, records show. The year before, Harrison was paid $1.04 million. Disclosure of Vernon's hefty salaries follows The Times' recent report that Robert Rizzo reaped total annual compensation of more than $1.5 million as city administrator in working-class Bell. That report sparked public outrage among Bell residents and prompted the resignations of Rizzo and two other highly paid managers. Although Vernon and Bell share a border in Southeast Los Angeles County, they are very different cities. Bell is a working-class, largely immigrant city with 38,000 residents. Vernon has fewer than 100 residents and is largely a business and industrial hub. But municipal government experts said they were taken aback Thursday by word of Vernon's big paychecks.
Rasmussen Reports:
Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 26% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-four percent (44%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -18 (see trends).
Politico:
Dems Retreat on Health Care Cost Pitch. Key White House allies are dramatically shifting their attempts to defend health care legislation, abandoning claims that it will reduce costs and deficit, and instead stressing a promise to "improve it." The messaging shift was circulated this afternoon on a conference call and PowerPoint presentation organized by FamiliesUSA — one of the central groups in the push for the initial legislation. The call was led by a staffer for the Herndon Alliance, which includes leading labor groups and other health care allies. It was based on polling from three top Democratic pollsters, John Anzalone, Celinda Lake, and Stan Greenber. The confidential presentation, available in full here and provided to POLITICO by a source on the call, suggests that Democrats are acknowledging the failure of their predictions that the health care legislation would grow more popular after its passage. The presentation concedes that groups typically supportive of Democratic causes — people under 40, non-college educated women, and Hispanic voters — have not been won over by the plan. "Straightforward ‘policy’ defenses fail to [move] voters’ opinions about the law," says one slide. "Women in particular are concerned that health care law will mean less provider availbality – scarcity an issue." The presentation also concedes that the fiscal and economic arguments that were the White House's first and most aggressive sales pitch have essentially failed. "Many don’t believe health care reform will help the economy," says one slide. The presentation's final page of "Don'ts" counsels against claiming "the law will reduce costs and deficit." The presentation advises, instead, sales pitches that play on personal narratives and promises to change the legislation. "People can be moved from initial skepticism and support for repeal of the law to favorable feelings and resisting repeal," it says. The presentation also counsels against the kind of grand claims of change that accompanied the legislation's passage. The Herndon Alliance, which presented the research, is a low-profile group which coordinated liberal messaging in favor of the public option in health care. Its "partners" include health care legislation's heavyweight supporters: The AARP, AFL-CIO, SEIU, Health Care for America Now, MoveOn, and La Raza, among many others.
USA Today:
More Offices See Bedbug Infestations. Your abusive boss isn't the only vermin in the office. Defying their reputation as a scourge of households, blood-sucking bedbugs are creeping into a growing number of cubicles, break rooms and filing cabinets. Nearly one in five exterminators have found bedbugs in office buildings in the U.S., according to a recent survey of extermination firms by the National Pest Management Association and the University of Kentucky. That compares with less than 1% in 2007.
Reuters:
More Tough Economic Times Forecast by CBO. The U.S. economy faces difficult times ahead with chronic unemployment and slow manufacturing hurting the pace of recovery, the head of Congress' budget agency said on Thursday. The warning from the non-partisan Congressional Budget Office came on top of more bad U.S. economic data that heightened concerns about a return to recession, roiling markets. The gloomy outlook could also spell trouble for Democrats facing November congressional elections.
Sharp to Cut LCD Panel Production - Nikkei.Sharp Corp (6753.T) will reduce LCD panel production for up to two months starting this month, adjusting supplies as TV inventories pile up in the United States and China, the Nikkei business daily reported. The company will lower the capacity utilisation rate by 20 to 30 percent at its new Sakai factory, which makes panels of 40 inches and up, and cut panel supplies to TV makers including Sony Corp (6758.T), the business daily said.
Salesforce.com(CRM) Raises Full Year Outlook. Salesforce.com Inc on Thursday posted a better-than-expected quarterly profit and raised its full-year outlook as more clients signed up for cloud-based computing services. Shares of the company rose 7.9 percent in after-hours trading as it also reported adding 5,100 net new customers in the quarter.
