Thursday, August 18, 2011

Today's Headlines

Posted by Gary .....at 2:54 PM

Bloomberg:
  • Dexia Falling Most in Two Years Leads European, U.S. Bank Drop. Dexia SA and Citigroup Inc. led a plunge in European and U.S. banks amid concern the regions’ economies are weakening and speculation that some European lenders may struggle to fund themselves. Dexia, Belgium’s biggest bank by assets, fell 14 percent to 1.57 euros ($2.25) in the largest drop since March 2009. The 46- member Bloomberg Europe Banks and Financial Services Index tumbled 6.7 percent at 4:45 p.m. in London. Citigroup, the third-largest U.S. bank, dropped 7.5 percent to $27.62 at 12:26 p.m. in New York, making it today’s worst performer in the KBW Bank Index of 24 U.S. firms. Europe’s sovereign debt crisis is spurring the Federal Reserve Bank of New York to question the region’s lenders about their access to funds for U.S. operations, the Wall Street Journal reported today, citing people it didn’t identify. An undisclosed euro-area lender borrowed $500 million from the European Central Bank Aug. 17, the first such bid in six months. U.S. shares fell after initial jobless claims unexpectedly rose and Philadelphia-area manufacturing shrank by the most in more than two years. “Macro conditions almost everywhere you’re looking are deteriorating,” said Gary Townsend, a founder of Hill-Townsend LLC in Chevy Chase, Maryland, which has $42 million under management. “These things spell an economic slowdown that is going to impact earnings and possibly credit quality but certainly share prices.” Societe Generale SA, France’s second-largest bank, sank 12 percent in Paris, while Barclays Plc slid 11 percent in London. The KBW index slid 4.7 percent to 36.91. Bank of America Corp., the nation’s biggest lender, declined 6 percent to $7.01. Regions Financial Corp., Alabama’s largest bank, fell 5.6 percent to $4.29.
  • Overseas Banks Seen Cutting Dollar Holdings Amid European Funding Drought. Overseas banks operating in the U.S. may have cut their dollar holdings by about $339 billion in the past four weeks as European banks face a squeeze on funding. The figure may have dropped by about 38 percent to $550 billion in the period, Jens Nordvig, a managing director of currency research at Nomura Holdings Inc. in New York said today. Banks had an average cash buffer of about $50 billion before the 2008 crisis and about $400 billion in 2010, he said. “The crisis we have now is very serious, and comes from concerns about European banks exposure to European sovereigns,” Nordvig said in a telephone interview. “I’m not expecting an imminent dollar shortage, but if you extrapolate this trend then this means that in two to four weeks there will be one.”
  • Dallara Says ECB is 'Stretched' by Sovereign Bond Purchases. The European Central Bank is “being stretched” in its current role as buyer of last resort for European sovereign debt, said Charles Dallara, managing director of the Institute of International Finance. The ECB’s burden will be eased in late September or early October, when European governments approve changes to a rescue fund, Dallara said today in an interview with Bloomberg Television. Euro-area leaders in July announced plans to allow the European Financial Stability Facility to buy bonds on the secondary market. “Ultimately the burden on the ECB is going to need to be eased by some degree of fiscal integration and fiscal consolidation,” Dallara said.
  • U.S. Company Credit-Risk Measure Jumps as Goldman Sachs(GS), BofA(BAC) Swaps Climb. The cost to protect corporate debt from losses rose to the highest level this week amid growing concern the economy is slowing. The perceived credit risk of Bank of America Corp. and Goldman Sachs Group Inc. worsened. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on company debt or to speculate on creditworthiness, increased 5.4 basis points to a mid-price of 115.1 basis points as of 12:18 p.m. in New York, according to Markit Group Ltd. That’s the highest since Aug. 12. Credit-default swaps on Charlotte, North Carolina-based Bank of America jumped 42.8 basis points to 334.3 basis points, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market. Swaps on New York-based Goldman Sachs rose 20.1 basis points to 205.1 points.
  • Corporate, Sovereign Credit Risk Surges in Europe on Economy. The Markit iTraxx Crossover Index of credit-default swaps lined to 40 companies with mostly high-yield credit ratings increased 44.5 basis points, the most since May 2010, to 644, according to JPMorgan Chase at 4 pm in London. The Markit iTraxx SovX Western Europe Index tied to the debt of 15 governments rose 21 basis points to 298. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 9.5 basis points to 152.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased 13 basis points to 233 and the subordinated index climbed 18 to 393.
  • U.S. Consumer Prices Rise More Than Forecast. The cost of living in the U.S. climbed more than forecast in July, which could make it harder for Federal Reserve Chairman Ben S. Bernanke to convince colleagues to immediately act to spur growth after manufacturing in the Philadelphia region plunged in August. The consumer-price index increased 0.5 percent from June, more than twice the 0.2 percent median forecast of economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington.
  • Jobless Claims in U.S. Rise Above Forecasts. More Americans than forecast filed applications for unemployment benefits last week, signaling the labor market is struggling two years into the economic recovery. Jobless claims climbed by 9,000 to 408,000 in the week ended Aug. 13, the highest in a month, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected a rise in claims to 400,000, according to the median forecast.
  • Philadelphia-Area Factory Index Plunges to -30.7, Lowest Since March of 2009. Manufacturing in the Philadelphia region unexpectedly contracted in August by the most in more than two years as orders plunged and factories shed workers. The Federal Reserve Bank of Philadelphia’s general economic index plunged to minus 30.7 this month, the lowest since March 2009, from 3.2 in July. The August gauge exceeded the most pessimistic projection in a Bloomberg News survey in which the median estimate was 2. The report showed the Philadelphia Fed’s new orders measure dropped to minus 26.8, the lowest since March 2009, from 0.1 in July. The shipments gauge decreased to minus 13.9, the weakest since May 2009, from 4.3 last month. The index of prices paid fell to 12.8 from 25.1 the prior month, while the measure of prices received dropped to minus 9 from 1.1. The employment index in the Philadelphia Fed report decreased to minus 5.2, the lowest since October 2009, from a reading last month of 8.9. A measure of the average workweek slumped to minus 14.4 in January from minus 5.4.
  • Moody's, S&P Mortgage Ratings Face Probe. The U.S. Justice Department is probing Moody’s Investors Service and Standard & Poor’s over ratings of mortgage-backed securities, according to three former employees who said they were interviewed by investigators. Washington-based lawyers from the Justice Department spoke to former employees as recently as last month about whether the companies raised their grades for the complex investments in order to win business, said the former employees, who asked for anonymity because the investigation is ongoing.
  • U.S. Mortgage Rates Hit 50-Year Low. U.S. mortgage rates fell to the lowest in more than half a century as concern that the global economic recovery is faltering spurred demand for bonds that guide home loans, according to Freddie Mac. The average rate for a 30-year fixed loan dropped to 4.15 percent in the week ended today from 4.32 percent, the McLean, Virginia-based mortgage financier said in a statement today. That was the lowest in more than 50 years, Freddie Mac said. The average 15-year rate fell to 3.36 percent from 3.5 percent.
  • General Motors(GM) canceled two scheduled Saturday shifts in August at its Gravatai, Brazil plant to adjust to lower demand, the company said. With the cancellation of the Saturday shifts in August, GM will produce 1,500 fewer vehicles, the company said. Earlier today, Valor Economico reported that GM canceled Saturday shifts in August and September that would reduce production by about 2,300 vehicles.
  • Citadel Follows Paulson in Pre-Rout Bet on Regions Financial. Citadel LLC and Lansdowne Partners Ltd. boosted stakes in Regions Financial Corp. in the second quarter, mimicking earlier bets by hedge fund Paulson & Co., before the bank led this month’s rout in U.S. financial stocks. The three firms, along with Capital Research Global Investors, Fairholme Capital Management LLC and Arrowstreet Capital LP, held a total of $1.21 billion in shares of Birmingham, Alabama-based Regions as of June 30, according to the companies’ regulatory filings this month. Regions has plunged 25 percent this month through yesterday, leading a 16 percent slide in the 24-company KBW Bank Index through yesterday.
  • BofA(BAC) Loan Risk May Rise $9 Billion If Judge Sides With MBIA. Bank of America Corp. may face billions of dollars more in liability for faulty mortgages if a judge agrees with insurer MBIA Inc. that the lender must buy back loans even if the errors didn’t cause a borrower’s default.
  • Gold Futures Soar to Record as Economy Sags. Gold futures surged to a record $1,829.70 an ounce on demand for an investment haven as mounting concern that the global economy is faltering triggered a plunge in equities. Gold futures for December delivery jumped $31.50, or 1.8 percent, to $1,825.30 at 11:25 a.m. on the Comex in New York. Before today, the price climbed 26 percent in 2011, after posting gains in the previous 10 years.
  • Copper Slides as Banks Cut Estimates for Global, Chinese Economic Growth. Copper fell the most in a week after Morgan Stanley and Deutsche Bank AG cut their forecasts for economic growth worldwide and in China, the biggest user of the metal. Copper futures for December delivery slid 6.6 cents, or 1.6 percent, to $3.987 a pound at 10:19 a.m. on the Comex in New York. A close at that price would mark the biggest loss for the contract since Aug. 10.
