Night Trading
- Asian equity indices are +.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 142.0 -3.0 basis points.
- Asia Pacific Sovereign CDS Index 111.0 -3.25 basis points.
- NASDAQ 100 futures +.19%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Change in Non-Farm Payrolls for July is estimated to fall to 185K versus 195K in June.
- The Unemployment Rate for July is estimated to fall to 7.5% versus 7.6% in June.
- Average Hourly Earnings for July are estimated to rise +.2% versus a +.4% gain in June.
- Personal Income for June is estimated to rise +.4% versus a +.5% gain in May.
- Personal Spending for June is estimated to rise +.5% versus a +.3% gain in May.
- PCE Core for June is estimated to rise +.1% versus a +.1% gain in May.
10:00 am EST
- Factory Orders for June are estimated to rise +2.3% versus a +2.1% gain in May.
Upcoming Splits
Other Potential Market Movers
- The Fed's Bullard speaking, China Non-Manufacturing PMI report, Eurozone PPI, ISM New York for July and the (DELL) shareholder meeting could also impact trading today.
BOTTOM LINE: Asian
indices are higher, boosted by industrial and real estate
shares in the region. I expect US stocks to open modestly higher
and to weaken into the afternoon, finishing mixed. The Portfolio is 75%
net long heading into the day.
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver-2.28% 2) Alt Energy -.39% 3) REITs -.30%
Stocks Falling on Unusual Volume:
- DX, AUY, SBRA, IRDM, CBEY, INT, RDS/A, SFY, DTV, HGR, BJRI, INT, SBH, VPHM, ROVI, HYGS, OTEX, PRLB, IACI, ISSI, ABMD, SLCA, THRM, CAVM, USU, GWR, CBM, ITRI, BDX, TRW, SPWR, MIC, HTZ, MNTA, TEAR, GWR, JIVE, AMBA, MNTA, SLCA, ITRI, BYD, NRP and ROVI
Stocks With Unusual Put Option Activity:
- 1) YELP 2) DTV 3) HTZ 4) WFM 5) XOM
Stocks With Most Negative News Mentions:
- 1) HUM 2) ITRI 3) FDX 4) XOM 5) ABX
Charts:
Style Outperformer:
Sector Outperformers:
- Gaming +2.20% 2) Oil Tankers +2.02% 3) Education +2.20%
Stocks Rising on Unusual Volume:
- PXD, PSE, LPI, IBOC, IRE, YELP, CTRP, LOCK, RKUS, PSE, MA, TRLA, LPSN, OPEN, CNQR, EGN, CHK, LKQ, BRKR, STRZA, THOR, ITT, TDC, LOCK, CTRX, AXLL, NUS, CNW, BLMN, DWA, WMB, CXO, PPC, PWR, MET and BSX
Stocks With Unusual Call Option Activity:
- 1) TSN 2) MBI 3) WAG 4) PXD 5) V
Stocks With Most Positive News Mentions:
- 1) CNQR 2) TWC 3) F 4) CBST 5) ESRX
Charts:
Evening Headlines
Bloomberg:
- Which Chinese City Will Become the Next Detroit?
In 2010, China’s National Audit Office announced that local governments
had amassed a debt of $1.73 trillion, driven largely by borrowing for
construction, infrastructure and debt service. Easy credit meant to
avert the worst of the global financial crisis only served to worsen the
problem: Local debt will grow to $2.63 trillion by the end of the year,
equal to 29 percent of gross domestic product, according to Huatai
Securities Co. Ltd. A 2012 audit of 36 local governments found $624.6
billion in debt -- suggesting there are at least a few Chinese cities
with debt equal to, or in excess of, the $18 billion that sunk Detroit.
- China SouFun July Home Prices Rise on Hopes of Benign Policies.
China’s new home prices jumped in July by the most since December as
buyers don’t expect the government to tighten the property market
further and push housing values lower. Prices surged 7.9 percent last
month from a year earlier, to 10,347 yuan ($1,688) per square meter
(10.76 square feet), SouFun Holdings Ltd. (SFUN), the nation’s biggest
real estate website owner, said in an e-mailed statement after a survey
of 100
cities. Prices began rising from a year earlier in December,
when they climbed 0.03 percent after a 0.46 percent slide in
November.