Telegraph:
Greek Crisis Refuses To Go Away. The European Commission has approved the next €9bn (£7.4bn) tranche of loans for Greece but the underlying economy continues to deteriorate as Greek banks suffer a record loss of deposits and output contracts at a quickening pace. A report by HSBC said banks had lost 8pc of their entire deposit base in the five months to May. "The Greek market has never, since the first data in 2001, experienced such attrition," said banking analyst Joanna Telioudi. While some withdrawals point to capital flight by wealthy Greeks, it is clear that households and companies are running down savings to make ends meet. The Athens Chamber of Commerce warned yesterday that its members are in "dire straits", with a majority facing a liquidity threat. Simon Ward from Henderson Global Investors said Greek lenders are covering their funding gap through loans from the European Central Bank (ECB), which reached a record €96bn in July. "The question is how much eligible collateral they have left to take to the ECB. It must be nearing the limits," he said. "What is worrying is that this is not just Greeks. Portuguese banks borrowed €50bn in July compared to €41.5bn in June. Together with Ireland and Spain they have borrowed €387bn from the ECB," he said. Spreads on 10-year Greek debt rose to 835 basis points over German debt. They are trading once again at the crisis levels of early May, before the EU launched its "shock and awe" rescue and the ECB began purchasing Greek bonds. Stephen Lewis, of Monument Securities, said investors doubt whether the EU/IMF plan is workable without debt restructuring and devaluation, the usual IMF cure for countries with such problems. IMF documents show that Greece's public debt will rise to 150pc of GDP after three years, even if the government complies fully. "The markets suspect that Greece will have to restructure its debt sooner or later, and bondholders will be the losers. They don't believe that Greece's euro membership on present terms is economically viable. The country doesn't have the freedom it needs to get out of this crisis," he said. Ian Stannard, a currency strategist at BNP Paribas, said investors have been unsettled by news that Spain is planning to soften its austerity package by renewing €500bn of rail and road projects. "The fear is that if Spain backtracks, then others like Greece are going to follow. This is creeping on to the radar screen," he said. Mr Stannard said a report on Greece by Spiegel magazine entitled "Entering a Death Spiral" revived worries about political stability, painting a picture of a country nearing popular revolt. It said unemployment had reached 60pc to 70pc in depressed areas. "The entire country is in the grip of a depression," said Speigel. "Everything seems to be going downhill. The spiral is continuing unabated and there is no clear way out." The risk is that country finds itself chasing its tail, trying to sustain a rising stock of debt on a diminishing base. Critics suspect that Greece has already passed the point of no return for debt dynamics, and some IMF officials privately agree. Willem Buiter, chief economist at Citigroup, said it remains unclear whether eurozone debtors can recover amidst severe fiscal tightening. "Europe's underlying problems have not been resolved. Medium-term worries over sovereign credit quality in periphery countries will probably resurface in coming months," he said.
The Standard:
A representative of China's government told Hong Kong journalists that the media should put helping the government ahead of monitoring its performance during times of national crisis, such as war, riots and severe natural disasters.
China Daily:
China's Ministry of Finance and the Banking Regulatory Commission said in a joint statement on Thursday that risks in loans to local government bodies will not cause systemic risk to the banking system.
Xinhua:
China's rapidly aging population threatens the sustainability of China's health-insurance fund, citing Hu Xiaoyi, vice minister of the Ministry of Human Resources and Social Security. While retirees accounted for 25% of the total population covered by health insurance for urban workers in 2009, they used 60% of health-insurance funds for inpatient care.
China should watch inflation pressures in the second half of this year, Guo Tianyong, head of banking research at the Central University of Finance and Economics, wrote in a commentary.
Oriental Morning Post:
Shanghai's public housing fund has stopped loans for third-home purchases.
Securities Times:
Chinese banks may need to take a 600 billion yuan provision on bad local government loans, the Securities Times reported, citing its own calculations based on figures announced by the government.
liveMint.com:
India Testing Ways to Access BlackBerry Emails. India’s security agencies are testing ways to access corporate email on BlackBerry devices by obtaining encrypted data in a readable format, a government source said on Thursday. Research In Motion (RIM) faces an 31 August deadline to give Indian authorities the means to track and read BlackBerry enterprise email and its separate BlackBerry messenger service.
Evening Recommendations Citigroup:
Reiterated Buy on (FL), target $19.
Reiterated Buy on (SPLS), target $26.
Reiterated Buy on (MRVL), target $23.
Reiterated Buy on (TECD), target $54.
Night Trading
Asian equity indices are -1.50% to +.25% on average.
Asia Ex-Japan Investment Grade CDS Index 122.0 +2.0 basis points.
Asia Pacific Sovereign CDS Index 119.5 +4.25 basis points.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 75% net long heading into the day.
