Evening Headlines
Bloomberg:
- Vacant Japan Homes Show Holes in Abe’s Push for Housing Growth.
More than 50 houses and apartments, almost 20 percent of the quaint
residential neighborhood of narrow streets and stairway paths leading
into green hills, are empty here, an hour’s train ride south of Tokyo
and 1,000 yards (900 meters) from the Yokosuka naval base, home of the
U.S. Seventh Fleet. That hasn’t stopped developers from building at
least eight new apartment blocks in the same city in the
past two years.
- China’s Choking Cities Means Job Cuts at Steel Town: Commodities. After a decade of failed efforts to cut outdated commodity
capacity in China, Goldman Sachs Group Inc. says Li is getting
serious, driven by the need to reduce severe pollution. Zhang
and thousands like him on Galaxy Street live off servicing mills
in Tangshan, the largest steel city in China that alone has almost five times as many blast furnaces as North America. “If you shut these plants, we’ll all lose our jobs,” said Zhang. “If there’s no steel industry, we would have a hard time
finding other work.”
- China August Home Prices Rise as Major Cities Post Record Gains. New home prices in China’s four
major cities rose the most in August since January 2011, led by
Guangzhou, on expectations that the government won’t implement
new nationwide property curbs any time soon. Prices climbed in 69 of the 70 cities the government
tracked last month from a year earlier, the National Bureau of
Statistics said in a statement today. The number of cities that
posted increases last month matched that of in July, June and
May, which was the most since August 2011. Prices jumped 19
percent in Guangzhou, while the capital city of Beijing and
financial center of Shanghai both rose 15 percent from a year
earlier. In Shenzhen, prices rose 18 percent from a year ago.
- Shanghai in Name Adds $45 Billion of Value Amid Bubble Risk.
Zhang Guangdi has watched the market value of his Shanghai
International Port Group Co. (600018) shares jump 130 percent since Aug.
22, when China’s commerce ministry said the government approved a
free-trade zone in Shanghai. The 67-year-old retiree says he’ll probably
sell the 2,935 yuan ($480) stake when the zone, part of Premier Li
Keqiang’s plan to liberalize yuan trading and relax government
regulation, opens at the end of this month. The port operator is valued at 25 times profit, a 121 percent premium versus the Shanghai Composite Index (SHCOMP), according to data compiled by Bloomberg.
- Asian Stocks Rise to Near Four-Month High Ahead of Fed.
Asian stocks rose, with the regional benchmark index trading near a
four-month high, before the Federal Reserve decides later today whether
to slow its $85 billion of monthly asset purchases. Mitsui O.S.K. Lines
Ltd. and Fanuc Corp. rose at least 3.3 percent in Tokyo as industrial
companies led gains on the Asia-Pacific benchmark index. Kawasaki Heavy
Industries Ltd. (7012) surged 4.4 percent to a six-year high amid
unconfirmed reports the Japanese manufacturer secured a 180 billion yen
($1.8 billion) rail-car order. Kansai Electric Power Co. sank 1.4
percent in Tokyo after the utility halted units at two power plants. The MSCI Asia Pacific Index gained 0.4 percent to 138.69 as
of 11:20 a.m. in Hong Kong as seven of the 10 industry groups on
the gauge advanced.
- Rebar Falls to Seven-Week Low as Purchases Slow, Iron Ore Drops. Steel reinforcement-bar futures in
Shanghai fell to the lowest level in seven weeks as purchases of
the building material slowed before a national holiday and as iron ore prices declined. Rebar
for delivery in January on the Shanghai Futures Exchange fell as much
as 0.6 percent to 3,626 yuan ($592) a metric ton, the lowest since July
31, before trading at 3,631 yuan at 10:18 a.m. The market will be closed
in China for a Mid-Autumn Festival tomorrow and Sept. 20.
- Gold Tumbles Below $1,300 to Six-Week Low Before Fed Statement. Gold for immediate delivery lost as much as 1.4 percent to
$1,292.95 an ounce, the lowest level since Aug. 8, and traded at
$1,294.79 at 9:26 a.m. in Singapore, sliding for a third day.
Bullion for December delivery slid as much as 1.3 percent to
$1,293 on the Comex in New York, the lowest since Aug. 8.
- Dimon Tells JPMorgan Staff to Brace for More Regulatory Woes. JPMorgan Chase & Co. Chief
Executive Officer Jamie Dimon told employees to prepare for more
legal woes while the bank undertakes an “unprecedented effort”
to comply with regulations. “We are all well aware of the news
around the legal and
regulatory issues facing our company, and in the coming weeks
and months we need to be braced for more to come,” Dimon said today in
an e-mail to JPMorgan’s more than 250,000 employees (JPM:US).
- Adobe’s(ADBE) Shift to Subscriptions Puts Brakes on Profit, Sales. Adobe Systems Inc.shares rose
after the largest maker of graphic-design tools said it amassed
more than 1 million customers for its online services amid a
shift away from software installed on personal computers. A 47 percent jump in the number of Web subscribers, which
exceeded some analysts’ estimates, coincided with a drop in
sales and profit. Revenue for the period through August declined
7.9 percent to $995.1 million, the company said in a statement
today, missing the $1.01 billion average of analysts’
projections compiled by Bloomberg.
Wall Street Journal:
MarketWatch.com:
Zero Hedge:
Business Insider:
New York Times:
Reuters:
- U.S. internet sales tax bill to follow seven principles. Legislation that the U.S.
House of Representatives will soon take up on allowing states to
tax online purchases will follow seven major principles,
including keeping the system simple for small businesses and
ensuring it will not lead to new taxes, sources present at talks
on the matter said on Tuesday.
- U.S. must cut $2 trillion over 10 yrs to stabilize debt-CBO. U.S. lawmakers are far from
finished with the job of deficit-cutting, the Congressional
Budget Office warned on Tuesday, saying that $2 trillion in
additional savings is needed over the next 10 years just to
stabilize long-term U.S. debt.
- Apple(AAPL) iPhone 5C orders 'not overwhelming': carrier source. Pre-orders for Apple Inc's new plastic-backed, brightly colored iPhone 5C have not been "overwhelming," and supply of both that model as well as a more
expensive phone has been disappointing, a source at a U.S. wireless
carrier told Reuters on Tuesday.
Financial Times:
- Housing price surge begs question of China’s leaders. Residential prices soared in China’s biggest cities in August, raising
the possibility that the government will take fresh measures to cool the
red-hot market. Some
investors and analysts have started to express concern about whether
China’s property market is veering into dangerous bubble territory, but
the government has so far taken a much more dovish line.
China Daily:
- China Demand for Crab Falls on Anti-Luxury Campaign. Demand for
hairy crabs from Yangcheng Lake near Shanghai have "dropped
significantly" from previous years mainly because of a government ban on
extravagant spending, citing Yang Weilong, chairman of the lake's crab
industry group.
China Securities Journal:
- China Faces Risk in Holding U.S. Treasuries. China faces rising
risks in holding U.S. Treasuries, Zhang Monan, a researcher with the
State Information Center under the National Development and Reform
Commission, wrote. China's holdings of U.S. Treasuries aren't safe,
Zhang wrote. China "must" change the situation of holding "too much"
U.S. Treasuries, Zhang said.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 132.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 110.25 +1.5 basis points.
- NASDAQ 100 futures +.20%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Housing Starts for August are estimated to rise to 917K versus 896K in July.
- Building Permits for August are estimated to rise to 950K versus 943K in July.
2:00 pm EST
- The FOMC is expected to leave the benchmark fed funds rate at .25%.
- Fed pace of MBS purchases estimated at $40B versus $40B prior.
- Fed pace of Treasury purchases estimated at $40B versus $45B prior.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,200,000 barrels versus a -219,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +500,000 barrels versus a +1,658,000
barrel gain the prior week. Distillate inventories are estimated to
rise by +500,000 barrels versus a +2,586,000 barrel gain the prior week.
Finally, Refinery Utilization is estimated to fall by -.5% versus a +.8% gain the prior week.
Upcoming Splits
Other Potential Market Movers
- The Fed's Bernanke speaking, Italian Senate vote on Berlusconi, Japan Trade Balance, weekly MBA Mortgage Applications report, CSFB Steel/Mining Conference and the (DKS) Analyst Day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.59 +1.46%
- Euro/Yen Carry Return Index 138.06 +.22%
- Emerging Markets Currency Volatility(VXY) 10.27 +.49%
- S&P 500 Implied Correlation 47.88 +2.29%
- ISE Sentiment Index 157.0 +42.73%
- Total Put/Call .75 -16.67%
Credit Investor Angst:
- North American Investment Grade CDS Index 73.14 -1.90%
- European Financial Sector CDS Index 133.85 +1.47%
- Western Europe Sovereign Debt CDS Index 91.0 +1.11%
- Emerging Market CDS Index 292.22 -1.06%
- 2-Year Swap Spread 15.75 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -8.5 unch.
Economic Gauges:
- 3-Month T-Bill Yield .01% unch.
- China Import Iron Ore Spot $131.10/Metric Tonne -2.24%
- Citi US Economic Surprise Index 40.70 -5.3 points
- Citi Emerging Markets Economic Surprise Index 1.90 -1.7 points
- 10-Year TIPS Spread 2.17 +3 basis points
Overseas Futures:
- Nikkei Futures: Indicating +178 open in Japan
- DAX Futures: Indicating +17 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech/reatail sector longs
- Disclosed Trades: None
- Market Exposure: 50% Net Long
Bloomberg:
- Europe August Car Sales Drop as Demand Lowest on Record. European
car sales fell in August, bringing deliveries this year to the
lowest since records began in 1990, as record joblessness in the euro
region hurt deliveries at Volkswagen AG (VOW), PSA Peugeot Citroen (UG)
and Fiat SpA. (F). Registrations dropped 4.9 percent to 686,957 vehicles from 722,458 cars a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. Eight-month sales declined 5.2 percent to 8.14 million autos. “We’re still in red territory,” Florent Couvreur, a Paris-based analyst
at CM-CIC Securities, said by phone. “When people say we’ve reached the
bottom, I say, ‘watch out,’ because the market is still decreasing. The
drop is a little less steep, but we’re still falling because of the bad
macroeconomic environment.”
- Prada Weighed Down by Euro Strength as Earnings Miss Estimates. Prada
SpA (PRP), the Italian owner of the Miu Miu and Church’s luxury brands,
said the euro’s strength will weigh more heavily on full-year earnings
than some analysts anticipate after first-half profit missed estimates. The currency’s appreciation against the yen and the dollar
“may be possibly not fully considered in some of the forecasts
that we have seen coming from the market at the moment,” Chief
Financial Officer Donatello Galli said on a conference call.
- Merkel Says German Election Is Decision Time for Euro’s Future. Chancellor Angela Merkel said that Germany’s election in five days will be a referendum on the euro’s future stability, as she appealed to voters to reward her handling of the debt crisis with a third term. Merkel, speaking at a rally of her Christian Democratic Union party in the eastern city of Magdeburg, cast the national
vote on Sept. 22 as a decision between her policy of conditional
bailouts for weaker euro countries and what she portrayed as
plans by Germany’s opposition to pool the currency bloc’s debt.
- European Stocks Retreat From a Five-Year High on Lloyds.
European stocks declined from a five-year high as investors sold
holdings in companies from Lloyds Banking Group Plc (LLOY) to
Continental AG. Lloyds dropped 3.5 percent after the U.K. government
sold a 3.2 billion-pound ($5.1 billion) stake in the lender. Continental
and Galp Energia SGPS SA fell at least 2.5 percent as investors sold
shares in the companies. Total SA (FP) retreated 1.3 percent following a
report that Groupe Bruxelles Lambert SA may dispose of its 4 percent
stake in the French oil producer. The Stoxx Europe 600 Index slipped 0.5 percent to 311.95 at the close in London.
- China Developer’s 20% Loan After Bank Rebuff Signals Risk.
China property developer Zhang
Fuguo was rejected by banks for a loan to help keep building two office
towers in the central city of Zhengzhou. So he turned to
a manufacturer of water and gas meters. The 50 million yuan ($8.2
million) loan last month at a 20
percent interest rate will help Zhang pay workers and buy materials and
was like “delivering coal on a snowy day,” he said. It was less so for
one board member at lender Henan Suntront Technology Co. (300259), who
abstained from approval on concern that Zhang’s company would fail to
repay the debt. So-called entrusted loans, in which banks are “entrusted” with funds as middlemen between companies, increasingly grease
the wheels of China’s economy, withstanding a crackdown on
shadow banking this year and rising to a record 293.8 billion
yuan in August. The increase was part of a surge in non-bank
credit that may add to default risks threatening Premier Li Keqiang’s efforts to sustain 7 percent expansion this decade.
- China Stocks Fall Most Since July as FDI Slows. The Shanghai Composite Index (SHCOMP) fell 2.1 percent to 2,185.56 at the close, the most since July 8. A report showed foreign-direct investment grew 0.6 percent last month, compared with the
Bloomberg estimate of 12.5 percent growth.
- Crude Falls for Third Day as Syria Risk Wanes. WTI for October delivery declined $1.42, or 1.3 percent, to $105.17 a barrel at 2:22 p.m. on the New York Mercantile Exchange.
The volume of all futures traded was 22 percent above the 100-day
average. Brent for November settlement slid $1.92, or 1.7 percent, to
$108.15 a barrel on the London-based ICE Futures Europe exchange.
- Former NYSE CEO Thain Says Stock Dark Pools Should Be Closed. CIT Group Inc. (CIT) Chief Executive Officer John Thain, the former head of the New York Stock Exchange, said there’s too much fragmentation and insufficient transparency in the stock market. “Dark pools” that allow for trading of stocks outside of exchanges should be eliminated, Thain, 58, said in an interview with Erik Schatzker and Stephanie Ruhle on Bloomberg Television’s “Market Makers.” “The biggest problem is the
fragmentation, you can trade stocks in 50 different places.”
- Mass Shootings Fuel Fear, Account for Fraction of Murders. The mass slaughters listed in the report caused the deaths of 547
people. Over the same three decades through 2012, that’s less than a
tenth of 1 percent of the 559,347 people the Federal Bureau of
Investigation estimates were murdered in America.
Wall Street Journal:
Fox News:
- Warren Buffett: Scrap ObamaCare and Start Over. You
know things are bad for President Obama when even Warren Buffett
has soured on Obamacare and says that "we need something else." Money
Morning writes: "Healthcare costs in the United States are like a
tapeworm eating at our economic body. "Those words come from famed
investor Warren Buffett, who said he would scrap Obamacare and start all
over. "'We have a health system that, in terms of costs, is really out of
control,' he added. 'And if you take this line and you project what has
been happening into the future, we will get less and less competitive.
So we need something else.' "Buffett insists that without changes to Obamacare average citizens will suffer. "'What we have now is untenable over time,' said Buffett, an early
supporter of President Obama. 'That kind of a cost compared to the rest
of the world is really like a tapeworm eating, you know, at our economic
body.'
- Navy gunman had federal clearance despite disturbing history. Aaron Alexis, the Navy veteran who gunned down 12 people at a Washington
military facility Monday, had his federal security clearance renewed
just two months before his rampage, despite a disturbing history of
psychological problems and violent behavior involving guns.
CNBC:
- 'Out of control' Fed should be abolished: McNealy. (video) The Federal Reserve has become a "marketing department" for the
government and "shouldn't be in any business at all," Scott McNealy,
co-founder of SunMicrosystems and Harvard-trained economist, told CNBC
on Tuesday.
- Can the mortgage market crash again? During the height of the housing boom, in 2006 and 2007, one of the
fundamental tenets of home mortgage lending flew out the window: the
borrower's ability to repay the loan. A broad swath of lenders simply
took it out of the equation, figuring that since home prices were rising
so fast, borrowers could simply sell their way out of any trouble.
Zero Hedge:
Business Insider:
U.S. Census Bureau:
Reuters:
- U.S. SEC charges 23 firms in short-sale crackdown; 22 settle. Twenty-two investment firms
will collectively pay more than $14.4 million in sanctions to
settle civil charges in connection with a broad crackdown by
federal regulators into illegal short-selling practices, the
U.S. Securities and Exchange Commission said on Tuesday.
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
Corriere:
- Berlusconi to Relaunch Party With Video Message Today. Video
message today to include launch of reformed Forza Italia party.
Berlusconi to declare he's "staying on the field, not giving up".
Style Underperformer:
Sector Underperformers:
- 1) HMOs -1.20% 2) Agriculture -.45% 3) Biotech -.32%
Stocks Falling on Unusual Volume:
- NTT, S, DK, BCS, BGFV, TCBI, PHG, ULTA, BERY, OUTR, BOHU, WERN, MTZ, GLT, TTWO, BTH, GPRE, FDS, SHOO, NSH, JKS, XONE, TAHO, KS, COTY, BMS, SWFT, CNW, RKT, CAF, CHEF, BITA and GCAP
Stocks With Unusual Put Option Activity:
- 1) ADBE 2) MON 3) AET 4) AKAM 5) JNK
Stocks With Most Negative News Mentions:
- 1) GOOG 2) YHOO 3) GIS 4) MOS 5) AMRN
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +1.16% 2) Education +.88% 3) Oil Service +.79%
Stocks Rising on Unusual Volume:
- BOFI, CETV, KYTH, RPRX, ARO, EZCH, SWY, PERI, NQ, CLNE and HLF
Stocks With Unusual Call Option Activity:
- 1) RPRX 2) AEO 3) WLL 4) SWKS 5) PFE
Stocks With Most Positive News Mentions:
- 1) SWY 2) WMT 3) CMI 4) TXT 5) HPQ
Charts:
Evening Headlines
Bloomberg:
- Assad Cheered in Damascus for Canny Survivor’s Delaying Tactics. Osama Salloum was on the balcony of
his Damascus apartment last week when a procession of honking
cars celebrating President Bashar al-Assad’s birthday passed by. The 34-year-old accountant joined the youths waving flags
and singing patriotic songs not only because he wanted to mark
Assad’s Sept. 11 birthday, “but also to express gratitude for
the government’s wise policies that prevented a U.S. strike,”
he said. “Syrian diplomacy has borne the best of fruits.”
- Kerry Says U.S. Isn’t Wavering on Seeking Assad’s Ouster.
Secretary of State John Kerry said the U.S. isn’t softening its
opposition to Syrian President Bashar al-Assad by making a deal that
envisions his cooperation in securing and eliminating Syrian chemical
weapons over the next nine months. Speaking to reporters in Paris
shortly before a United Nations report confirmed the use in Syria of the
nerve agent sarin, Kerry said yesterday that there’s no conflict between
sending international chemical-weapons experts to work with
Assad’s regime and the “strategic goal” of ending his rule.
- RBA Says Rate Cuts Still Possible, Signals No Moves Imminent. Australia’s
central bank repeated
it retains the option of reducing interest rates and said a further drop
in the currency would aid the economy as resource investment slows,
minutes of the Sept. 3 meeting showed. “Members agreed that the bank
should again neither close off the possibility of reducing rates
further nor signal an imminent intention to reduce them,” the Reserve
Bank of Australia said in notes of the meeting, at which it left its
benchmark rate at a record low, released in Sydney today. “Some further
decline in the exchange rate would be helpful.”
- China Stocks Fall for Third Day, Longest Losing Streak in Month. China’s stocks fell for a third
day, the longest stretch of losses in a month, after foreign
investment data trailed economists’ estimates. Consumer-staples
producers and Shanghai-based port operators and airlines slid. Shanghai
International Port (Group) Co. dropped the most in four weeks after UBS
AG downgraded the stock to sell. China Eastern Airlines Corp. retreated
at least 5 percent for a second day before details of the Shanghai
free-trade zone will be released later this month. Kweichow Moutai Co.
led declines for consumer-staples companies. A report showed
foreign-direct investment grew 0.6 percent last month, compared with the
median estimate of 12.5 percent growth compiled by Bloomberg. The Shanghai Composite Index (SHCOMP) fell 0.8 percent to 2,212.66
at 10:34 a.m.
- Asia Stocks Fall From Four-Month High Before Fed Meeting.
Asian stocks fell, with the benchmark regional index declining from a
four-month high, as the Federal Reserve begins a two-day policy meeting
at which it is forecast to reduce the pace of its U.S. bond buying.
Samsung Electronics Co. (005930), Asia’s biggest technology company,
sank 2.5 percent in Seoul, retreating from the highest level since May.
Daiichi Sankyo Co. (4568), a drugmaker that owns 64 percent of Ranbaxy
Laboratories Ltd., tumbled 5.7 percent in Tokyo after U.S. regulators
restricted imports from one of the Indian drugmaker’s facilities.
Japan’s Topix index rose 0.4 percent as
the equity market reopened after a holiday. The MSCI Asia Pacific Index slipped 0.3 percent to 138.32
as of 11:38 a.m. in Hong Kong as nine of the 10 industry groups
on the gauge declined.
- Rebar Trades Near Six-Week Low as China Steel Output Gains.
Steel reinforcement-bar futures in Shanghai traded near the lowest in
more than six weeks as output climbed in China, the biggest user. Rebar for delivery in January on the Shanghai Futures Exchange fell as much as 0.3 percent to 3,636 yuan ($594) a
metric ton and was at 3,642 yuan at 10:06 a.m. local time.
Futures declined to 3,628 yuan yesterday, the lowest intra-day
level for a most-active contract since July 31.
- Fed Leader Doubt Erodes Low-Rate Message as QE Taper Looms. Federal Reserve officials will gather in their Washington
board room this week to decide on policies that will unfold over the
next two to three years without knowing who will lead the institution
during that time. Yesterday’s announcement that Lawrence Summers
has withdrawn his name from Obama’s list of candidates to succeed Fed
Chairman Ben S. Bernanke threatens to weaken the central bank’s policy
message by leaving the succession unsettled just as it considers scaling
back record accommodation.
- NYSE Reviewing Upgrade as Possible Cause of Options Outage. NYSE
Euronext (NYX:US) is looking into whether a software upgrade at a
subsidiary disrupted a price feed that briefly halted U.S. options
exchanges today. Securities Industry Automation Corp., the NYSE unit that
oversees the quote dissemination service linking U.S. options
markets, is focusing on a programming update that may have led
to today’s halt, said Rich Adamonis, an NYSE Euronext spokesman.
Wall Street Journal:
- At Least 13 Killed in Washington Navy Yard Shooting. Pursuit of Another Potential Shooter Continues. A man who had been forced out of the military after a 2010 gun arrest
opened fire inside a Navy building Monday morning, killing 12 people
and injuring about a dozen more as he sprayed bullets into a cafeteria
of unsuspecting military workers, officials said. Authorities said the alleged gunman, Aaron Alexis of Fort Worth,
Texas, was killed in a shootout with police at the scene, but that
wasn't the end to a chaotic day in the nation's capital that saw
security officials lock down military buildings and the U.S. Senate, and
cancel the Washington Nationals game scheduled later in the evening.
- Yellen Is Now Top Fed Hopeful. White House Leans to Vice Chairwoman After Summers's Withdrawal From Consideration.
Federal Reserve Vice Chairwoman Janet Yellen emerged as the
front-runner to become the White House's nominee to lead the central
bank, a day after Lawrence Summers pulled out of the contest amid
congressional resistance, according to people familiar with the matter.
- How China Lost Its Mojo: One Town's Story. Once Booming Yantian Looks for New Sources of Growth. Not long ago, this factory town in southeastern China was an emblem
of the country's massive export boom. Today, it is a symbol of China's
struggle to sustain a growth streak. Low wages, easy access to overseas markets, and a business-savvy
leadership helped transform Yantian in the 1990s from a sleepy
agricultural hamlet to a manufacturing hub with close to 150,000 people.
By 1998, more than 400 foreign firms set up shop, churning out
electronics, toys and watches for export. A golf course and high-end
hotel sprang up to keep Japanese and Hong Kong factory bosses amused.
- GM(GM) Developing Car to Rival Tesla(TSLA). Cost of Advanced Battery-Technology Remains Hurdle to Building Longer-Range Vehicles. General Motors Co. is developing an electric car that can go 200 miles on a charge for around $30,000, officials at the largest U.S. auto maker said, offering a challenge to luxury electric-car startup Tesla Motors Inc. Doug Parks, GM's vice president of global product programs, disclosed the effort on Monday at GM's battery laboratory and test facility in Warren, Mich., but didn't say when the car would be
available. He said while the technology is available now, the cost of
the batteries remains too high to be able to pull off the feat today.
- Obama Feels a Pinch From Congressional Democrats. Resistance
to Summers for Fed Role Suggests Softening Clout Ahead of Budget Talks.
The Democratic uproar that sank Lawrence Summers's chances of taking
charge of the Federal Reserve suggests that President Barack Obama's
clout on Capitol Hill is eroding ahead of crucial decisions about
government spending and the debt ceiling.
Mr. Obama often singles out House
Republicans for blocking his agenda in Congress. But as his second term
plays out, he also is confronting restive factions within his own party
that are uneasy with some of his policies.
Fox News:
CNBC:
Zero Hedge:
Business Insider:
Reuters:
- Mosaic(MOS) cuts 3rd-quarter outlook for potash, phosphate. U.S. fertilizer company Mosaic Co
cut its third-quarter outlook for the price and sales
volume of potash and phosphate on Monday, saying crop nutrient markets had softened in the wake of the breakup of the
Belarusian Potash Company (BPC). The company's shares eased 0.9 percent in New York after markets closed.
Telegraph:
- Mario Draghi risks row with Germany over bank plan. Mario Draghi has put the European Central Bank on a collision course with
Berlin after insisting that Europe needs a single authority to wind up
failing banks — just two days after Germany said the idea was legally
questionable.
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 131.0 -4.0 basis points.
- Asia Pacific Sovereign CDS Index 108.75 -6.5 basis points.
- NASDAQ 100 futures -.05%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Consumer Price Index for August is estimated to rise +.2% versus a +.2% gain in July.
- The CPI Ex Food & Energy for August is estimated to rise +.2% versus a +.2% gain in July.
9:00 am EST
- Net Long-Term TIC Flows for July are estimated at -$15.0B versus -$66.9B in June.
10:00 am EST
- The NAHB Housing Market Index for September is estimated to fall to 58 versus 59 in October.
Upcoming Splits
Other Potential Market Movers
- The China Housing Price data, Eurozone Trade Balance report, UK Inflation Data, Germany ZEW Index, CBO Long Term Budget Forecast, weekly retail sales report, CSFB Chemical/Agricultural Conference, RBC Capital Financial Institutions Conference and the CSFB Small/Mid-Cap Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by real estate and technology
shares in the region. I expect US stocks to open mixed and to
weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.