- China’s Stock Market Dysfunctional Amid IPO Freeze, Neoh Says. China’s
equity market has become “dysfunctional” after the regulator halted
share sales and investors shifted to wealth-management products, said
Anthony Neoh, a former government adviser who helped the nation open up
to foreign money managers a decade ago. Smaller companies are losing access to capital as the China
Securities Regulatory Commission extends a more than nine-month
halt on initial public offerings and government-controlled banks
focus on lending to state-owned enterprises, said Neoh, who
helped start the Qualified Foreign Institutional Investor
program as the CSRC’s chief adviser from 1999 to 2004. Many
investors assume wealth-management products are guaranteed by
the government, creating “tremendous moral hazard,” Neoh said.
- China Seeks Cuts of Unapproved Steel Capacity, Daily Reports. China
plans to cut steel capacity from the 400 million metric tons of
production that was built without proper approvals, the National
Business Daily reported today, citing an unidentified person.
Authorities will stop banks from lending to steelmakers with unapproved
capacity if the companies have failed to meet environmental and land use
rules, the Shanghai-based newspaper reported, citing the person who has
seen a plan drafted by the National Development and Reform Commission
and the Ministry of Industry and Information Technology. The 400
million tons of unapproved capacity accounts for more than 40 percent of
China’s total, according to the report. Unapproved capacity operating
within China’s environmental
and land use standards may continue to be supported by banks
because of considerations for local employment and tax revenue,
the newspaper reported.
- Goldman Sachs(GS) Says Sell India Stocks as Capital Outflows Deepen. India’s capital outflows deepened in
July, spurring Goldman Sachs Group Inc. to recommend reducing
stock holdings as central bank efforts to support the rupee
threaten to worsen the nation’s economic slump. Foreigners sold a net $2 billion of domestic debt last month through July 30, extending the record $5.4 billion withdrawal in June. The two-month outflow from stocks reached $2.8 billion, the most since the global financial crisis in
November 2008, regulatory and exchange data compiled by
Bloomberg show. Goldman Sachs cut its rating on the nation’s
shares to underweight in a report dated July 31.
- Australian Manufacturing Slumps as Currency Fall Insufficient. A
gauge of Australian manufacturing slumped in July as a decline in the
currency and earlier interest-rate cuts failed to boost exports and
local demand. The manufacturing index dropped 7.6 points to 42 last
month, the biggest decline since April, the Australian Industry Group
said in a survey released today. The last reading above 50, the divide between expansion
and contraction, was in February 2012.'
- Asian Stocks Rise on China PMI Expansion, Fed Bond Buying.
Asian stocks rose, paring this week’s losses, as a gauge of China’s
manufacturing beat estimates and after the Federal Reserve maintained
its bond-buying program at current levels. Jiangxi Copper Co., China’s
biggest producer of the metal, gained 2.3 percent. Panasonic Corp.,
Japan’s largest consumer electronics maker, climbed 5.2 percent after
posting profit that beat estimates. STX Offshore & Shipbuilding Co.
(067250) jumped 11
percent in Seoul after agreeing to restructure debt with its
creditors. Australian bank shares fell on a report the
government will impose a new tax on lenders. The MSCI Asia Pacific Index advanced 0.9 percent to 133.46
as of 11:25 a.m. in Tokyo, with all 10 industry groups on the
gauge rising.
- Rubber Rebounds From Two-Week Low on Oil, China Manufacturing. Rubber rebounded from a two-week low
as oil rallied while manufacturing in China, the biggest user, unexpectedly strengthened and the Federal Reserve maintained its
bond-buying program to support recovery. The contract for delivery in
January gained as much as 2.1 percent to 245.3 yen a kilogram ($2,505 a
metric ton) on the Tokyo Commodity Exchange and was at 244.1 yen at
10:52 a.m. The most-active contract settled at the lowest since July 16
yesterday, paring gains for July to 1.7 percent.
- Meister Says Europe Should Brace for More Years of Merkel Policy. Europe’s
leaders should brace for four more years of unbending German policies
to fight Europe’s debt crisis as Chancellor Angela Merkel leads the
polls seven weeks before elections, one of her senior lawmakers said. If re-elected, Merkel will stick to her position that
neither government nor bank debt can be mutualized as long as
risk takers are free to make others pay for their own mistakes,
Michael Meister, deputy chairman of Merkel’s Christian Union
caucus in parliament, said in a July 31 telephone interview. “The German position is clearly stated” by Merkel and
lawmakers and “none of its guiding principles will change after
the election date,” Meister said. “The apologists in other
countries should be prepared to deal with four more years of
this German policy.”
- Rajoy Faces Dissent From Regions Handing Valencia Widest Deficit. Prime Minister Mariano Rajoy is facing pushback from some regional leaders as he tries to rein in Spain’s budget deficit. Budget Minister Cristobal Montoro won only “majority” support at a meeting of regional government presidents in Madrid
yesterday where he agreed that Valencia would be allowed the
widest budget deficit this year, the minister said in an e-mailed press release late yesterday.
- Egypt Set to Move Against Pro-Mursi Sit-Ins as Islamists Charged. Egyptian authorities charged the top
Muslim Brotherhood leader with inciting murder and ordered an
end to sit-ins by supporters of ousted President Mohamed Mursi,
moves that risk escalating a showdown with the Islamist group. The Interior Ministry was assigned to take steps against
protests in Cairo that have persisted since Mursi’s ouster by
the army on July 3, the military-backed cabinet said yesterday
in a statement. Defying the government, Mursi supporters are
calling for more protests tomorrow, Al Jazeera reported.
- Leveraged
Loans Pass '12 Level With Record Ahead: Credit Markets. The riskiest
U.S. .companies are stepping up their borrowing in the market for
leveraged loans, with the amount of financings completed this year
already exceeding what they raised in all of 2012. Borrowers from HJ
Heinz Co. to Valeant Pharmaceuticals Intl. have tapped non-bank lenders
for $298.4 billion in 2013, more than the $295.3 billion obtained last
year, according to S&P's Capital IQ Leveraged Commentary and Data.
At the current pace, the record of $386.6 billion in 2007 will be
eclipsed before year-end.
- Fed Chairman Search Expanded by Obama With Third Candidate Kohn. President Barack Obama has opened up
the contest to become the next chairman of the Federal Reserve,
adding former Fed Vice Chairman Donald Kohn to the list of names
he’s considering. At a closed-door meeting with Democrats in the U.S. House,
Obama yesterday rejected the notion that it’s a two-person race
between former Treasury Secretary Lawrence Summers and current
Fed Vice Chairman Janet Yellen to succeed Ben S. Bernanke, whose
term expires Jan. 31.
- SEC Says Largest U.S. Hedge Funds’ Debt Tops $1 Trillion. The nation’s largest hedge funds had
$1.47 trillion in net assets and more than $1 trillion in
borrowings as of the fourth quarter, according to the first
report compiled on confidential data they provided to the U.S.
Securities and Exchange Commission. The SEC’s Division of
Investment Management issued the report to Congress last week using
figures from money managers who run private funds with gross assets of
at least $150 million, including borrowed capital, and the agency broke
out
figures for the biggest firms. Congress ordered the SEC to
collect information from private-equity and hedge-fund managers
under a provision of the 2010 Dodd-Frank Act designed to help
regulators monitor risk in the financial system.
- Roc Capital Said to Shutter Main Hedge Fund After Losses. Roc
Capital Management LP, the
hedge-fund firm that counted Deutsche Bank AG (DBK) and the daughter of
billionaire Lakshmi Mittal among its investors, is liquidating its main
fund after losing money, according to a person with knowledge of the
firm. The firm has already started selling its holdings and is
scheduled to return all money to clients in the coming weeks, said the
person, who asked not to be identified because the firm is private. New
York-based Roc managed about $642 million as of March 1.
- J.C. Penney(JCP) Falls on Report CIT Stopped Funding Suppliers. J.C.
Penney Co. (JCP:US), the department-store chain seeking to rebound from
its worst sales year in more than two decades, tumbled 10 percent after
the New York Post reported that CIT Group Inc. (CIT:US) has stopped
funding some of its suppliers.
Wall Street Journal:
- Tepid Growth Restrains Fed. Easy Money to Keep Flowing for Now as Economy Plods Ahead; Inflation Stays Tame. The U.S. economy registered subpar growth and low inflation in the first
half of the year, factors that led the Federal Reserve Wednesday to
keep its easy-money policies in place.
- Bond Slump Saddles Big Banks. Large Banks Can't Avoid Trouble When Interest Rates Rise. The recent market turmoil exposed a new weakness in the balance
sheets of large banks: they hold so many bonds that they can't avoid
trouble when interest rates rise. When long-term rates jumped by a
full percentage point in May and
June amid worries the Federal Reserve would taper its bond-buying
stimulus program, bank investments in mortgage-backed securities and
Treasuries got slammed. J.P. Morgan Chase JPM +0.72% & Co., Bank of
America Corp., BAC +0.55% Citigroup Inc. C +0.70% and Wells Fargo WFC
+0.55% & Co. saw a measure of the paper value of these holdings fall
by more than $13 billion during the second quarter. The rout shows how
difficult it can be for the biggest financial institutions to maneuver
when markets get choppy.
- Mutual-Fund Assets Rise, Except for Muni Bonds.
Money-Fund Assets Also Increase; Taxable Funds' Seven-Day Yield Steady
at 0.01%. Long-term mutual funds rose $8.29 billion in the latest week,
as
investors added money across fund categories except for municipal bonds,
according to the Investment Company Institute. Equity mutual funds have recorded weekly gains for most of 2013,
after investors had avoided them for several years after the 2008
financial crisis. Money flowed in to bond funds in the latest week,
following a seven-week streak of outflows amid a recent run-up in
interest rates.
For the week ended July 24, equity
funds had inflows of $4.17 billion, up from $3.84 billion the prior
week. Domestic equity funds rose $2.72 billion, while foreign equity
funds rose $1.44 billion. Bond funds had inflows of $2.07 billion, against outflows of $3.48
billion in the previous week. Taxable-bond funds were up $4.08 billion,
while municipal-bond funds fell $2.01 billion.
- Daniel Henninger: Obama's Creeping Authoritarianism. Imposed law replaces checks and balances.
If we learned anything about Barack Obama in his first term it is that
when he starts repeating the same idea over and over, what's on his mind
is something else.
- Data of Prosperity Past. The latest GDP revisions underscore how subpar the current recovery is. The good news is that the Commerce Department's second-quarter GDP
report shows that the U.S. is richer and the economy larger than
previously believed. The bad news is that this has nothing to do with
anything that has happened lately, and certainly not in the last nine
months. The current not-so-great economic recovery trudges on.
Fox News:
- States argue for cutting off solar subsidies. Whether it is produced on a rooftop or in the desert, solar energy is generating profits and controversy. “We want to support renewable energy,” said Hawaii state Rep. Marcus
Oshiro. “But not at the expense of all the taxpayers who are heavily
subsidizing this one component.” So as the industry continues to grow, a number of utilities and
officials are saying it’s time for solar to stand on its own – without
the glut of subsidies.
MarketWatch.com:
- China’s rival factory gauges paint divergent image. For a third month in a row, the Chinese government’s data on the country’s manufacturers differed with a
privately-compiled survey on whether activity was growing or
contracting. China’s official Purchasing Managers’ Index (PMI), released Thursday
morning, registered a surprise gain for July, rising to 50.3 from 50.1
the previous month. Any reading above 50 indicates activity is expanding, and the result
beat expectations for a drop to 49.8, according to estimates reported by
Dow Jones Newswires. But 45 minutes later, a separate China manufacturing PMI published by
HSBC and Markit said activity was contracting, with the index sinking to
an 11-month low of 47.7, down from June’s final reading of 48.2.
Zero Hedge:
Business Insider:
New York Times:
- An Analysis Finds a Bias for Banks in S.& P. Ratings. The Wall Street ratings game is back. Five
years after inflated credit ratings helped touch off the financial
crisis, the nation’s largest ratings agency, Standard & Poor’s, is
winning business again by offering more favorable ratings. S.& P. has been giving higher grades than its big rivals to
certain mortgage-backed securities just as Wall Street is eagerly trying
to revive the market for these investments, according to an analysis
conducted for The New York Times by Commercial Mortgage Alert, which
collects data on the industry. S.& P.’s chase for business is
notable because it is fighting a government lawsuit accusing it of
similar action before the financial crisis.
