Evening Headlines
Bloomberg:
- China Builds All It Buys for Changsha From Rail to Biggest Tower.
In this city of seven million people, where Mao Zedong went to college,
China’s model of investment-driven growth funded by bank lending, bond
issuance and land sales remains in force, even as Premier Li Keqiang
tries to craft a new blueprint for
expansion powered by consumption and private enterprise.
Underscoring financial risks that prompted Li to order an urgent
nationwide government debt audit, a local financing company
raising money for Changsha’s tunnel says its ability to generate
revenue is low.
- RBA Lowers Growth Outlook as Economy Transitions From Mining. The Reserve Bank of Australia lowered
its growth outlook as the economy transitions from mining
investment, a process that may be aided by the currency falling
further from its still “high level.” “The forecast for Australian GDP continues to embody a
transition in the drivers of growth from mining investment to
other parts of domestic demand, and to exports,” the RBA said in its quarterly monetary policy statement released in Sydney
today. “There remains considerable uncertainty about how this
transition will proceed.”
- Asia Stocks Set to Snap Longest Winning Streak Since Jan. Asia’s
benchmark stock index is on course to snap its longest weekly winning
streak since January after Nikon Corp. (7731) cut its profit forecast
and investors await Chinese industrial production data. Nikon, a
Japanese camera maker, slumped 12 percent, dragging consumer shares
lower. BHP Billiton Ltd. (BHP), the world’s largest mining company,
climbed 1.8 percent in Sydney, leading raw-materials firms to the
largest advance among the 10 industry groups of the Asia-Pacific
benchmark gauge. SoftBank Corp. climbed 1.6 percent in Tokyo after a
report it will refinance a loan for its Sprint Corp. deal. The MSCI Asia Pacific Index slid 0.1 percent to 133.67 as
of 10:46 a.m. in Toyko, with five stocks rising for every four
that rose.
- Copper Pares Weekly Gain Ahead of China Industrial Output Data. Copper pared a weekly advance as
investors weighed China’s smaller-than-expected inflation rate and ahead of industrial output data due today. Copper
for delivery in three months on the London Metal Exchange fell 0.6
percent to $7,141.25 a metric ton at 11:25 a.m. in Shanghai. The metal
has climbed 2 percent this week.
- Fed Officials Signal Tapering Is Possible at September Meeting. Four Federal Reserve officials with
varied voting records on monetary stimulus indicated greater
willingness this week to begin tapering the central bank’s bond-buying program, citing confidence the economy is accelerating.
“I would clearly not rule” out a decision to start
dialing back the purchases at the Sept. 17-18 gathering of the Federal
Open Market Committee, Chicago Fed President Charles Evans said two days
ago in Chicago. “We’ve seen good improvement in the labor market,
there’s no question in my mind
about that,” and “I’m still wanting to see greater evidence
that it’s a sustainable improvement.”
- Cleveland Fed’s Pianalto to Retire Early in 2014, Bank Says.
Federal Reserve Bank of Cleveland President Sandra Pianalto will retire
from the district bank early next year, according to an e-mailed
statement. Pianalto, 59, is the longest serving of the Fed’s 12 regional
presidents, having become leader of her district bank in 2003. During
her 10-year tenure at the Fed, Pianalto was a reliable supporter of Fed
Chairman Ben S. Bernanke, never dissenting from a decision of the
Federal Open Market Committee.
- JPMorgan Nears Settlement With SEC on London Whale Loss. JPMorgan Chase & Co. (JPM) is negotiating final terms of a deal with U.S. securities regulators to end a
yearlong probe of derivatives bets that led to the bank’s
largest trading loss ever, two people briefed on the talks said.
Wall Street Journal:
- China's Gleaming Ghost Cities Draw Neither Jobs Nor People. When this small city in northeastern China launched a plan to build a
satellite city six miles down the road, it got off to a promising
start. Urban planners spent millions of yuan to clean up surrounding
marshland that had become a dumping ground for the city's untreated
sewage. A pristine environment, they hoped, would help attract the
businesses that would raise incomes and swell the population. Four years later, Tieling New City is virtually a ghost town.
- Anti-U.S. Hostility Ramps Up in Egypt. Media Outlets Blast American Policies, Further Straining Ties. A headline in a major Egyptian state newspaper this week referred to
the proposed U.S. envoy to Egypt as the "Ambassador of Death."
Posters in Cairo's Tahrir Square, a center of pro-government rallies,
depict President Barack Obama with a beard and turban, exclaiming his
"support for terrorism." Another large Egyptian newspaper alleged Sen.
John McCain, who traveled to Cairo this week in an effort to break a
deadlock betweenthe government and its Islamist rivals, has chosen sides
by
employing Muslim Brotherhood staffers in his office.
- Al Qaeda Yemen Branch Plan Prompted U.S. Terror Alert.
The terror plot that has temporarily shut down 19 U.S. diplomatic posts
wasn't ordered by al Qaeda's leader Ayman al Zawahiri, but proposed by
al Qaeda's Yemeni branch and approved by the global Qaeda chief, a
senior U.S. official said Thursday in a more specific description of the
plot's origin.
- Stocks Start to Look Overvalued. Stocks in S&P 500 Are at Highest Price/Earnings Ratio in Nearly Four Years. Stocks in the S&P 500 are at their highest price/earnings ratio
in nearly four years, and above their average multiple of the past 10
years. That has some investors becoming more cautious.
Fox News:
- Fox News Poll: Majority calls implementation of ObamaCare 'a joke'. Majorities
of Americans think the new health care law is going to increase their
medical costs and their taxes -- and add to the federal deficit as well.
Those are some of the reasons why voters say -- by a two-to-one margin
-- that Congress should keep working on the law. A Fox News national
poll released Thursday also asks voters about how they think Obamacare
is being carried out: 31 percent say “it’s going fine,” yet a 57-percent majority feels “it’s a joke.” Republicans are more than three times as likely to say it’s a joke (87 percent vs. 25 percent). Still, a quarter of Democrats agree. Nine times as many Democrats as Republicans say implementation of Obamacare is going fine (63 percent vs. 7 percent). Overall, 63 percent of voters think the 2010 health care law needs to be changed and Congress should keep at it.
That’s up from 58 percent who felt that way in July 2012. On the other
hand, 31 percent say the law is the law and Congress should “move on” to
other issues. The poll finds that 65 percent of independents think Congress should keep working on the law, up from 53 percent last year. It’s noteworthy that 41 percent of Democrats now feel the law needs more work, up from 35 percent. The number of Republicans who thinks the law needs to be changed -- 84 percent -- held steady.
MarketWatch.com:
- 5 signs Wall Street’s zombie apocalypse is at hand. 3. According to the U.S. Federal Reserve, U.S. households in the first
quarter of 2008, at the peak of the bubble, collectively owed $13.8
trillion in mortgages and consumer credit. In the first quarter of this
year, the figure was—drum roll, please—$12.8 trillion. That’s right. After five brutal years of financial crises and bailouts,
bankruptcies and foreclosures and economic recession and write-offs,
while the federal government has piled on the national debt to keep the
wheels rolling while the private sector “repaired” its balance sheet,
the great American household has managed to reduce its debt levels by
just 7%. (Yippee!) Debts today are still at the same level as they were
at the end of 2006. 4. U.S. business debt just surpassed household debt for
the first time in living memory. U.S. (nonfinancial) businesses today
owe about $12.9 trillion, compared with just $9.9 trillion at the start
of 2007. Zombies like to point to the large amount of cash that
corporations hold in their bank accounts, although quite a chunk of this
is being held offshore to avoid taxes. Zombies rarely point out the
other side of the equation—the spiraling debts. In total, U.S. nonfinancial corporations today have debts equal to 50%
of their net worth, says the Federal Reserve. As recently as 2006 that
figure was 40%. The average since the Second World War: 37%.
CNBC:
- China's factories remain in deflation, producer prices show. China's consumer inflation accelerated in July, largely in line
with forecasts, but producer prices dipped in the month, showing that
the factories in the country remained entrenched in deflation. China's consumer price index (CPI) rose 2.7 percent in July from a year
earlier, official data showed on Friday, unchanged from June and
slightly lower than a Reuters forecast of 2.8 percent. But the
producer price index (PPI) fell 2.3 percent in the month from the year
before, slightly worse than the 2.2 percent drop markets were expecting,
but better than the 2.7 percent drop in June.
Zero Hedge:
Business Insider:
New York Times:
- After Going All In During Mining Boom, BHP(BHP) Cuts Its Ambitions.
BHP Billiton, the world’s largest mining company, was willing to spend
big in early 2012. It was building new mines and upgrading old ones, at a
cost of $18 billion. It considered a potential expansion of its copper
and uranium
mine, Olympic Dam, which could have cost as much as $20 billion. It
proposed a deepwater extension of Port Hedland, its iron ore port, an
estimated $10 billion or more.
Reuters:
- Nvidia(NVDA) forecasts revenue below estimates on sluggish demand. Graphic
chipmaker Nvidia Corp forecast current-quarter revenue below analysts'
estimates as it continues to struggle with high competition in a slowing
PC market.
Nvidia, which gets majority of its sales from PCs, has been a late entrant in the market for smartphone chips.
- U.S. Fed balance sheet grew in latest week. The U.S. Federal Reserve's
balance sheet grew in the latest week as the Fed's holdings of
U.S. Treasuries increased, 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 $3.542 trillion
on Aug. 7, compared with $3.529 trillion on July 31.The Fed's holdings of Treasuries rose to $1.993 trillion as
of Wednesday, Aug. 7, up from $1.982 trillion the previous week.
- Brazil won't rule out retaliation if U.S. cotton payments end. Brazil's foreign minister, Antonio Patriota,
said on Thursday he could not rule out retaliation if the United States
stopped paying Brazil monthly compensation for controversial cotton subsidies. The dispute flared up days before the arrival of U.S.
Secretary of State John Kerry, who is to plan an October state
visit to Washington by President Dilma Rousseff.
- U.S. slowly opening up commercial drone industry. The Federal Aviation
Administration's recent certification of two expensive unmanned
aircraft for commercial use further opens up the U.S. market for
drones, but cheaper unmanned aerial vehicles (UAVs) will still
have to operate in regulatory limbo.
The drone industry was
heartened by the FAA's decision in
late July to greenlight Boeing Co's Insitu ScanEagle and AeroVironment
Inc's Puma, in the first such U.S. certification of drones for
commercial use.
- Priceline(PCLN), Orbitz profits top estimates on travel demand. Online travel agencies Priceline.com
and Orbitz Worldwide Inc posted
higher-than-expected quarterly profits on Thursday, pointing to
solid demand for travel. Rising reservations for rental cars and hotels bolstered
Priceline, which has the highest market capitalization among
online travel agencies, while Orbitz benefited from an increase
in bookings of higher-margin hotel and vacation packages.
Financial Times:
- Growth in crude oil shipped by rail slows.
Rail shipments of crude oil in the US – one of the major trends to
emerge from the shale drilling boom, are hitting the buffers. As the
price differential between inland and coastal oil markets narrows,
railways and logistics companies are reporting falling traffic
on the lines connecting oilfields to refineries.
Economic Information Daily:
- China 1H Solar Photovoltaic Exports Fall 31% to $6.52b. China's
exports of solar photovoltaic cells and modules fell 31% to $6.52b,
citing China Chamber of Commerce for Import and Export of Machinery and
Electronic Products.
Standard:
- Emperor Director Sees H.K. Home Prices Diving 40%. Prices in the
city almost doubled over the past 3 years, citing co.'s Donald Cheung.
Home prices will drop up to 15% and land prices to fall up to 25% over
next 12 months, he said.
China Securities Journal:
- China May Expand Property Tax Trial to 6 New Cities. China may
expand a property tax trial to as many as 6 cities including Hangzhou
and Nanjing, citing Yang Hongxu, deputy head of E-House China R&D
Institute. Eastern, central and western cities may be included, Yang
said. Expansion of a property tax nationwide may take 3-5 years, Yang
said. Local Chinese governments are not enthusiastic about property tax
trials as it slows economic growth, citing Yang.
Shanghai Securities News:
- China May Do More to Curb Property Speculation. China may further
introduce detailed differentiated home loan policy in 2H in order to
curb speculative home purchases, Yi Xianrong, a researcher at Chinese
Academy of Social Sciences, writes in a commentary.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 145.50 unch.
- Asia Pacific Sovereign CDS Index 110.75 -.25 basis point.
- NASDAQ 100 futures +.01%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:00 am EST
- Wholesale Inventories for June are estimated to rise +.4% versus a -.5% decline in May.
- Wholesale Sales for June are estimated to rise +.7% versus a +1.6% gain in May.
Upcoming Splits
Other Potential Market Movers
- The China Retail Sales/Industrial Production data and the (MU) analyst conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity 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.
Broad Equity Market Tone:
- Advance/Decline Line: Modestly Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 12.68 -2.31%
- Euro/Yen Carry Return Index 134.85 +.64%
- Emerging Markets Currency Volatility(VXY) 9.19 -1.29%
- S&P 500 Implied Correlation 47.77 -1.34%
- ISE Sentiment Index 111.0 -16.54%
- Total Put/Call .74 -23.71%
Credit Investor Angst:
- North American Investment Grade CDS Index 75.32 -1.33%
- European Financial Sector CDS Index 135.87 -1.68%
- Western Europe Sovereign Debt CDS Index 82.0 -1.80%
- Emerging Market CDS Index 304.48 -2.70%
- 2-Year Swap Spread 17.5 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -8.0 unch.
Economic Gauges:
- 3-Month T-Bill Yield .05% +1 bp
- China Import Iron Ore Spot $133.10/Metric Tonne n/a
- Citi US Economic Surprise Index 36.90 +.2 point
- Citi Emerging Markets Economic Surprise Index -26.10 +1.5 points
- 10-Year TIPS Spread 2.26 unch.
Overseas Futures:
- Nikkei Futures: Indicating +95 open in Japan
- DAX Futures: Indicating +23 open in Germany
Portfolio:
- Slightly Higher: On gains in my retail/medical/tech 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:
- Kuroda Warns Against Forgoing Japan’s Planned Sales-Tax Increase.
Bank of Japan Governor Haruhiko Kuroda warned against a delay in the
nation’s planned sales-tax increase, while pledging that the central
bank will take action should its two-year, 2 percent inflation target be
endangered. Budget consolidation is vital, and a loss of confidence in Japan’s fiscal sustainability could lead to higher government
bond yields, undermining BOJ monetary stimulus, Kuroda told
reporters today in Tokyo. He said he hopes that Prime Minister
Shinzo Abe’s government will proceed with fiscal tightening.
- ABS:
Subprime Auto Underwriting in 'Decay," Citi Says. Subprime auto ABS
credit underwriting has been slackening while spread differentials to
prime have been tightening, Citi analysts led by Mary Kane write. Avg
FICO for on-the-run subprime auto ABS "deteriorated significantly" to
578; was 587 in pre-crisis 2006. 2Y, 3Y class spread pickups for
on-the-run subprime auto names recently widened from roughly 14 bps and
45 bps, to 23 bps and 55 bps, respectively.
- Colorado Fracking Stresses Regulators as Permit Bids Soar. New rules governing oil and gas extraction in Colorado may
increase the review period for permits and add to a backlog of well
applications as energy exploration proceeds at a pace to eclipse last
year’s record. The new regulations by the Colorado Oil and Gas
Conservation Commission, which went into effect Aug. 1, would require
wells to be at least 500 feet (152 meters) from the nearest occupied
building and mandate pre-drilling notice for nearby landowners and
measures to reduce noise, odors, dust and light.
Wall Street Journal:
MarketWatch:
CNBC:
Zero Hedge:
Business Insider:
Reuters:
- McDonald's(MCD) July sales just beat, helped by Monopoly, McWraps. McDonald's
Corp on Thursday reported slightly higher-than-expected July sales at
established restaurants after the early return of its popular Monopoly
promotion and new premium wrap sandwiches helped bring U.S.
gains that offset weakness in Europe and Asia.
- Canadian Solar sees lower shipments as European sales slump. Canadian Solar Inc forecast lower shipments
and margins for the current quarter as its market share shrinks in the
European Union, the biggest solar market where the EU plans to cap
imports of cheap solar panels made in China. Shares of the company,
most of whose manufacturing operations are in China, were down 7 percent
at $13.26 on the Nasdaq on Wednesday.
Financial Times:
- Brazil calls for IMF eurozone rescue programmes revision. Brazil
calls for IMF eurozone rescue programmes revision. Brazil has called
for International Monetary Fund-backed rescue programmes for southern
eurozone countries, particularly Greece, to be reviewed to make them
more economically sustainable. The call came from finance minister
Guido Mantega who was seeking to explain Brazil’s stance on Greece’s
rescue programme after an apparent difference of opinion last week
between BrasÃlia and its IMF representative, Paulo Nogueira Batista.
Telegraph:
The Economic Times:
- US Fed's Richard Fisher says France biggest euro zone worry.
Dallas Fed President Richard Fisher said France worried him more than
any other euro zone country and the risks to the French economy must not
be underestimated, in an interview published in German paper
Handelsblatt on Thursday. "France worries me, more than any other
country. Against the backdrop of European history a strong France is
important. The risks to economic development there must not be
underestimated. The world is watching carefully," he said.
Xinhua:
- China Properly, Effectively Enacts Govt-Spending Cuts. Violations
of regulation proposed by Premier Li Keqiang to halt construction of
new govt buildings, cut spending on govt receptions, vehicles, banquets,
haven't been eliminated, citing statement from government. State
Council to work with relevant authorities to step up supervision,
investigate problems. No new workers to be added to overstaffed govt
depts.
Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -2.01% 2) Education -1.75% 3) Disk Drives -1.04%
Stocks Falling on Unusual Volume:
- XPO, RDEN, IMPV, WD, TUMI, SGI, TWGP, FIO, HTWR, SN, FCN, BIOS, NGVC, ALR, APEI, GMCR, CROX, ADES, PKT, CTL, HIW, HSC, CLMT, WTR, DF, AMCX, MBI and SCTY
Stocks With Unusual Put Option Activity:
- 1) UAL 2) GRPN 3) FIO 4) AMAT 5) M
Stocks With Most Negative News Mentions:
- 1) CVI 2) TGT 3) CLMT 4) DF 5) IGNT
Charts:
Style Outperformer:
Sector Outperformers:
- Gold & Silver +5.56% 2) Steel +2.90% 3) Coal +1.57%
Stocks Rising on Unusual Volume:
- GRPN, USU, OWW, SSYS, DXCM, FWLT, TSLA, RWT, VHC, CWH, GDP, LTD, IPI and TMUS
Stocks With Unusual Call Option Activity:
- 1) XOMA 2) CXO 3) GRPN 4) GRPN 5) CLR
Stocks With Most Positive News Mentions:
- 1) AES 2) LOW 3) COST 4) BKE 5) MDLZ
Charts:
Evening Headlines
Bloomberg:
- Fragile Five Unravel as Developing Economies Suffer: Currencies.
Emerging-market currencies are trailing their peers in advanced
economies by the most since 2009 as a global recovery eludes countries
from China to Brazil. The 20 most-traded developing-nation currencies
tracked by Bloomberg weakened an average 5.3% against the dollar in the
past three months, compared with a 1.1 percent gain for the six
comprising IntercontinentalExchange Inc.'s Dollar Index. That's the biggest gap since the height of the banking crisis four years ago. Options prices signal that the Indonesian rupiah, Turkish lira and Brazilian real will tumble further.
- China Escalates Islands Challenge to Japan on Philippine Success.
China escalated tensions with Japan by sending ships into waters near
islands claimed by both sides for more than 24 hours, drawing a formal
diplomatic protest from
the Japanese government. Ships from China’s newly formed coast guard remained in the
Japanese-controlled waters for the longest time since Japan
bought the islands last year, Cabinet Secretary Yoshihide Suga
said at a briefing in Tokyo today. Japan’s Foreign Ministry
summoned a Chinese diplomat and “sternly protested,” he said. The Chinese move mirrors the approach it has taken in
asserting its sovereignty claims in a dispute with the
Philippines over the Scarborough Shoal area of the South China
Sea. That strategy signals a more aggressive stance amid a
broader push by President Xi Jinping to make China a maritime
power in the region.
- EU Decides Against Anti-Subsidy Duties on Chinese Solar Panels. The European Union decided against
imposing preliminary anti-subsidy tariffs on Chinese solar
panels, opting to wait another four months to assess whether the
levies are warranted in the biggest EU trade fight of its kind. The European Commission waived the right to impose
provisional EU duties to counter alleged trade-distorting
government aid to Chinese solar-panel manufacturers. The
commission, the 28-nation EU’s regulatory arm, will study
whether “definitive” anti-subsidy levies should be applied by
Dec. 8.
- Australian Jobs Drop in Blow for Rudd’s Re-Election Bid: Economy. Australian employers unexpectedly cut payrolls in July and
unemployment held at an almost four-year high, denting Prime Minister Kevin Rudd’s bid for a come-from-behind election win.
The number of people employed fell 10,200, the statistics bureau said
in Sydney today. That compares with the median estimate for a 5,000 rise
in a survey of 24 economists. The jobless rate held at 5.7 percent as
fewer people sought work.
- Bank of Japan Refrains From Adding to Record Monetary Stimulus.
The Bank of Japan refrained from adding to unprecedented monetary
stimulus after consumer prices rose in June and a recovery in the
world’s third-biggest economy
maintained momentum. Governor Haruhiko Kuroda’s board stuck with an April pledge
to expand the monetary base by 60 trillion yen to 70 trillion
yen ($723 billion) per year, a statement released in Tokyo today
showed. All 26 economists in a Bloomberg News survey predicted
the decision.
- Japan's Nuclear Nightmare. Thailand’s
stocks are falling at the fastest pace in Asia as an amnesty bill for
political protesters spurs demonstrations in the streets of Bangkok and
threatens to
delay the nation’s biggest-ever infrastructure spending plan.
- Asian Stocks Rise as Bank of Japan Keeps Stimulus Policy.
Asian stocks rose, led by health-care companies, after the Bank of
Japan maintained its stimulus policy and Chinese exports grew more than
forecast. Toyota Motor Corp. (7203) gained 0.5 percent, leading Japanese
exporters higher as the yen headed for its first decline in five days.
Kubota Corp. surged 5.8 percent after profit at the Japanese tractor
maker climbed 50 percent, topping analyst forecasts. Telstra Corp. (TLS)
gained 1.7 percent as Australia’s largest phone company posted earnings
that beat analyst
estimates after luring subscribers to its wireless services. The MSCI Asia Pacific Index gained 0.6 percent to 134.14 as
of 11:15 a.m. in Hong Kong, with all 10 industry groups on the
gauge advancing.
- Rubber Rallies Most in Three Weeks as Weaker Yen Boosts Appeal.
Rubber rallied the most in three
weeks as a smaller-than-expected surplus for Japan weakened the nation’s
currency, increasing the appeal of contracts in yen, and ahead of
Chinese trade data. Rubber for delivery in January on the Tokyo
Commodity Exchange gained as much as 4.2 percent, the biggest advance
for a most-active contract since July 19. Futures were 3.6 percent higher at 255.2 yen a kilogram ($2,639 a metric ton) at 11:58
a.m. local time. That pared this year’s decline to 16 percent.
- Rebar Advances for 7th Day as Iron Ore Rises to Three-Month High.
Steel reinforcement-bar futures in Shanghai climbed for the seventh day
after prices of iron ore, a key ingredient in steel making, jumped to
the highest in more than three months. Rebar for January delivery on the Shanghai Futures Exchange
climbed as much as 0.7 percent to 3,740 yuan ($611) a metric ton,
the highest level since April 17, and was at 3,733 yuan at 10:15
a.m. local time. The price is up 2.4 percent this month.
- Egypt’s President Warns Opponents Mediation Has Ended. Egypt’s
interim president Adly Mansour vowed to press ahead with the
government’s plans, sending a warning to backers of ousted President
Mohamed Mursi
that “those who stay behind will bear the consequences.” Signaling that a crackdown on two main opposition sit-ins
in Cairo squares may be imminent, Mansour said in a televised
speech last night that “the train of the future has taken off”
and “all of us have to catch it.”
- JPMorgan( Says U.S. Faults MBS Amid Parallel Criminal Probe. JPMorgan Chase & Co. (JPM), the largest U.S. bank, said it’s under federal criminal investigation for practices tied to sales of mortgage-backed bonds that the Justice Department has already concluded broke civil laws. The department’s civil division told the bank in May of its preliminary finding after examining securities tied to subprime and Alt-A loans, which were sold to investors from 2005 to 2007, JPMorgan said today in a filing. The U.S. Attorney’s Office led by Benjamin Wagner in Sacramento has been conducting civil and criminal inquiries, the filing shows.
Wall Street Journal:
- 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.
- Diplomatic Rift With Putin Grows as Obama Cancels. Relations Strained Over Russia's Decision to Grant Asylum to NSA Leaker.
President Barack Obama's decision to pull out of a one-on-one meeting
with Russian President Vladimir Putin in Moscow next month punctuates a
steady decline in
relations and represents an unusually sharp rebuke for an administration
pledged to engaging adversaries.
- Probe Turns Up Heat on Banks. Prosecutors
Target Firms That Process Payments for Online Payday Lenders, Others.
The Justice Department is targeting banks that service a broad range
of what it considers questionable financial ventures, including online
payday lenders. The government has issued subpoenas to banks and
other companies that
handle payments for an array of financial offerings, ramping up an
investigation that has been under way for several months, according to
Justice Department officials and other people familiar with the matter.
It's a shift in strategy: Rather than just targeting individual
firms, the government is now going after the infrastructure that enables
companies to withdraw money from people's bank accounts.
- Officials Tighten Crude-Shipping Standards. The Federal Railroad Administration plans to start asking shipping
companies to supply testing data they use to classify their crude-oil
shipments, saying it is concerned that some shipments are being
transported in tank cars that aren't safe enough.
In a letter to American Petroleum
Institute CEO Jack Gerard last week, the FRA said it is investigating
whether some crude shipments contain chemicals—possibly from the
hydraulic-fracturing process used to extract it—that make them more
hazardous than their classification indicates.
- Members Only. How the White House is weaseling Congress out of ObamacCare. The White House on Wednesday released the legal details behind its
ObamaCare bailout for Members of Congress and their staffs, and if
anything this rescue is worse than last week's leaks suggested: Illegal
dispensations for the ruling class, different rules for the hoi polloi.
Fox News:
- Obama administration using housing department to compel diversity in neighborhoods. In a move some claim is tantamount to social engineering, the
Department of Housing and Urban Development is imposing a new rule that
would allow the feds to track diversity in America’s neighborhoods and
then push policies to change those it deems discriminatory. The policy is called, "Affirmatively Furthering Fair Housing." It
will require HUD to gather data on segregation and discrimination in
every single neighborhood and try to remedy it.
MarketWatch.com:
CNBC:
Zero Hedge:
Business Insider:
New York Times:
Real Clear Politics:
Reuters:
- Agrium(AGU) profit hit by cold North American spring. Canadian fertilizer company Agrium Inc
reported a fall in quarterly profit due to an
unusually cold spring in North America, but said it expected
strong demand for crop inputs for the rest of the year. Unseasonably cool weather in the U.S. Midwest this spring
compressed the usual time period for farmers to apply fertilizer
to their fields.
- Vale(VALE) profit dives on FX charge; cost-cutting continues. Brazilian miner Vale SA
said on Wednesday its second-quarter profit plunged
after the company recorded a surprise $2.78 billion in foreign
exchange losses on currency derivatives and debt, one of its
worst bottom-line results in a decade.
- SolarCity(SCTY) results top Street but shares drop 10 pct. SolarCity Corp, the U.S. solar
installer backed by Tesla Motors founder Elon Musk, on Wednesday reported better-than-expected quarterly results, but
sharply higher costs and an unchanged outlook for the year sent
its shares down 10 percent in extended trade.
China Daily:
- China Gov't Study Reaffirms Huai River 'Cancer Villages'. A
government study has reaffirmed the existence of "cancer villages" along
the Huai River in eastern China, citing Yang Gonghuan, a former health
official who led the study.
Evening Recommendations
Night Trading
- Asian equity indices are unch. to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 145.50 +1.5 basis points.
- Asia Pacific Sovereign CDS Index 111.0 +1.5 basis points.
- NASDAQ 100 futures +.34%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Initial Jobless Claims are estimated to rise to 335K versus 326K the prior week.
- Continuing Claims are estimated to fall to 2950K versus 2951K prior.
Upcoming Splits
Other Potential Market Movers
- The
China Trade/Inflation data, BoJ Press Conference, 2Q Mortgage
Delinquencies/Foreclosures, ECB Monthly Bulletin, 30Y T-Bond auction,
weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas
inventory report, Goldman Power/Utility Conference, (HAR) investor day
and the (SYNA) investor meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and automaker 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.
