Click Here for Today's Market Take.
Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 16.76 -1.47%
- Euro/Yen Carry Return Index 136.80 +.09%
- Emerging Markets Currency Volatility(VXY) 11.91 +2.41%
- S&P 500 Implied Correlation 54.51 -.15%
- ISE Sentiment Index 104.0 +23.81%
- Total Put/Call .74 -33.93%
Credit Investor Angst:
- North American Investment Grade CDS Index 83.53 -.31%
- European Financial Sector CDS Index 144.36 +.08%
- Western Europe Sovereign Debt CDS Index 85.91 +.12%
- Emerging Market CDS Index 341.48 +.37%
- 2-Year Swap Spread 17.25 +.75 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -10.0 -.25 bp
Economic Gauges:
- 3-Month T-Bill Yield .02% unch.
- China Import Iron Ore Spot $138.70/Metric Tonne unch.
- Citi US Economic Surprise Index 36.80 +6.0 points
- Citi Emerging Markets Economic Surprise Index -16.90 -2.2 points
- 10-Year TIPS Spread 2.11 unch.
Overseas Futures:
- Nikkei Futures: Indicating -88 open in Japan
- DAX Futures: Indicating -4 open in Germany
Portfolio:
- Slightly Lower: On losses in my retail sector longs, index hedges and emerging markets shorts
- Market Exposure: 25% Net Long
Bloomberg:
- Obama Gets Boehner’s Support in ‘Call to Action’ Against Syria. President
Barack Obama urged Congress to take a “prompt” vote authorizing
military action against Syria and won endorsement for the cause from the
two top Republicans in the U.S. House. Backing from House Speaker John
Boehner and Majority Leader Eric Cantor will help Obama as he makes his
case to lawmakers who’ve questioned the evidence presented by the
administration that the Syrian government was
behind a sarin gas attack last month or whether the U.S. has a vital
interest in the region.
- European Stocks Decline; Benchmark Stoxx 600 Index Falls.
European stocks declined as U.S.
Speaker of the House John Boehner said he supports the president’s call
for action against Syria, offsetting better-than-forecast manufacturing
data. Vodafone (VOD) Group Plc slipped 5 percent as shareholders weighed
the details of the $130-billion deal to sell its stake in Verizon
Wireless. Nokia Oyj soared 34 percent after Microsoft Corp. agreed to
buy its handset business for 5.44 billion euros ($7.2 billion). Dufry
AG, the operator of duty-free stores, climbed 3.4 percent after winning
contracts in Brazil. The Stoxx Europe 600 Index fell 0.4 percent to 301.78 at
the close. Stock markets were rattled earlier, with the gauge
losing as much as 0.7 percent, by what Israel said was a joint
flight test with the U.S. of its Arrow missile-interception
system over the Mediterranean Sea.
- Treasuries Slide Most in a Month as Factory Gains Spur Fed Bets. Treasuries
fell the most in a month as a gauge of U.S. manufacturing rose more
than forecast in August, reinforcing bets the Federal Reserve will soon
announce to reduce monetary stimulus. Yields on benchmark 10-year notes
climbed as much as 13 basis points, extending the biggest annual rout in U.S. government securities in almost four decades. Treasuries fell
earlier as demand for refuge eased while the threat of an
immediate U.S. military strike on Syria declined. The Labor
Department will report Sept. 6 U.S. payrolls added more jobs in
August than in July, and Fed policy makers meet Sept. 17-18.
- Crude Advances as Obama Seeks Support on Syria. West
Texas Intermediate crude
advanced as U.S. President Barack Obama sought support in Congress for a
military strike on Syria, bolstering concern that oil shipments from
the Middle East will be disrupted. Futures gained as much as 1.1
percent after House Speaker John Boehner told reporters he will back the
president’s call for action against Syria in response to the alleged
use of chemical weapons. Obama stepped up lobbying today after
requesting authorization from Congress on Aug. 31. Prices climbed
earlier as Israel said it carried out a missile joint test launch with
the U.S. in the Mediterranean Sea. “The market is processing what
appears to be a slow grind to military action against Syria,” said John
Kilduff, a partner at Again Capital LLC, a New York hedge fund that
focuses on energy. “There’s headline risk ahead of us. The reaction to
the Israeli missile test is an example of what we will be seeing until
the Syria situation is resolved.” WTI crude for October delivery
climbed $1.01, or 0.9 percent, to $108.66 a barrel at 1:39 p.m. on the
New York Mercantile Exchange. Trading was 2.6 percent above the 100-day
average. There was no floor trading yesterday because of the
U.S. Labor Day holiday, and yesterday’s electronic transactions
will be booked today for settlement purposes. Brent oil for October settlement increased $1.47, or 1.3
percent, to $115.80 a barrel on the ICE Futures Europe exchange.
Trading was 29 percent above the 100-day average. The European
benchmark grade traded at a $7.14 premium to WTI.
- Gold Rises First Time in Four Days on Middle Ease Tension. Gold gained for the first time in
four sessions after Israel tested its missile-defense system,
fueling concern that tensions in the Middle East will escalate and boosting the appeal of haven assets. Gold futures for December delivery rose 0.3 percent to
$1,400.50 an ounce at 10:20 a.m. on the Comex in New York.
- Dealers in Debt Pare Commitments Raising Risk as Rules Bite.
The worst losses in U.S. debt in at least 37 years are being magnified
by investors exiting the market at the same time new regulations prompt
Wall Street firms to cut back on trading corporate bonds. Bank of America Merrill Lynch’s U.S. Broad Market Index is
on pace to drop 4.41 percent, the biggest annual loss since at
least 1976. Investors pulled $123 billion from bond funds since
May, according to TrimTabs Investment Research. Trading in corporate fixed-income securities is the lowest
ever as a proportion of outstanding debt, and volumes in
Treasuries are little changed from 2007 levels even though the
market has almost tripled to $11.5 trillion, Financial Industry
Regulatory Authority and ICAP Plc data show. Bonds are getting
riskier even with inflation at bay and corporate profits hitting
new highs. “When bond investors start to meaningfully divest
themselves of their positions, it will be analogous to yelling
fire in a crowded theater,” Michael Underhill, the chief
investment officer at Capital Innovations LLC, which manages
$1.5 billion, said in an e-mail Aug. 23.
- State Bank of India Credit Growth 21% y/y as of Now. Home and
auto loans driving credit growth, Chairman Pratip Chaudhuri said in a
Bloomberg TV India interview.
Wall Street Journal:
Zero Hedge:
Business Insider:
New York Times:
- World Economy Growing Unevenly, O.E.C.D. Says. The world economy will continue slowly expanding for the rest of the
year, despite signs of relative weakness in China and other emerging
markets, and an uneven recovery in Europe, the Organization for Economic
Cooperation and Development said Tuesday. The picture in emerging economies is less promising, the organization
noted. China, it said, “appears to have passed the trough” — the nadir
of its economic cycle — but it and other emerging economies face
significant uncertainty, including possible financial market
disruptions.
- Former Chinese Railroad Official Indicted on Bribery Charges. A
former high-ranking Chinese railroad official, whose daughter’s
employment at JPMorgan Chase is a focus of an antibribery investigation
in the United States, has been formally indicted on bribery charges in a
Beijing court. Zhang Shuguang, former deputy chief engineer at the Ministry of
Railways, was indicted on charges related to 13 incidents of bribery
from 2000 to 2011, Chinese news reports said on Tuesday.
Reuters:
WantChinaTimes:
- Chinese cities reporting inflated foreign investment data: paper. Some eastern Chinese cities have been found inflating the amount of
foreign investments they receive by paying brokers to introduce US
dollars from abroad, which adds to the financial burden of local
authorities, the Chinese-language China Business News reports.
According to the news outlet, certain cities in an unspecified
eastern Chinese province have been hiring brokering agencies in
Guangdong to set up firms under the names of people based in Hong Kong
and Taiwan. The firms, which in actuality do not exist, then usher in US
dollars, which means foreign investments for local governments. The
brokering agencies bring in the "foreign investments" for a
reward from local authorities — 170,000 yuan (US$28,000) in return for
every US$1 million introduced — according to a report by Gong Zhen, an
official from the Central Committee of the Jiu San Society. As a result
of the practice, a city reported growth in the foreign investments for
four consecutive years, according to Gong.
CCTV:
- China's Xi Calls for Ban on Buying Gifts Using Public Funds.
Chinese President Xi Jinping calls for a ban on using public funds to
buy gifts or hold banquets during festivals, including the Mid-Autumn
Festival and National Day holidays, citing Xi as saying during a visit
to the northeaster Chinese province of Liaoning. Xi also calls for a ban
on using public funds for travel during holidays, CCTV said.
Style Underperformer:
Sector Underperformers:
- 1) Software -1.98% 2) REITs -1.39% 3) Utilities -1.29%
Stocks Falling on Unusual Volume:
- MSFT, AEC, WRI, WIFI, ENOC, WEC, GAS, HDB, SJR, PTNR, VZ, IBN, BBEP, GENT, VOD, SNY, BIOS, GIB, REG, KKD, USAC, MNST, SJR, ATW, UBNT, ESV, IBN, MGAM, SNH, KEX, IDA, INDY, PER, AEC, LNT and MUR
Stocks With Unusual Put Option Activity:
- 1) HOV 2) GPS 3) XLV 4) KRE 5) LVS
Stocks With Most Negative News Mentions:
- 1) WSM 2) PBR 3) KMP 4) ISRG 5) LF
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Networking +2.69% 2) Computer Hardware +2.16% 3) Steel +1.96%
Stocks Rising on Unusual Volume:
- TU, RCI, CMLS, CBS, SFUN, JAH, ERIC, JKS, CIEN, DDD, ISIS and FNF
Stocks With Unusual Call Option Activity:
- 1) IP 2) VZ 3) RPRX 4) HALO 5) SD
Stocks With Most Positive News Mentions:
- 1) APA 2) CCE 3) NVDA 4) FINL 5) STZ
Charts:
Weekend Headlines
Bloomberg:
- Syrian Rebels Armed From Abroad Count Down to U.S. Missile Fire. Syria’s
main rebel fighting force is counting down to U.S. intervention before
it’s even approved. “Zero hour for us begins with the first U.S. cruise
missile,” Colonel Qassem Saadeddine, a member of the Free Syrian Army’s
high command, said by telephone yesterday from his post just across
from the Turkish border. Syrian President Bashar al-Assad’s opponents
are depending on the U.S. to end a stalemate in the 2 ½-year conflict as
President Barack Obama seeks congressional approval to strike Syria for
what his administration says was a sarin gas attack last month by the
government in Damascus. Members of the Free Syrian Army, or FSA, have been posted
close to targets and received a consignment of rockets, machine
guns and anti-tank weapons from “sisterly countries” in the
past week that are enough to do the job, said Saadeddine.
- Egypt Military Bolsters Suez Security After Failed Attack.
Egyptian authorities said they tightened security along the Suez Canal
after foiling an attack on a passing ship, even as they pressed their
crackdown on the Muslim Brotherhood by arresting another top leader.
The failed attack on the Panama-registered Cosco Asia as it crossed the
waterway didn’t damage the ship or its cargo, the state-run Middle East
News Agency reported, citing Suez Canal Authority head Mohab Mamish.
The military dealt “decisively” with the attempt, he said, without
giving details. Canal traffic
is normal and 55 ships are expected to cross today, Mamish said,
according to the news agency.
- Asian Bonds Tumble Below Par in Capital Flight: Credit Markets. Asia
dollar-denominated bonds have dropped below par for the first time since
2011 as investors pull money out of the region amid concerns that
growth is slowing and as currencies from the rupee to rupiah plunge.
Average prices of company debentures in the region fell to 98.61
cents on the dollar on Aug. 22, the least since October 2011, Bank of
America Merrill Lynch indexes show. Dollar bonds globally have held
above 100 cents since September 2009. Both investment- and non-investment-grade debt in Asia were below par on Aug. 22. The last
time that happened was in September 2008, when Lehman Brothers Holdings
Inc. collapsed. Investor sentiment toward Asia is shifting as economic growth in
China slows and currencies in India and Indonesia -- the two countries
with the biggest external funding needs in the region -- plunge. About
$44 billion has been pulled from emerging-market stock and bond funds
globally since the end of May, data provider EPFR Global said on Aug.
23. “You
risk being swept away by fund outflows even if you buy bonds from the
best companies in Asia,” said Ben Bennett, a global credit strategist in
London at Legal & General Investment Management, which manages $670
billion. “You’d need to be very brave to add credit risk before
currencies show signs of stabilization.”
- Japan Salaries Extend Longest Fall Since ’10 in Threat to Abe.
Japan salaries extended the longest slide since 2010 in July, raising
the stakes for Prime Minister Shinzo Abe’s decision on whether to
increase a sales tax. Regular wages excluding overtime and bonuses
dropped 0.4 percent from a year earlier, marking a 14th straight month
of decline, according to data
released today by the Ministry of Health, Labour and Welfare.
- Abenomics Litmus Test Looms as Pressure Mounts on Tax Policy. Prime
Minister Shinzo Abe faces
rising pressure to expand tax relief for Japan’s companies after the
longest slump in business investment since 2009, setting up a potential
battle with the Finance Ministry. Officials will unveil tax breaks
for capital spending in coming months, according to 15 of 16 economists
surveyed by Bloomberg News -- a step Finance Minister Taro Aso has
backed. Aso opposes a broader cut in corporate tax rates, even after a
slide in investment since the start of 2012, and his ministry
has a history of shielding revenue.
- India Slowdown Adds Urgency to Fix Lowest BRIC Reserves: Economy. India’s weakest economic growth
since 2009 escalates pressure on the government to increase the
smallest foreign-exchange reserves among BRIC nations, as policy
makers struggle to contain a sliding rupee. The reserves have dropped 13 percent to $278 billion since
a peak in 2011 and are equivalent to less than seven months of
imports. Bank of America Merrill Lynch estimates India needs as
much as 10 months of import cover for currency stability, a
figure still about half the average in Brazil, Russia and China.
- Politicians Talk, the Rupee Drops, India’s Economy Tanks. India’s economy has stalled. Growth in the second quarter fell to 4.4
percent at an annual rate, down from 8 percent two years ago. The rupee
has slumped. Consumer-price inflation is about 10 percent and rising.
The country faces what could be a full-scale financial crisis.
- Rupee to Real Rout Extending 20% to Jen in Fed Taper: Currencies.
Emerging-market currencies, already headed toward their biggest annual
decline since 2008, will tumble another 20% as outflows from India to
Brazil accelerate, according to Stephen Jen, who predicted the current
rout back in April. The co-founder of SLJ Macro Partners LLP and former
global head of foreign-exchange at Morgan Stanley warned of a "sudden
stop" of capital to developing nations a month before a retreat that
sent the rupee to record lows and the real to its weakest level since
2008. Now, Jen says, the worst is yet to come because $3.9 trillion of
funds invested in emerging markets in the past four years will leave as
the U.S. Federal Reserve withdraws stimulus.
- RBA Running Out of Room to Cut Rates, Australia’s Robb Says.
Australia’s central bank is running out of room to implement emergency
stimulus measures should they be needed with interest rates now at
historical lows, Shadow Finance Minister Andrew Robb said. The central bank doesn’t have “a lot of room left if there
was some other unforeseen event in the world economy to make a
difference,” Robb, whose Liberal-National coalition is on track
to win government at the Sept. 7 election, said in an interview
with Bloomberg Television today. “The Reserve Bank has been
relied upon, or pressured, to do the heavy lifting in the
economy for the last few years.”
- Asian Stocks to Copper Jump as Yen Weakens; Aussie Climbs.
Asian stocks climbed the most in a month, led by Japan, and the yen
weakened on evidence of a pickup in global manufacturing. South Korea’s
won strengthened,
while U.S. Treasuries declined.
The MSCI Asia Pacific Index rose 1.4 percent at 12:25 p.m.
in Tokyo.
- Rebar Futures Decline for First Time in Three Days in Shanghai.
Steel reinforcement-bar futures in China fell for the first time in
three days on concern that gains in the price of futures have outpaced
growth in actual demand. Rebar for January delivery fell as much as
0.6 percent to 3,765 yuan ($616) a metric ton on Shanghai Futures
Exchange, and traded 3,772 yuan at 10:52 a.m. local time. Futures have
fallen
5.4 percent this year.
- Brent Crude Fluctuates as Lawmakers Urge Syrian Military Action.
Brent crude swung between gains and losses after rising for the first
time in three days as U.S. lawmakers urged backing for military action
against Syria, fanning concern that possible strikes may disrupt Middle
East oil exports.
Futures were little changed in London after advancing 0.3
percent yesterday.
- Gold Little Changed Above 1-Week Low as Investors Assess Economy. Gold traded little changed after
dropping for three days to a one-week low as investors assessed
prospects for reduced stimulus in the U.S. as the world’s
largest economy recovers.
Spot gold traded at $1,392.78 an ounce at 9:31 a.m. in
Singapore after touching $1,373.38 yesterday, the lowest since
Aug. 23.
- Copper Rally Reversing as Glut Expands to ’01 High: Commodities. The biggest rally in copper in three
months is reversing as analysts predict that the largest glut in
13 years will overwhelm consumption from an accelerating Chinese
economy, which uses two in every five tons. Production will exceed demand by 408,000 metric tons next
year, the most since 2001, compared with 167,000 tons in 2013,
the average of 15 analyst estimates compiled by Bloomberg shows.
Prices will drop
6.1 percent to $6,800 a ton by the end of December, the median
of 13 analyst and trader predictions shows.
- Tankers Worst Since 1997 as Africa Oil to China Slows: Freight.
China’s smallest oil imports from
West Africa in at least two years are curbing demand for tankers on the
second-longest trade route, prolonging the worst rates in more than a
decade for Frontline Ltd. and other owners. Chinese refiners will buy 28 percent less West African
crude this month than a year earlier, the least in data starting
in August 2011, according to loading plans and a Bloomberg News
survey of eight traders. Shares of Frontline, which operates 32
very large crude carriers, will drop 35 percent in 12 months,
the average of 13 analyst estimates compiled by Bloomberg shows.
Those of Euronav SA, with 13 supertankers in its fleet, will
retreat 24 percent, the forecasts show.
- Global Watchdog to Set Creditor-Loss Rules for Failing Banks. Global regulators said they would
seek to protect taxpayers from having to bail out failing banks
by drawing up international rules on creditor losses. The Financial Stability Board will propose rules next year
to ensure that big banks and other too-big-to-fail financial
institutions hold subordinated debt and other liabilities that
can be written down in an emergency. The group will also address
provisions in derivatives contracts that can deepen crises.
- Banks Must Boost Collateral on Swaps Trades Under Basel Plan. Banks must back trades in the $633
trillion market for swaps and other over-the-counter derivatives
with additional collateral as global regulators seek to choke
off opportunities for excessive risk taking. The plans jointly issued by two groups of international
standard-setters target swaps traded outside of clearinghouses
and would ensure lenders have safeguards in place when a trading
partner defaults. The regulators said they scaled back some of
the proposals to address bank concerns that the rules would
restrict lending.
- Italy Coalition Reels as Berlusconi Threatens to Sink Letta. Italian
Prime Minister Enrico Letta’s ruling coalition came under renewed
strain as Silvio Berlusconi threatened to bring down the government if
Letta’s party votes to expel the three-time ex-premier from the Senate.
“We’re not available to keep the government going if the left decides to
prevent the head of People of Liberty from remaining in politics,”
Berlusconi told a rally organized by
the Army of Silvio supporters’ association on Aug. 30. He
softened his rhetoric a day later, saying he “didn’t issue an
ultimatum” and wants the government to continue to govern.
- Small-Business Optimism Drops From U.S. to Germany, Insurer Says. Optimism
has declined among owners
of small businesses as entrepreneurs in the U.S. and Europe find it
harder to increase revenue and secure financing for new ventures,
insurer Hiscox Ltd. (HSX) said. Thirty-eight percent of small-business
owners said they were optimistic about the year ahead, compared to 48
percent a year earlier, according to a Hiscox survey of 3,000 people in
the U.S., Germany, the U.K., France, Spain and the Netherlands. Optimism
declined in all six countries, with the highest level in the U.S.,
at 50 percent, followed by Germany. The lowest level of optimism -- 22
percent -- was recorded in France. Just 37 percent of respondents said
that revenue increased in the last year, with the U.S. topping the
survey at 48 percent, and France and Spain relegated to the bottom, with
31 percent and 26 percent, respectively. Small businesses are “anticipating tough trading conditions rather than expecting any early return to the boom years of
the last decade,” Hiscox Chief Executive Officer Bronek Masojada said
in a statement. The insurance firm, based in Bermuda with its primary
stock listing in London, has conducted the survey for five years. Rather than hiring, small companies are introducing new
products and investing in training, Masojada said.
- Verizon(VZ) Doubles Down on U.S. as AT&T Seeks a Hedge in Europe. Verizon Communications Inc. (VZ:US)’s
decision to buy out its wireless partner for $130 billion is a bet that
the U.S. mobile-phone market still has room to expand even as
competition intensifies and smartphone demand slows. While owning
all of Verizon Wireless -- the 14-year-old venture with Vodafone Group
Plc (VOD) -- will give Verizon a full share of earnings, the acquisition
won’t result in reduced costs or bring new products or services. That
means Chief Executive Officer Lowell McAdam will have to persuade
investors and bondholders that the profit growth he’s getting will more
than justify the heavy price tag in the deal announced today.
- Microsoft(MSFT) to Buy Nokia’s Devices Business for 5.44 Billion Euros. Microsoft
Corp. (MSFT) agreed to pay 5.44 billion euros ($7.2 billion) for Nokia
Oyj (NOK1V)’s devices business and license patents as the Finnish
company, once the biggest maker of mobile phones, struggles to maintain
market share. The
deal includes paying 3.79 billion euros for the devices unit and 1.65
billion euros for patents, the companies said in a statement today.
Nokia Chief Executive Officer Stephen Elop will step aside to return to
Microsoft, they said.
Wall Street Journal:
- Obama Presses Syria Gamble. Reversing Course, White House Races to Get Congressional Backing for Strikes. The
White House raced on Monday to persuade Congress to authorize military
action in Syria, after President Barack Obama, in one of the biggest
gambles of his presidency, handed the volatile issue to lawmakers who
have given him few recent legislative victories. The president's
surprise reversal put on hold a military mobilization
that had appeared on the verge of launching missiles and sparked urgent
lobbying for a Congressional resolution authorizing force. The
president must win over those Republicans calling for a broad U.S.
mission against Syria, as well as lawmakers in both parties who are wary
of even limited strikes.
- Citigroup Is Dialing Back Its 'Alternative' Holdings. Citigroup Has Shed More Than $6 Billion in Private-Equity and Hedge-Fund Assets.
Citigroup Inc. C -0.29% has shed more than $6 billion in private-equity
and hedge-fund assets in the past month, according to people familiar
with the transactions, in order to comply with new regulations limiting
banks' holdings of "alternative" investments. The nation's third-largest
bank by
assets last week sold a $4.3 billion private-equity fund called Citi
Venture Capital International for an undisclosed price to Rohatyn Group,
a private-equity fund run by Nick Rohatyn, son of financier Felix
Rohatyn, said people familiar with the matter.
- The Politics of the Obama Delay on Syria. Betting that the focus on a GOP rift will divert attention from how many Democrats won't support the president. The most telling line in President Obama's Saturday Syria address
came near the end, when he (once again) lectured Congress about its duty
to rise above "partisan differences or the politics of the moment."
Having put America's global credibility at risk, Mr. Obama defaulted to
the same political cynicism that has defined his presidency.
The commander in chief is in a box.
His desperation to avoid military entanglement in Syria last year—in the
run-up to the presidential election—inspired Mr. Obama to fumble out
his "red line" warning to Bashar Assad on chemical-weapons use. The
statement was a green light to the dictator to commit every atrocity up
to that line and—when he received no pushback—to cross it.
Now trapped by his own declaration,
Mr. Obama is reverting to the same strategy he has used in countless
domestic brawls—that is, to lay responsibility for any action, or
failure of action, on Congress. The decision was made easier by the fact
that Congress itself was demanding a say.
Fox News:
- Obama courts McCain, Graham on Syria ahead of major hearing. President
Obama appeared to try and enlist two powerful Republican senators to
help in his effort to win congressional support for a strike on Syria,
ahead of a major hearing on Tuesday where top members of his national
security team will make their case to Congress and the public for
military action. The Senate Foreign Relations Committee will conduct the
first hearing on the proposed Syria strike on Tuesday afternoon.
Secretary of State John Kerry, Defense Secretary Chuck Hagel and Gen.
Martin Dempsey, chairman of the Joint Chiefs of Staff, are scheduled to
testify. Ahead of the hearing, Obama met Sunday with Sen. John McCain,
R-Ariz., who has been an ally in recent debates over immigration and
other issues, and Lindsey Graham, R-S.C.
- Union dumps AFL-CIO for its positions on ObamaCare, immigration reform. The
International Longshore and Warehouse Union has cut ties with the
AFL-CIO, citing in part the private-sector union’s support for ObamaCare
and immigration reform. In an August 29 letter to AFL-CIO President
Richard Trumka, leaders of the 40,000-member union said they have become
“increasingly frustrated” with the federation’s policy positions on
such matters as immigration and health care reform. “We feel the
federation has done a great disservice to the labor movement and all
working people,” wrote Robert McEllrath, president of the San
Francisco-based ILWU.
CNBC:
- Labor outlook: 'It's just a very tough job market'.
Millions of Americans are off from work this Labor Day. But millions
of others are off nearly every day because they have no job—or have
given up looking for one. "It's just a very tough job market now.
There's no other way of putting it," said Daniel Opler, professor of
history and a labor expert at the College of Mount St.Vincent. "And the
least skilled are in the toughest spot. It's a daunting task to find a
job these days," he said.
ValueWalk:
Business Insider:
Reuters:
- Japan to tell G20 it will raise sales tax as planned-finmin. Japan
will tell G20 nations at a summit this week that it plans to go ahead
with a two-stage sales tax hike from next year, Finance Minister Taro
Aso said on Tuesday. If the government were to raise the sales tax
as planned, it will consider compiling an extra budget and submit
relevant bills to parliament early next year for fiscal spending to
cushion any impact on the economy, Aso told a news conference.
- Beatings, evictions reveal ugly side of China's local debt pile. When Xu Haifeng's
home was razed three years ago, she went to China's capital Beijing to
complain about the city and county governments that ordered the
demolition.
Since then, she says family
members have been kidnapped at least 18 times, typically having black
bags thrust over their heads before being taken to a
hotel-turned-illegal jail in the eastern city of Wuxi and locked for
weeks in a tiny, windowless room.
- Spain new car sales fall 18.3 pct in August year on year. Spanish car sales dropped 18.3
percent year-on-year in August after rising by almost 15 percent
in July, car manufacturers' association Anfac said on Monday. August's figures were impacted by a jump in car sales in the
same month last year ahead of a 3-percentage-point rise in
value-added tax in September and due to calendar effects, Anfac
said. Some 38,872 cars were sold in August and the association
said a government subsidy scheme for the purchase of new
vehicles would mean a probable rise in September.
- Germany warns against "unrealistic" timeframe for EU banking union. Europe must not race ahead with
proposals for a banking union, a German official cautioned on
Monday ahead of a gathering of the Group of 20 leading economies
whose agenda will include banking reform.
"We don't want to destabilise markets with unrealistic
proposals so the time plan (for the planned European banking
union) has to be realistic," the official said, adding that EU
leaders had agreed that 2014 was a more realistic target date.
Financial Times:
- European ABS issuance slips to four-year low. The
market in new ‘sliced and diced’ loans in Europe has fallen to its
lowest level for four years as the continent’s financial institutions
trim their funding needs. Issuance of asset-backed securities has fallen by 29 per
cent to $40.2bn for the year to date compared with the same period last
year – the lowest level since 2009, according to figures from Dealogic.
Telegraph:
21st Century Business Herald:
- China Infrastructure Trust Sales Drop 40% m/m. China sold 20
infrastructure trust products in August, a decline of 40% m/m, citing
data from Wind Information. An audit of local government debt started on
Aug. 1 may reduce the number of infrastructure trust product sales,
according to the report, citing a person from the industry.
China Daily:
- China Should Curb Building New Cities 'Blindly'. Local
governments must be cautious and plan scientifically on construction of
new cities or areas, according to a front-page commentary. Blindly
building new cities is not in line with reality, and is in disregard of
the people's will, according to the commentary.
Night Trading
- Asian indices are -.25% to +1.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 158.50 -2.0 basis points.
- Asia Pacific Sovereign CDS Index 131.75 +3.75 basis points.
- NASDAQ 100 futures +1.14%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:58 am EST
- The Final Markit US PMI for August is estimated at 54.0.
10:00 am EST
- Construction Spending for July is estimated to rise +.3% versus a -.6% decline in June.
- ISM Manufacturing for August is estimated to fall to 54.0 versus 55.4 in July.
- ISM Prices Paid for August is estimated to rise to 51.2 versus 49.0 in July.
- IBD/TIPP Economic Optimism for September is estimated to rise to 46.0 versus 45.1 in August.
Upcoming Splits
Other Potential Market Movers
- The Eurozone PMI report, Japan 10Y auction, China Non-Manufacturing PMI report, Australia gdp report, RBA rate statement, Barclays
Back-to-School Consumer Conference, Citi Tech Conference and the Citi
Biotech Conference 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 higher and to weaken into the afternoon, finishing modestly higher. The Portfolio is 25% net long heading into the week.
Wall St. Week Ahead by Reuters.
Stocks to Watch Tuesday by MarketWatch.
Weekly Economic Calendar by Briefing.com.
BOTTOM LINE: I expect US stocks to finish the week mixed as high
energy prices, more emerging markets debt angst, technical selling and rising long-term
rates offset diminished Syria intervention worries, subsiding global growth fears, bargain-hunting
and short-covering. My intermediate-term trading indicators are giving
neutral signals and the Portfolio is 25% net long heading into the week.
