Bloomberg:
- Chinese Economy Facing Instability as Growth Cools, DRC Says. China’s
economy may be facing a period of instability and imbalance as it
transitions from high-speed growth (CNGDPYOY), a state researcher said.
“Growth inertia should not be underestimated, as new growth engines and
patterns have not been formed,” researcher Yu Bin said in a report by
China’s Development Research Center
released today in London. “Market expectations are unstable,
downward pressure has increased, and existing and new structural
mismatches exist. The economy has become unstable and uncertain
like never before.”
- India 10-Year Bond Yield Reaches 2013 High on Tightening Concern.
India’s 10-year bonds fell, pushing the yield to the highest level this
year, on speculation the central bank will tighten monetary policy
further to arrest a slide in the rupee. The Reserve Bank of India
increased the marginal standing facility and the bank rate to 10.25
percent from 8.25 percent last week, while keeping the key repurchase
rate unchanged after cutting it in May. The rupee fell by the most in
two weeks yesterday and lost 7.7 percent in 2013. A weaker currency
makes imports costlier and threatens to spur gains in consumer prices,
which have stayed close to 10 percent for more than a year. “There are fears the central bank may reverse its policy
stance as the rupee doesn’t seem to be behaving in the desired
manner even after the recent measures,” said Debendra Kumar Dash, a fixed-income trader at Development Credit Bank Ltd. in
Mumbai. “The bond markets are pretty jittery.”
- European Stocks Retreat After U.S. Manufacturing Report.
European stocks declined from a seven-week high as a measure of U.S.
manufacturing unexpectedly slumped, outweighing gains by companies from
Royal KPN NV
to Vivendi SA on plans to sell assets. The Stoxx Europe 600 Index dropped 0.3 percent to 299.44 at the close of
trading, erasing an earlier gain of as much as 0.5 percent.
- Congress Must Rein in Bank Commodities Units, Rosner Says. The U.S. Congress should rein in
banks’ ability to own and trade raw materials or risk another
financial collapse, Joshua Rosner of Graham Fisher & Co. said at a Senate subcommittee hearing today. “Historically Congress has acted when a few large firms exploited their advantage and sought to control too much,” said
Rosner, a bank analyst whose New York-based firm advises clients
on investments and regulation in the financial industry. If no
action is taken, “we’re destined to view 2008 as the first
financial crisis and not the worst.”
- Boehner Signals Clash With White House on U.S. Debt Limit. House Speaker John Boehner signaled
a clash with the White House and the Democratic-led Senate over
raising the U.S. borrowing authority later this year. “We’re not going to raise the debt ceiling without real
cuts in spending,” Boehner, an Ohio Republican, told reporters
in Washington today.
Wall Street Journal:
- More Americans Living in Others' Homes. The number of Americans living in someone else's home for economic
reasons rose in the past year despite an improving labor market, posing a
challenge for the housing market and the broader recovery. The number of so-called missing households—representing adults who
would be owning or renting their own home if household formation had
stayed at normal rates since the recession—has increased 4% over the
past year, according to an analysis for The Wall Street Journal.
Fox News:
MarketWatch:
CNBC:
Zero Hedge:
Business Insider:
- Richmond Fed Index Shows Mammoth Fall In Retail Sales. From the report: Retail sales contracted this month,
leaving the index at −22, twenty-three points below last month's
reading. Sales of big-ticket items declined slightly, while shopper
traffic dwindled. The index for big-ticket sales slipped to −5, a point
lower than the June reading, while the index for shopper traffic tumbled
twenty-two points to −16. Inventories declined more slowly than last
month, with that index settling at −12 compared to −22. Retailers were
doubtful about sales in the next six months; the expectations index
dropped to −29 from June's reading of 11. Retailers reduced their number of employees this month. The index fell twelve points lower to end at −14.
New York Times:
- Prices Fuel Outrage in Brazil, Home of the $30 Cheese Pizza. Shoppers here with a notion of what items cost abroad need to brace
themselves when buying a Samsung Galaxy S4 phone: the same model that
costs $615 in the United States is nearly double that in Brazil. An even
bigger shock awaits parents needing a crib: the cheapest one at Tok
& Stok costs over $440, more than six times the price of a similarly
made item at Ikea in the United States. For Brazilians seething with resentment over wasteful spending by the
country’s political elite, the high prices they must pay for just about
everything — a large cheese pizza can cost almost $30 — only fuel their
ire.
CNN:
- Investor pushes TheStreet(TST) for a sale. Private equity firm Spear Point, which holds a 2% stake in the company, wants TheStreet to
hire an outside financial adviser to weigh a number of options. Spear
Point, based in New Orleans, also said it will make a bid for the
company, though it declined to say how much it would be willing to pay.
Reuters:
- Flat steel sales in Brazil slump 6 pct in June -Inda.
Sales of flat steel products at distribution companies in Brazil
declined sharply in June from the prior month, according to the National
Institute of Steel Distributors, known as Inda. Sales fell 6 percent from May to 347,800 tonnes, and 0.3 percent from the same month a
year earlier, Inda added.
Unwanted inventory, which reached 1.1 million tonnes in
June, is now equivalent to about 3.2 months of monthly sales,
Inda added. In the first six months, sales fell 1.7 percent to
2.144 million tonnes, the institute said.
- Bullish on aerospace, United Tech(UTX) lifts 2013 forecast.
United Technologies Corp, the world's largest maker of elevators and
air conditioners, raised the bottom end of its 2013 earnings forecast on
Tuesday, citing its growing confidence after a jump in aerospace orders
and cost cuts.
However, the conglomerate, which also makes Pratt & Whitney jet engines and
Black Hawk helicopters, said revenue would be at the lower end of its forecast
of $64 billion to $65 billion for this year.
- Indian central bank takes more steps to tighten liquidity, support rupee. The Reserve Bank of India on
Tuesday announced further measures to tighten banking system
liquidity and to stabilise the falling rupee.
The RBI set the overall limit for borrowing under the daily
liquidity adjustment facility (LAF) for each bank at 0.5 percent
of deposits, outstanding as of the last Friday of the reporting
cycle two weeks prior to the current one. The central bank also said banks need to maintain 99 percent
of their daily cash reserve ratio requirements with the RBI, as
against 70 percent now.
Real Clear World:
Telegraph:
- China capitulates.
Once again, China has concluded that it is too dangerous to let the
Ponzi Scheme collapse. First we had an article in Xinhua saying that
growth below 7pc would “not be tolerated”.
Now we have a clear statement from Premier Li Keqiang that growth
must not fall below the government’s “lower limit” of 7.5pc for 2013,
and 7pc thereafter. Already we hear talk of more investment on railway projects, social
housing, infrastructure, green energy, sewage, broadband and G4, the
tried and tested levers of fiscal stimulus. So there we are, the on-again off-again credit boom may soon be on
once more, even though each extra yuan of credit now generates less than
0.2 yuan of growth compared to 0.85 before the Great Recession. It all feels like last summer when the authorities responded to the sharp slowdown (hard landing?) by cranking up stimulus. Now it looks as if Beijing has blinked yet again at the first sign of
real trouble. It may take a great deal of stimulus to keep growth at Mr
Li’s floor level, given China’s broken model, if it can be done at all.
That will store up yet more trouble for the future, and sooner of later
the future arrives.
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
Naftemporiki:
- Greeks Paid More 2012 Income Tax As Salaries Fell. Greeks earning
salaries and pensions paid 52% more income tax on average in 2012
compared with year earlier, citing Finance Ministry data. Salaries and
pensions shrank 18% on average during that period.
NHK:
- Fukushima Decontamination to Cost 5 Trillion Yen. Radiation
decontamination efforts in Fukushima prefecture may cost 5.13 trillion
yen, citing estimates by a group of experts at the National Institute of
Advanced Industrial Science and Technology. The estimated cost is more
than four times the budget the government has allocated.
Kyodo:
- Support for Japan PM Abe Falls 12 Points to 56% in July. Support
for Japanese Prime Minister Shinzo Abe's cabinet drops to 56.2% from 68%
in June, according to a poll conducted by Kyodo July 22 and 23.
Xinhua:
- China Bans New Government Building for 5 Years.
China bans Party and government agencies from building new buildings
for 5 years, citing a notice jointly issued by the Communist Party
Central Committee and the State Council. Projects that have already won
approval will be suspended.
Style Underperformer:
Sector Underperformers:
- 1) Tobacco -1.90% 2) Biotech -1.15% 3) Restaurants -.91%
Stocks Falling on Unusual Volume:
- LO, AMPE, WRB, TRV, MO, WNC, NWBI, IOC, PTNR, BPFH, WIN, WIBC, USU, CTG, PENN, USNA, HNP, SILC, WERN, BRCM, WAT, IDXX, ALGT, NFLX, KNX, SPTN, BNNY, EDU, GLF, CMRE, AXE, VLTR, PNK, RMBS, DPZ and TA
Stocks With Unusual Put Option Activity:
- 1) LO 2) BRCM 3) JCP 4) HCA 5) TXN
Stocks With Most Negative News Mentions:
- 1) JDSU 2) LUV 3) ITW 4) TRV 5) BNNY
Charts:
Style Outperformer:
Sector Outperformers:
- Coal +2.98% 2) Gold & Silver +1.78% 3) Steel +1.46%
Stocks Rising on Unusual Volume:
- TI, PACW, BSBR, NBS, ARRY, MTG, FIRE, CSE, LXK, SANM, IRWD, FSL, BTU, WLT, FTNT and PII
Stocks With Unusual Call Option Activity:
- 1) MTW 2) DFS 3) WLP 4) BRCM 5) AEGR
Stocks With Most Positive News Mentions:
- 1) TXN 2) HAS 3) PII 4) BTU 5) LMT
Charts:
Evening Headlines
Bloomberg:
- BRIC Bust Seen in Emerging Market Discontent With Growth. Stretched budgets and sluggish
growth are putting emerging-market governments on a collision
course with rising pressures from recently empowered middle
classes for more spending and better services. From Jakarta to Brasilia, policy makers face the end to an
era of abundant global liquidity that helped fuel the fastest
expansion in three decades. In the eight weeks through July 17,
investors pulled $40.3 billion from emerging-market bond and
equity funds amid signs the Federal Reserve may begin reducing stimulus later this year.
In 2012, $111 billion poured into
these asset classes, according to EPFR Global in Cambridge,
Massachusetts, which tracks money flows. The Fed’s plans didn’t trigger
the slump -- after a decade
of prosperity, the BRIC economies of Brazil, Russia, India and China
(SHSZ300) have been slowing since 2010. Developing nations are punished
more during downturns than their European counterparts because they
depend on growth to mitigate social tensions, said Angel Gurria,
secretary-general of the Organization for Economic Cooperation and
Development. “The needs are much more elementary and brutal,” said
Gurria, a former Mexican finance secretary, in a July 19
interview in Moscow. Families live with “vermin because they
don’t have cement on the floor, and when there’s a big wind it
blows off the roof. This isn’t the problem the middle class in
the Netherlands face.”
- Asian Stocks Extend Two-Month High on China Growth, Fed Stimulus.
Asian stocks rose, extending a two-month high, after Premier Li Keqiang
said China’s economy won’t grow any slower than 7 percent and as U.S.
housing data damped concerns the Federal Reserve will reduce stimulus
measures. Nippon Steel & Sumitomo Metal Corp. (5401) climbed 3
percent in Tokyo after the Nikkei newspaper reported the world’s biggest
steelmaker agreed to a 10 percent price increase with Toyota Motor
Corp. Yanzhou Coal Mining Co., China’s fourth-largest producer of the
fuel, added 3.8 percent in Hong Kong after saying its chairman and vice
chairman resigned. ZTE Corp., China’s No. 2 makerof equipment for phone
networks, jumped 17
percent after reporting higher first-half earnings. The MSCI Asia Pacific Index climbed 0.9 percent to 137.24
as of 12:18 p.m. in Tokyo, with almost four stocks rising for
each that fell.
- Swaption Drop Signals Treasury Market Prepared for Fed Tapering.
Options are signaling that the Federal Reserve can reduce its
bond-purchase program without causing a spike in price swings in the
Treasury market. Three-month implied volatility on 10-year interest-rate
swaps dropped to a one-month low of 89.4 basis points from 122.6 basis
points on July 5, which was the highest since November 2011, according
to data compiled by Bloomberg. The gauge is a measure of projected yield
fluctuations over the next 90 days. Half of the economists surveyed by
Bloomberg say the Fed will begin trimming its $85 billion in monthly
bond purchases in September.
- Fed Seen Tapering QE in September by Half of Economists Surveyed. A growing number of economists surveyed by Bloomberg News say the
Federal Reserve will begin trimming its $85 billion in monthly bond
purchases in September. That was the view of half of those who
participated in the July 18-22 survey, up from 44 percent in last
month’s poll. Even as expectations of a September taper rose, 10-year
Treasury yields continued to fall last week from an almost two-year high
after Fed Chairman Ben S. Bernanke said reducing bond-buying wouldn’t
constitute policy-tightening.
- MillerCoors Sees Metal-Warehouse Delay Costing Buyers $3 Billion. Global
aluminum costs were inflated
by $3 billion in the past year through unfair rules that allow Goldman
Sachs (GS) Group Inc. and other warehouse owners to slow deliveries,
said a risk executive at brewer MillerCoors LLC. The practices of
warehouse owners authorized to hold aluminum by the London Metal
Exchange created artificial limits on available supply, leaving prices
“inflated relative to the massive oversupply and record production,” Tim
Weiner, a global risk manager at Chicago-based MillerCoors, said in
written testimony before his appearance today at a U.S. Senate
subcommittee hearing in Washington.
- Southwest(LUV) Jet’s Gear Collapses, Snarls LaGuardia Traffic.
A Southwest Airlines Co. (LUV) jet’s nose gear collapsed on landing at
New York’s LaGuardia airport, snarling traffic in the nation’s busiest
air-travel market as flights were sent to other airports in the region. Eight of the 150 people on board the Boeing Co. (BA) 737-700 from Nashville, Tennessee, were injured today, Michelle Agnew, a
spokeswoman for Dallas-based Southwest, said in a telephone
interview. CNN video showed the plane sitting with its front end
on the runway and the emergency evacuation slides extended.
Wall Street Journal:
- Housing Recovery Increasingly Prices Out First-Time Buyers. Financial Factors Keeping Lid on Initial Purchases. First-time home buyers, long a key underpinning of the housing
market, are increasingly getting left behind in the real-estate
recovery.
Such buyers, typically couples in
their late 20s or early 30s, have accounted for about 30% of home sales
over the past year. They represented 40% of sales, on average, over the
past 30 years, and accounted for more than 50% in 2009, when
recession-era tax credits fueled the first-time market, according to
data from the National Association of Realtors.
- Economic Casualties: 'Missing Households'. The number of Americans living in someone else's home for economic
reasons rose in the past year despite an improving labor market, posing a
challenge for the housing market and the broader recovery. The number of so-called missing households—representing adults who
would be owning or renting their own home if household formation had
stayed at normal rates since the recession—has increased 4% over the
past year, according to an analysis for The Wall Street Journal.
- As Banks Retreat, Hedge Funds Smell Profit. Private investment funds, facing diminished returns in some other areas,
have piled into the business of lending to struggling companies, part
of a so-called shadow-lending system that operates under different rules
than commercial banks. Hedge funds D.E. Shaw Group and Oaktree Capital
Management, for example, recently set up funds to lend to small and
midsize businesses, including distressed ones.
- Portugal's Bond-Market Recovery Veers Off Track. If Portugal Can't Win Back Investors' Confidence, Another Bailout Could be Near. Only a few months ago, investors were betting on Portugal as Europe's
next bond-market recovery story. Now, despite the apparent resolution of
a political row that sparked this summer's debt selloff, the future
looks more complicated.
- A Global Revenue Grab. The G-20 unveils a plan to limit international tax competition. After five years of failing to spur a robust economic recovery
through spending and tax hikes, the world's richest countries have hit
upon a new idea that looks a lot like the old: International
coordination to raise taxes on business. The Organization for Economic
Cooperation and Development on Friday presented its action plan to
combat what it calls "base erosion and profit shifting," or BEPS. This
is bureaucratese for not paying as much tax as government wishes you
did. The plan bemoans the danger of "double non-taxation," whatever that
is, and even raises the specter of "global tax chaos" if this bogeyman
called BEPS isn't tamed.
Don't be fooled, because this is an attempt to limit corporate global
tax competition and take more cash out of the private economy.
Fox News:
- Will IRS scandal lead all the way to Obama? It took a mere two months and eight days for the Obama administration’s
spin on the growing scandal of the IRS targeting Tea Party and
conservative groups to completely collapse.
- Detroit bankruptcy raises concerns about other US cites under huge retiree debt. The recent bankruptcy filing in Detroit is raising red flags about
other major U.S. cities also dealing with billions in under-funded
retiree benefits, prompting the question -- who might be next? Just
last week, Chicago’s credit rating was downgraded as a result of its $19
billion in under-funded pension liabilities. Moody's Investors Service
called the liabilities “very large and
growing" and warned that Chicago, the country’s third-largest city,
faces a “tremendous strain’’ in trying to meet future funding
requirements and public safety demands.
CNBC:
- Japan PM Abe's mandate is much smaller than it looks. Japanese Prime Minister Shinzo Abe's landslide election victory at
the weekend was anything but a ringing endorsement from voters. The vast
majority never voted for his coalition. Abe's mandate is much
smaller than his ruling bloc's win in the upper house poll suggests:
only about one in four voters gave their support. Three-quarters of the
electorate either did not vote at all or backed opposition parties.
Zero Hedge:
Business Insider:
Reuters:
- Spain taps social security reserve fund to pay pensions. Spain tapped its social security reserve fund for the second time in a
month on Monday, the Labour Ministry said, to help with extra summer
pension payments as unemployment and retirement costs deplete government
funds. The government turned to the fund for 3.5 billion euros ($4.6
billion) on July 1 then for a further 1 billion euros on Monday. Spanish
pensioners receive two cheques in summer and two over the Christmas
holidays.
- Brazil tries to lift fiscal credibility, markets don't buy it. Brazil
announced on Monday it will freeze an additional 10 billion reais ($4.4
billion) in budgeted spending, in an effort that is unlikely to dispel
investors' mistrust in the government's commitment to fiscal
austerity. The new freeze, which was originally expected to reach up to
20 billion reais, is aimed at helping the central bank battle
inflation, which hit a 20-month high in June. Brazil's planning
ministry on Monday raised its projection for 2013 inflation to
5.7 percent from 5.2 percent previously -- closer to market
expectations.
- Italy says to press ahead with divisive tax decisions. Italy's fragile coalition
government said on Monday it would press on with plans to reform
a hated housing levy and resolve differences over sales tax,
despite earlier reports it might have to postpone decisions on
the divisive issues. Disagreements over tax policy have tested the left-right
coalition, which has seen its public support tick down steadily
since it was formed in April.
- Texas Instruments(TXN) upbeat about revenue, chip demand. Texas Instruments Inc
gave a third-quarter revenue forecast that was stronger
than some analysts expected and said customers seem more
confident about placing orders for chips. Orders picked up in the first half of 2013 and Chief
Financial Officer Kevin March told Reuters on Monday that
business continues to improve, following weak demand last year
due to concerns about the global economy. Texas Instruments' book to bill ratio, a measure of orders
filled, was 1.03 in the second quarter, unchanged from the prior
quarter.
- Brazil firms boost hedges as currency swings, debt soars. Brazilian companies, seeking
to buffer their growing foreign debt from the impact of a
surging U.S. dollar, are stepping up demand for hedges known as
non-deliverable forward contracts, data by Cetip SA Mercados
Organizados showed on Monday.
Berliner Zeitung:
- IWH
Forecasts Eastern German Economy Will Stagnate This Year. IWH Halle
institute expects the German economy to grow .7% this year, citing IWH
projections. Cos. in eastern Germany less protected from recession in
neighboring countries. Unfavorable demographic trend one of the reasons
for stagnation in eastern Germany; more than 500,000 people emigrated
from the region from 2000-2011. Economic slowdown has cut chances
eastern German regions will reduce financial arrears owed to western
German states.
Beijing News:
- China
Premier Says GDP Growth Bottom Line is 7%. China Premier Li Keqiang
said China's "bottom line" for GDP growth is 7% and the nation can't let
growth go below that, citing comments at a recent meeting with
economists and businesspeople. China's economy is at a "reasonable"
level as a whole, Li said. China's policy makers don't simply loosen
fiscal and monetary policies or adopt short-term stimulus when downward
economic pressure increases, citing Chen Yulu, a central bank adviser.
Evening Recommendations
RBC:
- Rated (LRCX) Outperform, target $61.
Night Trading
- Asian equity indices are +.50% to +1.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 126.50 -1.5 basis points.
- Asia Pacific Sovereign CDS Index 98.25 -3.75 basis points.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
9:00 am EST
- The House Price Index for May is estimated to rise +.8% versus a +.7% gain in April.
10:00 am EST
- The Richmond Fed Manufacturing Index for July is estimated to rise to 9.0 versus 8.0 in June.
Upcoming Splits
Other Potential Market Movers
- The
Japanese Cabinet Office Monthly Economic report, Eurozone Consumer
Confidence report, 2Y T-Note auction, HSBC Manufacturing PMI report,
Australian inflation data and the weekly retail sales reports could also
impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by commodity and real estate shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Modestly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 12.51 -.24%
- Euro/Yen Carry Return Index 136.93 -.66%
- Emerging Markets Currency Volatility(VXY) 9.08 -3.51%
- S&P 500 Implied Correlation 50.11 -2.43%
- ISE Sentiment Index 123.0 -7.53%
- Total Put/Call .95 +20.25%
Credit Investor Angst:
- North American Investment Grade CDS Index 72.59 -.01%
- European Financial Sector CDS Index 140.98 -5.90%
- Western Europe Sovereign Debt CDS Index 93.0 unch.
- Emerging Market CDS Index 271.92 -2.41%
- 2-Year Swap Spread 18.0 +.25 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -9.25 -.25 bp
Economic Gauges:
- 3-Month T-Bill Yield .01% -1 bp
- China Import Iron Ore Spot $131.50/Metric Tonne -.15%
- Citi US Economic Surprise Index -9.10 +.4 point
- Citi Emerging Markets Economic Surprise Index -29.30 +1.7 points
- 10-Year TIPS Spread 2.20 unch.
Overseas Futures:
- Nikkei Futures: Indicating +68 open in Japan
- DAX Futures: Indicating -3 open in Germany
Portfolio:
- Slightly Higher: On gains in my medical/biotech/retail sector longs
- Disclosed Trades: None
- Market Exposure: 50% Net Long
Bloomberg:
- China One-Year Swap Rate Rises on Capital Outflow Concerns. China’s
one-year interest-rate swap rose to a three-week high on concern
capital will head overseas as a slowdown in the world’s second-largest
economy erodes the creditworthiness of local companies. Yuan
positions at Chinese financial institutions accumulated from sales of
foreign exchange, an indication of capital inflows, rose 67 billion yuan
($10.9 billion) in May, the least in six months, the People’s Bank of
China reported June 14. The nation’s rating firms cut the most bond
issuer rankings on record in June, according to Guotai Junan Securities
Co., the nation’s third-biggest brokerage. “Concern about capital
outflows is rising because of fear of default and increasing
non-performing-loan ratios,” said Wee-Khoon Chong, a strategist at
Societe Generale SA in Hong Kong.
- India 10-Year Bonds Fall After Worst Weekly Decline Since 2009.
India’s 10-year bonds fell after posting their biggest weekly loss
since 2009 as the nation’s central bank raised two interest rates to
steady the currency. “The central bank is clearly aiming to raise short-term
rates,” said Arvind Chari, a senior fund manager at Quantum
Asset Management Co. in Mumbai. “The market’s expectations of a
rate cut have been pushed back significantly.” The yield on the 7.16 percent bonds due May 2023 rose two
basis points to 7.96 percent as of 10:30 a.m. in Mumbai,
according to the central bank’s trading system. The rate surged
41 basis points last week, the most for a benchmark 10-year
government note since December 2009, data compiled by Bloomberg
show.
- EU Bank Sovereign Debt and Capital Holdings to Be Published. The European Union’s top banking
regulator will reveal data on the sovereign debt and types of
capital held by the bloc’s biggest lenders as it forgoes a
stress test for a second year. The European Banking Authority, set up in 2011 to harmonize
banking rules, may publish the data as early as October and
include additional information on banks’ cross-border
investments across the EU.
- European Stocks Rise for Fourth Day as UBS, Philips Gain. European
stocks rose for a fourth day, extending a seven-week high, as companies
from UBS AG to Royal Philips (PHIA) Electronics NV reported increased
profit. UBS, Switzerland’s largest bank, rallied to a two-year high.
Philips, the Dutch maker of light bulbs and electric toothbrushes,
gained for an eighth day. Portugal’s PSI-20 Index (PSI20) advanced 2.3
percent as President Anibal Cavaco Silva affirmed that he doesn’t want
to call early elections. Mobistar (MOBB) SA slumped the most on record
after the Belgian mobile-phone company cut profit forecasts and
suspended its dividend.
The Stoxx Europe 600 Index rose 0.2 percent to 300.3 at the
close of trading, having swung between gains and losses at least
20 times.
- Gold Futures Advance Most in a Year on U.S. Stimulus Outlook. Gold gained the most in more than a
year on speculation that the Federal Reserve will maintain U.S.
economic stimulus, boosting the appeal of the precious metal as
a store of value. Silver also surged. Gold futures for December delivery rose 3.3 percent to
settle at $1,337.30 an ounce at 1:43 p.m. on the Comex in New York, the biggest gain since June 29, 2012. Earlier, the metal reached $1,340.50, the highest for a most-active contract since
June 20.
- Egypt Islamist Calls for U.S. Embassy Siege Amid Unrest. A
Muslim Brotherhood leader called on Egyptians to lay siege to the
U.S Embassy in Cairo to protest what he said was American support for
the ouster of Islamist President Mohamed Mursi. U.S. diplomats should
leave Egypt, Essam El-Erian told Brotherhood supporters today in Cairo’s Nasr City suburb, where they’ve been staging a sit-in since Mursi’s July 3 removal by the army.
He said he hoped they wouldn’t be harmed. The U.S., which gives more
than $1 billion a year to the Egyptian military, hasn’t labeled its
intervention as a coup, though it has called for a quick transition to
democracy.
Wall Street Journal:
- Euro-Zone's Debt Load Swells. Government Debt as Proportion of Economy Rises to 92.2%. The figures are a signal that the euro zone's strategy of spending
cuts and tax increases aimed at curbing debts isn't yet having the
desired effect, in part because of falls in economic output across the
bloc. A recession lasting 18 straight months, which critics say has been
the result in large part of austerity measures, has caused tax revenues
to wither and benefits payments to rise, forcing governments to borrow
more. Figures Monday from the EU's official statistics agency, Eurostat,
showed that the government debt of euro-zone countries grew to represent
92.2% of their combined gross domestic product at the end of March,
from 90.6% at the end of December and 89.9% at the end of September.
That represents a significant step up in the bloc's accumulation of
debt. The figures showed continued rises in the government debt levels
of euro-zone countries at the heart of the fiscal crisis. Irish
government debt rose to 125.1% of GDP, some 7.7 percentage
points higher than three months earlier, the figures showed. Spain's
debt rose 4.0 percentage points to 88.2% of GDP and Portugal's rose 3.5
percentage points to 127.2%. Greek government debt rose 3.7 percentage
points to 160.5% of GDP. Only two of the 17 euro-zone countries, Germany
and Estonia, reported falling levels of debt as a proportion of their
economy.
Fox News:
MarketWatch:
CNBC:
- Doctors are skeptical and confused about Obamacare, survey finds. The doctor is . . . skeptical about the Affordable Care Act. And clueless, too. A new survey shows that an overwhelming percentage of physicians don't
believe that their states' new health insurance exchanges will meet the
Oct. 1 deadline for those key Obamacare marketplaces to begin enrolling
the uninsured. Just 11 percent of doctors believe those exchanges will be open for business that day. But those doctors, by a wide margin, also said they are "not at all
familiar" with how a number of important aspects of those exchanges and
plans offered on them will work—aspects that will directly affect their
bottom lines. More than 65 percent of them gave that answer to all but
one of the questions asking their familiarity with plan benefits levels,
contracted rates with insurers, patient coverage terms and the claims
process.
- Pump prices jump 12 cents, AAA sees further rise. American motorists are bracing for further increases in gas pump
prices this summer after average national prices rose 12 cents in the
past week alone. AAA says drivers are experiencing "sticker
shock" as increased summer demand, unrest in Egypt and production
disruptions in the U.S. and other countries push up the price of crude
oil and gasoline. The national average price for regular unleaded gasoline was $3.67 a gallon on Friday.
- Investors are moving out of housing, here's why. They swarmed the distressed housing market, buying thousands of
foreclosed properties and pushing prices higher faster than anyone
expected. Now investors are pulling back, dissuaded by the higher prices
they themselves brought about.
Zero Hedge:
Business Insider:
c/net:
Finextra:
Reuters:
- EBay(EBAY) expands same-day delivery in local battle with Amazon(AMZN). EBay
Inc unveiled a big expansion of its eBay Now same-day delivery service
on Monday as the company battles with rival Amazon.com Inc for dominance
of the emerging online local commerce market. EBay Now, which delivers products from stores including
Target, Walgreen and Best Buy in as
little as an hour, was launched last year in San Francisco and
San Jose, California and Manhattan, New York.
89.3 KPCC:
Telegraph:
El Mundo:
- Spain Opinion Poll Shows PP Support Plunging. Support for Spain's
ruling People's Party plunges, citing opinion poll. Electoral support
for PP fell to 30.7%, 13.9 pps below support level gained to win Nov.
2011 general elections, citing poll by Sigma Dos; PP had 35.4% support
in May. Support for Socialists reached 27.8% in July vs 28.8% in 2011
elections; Izquierda Unida party has 14.3% support. 60.2% of those
polled had a bad or very bad opinion of Prime Minister Mariano Rajoy,
citing poll.
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
Efimerida ton Syndakton:
- Opposition Syriza Party Leads New Democracy, Greek Poll Shows.
Syriza with 23.5% support, up rom 22.5% the month before. New Democracy
at 21.5%, down from 23% in June. Nationalist Golden Dawn party in third
place with 14.5%.
Epoch Times:
