Weekend Headlines
Bloomberg:
- Euro Declines on Speculation European Banks Will Struggle to Raise Funds. The euro fell the most in a week against the dollar and the yen on concern European banks will struggle to raise funds, damping the region’s economic outlook. The 16-nation currency weakened against 15 of its 16 major counterparts after the Association of German Banks said the nation’s 10 largest lenders, including Deutsche Bank AG, may need about 105 billion euros ($134 billion) in fresh capital because of new regulations. The yen rose for a second day versus the euro as economists predicted the Bank of Japan will forego announcing fresh liquidity injections at the end of a policy meeting today, boosting demand for the currency. “Worries over fundraising by Europe’s banks and governments are likely to persist,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “The bias is for the euro to be sold.”
- Obama Plans Business Tax Relief, Spending to Spur Growth. President Barack Obama this week is proposing to expand tax relief for businesses and boost federal spending on the nation’s transportation system to help bolster an economy that’s losing jobs heading into the November congressional elections. Obama tomorrow will announce an expanded tax incentive to encourage business investment, an administration official said on condition of anonymity. Obama also will urge Congress to extend permanently and expand a research-and-development tax credit for businesses, costing about $100 billion over a decade. He began the rollout of initiatives yesterday in Milwaukee, calling for $50 billion in the first of a six-year program to fix roads, railways and runways and modernize the air-traffic control system.
- Unemployment in U.S. May Rise Toward 10% on 'Feeble' Growth. The jobless rate in the U.S. is likely to approach 10 percent in coming months as the economy fails to grow quickly enough to employ people rejoining the labor force, according to economists at BofA Merrill Lynch Global Research and Morgan Stanley. Private payrolls climbed 67,000 in August, after a gain of 107,000 the previous month, and the unemployment rate rose to 9.6 percent, Labor Department figures showed Sept. 3. “Growth is too sluggish to successfully bring down the unemployment rate,” said Michelle Meyer, a senior economist at BofA Merrill Lynch in New York. “At this stage, about one year into the recovery, this was still quite feeble job growth.”
- IMF's Lipsky Sees 'Modest Recovery' for Global Economy. John Lipsky, the second-ranking official at the International Monetary Fund, said Group of 20 nations deputies showed confidence about the global economic recovery, even taking into account challenges and risks. “They’re mainly confident that there’s a moderate recovery under way globally,” Lipsky said yesterday after a G-20 deputies’ meeting in the South Korean city of Gwangju. There are “obviously risks and challenges but things seem to be moving more or less in the line with our forecasts.”
- Lloyd's Insurance Brokers Test iPads to Replace Paper, FT Says. Lloyd’s of London will begin a trial of Apple Inc.’s iPad as a potential replacement for the traditional cases and paper slips used to arrange bespoke insurance policies, the Financial Times reported. The iPad is easier to carry while still supporting the “face-to-face negotiation that makes Lloyd’s unique,” Lloyd’s director of market operations, Sue Langley, told the newspaper.
- Greece Default Risk is 'Substantial,' Pimco's Bosomworth Says. Greece still faces a “substantial” default risk as insolvency prevents the nation from repaying its debt when its bailout program expires in three years, Pacific Investment Management Co. fund manager Andrew Bosomworth said. “Greece is insolvent,” Bosomworth, Munich-based head of portfolio management at Pimco, which oversees the world’s largest bond fund, said in a telephone interview today. “I see it as being quite a substantial risk that Greece eventually defaults or restructures.” In a best-case scenario, Greece’s government debt will swell to 150 percent of gross domestic product, Bosomworth said. The European Union-led rescue package assumes the Athens-based government will tap investors for 82 billion euros ($106 billion) during the life of the bailout program, “and that’s I think going to be very difficult,” he said.
- Hedge Funds Turn Gasoline Bears First Time in Four Years: Energy Markets. Hedge-fund bets against gasoline exceeded wagers that prices will rise for the first time in almost four years as the fuel fell in the final week of the U.S. driving season. Net-short positions held by money managers in gasoline futures and options increased to 1,169 contracts the week ended Aug. 31, the first time speculators have been bearish since November 2006, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. Hedge funds cut bullish bets for four straight weeks. Investors have turned bearish on gasoline amid a slide in demand just as the motoring season ends and economic data sends mixed signals about U.S. recovery.
- Mark Hurd Joins Oracle(ORCL) After Leaving HP(HPQ); Phillips Resigns.
- Europe's Bank Stress Tests Minimized Debt Risk. Europe's recent "stress tests" of the strength of major banks understated some lenders' holdings of potentially risky government debt, a Wall Street Journal analysis shows. As part of the tests, 91 of Europe's largest banks were required to reveal how much government debt from European countries they held on their balance sheets. Regulators said the figures showed banks' total holdings of that debt as of March 31.
- Wall Street's New, Unknown Power Broker. Just two years ago, Chris Cernich was working in obscurity, crunching numbers about used cars from his desk at Ford Motor Co.'s headquarters in a Detroit suburb. Today he is one of the most powerful people on Wall Street, whose opinion can sway fortunes and scuttle empires.
- Samsung Flags Record Investments. South Korea's Samsung Electronics Co., the world's largest computer-memory-chip maker by revenue, is considering investing a record 30 trillion won ($25.55 billion) next year to bolster its existing operations and expand into new business segments.
- Reserve Fund's Manager Says It Wasn't Only One to 'Break the Buck'. Reserve Management Co. has told a federal judge that its Reserve Primary Fund wasn't the only money-market fund for which the net asset value dipped below $1 per share, known as "breaking the buck," in the wake of Lehman Brothers' 2008 bankruptcy.
- Deals Offer Dell(DELL) Multiple Paths to Goal. Dell Inc. may have lost out to Hewlett-Packard Co.(HPQ) last week in its bid to acquire storage maker 3PAR Inc.(PAR), but the company has other options as it looks to expand beyond its core personal-computer business.
- The Boss is Robotic, and Rolling Up Behind You. Robots being used by more U.S. Hospitals, Companies.
- Sources: As Many as 2,000 More Troops May Be Going to Afghanistan. As many as 2,000 additional troops -- including a number of U.S. forces -- may be headed to Afghanistan in the coming weeks under a plan backed by Gen. David Petraeus, CNN has learned.
Philadelphia Inquirer:
Lloyd's List:
- The number of tankers storing crude oil and petroleum products fell tot he lowest in 18 months, citing data from EA Gibson Shipbrokers Ltd. At the end of August, 58 tankers were used for floating storage, down from 64 at the start of the month and 76 at the end of June. That compares with a peak of 149 tankers in November 2009, it said.
Le Figaro:
- U.S. and European economic growth will remain weak, IMF chief economist Olivier Blanchard said in an interview. Better-than-expected European growth in the second quarter hasn't removed the brakes on consumption and investment, which include the weakness of the financial system, Blanchard said.
- China should pay more attention to systemic risks associated with property loans, citing Yi Xianrong, a researcher with the Chinese Academy of Social Sciences. China has about 20 trillion yuan of loans related to the property industry, citing Yi, who didn't specify how many of them are at risk. China's current property bubble is a nationwide problem. The Chinese government will stick to its property curbs, citing Yi.
- About 80% of banks in the Chinese capital of Beijing raised loan rates for first-home purchases by reducing discounts, citing unidentified people from local property agents. Most buyers can only get a 15% discount for interest rates paid on loans to buy first homes, compared with an earlier 30% off. Banks also cut the amount of loans buyers can get to 60% of the total cost of a first home from up to 80% previously, citing some developers.
Barron's:
- Made positive comments on (DHI), (TOL), (AAPL), (MCD), (OCI), (CMS), (NE), (PHM), (RTN) and (BZH).
- Made negative comments on (DELL), (MOT), (GVA), (STJ) and (OSK).
- Rated (CHKM) Buy, target $28.50.
- Rated (BMC) Buy, target $45.
- Asian indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 116.0 -8.0 basis points.
- Asia Pacific Sovereign CDS Index 110.25 -8.25 basis points.
- S&P 500 futures +.11%.
- NASDAQ 100 futures +.19%.
Earnings of Note
Company/Estimate
- (CASY)/.81
- (PVH)/.54
- None of note
- None of note
- The $33 Billion 3-Year Treasury Notes Auction, weekly ABC consumer confidence reading, Barclays Consumer Conference, Citi Tech Conference and the Keefe Bruyette Woods Insurance Conference could also impact trading today.