  • Oil in New York Falls Most in a Week as Banks Cut Global Growth Forecasts. Crude oil declined the most in more than a week as commodities fell around the world after Morgan Stanley and Deutsche Bank AG cut their forecasts for global economic expansion. Crude oil for September delivery dropped $3.94, or 4.5 percent, to $83.64 a barrel at 12:01 p.m. on the New York Mercantile Exchange. The contract fell as low as $82.54. Oil has dropped 8.5 percent this year.
  • HP(HPQ) to Spin Off PCs, Eyes Software Purchase. Hewlett-Packard Co. (HPQ), the world’s largest computer maker, is in talks to buy Autonomy Corp. for about $10 billion and plans to spin off its personal-computer business, people with direct knowledge of the matter said.
  • Gunmen Open Fire on Israeli Bus, Detonate Mine; 14 Injured. Gunmen opened fire on an Israeli bus traveling near the Egyptian border, detonated an explosive device near a patrol and fired an anti-tank missile at forces, injuring at least 14 people. Two gunmen were killed, Army Radio said.At least nine people were injured in the attack on the bus traveling to the southern port city of Eilat, according to Yoseftal Medical Center. In a second incident, an explosive device was detonated when a Israeli patrol passed by, Brigadier General Yoav Mordechai, the chief army spokesman, told Army Radio. In the third incident, an anti-tank missile was fired at forces, Mordechai said, without providing additional details. At least five people were in critical condition, Army Radio said. "This was a sophisticated operation carried out by squads of terrorists that infiltrated into Israel," army spokeswoman Lieutenant Colonel Avital Leibovich said in a phone interview.
Wall Street Journal:
  • European Hedge Funds Nurse Big Losses. Some of the best-known names in the European long/short hedge fund community were left nursing large losses in the early part of August, when global markets plummeted on the back of concerns that Europe wouldn't be able to contain its debt crisis. Funds managed by Lansdowne Partners, Ridley Park Capital, Horseman Capital Management and Henderson Global Investors were among those worst hit, according to investors, with some of the funds having all of their gains for the year wiped out. The performance comes after a period of widespread losses across global equity markets. The Lansdowne U.K. Equity fund dropped 4.3% in the month to Aug. 12, and is down 15.8% this year, according to investors. The Henderson European Absolute Return fund, managed by Stephen Peak, fell 15.64% in the month to Aug. 5, and is down 32.46% this year to Aug. 5, according to investors. Horseman Capital Management's Horseman Global fund dropped 13.51% in the month to Aug. 10, giving back all of its earlier gains this year. It is now down 5.74% this year, investors said. The Ridley Park Paragon fund, managed by former Polar Capital star manager Julian Barnett, has fallen 7.85% this month to Aug. 5 and 25.44% for the year to Aug. 5, according to investors. John Armitage's Egerton European fund is down 4.59% to Aug. 5 and 5.30% for the year to Aug. 5.
  • Political Risk for China's Internet Stocks. China's Internet is the only strategic sector of the economy where private companies dominate. That oddity hasn't escaped the attention of the government. It shouldn't escape the attention of investors either. In their eagerness to buy a piece of the Chinese Internet dream, investors are overlooking the risk of government actions. Baidu(BIDU) had a reminder of the potential for problems this Monday when state broadcaster China Central Television aired a 30-minute special exposing negligence by members of the sales force in allowing fraudulent adverts on its platform. Baidu's stock fell 9% in the two days following the broadcast.
CNBC.com:
  • China Walks Tightrope Between Stability and Reform.
  • Buffett a Hypocrite for Seeking Tax on Ultra-Rich: Laffer. The creator of the Laffer curve called Warren Buffett a hypocrite for urging lawmakers to raise taxes on the super-rich to cut the budget deficit. "The hypocrisy of Warren Buffett is unfathomable," Arthur Laffer, chairman of Laffer Associates, told CNBC Thursday, referring to the Berkshire Hathaway(BRK/A) chairman. "If he really wanted to make (the tax code) fair, why doesn’t he propose a wealth tax on everyone over $1 billion worth of wealth of 50 percent once and for all," Laffer said. "That would really work for him, but of course he’s not going to suggest that because he would have to pay that." Laffer said most of Buffett's wealth is in unrealized capital gains. "It’s never seen a tax, and when he gives (the investments) to the Bill and Melinda Gates Foundation, it never will. This is ridiculous," he said.
Business Insider:Zero Hedge:
New York Times:
CharlotteObserver.com:
  • Delta(DAL) Wants to Rein in Speculators. Airline says financial players in oil markets push up fuel prices to profit from trading. Delta and the Air Transport Association, the lobby for airlines, have been out in front among 98 companies and trade groups that banded together to create the Stop Oil Speculation Now coalition. It's pushing for curbs on financial players in the oil markets, who they believe are pushing fuel prices high to profit from trading rather than from any need to consume fuel. "It warrants as much attention and scrutiny as the stock market gets, and deserves some checks on the power of any individual player so as not to unduly influence" pricing in oil markets, said John Heimlich, the Air Transport Association's chief economist. Airlines argue that huge investment inflows from pension fund investors and Wall Street firms into the oil markets are driving volatility in world oil prices and distorting the price of crude oil and jet fuel. For most of the last 30 years, end-users of oil - such as airlines and trucking companies - dominated the futures market. They traditionally composed 70 percent of the market. Today, that ratio has flipped: Financial players with no intent of ever using a barrel of oil make up 70 percent to 80 percent of the market in any given week. That's why Delta and the Air Transport Association are aggressively pushing regulators to rein in financial speculation. They want to return to a market in which some speculation is encouraged but not to the point that it crowds out oil users
LA Times:
Rasmussen Reports:
  • Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 19% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-two percent (42%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -23 (see trends).
Reuters:
  • Morgan Stanley(MS) Cuts Global Growth View, Eyes ECB. The United States and euro zone are "dangerously close to recession," Morgan Stanley said on Thursday, criticizing policymakers and predicting the European Central Bank will have to reverse its rates policy. The Morgan Stanley research note, which cut global growth forecasts, was cited by stocks traders as adding to market nervousness over the U.S. and euro zone debt crises and the economic drag of austerity measures in debt-burdened countries. Deutsche Bank added to the gloomy market tone by cutting its gross domestic product forecast for China, a major growth engine for the world economy.
  • AIG(AIG), Banks Say Class-Action Group Too Large. Bailed-out insurer American International Group and dozens of banks have filed motions in federal court to block a proposed nationwide class-action suit against them over AIG's 2008 near-collapse.
  • Austrians, Dutch Follow Finns, Seek Greek Collateral. Austria, the Netherlands and Slovakia said Thursday they want collateral on loans to Greece after Finland secured a commitment, raising question marks over a second bailout agreed for Athens last month. The three countries said their positions were not new and echoed the view of some other euro zone states.
  • European Shares Fall Most Since March 2009. German shares lost most, with traders citing the effects of a short-selling ban on financial stocks in other parts of Europe and intensifying worries about politicians' lack of a plan to address the euro zone sovereign debt crisis. The European banking sector , exposed to the euro zone debt crisis, fell 6.6 percent and is down 29.7 percent this year. Heavyweight fallers included Barclays and Societe Generale , both down 11.6 percent. Germany's Commerzbank fell 10.5 percent. The FTSEurofirst 300 index of top European shares ended the session provisionally 4.9 percent lower at 923.85 points, the biggest fall since March 2009. "The market is beginning to price in a recession. The Philadelphia Fed number was an absolute abomination," Michael Hewson, market analyst at CMC Markets, said.
  • Caterpillar(CAT) Sees Slowdown in Dealer Sales Growth. Caterpillar Inc (CAT.N) said growth in dealer sales of its heavy equipment slowed in the three months ended July, particularly in North America, reinforcing concerns about the struggling U.S. economy.
Telegraph:
  • China House Prices Raise Fears of More Tightening. China's annual housing inflation quickened in July for the second straight month this year, official data showed on Thursday, keeping up pressure on Beijing to rein in the red-hot property sector.
Le Temps:
  • Former European Commission President Jacques Delors said Europe and the euro are "on the edge of a cliff" and member states must embrace closer economic cooperation, citing an interview. The proposal for a European finance ministry is a "crazy gadget" and cooperating in economic matters without ceding some sovereignty won't achieve anything, Delors said.
China Finance:
  • Chinese inflationary pressure will be hard to ease for the meantime as the depreciation of the U.S. dollar may push up commodity prices and because China's autumn harvest is still uncertain, Yan Xianpu, an official with the National Bureau of Statistics, wrote in a commentary.
MEMRI:
0 comments

