Evening Headlines
Bloomberg:
- Asia Faces Rising Price Pressures: ADB. Asian policy makers need to tackle rising inflationary pressures in their economies even as global growth weakens, the Asian Development Bank said. The region can use monetary and fiscal policies as well as exchange rates to ease price pressure, the Manila-based lender said in its Asia Economic Monitor report today. Asian economies also face the risk of increased financial market volatility and destabilizing capital flows, the ADB said. “With robust growth moderating only slightly, many emerging East Asian economies face the challenge of controlling inflation and managing capital inflows in a difficult external environment,” the ADB said. “Inflationary pressures are rising in the region on strong domestic demand and high commodity prices, fueled by continuing capital inflows.” The lender’s forecast for growth of 7.9 percent this year in emerging East Asian economies may be revised lower, according to the report today, which was prepared by the ADB’s Office of Regional Economic Integration. “With the region’s economies recovering strongly in 2010 and continuing robust growth in 2011, output gaps have narrowed significantly or closed in many economies, thus contributing to rising inflation,” the lender said. “Elevated food and commodity prices and robust domestic demand could push inflation higher yet.” “Authorities are expected to keep tightening monetary policy and rolling back fiscal stimulus to counter rising inflation and economic overheating,” the ADB said. “But the weak external environment and tighter monetary stance is expected to help growth moderate to more sustainable levels in the months ahead.”
- Crude Oil Falls for a Second Day on U.S. Economy, Rising Crude Stockpiles. Oil declined for a second day in New York as investors bet that rising crude supplies and signs of a slowing economy in the U.S. indicate fuel demand may falter in the world’s biggest consumer of the commodity. Futures slid as much as 0.9 percent today after falling to the lowest in more than a week yesterday. U.S. crude stockpiles climbed 2.3 million barrels to 354 million last week, a Department of Energy report showed. A 2 million-barrel drop was forecast in a Bloomberg News survey. Crude for September delivery fell as much as 89 cents to $96.51 a barrel in electronic trading on the New York Mercantile Exchange, and was at $96.93 at 11:36 a.m. Sydney time. The contract yesterday slid $2.19 to $97.40, the lowest close since July 18. Prices are 26 percent higher the past year.
- Container-Vessel Rates Plunge, Signaling Slowdown in U.S.: Freight Markets. Plunging rates for chartering container vessels that carry sneakers, furniture and flat-screen TVs may signal a U.S. consumer slowdown and losses for shipping lines in what is traditionally their busiest time of the year. Fees for hiring vessels have fallen 9.3 percent since the end of April, according to the Howe Robinson Container Index, which tracks charter rates for a range of vessels. Last year, the index surged 56 percent in the period, as lines added ships on demand from U.S. and European retailers restocking for the back-to-school and holiday shopping periods. “The troubling part is that charter rates are falling in the peak season,” said Johnson Leung, head of regional transport at Jefferies Group Inc. in Hong Kong. “Sentiment among consumers and retailers isn’t very strong.”
- UBS(UBSN) Sued by Regulator Over $4.5 Billion Mortgage-Backed Securities Sale. UBS AG was sued by the U.S. over $4.5 billion in residential mortgage-backed securities sold to Fannie Mae and Freddie Mac as regulators went to court for the first time to recoup losses caused by the investments. The Federal Housing Finance Agency, which regulates the two mortgage companies operating under government control, sued the Swiss bank and several executives of UBS’s Mortgage Asset Securities Transactions unit in federal court in Manhattan today, claiming they misstated the securities’ risks. “Defendants falsely represented that the underlying mortgage loans complied with certain underwriting guidelines and standards, including representations that significantly overstated the borrowers’ capacity to repay their mortgage loans,” the FHFA said in its complaint.
- Radiation Concern Prompts Aeon to Test Beef. Concern that nuclear radiation fallout is contaminating meat prompted Aeon Co., owner of Japan’s biggest supermarket chain, to start testing beef for cancer-causing substances. Aeon will start selling beef today in Tokyo stores tested by an independent laboratory to be within safe limits for radioactive cesium, it said in a statement. The heightened surveillance may boost confidence in the safety of beef after agriculture officials said July 26 that 2,906 cattle ate tainted feed, potentially leading to contaminated meat.
- No Fear in China Options as Prices Drop. Traders betting on gains in China’s biggest companies are pushing options prices to the most bullish level in almost two years on speculation higher interest rates won’t curb the world’s second-largest economy. The premium investors pay for puts to sell the iShares FTSE China 25 Index versus calls to buy has tumbled to 15 percent from 31 percent on June 22, according to data on three-month options compiled by Bloomberg, and fell as low as 13 percent this week. That compares with the average of 20 percent since the start of 2005 for the U.S.-traded fund tracking Chinese companies listed in Hong Kong. “It’s almost like there’s no fear in China,” Jonathan Masse, a money manager at Walnut Creek, California-based Baochuan Capital Management LLC, which invests in Chinese stocks and options, said in an interview.
- Credit Suisse Plans to Cut About 2,000 Jobs. Credit Suisse Group AG (CSGN), the second- biggest Swiss bank, plans to cut about 2,000 jobs after second- quarter profit fell 52 percent on lower earnings from trading.
- Live Blog: The U.S. Debt Battle.
- Study Sees No Cellphone-Cancer Ties. A European study involving nearly 1,000 participants has found no link between cellular-phone use and brain tumors in children and adolescents, a group that may be particularly sensitive to phone emissions. The study, published in the Journal of the National Cancer Institute, was prompted by concerns that the brains of younger users may be more vulnerable to adverse health effects—such as cancer—from cellphones.
- Not All Chinese ADRs Created Equal. Recent accounting blowups have forced everyone from day traders to hedge-fund manager John Paulson to rethink Chinese stocks. But there is another risk hiding in plain sight: poor disclosure. Over the last several years, many Chinese firms have dropped anchor in the Cayman Islands, where they create shell companies that control businesses in China. The Cayman companies can issue American depositary receipts, or ADRs, that trade in New York, but aren't subject to some U.S. laws because the Securities and Exchange Commission and New York Stock Exchange often defer to a home country's rules.
- Citrix(CTXS) Net Surges 72% On Across-The-Board Revenue Growth. Citrix Systems Inc.'s (CTXS) second-quarter profit surged 72% as the virtualization and infrastructure software company reported across-the-board revenue growth, led by online and technical services, while margins jumped. Shares fell 6.1% to $66.60 in after-hours trading, as the per-share outlook for the current quarter narrowly missed Wall Street's expectations.
- When Greek CDS Don't Do the Job. Banks and investors relying on credit-default swaps to protect themselves against a European government reneging on its debt payments are finding that the insurance isn't such a sure thing after all. European leaders went to great lengths to ensure their planned Greek restructuring doesn't constitute a default that would trigger CDS payouts, even though holders of Greek bonds are likely to lose money on their investments. That is leading some to question the effectiveness of CDS in protecting against a sovereign default.
- China's Banned Churches Defy Regime. On a recent Sunday at the Beijing Zion Church, Pastor Jin Mingri laid out a vision for Christians in China that contrasts starkly with the ruling Communist Party's tight reins on religion.
- Juniper(JNPR) Sends Grim Signal. Tech Bellwether Warns on Sales, Suggesting Economic Stalling; Stock Drops 21%. As a key player in the Internet networking business, Juniper and larger rival Cisco Systems Inc. are regarded as bellwethers of how companies and governments invest in new technology and workers. By Juniper's often-lofty standards, the numbers were grim.
- The Road to a Downgrade. A short history of the entitlement state.
- China's CICC Warns on Local-Government Bonds. Recent fluctuations in urban investment bond prices are a reflection of mounting risks emanating from local government financing platforms, said China International Capital Corp. (CICC) in a recent research report.
- Spanish Bank Puts Cristiano Ronaldo Up As Collateral For ECB Loans. Spanish bank Bankia is seeking loans from the European Central Bank -- and putting Real Madrid football star and most-expensive-player-in-the-world Cristiano Ronaldo up as collateral.
- Will Fast and Furious Cost Obama's Attorney General His Job? Investigations into a gunrunning sting gone haywire are creeping closer to the top of the U.S. Justice Department and its head, U.S. Attorney General Eric H. Holder, Jr. A congressional report released yesterday reveals that top DOJ officials had knowledge of the sting, known as Operation Fast and Furious, in which U.S. Bureau of Alcohol, Tobacco, and Firearms (ATF) agents allowed more than 2,000 firearms to “walk” across the U.S. border to Mexico and into the hands of Mexico’s brutal drug cartels. As many as 1,700 of those weapons have since been lost. More than 100 have been linked to crimes on both sides of the border, including the murder of a U.S. Border Patrol agent last December.
- Pictures: Huge Protest Hits Madrid After Allegations of Police Violence.
- MSNBC Contributor Goldie Taylor Says Corporate America Is "Literally Raping" Minorities. (video)
NY Times:
- President On Sidelines in Critical Battle Over Debt Ceiling. For an hour on Wednesday the White House press secretary, Jay Carney, fielded questions about what, if anything, was doing to help end the impasse in Congress over the imminent need to raise the nation’s borrowing limit.
ABC News:
- U.S. Default: Robert Reich Calls S&P Warning About U.S. Credit 'Height of Hubris'. It's the "height of hubris" for ratings agency Standard & Poor's to suggest it may cut the credit rating of the U.S. even if the debt crisis is solved, says Robert Reich, former labor secretary in the Clinton administration. "No credit rating agency has gone as far as S&P," he told ABC News today. "That's a highly political move. I'm surprised they are doing it." Reich, who is a professor of public policy at the University of California, Berkeley and has also worked under Presidents Carter and Obama, called the credit rating agency's latest reports "irresponsible."
The Blaze:
- US Congresswoman in Iran Says U.S. Government Responsible for Assassinations, Most Violent On Planet. (video)
- Grover Norquist Backs John Boehner's Debt Bill. House Republicans should back Speaker John Boehner’s debt ceiling bill, says Grover Norquist, a key figure in the conservative movement.
- 17% Say U.S. Heading In Right Direction. Just 17% of Likely U.S. Voters now say the country is heading in the right direction, according to a new Rasmussen Reports national telephone survey taken the week ending Sunday, July 24. That finding is the lowest measured since January 11, 2009.
- Blackstone(BX) in Talks to Buy Emdeon(EM) - Source. Private equity and real estate firm Blackstone Group (BX.N) is in talks to buy healthcare IT company Emdeon Inc (EM.N), a source familiar with the situation said on Wednesday. A deal for Emdeon could be valued at about $3 billion, the source said. That number would include debt.
- Newer Brands to Brew More Growth for Green Mountain Coffee(GMCR). Green Mountain Coffee Roasters Inc forecast strong earnings for next year, and the company will double its capital spending as the popularity of newer brands boosts the already robust demand for its coffee machines and refills. Shares of the company, which had nearly tripled this year, soared 18 percent after the bell.
- Whole Foods(WFM) Boosts 2011 View, Shares Up. Upscale grocer Whole Foods Market Inc's quarterly profit rose a larger-than-expected 35 percent and it raised its full-year profit forecast, fueled by robust sales and snatching market share from other supermarkets. Shares of the biggest U.S. seller of organic and natural food products rose 3.4 percent in after-hours trade.
- Akamai(AKAM) Q2 Profit Misses as Pricing Pressures Linger. Internet delivery company Akamai Technologies Inc's second-quarter profit narrowly missed expectations hurt by a sequential drop in revenue at its biggest segment amid a difficult pricing environment. Shares of the company fell 4 percent at $28.39 in extended trading, after closing at $29.48 on Wednesday on Nasdaq.
- Cliffs Natural Resources(CLF) Q2 Profit Below Estimates. Mining company Cliffs Natural Resources Inc posted a 56 percent increase in second-quarter profit that fell short of expectations as its expenses rose sharply, sending its stock down 6 percent.
- BMC Software(BMC) Reports Soft Q1 Revenue, Shares Fall. BMC Software Inc reported weaker-than-expected first-quarter revenue as it failed to show bookings growth at its enterprise services management (ESM) unit, which accounts for about two-thirds of the business software maker's sales. Shares of the Houston-based company fell about 7 percent to $45.70 in post-market trading, after closing at $48.89 on Wednesday on Nasdaq.
- IMF Warned Against Putting Large Sums Into Greek Loan. The IMF has been warned by emerging-market countries against putting large sums into a new Greek rescue. Paulo Nogueira Batista, Brazil's executive director at the IMF, who also represents eight other countries, said the Greek austerity program is too stringent, while the restructuring of Greek debt held by European banks is too small. Arvind Virmani, India's executive director at the IMF, said the proposal leaves Greece with a large sovereign debt stock that threatens future defaults.
- Fed Under Fire Over Default Talks. Wall Street bankers, from senior executives to traders, are complaining that the Federal Reserve is refusing to engage in scenario planning for a US downgrade or default.
- Chinese Media Defy Censors to Attack Government on Train Crash. Chinese censors are struggling to contain public and media reaction to the high-speed train crash that claimed at least 39 lives in Wenzhou last weekend and wrecked the image of China’s high-speed rail network. On Wednesday the Beijing News posed three direct questions across an entire page challenging the government’s handling of the tragedy, disregarding a blunt official directive that their reporting of the tragedy should not “question”, “elaborate” or “associate”.
- Greek Bail-Out Was a One-Off, Says German Finance Minister Wolfgang Schaeuble. The German finance minister has warned that he will not bail out every troubled eurozone country in a move that rattled confidence in Europe's response to the debt crisis.
- Europe is not heading toward becoming a "debt union," following last week's agreement on a second bailout for Greece and measures to strengthen the region's bailout mechanism, Klaus Regling, chief executive officer of the European Financial Stability Facility, said.
Kyodo News:
- Japan plans to ban shipments of beef cattle from Miyagi prefecture after cesium was found in beef sourced from the area.
- Rates Must Go Up and They Will. THE Reserve Bank of Australia really has no choice. It must lift its official cash rate next Tuesday; and it will. But don't blame RBA governor Glenn Stevens. Blame Julia Gillard and Wayne Swan for strangling the productivity we need to sustain strong growth in the economy without inflation pressures. Now a rate rise will come absent only some form of global financial meltdown before Tuesday. And the warring politicians in the US still failing to agree to lift their debt ceiling would NOT of itself constitute such an event.
- The Chinese high-speed rail train crash shows that safety management in the railway bureau is "not up to par" and safety fundamentals are still "relatively weak" such as with equipment quality, personnel and on-site controls, citing Au Lusheng, head of the Shanghai Railway Bureau.
- China's fatal high-speed train crash on July 23 was caused in part by design flaws in the railway signal equipment, citing An Lusheng, head of the Shanghai Railway Bureau.
- U.S. dollar weakness may continue, supporting commodities prices and suggesting inflation risk will remain for the global economy, China Securities Journal wrote in a front-page editorial today. Emerging countries, already hurt by inflation, will face "more complicated" challenge of balancing policies in terms of how to fight inflation and at the same time maintain stable economic growth, according to the editorial.
- China Banking Regulatory Commission ordered more than 20 trust companies to stop financing real estate projects.
- China needs development "but not stained with blood," People's Daily said today in a front-page commentary about the high-speed rail train crash that killed at least 39 people. China shouldn't sacrifice safety and quality issues while chasing fast growth, the Communist party-run paper said. Construction on projects with safety concerns must be suspended "decisively," the newspaper said.
Citigroup:
- Reiterated Buy on (JAH), boosted target to $53.
- Reiterated Buy on (SXCI), boosted target to $75.
- Asian equity indices are -1.75% to -.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 118.0 +2.5 basis points.
- Asia Pacific Sovereign CDS Index 118.0 +1.0 basis point.
- S&P 500 futures +.15%.
- NASDAQ 100 futures +.19%.
Earnings of Note
Company/Estimate
- (QSII)/.62
- (XOM)/-.14
- (CPO)/1.13
- (GT)/.26
- (BSX)/.08
- (IP)/.67
- (DHI)/.06
- (AVP)/.49
- (ARG)/.96
- (STRA)/2.38
- (LLL)/2.12
- (CME)/4.17
- (PHM)/-.04
- (AGCO)/1.15
- (MWW)/.09
- (DD)/1.34
- (BG)/1.41
- (CL)/1.25
- (S)/-.12
- (ABC)/.59
- (RTN)/1.15
- (BMY)/.55
- (D)/.59
- (PCP)/1.95
- (BWA)/.98
- (K)/.91
- (CAM)/.64
- (MCK)/1.14
- (DECK)/-.23
- (ACOM)/.30
- (KLAC)/1.38
- (SBUX)/.34
- (VECO)/1.35
- (DRIV)/.15
- (CERN)/.43
- (MET)/1.11
- (SPF)/.00
- (CHK)/.72
- (FII)/.40
- (EXPE)/.49
- (CRR)/1.29
- (NLY)/.64
8:30 am EST
- Initial Jobless Claims for this week are estimated to fall to 415K versus 418K the prior week.
- Continuing Claims are estimated to rise to 3700K versus 3698K prior.
- Pending Home Sales for June are estimated to fall -2.0% versus a +8.2% gain in May.
- None of note
- The Fed's Lacker speaking, Fed's Williams speaking, 7-Year Treasury Note Auction, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, Fed's weekly balance sheet report and the M1/M2 Reports could also impact trading today.
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