North American Investment Grade CDS Index 103.0 bps -.82%
European Financial Sector CDS Index 102.69 bps +1.22%
Western Europe Sovereign Debt CDS Index 119.66 bps -.38%
Emerging Market CDS Index 208.67 bps -1.22%
2-Year Swap Spread 20.0 unch.
TED Spread 27.0 unch.
Economic Gauges:
3-Month T-Bill Yield .14% unch.
Yield Curve 228.0 -3 bps
China Import Iron Ore Spot $144.50/Metric Tonne unch.
Citi US Economic Surprise Index -33.0 -.1 point
10-Year TIPS Spread 1.79% +1 bp
Overseas Futures:
Nikkei Futures: Indicating +63 open in Japan
DAX Futures: Indicating +9 open in Germany
Portfolio:
Higher: On gains in my Retail, Biotech and Technology long positions
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 is trading near session highs, despite the decline in the euro and recent stock gains. On the positive side, Airline, Homebuilding, Wireless, Internet, Restaurant and Gaming stocks are especially strong, rising 1.5%+ on the day. Small-Cap shares are outperforming. (IYR) has outperformed throughout the day. Copper continues to trade well, rising another +.6%. On the negative side, Tobacco, Computer, Gold, Ag, Oil Service, Oil Tanker and Coal shares are slightly lower on the day. The 10-year yield is hovering near recent lows, which is a negative. Volume is very light today, however it is a big positive that expectations regarding any significant FOMC move tomorrow have been ratcheted down, yet stocks are at the upper end of their recent trading range. One of my longs, (VRX), is hitting another new all-time high today. While I still see substantial upside to the shares longer-term, I would wait for a pullback to purchase additional shares. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, technical buying, less financial sector pessimism and mostly positive earnings reports.
McDonald's(MCD) July Sales Rise 7%, Topping Estimates. McDonald’s Corp. said comparable- store sales climbed 7 percent last month from a year earlier, the most in more than a year, fueled by U.S. and Asian sales at the world’s largest restaurant chain. Analysts projected global sales would advance 5.1 percent, the median of three estimates compiled by Bloomberg. Sales at restaurants open at least 13 months rose in all regions, with a 5.7 percent increase in the U.S. and a 10 percent gain in Asia, Africa and the Middle East.
Structured Notes Are Wall Street's 'Next Bubble,' Whalen Says. Wall Street banks are creating the “next investment bubble” by selling opaque and unregulated structured notes to investors hunting for yield, according to Christopher Whalen, managing director of Institutional Risk Analytics. Using the same “loophole” that allowed over-the-counter sales of collateralized debt obligations and auction-rate securities, firms are pitching illiquid structured notes whose value is partly derived from bets on interest rates, Whalen wrote today in a report. Whalen, who predicted the collapse of the mortgage-backed securities market in March 2007, said that these structured notes “promise enhanced yields that go well into double digits” and “often come with only minimal disclosure.”
Euro May Stall Against the Dollar, BNP Says: Technical Analysis. The euro may be unable to sustain gains against the dollar after it failed to break through a key Fibonacci resistance level ahead of economic data being released across Europe this week, according to BNP Paribas SA. “The key resistance level will be $1.3325,” Mary Nicola, a currency strategist at BNP, wrote in an investor note today. “The euro continues to test the level due to broad dollar weakness. However, it is unable to rally above the $1.33 level for too long.”
Morgan Stanley Group's(MS) $11 Billion Makes Chicago Taxpayers Cry. Chicago drivers will pay a Morgan Stanley-led partnership at least $11.6 billion to park at city meters over the next 75 years, 10 times what Mayor Richard Daley got when he leased the system to investors in 2008. Morgan Stanley, Abu Dhabi Investment Authority and Allianz Capital Partners may earn a profit of $9.58 billion before interest, taxes and depreciation, according to documents for a $500 million private note sale by their Chicago Parking Meters LLC venture. That is equivalent to 80 cents per dollar of projected revenue. Standard Parking Corp., which runs 30,000 spaces at the city’s O’Hare and Midway airports, earned 4.84 cents on that basis last year, data compiled by Bloomberg show.
HP(HPQ) Drops as Hurd Quits, Leaving Lesjak Slowing Growth. Hewlett-Packard Co. slid the most in three months in New York trading following the Aug. 6 resignation of Chief Executive Officer Mark Hurd, who leaves behind a company with slowing growth and a senior staff that may be distracted by jockeying for the top job.
California Demands Data on City Manager Paid $800,000. California Attorney General Jerry Brown said he expects legal action in “weeks, not months” after subpoenaing personal financial records of present and former officials of Bell, the Los Angeles suburb that paid its city manager almost $800,000 a year.
Google(GOOG), Verizon(VZ) Release Internet Proposal. Google Inc. and Verizon Communications Inc. on Monday released a joint proposal stating that wireline broadband providers shouldn't be able to discriminate against lawful Internet content providers and that the regulators should have authority to stop offenders.
U.S. Incomes Tumbled in 2009. Personal income took a hit in most of the U.S. last year with the only gains coming from government support, according to new data from the Commerce Department.
Bloomberg Businessweek:
North Korea Fires Artillery Off West Coast, Raising Tensions. North Korea fired artillery into waters off the peninsula’s west coast and near the border with South Korea today, after the communist country threatened to retaliate against military exercises involving the U.S. Navy. North Korea fired at least 110 shells between 5:30 p.m. and 6:14 p.m. local time, a defense ministry official in Seoul said, confirming a television report by YTN. The artillery fell into the North’s waters and no South Korean casualty was reported, said the official, who declined to be named because of ministry policy. South Korea’s navy heightened its combat-readiness, the official said.
CNBC:
Raid By NY Law Firm Points to Coming M&A Boom? A recent raid by one big New York law firm of a team of top acquisition finance lawyers from a rival firm may foreshadow a mergers and acquisitions boom.
In Crackdown on Energy Use, China to Shut 2,000 Factories. The Ministry of Industry and Information Technology quietly published a list late Sunday of 2,087 steel mills, cement works and other energy-intensive factories required to close by Sept. 30.
NY Post:
FCC Readies Comcast(CMCSA) Net Neutrality Trap. He's ba-a-ack! Just months after a stinging rebuke by a federal appeals courts and days after his industry talks on net neutrality collapsed, Federal Communication Commission Chairman Julius Genachowski is once again pushing his pet project -- that Internet providers should be barred from treating some types of Web traffic better than others. This time, Genachowski is zeroing in on making Comcast promise it would never slow certain types of internet traffic as a possible condition of the cable giant's $14 billion pending acquisition of NBC Universal, a source familiar with the FCC's thinking told The Post.
Energy Expert Matthew Simmons Dies in North Haven. Matthew Simmons, an international oil expert who most recently focused on developing renewable energy from the waters off Maine, died Sunday night of an apparent heart attack, his office is reporting. He was 67.
AppleInsider:
Apple(AAPL) Obtains Exclusive Rights to Custom, Super-Durable Metal Alloy. Apple has entered into an exclusive agreement to utilize amorphous metal alloys with unique atomic structures, allowing products that are stronger, lighter, and resistant to wear and corrosion, AppleInsider has learned.
GIZMODO:
SF Parking Meters to Adjust Their Prices Based on Demand. In order to help control the parking situation in San Francisco, the city is set to install smart parking meters that will lower or raise their prices depending on demand. It's a two-year experiment called SFpark, and the prices are going to range from the reasonable 25-cents to the I-should-have-just-taken-a-cab $6.
Rasmussen Reports:
Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 28% 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 -15 (see trends).
