BHP's(BHP) $45 Billion Debt Commitment 'Tests' Limits of Rally: Credit Markets. BHP Billiton Ltd.’s ability to raise the most debt to finance a takeover since February 2008 underscores a credit-market rally that has pushed corporate bond yields to record lows even as the economic recovery sputters. BHP, the world’s biggest miner, got $45 billion of funding to back its hostile takeover bid for Potash Corp. of Saskatchewan Inc. in the largest debt issue since it agreed to a $55 billion loan to acquire Rio Tinto Group. The Melbourne-based miner will seek to refinance the loans in the corporate bond market, in which U.S. investment-grade yields have fallen to a record low.
Euro Weakens for Second Day on Concern Europe's Economic Recovery Slowing. The euro weakened for a second day against the dollar and the yen as speculation Europe’s economic recovery is waning damped demand for the single currency. The euro dropped against 15 of its 16 major counterparts after Germany’s Der Spiegel magazine reported that tensions are rising in Greece as austerity measures shrink every aspect of the economy. Traders said the euro extended its slide due to the triggering of so-called stop-loss orders, or automatic instructions to sell a currency if it reaches a certain level. “The fundamentals of most of the euro zone haven’t really improved,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. based in Tokyo. “The bias is for the euro to be sold.”
Bank of Japan May Expand Credit Program to Weaken Currency, Sankei Reports. The Bank of Japan may expand a bank lending program to lower interest rates and help weaken the yen, the Sankei newspaper reported, without saying where it got the information. The central bank may increase the credit facility for lenders to 30 trillion yen ($351 billion) from 20 trillion yen, the newspaper said. The duration of the loans may also be increased to six months from three months, possibly at an emergency policy meeting before Prime Minister Naoto Kan meets BOJ Governor Masaaki Shirakawa next week, the report said. Japanese policy makers are facing pressure to support the economy as the yen’s climb to a 15-year high against the dollar threatens to erode exporters’ earnings and fuel deflation.
Clinton to Urge Global Aid for Pakistan to Match Haiti Earthquake Response. U.S. Secretary of State Hillary Clinton speaks today on Pakistan’s increasing need for humanitarian assistance as donations trail the response to the Haiti earthquake. Clinton speaks at 4 p.m. at the United Nations General assembly in New York, a day after an Obama administration official said the U.S. will pledge more money to flood- devastated Pakistan in a bid to spur more financial aid from other nations.
North Korea Confirms Seizure of South's Fishing Boat as Tensions Increase. North Korea confirmed it seized a South Korean fishing boat last week off the communist country’s east coast for violation of the maritime border. North Korea is investigating the four South Korean and three Chinese crew members, who had “confessed that they intruded into the economic waters,” the state-run Korean Central News Agency reported. The North Korean navy captured the boat on Aug. 8 at around 10:15 a.m. local time, the report said. South Korea has sent a message to North Korea, urging a swift return of the 41-ton Daeseung and its crew.
Most Bush Tax Cuts Should Be Extended, Pimco's McCulley Says. President George W. Bush’s tax cuts should be extended except for the top two brackets to help bolster the fragile economic recovery, said Paul McCulley, a managing director at Pacific Investment Management Co. “Congress has to extend them or else the double-dip- recession risk will go up dramatically,” McCulley said in a Bloomberg Radio interview with Kathleen Hays on ‘The Hays Advantage.’ McCulley, based in Newport Beach, California, suggested making permanent the tax cuts on all but the top two income brackets, individuals earning between $500,000 and $1 million and those who earn more than $1 million. Cuts in the lower brackets should be renewed for a few years, and Congress can revisit the issue when the economy is more stable, he said.
California Budget Logjam May Spur IOUs Next Month, Chiang Says. California may begin paying bills with IOUs in September for a second year in a row as a legislative logjam over erasing a $19 billion deficit prevents passage of a budget. State Controller John Chiang said the IOUs may be issued in two to four weeks if the budget impasse persists. The warrants will pay for everything from contracted services to health-care clinics so California can preserve funds to make payments on priority items such as bonds.
