Evening Headlines
Bloomberg:
- Japan's Kan Poised to Resign as Bills Pass. Japan’s parliament passed two pieces of legislation that Prime Minister Naoto Kan said were conditions for him to resign as early today, setting up a succession battle that will play out by early next week.
- Airlines Scrub 180 Flights Before Hurricane Irene U.S. Landfall. American Airlines, JetBlue Airways Corp. and other large carriers scrubbed about 180 flights ahead of Hurricane Irene’s U.S. landfall and waived rebooking penalties to allow passengers to change flights. Cancellations totaled about 154 at AMR Corp.’s American and its American Eagle regional unit near the Caribbean and Bahamas, said Ed Martelle, a spokesman. JetBlue reported dropping a dozen flights, US Airways Group Inc. had eight, Delta Air Lines Inc. had four and United Continental Holdings Inc. had one.
- Syria Forces Kill 25 Protesters in Past Two Days. Syrian security forces have killed at least 25 protesters in the past two days as activists and opposition groups prepare for a conference aimed at presenting a united front against President Bashar al-Assad’s rule. At least 13 anti-government demonstrators were shot dead yesterday in the central city of Homs, the eastern town of Deir al-Zour and the suburbs of the capital, Damascus, Mahmoud Merhi, head of the Arab Organization for Human Rights, said by phone. At least 12 people were killed on Aug. 23 across the Hama governorate, Homs and the northern province of Idlib, he said.
- U.S. May Snap Up Qaddafi's Missiles in Mali Black Market to Soak Up Supply. The fall of Libyan dictator Muammar Qaddafi has touched off a race to secure his arsenal of portable, terror-ready weapons such as shoulder-fired anti- aircraft missiles, and part of the solution may be for the U.S. and allies to go out and buy them. There is evidence that a small number of Soviet-made SA-7 anti-aircraft missiles from Qaddafi’s arsenal have reached the black market in Mali, where al-Qaeda in the Islamic Maghreb is active, according to two U.S. government officials not authorized to speak on the record. The disintegration of Qaddafi’s four-decade dictatorship has created a business opportunity for looters trafficking in the war-stricken country’s missiles, which would enable terrorists to attack military or civilian aircraft.
- For Texas 'Miracle,' Cut the Cost of Business: Brian Barry. Unemployment is high across the U.S., but some states are better than others at creating jobs. Texas Governor Rick Perry cast a spotlight on this when he entered the presidential race. His fast-growing state accounts for as much as half of all net U.S. jobs since mid-2009. Texas is part of a broader pattern, from which all states can learn. Research shows that states keeping costs low for business have enjoyed better job growth during the past couple of decades. The low costs appear to be more important than other advantages often associated with higher spending, including infrastructure and an appealing quality of life. Those findings emerge in a recent paper by Jed Kolko and Marisol Cuellar Mejia of the Public Policy Institute of California, along with David Neumark of the University of California at Irvine. The researchers compared states by digging into almost a dozen indexes that rank business- climate attractiveness.
- UN Authorizes U.S. to Release $1.5 Billion to Libyan Rebels. The United Nations Security Council today authorized the Obama administration to release $1.5 billion in frozen Libya assets to help the rebels' National Transitional Council deliver aid and services. The action followed approval by South Africa, a Security Council member that held up the release out of concern that the decision would signify recognition of the NTC as the government of Libya.
- Fed Pledge Inflates Hong Kong's Misery With Currency Peg: Chart of the Day. A U.S. pledge to keep interest rates at record lows through mid-2013 is no boon for Hong Kong, where a “misery index” has climbed the most in the world because of inflation fueled by cheap funding. The gauge, which sums the jobless rate and the annual increase in consumer prices, jumped 570 basis points in the 12 months through July to the highest level in more than 15 years. It was the biggest gain of 56 countries tracked by Bloomberg. “Inflation in the city will continue to accelerate because of the Fed’s pledge to keep rates low,” said Raymond Yeung, a senior economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. “This will only heighten politicians’ demands for a change to the currency peg.” Yeung says a faster pace of gains by the yuan will also fuel inflation in the city.
- Short Sellers May Spend Another Month on European Stock Market Sidelines. Investors may face another month of short-selling curbs in Europe after French, Italian and Spanish financial regulators extended temporary bans introduced this month in a bid to stem market volatility. Spain and Italy extended their bans through Sept. 30, regulators in both countries said in a statement. France’s Autorite des Marches Financiers said its ban could last as long as Nov. 11. The regulators all said they might lift the bans on short selling of financial stocks when the market stabilizes. The ban didn’t prevent an 8 percent drop in European bank stocks since it was imposed on Aug. 12 after shares of lenders including Societe Generale SA hit their lowest levels since the credit crisis of 2008.
- Bailout for Greece Falters Over Demand for Collateral. Euro-zone policy makers on Thursday appeared no nearer to settling a dispute over Finland's collateral demands in exchange for participating in a €110 billion ($158.6 billion) bailout for Greece, raising concerns that the Mediterranean nation may default. Markets have grown more worried about the potential for a Greek debt default amid an apparent lack of progress in resolving the collateral issue this week. Finland, meanwhile, shows no sign of backing down.
- At Least 53 Killed in Mexico Casino. In what Mexican officials have called an "act of terror," a half dozen gunmen burst into a casino in Mexico's industrial capital of Monterrey Thursday, sprayed the place with gasoline, and started a fire in the bingo section, killing at least 53 people. Speaking to Monterrey's leading newspaper El Norte, Nuevo León Gov. Rodrigo Medina said that at least 53 people had been killed in the attack, making it the bloodiest attack suffered by this prosperous city, which has been rocked by spiraling drug violence in the last year. Monterrey is the capital of Nuevo Leon state.
CNBC:
- China's Hu Tells Sarkozy Concerned About Euro. China hopes that Europe will take steps to protect its investments there, President Hu Jintao told the French President Nicolas Sarkozy on Thursday, nonetheless voicing confidence in the euro and vowing to keep investing in it.
- Chance of Recession Is as High as 80%: Study. A plunge in recent economic data puts the probability of a double-dip recession above 80 percent, according to modeling by Bank of America Merrill Lynch released Wednesday.
- JPMorgan(JPM) to Pay $88 Million for Violating US Sanctions. JPMorgan Chase has agreed to pay $88.3 million to settle potential civil liability for apparent violations of a wide range of U.S. sanctions, the U.S. Treasury department announced Thursday.
- Fed's Hoenig Says "Fed Can't Do It All, No Reason for Operation Twist to Work". Fed Chairman Ben Bernanke ought to listen to common sense from Kansas City President Thomas Hoenig who says Focus Should Shift to Fixing U.S. Fiscal Woes.
- The Steaming Pile of Assets That Could Take Down Bank of America(BAC) - Blodget Explains All. (podcast)
- Why Is The White House Defending The Banks From Investigations? Via Outside the Beltway, I see that the administration is pressing New York's attorney general to drop its investigation into dodgy foreclosure practices and settle with the banks. Doug Mataconis, who wrote the post, says, "I'm sure the large amount of donations coming from the financial sector into the coffers of the Democratic National Committee and Obama For America have nothing to do with this pressure. I also believe the guy who tells me he has a bridge in Brooklyn to sell me."
- HFT Quote Stuffing Market Manipulation Caught In The Act.
- The European Dollar Funding Crunch Is Back: Fed Does Another $500 Million In USD Swaps This Time With The ECB.
NY Times:
Stormpulse:
CNN:
- 9/11 Ceremony Won't Include Religious Leaders or Formal Prayers. As the city of New York prepares to remember the 10th anniversary of 9/11, religious leaders are raising concerns over the lack of clergy participating in the anniversary events. "Utterly disappointed and surprised," Fernado Cabrera a New York City councilman and the pastor of New Life Outreach International church in the Bronx, said over the decision not to include any clergy in the ceremony. "There's certain things that government cannot do, and answering questions of meaning of 'Why are we going through this?' and 'Where am I going to get strength from?' - those are existential questions that can only be answered from a spiritual aspect," Cabrera said. "I'm telling you I saw it first hand, the power of prayer," he added of his time at ground zero on September 11, 2001. Cabrera said he reached out to the mayor's office and was told there would be no prayer in this year's ceremony. He has started a petition on Facebook to change that.
- Halliburton(HAL) Adding 11,000 Jobs, Mostly in North Dakota.
CBSNews:
- Former Bush Spokeswoman: Rick Perry Should "distance himself" from George W. Bush. Dana Perino, who was White House Press Secretary under President George W. Bush, said on Fox News Thursday that Republican presidential candidate Rick Perry should "distance himself" from her former boss. "Rick Perry is smart to distance himself from George W. Bush if he wants to win the Republican nomination and, eventually, the presidency," Perino said.
- Illinois Increases Taxes, Loses Jobs. How many times have I told you that taxes influence behavior? People want to keep more of what they earn. It’s as simple as that. So it doesn’t take a rocket scientist to figure this one out. Since the official start of the “recovery,” Illinois employers were moderately adding jobs for months. That all stopped in January 2011. Since January, Illinois started losing jobs. Big time. In fact, in July 2011, Illinois lost more jobs than any other state in the nation. It lost 24,900 non-farm payroll jobs in July as its unemployment rate climbed for the third straight month to 9.5%. So Illinois was steadily adding jobs and then .. bam! .. it is losing more jobs than any other state in the nation. What happened? Tax increases.
- AFL-CIO Head: Labor to Ditch Democrats. The growing rift between labor and their Democratic allies was on full display Thursday, as AFL-CIO President Richard Trumka told reporters that labor groups are planning to scale back their involvement with the Democratic Party in advance of the 2012 elections. Going forward, Trumka said, the labor movement will build up its own political structures and organizations rather than contribute to and depend on the Democratic Party’s political operation.
- Spain Government, PP Agree to Deficit Limit in Constitution. The Spanish government said on Friday it had reached an agreement with the main opposition People's Party over plans to reform the constitution and establish limits for the public deficit and debt. The amendment to the constitution will be made by implementing a law which will include a cap on the country's deficit and debt. The law will have to be approved before June 30, 2012, the government said in a statement early on Friday morning.
- Brevan Howard Profits From Market Turmoil - FT. Brevan Howard, one of the Europe's biggest and most successful hedge fund managers, has made close to $1.5 billion over the past three weeks on the back of turmoil in the global markets, the Financial Times reported on Friday.
- Investors Return to US Equity Funds - Lipper.
- Pandora Media(P) Revenue Beats on Strong Ad Sales. Online radio service Pandora Media Inc reported results that beat expectations on strong advertising sales in its fiscal second quarter. Pandora shares rose 5.9 percent to $13.20 in after-hours trading following the earnings report on Thursday.
- Micros Systems(MCRS) Q4 Tops Street. Micros Systems Inc , which provides information systems to the hospitality industry, posted quarterly results ahead of market estimates, helped by double-digit revenue growth in its services business.Shares of the Columbia, Maryland-based company, which have lost 18 percent of their value over the last one month, were up 4 percent in trading after the bell.
- Bank of America(BAC) Gives Buffett a $3 Billion Gift. When Bank of America Corp agreed to sell $5 billion of preferred shares to Warren Buffett, it gave the Oracle of Omaha a $3 billion gift with the deal. The 700 million warrants attached to the preferred share sale were worth $3.17 billion when the deal was crafted, said Linus Wilson, an assistant professor of finance at the University of Louisiana at Lafayette.
- OmniVision(OVTI) Sees Q2 Below Estimates, Shares Dive. OmniVision Technologies Inc forecast second-quarter results well below estimates, hinting at a loss of market share in its key smartphone image sensor business, sending its shares down 25 percent in extended trade.
- Greece Forced to Tap Emergency Fund. Greece has been forced to activate an obscure emergency fund for its banks because they are running short of collateral that is acceptable to the European Central Bank (ECB). In a move described as the "last stand for Greek banks", the embattled country's central bank activated Emergency Liquidity Assistance (ELA) for the first time on Wednesday night. Raoul Ruparel of Open Europe told The Telegraph: "The activation of the so-called ELA looks to be the last stand for Greek banks and suggests they are running alarmingly short of quality collateral usually used to obtain funding." He added: "This kicks off another huge round of nearly worthless assets being shifted from the books of private banks onto books backed by taxpayers. Combined with the purchases of Spanish and Italian bonds, the already questionable balance sheet of the euro system is looking increasingly risky.
- The yuan is not ready for rapid appreciation because of the "immaturity" of the Chinese economy, citing Nobel laureate Myron Scholes in an interview. The Asian country still depends on exports as consumption is too low to support the economy, Scholes said.
- China should urge the U.S. government to reduce its fiscal deficit as part of measures to protect China's foreign-exchange reserves, citing Wang Tianlong, a researcher at the China Center For International Economic Exchanges. China should accelerate the resolution of local government debt risks to prevent "concentrated outbreaks" of such risks, the report said, citing Wang.
Citigroup:
- Reiterated Buy on (P), target $25.
- Rated (BRCM) Buy, target $40.
- Asian equity indices are -1.25% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 163.0 -2.0 basis points.
- Asia Pacific Sovereign CDS Index 152.75 -4.25 basis points.
- FTSE-100 futures +.11%.
- S&P 500 futures +.57%.
- NASDAQ 100 futures +.59%.
Earnings of Note
Company/Estimate
- (TIF)/.70
8:30 am EST
- 2Q GDP is estimated to rise +1.1% versus a prior estimate of a +1.3% gain.
- 2Q Personal Consumption is estimated to rise +.2% versus a prior estimate of a +.1% gain.
- 2Q GDP Price Index is estimated to rise +2.3% versus a prior estimate of a +2,3% gain.
- 2Q Core PCE is estimated to rise +2.1% versus a prior estimate of a +2.1% increase.
- Final Univ. of Mich. Consumer Confidence for August is estimated to rise to 55.8 versus a prior estimated of 54.9.
- (CLW) 2-for-1
- Fed Chairman Bernanke's speech could also impact trading today.