58% Oppose Federal Mortgage Forgiveness Plan for Troubled Homeowners. Rumors have circulated that the Obama administration is considering a partial mortgage forgiveness plan to help those who owe more than their homes are worth. Just 28% of U.S. voters favor such a proposal.
Politico:
Rep. Maxine Waters Charged With Three Violations. The House ethics committee released its formal charges against Rep. Maxine Waters (D-Calif.) on Monday, accusing her of three counts of violating the letter and spirit of House rules and federal regulations by assisting a bank in which her husband owned stock. The 10-page "Statement of Alleged Violation" focuses on the actions of Waters and Mikael Moore, who is the congresswoman's chief of staff and her grandson, and tracks very closely with the year-old findings of the independent Office of Congressional Ethics. Waters is accused of improperly intervening on behalf of OneUnited, a minority-owned bank in which her husband held stock worth roughly $350,000.
Regulators Probe Goldman's(GS) Notice About SEC Case. U.S. and British regulators are investigating the timing of Goldman Sachs Group Inc's (GS) disclosure to them that the bank was the subject of a federal civil fraud probe, Goldman said on Monday.
DigitalGlobe, GeoEye Sign Govt Contracts, Shares Soar. Shares of DigitalGlobe (DGI) and GeoEye Inc (GEOY) touched life-time highs on Monday, after the U.S. National Geospatial Intelligence Agency (NGA) awarded about $7.3 billion worth of orders between the two commercial satellite operators.
Financial Times Deutschland:
The European Union wants to raise its own taxes to reduce money transfers from national governments, citing an interview with Budget Commissioner Janusz Lewandowski. The EU will propose in September to raise taxes or fees on air traffic, on financial transactions and on CO2 emissions.
DigiTimes:
Apple(AAPL) to Launch Upgraded iPad with Cortex-A9-based CPU in 2011, Says Digitimes Research. Apple is set launch an upgraded 9.7-inch iPad adopting a new ARM Cortex-A9-based processor and 512MB RAM in the first quarter of 2011. Meanwhile, the company will also launch a 7-inch iPad using the Cortex-A9 processor and an IPS panel with a resolution of 1024×768, according to Digitimes Research senior analyst Mingchi Kuo. As for the CDMA iPhone, Pegatron Technology is expected to start mass production in December and will supply to both US-based Verizon Wireless and China-based China Telecom. The CDMA iPhone's back plate will be forged from metal materials and will feature an integrated antenna, according to Digitimes Research. Verizon is expected to announce the product at CES 2011 and will start shipping in January 2011. The sales ratio of GSM and CDMA iPhones in 2011 is expected to reach 65:35, Digitimes Research out. In addition, Apple is also set to launch a new Apple TV using AMD's Fusion solution and will not include a hard drive. The new device will adopt a user interface similar to the iPhone with support for social networking websites, network multimedia and the App Store. Mass production of the device will start in December, Digitimes Research noted.
China Risks 'Sacrificing' Growth as Energy Curbs Slow Factory Production. China’s growth may have weakened in July as the government shuttered energy- intensive factories, highlighting how environmental goals risk damping industrial outputgrowth just as export orders soften. China is lagging behind a target for reducing the amount of energy used relative to gross domestic product, with only months to run in Premier Wen Jiabao’s five-year plan. Policy makers’ determination to meet the goal may be tested by the need for “sacrificing” growth in an economy that is already cooling, according to UBS AG economist Wang Tao. A harsher campaign of closures of inefficient factories would add to weakness in export orders, illustrated by a third monthly decline in a July index released by the logistics federation. A cooling property market, easing infrastructure investment and credit curbs are also restraining the expansion of the fastest-growing major economy. The energy measures add to the threat of excessive “tightening” by officials, while weakness in external demand poses the biggest near-term risk to growth, according to Ken Peng, an economist for Citigroup Inc. China’s energy used per unit of GDP rose 0.1 in the first six months from a year earlier, making it harder to meet the 2006-10 goal of a 20 percent cut. In the first four years, the reduction was 15.6 percent, according to UBS. “If the government has true resolve, then investors, especially overseas investors, may have not fully comprehended the implications of such policies on China’s heavy industry and demand for commodities,” Beijing-based economist Wang said in a note last month.