Wall Street Journal:
States Will Be Hedge-Fund Police. Thousands of midsize and smaller hedge funds are about to fall under the sway of state overseers, and it isn't clear the states are ready. The new Dodd-Frank financial law seeks to tighten the leash on hedge-fund advisers, forcing all of them to register with regulators and undergo exams. But only hedge funds and other investment advisers managing more than $100 million will face oversight from the Securities and Exchange Commission. Those with smaller portfolios will be overseen by states. The old threshold, for those investment advisers that registered under earlier laws, was $25 million. The SEC estimates about 4,000 investment advisers will switch to the states. "Right now, as it is, the states don't have the budget or the manpower to even deal with the advisers that they have," said Bart Mallon, a lawyer who advises several hedge-fund advisers that have registered with states. "You're lucky if the states [examine firms] on a three-year basis. I've had certain clients who have never been audited." State budgets are strapped, and some regulators have had to take unpaid furloughs. Several states that have a big hedge-fund industry, such as Connecticut and California, say they are weighing options including boosting fees.
Motorola(MOT), Others Granted Net Funds. Motorola Inc. was among several companies to win millions in government funding Wednesday as the Obama administration announced $1.8 billion in new broadband stimulus grants and loans. Motorola, based in Schaumburg, Ill., received a $50.6 million award to build a new wireless-broadband network in the San Francisco area for police, firefighters and other public safety officials. It's the first time the government has given broadband grants to fund public safety wireless networks instead of new Internet networks for consumers.
130,000 iPhone 4 Orders Crush Korea Telecom Servers. IPhone 4 mania is as strong in South Korea as it is in the States–perhaps even more so. Korea Telecom’s servers were overwhelmed by pre-orders for the September iPhone 4 launch, company officials said Wednesday. More than 130,000 people pre-ordered Apple’s (AAPL) latest smartphone in just nine hours, causing some nasty congestion. “Our online shop server was jammed instantly as too many clients placed orders simultaneously,” KT spokesman Jin Byung-Kwon told AFP. “We didn’t expect so many people to pre-order the iPhone 4 in such a short time.” But then, no one ever does. Right, AT&T? Incidentally, first-day pre-orders for the iPhone 4 easily broke the local record held by the iPhone 3G, which received 65,000 pre-orders over five days.
Mexico Under Siege. A surge of drug violence in Mexico's business capital and richest city has prompted an outcry from business leaders who on Wednesday took out full-page ads asking President Felipe Calderón to send in more soldiers to stem the violence. The growing violence in Monterrey, long one of Mexico's most modern and safe cities, is a sign that the country's war against drug gangs is spreading ever further from poorer battlegrounds along the border and into the country's wealthiest enclaves.
RIM(RIMM) Shops for Mobile Ad network. Under pressure in the increasingly competitive wireless market, BlackBerry maker Research in Motion Ltd. is shopping for a mobile advertising network, people familiar with the matter said.
Hedge Funds Tap ETF for Gold Bets as Stock Correlation Rises. Hedge funds managed by George Soros, John Paulson and other high-profile investors are using a $50 billion exchange-traded fund to buy gold, recent filings show, even as the ETF's growing clout may be chipping at gold's role as an asset that moves to its own beat.
Last U.S. Combat Brigade Leaves Iraq. As their convoy reached the barbed wire at the border crossing out of Iraq on Wednesday, the soldiers whooped and cheered. Then they scrambled out of their stifling hot armored vehicles, unfurled an American flag and posed for group photos. For these troops of the 4th Stryker Brigade, 2nd Infantry Division, it was a moment of relief fraught with symbolism. Seven years and five months after the U.S.-led invasion, the last American combat brigade was leaving Iraq, well ahead of President Obama's Aug. 31 deadline for ending U.S. combat operations there.
Deconstructing Harry Reid. The Senate majority leader's inexplicable desire to debate taxes in September.
China's Crude Steel Production Rises. Major steel producers all announce price hikes for September. Amid a revival in steel prices, China's crude steel production has begun a rebound after a three-month decline. According to data from China Iron & Steel Association (CISA), its member companies reported total crude steel production of 14.13 million tons during the first 10 days of August. Average daily production was 1.41 million tons, up 29,000 tons from the last 10 days of July. This is the first daily crude steel output rise after a three-month decline.
Forget Facebook: Bet On E-Commerce IPOs. Don’t scoff. Sure, after the dotcom bomb, e-commerce had a stench from Pets.com, Webvan, and other expensive duds. But savvy investors who looked past those failures and embraced true innovation have put hundreds of millions of dollars into rising stars. From Groupon to Etsy and FreshDirect to Diapers.com, a cunning new breed of e-commerce players should be ready to test the public markets soon.
ABC News:
Ground Zero Mosque Backers Won't Rule Out Taking Funds From Saudi Arabia, Iran. The developers behind the Islamic center planned for a site near Ground Zero won't rule out accepting financing from the Mideast -- including from Saudi Arabia and Iran -- as they begin searching for $100 million needed to build the project.
LA Times:
Credit Default Swap Deals Unnerve California. Some say credit default swaps may influence the market for muni bonds. Is Wall Street profiting from California's misery? That's been a concern of state Treasurer Bill Lockyer, who takes a dim view of financial instruments — known as credit default swaps — that enable speculators to bet against California's ability to pay its debts. Like other giant Wall Street firms, JPMorgan Chase & Co. helps investors place such bets against California but also earns hefty fees from the state for helping it get the best prices on the bonds it sells to finance capital improvements and other expenses. So it was no small annoyance, Lockyer said, when JPMorgan Chief Executive Jamie Dimon publicly suggested in February that he was more concerned about California's budget problems than about Greece's.
Rasmussen Reports:
28% Say U.S. Heading in Right Direction. Twenty-eight percent (28%) of Likely Voters say the country is heading in the right direction, according to a new Rasmussen Reports national telephone survey taken the week ending Sunday, August 15. Sixty-seven percent (67%) of all voters say the country is heading down the wrong track, up two points from last week. 77% of voters not affiliated with either political party feel the country is heading down the wrong track.
USA Today:
Companies are Boosting Their Spending: Could Jobs Be Next? Federal Express (FDX) is snapping up more airplanes. Caterpillar (CAT) is expanding factory capacity. And Wynn Las Vegas (WYNN) is remodeling all of its 2,716 rooms. Cash-rich U.S. corporations are sharply increasing their capital spending this year after scaling back drastically during the economic downturn. The trend has emerged as a bright spot in a recovery that lately has lost momentum and prompted worries that the U.S. could slip back into recession. Many economists believe business investment could help pick up the slack and eventually spark job growth that lifts the economy from its doldrums.
Reuters:
US Senator Baucus Urges US Case on Canada Lumber. The Obama administration should pursue a new trade case against Canadian softwood lumber practices, Max Baucus, the powerful Democratic chairman of the Senate Finance Commission, said on Wednesday. "The provincial government of British Columbia is selling government-owned timber used for softwood lumber production at firesale stumpage prices," Baucus said in a letter to U.S. Trade Representative Ron Kirk, arguing the fees contravene a bilateral softwood lumber deal.
India Finds a Way to Access BlackBerry Emails - Paper. India's telecoms ministry has suggested a formula by which security agencies can get access to corporate email on Research In Motion's(RIMM) Blackberry devices, the Economic Times reported on Thursday.
NetEase(NTES) Q2 Profit Up 4.5%, Misses Expectations. China's third-largest online game operator NetEase.com second-quarter net income rose 4.5 percent from a year earlier, missing analysts' expectations, amid a lack of new titles and stiff competition.
NetApp(NTAP) Falls as Qtrly Revenue Beat Disappoints. U.S. data storage equipment maker NetApp Inc's quarterly profit more than doubled, but its revenue beat Wall Street estimates by the smallest margin in four quarters, sending its shares down 5 percent.
Applied Materials(AMAT) Sees Strong Q4, but Solar Wanes. Applied Materials Inc forecast quarterly results that beat Wall Street estimates, with demand for its chip-making gear holding up despite fears of weakening technology spending. But the world's top supplier of semiconductor manufacturing equipment warned that sales of solar and energy equipment -- a fast-growing business that accounts for about 15 percent of revenue -- would slide 10 percent to 20 percent this quarter. Executives blamed that slide on an unfavorable comparison with a strong fiscal third quarter ended Aug. 1, as well as a lowering of subsidies for solar power in Germany.
PetSmart(PETM) Sees Strong Full-Year Earnings, Shares Rise. PetSmart Inc posted a strong quarterly profit, helped by continued positive same-store sales in its higher-margin hardgoods business, and the pet products retailer raised its full-year earnings view, sending shares up 7 percent after the bell.
Move Over Skinny Jeans, Denim Goes Wide for Spring. Women who hate skinny jeans can rejoice this spring when the extra-tight denim that has dominated the market for more than two years makes way for wide-leg cuts. Bell-bottoms and boot-cut styles will appear in U.S. stores this spring. Many apparel watchers predict the eventual demise of the skinny that has spurred both adoration and revulsion. "The pendulum is swinging away from skinny," said Ryan Dziadul, a spokesman for VF Corp's (VFC) 7 For All Mankind. "There are millions of pairs out there. For spring, it's about bell-bottoms."
Canada Does Not Need Offshore Drilling Ban. Canada has no need for a moratorium on offshore drilling in the wake of the Gulf of Mexico spill because the current risk of an accident is low, according to a Senate report released on Wednesday.
Financial Times:
US Banks Receive Basel III Boost. Big US banks should be able to meet tighter global capital requirements without having to raise substantial amounts of new equity, according to calculations by Barclays Capital. The analysis by BarCap’s debt capital markets group estimates that the 35 largest US banks will have to come up with half as much new capital as had been expected following last month’s rewrite of proposed requirements by the Basel Committee on Banking Supervision. Analysts at Nomura calculated earlier this month that the top 16 European banks would also gain a sizeable, though slightly smaller, benefit. The numbers are likely to revive complaints that the reforms have been softened too much in the face of lobbying by banks.
Telegraph:
Western Profits Wilt on China's Surging Wages. Rising wage and production costs in China are eating into the profits of Western companies and may soonset off an exodus of multinational companies to cheaper locations. Credit Suisse's survey of executives found that 55pc of foreign firms in China could relocate plant to Bangladesh, Vietnam, Indonesia or other low-cost regions relatively easily, though it would be costly. Diana Choyleva from Lombard Street Research said China has a delicate task ahead. Rampant overheating has given way to a "sharp cyclical downswing", yet China cannot easily unleash another stimulus blitz without risking inflation. They are in the "nasty quadrant " of the economic cycle where all choices are hard, though China is not as far gone as over-cooked India. Beijing may have manoeuvred itself into a policy swamp by relying on tiger-style export growth for so long with a suppressed currency instead of boosting domestic demand. Consumption has fallen from 47pc of GDP in 1998 to 35pc, the flip-side of over-investment in excess capacity. Meanwhile, China Daily reports that 70pc of all flats in Hainan, 66pc in Beijing, and 51pc in Shanghai are empty, based on a survey of electricity use. They are presumably owned by investors and speculators. Given that the "cohort" of young people aged 20 to 30 currently joining the workforce is now contracting as China's demographic crunch starts to bite, this property glut looks all too like the bubble peaks in Taiwan, Hong Kong, and Singapore in the 1990s.
21st Century Business Herald:
China has begun making changes to its labor union law, including allowing migrant workers to join unions, citing Liu Jichen, head of the law department at the All-China Federation of Trade Unions. Changes to the law may also allow industry trade unions to participate in salary negotiations between companies and workers.
The Chinese government's push to clean up local government financing may double the balance of non-performing loans at the nation's banks, citing a commercial bank official. If the government forces banks to increase provisions for loans that may go bad, it could wipe out profit for China's banking industry this year.
China's government shouldn't set gross domestic product growth as the "final target" as the nation's resources and environment are under great pressure, citing Zhang Bin, a researcher at the Chinese Academy of Social Sciences. The nation should instead use the quality of life of its citizens as its target.
Oriental Morning Post:
Shanghai may raise the "cost of owning property" to curb speculative demand, according to a report from the city's Ministry of Land and Resources branch published in the Oriental Morning Post today. Shanghai may use a mix of financial, taxation and land measures to curb property market speculation, the report said.
Munwha Ilbo:
North Korea imported missile-related equipment from a Chinese company in April, citing a South Korean government official.
Evening Recommendations Citigroup:
Reiterated Buy on (DE), target $75.
Night Trading
Asian equity indices are -.25% to +1.0% on average.
Asia Ex-Japan Investment Grade CDS Index 120.0 +2.0 basis points.
Asia Pacific Sovereign CDS Index 115.25 -.75 basis point.
Initial Jobless Claims for last week are estimated to fall to 478K versus 484K the prior week.
Continuing Claims are estimated to rise to 4500K versus 4452K prior.
10:00 am EST
Philly Fed for August is estimated to rise to 7.2 from 5.1 in July.
Leading Indicators for July are estimated to rise +.1% versus a -.2% decline in June.
Upcoming Splits
None of note
Other Potential Market Movers
The Fed's Bullard speaking, Fed's Evans speaking, (CAT) analyst meeting, weekly EIA natural gas inventory report and the (VSEA) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
North American Investment Grade CDS Index 105.30 bps -1.36%
European Financial Sector CDS Index 109.58 bps -1.93%
Western Europe Sovereign Debt CDS Index 134.33 bps +.07%
Emerging Market CDS Index 224.12 bps -.15%
2-Year Swap Spread 18.0 -1 bp
TED Spread 20.0 unch.
Economic Gauges:
3-Month T-Bill Yield .15% unch.
Yield Curve 214.0 +1 bp
China Import Iron Ore Spot $147.60/Metric Tonne -.54%
Citi US Economic Surprise Index -53.0 +.2 point
10-Year TIPS Spread 1.60% -2 bps
Overseas Futures:
Nikkei Futures: Indicating +15 open in Japan
DAX Futures: Indicating +14 open in Germany
Portfolio:
Higher: On gains in my Tech, Ag, Retail and Medical long positions
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 is trading slightly higher despite euro weakness. On the positive side, Road&Rail, Education, Retail, Homebuilding, Construction, Telecom, Disk Drive, Computer, Semi and Gold stocks are especially strong, rising 1.0%+. (XLF) has outperformed slightly throughout the day. Trading in the tech sector continues to improve. The 10-year yield is flat, but near session highs at 2.63%. Lumber is rising another +1.58%. Oil is trading very poorly given the recent bounce in stocks/euro, hurricane season, deafening Iran rumors and increase in spec long positions. The European Investment Grade CDS Index is falling -2.41% to 100.83 bps, the Japan sovereign cds is falling -3.19% to 67.39 bps and the US Muni CDS Index is declining -2.43% to 220.75 bps. On the negative side, Oil Service, Energy, Coal and Utility shares are lower on the day. Gold continues to trade well and market volume remains anemic. The average stock is performing much better than the major averages today. I still suspect stocks will build further on their recent rally before week's end. (HPQ)'s report after the close tomorrow has taken on added significance given recent negative comments from analysts regarding pc sales. I expect US stocks to trade mixed-to-higher into the close from current levels on less economic fear, short-covering, bargain-hunting, lower energy prices and technical buying.
Deere(DE) Profit Tops Estimates on Farm Equipment Demand. Deere & Co., the world’s largest farm-equipment maker, reported a 47 percent jump in fiscal third-quarter earnings, while tempering investor expectations for the fourth quarter amid weakening demand in Western Europe. Net income climbed to $617 million, or $1.44 a share, in the third quarter ended July 31, amid strength in the U.S. farming industry, the Moline, Illinois-based company said in a statement today. The average of 17 analyst estimates compiled by Bloomberg was for profit excluding some items of $1.22. Deere fell in New York trading after saying fourth-quarter earnings will be $375 million, less than the average estimate from analysts for $389.4 million, excluding items. Deere, led by Chief Executive Officer Sam Allen, said full-year sales will rise 5 to 10 percent in the U.S. and Canada on “solid” commodity prices, while Western Europe sales will fall as much as 20 percent. “While the company’s guidance looks a tad light relative to expectations, this is a conservative management team and is probably trying to set a reasonable bar to exceed,” Joel Levington, managing director of corporate credit at New York- based Brookfield Investment Management Inc., said in an e-mail.
Maersk Raises Forecast as Freight Rates Help First-Half Earnings Recover. A.P. Moeller-Maersk A/S, the owner of the world’s largest container-shipping line, raised its full- year earnings forecast after increases in freight rates and global trade helped the company restore first-half profit. Net income in the first six months of the year was 13.4 billion kroner ($2.31 billion) compared with a 3.67 billion- krone loss a year earlier, the Copenhagen-based company said today in a statement. That beat the 8.22 billion-kroner average estimate of four analysts surveyed by Bloomberg. Sales rose 20 percent to 154 billion kroner.
Druckenmiller Calls It Quits After 30 Years as Job Gets Tougher. Stanley Druckenmiller, the hedge- fund icon who boasts one of the best long-term trading records and the distinction of having made $1 billion for George Soros by forcing a devaluation of the British pound in 1992, is closing his firm after 30 years. Druckenmiller, 57, said he was tired of the stress of managing money for others and frustrated by his failure in the past three years to match returns that had averaged 30 percent annually since 1986. His Duquesne Capital Management LLC, which oversees $12 billion and has never had a losing year, is down 5 percent in 2010. “Managing more than $10 billion seems to challenge my long-term standard” for investment performance, Druckenmiller said in a two-hour interview in his New York office on 57th Street overlooking Central Park. “For 30 years I’ve been responsible for managing client money and it’s been a joy, but at some point I need to move on. Thirty years is enough.” “While the joy of winning for clients is immense, for me the disappointment of each interim drawdown over the years has taken a cumulative toll that I cannot continue to sustain,” he wrote to his 100 clients today.
Obama Says He Has 'No Regrets' About Remarks Supporting Ground-Zero Mosque. President Barack Obama said he had “no regrets” about defending the rights of Muslims to build an Islamic center near the World Trade Center site in New York. Obama was responding to a question as he left an event in Columbus, Ohio. His comments about the controversy last week drew criticism from some Republicans and some representatives of families of those killed at the World Trade Center in the Sept. 11 terrorist attacks. Obama spoke about the center for the first time Aug. 13 during an annual White House iftar dinner, marking the Muslim holy month of Ramadan.New York voters oppose the plan by more than two to one, according to a Siena College Research Institute survey. While 64 percent of voters said developers of the mosque have a constitutional right to build, only 27 percent supported putting the project two blocks from the World Trade Center site, with 63 percent opposed, according to the poll. Representative Peter King, a New York Republican, said Obama should have urged leaders to compromise and find a new location for the mosque. The symbolism of having it near Ground Zero is wrong, he said Aug. 15 on CNN.
Crude Oil Falls After Industry Report Shows Higher U.S. Oil, Gasoline Supplies. Crude oil fell to a one-month low after the U.S. Energy Department said total petroleum stockpiles surged to the highest level in at least 20 years. Inventories of crude and fuels climbed 5.34 million barrels to 1.13 billion in the week ended Aug. 13, according to the department. Supplies of distillate fuel, which include heating oil and diesel, rose to the highest level since 1983. “Our inventories are rising at a time of year when they usually decline, so we’re getting a growing surplus,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “Demand has improved but supply has risen even faster.” Crude oil for September delivery fell $1.02, or 1.3 percent, to $74.75 a barrel at 12:48 p.m. on the New York Mercantile Exchange. “We got another big build in distillate supplies,” said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “This is a well- supplied market.” Plans by China to curb oil demand growth by 2020 will have “major implications” for crude prices and refining margins, a consultant said. China may allow oil consumption to peak in 2020 at about 13 million barrels a day, after which growth will slow to about 150,000 barrels a day, or about 1.1 percent a year, Fereidun Fesharaki, chairman of Singapore-based FACTS Global Energy, said in an e-mailed note today.
Vietnam Devalues Its Currency as Equities Approach Bear Market. Vietnam devalued its currency for the third time since November, moving to reverse a slump in exports that helped to drive stocks close to a bear market. The dong dropped 1.1 percent to 19,320 per dollar as of 11:22 a.m. in Hanoi, after touching a record-low 19,425 as the central bank lowered the reference rate by 2 percent. The Ho Chi Minh City Stock Exchange’s VN Index dropped 1.7 percent to 455.49, extending its decline from the May peak to 17 percent, near the 20 percent that would indicate a bear market.
Mexico Imposes Tariffs on U.S. Food Products in Dispute Over Truck Access. Mexico will impose import tariffs on some U.S. pork cuts, ketchup, cheeses, sweetcorn and some fruits because of the U.S. government’s failure to restore a program allowing Mexican trucks to operate north of the border, the nation’s official gazette said. The list includes a tariff of 5 percent on some cuts of pork and as much as 25 percent on fresh white cheese, according to the notice. Onions, apples, pears, oranges, cherries, soy sauce, mineral water and sunglasses are also on the list. Mexico will charge the duties on a rotating list of 99 U.S. products valued at about $2.5 billion, Economy Minister Bruno Ferrari told reporters Aug. 16 in Mexico City.
Paychecks to Shrink Because of Higher Health Premiums, U.S. Companies Say. Workers will pay more for their health care next year as U.S. companies prepare for provisions of the overhaul signed into law by President Barack Obama, according to a survey released today. About 63 percent of businesses plan to make employees pay a higher percentage of their premium costs in 2011, said the Washington-based National Business Group on Health, which surveyed 72 companies that employ more than 3.7 million people. The survey showed 46 percent plan to raise the maximum level of out-of-pocket costs that workers must bear. The companies surveyed expect their costs of health-care benefits to rise an average of 8.9 percent next year.
Homebuilder Mergers Loom as 'Elephant in Room,' Citigroup Says. Homebuilder takeovers may increase as tumbling demand for new houses and a faltering U.S. economic recovery spur companies to consolidate to gain market share, according to Citigroup Inc.Ryland Group Inc.(RYL), Meritage Homes Corp.(MTH) and Beazer Homes USA Inc.(BZH) are the most likely acquisition targets, Josh Levin, a New York-based analyst, wrote in a note to clients today. D.R. Horton Inc., KB Home, MDC Holdings Inc. and PulteGroup Inc. would be probable buyers, he said. “We view consolidation as the proverbial elephant in the room,” Levin wrote.
BHP's(BHP) Kloppers Goes Hostile in Bid for Potash(POT). BHP Billiton Ltd. Chief Executive Officer Marius Kloppers flew to Chicago to deliver the letter containing his $40 billion offer to Potash Corp. of Saskatchewan Inc. CEO Bill Doyle. The reply was a blunt rejection.
American Eagle(AEO) Call Option Trading Surges on Speculation Retailer For Sale.American Eagle Outfitters Inc. call trading jumped to a nine-month high on speculation that the teen retailer may be acquired. Almost 16,000 calls to buy the stock changed hands, eight times the four-week average and 19 times the number of puts to sell, as the shares increased 4.3 percent to $12.86 as of 1:23 p.m. in New York. The most-active contracts were September $13 calls, which doubled to 75 cents and accounted for a quarter of the bullish volume.
JPMorgan(JPM) Said to Plan $1 Billion CMBS Offering in Biggest Sale of the Year. JPMorgan Chase & Co. plans to sell $1 billion of commercial mortgage-backed bonds, giving control of soured loans to a holder of the riskiest portion after another offering ceded power to investors in the safest pieces. JPMorgan’s sale, the largest this year of the debt, would grant hedge fund H/2 Capital Partners LLC, the buyer of the bottom $50 million slice, primary authority over troubled loans, according to people familiar with the transaction who declined to be identified because negotiations are private.
Wall Street Journal:
Banks Face Fight Over Mortgage-Loan Buybacks. Fannie and Freddie Work to Push Bad Loans to Originators; A Search for Applicants' Lies. While mortgage delinquencies are easing, banks are facing a new round of losses from loans made just before the financial crisis, and the fight to keep them off their balance sheets is intensifying. Leading the charge to make originators repurchase their loans are Fannie Mae and Freddie Mac, the two government-owned finance agencies that guaranteed the mortgages. The firms are sorting through delinquent loans for signs of any violations of the representations and warranties, known as "reps and warranties." In essence, they are looking for lies made by borrowers or lenders in loan applications.
GM May Invest $2.85 Billion in Brazil Production. General Motors Co. is investing 5 billion Brazilian reais ($2.85 billion) to overhaul its portfolio of cars in Brazil, as the firm aims to avoid losing its share of sales in the domestic market, the company's new top executive in Latin America's largest economy said Wednesday.
CNBC:
Where Google(GOOG) Stands Six Years After Going Public. Thursday marks the sixth anniversary of the Google's IPO. Although the company's share price is down about 20 percent this year, it's up an amazing 389 percent since the initial public offering on August 19, 2004.
Nancy Pelosi, House Speaker, Wants Investigation into Ground Zero Mosque Opposition Funding. Nancy Pelosi wants some answers. The house speaker is calling for an investigation into groups protesting the building of the Ground Zero mosque. "There is a concerted effort to make this a political issue by some," she told San Francisco's KCBS radio on Tuesday. Pelosi added that she joins "those who have called for looking into how is this opposition to the mosque being funded." Many Republicans have said they are against the building of the mosque, and have demanded Democratic candidates and incumbents to publicly choose a side. The GOP said it will keep hammering the issue in a drive to take back Congress.
LA Times:
California Pension Reform Effort Loses Support. The bill's sponsor, state Controller John Chiang, and others say it has become so watered down that it would do little to prevent public employees from spiking their end-of-career paycheck.
What's Intel's(INTC) Next Move? (NYSE: Intel Corp. (Nasdaq: INTC) is adding one more piece to the do-it-all cable video gateway puzzle by purchasing Texas Instruments Inc.TXN)'s cable modem business, but the chip giant may have to do more shopping if it's to match up with Broadcom Corp. (Nasdaq: BRCM)'s ability to develop super-integrated system–on-chips (SoCs) for advanced set-tops, TVs, and other broadband-connected devices. (See Intel Snares TI's Cable Modem Business .) Companies that could top that list include Entropic Communications Inc. (Nasdaq: ENTR), the leading maker of Multimedia over Coax Alliance (MoCA) chipsets, and MaxLinear Corp. and Microtune Inc. (Nasdaq: TUNE), which make silicon tuners.
Boston Globe:
Grow Jobs and Shrink Government by Mitt Romney. IT’S NOT happening the way President Obama had planned. Unemployment blew past his 8 percent ceiling and hasn’t looked back. Private sector investment in new jobs and capital has languished. Even the head of the president’s Council of Economic Advisers, Christina Romer, has resigned. Almost every action the president has taken has deepened and lengthened the downturn. The private sector has retreated, frightened by his agenda and paralyzed by the uncertainty, lack of predictability, and outright hostility he has engendered. His policies are anti-investment, anti-jobs, and anti-growth. Raising taxes — with a 15 percent hike on certain small business corporations, new taxes to pay for ObamaCare, and an increase on the dividend tax from 15 percent to nearly 40 percent — depresses new investment throughout the economy. Promoting an open-ended cap-and-trade tax dissuades expansion by employers in the energy sector. Bowing to the demands of unions to tilt the table in their favor — with proposals for card check and mandatory arbitration as well as the installation of a labor stooge at the National Labor Relations Board — chills new hiring.
The Post and Courier:
Charleston Port Volume Soars for July, But Caution is Urged. July's container volume at the Port of Charleston rebounded to a level not seen since the financial market meltdown two years ago, but the head of the State Ports Authority cautioned that the uptick might be short-lived. The SPA handled nearly 74,000 containers in July, a 26 percent increase over a year earlier and the port's best month since October 2008.
AP:
AP Poll: Obama at New Low for Handling Economy. A new Associated Press-GfK poll is giving President Barack Obama his lowest marks ever on how he's handling the economy. The same poll finds that an overwhelming majority of Americans now describe the nation's financial outlook as poor. If this sour outlook lasts until the November elections, frustrated voters could take it out on the party in power, which means Obama's Democrats. Just 41 percent of those surveyed approve of the president's performance on the economy — down from 44 percent in April — while 56 percent disapprove. And 61 percent now say the economy has gotten worse or stayed the same on Obama's watch.
Reuters:
Chico's(CHS) Beats With Trendier Clothese, Sees Sales Gains. Women's apparel retailer Chico's FAS Inc reported higher-than-expected quarterly profit as trendier fashions attracted shoppers and margins were boosted by exclusives at its outlet stores. Chico's shares rose 7.5 percent to $9.04 on Wednesday as the company also forecast further sales gains through the end of the year.
Frankfurter Allgemeine Zeitung:
The European Commission may introduce a tax on raw materials including wood, metal, water and fossil fuels, citing an internal commission document.
National Post:
A Brave Canadian Confronts Ground Zero Mosque.Unlike U.S. President Barack Obama who insists putting a mosque near the site of 9/11 is “legal” and not his concern, a leading Canadian Muslim has publicly attacked the proposal as inappropriate, insensitive and wrong. Farzana Hassan lives in Toronto and is an astonishingly brave woman who has written three books since 9/11, putting Islam into perspective. She, along with Tarek Fatah, founder of the Canadian Muslim Congress (MCC), are among the few Muslims who speak out loudly and clearly against extremism. Both have had death threats, both soldier on fearlessly and honestly.
Beijing News:
China's western Qinghai province will raise minimum wages by an average of 29% from Sept. 1, the 27th of the nation's 31 regions to increase pay rates this year, citing the local government. The remaining four - Guangxi, Gansu, Guizhou and Chongqing - also plan increases.