Reuters:
- Government requests for Twitter users' data on the rise. Twitter is under
increasing pressure from governments around the world to release
user's private information, with requests rising 40 percent in
the first six months of the year, the microblogging company said
Wednesday in its semi-annual transparency report.
- Marriott cuts earnings outlook as group bookings lag. Marriott
International Inc, which runs the Marriott and Ritz-Carlton hotels, cut
its 2013 earnings outlook to reflect lower-than-expected conference
revenue, sending its shares down 3 percent in trading after the bell.
Evening Recommendations
Night Trading
- Asian equity indices are -.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 145.0 +3.0 basis points.
- Asia Pacific Sovereign CDS Index 114.25 +3.75 basis points.
- NASDAQ 100 futures +.39%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Initial Jobless Claims are estimated to rise to 345K versus 343K the prior week.
- Continuing Claims are estimated to rise to 3000K versus 2997K prior.
10:00 am EST
- Construction Spending for June is estimated to rise +.4% versus a +.5% gain in May.
- ISM Manufacturing for July is estimated to rise to 52.0 versus 50.9 in June.
- ISM Prices Paid for July is estimated to rise to 53.8 versus 52.5 in June.
Afternoon
- Total Vehicle Sales for July are estimated to fall to 15.8M versus 15.89M in June.
Upcoming Splits
Other Potential Market Movers
- The Eurozone PMI report, ECB rate decision, BoE rate decision, Challenger Job Cuts report for July, Final Markit US PMI for July, RBC Consumer Outlook Index for August, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, CSFB Gaming/Lodging/Leisure/Restaurants Conference, (MYL) investor day and the (NEM) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and real estate shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 13.35 -.30%
- Euro/Yen Carry Return Index 135.72 -.11%
- Emerging Markets Currency Volatility(VXY) 9.97 +2.15%
- S&P 500 Implied Correlation 47.91 -1.40%
- ISE Sentiment Index 113.0 +7.62%
- Total Put/Call .89 +14.10%
Credit Investor Angst:
- North American Investment Grade CDS Index 74.77 -1.12%
- European Financial Sector CDS Index 140.99 -1.22%
- Western Europe Sovereign Debt CDS Index 86.50 -.20%
- Emerging Market CDS Index 304.62 -.72%
- 2-Year Swap Spread 16.75 +.75 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -9.25 -.25 bp
Economic Gauges:
- 3-Month T-Bill Yield .03% unch.
- China Import Iron Ore Spot $129.90/Metric Tonne -.76%
- Citi US Economic Surprise Index 4.0 +11.6 points
- Citi Emerging Markets Economic Surprise Index -27.40 +.7 point
- 10-Year TIPS Spread 2.20 +5 bps
Overseas Futures:
- Nikkei Futures: Indicating -58 open in Japan
- DAX Futures: Indicating +3 open in Germany
Portfolio:
- Higher: On gains in my biotech/medical/retail sector longs and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them
- Market Exposure: 50% Net Long
Bloomberg:
- Rail Debt Costs Surge as Li Steps Up Investment: China Credit.
Borrowing costs for China's state-owned railway company are rising the
fastest in two years just as Premier Li Keqiang vows to accelerate
network expansion in an economy set to grow at the slowest pace in 12
years. The yield on 10-year rail debt surged 23 basis points last month
to 5.32% in Shanghai, the biggest increase since August 2011, ChinaBond
data show. The rate on similar-maturity government bonds climbed 21
basis points to 3.73%.
- Germany’s Retail Sales Unexpectedly Declined in June.
German retail sales (GRFRIAMM) unexpectedly declined in June,
suggesting that doubts about Europe’s economic recovery weighed on
consumer spending. Sales adjusted for inflation and seasonal swings
dropped 1.5 percent from May, when they rose 0.7 percent, the Federal
Statistics Office in Wiesbaden said today. Economists predicted an
increase of 0.2 percent, according to the median of 25 estimates in a
Bloomberg News survey. Sales fell 2.8 percent from a year earlier.
- German Jobless Holds Near Low as Euro Region at Record: Economy. Germany’s unemployment rate held near a two-decade
low, potentially buoying support for the government before September
elections, while the rate in the euro area stayed at a record high. The
number of people out of work in Germany decreased by a seasonally
adjusted 7,000 to 2.93 million in July and the adjusted jobless rate was
unchanged at 6.8 percent, according to the Nuremberg-based Federal Labor Agency today. The
rate in the 17-nation euro area was 12.1 percent in June, unchanged
from a revised figure for May, the European Union’s statistics office
said in Luxembourg.
- European Stocks Are Little Changed After U.S. GDP Report.
European stocks were little changed, with the Stoxx Europe 600 Index
completing its biggest monthly gain since October 2011, as a report
showed the U.S. economy expanded at a faster-than-expected pace.
Anheuser-Busch InBev NV jumped 6.9 percent after the maker
of Stella Artois lager posted earnings that beat estimates.
Invensys Plc added 1.1 percent after Schneider Electric SA
agreed to buy the company for 3.4 billion pounds ($5.2 billion). The Stoxx Europe 600 Index added 0.1 percent to 299.58 at
the close of trading London, after earlier climbing as much as
0.4 percent and dropping as much as 0.5 percent.
- Fed Keeps $85 Billion QE Pace, Sees Risk of Disinflation.
The Federal Reserve said it will maintain its $85 billion in monthly
bond purchases and persistently low inflation could hamper the economic
expansion. “The committee recognizes that inflation persistently
below its 2
percent objective could pose risks to economic performance, but it
anticipates that inflation will move back toward its objective over the
medium term,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington. Chairman
Ben S. Bernanke and his colleagues are debating when employment gains
will be sufficient to warrant tapering bond buying that has swelled the
Fed’s balance sheet to a record $3.57 trillion. Some policy makers have
said
the purchases, aimed at fueling growth and reducing 7.6 percent
unemployment, risk creating asset-price bubbles. The statement
contained no new language on the conditions for maintaining the current
pace of asset purchases. The Fed repeated the pledge it has used since
September that it will continue the purchases until the U.S. labor
market outlook has improved substantially.
- Commodity-Linked Structured Note Sales Slump to Nine-Year Low. Banks
are selling the least
structured notes tied to commodities in nine years as investors shun the
securities amid a slowdown in China’s economy and the prospect of the
U.S. Federal Reserve winding down stimulus. Global issuance in the first half of the year fell to about
$2 billion, 41 percent lower than the same period of 2012 and
the least since 2004 with securities linked to oil and gold
among the biggest losers, according to a report from Barclays
Plc. In the U.S., banks sold $689.6 million of the securities in
the same period, the lowest since at least 2010, and have added
$70.9 million this month through July 30, according to data
compiled by Bloomberg.
- Crude Heads for Best Month Since August on U.S. GDP. WTI for September delivery rose $1.51, or 1.5 percent, to $104.59 a barrel at 1:57 p.m. on the New York Mercantile Exchange.
Futures traded at $103.57 before the supply report. The volume of all
futures traded was 4.7 percent below the 100-day average for the time of
day. Prices have climbed about 8.3
percent this month.
- Fed’s Debit-Card Swipe-Fee Rules Rejected by U.S. Judge. The
Federal Reserve disregarded the Congress’s intent in deciding how much
banks can charge merchants for debit-card transactions, a judge ruled,
handing a victory to retailers who challenged the fees as being too high. U.S. District Judge Richard Leon in Washington ruled today that the Fed considered data it wasn’t allowed to use in setting
a 21-cent cap on debit-card transaction fees under the Dodd-Frank law. Leon said the rule, in effect since October 2011,
would remain in place until the Fed drafts new regulations or
interim standards.
- Kids’ IPhone Hopes Dashed as Americans Pare School Spending. U.S. households are planning to shell out an average of 7.8 percent
less for this year’s back-to-school shopping season because of the bumpy
economic recovery, the National Retail Federation says. The potentially
lackluster spending is one more signal that consumers are conflicted
about the strength of the recovery and the stability of their buying
power. That means retailers will have to keep prices low and offer
exclusive products to fare well during the important back-to-school
season, second only in importance to the year-end holiday season. Total
back-to-school spending may total $26.7 billion this year, the
Washington-based NRF said July 18. That translates to an average of
about $634.78 on apparel, shoes, supplies and electronics for parents
with school-age children, down from $688.62 last year, the group said. “There
is no question that the economy still has a tight grip on Americans’
spending decisions,” NRF Chief Executive Officer Matthew Shay said on a
conference call. “People are finding ways to get by.”
- Obama Calls Summers Criticism Unfair. President Barack Obama told House Democrats that former
Treasury Secretary Larry Summers -- a potential candidate for Federal
Reserve chairman -- is being unfairly criticized, lawmakers said after a
private meeting with the president. “He took a minute to stand
up for Larry Summers,” said Representative Brad Sherman of California.
Obama told Democrats he hadn’t made a decision about whom to appoint as
Fed chairman though he said Summers was being unfairly criticized,
Sherman said today. Representative John Larson, a Connecticut
Democrat, said the president “hasn’t begun the process but he was, I
thought, very adamant in his defense of the service Larry Summers has
provided.” Representative John Lewis of Georgia said the
president “was very defensive, I would say, of Summers and saying that
Summers had played a very critical role early in the administration.”
- SodaStream(SODA) Rallies Most Since May After Raising Outlook.
SodaStream International Ltd. (SODA), the Israeli maker of home soda
machines, surged the most in 11 weeks after boosting its revenue outlook
for 2013 and reporting second-quarter earnings that beat analysts’
estimates. Shares of the Airport City, Israel-based company jumped 15 percent to $67.10 at 10:08 a.m. in New York. The advance pared the stock’s retreat in July to 8 percent, the biggest slump
since October.
Fox News:
- US not into electric cars, but feds gave company $100M for charging stations, watchdog says. A California company was given more than $100 million in taxpayer
funds by the federal government – with few strings attached – to
establish a network of electric car charging stations that is fraught
with problems, according to a government audit. All this, despite weak demand by the American public for electric cars. While President Obama has pledged to get 1 million electric cars on
U.S. roads by 2015, a new report by the Department of Energy’s inspector
general found that Americans’ aversion to electric vehicles and loose
department supervision led to stalling the charging network – which cost
taxpayers more than $135 million.
- Republicans press new FBI director on Benghazi probe.
CNBC:
- Soros takes large Herbalife(HLF) stake, shares spike.
The hedge fund battle over Herbalife intensified on Wednesday as George
Soros has taken a large long position in the nutritional
supplements maker, according to sources. Soros' position in Herbalife is one of his top three holdings, sources said.
- Company pensions in peril as shortfalls hit record. Young workers may want to start counting on something other than company pensions to fund their retirements. It turns out that the plans of S&P 500 companies are underfunded
to the tune of $451.7 billion, a number that has grown some 27 percent
in just the last year alone, according to data released Wednesday by
S&P Dow Jones Indices. While firms have plenty of cash to
cover older workers currently on the payroll or in pension plans, that
may not be the same once the younger generation gets ready to stop
working.
Zero Hedge:
Business Insider:
New York Times:
- New Siemens Chief Sees Weakness in China. The newly named chief executive of Siemens has promised to restore
stability to the company that symbolizes German engineering and
electronics prowess. But he also issued a warning that could bode ill
for the euro zone economy: Don’t count on China.
Townhall.com:
Reuters:
- Honda first-quarter profit lower than expected, cautious on emerging markets. Honda Motor Co (7267.T) announced a lower than expected 5.1 percent rise in quarterly operating profit after sales in Japan dropped following the end of subsidies and as it lagged behind rivals in selling profitable SUVs and pickups in the U.S.
- Brazil cenbank intervenes 3 times as real hits 4-yr low. Brazil's central bank
intervened three times in the foreign exchange market on
Wednesday as it tried to halt a currency slide that took the
real to its weakest level in over four years, potentially adding
to inflation pressures. The interventions came right after the real
slid to as much as 2.3022 per dollar, its weakest since April 1,
2009, suggesting that policymakers are ready to put up a fight
to stop the currency from weakening past the
psychologically-relevant mark of 2.3 per dollar.
- Big funding gaps and not enough FDI in emerging markets. Big balance
of payment deficits and low levels of bricks-and-mortar direct
investment make South Africa, Turkey, Ukraine and India the developing
countries most vulnerable to a "sudden stop" in foreign capital flows.
Telegraph:
