- 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.
- Leading Index Signals U.S. Growth to Pick Up Into 2014: Economy. The Conference Board’s gauge of the outlook for the next three to six months increased 0.6 percent after no change in June, the New York-based group said today.
- 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.
- 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.
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.
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.
- 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.
- 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.
- 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.
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- Brazil will allow allow gasoline price increases of up to 10%.
- 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.
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