U.S. Economy Improving, More Stimulus Isn't the Answer, Rubin, O'Neill Say. The U.S. economy will improve slowly and another round of fiscal stimulus probably wouldn’t be effective, former Treasury secretaries Paul O’Neill and Robert Rubin said. Rubin, who served under Democratic President Bill Clinton, said the U.S. is “going to have slow and bumpy growth,” during a taped interview on CNN’s “Fareed Zakaria GPS” aired today. A “major second stimulus” might create more uncertainty and undermine confidence, he said.
Hedge Funds Raise Bets on Rising Oil Price to 13-Week High: Energy Markets. Hedge funds last week boosted their holdings of crude oil futures and options to the highest level in 13 weeks in a bet that Tropical Storm Bonnie would delay imports to states along the Gulf of Mexico, reducing supplies. Oil jumped 6.5 percent in the week ended Aug. 3 as the funds, along with other large speculators, boosted their long positions in New York Mercantile Exchange contracts by 24 percent to 135,833, the most since May 4, a Commodity Futures Trading Commission report Aug. 6 showed. Hedge funds increased net-long positions, or bets that crude oil will rise, for the fourth straight week, the longest streak since March the CFTC’s weekly Commitments of Traders report showed. “The bullish news is they’re buying it and that’s good for prices,” said Tim Evans, an energy analyst at City Futures Perspective in New York. “The bearish news is that it’s becoming more vulnerable with larger long positions.”
Berkshire Profit Falls as Buffett's Derivative Bets Suffer. Berkshire Profit Falls as Buffett's Derivative Bets Suffer. Warren Buffett’s Berkshire Hathaway Inc. said second-quarter profit declined 40 percent as derivative bets on equity indexes by the billionaire chairman slid amid the retreat of global stocks. Buffett, whose career of stock picking helped him amass the world’s third-largest personal fortune, has accumulated losses for Berkshire on equity derivatives since the 2008 financial crisis. The contracts, which mature starting in 2018, lose value when equity indexes decline. “On the derivatives, we had a problem there in the second quarter,” Bill Bergman, an analyst with Morningstar Inc., said in an interview. “That’s clearly reflected in the bottom line.”
Goldman Sachs(GS) Estimates Derivatives May Provide Up to 35% of Its Revenue. Goldman Sachs Group Inc., which makes more money from trading than any other bank, estimates that 25 percent to 35 percent of its revenue comes from derivatives, a spokesman said. The New York-based firm, whose executives have said that they didn’t know how much of their money came from derivatives, provided the information in response to a request from the Financial Crisis Inquiry Commission, spokesman Lucas van Praag said. Based on the firm’s 2009 revenue of $45.2 billion, the estimate means derivatives may have provided $11.3 billion to $15.8 billion of revenue last year. Goldman Sachs held a gross amount of $49.1 trillion of derivatives contracts as of March 31, according to a June report from the Office of the Comptroller of the Currency. The OCC lists Goldman Sachs among the five banks that together account for 97 percent of the derivatives held by U.S. banks.
Wheat Speculators Slow Bets on Gain After Best Month Since 1973. Wheat speculators slowed their bets on higher prices after the biggest monthly gain in Chicago Board of Trade futures in 37 years, a sign the rally may be peaking, according to Grain Service Corp. Speculators including hedge funds raised their net-long positions in futures and options by 5.3 percent in the week ended Aug. 3, the smallest increase since they turned bullish last month, U.S. Commodity Futures Trading Commission data on Aug. 6 show.