Bear Radar

Posted by Gary .....at 2:07 PM

Style Underperformer:
  • Mid-Cap Growth (-5.55%)
Sector Underperformers:
  • 1) Networking -7.31% 2) Oil Service -6.61% 3) Road & Rail -6.30%
Stocks Falling on Unusual Volume:
  • BCS, UBS, TIN, STO, SFLY, CALM, NTAP, CBOU, FFIC, TECD, LFUS, WFM, APKT, MOLXA, INFA, SHLD, AFCE, CTSH, DLTR, OPNT, PEGA, PERY, ERIE, INFY, GKSR, CREE, SGK, IRF, EEQ, IGN, HPQ, PSJ, FEZ, EMC, AVB, GDT and EFG
Stocks With Unusual Put Option Activity:
  • 1) EWT 2) CBG 3) HPQ 4) KMP 5) KRE
Stocks With Most Negative News Mentions:
  • 1) VLO 2) AINV 3) PLD 4) TRW 5) URI
Charts:
0 comments

Bull Radar

Posted by Gary .....at 11:29 AM

Style Outperformer:
  • Large-Cap Value (-3.91%)
Sector Outperformers:
  • 1) Gold & Silver -1.71% 2) Tobacco -1.90% 3) Telecom -1.91%
Stocks Rising on Unusual Volume:
  • SNPS, PLCE and CNX
Stocks With Unusual Call Option Activity:
  • 1) BPOP 2) DHR 3) EK 4) CEPH 5) STX
Stocks With Most Positive News Mentions:
  • 1) KO 2) BIIB 3) CELG 4) T 5) SYMC
Charts:
0 comments

