Bloomberg:
- If You Think Europe Is Fine, Look at Italy. It has become fashionable not to worry about Europe and the euro area. This complacency has a serious flaw: Italy.
- Covenant-Light Loans Challenge '07 Europe Record: Credit Markets. The riskiest European companies are stepping up their borrowings of loans that lack standard lender protections, with the amount raised this year already exceeding all of 2012 by more than threefold. Private-equity firms from BC Partners Ltd. to Cinven Ltd. raised 4.6 billion-euros of covenant-light loans from non-bank lenders for companies they own in the region, up from 1.4 billion-euros last year, according to S&P Capital IQ Leveraged Commentary and Data. The amount is on pace to challenge the record 7.7 billion euros raised in 2007, before the market for such financings closed for the next four years. European companies are taking advantage of demand from the U.S., where record low interest-rates are encouraging investors to search further afield for high yields - even in places struggling to emerge from recession. About 70% of the covenant-light loans, which often have no restrictions on a borrower's ability to load up on debt, were issued in U.S. dollars, according to Bloomberg.
- Yuan Advances to 19-Year High on PBOC Fixing, Convertibility Bet. China’s yuan rose to a 19-year high as the central bank boosted the currency’s reference rate and on speculation the government will further open the nation’s capital markets to offshore investors.
- Standard Chartered First-Half Net Income Drops 24 Percent. Standard Chartered Plc (STAN), the U.K. bank that makes about three-quarters of its earnings from Asia, posted a 24 percent drop in first-half profit after writing down the value of its Korean business by $1 billion. Net income fell to $2.18 billion from $2.86 billion a year earlier, the London-based lender said in a statement yesterday. Revenue rose 6.6 percent as growth in Hong Kong and India mitigated declines in Korea, Singapore and China.
- Japan Drives Asian Stock Drop on Yen as Gas to Gold Slide. Asian stocks fell, led by Japanese shares, and the yen rallied to a six-week high on prospects the nation’s central bank will refrain from adding to stimulus. Natural gas futures extended declines and precious metals slid. The MSCI Asia Pacific Index decreased 1 percent to 134.35 at 12:15 p.m. in Tokyo, poised for its biggest drop this month. Japan’s Topix Index sank 1.6 percent.
- Something's Gotta Give When 15% Loans Sap States: Brazil Credit. States in Brazil are pressuring Congress to cut interest rates on $202 billion in debt as they seek money to meet protester demands for better public services, a move that threatens to strain the nation's budget as borrowing costs rise. "We are being bled every month," Teotonio Vilela Filho, governor of the northeastern state of Alagoas, said about proposals to cut rates on loans including those from the $16.9 billion bailout of states in 1997. "It's a huge burden and we're working so Congress can change this."
- Copper Declines as U.S. Trade Data Fuels Fed Stimulus Concern. Copper fell as better-than-expected U.S. trade data fueled concern the Federal Reserve may reduce its bond purchases this year, reducing stimulus from the economy and weakening demand for base metals. Copper for delivery in three months dropped 0.6 percent to $6,966.50 a metric ton on the London Metal Exchange at 11:44 a.m. in Tokyo. Futures for delivery in September dropped 0.5 percent to $3.1580 a pound on the Comex in New York.
- Rubber Declines as Yen’s Gains Cut Appeal Ahead of BOJ Meeting. Rubber declined as the strengthening Japanese currency reduced investor appetite for yen-denominated contracts for the commodity used in tires. Futures for delivery in January fell as much as 1.6 percent to 245.9 yen a kilogram ($2,526 a metric ton) on the Tokyo Commodity Exchange, before trading at 249.8 yen at 11:04 a.m. local time. Rubber lost 18 percent this year.
- BofA(BAC) Lied to Investors About Mortgage-Bond Risks, U.S. Says. Bank of America Corp. (BAC:US) was sued by the U.S. for allegedly hiding risks from investors in a 2008 deal for $850 million of bonds backed by residential mortgages. Government lawsuits filed today in federal court in Charlotte, North Carolina, lay out a pattern of intentional acts by bank officials to disguise the mortgages’ risks in disclosures to the U.S. Securities and Exchange Commission and investors. Those accused of fraudulent conduct are identified only by their positions without any names.
- JPMorgan(JPM) Sued With Goldman Sachs(GS) in Aluminum Antitrust Case. JPMorgan Chase & Co. (JPM:US), the biggest U.S. bank, was sued with Goldman Sachs Group Inc. (GS:US) over claims it restrained aluminum supplies and drove up prices. The complaint was filed today in federal court in Tallahassee, Florida, by a Jacksonville direct purchaser, Master Screens Inc., and by individual plaintiff Daniel Price Bart of Tallahassee, who is described in the filing as a “purchaser of beverages sold in aluminum cans.”
- Bats Exchange Trading Restored After One-Hour Shutdown. Bats Global Markets Inc., the fourth-largest U.S. stock exchange operator, shut its main market for almost an hour today amid a malfunction in its computer systems. Trading on the Bats BZX Exchange stopped at 1:10 p.m. New York time and resumed at 2 p.m., according to data compiled by Bloomberg. The issue was caused by an internal network problem, not a software malfunction, Randy Williams, a spokesman for Lenexa, Kansas-based Bats, wrote in an e-mail. “All systems were fully operational for the remainder of the trading day and we fully expect them to run smoothly tomorrow,” he said.
- SEC's Hunt for Crisis-Era Wrongdoing Loses Steam. Hedge Fund Magnetar Won't Face Charges Tied to Mortgages. Securities and Exchange Commission enforcement officials have decided not to recommend filing civil charges against hedge-fund firm Magnetar Capital LLC, which teamed up with Wall Street firms to create mortgage securities that suffered billions of dollars in losses during the financial crisis, according to people familiar with the situation. The decision is a sign the SEC's investigations into whether companies or individuals broke the law with their conduct ahead of the crisis are running out of gas.
- Consumers Find Investors Eager to Make 'Peer-to-Peer' Loans. Peer-to-Peer Lending Platforms Enable Consumers to Bypass Banks When Borrowing.
- China Labor Camps Under Fire from State Think Tank. An influential Chinese government-run think tank is the latest to decry the country’s controversial system of re-education through labor, with a newly published report describing the system as outdated and in violation of judicial principles. The Chinese Academy of Social Sciences, in a political development report published on Monday, said abuses in the system have become increasingly apparent and had given rise to widespread public opposition, according to state media reports summarizing CASS’s findings.
- Investors Grow Wary of Indonesia. Protectionism, Slowing Growth Are Worries as Election Approaches.
- The Other Targeting Scandal. Democrats lobbied the SEC to limit business political donations. The IRS targeting scandal is best understood as part of a larger effort to limit the political speech of conservatives and business groups. That became clearer last week regarding the Federal Election Commission, and now evidence is spreading to the Securities and Exchange Commission.
- US files charges against Benghazi attack suspects, official says. The Justice Department has filed criminal charges against several suspects in the Benghazi terror attack, a U.S. official tells Fox News. The U.S. official confirmed that sealed charges were filed against suspects in connection with the Sept. 11, 2012, attack. It's unclear whether they are the same individuals whose images the FBI released to the public in May. One of the individuals charged is Libyan militia leader Ahmed Khattalah.
- Fort Hood trial turns bizarre as shooter grills witnesses. The trial of the Fort Hood gunman, who is acting as his own attorney, took a surreal turn as the former Army psychiatrist accused of killing 13 in the November 2009 attack grilled witnesses -- including his former boss in the military and a fellow Muslim who spoke to him the day of the shooting. After a short opening statement in which ex-Army Maj. Nidal Hasan called himself a "mujahedeen," admitted to the rampage and said "the dead bodies will show that war is an ugly thing," Hasan cross-examined prosecution witnesses, including retired Lt. Col Ben Kirk Phillips, his former boss. When pressed by the defendant, Phillips acknowledged that his officer evaluation report had graded Hasan as "outstanding." But he declined to cross-examine one of his shooting victims, Sgt. Alonzo Lunsford, who provided the day’s most damning testimony.
- Government data pull rug out from under us. Commentary: GDP-report revisions raise serious questions.
- China's Credit Crisis In Charts. (graphs)
New York Times:
- Tapering of Stimulus Could Start as Soon as September, 2 Fed Presidents Hint. Two Federal Reserve regional presidents suggested on Tuesday that the central bank could ease its extraordinary efforts to stimulate the economy sooner rather than later, but stopped short of providing an exact time frame.
- The Other Benghazi Scandal: Journalists Worry Covering The Attack Threatens White House Access. As the one year anniversary of the deadly attack on an American consulate in Benghazi approaches, journalists have begun to take another look into the scandal surrounding the government’s response to that terrorist event. Last week, CNN aired two striking reports revealing that the Central Intelligence Agency had a large number of agents on the ground on the night of the attack and that a suspect in the attack has never been interviewed by investigators. Following these revelatory reports, which some in President Barack Obama’s administration believe represent a political threat, some CNN reporters now fear for their access to the White House. They are not alone.
- Evidence suggests new bird flu spread among people. New evidence suggests that a specific strain of the bird flu, H7N9, can be spread between humans. Chinese scientists have found the strongest evidence yet that a new bird flu strain is sometimes able to spread from person to person, but they are emphasizing that the virus still does not transmit easily. The new bird flu strain, known as H7N9, was first reported by Chinese authorities in March. As of the end of May, there were 132 cases and 37 deaths in China and Taiwan linked to the virus.Health officials suspect patients were most likely infected by birds in live animal markets but acknowledged there were probably sporadic cases of the virus spreading among humans.
- Tens of thousands rally to oust Tunisian government. Tens of thousands of Tunisians crowded the streets of downtown Tunis on Tuesday to demand the transitional government's ouster, in the largest opposition protest since the country's political crisis began two weeks ago. The secular opposition, angered by two assassinations in its ranks and emboldened by the army-backed toppling of Egypt's Islamist president, is trying to topple Tunisia's Islamist-led government and dissolve the Constituent Assembly.
- Japan govt joining efforts to contain Fukushima toxic water. The Japanese government is joining efforts to contain a buildup of radioactive water at the crippled Fukushima nuclear plant, as operator Tokyo Electric Power Co struggles to contain the problem, government officials said on Wednesday.
- Obamacare months behind in testing IT data security -gov't. The federal government is months behind in testing data security for the main pillar of Obamacare: allowing Americans to buy health insurance on state exchanges due to open by Oct. 1. The missed deadlines have pushed the government's decision on whether information technology security is up to snuff to exactly one day before that crucial date, the Department of Health and Human Services' inspector general said in a report. As a result, experts say, the exchanges might open with security flaws or, possibly but less likely, be delayed.
- First Solar(FSLR) cuts 2013 outlook, buys GE solar technology. First Solar Inc on Tuesday reported quarterly earnings and revenue well short of expectations and slashed its outlook for the year due to construction delays for a large project and a decision to sell two projects only after they are finished. The company's shares slid 9 percent in extended trade.
Financial Times:
Telegraph:- Fear gauge shows complacency has taken hold. A strong rally in US stocks has pushed Wall Street’s most widely watched risk barometer close to multiyear lows in a sign investors are growing increasingly complacent as equity indices test fresh record highs. The CBOE Vix index, a gauge of the price traders are prepared to pay to protect against volatility in the US stock market, has dipped more than 40 per cent since late June and neared pre-financial crisis levels by the start of the week.
- IMF crosses swords with Germany over crisis handling. The International Monetary Fund has exhorted Germany to stop dragging its feet on eurozone crisis measures, refuting claims that austerity is working and that Europe is on the road to recovery.
- 'Rate rises threaten crash in every asset'. The value of almost all investments, including shares, bonds and property, could fall if investors believe that interest rates are about to return to normal, a senior fund manager has warned.
- China to Strictly Control Govt Spending Next Year. People's Daily reports, citing the Ministry of Finance on budgeting work for next year.
- China 2H Trade Growth May Continue to Slow. China's export and import growth may continue to slow in 2H as external environment for trade is "not optimistic," according to a report by State Information Center, which was published today.
- China's Urbanization Not Another 4t Yuan Stimulus. China's urbanization shouldn't be seen as a new 4 trillion yuan stimulus plan, citing Qiao Runling, deputy director of the China Center for Urban Development under National Development and Reform Commission. The core idea behind urbanization is reform, citing Qiao.
- None of note
- Asian equity indices are -1.50% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 144.0 +2.0 basis points.
- Asia Pacific Sovereign CDS Index 109.5 -.25 basis point.
- FTSE-100 futures -.14%.
- S&P 500 futures -.24%.
- NASDAQ 100 futures -.12%.
Earnings of Note
Company/Estimate
- (DVN)/.95
- (STE)/.56
- (WCG)/1.22
- (TWX)/.76
- (MMC)/.67
- (DUK)/.93
- (AOL)/.43
- (RL)/1.94
- (MDLZ)/.34
- (GMCR)/.76
- (MBI)/.14
- (PRU)/1.99
- (JACK)/.41
- (CECO)/-.46
- (JOE)/.02
- (CXW)/.64
- (TSLA)/-.19
- (SCTY)/-.38
- (SKYW)/.34
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,500,000 barrels versus a +431,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -500,000 barrels versus a +770,000 barrel gain the prior week. Distillate supplies are estimated unch. versus a -466,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.3% versus a -1.0% decline the prior week.
- Consumer Credit for June is estimated to fall to $15.0B versus $19.615B in May.
- None of note
- The Fed's Pianalto speaking, Fed's Plosser speaking, 10Y T-Note auction, BoE inflation report, weekly MBA mortgage applications report and the Bloomberg US Economic Survey for August could also impact trading today.