Crash of 2015 Won't Wait for Regulators to Buckle Wall Street Safety Belts. The financial system experiences a crisis “every five to seven years,” JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon told the Financial Crisis Inquiry Commission in January. By that measure, the next crash could come by 2015 -- years before new banking reforms are in place. Many of the measures ordered by Congress and global regulators, aimed at cushioning the financial system in future crises, are years away from being implemented. The Basel Committee on Banking Supervision plans to give the world’s banks until 2018 to comply with limits on how much they can borrow. Parts of the Volcker rule, a provision of the new Dodd-Frank Act that would force firms to cut stakes in in-house hedge funds and private-equity units, may not go into effect for a dozen years. Banks’ appetite for using borrowed money, known as leverage, for investing in complex, illiquid securities contributed to the worst credit crisis since the Great Depression. The pace at which curbs on leverage are likely to be imposed on the industry contrasts with the speed at which banks including and UBS AGMorgan Stanley are hiring to ramp up trading activities. “Based on our experience of government’s ability to execute these things effectively and in a timely way, we are almost uncovered now from any future financial risk for at least another 8 or 10 years, and that’s a little scary,” said Roy Smith, finance professor at New York University’s Stern School of Business and a former banker at Goldman Sachs Group Inc.
North Korea May Have Seized South Korean Fishing Boat Off Peninsula's East. A South Korean fishing boat may have been detained by North Korea off the peninsula’s east coast after the communist country threatened “physical retaliation” against the South’s joint military drills with the U.S. The 41-ton Daeseung has not been in contact since its last communication through satellite phone at 2:35 p.m. local time today that it was being taken away by a North Korean patrol ship, an official at the Korea Coast Guard said by telephone, confirming a Yonhap News report.
Iran Sanctions Make China, Russia Winners While Reliance Loses. Sanctions punishing Iran for its nuclear program are deepening the country’s ties with China and handing Russia opportunities to sell more gasoline while hurting suppliers in Europe and India. Iranian Oil Minister Masoud Mir-Kazemi and Chinese officials pledged for their countries to cooperate more closely in the energy industry during talks in Beijing on Aug. 6, Iran’s government-run Press TV reported. Russia’s state-controlled OAO Rosneft and OAO Gazprom Neft may step up fuel shipments to the Islamic republic this month, the Iran Commission of the Moscow Chamber of Commerce and Industry said in July.
Dubai Brokerages Shutter as Stock Trading Tumbles to 4-Year Low. Stock brokers in the United Arab Emirates are struggling to make ends meet as trading volumes tumble to the lowest in four years, forcing some to close. The number of brokerages in the country may drop to as low as 55 from 81, according to Shuaa Securities LLC, the brokerage unit of the U.A.E.’s biggest investment bank.
HP's(HPQ) Ex-CEO Hurd Said to Settle With Sexual-Harassment Accuser. Hewlett-Packard Co. Chief Executive Officer Mark Hurd reached a settlement last week with a woman who accused him of sexual harassment, releasing HP from responsibility, two people familiar with the matter said. Hewlett-Packard was informed by Hurd’s attorneys that he had settled with the woman, who worked as a contractor for HP between 2007 and 2009, said one of the people, who declined to be identified because the settlement hasn’t been made public. HP didn’t make any payments, one of the people said. Hurd, who had been Hewlett-Packard’s CEO since 2005, resigned Aug. 6 after a company investigation found he violated its standards of business conduct by submitting inaccurate expense reports and concealing his personal relationship with the woman, who has not been identified. HP found that Hurd didn’t violate its harassment policy. The expenses, which ranged between $1,000 and $20,000, were for meals and travel, and Hurd intends to pay back the amount, according to one person familiar with the matter.
Wall Street Journal:
Saudi RIM(RIMM) Pact Lifts Hope of Ending U.A.E Impasse. Saudi Arabia's telecom watchdog and local phone operators reached a preliminary agreement with BlackBerry maker Research in Motion Ltd. over the weekend to use local data servers, said an official at a Saudi-based telecom operator involved in the talks.
Woman in Hurd Case Regrets Dismissal. The woman at the center of the ethics scandal that cost Mark Hurd the top job at Hewlett-Packard Co. identified herself Sunday as Jodie Fisher, a 50-year-old sometime actress whose film credits include "Intimate Obsession" and "Body of Influence 2."
Brands Are Friending Social Gaming. Honda Motors Co. and McDonald's Corp.(MCD) are making a push into social gaming to promote their brands, as Madison Avenue begins to take notice of the latest Web craze that is drawing growing numbers of people to games on social networks.
China Orders Factory Closures. China has ordered 2,087 companies in 18 industries that are highly pollutive and energy intensive, including steel, coal, cement and glass, to shut obsolete capacity as part of Beijing's economic restructuring efforts, the Ministry of Industry and Information Technology said Sunday. China's government has made it clear that overcapacity must be cut, and its weekend warning suggests it is tackling the issue with more urgency. The listed companies must shut obsolete capacity by the end of September or face financial and administrative penalties, such as halts in new project approvals and lending curbs, the ministry said on its website. Most of the companies in the list are small- and medium-sized, and they aren't state-owned, according to the minister.
Regulators Plan First Steps on Credit Rating. U.S. financial regulators this week will take their first steps to replace private credit ratings in their review of bank capital levels, a big step for regulators eager to ensure they are able to accurately assess firms' financial condition. The Federal Deposit Insurance Corp. on Tuesday will lay out a number of options to the use of credit ratings in capital evaluations, part of a joint effort with the Federal Reserve and other federal banking agencies. Among the options being discussed is a greater use of credit spreads, having supervisors develop their own risk metrics and a reliance on existing internal models, according to people familiar with the situation.Agency officials aren't expected to endorse a particular approach and instead plan to encourage input from banks, academics and other regulators.
U.S. to Sell F-15s to Saudis. The proposed $30 billion, 10-year arms package, which would be one of the biggest single deals of its kind, has been a source of behind-the-scenes tension during months of negotiations. Israeli officials have repeatedly conveyed their concerns in private that the U.S. risks undermining its military advantage by equipping regional rivals with top-flight technologies.
Doctors Get Dose of Technology From Insurers. Health-insurance companies including Humana Inc. and Aetna Inc. are stepping into the race to equip doctors with high-tech patient records.
China 'Fear' Gauge Plunges to Lowest Since 2006 on Wen Policy. Chinese stocks volatility fell to the lowest level in almost four years, signaling investors’ “comfort” with the outlook for slowing economic growth, according to AlphaShares Inc. The AlphaShares Chinese Volatility Index, a gauge of investor fear of Chinese stocks, fell to 20.17 on Aug. 5, the lowest since Dec. 15, 2006. The index tracks the implied volatility of options on the Hang Seng Index, the benchmark for Hong Kong stocks, and the FTSE/Xinhua China 25 Index, or FXI, which tracks the nation’s 25 largest companies by market value.
Marketwatch.com:
Chinese Banks Reportedly Face Wave of Bad Loans. China's banks could see as much as 20% of their loans from state-controlled firms go bad, a report said Sunday, even as the nation's banking regulator said non-performing loans were on the decline. Recent stress tests conducted by the China Banking Regulatory Commission (CBRC) showed 20% of all outstanding loans to state-owned companies were "in trouble" as of the end of June, the Japanese business newspaper Nikkei reported, citing an unidentified CBRC official. The report put the total amount of current loans to state-controlled enterprises at 7.7 trillion yuan ($1.14 trillion), meaning 1.54 trillion yuan are in the "problem" category. As a result, the CBRC will order banks to increase their loan-loss provisions, it said.
Wall Street Rewards to Trigger Surge in Informants. New US whistleblowing incentives within the Dodd-Frank financial reform act – that could net informants multimillion dollar pay-outs – are likely to generate a surge in allegations against US-listed companies and Wall Street banks, lawyers say.
Sectarian Clashes Surge in a City in Pakistan's Heartland. This industrial city, famous for its textile exports, has lately become renowned as the center of a new wave of sectarian violence that has gripped Pakistan as militancy and extremism have taken firm root here in central Punjab Province.
Housing Policy's Third Rail. WHILE Congress toiled on the financial overhaul last spring, precious little was said about Fannie Mae and Freddie Mac, the mortgage finance companies that collapsed spectacularly two years ago. Indeed, these wards of the state got just two mentions in the 1,500-page law known as Dodd-Frank: first, when it ordered the Treasury to produce a study on ending the taxpayer-owned status of the companies and, second, in a “sense of the Congress” passage stating that efforts to improve the nation’s mortgage credit system “would be incomplete without enactment of meaningful structural reforms” of Fannie and Freddie. No kidding. With midterm elections near, though, there will be talk aplenty about dealing with the companies precisely because Dodd-Frank didn’t address them. Unfortunately, if past is prologue, this talk is likely to be more political than practical.
NY Post:
Rangel Fund in Furor. Aids Chaotic Nonprofit. With the help of Rep. Charles Rangel, a politically powerful uptown nonprofit is getting a $2.6 million taxpayer-funded grant despite serious concerns about the organization’s finances. The Upper Manhattan Empowerment Zone, a Rangel-sponsored group that distributes tax money to improve the local community, green-lighted the grant to Alianza Dominicana. The money was OK’d even after one of the zone’s own finance executives refused to sign off on the cash — and questioned the nonprofit’s checkered balance sheet, The Post has learned.
CNNMoney:
Health Reform: What You're Not Getting. If you gloss over your benefits materials at open enrollment this year, you may be setting yourself up for a nasty surprise at the doctor's office. Many self insured companies will be exempted from some of health reform's key benefit improvements.
Business Insider:
Japan's Debt Is So High, It Doesn't Even Fit on the Charts. Let this be a reminder that the ongoing popularity of the yen and JGB (Japanese Government Bonds) should throw a big fat wrench into any notion that any simplistic ideas about the size of a country's debt, and the strength of their national financial instruments.
Bell Admits More Hefty City Salaries. Several other administrators get six-figure paychecks, and two were given extra payments. The city of Bell, already under fire for paying unusually high salaries to three top administrators, acknowledged Friday that two more officials were earning over $400,000. The city's director of administrative services, Lourdes Garcia, was earning $422,707, and the director of general services, Eric Eggena, earned $421,402, officials said. Those amounts include salary, deferred compensation and some benefits, which city officials did not fully detail. In addition, Bell's director of community services, Annette Peretz, earned $273,542, a deputy city engineer earned $247,573, the business development coordinator earned $295,627, a police captain earned $238,075 and a police lieutenant earned $229,992.
Whistleblower: Fannie Mae Bungled HAMP Anti-Foreclosure Program. Fannie Mae executives bungled their stewardship of the federal government’s massive foreclosure-prevention campaign, creating a bureaucratic muddle characterized by “mismanagement and gross waste of public funds,” according to a whistleblower lawsuit by a former Fannie Mae executive and consultant. Caroline Herron, a former Fannie vice president who returned to the mortgage giant in 2009 as a high-level consultant, claims that the homeowner-relief effort was marred by delays, missteps and executives preoccupied with their institution’s short-term financial interests. “It appeared that Fannie Mae officers were focused on maximizing incentive payments available to Fannie Mae under various federal programs – even if this meant wasting taxpayer money and delaying the implementation of high-priority Treasury programs,” she claims in the lawsuit.
SiliconValley.com:
Chip Industry in Midst of Boom. The chip industry is in the midst of a record-setting boom, an upbeat sign about the health of the technology industry as it struggles to rebound from the Great Recession. Global sales of the microprocessors that are the lifeblood of Silicon Valley this year are expected to be the biggest in the industry's history, two research firms recently reported, with total sales expected to top $300 billion.
White House Official: 'Potential' for Climate Change in Lame-Duck. Carol Browner, the White House's top energy and environmental adviser, refused on Sunday to shut the door on passing climate change legislation this year — even though Senate Democratic leaders have conceded they lack the votes and have punted on the volatile issue. Browner said on NBC's "Meet the Press" that President Barack Obama is still committed to pushing the bill through the Senate, and that there was "potential" for the bill to come up in a post-election, lame-duck session of Congress. Browner's remarks will almost certainly give ammunition to Republicans who say Democrats are plotting to do mischief in a lame-duck session — even though top congressional Democrats have thrown cold water on an overly ambitious lame-duck agenda. Rep. Mike Pence (R-Ind.) later said on the same program that it's "outrageous" for Democrats to consider passing the bill after the elections.
USA Today:
Tracking Big Corporate Donors. Find out how much money some of the nation's largest companies have given to nonprofit groups over the past three years, and what charities they support. Click on each column to reconfigure the chart.
Chavez Rejects US Ambassador-Designate to Venezuela. President Hugo Chavez on Sunday rejected Larry Palmer as the US ambassador-designate to Venezuela, and urged US President Barack Obama to "look for another candidate." "How can you think I'd accept this gentleman coming here? You'd best withdraw him, Obama. Don't insist, I'm asking you," said Chavez in his weekly "Alo Presidente" radio and television show. Palmer "can't come here as ambassador," said Chavez. "He disqualified himself by breaking all the rules of diplomacy. He messed with all of us. He can't come here." "The best thing the United States government can do is to look for another candidate," for ambassador to Venezuela, he added.
Handelsblatt:
Germany's Ifo research institute expects the economy to "cool down" in the third quarter, citing Ifo economist Kai Carstensen.
Xinhua:
Chinese central bank adviser Xia Bin said the nation should introduce a property transaction tax based on the number of homes sold and the frequency of sales. The government's policies for credit, local government financing vehicles and limits on production capacity and energy consumption affected economic growth in the first half, Xia said.
The People's Daily:
The introduction of additional stimulus measures in China would cause overcapacity, asset bubbles and drive speculation and price surges in the property market, citing Ba Shusong, deputy head of the financial institute of the State Council's Development Research Center. Additional stimulus measures may cause China's economy to easily overheat, citing Jia Kang, head of the Ministry of Finance's research institute. China shouldn't introduce new stimulus measures and also shouldn't introduce new tightening measures, citing Fan Jianping, head of the economic forecast department at the State Information Center.
Securities Daily:
Chinese home prices will not realistically stay at their current high levels after an expected surge in the housing supply later this year, citing China Vanke Co. Chairman Wang Shi. The government won't stop politices aimed at curbing the property market to stimulate domestic consumption, Wang said.
Weekend Recommendations Barron's:
Made positive comments on (V), (MA), (SYY), (WLL), (BWP), (TGT), (HPQ) and (NFX).
Citigroup:
Reiterated Buy on (FISV), target $60.
Reiterated Buy on (HPQ), target $65.
Reiterated Buy on (CSCO), target $31.
Reiterated Buy on (EOG), target $120
Night Trading
Asian indices are -.25% to +.50% on average.
Asia Ex-Japan Investment Grade CDS Index 118.0 unch.
Asia Pacific Sovereign CDS Index 113.50 -1.0 basis point.
The JPMorgan Auto Conference, Needham Cleantech Conference and the (CBSH) analyst meeting 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 week.
BOTTOM LINE: I expect US stocks to finish the week modestly higher on short-covering, less financial sector pessimism, mostly positive earnings reports and technical buying. My intermediate-term trading indicators are giving mostly bullish signals and the Portfolio is 100% net long heading into the week.