Thursday Watch

Posted by Gary .....at 1:01 AM

Evening Headlines

Bloomberg:
  • ECB Daren't Blink First as It Stares Down Bond Market Yields: Euro Credit. The European Central Bank needs to back up last week’s record purchases of government debt with further buying to prevent speculators from driving borrowing costs for Spain and Italy back up again. “The ECB’s bond purchase program has been a very effective deterrent to panic selling, and as long as they don’t blink now, they can have this problem of speculative shorting licked in weeks rather than months,” said Luca Jellinek, the London-based head of European rate strategy at Credit Agricole Corporate & Investment Bank. The ECB snapped a five-month hiatus to buy 22 billion euros ($31.7 billion) of government bonds in the week through Aug. 12, and has bought more securities since. That helped push 10-year Spanish and Italian yields below 5 percent after they surged to euro-era records the previous week amid concern contagion from the debt crisis had infected both countries. The success mirrors the initial benefit of the ECB’s first program of buying Greek bonds in May 2010. Policy makers must avoid what came after that: a reluctance to extend the program with further purchases saw Greek 10-year yields reverse declines and soar by more than 10 percentage points.
  • Bad Debt at China Banks Growing: Jain. Bad loans at Chinese banks will rise to “shockingly high” levels, eroding profits and slowing growth in the world’s second-biggest economy, said Vontobel Asset Management Inc.’s Rajiv Jain, who runs some of this year’s best-performing mutual funds. China’s local governments are struggling to repay their debt and “frothy” real-estate markets may leave banks exposed to falling prices, Jain said in an Aug. 16 phone interview. While valuations on Chinese banks have dropped to the lowest levels since October 2008, Jain said the shares aren’t cheap enough to buy because the lenders’ leverage is too high and earnings are likely to disappoint investors. “We have not owned a Chinese bank, and I don’t see owning one any time soon,” said Jain, who oversees about $15 billion, including three funds that beat 99 percent of peers this year, data compiled by Bloomberg show. “If you look at the accounting, I don’t see how anyone could put a penny there.” About a third of local government financing vehicles, used to get around laws prohibiting direct borrowing, don’t have cash flow to service their debt, according to China’s banking regulator. Non-performing loans may climb to as high as 18 percent in a “stress” case, Moody’s Investors Service said in a July 5 statement. “We feel that the non-performing loans are going to be shockingly high,” said Jain, who declined to give a specific estimate for the amount of bad debt. Jain’s $1.9 billion Virtus Emerging Markets Opportunities Fund has climbed 15 percent during the past 12 months and rose 0.2 percent this year through Aug. 16, the best performance among emerging-market stock funds with more than $500 million in assets, according to data compiled by Bloomberg. MSCI’s China Financials Index has dropped 16 percent this year. Shares haven’t fallen enough to compensate investors for the risks associated with high leverage, low lending margins and management incentives that may not maximize returns for shareholders, Jain said. Government-controlled ICBC had a financial leverage ratio, or total assets divided by common equity, of 16.5 at the end of March, according to data compiled by Bloomberg. That compares with an average ratio of 12.7 for banks in the MSCI Emerging Markets Index, the data show. ICBC’s net interest margin was 2.96 percent in the first quarter, compared with 6.1 percent for Itau Unibanco Holding SA (ITUB4), Brazil’s biggest bank by market value, according to data compiled by Bloomberg. For the Chinese banks, “there’s no margin of safety for us,” Jain said. The government may have limited room to use fiscal or monetary stimulus to support lending and property markets because of high inflation, according to Jain.
  • China's benchmark money-mark rate rose the most in four weeks on speculation the central bank will add to this year's three interest rate increases as part of efforts to stem gain in living costs. Containing inflation remains the nation's top policy goal, Commerce Minister Chen Deming said yesterday in Hong Kong. "Not everyone agrees inflation is completely under control," said Matthew Huang, Singapore-based senior strategist with Macquarie Group Ltd. The seven-day repurchase rate, a gauge of funding availability in the financial system, rose 28 basis points to 3.53% as of 9:46 am in Shanghai. That's the biggest increase since July 20.
  • China Forecasts Cut by Morgan Stanley(MS), Deutsche Bank(DB). Morgan Stanley (MS) and Deutsche Bank AG cut estimates for China’s economic growth as the debt burdens and elevated unemployment of developed nations threaten demand for exports.
  • Japan Exports Fall More-Than-Expected 3.3%. Japan’s exports fell more than expected in July as a global slowdown and a strengthening currency weigh on the outlook for the nation’s sales overseas. Exports decreased 3.3 percent in July from a year earlier, the Finance Ministry said today in Tokyo. The median estimate of 24 economists surveyed by Bloomberg News was for a 2.6 percent decline, after a 1.6 percent decrease in June.
  • Midwest Farmland Rose 17% in Second Quarter, Chicago Fed Says. Farmland values in one of the most productive regions in the U.S. Midwest rose 17 percent in the second quarter from a year earlier as higher grain prices made real estate more attractive, the Federal Reserve Bank of Chicago said in an e-mailed report. Rising demand for wheat, corn and soybeans boosted earnings, supporting higher land prices in the five-state Seventh Federal Reserve District, according to the report. The increase in farmland values was the biggest since the 1970s, the Fed said. Gains were reported in Illinois, Iowa, Indiana, Michigan and Wisconsin.
  • Let Greece, Ireland, Portugal Default So Spain, Italy Won't, Kashkari Says. European politicians should let Greece, Ireland and Portugal default while taking steps to ensure Italy and Spain won’t, according to Pacific Investment Management Co.’s Neel Kashkari. “They are delaying and denying as long as possible because the medicine to actually put out this crisis tastes so bad,” Kashkari, head of new investment initiatives at Pimco, said in an interview on “InBusiness With Margaret Brennan” on Bloomberg Television. “They are always behind, always trying to play catch-up, and the crisis is always getting worse.” Germany, France, the International Monetary Fund and the ECB should unveil a “massive” bailout package and announce it’s available to the entire euro zone, except for Greece, Ireland and Portugal, effectively letting them default, according to Kashkari.
Wall Street Journal:
  • Fed Eyes European Banks. Regulators Scrutinize Ability of Institutions' U.S. Units to Fund Themselves. Federal and state regulators, signaling their growing worry that Europe's debt crisis could spill into the U.S. banking system, are intensifying their scrutiny of the U.S. arms of Europe's biggest banks, according to people familiar with the matter. The Federal Reserve Bank of New York, which oversees the U.S. operations of many large European banks, recently has been holding extensive meetings with the lenders to gauge their vulnerability to escalating financial pressures. The Fed is demanding more information from the banks about whether they have reliable access to the funds needed to operate on a day-to-day basis in the U.S. and, in some cases, pushing the banks to overhaul their U.S. structures, the people familiar with the matter say. Officials at the New York Fed "are very concerned" about European banks facing funding difficulties in the U.S., said a senior executive at a major European bank who has participated in the talks. Regulators are seeking to avoid a repeat of the 2008 financial crisis, when the global financial system began to seize up. This time the worry is that the euro-zone debt crisis could eventually hinder the ability of European banks to fund loans and meet other financial obligations in the U.S. While signs of stress are bubbling up, the problems aren't yet approaching the severity of past crises.
  • Chinese Audit Regulators to Visit U.S. A delegation of Chinese regulators will visit Washington in October as the U.S. and China continue talks on allowing American inspectors to scrutinize Chinese audit firms, the U.S.'s top auditing regulator said Wednesday.
  • Threat to Letterman on Muslim Forum. A frequent contributor to a jihadist website has threatened David Letterman, urging Muslim followers to "cut the tongue" of the late-night host because of a joke the comic made on his CBS show. The Site Monitoring Service, a private intelligence organization that watches online activity, said Wednesday that the threat was posted a day earlier on the Shumuka al-Islam forum, a popular Internet destination for radical Muslims.
  • Exxon(XOM), U.S. Government Duel Over Huge Oil Find. Exxon Mobil Corp. is fighting with the U.S. government to keep control of one of its biggest oil discoveries ever, in a showdown where billions of dollars hang in the balance for both sides. The massive Gulf of Mexico discovery contains an estimated one billion barrels of recoverable oil, the company says. The Interior Department, which regulates offshore drilling, says Exxon's leases have expired and the company hasn't met the requirements for an extension. Exxon has sued to retain the leases. The court battle is playing out at a time in which the Obama administration has made an issue of unused leases, which deprive the Treasury of valuable taxes. The stakes are high: Under federal law, the leases—and all the oil underneath—could revert to the government if Exxon doesn't win in court.
  • Analysts Say Greece's Recession Will Continue in 2012. Analysts warned that Greece is at risk for a fourth year of recession in 2012, defying official forecasts of a recovery and dealing a further setback to the government's deficit-cutting plans. Amid plunging consumer demand, weakening global growth prospects and the possibility of fresh austerity measures, analysts said Greece's economy could shrink 2% or more next year, following a 4.5% contraction in 2010 and an expected 3.9% downturn this year.
  • Behold, A Hard-Money Texas Politician. The media trope of the week is that Mr. Perry is George W. Bush only more so, but he clearly isn't the same on monetary policy. Mr. Bush, who first appointed Mr. Bernanke, was an easy-money, weak-dollar President. He and his former economic advisers still don't understand how Alan Greenspan's policies at the Fed contributed to the credit and housing manias that led to the financial meltdown that caused the GOP's political undoing in 2008. Mr. Perry seems to appreciate that the Federal Reserve can't conjure prosperity from the monetary printing presses. His articulation needs some work, but we hope the Texan doesn't let media and other criticism deter him from pursuing the argument. The issue is crucial to understanding—and explaining to the American public—how the meltdown happened and why Americans are so unhappy with the current recovery. The Texas Governor has a better insight into middle-class economic anxiety than do most Washington-Wall Street elites. Americans intuitively understand that their after-inflation incomes haven't risen for a decade. Even when incomes rose during the growth years from 2003-2007, the gains were undermined by the rising cost of housing, as well as by rising food and energy prices. Then huge chunks of middle-class net worth were wiped out in the panic. And now, even as the recovery is supposedly underway, their meager salary increases are being washed away with another burst of commodity inflation caused by near-zero interest rates and quantitative easing. This is what happens when politicians and central bankers try to use monetary policy to compensate for the slow growth caused by bad fiscal and regulatory policies. The Texas Governor, or one of his advisers, may also have noticed that various economic sages are offering inflation as the solution to America's debt problem. Harvard economist Kenneth Rogoff has suggested that an annual 4% to 6% rise in the price level over several years would do the trick. Assorted columnists are picking up the theme, and our guess is that the Obama Administration is privately on board. By all means, we need a debate in 2012 over Fed policy.
Business Insider:
Zero Hedge:
Forbes:
  • SEC Destroys Evidence Against Banks and Hedge Funds, Whistleblower Alleges. In a heavy dose of irony for the Securities and Exchange Commission, which launched a new whistleblower program this week, one of its own lawyers is calling foul on the agency for allegedly destroying thousands of documents related to investigations that involved suspicious activity at major banks and hedge funds. Today Sen. Chuck Grassley of Iowa asked the SEC to account for the allegations. “From what I’ve seen, it looks as if the SEC might have sanctioned some level of case-related document destruction,” Grassley said. “It doesn’t make sense that an agency responsible for investigations would want to get rid of potential evidence. If these charges are true, the agency needs to explain why it destroyed documents, how many documents it destroyed over what timeframe, and to what extent its actions were consistent with the law.”
IBD:
NY Times:

The Washington Examiner:
  • Obama Concedes Health Care Law Won't Control Costs. With a little noted remark at an appearance in Cannon Falls, Minn., on Monday, President Obama tacitly acknowledged that his signature legislative achievement won't meet its stated goal. During a rant against Republican intransigence, Obama said that he could tackle the deficit tomorrow if his opponents would agree to raise taxes and "were willing to take on some of the long-term costs that we have on health care." Sound familiar? Back in February 2009, days after signing an economic stimulus package then valued at $787 billion, Obama convened a Fiscal Responsibility Summit at the White House. At the time, the event was advertised as Obama's "pivot" to tackling the nation's debt burden, but it was really the opening pitch for imposing national health care on America. "Health care reform is entitlement reform," said Peter Orszag, then Obama's budget director. "The path to fiscal responsibility must run directly through health care." Obama amplified this message in his own remarks, calling rising health care costs "the single, most pressing fiscal challenge we face, by far." He added that in the 2008 election, Americans had rejected the "casual dishonesty of hiding irresponsible spending with clever accounting tricks." It's undeniable that health care inflation -- which helps drive the ballooning cost of Medicare and Medicaid -- is the most significant fiscal challenge we face. The problem is, the health care plan that Obama rammed through Congress ended up making our problems worse, as it relied on the very type of accounting tricks he decried. To make the legislation appear cheaper over the standard 10-year budget window, Obama and his Democratic allies delayed the major spending provisions until 2014. To be able to claim modest deficit reduction, they turned to other gimmicks.
Reuters:
  • China's Exporters Feel The Pain of Shoppers in Europe, U.S. Chinese exporters are bracing for bad news as shoppers in their two biggest markets -- Europe and the U.S. -- increasingly stay at home. A week after surprisingly strong export data for July, interviews with 16 Chinese manufacturers showed that most expect a slump in exports in the coming months, particularly for textiles and electronics. "Right now with Europe's debt crisis, people are making less, and they will have to buy less too. That will have a big impact on our business," said Roger Wen, manager of the Shenzhen Design Center Co, which exports small home appliances such as microwaves and coffee makers. "Christmas orders have already come in and they aren't bad, about the same as last year. But I'm not sure all the orders will go through in the end," he said. "When we get to September and October, who knows if they'll still want the shipments. They might cancel."
  • Brazil Gov't in Crisis as Fourth Minister Quits. Brazilian President Dilma Rousseff's seven-month-old government sunk further into crisis on Wednesday as a fourth minister quit and another top aide publicly questioned whether the leader would seek reelection or step aside in 2014 for her much more popular predecessor.
  • JDS Uniphase(JDSU) Forecasts Weak Q1, Sees Bookings Improving. JDS Uniphase Corp forecast weak first-quarter revenue on macro-economic challenges and inventory corrections but said booking trends were encouraging. Shares of the company, which provides broadband and optical communication components, fell much as 16 percent to $9.80 in after-market trading on Wednesday, before recouping the losses.
  • Limited Brands(LTD) Raises Profit, August Sales Outlook. Limited Brands Inc reported a higher-than-expected profit as it sold more lingerie at full price and the company raised its August same-store sales and full-year profit forecasts, sending its shares up more than 3 percent.
  • NetApp(NTAP) Misses as Sales Slow Sharply in July. Data storage equipment maker NetApp Inc posted quarterly revenue below Wall Street projections, saying business fell dramatically in July -- the latest sign that global technology spending is slowing. "The environment remains unsettled and macro economic forecasting remains beyond our scope," Chief Executive Tom Georgens told investors in a conference call on Wednesday, after watching shares in his company tumble 12 percent
Financial Times:
  • Markets Give Eurozone Plan Cool Reception. Financial markets and fellow European leaders reacted coolly on Wednesday to proposals by the French and German leaders for more economic co-ordination between eurozone capitals, with several countries reiterating long-held reservations towards ceding control of tax and economic policies.
Telegraph:
Globe and Mail:
  • Soros: Crisis Is Not Over. The current crisis in Europe is a continuation of the 2008 U.S. crisis rather than a separate event and it is far from over, according to billionaire investor George Soros. Soros further argued China will defend the Euro, because it wants a viable alternative currency to the U.S. dollar. As a result, he says, he won’t short the Euro. In fact, he says, that is why the Euro has been so strong relative to the dollar during the European crisis “There is a mysterious buyer that keeps propping up the euro,” he said.

Financial News:
  • China should place priority on using interest rates as one of its policy tolls and eliminate arbitrage opportunities in the interest rate structure, citing market participants. The Asian nation will likely further tighten lending for property development in the second half.
People Daily:
  • Europe must defend the euro against an uncertain future, the People's Daily said in a commentary attributed to Ding Gang. Europe must rely on itself to solve its debt turmoil and obtain credit for the eurozone, the commentary said.
Evening Recommendations
Citigroup:
  • Rated (RHT) Buy, target $45.
  • Reiterated Buy on (JDSU), target $14.50.
Night Trading
  • Asian equity indices are -2.25% to -.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 141.0 -4.5 basis points.
  • Asia Pacific Sovereign CDS Index 138.0 -2.75 basis points.
  • FTSE-100 futures -1.31%.
  • S&P 500 futures -.87%.
  • NASDAQ 100 futures -.94%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (PERY)/.04
  • (SSI)/.29
  • (SHLD)/-.46
  • (TECD)/.95
  • (PLCE)/-.39
  • (BKE)/.50
  • (SJM)/1.08
  • (DLTR)/.75
  • (ROST)/1.28
  • (TTC)/1.13
  • (GME)/.21
  • (GPS)/.33
  • (INTU)/.00
  • (ADSK)/.41
  • (ARO)/-.03
  • (CRM)/.29
  • (HPQ)/1.09
  • (FL)/.12
  • (CRMT)/.75
Economic Releases
8:30 am EST
  • The Consumer Prices Index for July is estimated to rise +.2% versus a -.2% decline in June.
  • The CPI Ex Food & Energy for July is estimated to rise +.2% versus a +.3% gain in June.
  • Initial Jobless Claims are estimated to rise to 400,000 versus 395,000 the prior week.
  • Continuing Claims are estimated to rise to 3700K versus 3688K prior.
10:00 am EST
  • Leading Indicators for July are estimated to rise +.2% versus a +.3% gain in June.
  • Philly Fed for August is estimated to fall to 2.0 versus 3.2 in July.
  • Existing Home Sales for July are estimated to rise to 4.9M versus 4.77M in June.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Dudley speaking, 5-year TIPS auction, Bloomberg Economic Expectations Index for August, Fed's weekly balance sheet/M1, M2 reports, Bloomberg's weekly Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by technology and commodity shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 75% net long heading into the day.

0 comments

Wednesday, August 17, 2011

Stocks Slightly Lower into Final Hour on Tech Sector Weakness, Global Growth Worries, Emerging Markets Inflation Fears, Eurozone Debt Angst

Posted by Gary .....at 3:53 PM

Broad Market Tone:
  • Advance/Decline Line: Lower
  • Sector Performance: Mixed
  • Volume: Slightly Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 32.53 -1.19%
  • ISE Sentiment Index 103.0 +5.14%
  • Total Put/Call 1.43 +37.50%
  • NYSE Arms 1.06 -34.82%
Credit Investor Angst:
  • North American Investment Grade CDS Index 109.62 -.58%
  • European Financial Sector CDS Index 195.90 +3.75%
  • Western Europe Sovereign Debt CDS Index 292.17 +.34%
  • Emerging Market CDS Index 258.22 -1.99%
  • 2-Year Swap Spread 25.0 unch.
  • TED Spread 28.0 unch.
Economic Gauges:
  • 3-Month T-Bill Yield .01% unch.
  • Yield Curve 198.0 -5 bps
  • China Import Iron Ore Spot $176.80/Metric Tonne +.45%
  • Citi US Economic Surprise Index -72.90 +1.2 points
  • 10-Year TIPS Spread 2.13% -3 bps
Overseas Futures:
  • Nikkei Futures: Indicating -17 open in Japan
  • DAX Futures: Indicating -38 open in Germany
Portfolio:
  • Slightly Higher: On Medical sector longs and ETF hedges
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my EEM short
  • Market Exposure: Moved to 75% Net Long
BOTTOM LINE: Today's overall market action is just mildly bearish, as the S&P 500 hugs the flatline despite global growth worries, Eurozone debt angst, rising food/energy prices, emerging markets inflation fears and tech sector weakness. On the positive side, Telecom, Tobacco, Utility, Oil Service, Bank and Construction shares are especially strong, rising more than +.75% on the day. (XLF) has traded well throughout the day. Copper is rising +1.12% and Lumber is gaining +.43%. The Germany sovereign cds is falling -4.04% to 74.33 bps, the France sovereign cds is falling -6.03% to 137.67 bps, the Spain sovereign cds is falling -6.61% to 331.0 bps and the Israel sovereign cds is falling -4.6% to 149.29 bps. Moreover, the Eurozone Investment Grade CDS Index is down -2.0% to 120.22 bps. On the negative side, Computer, Software, Alt Energy, Internet, Disk Drive, Networking and Education shares are under pressure, falling more than -1.0%. Cyclicals and small-caps are relatively weak again. The Transports have underperformed throughout the day again and tech shares trade very poorly. The 10-year yield is falling -5 bps to 2.17%. Gold is rising +.22%, oil is rising +.67% and the UBS-Bloomberg Ag Spot Index is jumping +2.0%. Rice is rising +.69%, and is still near a multi-year high, rising +29.0% in about 7 weeks. The US price for a gallon of gas is falling -.01/gallon today to $3.58/gallon. It is up .44/gallon in about 7 months. The China sovereign cds is rising +2.28% to 109.50 bps, the Greece sovereign cds is rising +2.85% to 1,853.31 bps and the Ireland sovereign cds is rising +1.19% to 763.50 bps. The China Development Bank Corp. cds has gone parabolic over the last month and is not pulling back with most other cds, rising another +6.3 bps today to 225.30 bps. German stocks traded poorly today despite gains in Asia and other parts of Europe today. The DAX fell -.77% and is down -13.96% ytd. Today's broad equity market performance is worse than the major averages would suggest again, with many economically-sensitive stocks under pressure for the second day in a row. Weak tech and strong financial shares have been playing tug-o-war all day. The Citi Eurozone Economic Surprise Index plunged another -33.1 points today to -66.4, which is the lowest level since April 20th, 2009. It has dropped -50.2 points in 2 days, which is a large negative. Moreover, the UBS-Bloomberg Ag Spot Index is now just .8% from its Feb. 9th record high, which makes any further central bank stimuli extremely risky. The market is mostly ignoring quite a bit of negative news today, which is a large positive. The odds of a new global recession appear to be higher than investors currently perceive, in my opinion. I would like to see the tech sector firm up before getting more aggressive on the long side. I expect US stocks to trade mixed-to-lower into the close from current levels on tech sector pessimism, eurozone debt angst, tax hike fears, more shorting, global growth worries, emerging markets inflation fears and rising food/energy prices.

0 comments

Today's Headlines

Posted by Gary .....at 2:50 PM

Bloomberg:
  • Merkel-Sarkozy Crisis Plan Shuns Steps Sought by Investors. The latest Franco-German strategy to counter the euro debt crisis stressed ideas already in the works, shunning bolder steps investors were seeking to calm markets. German Chancellor Angela Merkel and French President Nicolas Sarkozy ruled out steps such as the issuance of euro bonds or expanding the bailout fund. They backed a plan being drawn up for national balanced-budget amendments and reheated one rejected last year for a financial-transactions tax. They called for the 17 euro leaders to hold two summits a year, the same number of times they have already met in 2011. “There remains an ongoing tension between investors who want a quick fix and the policy makers who are working on the building blocks for the future,” said Jacques Cailloux, chief euro-area economist at Royal Bank of Scotland Group Plc. “Everyone can recognize that the building blocks are important, but stronger leadership with a clearer road map is sorely missing in this direction.”
  • European Banks Fall as Merkel, Sarkozy Propose Financial Tax. European banking and exchange shares tumbled, led by Deutsche Boerse AG (DB1) and Barclays Plc (BARC), after the leaders of Germany and France proposed a tax on financial transactions. Deutsche Boerse, the German stock exchange operator that is buying NYSE Euronext, dropped 5 percent to 41.10 euros in Frankfurt trading, while Barclays, Britain’s second-biggest bank by assets, slid 4.2 percent in London. The Bloomberg Banks and Financial Services Index declined 1.1 percent.
  • Treasury Yield Curve Flattest in Week on Concern U.S. Recovery Faltering. The extra yield Treasury investors get to hold 30-year bonds instead of two-year notes shrank to the narrowest in a week on speculation the U.S. economic recovery is stalling. “What the curve flattening is telling us is that there is risk capital that is finding its way into the bond market and grabbing whatever yield it can,” said Steven Ricchiuto, chief economist in New York at Mizuho Securities USA Inc., one of the 20 primary dealers that trade with the Fed. “It’s the economic scenario. People are not comfortable.” The difference between yields on two-year notes and 30-year bonds fell to 3.38 percentage points at 1:02 p.m. in New York, from 3.48 yesterday. The spread was the narrowest since Aug. 10, when it was the smallest since October 2010.
  • Wholesale Prices Rose More Than Forecast. Wholesale costs in the U.S. rose more than forecast in July, led by higher prices for tobacco, trucks and pharmaceuticals, showing declines in commodity expenses have yet to filter to other goods. The 0.2 percent advance in the producer price index followed a 0.4 percent drop in June, Labor Department figures showed today in Washington. Economists forecast a 0.1 percent increase, according to the median estimate in a Bloomberg News survey. The so-called core measure, which excludes volatile food and energy, climbed 0.4 percent, the most since January.
  • Europe Bankers Slam Transaction Tax Plans. Banks criticized Franco-German plans for a tax on financial transactions, saying they will jeopardize economic growth and distort markets, as the British, Dutch and Swedish governments distanced themselves from the proposals. “The financial-services industry should not be seen as an additional source of tax revenue but as an essential part of a stable and sustainable economy,” said the Association for Financial Markets in Europe, which represents firms including Deutsche Bank AG (DBK) and BNP Paribas (BNP) SA. A “tax would be a brake on economic growth,” it said in a statement. Lenders would pass on the cost of the levy to customers in the same way they already transfer the cost of U.K. Stamp Duty on share purchases to clients, Brian Mairs, a spokesman for the British Bankers’ Association, a London-based lobby, said today. A tax would only work if implemented globally or it would trigger “distortions” in financial markets, Mairs said.
  • Plosser Says Federal Reserve May Have to Increase Rates Before Mid-2013. Charles Plosser, president of the Federal Reserve Bank of Philadelphia, said the Fed will probably need to raise interest rates before mid-2013 and that policy makers should have waited to see how the economy performed before pledging to hold rates at record lows for two years. “It was inappropriate policy at an inappropriate time,” Plosser, 62, said today in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. Plosser spoke in his first interview since he dissented from a Fed decision on Aug. 9 to step up stimulus for an economic recovery that’s “considerably slower” than anticipated. Plosser said that it wasn’t clear that the economy needed additional stimulus, especially given rising inflation and a decline in the unemployment rate since November to 9.1 percent.
  • Fed Shouldn't Protect Stock Traders: Fisher. Federal Reserve Bank of Dallas President Richard Fisher said the central bank shouldn’t ease monetary policy whenever there is a big drop in U.S. stock prices, an action he said some traders might view as a “Bernanke put.” “My long-standing belief is that the Federal Reserve should never enact such asymmetric policies to protect stock market traders and investors,” Fisher said today in prepared remarks in Midland, Texas. “I believe my FOMC colleagues share this view.” Fisher’s comments offered his first explanation of his dissent from the Federal Open Market Committee decision last week to specify a date for their commitment to low borrowing costs.
  • Target's(TGT) Profit Tops Analysts' Estimates on Cost Reductions. Target Corp., the second-largest U.S. discount retailer, posted second-quarter profit that surpassed analysts’ estimates as cost reductions helped offset sales of lower-margin goods.
  • Deere(DE) Profit Beats Estimates as Farm-Equipment Demand Gains. Deere & Co. (DE), the world’s largest farm-equipment maker, reported fiscal third-quarter profit that topped analysts’ estimates and raised its full-year earnings forecast as global demand improved.
  • Wheat Gains for Third Day as Dryness in U.S. May Curb Winter-Crop Seeding. Wheat for December delivery gained 5.25 cents, or 0.7 percent, to $7.5725 a bushel by 1:15 p.m. London time on the Chicago Board of Trade. The grain reached $7.60, the highest level since Aug. 3, after climbing for a third week last week.
  • Crude Oil Advances in New York as Dollar Declines, Boosting Commodities. Crude rose to the highest level in almost two weeks, advancing as the dollar fell against the euro, increasing the appeal of dollar-denominated commodities as an investment. “The decline of the dollar is increasing demand for all things priced in the currency, such as oil and gold,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “If the dollar continues to fall, you are going to see a further rally in commodities.” Crude for September delivery rose 68 cents, or 0.8 percent, to $87.33 a barrel at 12:21 p.m. on the New York Mercantile Exchange.
  • U.K. Unemployment Claims Rise at Fastest Pace Since May 2009. U.K. unemployment claims increased the most in more than two years in July, adding pressure on Prime Minister David Cameron to ease the pace of budget cuts as the economic outlook worsens.
  • Chavez Preparing Government Takeover of Venezuela's Gold Mining Industry. Venezuelan President Hugo Chavez said he’s preparing a decree to give the government exclusive control over gold mining in the country to pare illegal operations and boost international reserves. Chavez, speaking today on state television, said Venezuela can’t allow illegal miners to continue exploiting deposits rich in gold and coltan, an ore containing tantalum, which is used in mobile phones and video-game consoles. “The area is run by the mafia,” said Chavez. “We’re going to nationalize gold. We can’t keep allowing them to take it away.”
Wall Street Journal:
  • Junk-Bond Spreads Pricing in 'Mild Recession:" BofA Analysts. We’ve been warning here about the warning lights flashing on the credit-market dashboard. Bank of America-Merrill Lynch credit strategists recently suggested that one of those indicators is pointing to a recession. Oleg Melentyev and Christopher Hays write:
Barron's:
  • First Solar(FSLR) Drops 6%: Utility Biz Head Leaves, Goldman Trims Rating. Shares of solar energy technology provider First Solar (FSLR) are down $5.55, or 5%,at $98.91 this morning after the company last night announced its former chief financial officer, Jens Meyerhoff, currently head of its division that sells projects to utilities, will leave the company at the end of September.
CNBC.com:
Business Insider:
Zero Hedge:
Washington Post:
  • China Online Video Giant Tudou Opens 13 Percent Below IPO Pricing. A rocky financial climate isn’t stopping this IPO—Chinese online video site Tudou has started trading on the NASDAQ this morning under the symbol ‘TUDO.’ Last night, Tudou priced its shares $29 a piece, raising $174 million in the offering. This morning, Tudou opened 13 percent below its pricing at $25.11 per share, giving the company a valuation of $2.8 billion (as opposed to $3.2 billion at $29 per share)
Rolling Stone:
Institutional Investor:
  • Hedge Fund Managers Blast 'Self-Serving' Buffett. Buffett’s immodest proposal does not sit well with some of the wealthiest people in our society — successful hedge fund managers. Every one of the handful of billionaire hedge fund managers I contacted railed at Buffett’s proposal, calling it self-serving. All of the managers — none of whom agreed to be quoted by name, of course — criticize Buffett for not calling for a hike in the one area that would affect him the most: the long-term capital gains rate, which is currently just 15 percent. They are all very quick to point out that most of Buffett’s profits over the years have come from long-term capital gains. He’s been known to hold some positions for decades. “He’s a total BS guy,” says one. “He never pays tax because he never sells.” The manager notes that Buffett has agreed to leave his entire fortune to his foundation when he dies; this will result in no estate taxes being paid. “He’s not even charitable to our country,” the manager adds. “When Buffett hits himself, it will add credibility,” scoffs another well-known hedge fund manager.
Rasmussen Reports:
  • Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 20% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-two percent (42%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -22 (see trends).
Reuters:
  • India Protests Swell as Anti-Graft Activist Fasts. Protests swelled across India on Wednesday in support of a self-styled Gandhian anti-corruption campaigner fasting to the death in jail, with Prime Minister Manmohan's Singh's beleaguered government apparently unable to end the standoff. An uncompromising Singh, 78, who is widely criticised as out of touch, dismissed the fast by Anna Hazare demanding tougher laws as "totally misconceived," sparking outrage as lawmakers cried "shame." "It is a wake-up call for all of us unless we put our house in order. The people of this country are becoming restless," said Arun Jaitley, a leader of the opposition Hindu nationalist Bharatiya Janata Party.
  • Baidu(BIDU) May Face Tougher Rules After State Media Criticism. Chinese search engine Baidu Inc may face tighter regulations after facing a barrage of criticism from state media over its business practices at a time when it is cementing its dominance of the booming Internet market.
  • Merkel, Sarkozy Discussed Euro Bonds Briefly, Both Negative. German Chancellor Angela Merkel and French President Nicolas Sarkozy discussed proposals for common euro zone bonds briefly in their talks on Tuesday and both rejected the idea, Merkel's spokesman said on Wednesday. "Both sides only discussed this briefly and with a negative view, by which I mean they both explained to each other why they don't think euro bonds are the right remedy," Merkel's spokesman Steffen Seibert told a regular news conference.
  • Analysis: Viability of Sarkozy's Euro Crisis Ideas in Question. In trademark showman style, French President Nicolas Sarkozy has unveiled a slew of proposals aimed at driving panic-sellers away from the euro zone, but some look poorly thought through or even unviable.
  • Obama Says Revenues Needed for U.S. Deficit Fix.
  • Rise of China State-Owned Firms Rattles US Companies.
  • US Candidate Perry Says Fed Should Open Its Books. Republican presidential candidate Rick Perry on Wednesday called for more transparency from the Federal Reserve to show that the U.S. central bank was not engaging in unspecified "improper" actions.
Financial Times:
  • China's State Broadcaster Attacks Bidu(BIDU). China’s main state broadcaster has unleashed a series of attacks against Baidu, the country’s largest online search company, in a move certain to fuel concerns among foreign investors about the risks of operating in the Chinese internet industry. In a barrage of investigative reports, microblog posts and commentary, CCTV criticizes Baidu as a “monopolist” which it alleges abuses its power and fails to manage content on its site in a responsible way.
  • Maersk Hit by Sharp Fall in Container Profits. “As we anticipated at the start of the year, the shipping market has been difficult, due to growing capacity,” Mr Andersen said. “We expect the slow economic growth and market volatility to continue for the coming quarters.”
  • Nerves, Noise or Funding Fears? (video) A bank has approached the European Central Bank to borrow dollars - is this another hint that the region's bank funding is a wee bit upset?
Telegraph:
  • EMU Crisis Deepens as Slump Reaches Europe's AAA Core. The German economy slowed drastically over the early summer and may be on the cusp of a double-dip recession, dashing hopes that Europe's industrial engine would eventually lift EMU's southern bloc out of slump.
L'Hebdo:
  • Billionaire investor George Soros said a collapse of the euro may spark a global financial crisis in a "new Great Depression," citing an interview. "It would lead to a banking crisis that would be totally out of control."
MEMRI:
  • Al-Qaeda, Jihadis Infest the San Francisco, California-Based 'Internet Archive' Library. Besides the U.S. government, Al-Qaeda and other jihadi groups are continually and increasingly using the Internet Archive to spread their propaganda/recruitment messages, including video and audio recordings of speeches, attacks, publications, and much more. They often include content encouraging, and urging, terrorist attacks against America. It can be assumed that Al-Qaeda-related material was first posted to the Internet Archive for legitimate research purposes, but that at some point Jihadis discovered that it was an accessible website that they can easily use for their online jihad campaign. Content is uploaded to and downloaded from the Internet Archive by jihadis daily.
0 comments
Subscribe to: Posts (Atom)