Bloomberg:
- Natto Makers to Public Baths Suffer in Abenomics Divide. Almost everything Mikio Matsushita’s factory near Tokyo needs to produce natto is imported, from the soybeans used in the fermented Japanese snack to the polystyrene trays in which they’re packaged. The reliance on imports, combined with the domestic market focus for the quintessentially Japanese product, puts Matsushita on the losing end of government policies that aid heavy exporters by weakening the country’s currency. Expenses have surged for Matsushita’s company as the yen’s slide boosts its costs for beans grown in China and North America. The fuel it uses to steam the beans and for the natto’s polystyrene packaging, both petroleum products derived from imported crude, have also gotten more expensive.
- Singapore Exports Fall More Than Estimated on Electronics Slump. Singapore’s exports fell more than economists estimated in May as manufacturers shipped fewer electronics after an uneven global recovery hurt demand. Non-oil domestic exports slid 4.6 percent from a year earlier, after falling 1 percent in April, the trade promotion agency said in a statement today. The median of 10 estimates in a Bloomberg News survey was for a 0.2 percent drop. Shipments of electronics dropped 13.2 percent from a year ago, extending the slump to a 10th month.
- China’s Stocks Fall, Led by PetroChina, Anhui Conch Cement. China’s stocks fell, led by material producers, on concern a deeper economic slowdown would curb demand for commodities and construction-related products. PetroChina Co. dropped 0.8 percent to a record low after BNP Paribas SA cut its share-price estimate for the nation’s largest energy producer. Anhui Conch Cement Co., the biggest producer of the building material, slumped to a nine-month low. China Everbright Bank Co. and New China Life Insurance Co. climbed more than 2 percent after state-owned Central Huijin Investment Co. boosted its stakes in the companies. The Shanghai Composite Index (SHCOMP) lost 0.3 percent to 2,155.26 at 9:46 a.m. local time, dropping for a ninth time in 10 days.
- Asian Stocks Climb While Yen Drops on FOMC; Corn Declines. Asian stocks rose and the yen retreated after its biggest weekly climb in four years as investors awaited this week’s Federal Reserve meeting and weighed prospects of reduced economic stimulus. Corn declined and natural gas rallied. The MSCI Asia Pacific Index (SPGSCI) of equities climbed 0.7 percent to 131.67 at 11:42 a.m. in Tokyo, as Japan’s Topix index added 1.3 percent.
- Italian Bonds Fall 6th Week Amid Fed Concern; German Bunds Gain. Italian government bonds fell for a sixth week, the longest losing streak in a year, amid concern the Federal Reserve will slow its asset-purchase program that has boosted higher-yielding securities around the world. Italy’s 10-year yields climbed to the highest level in two months after a report showed gross domestic product shrank more than initially reported last quarter. Portuguese and Greek bonds also dropped this week after European Central Bank President Mario Draghi said debt purchases will only be used when prices are out of line with fundamentals. German bunds rose as speculation central banks will remove stimulus pushed down stocks and boosted demand for the region’s safest securities.
- Bond Rally Leaves HSBC Wary of Economic Recovery: Euro Credit. A rally that makes euro-region bonds the best-performing sovereign securities this year leaves debt burdens for the weakest economies unimproved and masks the need for further economic reforms, HSBC Holdings Plc predicts. Greek, Spanish and Irish bonds have had the highest returns this year among 26 markets tracked by Bloomberg and the European Federation on Financial Analysts Societies. Even so, those gains are not translating into economic recovery.
- Istanbul Police Escalate Crackdown as Erdogan Rallies Supporters. Police in Istanbul stepped up their attacks on protesters, detaining hundreds amid some of the worst violence this month, as Prime Minister Recep Tayyip Erdogan told a mass rally a few kilometers away that those behind the unrest will be made to pay. The clashes spread in all directions out of Taksim Square yesterday, a day after police moved in to clear demonstrators out of Gezi Park where they had been camping out to oppose a development plan. Late yesterday, police were firing tear gas along side streets off the square and nearby districts, beating and arresting protesters. The Istanbul Bar Association said 350 were detained, according to Hurriyet daily. Scattered and bedraggled groups of demonstrators sought to escape or regroup and head back toward Taksim as a thunderstorm lashed the city.
- Rigged Benchmark Probes Proliferating From Singapore to London. The probe of Libor manipulation is proving to be the tip of the iceberg as inquiries into assets from derivatives to foreign exchange show that if there’s a chance to rig benchmark rates in world markets, someone is usually willing to try. Singapore’s monetary authority last week censured 20 banks for attempting to fix interest rate levels in the island state and ordered them to set aside as much as $9.6 billion. Britain’s markets regulator is looking into the $4.7 trillion-a-day currency market after Bloomberg News reported that traders have manipulated key rates for more than a decade, citing five dealers.
- Hedge Funds Cut Gold Bets as Paulson’s Loss Widens: Commodities. Hedge funds cut wagers on a gold rally for the first time in three weeks on mounting speculation central banks will curb record stimulus and as this year’s slump in bullion spurred losses for billionaire John Paulson. The funds and other large speculators lowered their net-long position by 4.1 percent to 54,779 futures and options by June 11, U.S. Commodity Futures Trading Commission data show. Net-bullish wagers across 18 U.S.-traded commodities rose 0.1 percent. Bearish copper bets more than doubled as the metal had its longest slump since November. Cocoa holdings advanced to the highest since 2008 before the biggest weekly slide since January.
- Record Soybean Glut Is Seen Worsening as China’s Appetite Eases. Soybean imports by China, the biggest buyer, may be lower than official U.S. forecasts, deepening a glut and weighing down prices as global reserves are set to reach a record. Inbound shipments will be 63 million metric tons in the 12 months starting Oct. 1, less than the U.S. Department of Agriculture’s June 13 projection of 69 million tons, according to the median of 14 estimates of China-based crushers and researchers by Bloomberg. Soybeans, which rose to a record $17.89 a bushel in Chicago during the 2012 drought in the U.S., slumped 14 percent this month and are in a bear market along with corn and wheat.
- West to Press Iran on Nukes. Plan to Seek Resumed Talks by August After Surprise Election of Centrist President. The Obama administration and its European allies—surprised and encouraged by Hassan Rohani's election as Iran's next president—intend to aggressively push to resume negotiations with Tehran on its nuclear program by August to test his new government's positions, U.S. and European diplomats say.
- Smithfield(SFD) Pressed to Carve Itself Up. A major Smithfield Foods Inc. investor is pressuring the company to explore a breakup rather than follow through with its planned takeover by a Chinese meat producer, according to a letter reviewed by The Wall Street Journal. In a letter to the Smithfield board, expected to be delivered by Monday, activist investment fund Starboard Value LP says it has taken a 5.7% stake in the world's largest hog farmer and pork processor and urges the company to consider splitting up.
- Emerging-Market Fund Exodus Grows. Investors continued to pull money out of emerging-market bond and equity funds on increasing concerns about a tapering of the Federal Reserve's bond-buying program. Investors continued to pull money out of emerging-market bond and equity funds on increasing concerns about a tapering of the Federal Reserve’s bond-buying program. During the week ended June 12, mutual-fund and ETF managers pulled out $8.9 billion in total, said data provider EPFR Global. This adds to the nearly $6 billion in outflows the previous week, bringing the total selling of emerging-market assets to nearly $15 billion. The outflows were the second highest on record, with $2.53 billion in net unwinding. These assets have seen a sharp fall in value after weeks of continued selloff in emerging-market currencies and bonds.
Marketwatch.com:
- China exposed as Abenomics trade ends. Commentary: Exiting foreign money risks credit crunch.
Fox News:
- Iran reportedly preparing to send 4,000 troops into Syria. Iran reportedly is preparing to send 4,000 Revolutionary Guard soldiers to Syria to defend President Bashar Assad's regime, as the United States intends to supply rebels with small arms through a CIA-run program. Pro-Iranian sources deeply involved with Iran's security told The Independent that the decision to move soldiers into Syria was made before last week's presidential election.
- Genome Research Benefits Growing and Getting Cheaper. The ruling by the U.S. Supreme Court this week that human genes cannot be patented comes a decade after the Human Genome Project was completed to much fanfare, and people might be forgiven for wondering what the fuss was about. After all, where are the miraculous benefits?
Zero Hedge:
Business Insider:
New York Times:
MercuryNews.com: - Faltering Economy in China Dims Job Prospects for Graduates. A record seven million students will graduate from universities and colleges across China in the coming weeks, but their job prospects appear bleak — the latest sign of a troubled Chinese economy. Businesses say they are swamped with job applications but have few positions to offer as economic growth has begun to falter. Twitter-like microblogging sites in China are full of laments from graduates with dim prospects. The Chinese government is worried, saying that the problem could affect social stability, and it has ordered schools, government agencies and state-owned enterprises to hire more graduates at least temporarily to help relieve joblessness. “The only thing that worries them more than an unemployed low-skilled person is an unemployed educated person,” said Shang-Jin Wei, a Columbia Business School economist.
- Is Bay Area housing bubble back? It seems absurd, but a few short years after the biggest home price crash in memory, soaring prices are stoking fears -- or at least stirring talk -- that another housing bubble is forming in the Bay Area. That has some buyers skittish and others dropping out of a market that favors cash offers and whopping over-asking-price bids. "It's back to the bubble," said Janine Epstein, a San Jose schoolteacher who is having trouble finding a condominium or townhouse she can afford.
Washington Post:
- Document: Major resources needed for Obama Africa trip. When President Obama goes to sub-Saharan Africa this month, the federal agencies charged with keeping him safe won’t be taking any chances. Hundreds of U.S. Secret Service agents will be dispatched to secure facilities in Senegal, South Africa and Tanzania. A Navy aircraft carrier or amphibious ship, with a fully staffed medical trauma center, will be stationed offshore in case of an emergency. Military cargo planes will airlift in 56 support vehicles, including 14 limousines and three trucks loaded with sheets of bulletproof glass to cover the windows of the hotels where the first family will stay. Fighter jets will fly in shifts, giving 24-hour coverage over the president’s airspace, so they can intervene quickly if an errant plane gets too close. The elaborate security provisions — which will cost the government tens of millions of dollars — are outlined in a confidential internal planning document obtained by The Washington Post. While the preparations appear to be in line with similar travels in the past, the document offers an unusual glimpse into the colossal efforts to protect the U.S. commander in chief on trips abroad.
- French Socialists call for weaker euro, eased EU budget rules. France's ruling Socialists called on Sunday for a weaker euro and changes to EU rules on budget deficits, accusing the centre-right governments of Britain and Germany of creating economic hardship across the European Union. At a conference on Europe, Francois Hollande's party adopted a policy paper that toned down earlier attacks on German Chancellor Angela Merkel, providing some relief to the French president as he seeks to ease tensions with Berlin. "Right-wingers have ruined Europe and thrown Europeans into precariousness," read the preamble to the 13-page policy paper which seeks to woo voters ahead of European Parliament elections in early 2014 where Eurosceptic and far-left and far-right parties are expected to make gains.
- Bid to relaunch synthetic CDO unravels. An attempt by two big Wall Street banks to revive notorious credit boom-era securities blamed for exacerbating the global financial crisis has failed after investors balked at buying some of the derivatives on offer. JPMorgan Chase(JPM) and Morgan Stanley(MS) have scrapped a plan to sell “synthetic collateralised debt obligations” – sliced and diced pools of credit derivatives – after failing to find investors willing to take on all of the deal’s different pieces.
- G8 dispute breaks out on Syria arms. An international row has broken out on the eve of the G8 summit over arming of both sides in Syria’s civil war. President Vladimir Putin bluntly warned the US and its allies not to arm opposition rebels in Syria, reasserting Russia’s uncompromising support for Bashar al-Assad’s regime and declaring that Moscow backs the country’s “legitimate” government.
- Fitch says China credit bubble unprecedented in modern world history. China's shadow banking system is out of control and under mounting stress as borrowers struggle to roll over short-term debts, Fitch Ratings has warned.
- America enjoys oil rush as world switches to other energy sources. The peak oil theory, which states that we have passed the moment of maximum global oil production, was described 40 years ago by Marion Hubbert, a former Royal Dutch Shell geophysicist. However, once again, human innovation has saved the day.
- German unemployment rate will rise to 6.9% in 2013, 7.0% in 2014, citing a study from DIW economic institute.
- The Netherlands sees no role for IMF in future European aid programs after crisis and current programs have ended, citing Dutch Finance Minister Jeroen Dijsselbloem.
- Aides to Brazil President Dilma Rousseff see currency depreciation as one of the main concerns because it may affect inflation and lead the central bank to increase benchmark interest rates more than planned, citing the aides.
- China Shouldn't Pursue Growth of Over 8%. Chinese growth of more than 8% may lead the Asian nation into overcapacity, inflationary pressure and bubbles, citing Cai Fang, director of the Institute of Population and Labor Economics under the Chinese Academy of Social Sciences, as saying.
- China Gov't Spending Curb Won't Harm Economy. The stable consumer demand won't be affected by government spending curbs, according to a front-page commentary written by an unidentified reporter. The Communist Party's rules on limited government spending aim to control "artificially" high consumption demand. Governments at all levels should firmly implement the rules even if some industries will be affected in the short-term, according to the commentary.
Weekend Recommendations
Barron's:- Bullish commentary on (AMD), (EMN) and (AMGN).
- Asian indices are unch. to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 135.0 -2.5 basis points.
- Asia Pacific Sovereign CDS Index 107.75 -5.5 basis points.
- FTSE-100 futures +.10%.
- S&P 500 futures +.43%.
- NASDAQ 100 futures +.42%.
Earnings of Note
Company/Estimate
- (KFI)/.31
8:30 am EST
- Empire Manufacturing for June is estimated to rise to 0.0 versus -1.43 in May.
- The NAHB Market Index for June is estimated to rise to 45.0 versus 44.0 in May.
- (FLO) 3-for-2
- The G-8 Meetings, India rate decision, RBA minutes, China Home Price data and the (DDD) investor meeting could also impact trading today.
