Evening Headlines
Bloomberg:
- Japan Intervenes First Time Since 2004 to Rein in Yen. Japan intervened in the foreign- exchange market for the first time since 2004 after a surge in the yen to the strongest against the dollar in 15 years threatened to stunt the nation’s economic recovery. Finance Minister Yoshihiko Noda confirmed the intervention, speaking to reporters today in Tokyo. Noda said that Japan had contacted other nations about the step, without specifically saying that today’s measure was taken unilaterally.
- Feinberg May Ease Test for BP(BP) Spill Claims Distant From Coast. Kenneth Feinberg, responsible for compensating victims of the BP Plc’s Gulf of Mexico oil spill, is encouraging restaurants and hotel owners to apply, even if their businesses aren’t within a few miles of the coast. “I would propose that those who believe they have a valid claim, who have been harmed as a result of the spill, wherever they are located without regard to proximity, fill out a claim,” Feinberg said today at a meeting of the Florida Restaurant and Lodging Association in Orlando.
- IMF Meeetings Should Target Double-Dip Risk: Mohamed A. El-Erian. Many topics are being teed up for next month’s annual meetings of the International Monetary Fund and World Bank in Washington, a gathering that will draw about 190 country representatives. There is a substantial risk of disappointment, one that would be detrimental to the welfare of billions around the world over time. This risk can and should be minimized. To do so, the natural inclination for complexity must urgently be replaced by focused simplicity. This can be achieved by placing just one question on the agenda: Why are economic policies in industrial countries proving so frustratingly ineffective? Already, there are too many examples of policy outcomes that have fallen well short of expectations. In the U.S. alone, just look at the high unemployment rate that persists in the face of unprecedented fiscal stimulus and the extended use of unconventional monetary policy. Witness the de-risking of household investment portfolios as individuals sell equities in favor of cash and bonds. Consider the massive cash balances being hoarded by large companies and banks. Normally, cash burns a hole in the pockets of Americans, especially when the Federal Reserve is aggressively using low interest rates to push us all to assume more risk. Not today.
- Oil Falls For Second Day as Inventories Rise, Enbridge Begins Pipe Repairs. Oil fell for a second day after an industry report showed U.S. crude stockpiles rose and as Enbridge Energy Partners LP said it expected to finish welding a replacement section into a pipeline that was shut last week. Futures dropped after the American Petroleum Institute said inventories increased by 3.33 million barrels last week. Crews worked to attach a section on Enbridge’s Line 6A, which transports 670,000 barrels a day from Canada to U.S. refineries. The October contract lost as much as 60 cents, or 0.8 percent, to $76.20 a barrel in electronic trading on the New York Mercantile Exchange, and was at $76.46 at 11:03 a.m. Sydney time.
- Gold Futures Surge to a Record on Haven Demand as Stocks, Bonds Languish. Gold futures rose to a record $1,276.50 an ounce on demand for a haven against turmoil in the global economy and financial markets. The precious metal, heading for the 10th straight annual gain, has offered a hedge against gyrations in the dollar and the euro amid sovereign-debt woes.
- MasterCard's(MA) Board of Directors Approves $1 Billion Share-Buyback Program.
- Gasoline Shipments to U.S. Slide as Profit Margin Vanishes: Energy Markets. Bookings of tankers to ship European gasoline across the Atlantic fell in August as profit margin from the trade dropped to the lowest level in a year. Traders and oil companies chartered 21 vessels to transport the auto fuel to the U.S. Atlantic Coast from Europe last month, down from 24 in July and 30 in June, according to data compiled by Bloomberg and Clarkson Research Services Ltd., a unit of the world’s biggest shipbroker. The decrease occurred as U.S. gasoline inventories were 15 percent above the five-year average in the week ending Sept. 3, Energy Department data show.
- OPEC Won't Change Output Quotas Even as Demand Recovers, Pastor Says. The Organization of Petroleum Exporting Countries doesn’t plan to change output quotas at its next meeting amid the recovery of world oil demand after the recession, OPEC President Wilson Pastor said. The group is scheduled to meet next on Oct. 14 in Vienna. OPEC may meet again in Quito in December, said Pastor, who is also Ecuador’s Minister of Non-Renewable Natural Resources. Prices will likely remain stable in 2011, he said, without giving additional details.
- Morgan Stanely(MS) Sued by China Development Industrial Bank Over CDO Losses. Morgan Stanley was sued by Taipei- based China Development Industrial Bank for fraud to recover losses from an investment tied to residential mortgage-backed securities. The Taiwanese bank claims Morgan Stanley made an investment linked to U.S. subprime mortgage bonds in mid-2006 and, after learning of problems with it, “dumped those losses” on CDIB in April 2007. The complaint, filed in New York state Supreme Court on July 15, was made public yesterday by CDIB’s lawyers.
- Boeing(BA) Likely To Lose Ruling. Trade panel expected to find U.S. company received illegal subsidies.
- US Health Insurers Say Getting Tough in Hospital Talks. Some of the nation's largest health insurers say they're getting tougher in price negotiations with hospitals and are using their clients as leverage, as health plans and employers try to restrain medical costs. Employers are warming to the idea of narrow provider networks as a way to save money, which is helping in contract talks with hospitals, health insurers say. In some cases, managed-care clients want to become directly involved in hospital negotiations.
- Richmond Fed's Lacker Wants High Threshold for More Fed Action. Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, sees modest growth in 2011, little change in inflation and little to spur the Fed to take new actions to support the economy. “The economy is facing very real impediments to growth and there is little monetary policy can do about that,” Mr. Lacker said in an interview with The Wall Street Journal late last week. “So I think our expectations for real growth and for the rate at which unemployment comes down ought to be very modest right now.”
- Retailers Turn to Gadgets. Best Buy(BBY), Others Stock Up on Handhelds for Holidays as TVs, PCs Lose Luster.
- Christine O'Donnell Wins Delaware Primary. Her Victory Marks Big Win for Tea-Party Movement.
- Union Power and the Christie Effect. After decades of expanding political clout, organized labor is finding voters increasingly unreceptive to its high-tax message.
- Glenn Beck, Progressives and Me. The TV host has a point when he says a limitless view of state power is un-American.
- Charlie Munger on US Economy: Pain Not Over.
- Man Vs. Machine: How the Crash of '87 Gave Birth to High-Frequency Trading.
- More Dinner Reservations Made Online - It's An Idea With Legs. If there's one thing OpenTable (OPEN) has going for it, it's legs — and plenty of them.
- Jamie Dimon: "JPMorgan Will Keep Hedge Fund Highbridge"JPMorgan knows how to skirt the Volcker rule: keep Highbridge. Dimon announced today that JPMorgan will be keeping Highbridge Capital, the bank's hedge fund. The bank plans to deal with the new Volcker Rule by moving its best prop traders to the asset management division, says Dimon.
- Bernanke Loses Control Over The Fed, As Internal Divide Now On Full Display For The Public.
TechCrunch:
LA Times:
- Southern California Home Sales Slide in August. Sales volume falls 2.1% and the median sale price drops 2.4% from July. Fading government stimulus and waning buyer enthusiasm caused Southern California's housing market to soften in August — but not as badly as earlier in the summer.
Politico:
- Health Care Challenge Moves Forward. A federal judge said Tuesday he is likely to let 20 states proceed with at least a portion of their lawsuit challenging the heart of the Democrats’ health care overhaul. U.S. District Judge Roger Vinson scheduled oral arguments to begin Dec. 16 in Pensacola, Fla., but did not say which parts of the lawsuit he will approve. Vinson said he plans to issue a complete ruling by Oct. 14.
- Henry Waxman: Democrats Would Push Climate Legislation in 2011. The campaign to pass climate legislation will continue on Capitol Hill in 2011 – if Democrats are still in charge, that is. That’s the word Tuesday from a top House Democrat who led the charge over the last two years to pass a major cap-and-trade bill.
- Broker Watchdog Warns on Too Much Market Info. A top watchdog over broker dealers warned on Tuesday against too much transparency in the opaque, $615 trillion swaps market and said "more is not always better." "You have to be careful on what you put out there," said Steve Joachim, an executive vice president with the Financial Industry Regulatory Authority, or FINRA. "We have to think very carefully about what we are doing. Too much information can be a negative also," he said.
- China Hits Back at U.S. Over Steel Pipe Duties. U.S. sanctions against imports of seamless steel pipe from China are unacceptable and will hurt bilateral trade relations, the Commerce Ministry said on Wednesday.
- Greek Budget Cuts on Track But Risks Remain.
- Transocean(RIG) Rig Leaving Gulf of Mexico for Egypt.
- Steel Dynamics(STLD) Sees Weak Q3 Profit on Lower Margins. Steel Dynamics Inc (STLD), the fifth-largest U.S. steelmaker, forecast third-quarter profit below market estimates, hurt by reduced margins due to lower sales prices. The company expects its third-quarter net income to be in the range of 5-10 cents a share. Analysts on average expect quarterly earnings of 20 cents a share, according to Thomson Reuters I/B/E/S.
- Swaps Rules Leave Insurers in Limbo. Insurers are facing uncertainty created by sweeping definitions in the Wall Street reform act, which leave open the possibility that their products will be covered by the new swaps regime. The Commodity Futures Trading Commission has the power to use the ambiguity of wording in the Dodd-Frank financial reform act to extend its reach to financial products that share some of the characteristics of derivatives, lawyers have said. Gregory Mocek, former director of enforcement at the CFTC, said the very wide definition of swaps – derivatives in which two counterparties exchange benefits – in the legislation left it “unclear as to how insurance will be covered”.
- Chinese Think Tank Warns US It Will Emerge as Lose in Trade War. A State Council think-tank in China has warned Washington that the US will come off worst in a trade war if it imposes sanctions against Beijing over the two nations' currency spat.
- Real IRA Says It Will Target UK Bankers. Banks and bankers are now potential targets for the Real IRA, leaders of the dissident republican terror group have warned in an exclusive interview with the Guardian. Despite having only 100 activists they also said that targets in England remained a high priority.
- Sovereign Debt Bears Prowl Hedge Fund Summit. Sovereign debt fears were daily front page news a few months ago, but have faded into the general background noise of worry. Not so at the World Alternative Investment Summit Canada, the annual Niagara Falls gathering of the hedge fund industry. Here, some high profile people with a lot of experience in the debt world are warning investors in the audience to keep their focus on sovereign debt because the problems of countries not being able to pay their debts are not going away.
- Toyota expects 66% drop in October-December car sales.
Citigroup:
- Rated (IR) Sell, target $33.
- Rated (CBE) Buy, target $53.
- Rated (TYC) Buy, target $46.
- Rated (CR) Sell, target $35.
- Rated (CSL) Sell, target $29.
- Rated (DHR) Buy, target $47.
- Rated (WCC) Buy, target $41.
- Rated (GE) Buy, target $19.
- Rated (ITW) Buy, target $52.
- Asian equity indices are -.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 119.0 +5.0 basis points.
- Asia Pacific Sovereign CDS Index 113.25 +3.25 basis points.
- S&P 500 futures +.11%.
- NASDAQ 100 futures +.20%.
Earnings of Note
Company/Estimate
- (DBRN)/.49
- (AIR)/.30
8:30 am EST
- The Import Price Index for August is estimated to rise +.3% versus a +.2% gain in July.
- Empire Manufacturing for September is estimated to rise to 8.0 versus a reading of 7.1 in August.
- Industrial Production for August is estimated to rise +.2% versus a +1.0% gain in July.
- Capacity Utilization for August is estimated to rise to 75.0% versus 74.8% in July.
- Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,500,000 barrels versus a -1,853,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -625,000 barrels versus a -243,000 barrel decline the prior week. Distillate inventories are expected to rise by +650,000 barrels versus a -388,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.55% versus a +1.20% gain the prior week.
- None of note
- The Chicago Fed Mortgage Hearing, weekly MBA Mortgage Applications report, (KFT) Analyst Day, (MA) Investment Community Meeting, Wedbush Clean Tech Conference, Barclays Energy/Power Conference, CSFB Chemicals Conference, Goldman Sachs Retail Conference, ThinkEquity's Growth Conference, Stifel Nicolaus Healthcare Conference, Morgan Keegan Industrial/Transport Conference, Deutsche Bank Tech Conference, BofA Merrill Media/Communications/Entertainment Conference, Keybanc Basic Materials Conference and the (BRCD) Analyst Meeting could also impact trading today.