Style Outperformer:
- Large-Cap Value (-.13%)
- 1) Computer Services +.96% 2) Utilities +.38% 3) Drugs +.37%
- BMRN, AMZN, GPOR, REXX, QCOR, IDCC, SNX, JBL and ATU
- 1) ATI 2) AOL 3) IOC 4) ACI 5) EVEP
- 1) NEOG 2) ACN 3) CMA 4) JBL 5) IVN
Wednesday, September 28, 2011
Bull Radar
Style Outperformer:
Wednesday Watch
Evening Headlines
Bloomberg:
- Euro Crisis Makes Fed Lender of Only Resort as Funding Dries Up. The Federal Reserve, chastised by Congress for lending money to foreign institutions such as the Central Bank of Libya, is once again the lender of last resort for banks around the world it knows little about. Three years after the collapse of Lehman Brothers Holdings Inc., money-market borrowing rates for dollars are rising, leading the Fed and European Central Bank to make the currency available to Europe’s institutions for as many as three months. U.S. prime money-market funds cut their exposure to euro-zone bank deposits and commercial paper, or short-term IOUs, to $214 billion in August from $391 billion at the end of last year, according to JPMorgan Chase & Co. data. The failure of regulators worldwide to address European banks’ fragile dependence on short-term funding is “putting the Fed in a really awkward position,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics, a Washington regulatory research firm whose clients include the biggest U.S. banks. The swaps with Europe “are an extremely advantageous political football” for critics of the Fed. The extended funding comes as the U.S. central bank is already under fire for its unprecedented monetary stimulus. Republican leaders including Representative John Boehner of Ohio and Senator Mitch McConnell of Kentucky wrote Chairman Ben S. Bernanke and the Board of Governors on Sept. 19, asking them to “resist further extraordinary intervention in the U.S. economy.” Representative Ron Paul, a Texas Republican who wants to abolish the Fed, and Senator Bernard Sanders, a Vermont independent, have criticized its loans to foreign institutions.
- Basel Regulators Are Said to Keep Capital-Surcharge Plans for Big Banks. Global regulators may largely stick to planned capital surcharges of up to 2.5 percent for the world’s biggest banks while adjusting how the levies are calculated, according to three people familiar with the talks. The Basel Committee on Banking Supervision discussed yesterday how to respond to criticisms from banks including BNP Paribas SA and Citigroup Inc. (C) that the measures are flawed and may stymie the financial system’s recovery, according to the people, who spoke on condition of anonymity because the talks are private.
- U.S. Real Estate Deals Hindered by Financing, Investors Say. Rising borrowing costs and anemic economic growth are hindering investments in U.S. commercial real estate, said panelists at the Bloomberg Dealmakers Summit in New York today. “In the last 60 days, it’s really slowed down,” Related Cos. President Jeff Blau said at the conference. “People are throwing term sheets around, but I don’t think anyone’s really closing deals.”
- Oil Declines After Biggest Gain in Four Months on Concern Over Europe. Oil fell in New York, after the biggest gain in four months yesterday, as investors speculated that European leaders are divided on plans to tame a debt crisis that threatens to slow the economy and commodity demand. Crude for November delivery slid as much as $1.40, or 1.7 percent, to $83.05 a barrel in electronic trading on the New York Mercantile Exchange and was at $83.49 at 10:36 a.m. Sydney time. The contract yesterday climbed $4.21, or 5.3 percent, to $84.45. It was the biggest gain since May 9. Oil is down 6 percent this month and 9 percent this year. Prices have dropped 13 percent from the end of June, the biggest quarterly loss since the three months ended December 2008.
- Bond investors are concerned consumer price-gains in South Korea and Brazil may accelerate as plunging currencies boost import costs even amid slowing growth, inflation-linked notes show. The so-called breakeven rate on South Korea's inflation-protected security due March 2017 rose 16 basis points this month to 2.93% yesterday, the most since February, as the won weakened 9.1%. In Brazil, the two-year breakeven rate jumped 40 basis points to 6.21% as the real slid 12.9%.
- China Warns Asia Not to Hide Behind U.S. Military. Asian countries should be on guard against the “danger” of feeling they can “do whatever they want” because of the U.S. military presence in the region, the Chinese Communist Party’s People’s Daily said in a commentary. The opinion piece said it was understandable that some Asian countries may be uncomfortable with China’s rise and emphasized that the government in Beijing was working for “peaceful solutions” to conflicts such as territorial disputes in the South China Sea. The commentary comes as countries such as the Philippines and Vietnam are increasingly voicing concerns over China’s claims to the waters. “Asia remains a fertile ground for a Cold War mentality,” the commentary said. “Asia is advancing, will never return to the Cold War, and China must have an important role in the future of Asian security.”
- Fed Wary of Bank Stock Buybacks. The Federal Reserve is taking a cautious stance with U.S. banks that have approached it in recent weeks for permission to buy back more of their shares, according to people familiar with the matter. Some of the biggest U.S. banks have gone individually to the Fed in recent weeks seeking approval for additional or accelerated buybacks, and regulators are pushing back, these people said. The requests are being handled on a case-by-case basis and granted depending on an individual bank’s capital situation, the people said. Some banks are being told it is too early to use capital that way.
- Rivals Scout Paulson Assets. John Paulson already has lots to worry about: turbulence in the stock market, a rocky economy and volatile gold prices. As the hedge-fund manager suffers through the worst losses of his career, Mr. Paulson now is facing a flock of vulture investors who hope he will be forced to conduct a fire sale of stock and debt holdings. Rival hedge funds, brokers and other firms are combing through Paulson & Co.'s investments, trying to anticipate what Mr. Paulson might sell if he needs to return cash to investors.
- Solyndra Violated Terms of Its U.S. Loan. Solyndra LLC had such steep financial problems in late 2010 that the company violated terms of its loan-guarantee agreement with the Department of Energy and technically defaulted on its $535 million loan, according to people familiar with the matter. The failed solar-panel maker, which is under numerous criminal and congressional investigations, ran so short of cash in December 2010 that it was unable to satisfy certain terms of its U.S. loan agreement, these people said. The agreement required Solyndra to provide $5 million in equity to a subsidiary building its factory but cash-flow problems prevented those payments.
- Benefits Tax Hits Business Twice. State and federal taxes are rising for employers across the U.S. as states struggle to repay federal loans for unemployment benefits, including more than $1 billion in interest due Friday. The increases in state and federal unemployment-insurance taxes—paid primarily by businesses—are hitting as the recovery appears close to stalling, consumer confidence is low and unemployment remains high at 9.1%. These tax increases come on top of measures intended to tame government budgets, including other state tax increases and spending reductions as well as federal cuts. The higher tax tab could discourage hiring.
- China Train Crash Spurs Safety Fears. Subway Collision Injures 260 and Is Latest in String of Accidents to Mar Country's Rapid Railway Expansion Efforts.
- Beyond 'Repeal and Replace'. Paul Ryan's new health-care roadmap.
- Shots Fired: Eric Sprott Says Jamie Dimon's Criticism Reflects An "Inability To Acknowledge" The Banking Crisis.
- Details Show $50 Billion Shareholder Lawsuit Against Bank Of America(BAC) Is A Huge Liability.
- "The Carnage... The Carnage..." - Presenting the Complete September and YTD Hedge Fund Bloodbath.
- Euro TARP - Why It Will Be A Screaming Failure. If the expansion of the EFSF, including the SPV, isn't legal from a German perspective without a formal vote of the people, then this deal is most likely dead before it starts. However, if Europe is going all in with leveraged bets that will water down the credit quality of both France and Germany -- which leaves no strong credits in the Eurozone --then there will be further complications down the road as borrowing costs for Germany and France push higher dropping the Eurozone into a deeper recession. Of course, SPV's have a dubious and disastrous history to start with and it is highly likely that this whole process will end badly. The reality is that PIIGS need an orderly mechanism to default, figure out what banks to save and which ones can be let go and start the process of clearing the years of bad debt and excesses from the system. The only question is not whether this "clearing process" will occur it is only a function of when and under what terms.
- Europe Readies Plan for Tax on Financial Transactions. The European Commission is expected to unveil a detailed plan on Wednesday to create a financial transaction tax, despite the opposition of several member countries and a formal acknowledgement that it could have a significant negative impact on the European Union’s gross domestic product. ‘‘With a tax rate of 0.1% the model shows a drop in G.D.P. (-1.76 percent) in the long run,’’ according to a draft of the plan.
- Proposed Airline Ticket Tax Bump Has Tempers Soaring. President Obama is asking passengers to pay a few dollars more in taxes for an airline ticket — which already is about 20% taxes and fees. And the travel industry is in an uproar about it.
- Split Opens Over Greek Bail-Out Terms. The divisions have emerged amid mounting concerns that Athens’ funding needs are much bigger than estimated just two months ago. They threaten to unpick a painfully negotiated deal reached with private sector bond holders in July. While hardliners in Germany and the Netherlands are leading the calls for more losses to be imposed on the private sector, France and the European Central Bank are fiercely resisting any such move. They fear re-opening the bond deal could spark renewed selling of shares in European banks, which have significant holdings of Greek and other peripheral eurozone debt.
- Germany Slams 'Stupid' US Plans to Boost EU Rescue Fund. Germany and America were on a collision course on Tuesday night over the handling of Europe's debt crisis after Berlin savaged plans to boost the EU rescue fund as a "stupid idea" and told the White House to sort out its own mess before giving gratuitous advice to others. German finance minister Wolfgang Schauble said it would be a folly to boost the EU's bail-out machinery (EFSF) beyond its €440bn lending limit by deploying leverage to up to €2 trillion, perhaps by raising funds from the European Central Bank. "I don't understand how anyone in the European Commission can have such a stupid idea. The result would be to endanger the AAA sovereign debt ratings of other member states. It makes no sense," he said. Mr Schauble told Washington to mind its own businesss after President Barack Obama rebuked EU leaders for failing to recapitalise banks and allowing the debt crisis to escalate to the point where it is "scaring the world". "It's always much easier to give advice to others than to decide for yourself. I am well prepared to give advice to the US government," he said. The comments risk irritating the White House. US Treasury Secretary Tim Geithner has been a key driver of plans to give the EFSF enough firepower to shore up Italy and Spain, fearing a drift into "cascading default, bank runs and catastrophic risk" without dramatic action. The danger for Germany is that America will lose patience, with unpredictable consequences. The US Federal Reserve is currently propping up the European banking system in a variety of ways, including dollar swaps. Markets across the world ignored the mixed signals about the true scope of EU rescue measures, convinced that EU leaders have a "grand plan" up their sleeves and will unveil the details after the Bundestag has voted on Thursday on the earlier July deal to revamp the fund.
- BofA(BAC) Was 'Let Off Lightly' Over Sub-Prime Fiasco. Bank of America was treated too leniently in settlement talks over mortgage fraud at the company, robbing the US taxpayer of billions of dollars of potential compensation, according to a damning report. BofA and Countrywide Financial, the mortgage lender it acquired in 2008, were among the biggest providers of sub-prime loans in the run-up to the financial crisis, but government-run finance giant Freddie Mac failed to extract more than $1.35bn in compensation for the dodgy loans it purchased from the pair. The settlement between BofA and Freddie Mac last December was signed over the objection of a senior official at Freddie Mac's regulator, the Federal Housing Finance Agency, and a report by its inspector-general said it should never have gone ahead.
- Euro-area members have started talks on renegotiating the second aid package for Greece that was agreed on in July, Banks and insurance companies could have to increase their contribution to the rescue package as Greece's economy has deteriorated, FTD said.
- Volker Beck, a member of the German opposition Green Party, said Chancellor Angela Merkel's government should resign if she cannot obtain majority support within her coalition for the reform of the European Financial Stability Fund, citing an interview.
- Klaus-Peter Willsch, a German lawmaker from Chancellor Angela Merkel's Christian Democrats party, told the N-TV television program Das Duell that Greece is unable to repay its debts. German taxpayers cannot be expected to permanently compensate for Greece's deficit, Willsch said, according to an e-mailed summary of the interview. The euro monetary union should continue with fewer members, Willsch said.
- China's export and import growth in Q4 this year may slow, citing Li Jian, a researcher at the Ministry of Commerce's international trade and economic cooperation research department. China faces the problem of sustaining growth of its trade in the next few years, Li says. Li does not rule out the risk of debt crises, including those in Europe and the U.S., leading to another financial crisis and global economic downturn.
Wedbush:
- Rated (CMG) Outperform, target $400.
- Rated (BWLD) Outperform, target $82.
- Rated (ETN) Overweight, target $53.
- Rated (CAT) Overweight, target $114.
- Rated (CMI) Overweight, target $130.
- Rated (DE) Overweight, target $100.
- Rated (MTW) Overweight, target $14.
- Asian equity indices are -.75% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 226.50 +10.5 basis points.
- Asia Pacific Sovereign CDS Index 161.0 -13.25 basis points.
- FTSE-100 futures -1.27%.
- S&P 500 futures -.40%.
- NASDAQ 100 futures -.43%.
Earnings of Note
Company/Estimate
- (ATU)/.46
- (DRI)/.78
- (TXI)/-.26
- (MOS)/1.30
- (WOR)/.39
- (THO)/.61
- (FDO)/.63
- (MKC)/.65
8:30 am EST
- Durable Goods Orders for August are estimated to fall -.2% versus a +4.0% gain in July.
- Durables Ex Transports for August are estimated to fall -.2% versus a +.7% gain in July.
- Cap Goods Orders Nondef Ex Air for August are estimated to rise +.4% versus a -1.5% decline in July.
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,050,000 barrels versus a -7,336,000 barrel decline the prior week. Distillate inventories are estimated to fall by -400,000 barrels versus an -874,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +1,000,000 barrels versus a +3,295,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.5% versus a +1.3% gain the prior week.
- None of note
- The Fed's Bernanke speaking, 5-Year Treasury Note Auction, weekly MBA mortgage applications report, (SNPS) analyst meeting, (TTMI) analyst day and the (KMT) analyst day could also impact trading today.
Tuesday, September 27, 2011
Stocks Rising into Final Hour on Less Eurozone Debt Angst, Quarter-End Short-Covering/Window Dressing, Less Global Growth Pessimism
Broad Market Tone:
- Advance/Decline Line: Substantially Higher
- Sector Performance: Most Sectors Rising
- Volume: Slightly Below Average
- Market Leading Stocks: Performing In Line
- VIX 35.92 -7.89%
- ISE Sentiment Index 82.0 -40.58%
- Total Put/Call 1.02 unch.
- NYSE Arms .46 +46.01%
- North American Investment Grade CDS Index 133.21 -4.02%
- European Financial Sector CDS Index 245.17 -2.58%
- Western Europe Sovereign Debt CDS Index 340.17 -4.17%
- Emerging Market CDS Index 339.71 -6.18%
- 2-Year Swap Spread 29.0 unch.
- TED Spread 36.0 unch.
- 3-Month T-Bill Yield .00% unch.
- Yield Curve 175.0 +8 bps
- China Import Iron Ore Spot $172.60/Metric Tonne -.17%
- Citi US Economic Surprise Index -41.80 -1.4 points
- 10-Year TIPS Spread 1.90 +10 basis points
- Nikkei Futures: Indicating +49 open in Japan
- DAX Futures: Indicating +24 open in Germany
- Higher: On gains in my Technology, Medical and Retail sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and added to my (EEM) short
- Market Exposure: Moved to 50% Net Long
Today's Headlines
Bloomberg:
- European Stocks Climb Most in 16 Months Amid Effort to Contain Debt Crisis. European stocks climbed the most in 16 months amid speculation policy makers will increase efforts to contain the region’s sovereign-debt crisis. Rio Tinto Group led a rally in raw-material shares, surging 7.8 percent, as metal prices rose. BNP Paribas (BNP) SA and Societe Generale (GLE) SA, France’s biggest banks, soared more than 14 percent. MAN SE (MAN) rose the most in two years as European Union regulators cleared Volkswagen AG (VOW)’s takeover of the truckmaker. The benchmark Stoxx Europe 600 Index climbed 4.4 percent to 229.91 at the 4:30 p.m. close in London. That’s the biggest gain since May 10, 2010, when it jumped 7.2 percent after the EU unveiled a 750 billion-euro ($1 trillion) loan package aimed at controlling the debt crisis. The gauge has surged 7 percent over the past three trading days after falling to a two-year low on Sept. 22. “The markets are hoping that the international leaders and politicians will act together and do what is needed to avoid a disaster,” said Lars Knudsen, who manages about $110 million at LGT Capital Management AG in Pfaeffikon, Switzerland. “Politicians are starting to feel pressure to act on the crisis. It is important that the European leaders act now.” The Stoxx 600 fell 26 percent from this year’s peak in February through Sept. 22 as European and U.S. economic reports trailed forecasts, adding to concern that the global recovery is at risk.
- Papandreou Has Votes to Approve New Property Tax. Greek Prime Minister George Papandreou garnered the support of 151 lawmakers in a vote to approve a new property tax, according to a tally of votes in the parliament in Athens today. The result, if confirmed, will bolster his chances of meeting 2011 budget targets and securing further international financial aid for the country. The vote is being televised live on state-run Vouli TV and is continuing.
- Italy, Spain Sell $24 Billion of Debt at Higher Yields; Bonds Gain on Sale. Italy and Spain sold 17.7 billion euros ($23.9 billion) of debt and their bonds rose after the sale even as both countries had to pay more to borrow than a month ago. Italy sold 8 billion euros of 182-day bills to yield 3.071 percent, up from 2.14 percent at the last auction of similar- maturity debt on Aug. 26. The Rome-based Treasury also sold 76- day bills at 1.808 percent and zero-coupon bonds due in 2013 at 4.511 percent. Spain’s interest costs also rose as it sold 3.22 billion euros of three- and six-month bills, just below the maximum target for the auction. Spain’s auction was “a very good result” and “in the near term, assuming Greece receives its disbursement, we are in for at least a short period of relatively less volatile markets,” said Matteo Regesta, senior interest-rate strategist in London at BNP Paribas SA, referring to Greece’s next bailout payment. “The yield was a little bit up, but nevertheless the take-up was significant and the yield pick-up not massive.”
- Financial Debt Swaps Fall in Europe on Crisis Containment Bets. The cost of insuring against default on European financial debt fell for a third day amid speculation policy makers will step up efforts to contain the region’s deficit crisis. The Markit iTraxx Financial Index of credit-default swaps on senior debt of 25 banks and insurers declined 16.5 basis points to 259.5 and the subordinated gauge was 26 lower at 498, according to JPMorgan Chase & Co. at 3 p.m. in London. “How many ‘hope’ rallies have ended up in eventual disappointment in Europe over the last 18 months?” Jim Reid, head of fundamental strategy at Deutsche Bank AG in London, wrote in a note to investors. “The answer is they all have in the end. Is this time any different?” Credit-default swaps on BNP Paribas SA dropped 40 basis points to 232 and are down from a record 309 on Sept. 22, according to CMA. Contracts on Deutsche Bank AG declined 25 to 171, Credit Suisse Group AG tumbled 22 to 170 and Credit Agricole SA fell 35 to 232, CMA prices show. The Markit iTraxx Crossover Index of credit-default swaps on 50 companies with mostly high-yield credit ratings dropped 39.5 basis points to 793. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings was down nine at 187.5 basis points. Both benchmarks are down from the highest levels in 2 1/2 years. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments dropped 17.5 basis points to 334.5, after reaching a record 358 on Sept. 23. A basis point on a credit-default swap protecting $10 million of debt from default for five years is equivalent to $1,000 a year. Contracts on Belgium declined 24 basis points to 258, France dropped 24 to 173 and Germany fell seven to 103, according to CMA. Ireland decreased 49 basis points to 751 and Italy fell 50 to 453, while Portugal was 61 lower at 1,121 and Spain was down 32 at 368.
- Brazil Prepares for a Greek Default This Week, Valor Says. Brazil’s government is preparing the country for a Greek default as early as this week, Valor Economico reported, citing an unidentified government official. President Dilma Rousseff and Finance Minister Guido Mantega got back from the U.S. this weekend more pessimistic about the global crisis after meeting with foreign officials and business leaders, the Sao Paulo-based newspaper said. The government may adopt new economic measures to shield the country if the crisis worsens, according to the newspaper.
- Commodities Rise Most in Four Months After European Debt Concerns Subside. Commodities rose the most in four months, led by metals, on signs that European policy makers will intensify efforts to contain the region’s debt crisis. The Standard & Poor’s GSCI index of 24 raw materials rose 2.9 percent to 617.86 at 12:50 p.m. New York time, heading for the biggest gain since May 9. Last week, the gauge plunged 8.2 percent, the most since May.
- Health-Benefit Costs Rise Most in Six Years. The cost for businesses to buy health coverage for workers rose the most this year since 2005 and may reach $32,175 for a family in 2021, according to a survey of private and public employers. The average cost of a family policy climbed 9 percent in 2011 to $15,073, according to a poll of 2,088 private companies and state and local government agencies by the Henry J. Kaiser Family Foundation in Menlo Park, California, and the Chicago- based American Hospital Association’s Health Research and Educational Trust.
- Apple(AAPL) to Introduce New iPhone at Oct. 4 Event. Apple Inc. (AAPL) will introduce a new iPhone at an Oct. 4 event in Cupertino, California, the company said in an e-mailed statement today. “Let’s talk iPhone,” Apple said in the statement. The new iPhone will include a better camera and faster processor, people familiar with the matter said earlier this year. Introduced in 2007, the iPhone is Apple’s top-selling product, accounting for about half its revenue in the third quarter. The touch-screen gadget has helped push Apple to be the world’s most valuable company, bigger than Exxon Mobil Corp. Apple’s shares rose $2.94 to $406.11 at 11:35 a.m. New York time on the Nasdaq Stock Market. The stock had climbed 25 percent this year before today.
- China May Suspend Some Military Exchanges With U.S. China has indicated it will suspend or cancel some military exchanges in response to the latest U.S. arms sales to Taiwan but has stopped short of a full suspension of bilateral defense ties, according to a senior State Department official. Yang Jiechi, China's foreign minister, asked the U.S. to reconsider the $5.3 billion package—consisting mainly of upgrades for Taiwan's existing fighter jets—in a meeting with Secretary of State Hillary Clinton in New York on Monday, the official told reporters in a briefing there.
- Solyndra Faced Headwinds Before Loan Guarantee - Report. Before Solyndra Inc. received a federal loan guarantee, there were warning signs that the solar panel maker's competitive edge was eroding, a new nonpartisan congressional report said. The Congressional Research Service, in a Sept. 9 report obtained by Dow Jones Newswires, said Solyndra had a niche technology and even before the loan guarantee was issued, one of the company's key advantages--high polysilicon prices--had disappeared.
- European Banks to Trade EUR15B of Real-Estate Loans 2012. European banks could trade up to EUR15 billion of non-performing real-estate loans in 2012, property consultants Situs Cos. said Tuesday, as institutions come under increasing pressure to deleverage their balance sheets and stimulate the wider economy.
- U.S. Home Prices Up for Fourth Month: Case-Shiller. The S&P/Case-Shiller 20-city home price index rose 0.9% compared to June, to narrow the year-on-year decline to 4.1%.
Business Insider
- Check Out The Latest Recipients Of 'Free Money' From The Federal Financing Bank. The Federal Financing Bank (FFB) has released it's August report. This is the bank that has provided the $500mm to Solyndra.
- If You're Outraged By Greece Now, Wait Till You Read Michael Lewis' New Book.
- UPRISING! Microsofties(MSFT) Trash Ballmer After Disastrous All-Hands
Meeting.
- Here's How Medicare Wastes Almost $50 Billion A Year.
- Ford(F) Pulls Anti-Bailout Ad Over Objections From White House.
- Venizelos Refuses to Release Bond Swap Data, Confirming Key Precondition to Second Greek Bailout Has Failed.
- Leverage: Yesterday's Problems, Today's Solution. Why is EFSF just not being expanded? Wouldn’t it be easier to just increase the size of the EFSF? It would be, but there is no support to get that done. So the group of bankers and politicians who do not have the courage to attempt to draw a line in the sand and attempt to fix the existing problem have embarked on a new crusade. The crusade is to come up a €2 trillion plan that will for once and all make Europe safe again. They have their goal and after being told, in no uncertain terms, that they wouldn’t get that much money, they put their thinking caps on. They started to figure out creative ways to turn the €440 billion they think they can get their hands on, and turn it into €2 trillion. There are several ways to accomplish this “miracle of finance”. There are a couple of ways that the EFSF could be used to create leverage. The potential to provide “equity” capital to the EIB would be another way. We will start with the EFSF.
- Fed's Fisher Comes Clean on Moral Hazard and 'Twist' Infeffectiveness.
- It Is Virtually Impossible To Land A Job as "Jobs Hard to Get" Responses Hit 28-Year High. (graph)
- Nightmare in Libya: 20,000 Surface-to-Air Missiles Missing. (video) U.S. officials had once thought there was little chance that terrorists could get their hands on many of the portable surface-to-air missiles that can bring down a commercial jet liner. But now that calculation is out the window, with officials at a recent secret White House meeting reporting that thousands of them have gone missing in Libya. "Matching up a terrorist with a shoulder-fired missile, that's our worst nightmare," said Sen. Barbara Boxer, D.-California, a member of the Senate's Commerce, Energy and Transportation Committee. The nightmare has been made real with the discovery in Libya that an estimated 20,000 portable, heat-seeking missiles have gone missing from unguarded Army weapons warehouses.
- LightSquared Doubles Size of Its Lobbying Team in 2011. LightSquared, the wireless telecom firm facing Republican complaints that it has benefited from political ties to the White House, has significantly boosted its lobbying this year. The company has more than doubled the number of lobbying firms on its payroll, from four to nine K Street shops, in the first half of 2011.
- Army, Marines Could Cut 150,000 Troops. Proposed Defense Cuts Highest Since WWII. If the supercommittee fails to agree on a plan to reduce the deficit by $1.2 trillion over 10 years, an automatic $600 billion reduction in Pentagon spending will be cut on top of $350 billion already mandated.
- Big Four Auditors Face Massive Shake-Up. The "Big Four" global auditors could be broken up, leaving them susceptible to takeovers if radical European Union plans to boost competition go ahead, a UK auditing official said on Tuesday.
- U.S. on "Knife Edge" of Contraction: Fed Economist. The U.S. economy is on a 'knife edge' between growth and contraction and monetary policy tweaks do not seem to be helping, the Dallas Federal Reserve's top economist said on Tuesday. The U.S. jobs engine has lost momentum and could be set for further "backtracking," Dallas Fed chief economist Harvey Rosenblum told a forum sponsored by the greater San Antonio Chamber of Commerce. Meanwhile, he said, there is also a "credible" risk of rising inflation. "We are in the midst of the Second Great Contraction," Rosenblum said, demonstrating the economy's predicament with a picture of a place on the Appalachian Trail known as "Knife's Edge." "Economic growth has slowed; it may have stalled," he said. "The patient isn't responding well to the medicine."
- Bank Demand for ECB Cash Stays High. Euro zone bank demand for European Central Bank loans remained high on Tuesday and was expected to stay strong at upcoming emergency tenders as banks build up cash buffers, fearing there will be no quick solution to the debt crisis.
- Investor Confidence Up Slightly in Sept. - State Street. The U.S. financial services firm said its global investor confidence index rose to 89.9 this month from 88.1 in August.
Die Welt:
- German Chancellor Angela Merkel's junior coalition partner, the Free Democratic Party, is threatening to vote against an overhaul of the European Financial Stability Facility if discussions about leveraging the fund don't stop. The FDP opposes any form of leverage for the region's rescue fund because it would increase the burden on German taxpayers and circumvent parliament, Hermann Otto Solms, the party's deputy floor leader and finance spokesman, said.
- European Union Trade Commissioner Karel De Gucht said China's currency policy has a destabilizing effect on world trade.
- Danish toy brick maker Lego A/S is preparing for a period of global economic decline. CEO Joergen Vig Knudstorp's recent management changes are designed to help the company cope with adverse market conditions.
- China's monetary policy faces dilemma because the nation has to deal with high prices and a potential slowdown in economic growth, Xinhua News said in a commentary posted on the central government's website.
Bear Radar
Style Underperformer:
- Large-Cap Growth (+2.57%)
- 1) Retail +.64% 2) Airlines +.65% 3) Utilities +1.02%
- IOC, WAG, NEOG, DMND, JVA, NFLX, AMZN, FGP, NDN, AM and GDOT
- 1) EWT 2) IOC 3) LCC 4) CIGX 5) MELA
- 1) WMS 2) ABT 3) ZMH 4) INTC 5) AMAT
Bull Radar
Style Outperformer:
- Small-Cap Growth (+3.38%)
- 1) Coal +4.89% 2) Oil Tankers +4.78% 3) Steel +4.75%
- IVN, DB, SU, TDS, THO, SAPE, RIMM, CAVM, NUAN, IMGN, JOYG, SGA, TY, MIC and ATI
- 1) IVN 2) WAG 3) AMX 4) CI 5) SGMO
- 1) KIM 2) SAM 3) BSX 4) LMT 5) BAX
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