Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -2.35% 2) Coal -2.34% 3) Steel -2.01%
Stocks Falling on Unusual Volume:
- TI, S, EVC, RH, MDCO, UPS, KMP, RLD, BA, ENTA, CPHD, FDO, DG, FDX, TCO, BTI, CLFD, SODA, ECYT, CODE, UFS, PCP, BUD, BEAV, GOLD, ACRX and TXI
Stocks With Unusual Put Option Activity:
- 1) MRO 2) MNST 3) TXN 4) UPS 5) BA
Stocks With Most Negative News Mentions:
- 1) VMW 2) TGT 3) SPG 4) C 5) BBBY
Charts:
Style Outperformer:
Sector Outperformers:
- Airlines +1.04% 2) Homebuilders +.88% 3) Semis +.74%
Stocks Rising on Unusual Volume:
- WBMD, ATHN, ALNY, SPRD, INFY, QSII, VVUS, NOW, VLO, DWA, HRB, XLNX, NFLX, DECK, ITMN, SSNC, EW, FFIV, REGN, TA, CALX and EBIX
Stocks With Unusual Call Option Activity:
- 1) KLAC 2) DECK 3) CWH 4) TXN 5) XLNX
Stocks With Most Positive News Mentions:
- 1) XLNX 2) QSII 3) FFIV 4) ALK 5) WEN
Charts:
Evening Headlines
Bloomberg:
- China Finance Chief Lou Says 6.5% Growth Wouldn’t Pose Problem. Chinese
Finance Minister Lou Jiwei said a 6.5 percent economic-growth rate
wouldn’t be a “big problem,” signaling the government may tolerate a
slower pace of expansion than officials have previously indicated.
Lou, speaking yesterday at the U.S.-China Strategic and Economic
Dialogue in Washington, also said he’s confident in achieving a 7
percent growth rate this year. That’s lower than the government’s 2013
target of 7.5 percent, given in March. First-half expansion was probably
below 7.7 percent “but not too far from it,” he said. His comments
suggest China is prepared to allow the economy to slow further from a
pace that’s already at risk of falling to a 23-year low this year as
Premier Li Keqiang’s government focuses on policy changes to create
more-sustainable expansion. The statistics bureau reports second-quarter
gross domestic product on July 15, with the median estimate of analysts
for a 7.5 percent increase from last year. “We don’t think 6.5 percent
or 7 percent will be a big
problem,” Lou said at a press briefing in response to a
question on whether there’s a limit on slower growth that
officials will tolerate. “It’s difficult to give you a limit.
But from the data we have, we have the confidence.”
- Toxic China Lake Incites Next Generation. “My parents were more focused on putting food on the table,” said
Chen, sitting in one of his Mr. Cake shops sporting black Ray-Ban
sunglasses and a Bluetooth headset. “But for us, we’re living very well
and we want a better quality of life. We want the things we’re eating to
be the best, we want the place we’re living in to be the best, we want
the air we’re breathing to be the best.” Chen’s concerns help
explain why China’s new leaders have signaled they are willing to endure
the pain of slower growth as they push a more durable economic model
that buttresses the Communist Party’s legitimacy. The nation is entering
uncharted territory -- navigating the demands of a newly vocal middle
class without the democratic and civil institutions that helped Japan
and the U.S. clean up environmental damage in the 1970s.
- China Swap Rate Rises in Week as PBOC Refrains From Adding Funds. China’s
one-year interest-rate swap climbed this week on speculation the
central bank will refrain from adding funds to markets after inflation
quickened in June. The People’s Bank of China didn’t inject capital
into the financial system this week for the first time since May, data
compiled by Bloomberg show. Consumer prices in Asia’s largest economy
rose 2.7 percent in June from a year earlier, the most
in four months, official figures showed July 9.
- Asian Stocks Extend U.S. Jump on Stimulus as Copper Gains.
Asian stocks rose, with the regional benchmark headed for its biggest
weekly gain since April, on optimism policy makers from the U.S. to
Japan will maintain stimulus. Metals led commodities lower, while the
won climbed. The MSCI Asia Pacific Index added 0.2 percent to 135.39 at 12:31 p.m. in Tokyo.
- Gold Heads for Best Week Since October 2011 on Stimulus Outlook. Spot gold traded at $1,283.62 an ounce by 11:50 a.m. in
Singapore from $1,286.20 yesterday, when prices climbed for a
fourth day to $1,298.73, the highest since June 24. The metal is
poised for a 4.9 percent gain this week. Holdings in the SPDR
Gold Trust, the biggest bullion-backed exchange-traded product,
were unchanged yesterday after declining for four days.
- Rubber Set for First Weekly Loss in Four as Yen Reduces Appeal.
Rubber declined, heading for the
first weekly loss in four, after Japan’s currency rebounded,
weakening the appeal of yen-denominated futures. Rubber for delivery in
December on the Tokyo Commodity Exchange lost as much as 1.2 percent to
242.2 yen a kilogram ($2,440 a metric ton) after settling yesterday at
the highest level since July 5. Futures traded at 242.7 yen at 10:33 a.m.,
extending losses for this week to 1 percent.
- Draghi
Impotent as Fed Trumps ECB on Yield Curve: Euro Credit. The widest gap
between two- and 10- year German yields in more than a year suggests the
European Central Bank is struggling to protect the region's economy
from a U.S.-led surge in borrowing costs. "The steeper yield curve in
the euro area effectively means an increase in funding costs for both
sovereign and corporate borrowers without an associated change in
inflation or growth," said Lyn Graham-Taylor, a fixed-income strategist
at Rabobank Intl. in London.
- Loose Lips Sink Euro Bond Markets in Crisis: Cutting Research. Loose
lips can cost Europe’s bond markets. A European Central Bank paper
released last week used 25,000 news media releases between January 2009
and October 2011 to investigate how much political communications
affected sovereign bond yields during the region’s fiscal crisis.
The ECB study focused on public pronouncements on fiscal policy and
state finances by officials. It found in the short term that certain
types of commentary had a quantifiable effect on the spread between the
bond yields of Greece, Ireland and Portugal over German bunds. The
impact was biggest for Greece.
- Cross-Border Swaps Deal to End U.S.-Europe Regulation Overlap. U.S. and European Union financial regulators took a step
toward bringing derivatives trading under an integrated framework of
global regulation designed to reduce risks in the $633 trillion swaps
market. The accord, announced jointly yesterday in Brussels and
Washington by the EU and the U.S. Commodity Futures Trading Commission,
broke a deadlock over whether the U.S. could impose its rules on trades
booked in Europe. Banks and other swaps traders said the deal reduces
the chance they will be forced to comply with conflicting regulatory
regimes. “This shows that the CFTC recognizes that other
countries and other jurisdictions have equally made a lot of progress
and that they have to recognize those rules,” Ken Bentsen, president of
the Securities Industry and Financial Markets Association, said in a
telephone interview. “The devil’s in the details. But it would appear to
be a shift in a positive way.”
- Mortgage Applications for New U.S. Homes Dropped 15% in June. Loan applications for purchases of
new U.S. homes tumbled last month, a sign rising mortgage rates
may have damped demand for builders, according an index released
today by the Mortgage Bankers Association. The Builder Application Survey showed a 15 percent decline
in loan submissions in June from the previous month, the
Washington-based group said in a statement. The newly created
gauge tracks application volume predominantly from mortgage
units of large homebuilders across the country. The survey may be an indicator of new-home sales, since the
mortgage application is typically made around the time the sales
contract is signed, said Michael Fratantoni, vice president of
research and economics at the Mortgage Bankers Association. A
jump in mortgage rates, spurred by expectations that the Federal
Reserve will reduce its stimulus program, has sparked concern
that housing demand will weaken as buying costs increase.
- Obama Gets Negative Marks From Voters Upset With Policies. The Quinnipiac University survey showed 48 percent of respondents disapproving of Obama’s job performance and 44
percent approving, virtually unchanged from the 49 percent
negative rating and 45 percent positive mark for him in a May
poll. In an April poll, Obama was given a positive grade by 49
percent and a negative one by 45 percent.
Wall Street Journal:
- Spain Prepares Cuts in Renewable-Energy Subsidies. Moving to Curb the Threat to Public Coffers, the Government
Will Estimate Projects' 'Reasonable Profitability'. Spain is preparing cuts in subsidies for renewable-energy production
in an attempt to diminish their threat to public coffers, according to
people familiar with an industry overhaul expected to be announced as
early as Friday. They said the government would unveil a more complex formula for
determining the guaranteed income that producers receive for the
electricity they generate from wind- and solar-energy projects. That
formula would be based on the government's estimate of a level of
"reasonable profitability" for each project, depending on several
factors including its age, cost, and the amount of subsidies it has
already received.
- Hospitals Prescribe Big Data To Track Doctors at Work. Technology is making it easier to monitor doctors' work as patients'
details are compiled electronically instead of on paper charts. Software
makers are selling new tools to crunch the data. Software called
Crimson offered by the Advisory Board Co. ABCO +3.55% now includes
information on more than a half-million doctors, up from fewer than
50,000 in 2009.
- U.S., Firms Draw a Bead on Chinese Cyberspies. The U.S. government gave American Internet providers addresses linked
to suspected Chinese hackers earlier this year as part of a previously
undisclosed effort aimed at blocking cyberspying, current and former
U.S. officials said. The push reflects a significant shift in levels of cooperation
between the government and Internet companies amid rising concerns over
hacking. It also marks a bold move by the U.S. as it takes part in
high-level meetings on cybersecurity and other matters with the Chinese
this week in Washington. Each side accuses the other of cyberespionage.
Fox News:
MarketWatch.com:
CNBC:
- ECB's Constancio Sees Long Period of Slow Euro Zone Growth. The euro zone is likely to see an extended period of slow economic
growth and European Central Bank's policy will have to stay loose for a
long time, ECB Vice-President Vitor Constancio said on Friday. Constancio,
in the text of a speech to be given in Singapore, also criticized the
European Commission's proposal for shutting down failing banks, saying
that the planned authority should be given access to a public credit
line.'
- US Senators Introduce Bill to Break Up Megabanks. A small bipartisan group of U.S. senators on Thursday introduced
legislation that would break up Wall Street's megabanks by separating
traditional banking activity from riskier financial services.
Zero Hedge:
Business Insider:
New York Times:
- Consumer Frugality Adds to Woes in France. “It used to be elbow to elbow here,” said Hamidou Debo, a shoe vendor
who sat quietly in his outdoor stall as a handful of people browsed
through silver-hued sandals and black leather high-tops before shuffling
away without buying. “Now the crowds are around half what they used to
be.” For Mr. Debo and 2,500 other merchants in the 17-acre market on the
northern edge of Paris, an economic slowdown has gripped business, and
there is no telling when things might turn around. Last year, he said,
he regularly made 300 to 400 euros, or $390 to $520, in sales by
lunchtime. Now he barely makes 100 euros.
Reuters:
- Bomb, gun attacks across Iraq kill at least 44. Bombers
and gunmen attacked policemen and a wake in Iraq among other targets,
killing at least 44 people across the country on Thursday, in the latest
burst of violence that has raised concerns about a return to civil
strife.
Gunmen opened fire on two checkpoints guarding oil installations on the
road between Haditha and Baiji, 180 km (111 miles) north of the
capital, killing 11 people, police said.
In the town of Muqdadiya, 80 km northeast of Baghdad, a further 11
people were killed when a car bomb exploded at a wake. As survivors
gathered to evacuate the wounded, a suicide bomber blew himself up,
police said.
- Google's(GOOG) Schmidt says relationship with AppleAAPL) has improved. The
relationship between Google Inc and Apple Inc has improved over the
past year with the rival technology companies and sometimes partners
conducting "lots and lots" of meetings, Google Executive Chairman Eric
Schmidt said. Schmidt did not provide details about the nature of
the meetings during comments to reporters at the annual Allen and Co
media
conference in Sun Valley, Idaho on Thursday. He noted that Google Chief
Business Officer Nikesh Arora, who joined him at the press briefing, was
leading many of the discussions. The two companies are in
"constant business discussions on a long list of issues," Schmidt said.
- Ford(F) says auto industry needs more Europe output cuts. Ford
Motor Co's European chief Stephen Odell on Thursday said that the
industry production cuts of 1.5 million to 2 million vehicles in Europe
that have occurred or are announced still leave output well above demand. Ford estimates that Europe's auto industry, after those cuts
are realized, will still be making at least 4 million vehicles a
year - more than market demand. Ford expects to lose $2 billion in Europe in 2013.
- Valero(VLO) sees lower Q2 earnings as costs rise.
U.S. refining company Valero Energy Corp on Thursday said it expects
lower second-quarter earnings as the price of some of the crude oil it
processes rose. Shares of Valero fell 4 percent to $33.15 after the close of
regular trading.
- U.S. Fed balance sheet grew in latest week. The U.S. Federal Reserve's
balance sheet grew in the latest week as the U.S. central bank
added to its holdings of Treasury debt, Fed data released on
Thursday showed.
The Fed's balance sheet liabilities, which are a broad gauge
of its lending to the financial system, stood at $3.462 trillion
on July 10, compared with $3.450 trillion on July 3.
Telegraph:
- China’s great economic leap forward hits the wall. This was supposed to be the Asian century, but the Eastern boom is dying of
exhaustion.
So here’s how it looks. Years of unsustainable, credit-fuelled growth are
brought to a halt by a crushing financial crisis which exposes deep
structural flaws at the heart of the economy. Rarely has the assumption of
ever-rising living standards looked so vulnerable, with younger generations
forced to pay not just for the crippling legacy of debt their parents leave
behind, but for the mounting costs of an ageing population and the
consequences of decades-long environmental degradation. Economic decline,
austerity and inter-generational recrimination seem to beckon as populations
adjust to the true mediocrity of their circumstances.
Yomiuri:
- Tepco
Fukushima Plant's Cesium-137 Levels Above Limit. Tepco detected level
of radioactive Cesium-137 near Fukushima Dai-Ichi No. 3 reactor's
turbine building was ~1m times higher than the regulatory limit, citing
co.
Shanghai Securities News:
- China Should Not Artificially Stimulate Growth. Ba Shusong, a
researcher at the State Council Development Research Center, said China
should not artificially stimulate economy for the time being, citing
Ba's speech at a meeting. Stimulus will only lead to asset bubbles, Ba
said. 2Q GDP growth will slow to .4% and the trend of slowdown will
continue for the next few months, citing Ba.
Evening Recommendations
Morgan Stanley:
- Cut Wynn Macau to Underweight, target HK$22.
Night Trading
- Asian equity indices are -.50% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 146.0 -10.5 basis points.
- Asia Pacific Sovereign CDS Index 110.0 -8.75 basis points.
- NASDAQ 100 futures -.08%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Producer Price Index for June is estimated to rise +.5% versus a +.5% gain in May.
- The PPI Ex Food & Energy for June is estimated to rise +.1% versus a +.1% gain in May.
9:55 pm EST
- Preliminary Univ. of Mich. Consumer Confidence for July is estimated to rise to 84.7 from 84.1 in June.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Williams speaking, Fed's Bullard speaking, Fed's Plosser
speaking, Eurozone Industrial Production data and the BoJ Economic
Situation report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Substantially Higher
- Sector Performance: Almost Every Sector Gaining
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- Volatility(VIX) 13.90 -2.18%
- Euro/Yen Carry Return Index 134.99 +.17%
- Emerging Markets Currency Volatility(VXY) 10.49 +.48%
- S&P 500 Implied Correlation 51.36 +2.01%
- ISE Sentiment Index 61.0 -14.08%
- Total Put/Call 1.05 +2.94%
Credit Investor Angst:
- North American Investment Grade CDS Index 77.98 -4.14%
- European Financial Sector CDS Index 154.66 -2.09%
- Western Europe Sovereign Debt CDS Index 96.09 +.10%
- Emerging Market CDS Index 323.86 -3.86%
- 2-Year Swap Spread 17.0 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -9.75 unch.
Economic Gauges:
- 3-Month T-Bill Yield .03% unch.
- China Import Iron Ore Spot $125.20/Metric Tonne +1.05%
- Citi US Economic Surprise Index -11.90 -1.7 points
- Citi Emerging Markets Economic Surprise Index -31.70 +2.0 points
- 10-Year TIPS Spread 2.03 -2 bps
Overseas Futures:
- Nikkei Futures: Indicating +137 open in Japan
- DAX Futures: Indicating +36 open in Germany
Portfolio:
- Higher: On gains in my tech, retail, medical and biotech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short
- Market Exposure: Moved to 75% Net Long
Bloomberg:
- Cosco Shipping Loss Triples in Latest Sign of Weak China Profits. Cosco
Shipping Co. (600428), a listed unit of China’s biggest shipping group,
said first-half net loss tripled, the latest sign that slowing growth
in the world’s second-biggest economy is eroding corporate earnings. The
shipping company’s loss in the first six months was 78 million yuan
($12.7 million), widening from 23.6 million yuan a year earlier, it said
in a statement to Shanghai’s stock exchange yesterday. Gold miner
Zijing Mining Group Co. (2899), sportswear maker Peak Sport Products
Ltd. (1968) and winemaker Dynasty Fine Wines Group Ltd. (828) are among
others to report sliding profits
or losses this month.
- Ibovespa Rout to Worsen as EPS
Estimates Sink: Corporate Brazil. Brazilian earnings estimates are
falling faster than the Ibovespa benchmark gauge, signaling to HSBC
Holdings Plc and Citigroup Inc. that the world's worst major stock
market selloff isn't over. Analysts have cut the average
earnings-per-share forecast on companies in the Ibovespa, led by
retailer B2W Cia. Digital, by 33% over the past 12 months, outpacing the
index's 15% plunge. That has lifted stock valuations, with the gauge
trading at 11.2 times earnings estimates, up from 9.3 times a year ago,
according to Bloomberg.
- Indonesia Fights Inflation With More-Than-Forecast Rate Rise.
Bank Indonesia raised its key interest rate more than economists
forecast to bolster a weakening currency and ease inflation pressures
after the government increased fuel prices last month. The central
bank boosted the reference rate by 50 basis points to 6.5 percent,
Governor Agus Martowardojo said in Jakarta today. The outcome was
predicted by three of 19 economists surveyed by Bloomberg News, with the
majority expecting a 25 basis-point increase. It also raised the deposit facility rate to 4.75 percent from 4.25 percent.
- Rajoy Punishes Exporters Sustaining Spain’s Economy: Euro Credit. Aliberico SL survived Spain’s economic crisis by expanding
sales of aluminum panels in the U.S., Brazil and Morocco. Prime Minister
Mariano Rajoy’s plan to raise corporate taxes may undermine the
company’s efforts. “The fiscal pressure is intense,” Clemente
Gonzalez Soler, chief executive officer and founder of the Madrid-based
manufacturer, said in a telephone interview. “The changes mean a loss of
competitiveness for Spanish companies just at the moment when we need
to export more.”
- Deutsche Bank(DB) Opaque Loans From Brazil to Italy Obscure Risk. Deutsche Bank AG (DBK), perennially among
the top three in global credit markets, made billions of dollars
of loans to banks worldwide since 2008 and accounted for them in
a way that obscured their continuing risk to investors. Germany’s largest bank managed to lend to firms from Brazil
to Italy while making the transactions disappear from its
balance sheet, even though it still is owed the money, according
to four people with knowledge of the practice and internal
documents provided to Bloomberg News. Deals totaling 2.5 billion euros ($3.3 billion) involving
Italy’s Banca Monte dei Paschi di Siena SpA and Banco do Brasil
SA reveal a technique that obscured Deutsche Bank’s lending
reach when it sent cash to the banks, the documents show. The
company had talks about a similar loan to Dexia SA (DEXB) weeks before
that firm was rescued, according to the documents, and it used
the same accounting for other deals through 2011, two of the
people with knowledge of the transactions said. “We should be very concerned about the opacity and
complexity of these transactions,” said Joshua Rosner, an
analyst at research firm Graham Fisher & Co. in New York who
warned in early 2007 that securities linked to subprime loans
posed risks to the economy.
- European Stocks Gain Amid Continued Fed Stimulus Optimism.
European stocks advanced to their highest level in more than five weeks
after Federal Reserve Chairman Ben S. Bernanke said the U.S. economy
will continue to need stimulus measures. Ashmore Group Plc (ASHM) jumped
7.1 percent after reporting fiscal fourth-quarter net inflows of $4.5
billion. BHP Billiton Ltd. and Rio Tinto Group, the world’s biggest
mining companies, each gained 4.6 percent. Portuguese shares slid amid
uncertainty over
whether the country’s president will approve the new make-up of
the government. The Stoxx 600 increased 0.6 percent to 296.54 at the close
of trading.
- Treasury 10-Year Notes in Longest Rally Since February on Fed. Treasury 10-year notes rose for a
fourth day, the longest rally since February, after Federal
Reserve Chairman Ben S. Bernanke called for maintaining stimulus amid division among policy makers on when to slow bond buying.
Treasury notes remained higher after the U.S. sold $13 billion in
30-year bonds at the highest yield in almost two years. Benchmark
10-year yields approached the biggest weekly drop in more than a year
after Bernanke said yesterday “highly accommodative monetary policy” was
needed for the foreseeable future to support the economy. The yield
climbed to the highest level since August 2011 earlier this week on
speculation the Fed will scale back purchases. “You had more evidence
from the Fed that they are going to great lengths to make the market
realize that they are very data dependent and are not talking about
tightening,” said David Coard, head of fixed-income trading in New York
at Williams
Capital Group LP, a brokerage for institutional investors. The
Fed “won’t do anything that will jeopardize a recovery that’s
still somewhat fragile.”
- Gold Rises to Two-Week High as Bernanke Backs Sustained Stimulus.
Gold futures rallied to a two-week
high after Federal Reserve Chairman Ben S. Bernanke said yesterday that
the U.S. needs “highly accommodative monetary policy for the foreseeable
future.” Silver also gained. Gold futures for August delivery
climbed 2.6 percent to settle at $1,279.90 an ounce at 1:46 p.m. on the
Comex in New York, the biggest jump for a most-active contract since
July 1.
Earlier, the precious metal touched $1,297.20, the highest since
June 24, the last time the price topped $1,300.
- IEA Sees 20-Year Supply Peak Outpacing Demand in 2014. Oil supply will outstrip an
acceleration in demand growth next year as production outside of
OPEC expands at the fastest pace in 20 years, the International Energy Agency predicted.
World oil consumption will climb by 1.2 million barrels a day next
year, up from 930,000 a day in 2013, the IEA said in its first monthly
report with forecasts for 2014. Supplies from outside the
Organization of Petroleum Exporting Countries will jump by 1.3 million
barrels a day amid booming output in North America, shrinking the need
for crude from the 12-member producer group, according to the report. The assessment should “give bulls some cause for alarm,”
the Paris-based adviser to oil-consuming nations said. “While
demand growth is also forecast to pick up momentum,” this
“will still fall short of forecast non-OPEC supply growth.”
- U.S. Mortgage Rates for 30-Year Loans Rise to 2-Year High. U.S. mortgage rates for 30-year
loans rose to a two-year high, increasing borrowing costs amid
signs of an improving job market. The average rate for a 30-year fixed mortgage climbed to
4.51 percent, the highest since July 2011, from 4.29 percent last week, McLean, Virginia-based Freddie Mac said in a statement today. The average 15-year rate increased to 3.53
percent from 3.39 percent.
- Fed’s Duke to Resign Aug. 31 After Five Years as Governor. Federal
Reserve Governor Elizabeth Duke, a former community banker who focused
on regulation, plans to resign her seat effective Aug. 31. Duke, who
never dissented from a Federal Open Market Committee decision, submitted
her letter of resignation to President Barack Obama and made no
announcement about her future plans, the Fed said in a statement today in Washington.
MarketWatch:
Zero Hedge:
Business Insider:
Reuters:
- Chinese banks lend aggressively in early July, risking another crackdown. New
local currency yuan loans extended by China's big four state-owned
banks stood at an unusually large 170 billion yuan ($27.7 billion) in
the first week of July, the official Shanghai Securities News said on
Thursday, a move that may alarm regulators trying to strangle distorted
credit growth. Traders said similarly aggressive lending by Chinese
banks in early June caused the central bank to set off an acute
liquidity squeeze in the country's interbank market.
- Lacklustre Italian auction weakens peripheral bonds. Italian bond yields rose on Thursday after a
lacklustre debt auction that suggested choppy trading caused by the
Federal Reserve's mixed messages on ending stimulus is hurting demand for lower-rated euro zone debt.
- Dollar losses accelerate versus yen and euro. The U.S. dollar's losses
versus the yen and euro accelerated in mid-morning New York
trade on Thursday as investors continued to shed bullish dollar
bets on the greenback in the wake of comments made by Federal
Reserve Chairman Ben Bernanke.
Telegraph:
O Estado de S. Paulo:
- Brazil Considers Postponing New Tax Cuts. Some tax cuts already
announced for next yr may be delayed on need for further fiscal
tightening, citing people in the govt's economic team.
Echoing fears that
European policymakers remain in a state of cognitive dissonance –
recognizing the need for root-and-branch overhaul of peripheral banks,
but backtracking on joint liability plans – Christopher Flowers, the
legendary FIG investor who now runs the £2.3 billion ($3.5 billion)
private equity group JC Flowers, sounded the alarm over the negative
sovereign-bank feedback loop.
In a shot across the bows of market bulls, who cite the return of
capital flows to weaker eurozone states, Flowers issued a stark warning:
"There is a scenario where we have a Lehman-type event: we wake up some
Thursday and a big country is in trouble.
"And the ECB will have to decide to support banks x, y, z. And then the
ECB will, in fact, decide to own bank x, y, z.
While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3211790/CurrentIssue/88924/Restructuring-Flowers-slams-Europe-over-inaction.html?copyrightInfo=true
China News Service:
- China 2H Trade Situation May Be More Serious. Rising costs caused
by yuan appreciation and higher labor costs are "important factors"
that make trade environment more serious, citing Commerce Ministry
spokesman Yao Jian today in Beijing.
Style Underperformer:
Sector Underperformers:
- 1) Banks -.55% 2) Oil Service -.29% 3) I-Banks -.19%
Stocks Falling on Unusual Volume:
- WGO, DECK, BCO, CNSL, GDP, PVTB, RF, KOG, NXST, FLY, TXI, REGI, NUS, DWA, JIVE, YUM, GMCR, DV, SCHW, ANGI, AMTD and CMA
Stocks With Unusual Put Option Activity:
- 1) PBI 2) LM 3) CELG 4) XLK 5) LOW
Stocks With Most Negative News Mentions:
- 1) HAS 2) RIG 3) UTX 4) GM 5) AMGN
Charts:
