Style Outperformer:
Sector Outperformers:
- Gold & Silver +2.23% 2) Softwate +1.86% 3) Energy +1.03%
Stocks Rising on Unusual Volume:
- ADSK, MSFT, PRAN, INSM, SKYW, UEPS, EXPE, MENT, AFOP, FTK, DAR, FB and TNGO
Stocks With Unusual Call Option Activity:
- 1) ADSK 2) IP 3) CERN 4) ARO 5) HAL
Stocks With Most Positive News Mentions:
- 1) VMW 2) PLCE 3) SPG 4) UNH 5) PG
Charts:
Evening Headlines
Bloomberg:
- Islamists Call New Rallies in Fraught Climate of Mubarak Release. An alliance of Islamist groups
backing Mohamed Mursi called for its first mass marches in days
to demand the ousted president’s return, even as authorities
were rounding up their leaders and putting them behind bars. The
rallies are to take place against a political backdrop
made even more fraught by the release of longtime autocrat Hosni Mubarak
from prison yesterday. It was a stunning development for
many who took part in the 2011 uprising that toppled him, and
some critics say Egypt’s current leadership, installed by the
military, is out to reprise the police state Mubarak once led. Mubarak, said to be ailing, was wheeled on a gurney
yesterday to a helicopter that flew him to a nearby military
hospital at a time when the country he once led is reeling over
the army’s removal of the Muslim Brotherhood’s Mursi. About
1,000 people died in clashes touched off when security forces
stormed two pro-Mursi protest camps on Aug. 14, and Mubarak’s
release threatens to inflame the political crisis.
- ICBC to Lead China’s Biggest Banks in Posting Slower Profit Gain.
Industrial & Commercial Bank of China Ltd., the world’s most
profitable lender, and its three largest local rivals are set to post
the slowest earnings growth since 2010 as China’s economy falters and
bad loans jump. The four banks, among the world’s nine biggest by market value, will probably report combined second-quarter net income
of 207 billion yuan ($34 billion), an increase of 10 percent
from a year earlier, according to the median estimate of 11
analysts surveyed by Bloomberg News. Profit at the four largest
U.S. banks climbed 35 percent to $20.2 billion.
- Fukushima Clouds Abe’s Bid to Start Nukes for Recovery: Economy. Radiation
spreading from Japan’s crippled Fukushima plant threatens to derail
Prime Minister Shinzo Abe’s efforts to revive nuclear power and deliver
the lower energy prices needed to power his economic reforms. As Abe
prepares for a trip tomorrow to the Middle East where he will promote
sales of nuclear technology, the atomic industry at home is reeling.
Japan’s nuclear regulator said this week that a new radioactive water
leak was the most serious
incident at the Fukushima Dai-Ichi plant since the March 2011
accident that devastated the site.
- Asian Stocks Rise, Paring Weekly Slide, on Economic Data.
Asian stocks rose, paring the benchmark equity gauge’s biggest weekly
decline in two months, after reports from Europe to the U.S. boosted
confidence in the economic recovery and the yen weakened against the
dollar. Asia’s largest carmaker Toyota Motor Corp. (7203), which gets
about 75 percent of sales outside Japan, climbed 3.6 percent as the yen
touched its lowest level in nearly three weeks against the dollar. BHP
Billiton Ltd. (BHP) rose 1.1 percent in Sydney after
copper jumped overnight. Amada Co., a Japanese maker of metal-cutting
machines, jumped 5.1 percent after a report that its
operating profit will rise by 150 percent. The MSCI Asia Pacific Index advanced 1.3 percent to 131.33
as of 9:48 a.m. in Hong Kong as nine of the 10 industry groups
on the gauge climbed.
- Ford(F) Says U.S. Loses as Yen Lets Japan Keep Excess Capacity. Ford Motor Co., stepping up
criticism of Japan’s auto industry, said a weaker yen lets
carmakers led by Toyota Motor Corp. (7203) keep open plants that are
producing a vehicle glut and threatening U.S. job growth. Production for automakers including Ford is constrained in
North America as U.S. sales rise, Joe Hinrichs, Ford’s president
of operations in the region, said in an interview. At the same
time, the weaker yen is supporting exports from Japan, which IHS
Automotive estimates has 2 million vehicles of excess capacity. “The industry is growing and capacities are a little tight
in North America,” Hinrichs said from Dearborn, Michigan, where
Ford is based. “Where is the extra available capacity going to
come from? If Japan’s one of those places, in lieu of more
manufacturing in the U.S., the American worker does lose in that
proposition.” His comments build on remarks by Chief Executive Officer
Alan Mulally, who in June said Japan was manipulating its
currency, and reflect a threat that Ford sees to continuing its
recent growth in the U.S.
- Rubber Climbs to 3-Month High on Weaker Yen. Rubber
for delivery in January on Tokyo Commodity Exchange gained as much as
2.0 percent to 271.2 yen a kilogram ($2,741 a metric ton), the highest
level for a most-active since May 29.
Futures traded at 270.8 yen at 11:40 a.m., heading for the third
weekly advance.
- Rebar Rises. Rebar for January delivery gained as much as 1.4 percent to 3,820 yuan ($624) a metric ton before trading at 3,813 yuan at
10:30 a.m. local time. The contract fell by 1.1 percent this
week before today.
- Moody’s Mulls Downgrade of Biggest Banks as U.S. Support Wanes. Moody’s Investors Service may cut
debt ratings on at least four of the six largest U.S. banks
because the government could be less likely to ensure their
survival in a crisis. Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan
Stanley and Wells Fargo & Co. may be downgraded, Moody’s said
today in a statement. Bank of America Corp. and Citigroup Inc.
are under review, with the direction of any rating change
uncertain, Moody’s said. Bank of New York Mellon Corp. and State
Street Corp. were already under review, Moody’s said.
- Pentagon Weighs Firing Thousands Under 2014 Spending Cuts. The Defense Department may have to
fire at least 6,272 civilian employees if automatic cuts known
as sequestration slice $52 billion from its fiscal 2014 budget,
according to a Pentagon planning document. Additional budget analysis is “likely to produce further reductions” as the services focus on shrinking their contract
labor forces, according to a Pentagon “execution plan”
obtained by Bloomberg News. The job cuts, although less than 1
percent of the non-uniformed workforce, would mark an escalation
from the unpaid leave mandated under sequestration in the
current fiscal year.
- JPMorgan(JPM) Sub-New Normal Growth
Seen Confronting Next Fed Chief. The next chairman of the Federal
Reserve faces an alarming possibility: the new normal for the economy is
even worse than advertised. The long-run potential growth rate for GDP
has slid to around 1 3/4 percent per year, from an average rise in GDP
of 2 1/2 percent since 1990, according to economists at JPMorgan Chase
& Co., the largest U.S. bank by assets. That would be the lowest
level since World War II and below the 2 percent mark that PIMCO pegged
as the new normal for the economy.
Wall Street Journal:
- GOP Plans Spending Bill to Avoid Shutdown. Sidestepping Conservatives' Call to Cut Health-Law Funding, House Leaders Set Up Debt-Limit Fight for Later This Year.
House Speaker John Boehner said Thursday GOP leaders were crafting a
strategy that could avert a September showdown with Democrats over
government funding levels by
deferring the toughest budget issues to later in the fall, when
lawmakers face a deadline to raise the debt ceiling.
- U.S. Weighs Plans to Punish Assad. Possible Military Responses Are Refined After Poison Gas Claims. The U.S. began refining its military options for possible strikes in
Syria, officials said, and initiated diplomatic efforts to craft an
international response to allegations that Syria's government killed
over 1,100 civilians with chemical weapons.
- Doctors Face New Scrutiny Over Gifts. New Health Law Calls for Increased Disclosures. U.S. doctors are bracing for increased public scrutiny of the payments
and gifts they receive from pharmaceutical and medical-device companies
as a result of the new health law.
- CFTC Moves to Rein In High-Speed Traders. Regulator Aims to Increase Oversight of Computer Trading. Federal commodities regulators are preparing to take their first big
step toward reining in high-speed computer trading and subjecting it to
tougher oversight.
- Central-Bank Moves Blur the View. Emerging Markets' Efforts to Defend Their Currencies Stokes Confusion. Central banks from Indonesia to Turkey to Brazil are stepping up efforts
to fight steep declines in their currencies and protect vulnerable
economies as investors pull cash from emerging markets. The escalating role policy makers are playing in the foreign-exchange
market injects new uncertainty into financial markets. Investors already
are struggling to absorb a rapidly changing outlook for global economic
growth and the potentially imminent end to the Federal Reserve's
easy-money policies. These measures to support local markets are a sharp
reversal from much of the past two years, when some of these same
emerging-market central banks were trying to tame excessive currency
appreciation.
Fox News:
- Education bus tour pulls Obama away from Mideast crises. President Obama’s two-day bus tour touting his revamped education
plan has raised questions about his priorities as the Middle East
convulses with violence and political upheaval. On the same morning Obama traveled to address students at the
University of Buffalo, Egypt’s deposed former leader Hosni Mubarak was
released from jail, four rockets were fired near Israel and global
powers bickered at the U.N. over how to respond to an alleged deadly
chemical gas attack in Syria. Sen. John McCain, R-Ariz., issued a
blistering statement Thursday
morning in response to the latest violence in Syria. "American
credibility in the Middle East has never been lower," he said. The
Republican National Committee, meanwhile, derisively dubbed the Obama
trip the "lame duck" bus tour.
- Muslim Brotherhood's bid to scapegoat Christians failing, say Egyptians. As their nation descends into violent chaos, Egyptians are
increasingly blaming the Muslim Brotherhood, despite attempts by the
Islamist group to scapegoat Christians and the military, according to
several sources who spoke to FoxNews.com from Cairo. “The Muslim Brotherhood has lost all sympathy with their points due
to their violence,” said a Long Island, N.Y., Egyptian-American, who is
in a Cairo suburb for a family wedding.
MarketWatch.com:
CNBC:
Zero Hedge:
ValueWalk:
Business Insider:
New York Times:
LA Times:
- Why get off welfare? Poor people aren't stupid. If they can get more from the government than they can from a job, they aren't going to work.
The Week:
- Is the Fed setting the stage for another financial crisis — in Asia? The side effects of quantitative easing are coming to the fore.
Central bankers "always knew it was extremely risky," says The
Guardian's Heather Stewart, "but judged that the price of a prolonged
slump across the rich world was greater than the threat of inflating
unsustainable bubbles in the world's financial markets." But bubbles
are what appear to have formed, with a lot of that new, easy money
finding its way to higher-yielding bonds in emerging nations."If you are
tired of earning a piddling 2 percent on your U.S. Treasury bonds,"
explains Neil Irwin of The Washington Post, "a rate pushed low by the
fact that the Fed has been buying them, then making 5 percent on your
money in Indonesian bonds or 7 percent from Indian bonds looks pretty
good, even with the greater risk attached."
Reuters:
- Brazil central bank launches $60 bln currency intervention. Brazil's central bank
announced a currency-intervention program on Thursday that will
provide $60 billion worth of cash and insurance to the
foreign-exchange market by year-end, a move aimed at bolstering
the country's currency, the real, as it slips to near
five-year lows against the dollar.
- Crashing markets spell trouble for India's privatisation plans. The collapse of the rupee is
derailing India's hopes of raising more than $6 billion from the
sale of stakes in state-run firms, jeopardising a key plank of
Finance Minister P.Chidambaram's blueprint to reverse the
country's economic malaise. Investor
confidence has evaporated amid fears over the rising cost of funding
India's gaping current account deficit, prompting New Delhi to delay
plans to raise much-needed funds through partial privatisations, finance
ministry sources said.
- Autodesk(ADSK) forecasts disappointing 3rd qtr, shares fall. Autodesk
Inc forecast third-quarter results below analysts' estimates as it
anticipates lower demand for its computer-aided design (CAD) software
used in construction, manufacturing and engineering industries. The company's shares fell as much as 5.6 percent in extended
trading.
- Aeropostale(ARO) forecasts another loss, to speed up store closings. Teen
apparel retailer Aeropostale Inc on Thursday forecast a deep third
quarter loss, and said the highly promotional environment that has led
it to cut prices and decimated earnings would continue in the back-to-school shopping period. Shares were down 8.2 percent at $10.07 in after-hours
trading. They closed down 1.6 percent on Thursday.
Financial Times:
- Emerging markets central banks’ emergency reserves drop by $81bn. Central banks in the developing world have lost $81bn of emergency reserves through capital outflows and currency market interventions since early May, even before renewed turmoil in emerging markets. The figure, which excludes China, is equal to roughly 2 per cent of all developing country central bank reserves, according to
Morgan Stanley analysts, who compiled the data from central bank filings
for May, June and July.
Telegraph:
- Emerging market rout threatens wider global economy. The $9 trillion (£5.8 trillion) accumulation of foreign bonds by the
rising powers of Asia, Latin America and the emerging world risks going into
reverse as one country after another is forced to liquidate holdings to
shore up its currency, threatening to inflict a credit shock on the global
economy.
Brazilian Bubble:
- “Brazil close to experience its own Subprime,” says IMF economist in interview. According
to Pedro Videla, a consultant to the IMF, the World Bank and a
professor at the Iese School of Economics and Business, in Spain, Brazil
failed miserably to make structural changes to increase productivity at
a time of strong economic growth, and now, he says, the country may pay
the price for its mistake. “Now, everyone is very concerned that there is a Brazilian subprime” he said in an interview to Estado de Sao Paulo.
China Daily:
- China Researcher Warns of Liquidity Problems in 2H. China's
high-leveraged economy may have increasing liquidity problems if a
slowdown in outstanding funds gets worse in 2H, citing Liu Yuhui, a
researcher at the Chinese Academy of Social Sciences. China is becoming
more vulnerable to an external shock given its heightened debt and signs
of faltering productivity, citing Liu.
China Securities Journal:
- China should conduct antitrust investigations into auto and
petroleum industries because of monopoly behavior, reporter Wang
Yingchun said in a front-page commentary.
Shanghai Securities News:
- China 2H Industrial Output Faces Downward Pressure. China's 2H
industrial output may grow about 9%, according to a joint report by
China Development Bank, NDRC's State Information Center and Shanghai
Securities News published by the newspaper.
Evening Recommendations
Night Trading
- Asian equity indices are unch. to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 162.0 -4.0 basis points.
- Asia Pacific Sovereign CDS Index 131.5 -.25 basis point.
- NASDAQ 100 futures +.23%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:00 am EST
- New Home Sales for July are estimated to fall to 487K versus 497K in June.
Upcoming Splits
Other Potential Market Movers
- The Final German Q2 gdp report, Canadian inflation report and the Fed Jackson Hole Day 2 could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and industrial 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: Substantially Higher
- Sector Performance: Almost Every Sector Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.82 -7.03%
- Euro/Yen Carry Return Index 137.15 +.80%
- Emerging Markets Currency Volatility(VXY) 11.24 +.09%
- S&P 500 Implied Correlation 48.73 -9.50%
- ISE Sentiment Index 96.0 +21.62%
- Total Put/Call .80 -17.53%
Credit Investor Angst:
- North American Investment Grade CDS Index 81.47 -3.40%
- European Financial Sector CDS Index 144.06 -3.90%
- Western Europe Sovereign Debt CDS Index 85.50 +.80%
- Emerging Market CDS Index 334.31 -2.23%
- 2-Year Swap Spread 19.0 +.25 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -9.75 -.5 bp
Economic Gauges:
- 3-Month T-Bill Yield .02% -1 bp
- China Import Iron Ore Spot $137.70/Metric Tonne -.07%
- Citi US Economic Surprise Index 34.30 -.4 point
- Citi Emerging Markets Economic Surprise Index -26.40 +5.9 points
- 10-Year TIPS Spread 2.12 -4 bps
Overseas Futures:
- Nikkei Futures: Indicating +220 open in Japan
- DAX Futures: Indicating +8 open in Germany
Portfolio:
- Slightly Higher: On gains in my biotech/tech/medical/retail sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
Bloomberg:
- Nasdaq Halts Trading in Stocks, Options Amid ‘Issue’.
Computer errors shook American equity markets again today as
malfunctioning software that feeds data between exchanges prompted
Nasdaq Stock Market to halt trading in thousands of stocks and options.
Nasdaq said in alerts posted on its website that trading in shares it
lists had been stopped amid issues at its Securities Information
Processor, the feed that disseminates stock quotes. The
second-biggest stock market operator in the U.S. halted transactions in
what it calls Tape C, which comprises all Nasdaq-listed securities.
Buying and selling in many of the country’s most heavily traded shares
from Apple Inc. to Intel Corp. and Facebook Inc. ground to a virtual
halt as brokers were unable to execute customer orders. As of 1:45 p.m.
in New York, the Nasdaq 100 equity index hadn’t moved in almost 90
minutes, according to data compiled by Bloomberg.
- Political mess leaves Manmohan Singh hamstrung on rupee drop. Prospects of an indecisive 2014 election is eroding confidence among investors that govt can stop rupee’s decline. The prospect of an indecisive 2014 election in India is
eroding confidence among global investors that the government can stop
the rupee’s worst drop in more than two decades. “The $1.8 trillion
economy needs radical reforms neither Prime Minister Manmohan Singh’s
administration nor the next government can undertake,” said Lutz
Roehmeyer, a fund manager at Landesbank Berlin Investment. Fisch
Asset Management Ltd treats the nation’s bonds as junk because of the
mess created by politics. Legg Mason Inc. is concerned the nation’s
leaders will be hamstrung by compromises needed to stay in power. “They
need to provide confidence to international investors, particularly with
an election coming up,” Amanda Stitt, investment director at Legg Mason
Global Asset Management, which oversees about $436 billion of debt,
said in a telephone interview from
London. “The government understands the problems. It’s just whether they
have the political ability to deal with them.”
- India’s Richest Man Loses $5.6 Billion as Rupee Stumbles.
Mukesh Ambani, India’s richest man, is the biggest loser among the
country’s billionaires as the rupee’s slump to record lows erased 24
percent of his fortune. The chairman of Reliance Industries Ltd.
(RIL), operator of the world’s biggest oil refinery complex, has lost
$5.6 billion of his wealth since May 1, as the rupee’s plunge
accelerated. The 56-year-old is left with a net worth of $17.5 billion, according to the Bloomberg Billionaires Index.
- Brazilian Swap Rates Climb on Fuel Price Prospects; Real Gains.
Brazil’s swap rates rose to the highest in almost two years after a
newspaper reported that the government may raise fuel prices, adding to
speculation that the central bank will step up increases in borrowing
costs. Swap rates on the contract due in January 2016 climbed 13 basis
points, or 0.13 percentage point, to 11.54 percent at 10:14 a.m. in Sao
Paulo, the highest level on a closing basis since September 2011.
The real appreciated 0.4 percent to 2.4435 per U.S. dollar after
tumbling 2.5 percent yesterday to the weakest since December 2008.
Brazil will authorize price increases for diesel and
gasoline, O Estado de S. Paulo reported today, without saying
where it got the information.
- Emerging-Market Noose Closes In on Ruble Bonds: Russia Credit. A selloff in emerging-market assets
is showing no signs of abating as Russia failed to place all of its shortest-dated bonds at an auction yesterday.
The Finance Ministry sold 6.37 billion rubles ($193 million) of May
2016 OFZs, according to a website statement yesterday, the first time
Russia hasn’t sold out a 10-billion ruble offering of the notes since
their June debut. At 6.32 percent, the average yield was 175 basis
points above that of similar maturity debt sold by fellow oil producer
Mexico, rated the same at Moody’s Investors Service. Bonds and
currencies are tumbling from Jakarta to Johannesburg as
developing-market economies founder and looming U.S. stimulus cuts drive
investors from riskier assets. The ruble weakened 6.8 percent to the central bank’s basket of dollars and euros as of 6 p.m. in Moscow yesterday since May 22, when Federal Reserve Chairman Ben S. Bernanke said he could
scale back debt purchases.
- China’s Stocks Fall to 2-Week Low as Fed Concern Overshadows PMI. China’s
stocks fell to a two-week low as concern the Federal Reserve will pare
stimulus overshadowed a better-than-estimated manufacturing report.
Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. and Yanzhou Coal
Mining Co. led declines for material and energy companies with losses of
at least 2.1 percent. Yunnan Baiyao Group Co., a traditional Chinese
medicine company, soared 5.7 percent after first-half profit rose 30
percent. ZTE Corp. (000063) advanced 1 percent after its net income
jumped 27 percent. The Shanghai Composite Index (SHCOMP) dropped 0.3 percent to 2,067.12 at the close.
- Berlusconi Ally Says Government to Collapse If Ex-Premier Ousted.
Italian Prime Minister Enrico Letta’s government will collapse if his
Democratic Party votes to end Silvio Berlusconi’s mandate as senator, a
senior ally of the three-time premier said. “If in a private company, a partner reports another one or tries to get rid
of him, the business doesn’t exist anymore,” Renato Brunetta, chief
whip of Berlusconi’s People of Liberty party in the parliament’s lower
house, said in a phone interview today. The PD “would provoke the
government’s fall,” he said.
- Merkel Warns SPD Tax Plans Could Upend Germany’s Labor Market. Chancellor
Angela Merkel warned that plans by the opposition Social Democrats to
raise taxes will upend Germany’s robust labor market as she campaigned
for a third term in the formerly communist east. Speaking to a crowd
of several hundred in the town of Wernigerode at the foot of the Harz
mountains, Merkel dismissed the notion that the government must create
jobs. She instead touted her Christian Democratic Union’s alliance with
the
business community.
- European Stocks Advance on German Manufacturing Report.
European stocks climbed the most in three weeks as a report showed
Germany’s manufacturing and services industries expanded at a
faster-than-expected pace. Royal Ahold NV rallied the most since May
2009 after the Dutch owner of the Stop & Shop supermarket chain
reported second-quarter underlying operating income that exceeded
analysts’ estimates. IMI Plc (IMI) rose to its highest price since at
least 1988 after posting first-half adjusted pretax profit that
beat analysts’ estimates. The Stoxx Europe 600 Index added 1 percent to 303.55 at the
close of trading as more than five shares rose for every one
that fell.
- Commodities May Decline 11% on Fibonacci: Technical Analysis. Commodities may fall 11 percent by
the second quarter next year as the biggest rally in 11 months
runs “out of steam,” according to technical analysis by
Commerzbank AG. The Standard & Poor’s GSCI Total Return
Index of 24 raw
materials will first slide toward its 200-week moving average at
4,781.68 before testing 4,442.35, the 50 percent Fibonacci retracement
of its advance between 2009 and 2011, Axel Rudolph, a London-based
technical analyst at Commerzbank, said in an Aug. 20 report. The decline
is forecast by the second quarter next
year, he said by e-mail today.
- Record Nickel Stockpiles Set to Climb as China Ships More Metal.
Record nickel stockpiles in warehouses monitored by the LME are poised
to climb as top producer China delivers more metal, according to Jim
Lennon, commodities consultant to Macquarie Group Ltd. Nickel
inventories in LME warehouses climbed 50% to a record 209,868 metric
tons this year, according to bourse data today. Stockpiles in Johor,
Malaysia have more than doubled in that time. The amount of metal
shipped from China almost tripled in the second quarter from the first,
with exports reaching a three-year high in June, customs data show. LME
stocks may rise by another 10,000 tons to 20,000 tons, Lennon said.
There are more than 100,000 tons of nickel inventories in China,
estimates Lennon. Global output of nickel will exceed demand by 95,000
tons this year with China accounting for about 35% of supplies,
according to Barclays Plc.
- Crude Rises From Two-Week Low. WTI for October delivery rose 72 cents, or 0.7 percent, to $104.57 a barrel at 1:47 p.m. on the New York Mercantile
Exchange. The volume of all futures traded was 25 percent below
the 100-day average. The contract fell to $103.85 yesterday, the
lowest close since Aug. 8.
- Treasury 5-Year Inflation Debt Sold at Highest Yield Since 2010. The government’s $16 billion sale of
five-year inflation-linked notes sold at the highest yield since
2010 amid bets that the economic recovery is strong enough for
the Federal Reserve to begin withdrawing monetary stimulus. The
Treasury Inflation Protected Securities yielded negative 0.127 percent,
highest yield since April, 2010, with investors wary of paying a premium
to guard against the threat of rising consumer prices. The last
sale, an $18 billion offering on April 18, drew a yield of negative
1.311 percent, the second-lowest on record, after the securities sold at
a
record negative 1.496 percent in December 2012.
- Fisher Says ‘Super-Easy’ Fed Can’t Alone Boost Manufacturing.
Federal Reserve Bank of Dallas
President Richard Fisher, one of the most vocal critics of bond
purchases by the central bank, said record Fed stimulus can’t revive
U.S. manufacturers from a two-year slump caused by ambiguity in
regulation and fiscal policy. “They have been given abundant,
super-cheap monetary fuel needed to stoke up their production engines
and expand their businesses,” Fisher, who doesn’t vote on monetary
policy this year, said today in a speech in Orlando, Florida. “What is
holding us back” is “fiscal and regulatory policy of the gang
that can’t shoot straight in Washington.”
- Mortgage Rates in U.S. Jump to Highest Level in Two Years. Mortgage rates in the U.S. jumped to
a two-year high, increasing borrowing costs for homebuyers as
sales accelerate. The average rate for a 30-year fixed mortgage rose to 4.58
percent this week from 4.4 percent, Freddie Mac said in a
statement today. The average 15-year rate climbed to 3.6 percent
from 3.44 percent, the McLean, Virginia-based mortgage-finance
company said. Both were the highest since July 2011.
- Consumer Comfort in U.S. Declined Last Week to Two-Month Low. (graph) Consumer confidence fell last week to the lowest level in two months as Americans’ views on the economy deteriorated.
The Bloomberg Consumer Comfort Index (COMFCOMF) fell to minus 28.8 for
the period ended Aug. 18 from minus 26.6. The two-week decrease from a
more than five-year high reached in early August has been the steepest
in a year. The monthly Bloomberg consumer economic expectations gauge
held in August at minus 5, a five-month low. The measure on current views on the economy declined to
minus 52.6 from minus 47.2, the biggest one-week drop since May
2012. The monthly expectations gauge showed 33 percent of
consumers reporting the economy getting worse and 28 percent
saying it’s improving.
- Subprime Squeezed as Auto-Lender Costs Increase: Credit Markets. Borrowing costs are rising for
subprime auto lenders in the asset-backed bond market, squeezing profit margins and pressuring firms to make even riskier loans. A General Motors Co. (GM) unit that makes car loans to people with blemished or limited credit sold top-rated securities
backed by the debt to yield 45 basis points more than the
benchmark swap rate on Aug. 7, almost double the spread it paid
on similar notes in April, according to a person with knowledge
of the transactions. American Credit Acceptance Corp., the
Spartanburg, South Carolina-based buyer of “deep subprime”
loans, paid 225 basis points over benchmarks to sell A rated
debt on July 31, up from 165 in March.
- Abercrombie(ANF) Falls After Profit Trails Analysts’ Estimates.
Abercrombie & Fitch Co. (ANF) plunged the most in more than 21
months after forecasting profit for the current quarter that was less
than analysts estimated amid declining traffic at its stores. The shares slid 17 percent to $38.71 at 11:13 a.m. in New
York and earlier fell as much as 21 percent for the biggest
intraday drop since Nov. 3, 2011. Third-quarter profit will be
as much as 45 cents a share, the company said today in a
statement, while declining to forecast earnings beyond then.
Analysts estimated $1.07, on average.
Wall Street Journal:
- Syria Opposition Calls on U.N. Rebels pledge to respond to alleged chemical attack with force as airstrikes continue. Syria opposition groups called on Thursday for United Nations
investigators to immediately visit the suburbs of Damascus where a day
earlier a suspected chemical attack killed over 1,000 civilians, many of
them children. Syrian opposition groups and residents in the area blame the Syrian
regime for using poison gas in shells targeting their towns as part of a
military offensive to regain territory from rebels.
- Obama to Propose College Ratings System on Bus Tour. President
Barack Obama on Thursday will announce proposals aimed at combating
rising college costs by creating a new ratings system and eventually
tying federal
student aid to institutions’ performance.
Fox News:
CNBC:
- All Nasdaq markets halting trading due to processor issue. Traders waited nervously Thursday for the Nasdaq to begin trading after its largest intra-day shut in recent memory.
"When everyone comes back online at the same time that's when even
more dangerous things can happen in the marketplace," said Sal Arnuk,
the co-founder of Themis Trading.
- Is the rupee ‘out of control’? As
the battered rupee slumped to yet another lifetime low of 64.56 to the
dollar on Wednesday, analysts say the selling is getting out of hand and
the
currency could fall to 70 in the coming months.
- Report: Household income below end-of-recession. The average American household is earning less than when the Great
Recession ended four years ago, according to a report released
Wednesday. U.S. median household income, once adjusted for
inflation, has
fallen 4.4 percent in that time, according to the report from Sentier
Research. The report is based on an analysis of Census Bureau data.
The median, or midpoint, income in June 2013 was $52,098. That's down
from $54,478 in June 2009, when the recession officially ended. And it's
below the $55,480 that the median household took in when the recession
began in December 2007.
Zero Hedge:
Business Insider:
USA Today:
- Sears(SHLD) struggles ongoing, stock dives. Sears' sales continued to fall last quarter and its loss widened, despite improving results from its frequent shopper program. Sears
Holdings on Thursday reported a net loss of $194 million, or $1.83 a
share, compared to a loss of $132 million, or $1.25 a share, for the
same period last year. Its stock was down more than 8% in afternoon
trading.
Reuters:
- Indian Rupee Extends Slump, Falls to New Record Low Against US Dollar. The Indian rupee fell past 65 to the dollar to a record low on Thursday,
after Federal Reserve minutes hinted that the U.S. was on course to
begin tapering stimulus as early as next month and as foreign investors
become sellers of Indian stocks. In an ominous sign for Asia's
worst-performing currency this year,
overseas investors who had been net buyers of Indian stocks so far in
2013 headed for the exits this week, selling a net $500 million worth of
shares in the four sessions through Wednesday. Foreigners have also
sold a net $1.3 billion of Indian government and corporate bonds so far
this month.
- CME(CME) says 'technical issue' affected CBOT soy data. The
CME Group on Thursday said it was monitoring a "technical issue" that
affected the display of some market data in its Chicago Board of Trade
soy futures complex but had no impact on trade. Traders noted suspect data in CBOT soybean and soymeal futures on CME's Globex electronic trading platform, where some
bids appeared higher than offers, the reverse of normal.
- Fitch sends rating warning shot to India and Indonesia.
India and Indonesia are not at immediate risk of credit rating
downgrades, Fitch said on Thursday, but it warned it could act if the
countries' governments fail to calm the current financial market
tensions. Fitch rates both India and Indonesia BBB- with a stable
outlook but the recent sharp sell-off in emerging markets, sparked by
worries of a scaling back of cheap U.S. financial stimulus, has put the
countries in the spotlight. The rating agency said that with currency
reserves still ample despite the downward trajectory, and both
governments
trying to mend economic imbalances, the market turbulence was
not "a trigger for rating action at this point."
- U.S. Fed may need to drain up to $2 trln - Barclays. The U.S. Federal Reserve may
need to drain up to $2 trillion from the financial system when
it decides to normalize short-term interest rates, according to
Joseph Abate, Barclays' money market strategist. This huge sum of liquidity reduction would be needed for the
central bank to achieve its rate target due to the high level of
reserves banks have now, which has curbed their demand to borrow from the federal funds market, Abate said in a research note
released on Thursday.
Telegraph:
- German data buoys eurozone as France falters. Strong German data cemented the country’s status as the eurozone’s powerhouse
on Thursday, while France faltered, leaving a “big question mark” over the
country’s ability to return to sustained growth.
WirtschaftsWoche:
- Schaeuble Rules Out Another Greek Debt Cut. German Finance
Minister Wolfgang Schaeuble says there won't be another debt cut for
Greece. Schaeuble says there are not secret plans for the time after the
Sept. 22 German election and no decisions in Europe will be postponed
because of the election. Schaeuble says debate over a second debt cut is
misleading and dangerous for confidence in the euro region.
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
Correio:
- Brazil will allow allow gasoline price increases of up to 10%.
China Securities Journal:
- PBOC Adviser Warns on Competitive Currency Weakening. Competitive
currency depreciation between nations is a "dead end," and negotiation
should be used to ease the risk of sovereign debt and the risk of
disorderly cross-border capital flows, citing Chen Yulu, a Chinese
central bank's adviser, at a seminar yesterday.
Style Underperformer:
Sector Underperformers:
- 1) Computer -1.46% 2) Telecom -.13% 3) Retail +.04%
Stocks Falling on Unusual Volume:
- ANF, HPQ, SSI, LXK, INFN, PTR, PCG, PUK, NOAH, BONT, SHLD, SWI, DMND, CXW, PDCO, CYBX, GEO, TGT, INCY, EXPR, BKE, YY, SMRT, LTD, ENB, CCU, ANN, PERY and ARO
Stocks With Unusual Put Option Activity:
- 1) A 2) HAL 3) GPS 4) HPQ 5) EWZ
Stocks With Most Negative News Mentions:
- 1) TGT 2) FUL 3) TGT 4) CATO 5) ORCL
Charts:
Style Outperformer:
Sector Outperformers:
- Steel +2.14% 2) Gold & Silver +1.82% 3) Alt Energy +1.74%
Stocks Rising on Unusual Volume:
- IRE, PLCE, HAIN, GME and CLDX
Stocks With Unusual Call Option Activity:
- 1) CLDX 2) SUNE 3) HPQ 4) EA 5) ANF
Stocks With Most Positive News Mentions:
- 1) MRO 2) BWS 3) AXP 4) PCP 5) GRMN
Charts: