Tuesday, June 04, 2013

Today's Headlines

Posted by Gary .....at 3:48 PM
Bloomberg:
  • Merkel CDU Says Euro Future Hinges on Low Debt. Staying the course on debt reduction and measures to boost competitiveness are the prescriptions for ending the euro region crisis, German Chancellor Angela Merkel’s party says in a draft paper for her re-election campaign. The 10-page platform for the Christian Democratic Union suggests that Merkel, who is running for a third four-year term in Sept. 22 elections, will stick to positions staked out during the debt crisis that have made her popular in Germany and resented in southern Europe. “The answer to the sovereign-debt crisis must be greater competitiveness in Europe” and lower budget deficits, the CDU document obtained by Bloomberg News says. “This is the only path that leads to growth and new jobs and strengthens Europe.” Pooling euro-area debt, including with so-called euro bonds, is rejected because it “would weaken Europe.”
  • ESM Bank Aid Delayed by German Push to Slow Banking Union. Germany has secured French support to delay rules on direct bank aid from the euro area’s firewall fund, calling into question when the tool will be available, according to two European officials. Euro-area finance ministers had aimed to reach political agreement this month on when and how the European Stability Mechanism could help banks so that the new program is ready next year when common supervision starts within the currency bloc. 
  • EU Seeks Role in Bank Shutdowns That Goes Against German Plan. The European Commission is seeking to give itself the power to shut down failing euro-area banks as part of a draft crisis blueprint that defies German calls for a more decentralized approach. The Brussels-based authority is set to propose that decisions to force losses on crisis-hit lenders’ creditors, as well as other steps to prevent a disorderly collapse, should be taken largely out of national hands, according to a document obtained by Bloomberg News. While the system would include a “newly-created central resolution body,” final decisions would be taken by the commission itself. 
  • European Stocks Climb as Fed’s Lockhart Backs Stimulus. European stocks rose, rebounding from a one-month low, as Federal Reserve Bank of Atlanta President Dennis Lockhart said the central bank is committed to its stimulus program.
  • Gross Says Reduce Risk Assets Since QE Not Boosting Growth. Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund (PTTRX), said the Federal Reserve’s zero-bound interest rate policy and quantitative easing programs are becoming more of a problem for an economy that needs structural reforms. The Fed’s polices are “desperately attempting to cure an economy that requires structural as opposed to monetary solutions,” Gross wrote in his monthly investment outlook posted on Newport Beach, California-based Pimco’s website today. “Central banks -- including today’s superquant Kuroda, leading the Bank of Japan -- seem to believe that higher and higher asset prices produced necessarily by more and more QE check writing will inevitably stimulate real economic growth via the spillover wealth effect.”    
  • IRS Paid Speaker $17,000 to Paint Michael Jordan at Event. The Internal Revenue Service spent $17,000 to hire a speaker who painted pictures of Michael Jordan and U2 singer Bono to motivate employees at a 2010 conference in California, the agency’s inspector general said. The tax agency spent about $49 million on 225 conferences from fiscal 2010 to 2012, including $4 million on the Anaheim, California meeting, said the inspector general report released today. In Anaheim, some IRS employees stayed in rooms typically costing as much as $3,500 a night, and the agency paid $135,350 to speakers, including $17,000 for a lecture by Erik Wahl on “The Art of Vision,” the report said.
  • Shipping Faces $500 Billion Environment Costs as Rates Slump. Shipping faces $500 billion in extra costs to meet environmental legislation at a time when a rout in rates has become so severe that some owners are struggling to maintain vessel safety. The industry will need $50 billion a year between 2015 and 2025 to meet sulfur-emission rules and other regulations, Masamichi Morooka, chairman of the International Chamber of Shipping, representing most of the world’s ship operators, said at a conference in Oslo today. Some shipping companies already aren’t earning enough to maintain their fleets, said Andreas Sohmen-Pao, chief executive officer of BW Group Ltd., a Singapore-based owner.
MarketWatch:
CNBC: 
Zero Hedge: 
Business Insider: 
Telegraph: 
Xinhua:
  • China's economic situation is "very complicated" and the country is facing increasing risks and challenges, citing Vice Premier Zhang Gaoli.
China National Radio:
  • Land Sales in 10 Chinese Cities Surge 390% Y/Y in May. Land Sales in 10 Chinese cities including China totaled about 67b yuan in May, a record high since 2008, citing data from E-house China R&D Institute. Beijing Jan.-May land sales are more than 60b yuan, almost equal to the total of 2012.
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Bear Radar

Posted by Gary .....at 1:10 PM
Style Underperformer:
  • Small-Cap Value -.76%
Sector Underperformers:
  • 1) Homebuilders -1.92% 2) Gold & Silver -1.92% 3) Construction -1.25%
Stocks Falling on Unusual Volume:
  • ACTG, SPAR, CP, CATY, CFNL, CLVS, TSRO, MAIN, DG, RHP, CG, CRM, UBNT, HITK, HPTX, HCI, AL, AIMC, BIG, FRGI, SCTY, ASML, FEN, EQIX, LMCA, LGND, HE, CONE, TTS, ACC, TROX, KCAP, DDS and MKTO
Stocks With Unusual Put Option Activity:
  • 1) OCN 2) TGT 3) MON 4) IYR 5) INTC
Stocks With Most Negative News Mentions:
  • 1) ULTA 2) BMY 3) WFC 4) C 5) PVH
Charts:
1 comments

Bull Radar

Posted by Gary .....at 11:43 AM
Style Outperformer:
  • Large-Cap Value -.06%
Sector Outperformers:
  • Semis +1.09% 2) Airlines +.96% 3) Oil Tankers +.77%
Stocks Rising on Unusual Volume:
  • INVN, LMOS, EVC, MNST, ET, GIII, INFI, MKTG, UNXL, HMA and MNST
Stocks With Unusual Call Option Activity:
  • 1) ANV 2) BBBY 3) DG 4) HCA 5) INFI
Stocks With Most Positive News Mentions:
  • 1) TOL 2) TIF 3) AN 4) ALTR 5) BA
Charts:
0 comments

Tuesday Watch

Posted by Gary .....at 12:31 AM
Evening Headlines 
Bloomberg: 
  • Slovenia Shows Why the EU Shouldn’t Discard Austerity. The Slovenian government has been masterful at delaying difficult reform, particularly in the banking sector. If there is no real pressure to finally clean up the banking sector and push through the sale of state assets, the flow dynamics may keep worsening public debt, government deficits and bad bank loans. Now that the EU has loosened fiscal targets, it’s hard to see where the pressure will come from.
  • Copper Ruse Busted Curbs Yuan, Cuts Cash Supplies: China Credit. China’s crackdown on financial deals disguised as copper trades is helping curb yuan appreciation and worsening the tightest money market in more than a year. Metal trades designed to facilitate borrowing of dollars to finance higher-yielding yuan investments swelled inventories in Shanghai’s bonded zone to a record 1 million tons earlier this year, about 5 percent of global annual production. Goldman Sachs Group Inc. said in a May 22 report that regulators may end the arbitrage. The benchmark seven-day repurchase rate averaged 3.57 percent in May, the highest in 13 months, while the yuan fell the most since February last week. “Commodity finance has been a fast-growing type of credit,” said Fu Peng, commodity strategist at Galaxy Futures Co., a brokerage controlled by the country’s sovereign wealth fund. “Now, strict rules limiting the trade will rein in this source of funding, which will have a material impact on money markets and currency exchange rates.” 
  • Beijing Caps Home Prices to Control Demand: Mortgages. Beijing, which already has China’s strictest real estate curbs, is being forced to take additional steps to contain surging home prices as demands for record-high down payments fail to deter buyers. The city has enforced citywide price caps since March by withholding presale permits for any new project asking selling prices authorities deem too high, according to developer Sunac China Holdings Ltd. (1918) and realtor Centaline Group. Local officials will need further tightening as they struggle to meet this year’s target of keeping prices unchanged from last year, said Bacic & 5i5j Group, the city’s second-biggest property broker.
  • Canary in Coal Mine Gasps as Australia Resource Jobs Fall. “Companies won’t hire,” McGrath said by phone from the central coast, separated from his family who are packing up the Liverpool home. “They’ve a lot of contractors working in the pits up here,” he said, who are being let go first. A drop in hiring of support staff by resources companies is one of the first indicators of a broader downturn because each mining position creates four to five contract jobs in related services, said Martin Whetton, an interest-rate strategist at Nomura Holdings Inc. in Sydney. “Mining service companies are the canary in the coal mine,” said Whetton. “We’re likely to see higher unemployment over the course of the year.”  
  • Gillard Slips Again in Poll as Australians Abandon Labor. Australian Prime Minister Julia Gillard’s Labor party slumped again behind Tony Abbott’s Liberal-National coalition in an opinion poll that indicates a change of government in the Sept. 14 election. Labor fell 2 percentage points to 42 percent on a two-party preferred basis, while the opposition gained 2 points to 58 percent, according to a Newspoll published in the Australian newspaper today. Gillard’s satisfaction rating dropped 3 points to 28 percent. 
  • Philippine Stock Swings Surge as Index Tumbles 10% From High. Philippine stock volatility is surging at the fastest pace in emerging markets as foreign investors sell the world’s most expensive equities on speculation the U.S. will reduce monetary stimulus. The Philippine Stock Exchange Index’s 10-day historical volatility increased to 33 yesterday from 12 two weeks ago, the highest level since October 2011 and the biggest jump among 21 developing-nation gauges tracked by Bloomberg.
  • Won Gains as Fed Concern Eases; Most Asian Stocks, Oil Decline. South Korea’s won led gains among emerging-market currencies as concerns eased the Federal Reserve will reduce its monetary stimulus. Most Asian stocks fell and oil declined. The won advanced 0.6 percent to 1,121.26 per dollar as of 12:23 p.m. in Tokyo, the biggest gain since April 19. China’s Shanghai Composite Index dropped 1.2 percent as the MSCI Asia Pacific Index added 0.3 percent.
  • China’s Stocks Fall for 4th Day, Led by Appliance Shares. China’s stocks fell for the fourth day, the longest losing streak in two months. Small-company shares and consumer-discretionary companies declined, while price-swings on the benchmark index dropped to a nine-month low. Gree Electric Appliance Inc. and TCL Corp. led a gauge of consumer companies to the second-biggest slump among industry groups as the government ended subsidies for purchases of energy-saving home appliances at the start of the month. Qingdao TGOOD Electric Co. and Tianjin Chase Sun Pharmaceutical Co. dropped more than 2 percent, pacing losses for small-company shares. Yanzhou Coal Mining Co. lost 1.4 percent after the Hong Kong-listed shares were cut at Bank of China Ltd. 
  • Rebar Declines on Concern Supply Will Outstrip Demand in China. Steel reinforcement-bar futures in Shanghai fell on concern that supply will continue to outstrip demand. Rebar for delivery in October on the Shanghai Futures Exchange fell as much as 0.5 percent to 3,467 yuan ($566) a metric ton and was at 3,474 at 10:13 a.m. local time. Futures gained 2 percent yesterday after falling for a fourth month in May. The steel industry’s purchasing manager’s index in May rose to 46.8 from 45.1 in April, the Beijing-based National Bureau of Statistics and Federation of Logistics and Purchasing said yesterday. The steel industry’s output index also expanded to 49 in May from 44.9 a month ago, it said. “There’s no sign the steel mills are cutting production, while previous expectations for stronger demand to help absorb this supply hasn’t really materialized,” Li Jinlu, an analyst at Yongan Futures Co., said by phone from Hangzhou today.
  • Rising Junk-Debt Loads Erode Credit Quality, Morgan Stanley Says. The record pace of U.S. junk-bond sales is weakening the credit quality of speculative-grade companies as debt loads expand and cash piles erode, according to Morgan Stanley. U.S. junk companies increased borrowings by 10 percent in the first quarter from a year earlier while the ratio of cash to debt fell to 9.6 from almost 15 percent in 2010 and is approaching the long-term average of 8.7 percent, strategists led by Adam Richmond in New York wrote in a note to clients dated today. Even as earnings growth slows the economic expansion sputters, companies are “no longer feeling the need to hoard cash,” they wrote. “Low rates have served as both a positive and a negative driver of corporate fundamentals,” the analysts wrote. While “low rates have allowed companies to lower coupon payments, in some cases quite dramatically, and push out upcoming maturities in the process,” they wrote, “today’s record low cost of debt has given companies the incentive to issue debt and increase leverage.”
  • Credit Traders Said to Win SEC Relief in Portfolio Margin Rules. Hedge funds and asset managers will win partial relief from Dodd-Frank Act collateral requirements for credit-default swaps under a policy shift to be announced this week, according to two people briefed on the matter. The U.S. Securities and Exchange Commission is revising a policy released in March that required some clients to put up double the collateral dealers post at Atlanta-based IntercontinentalExchange Inc. (ICE), according to the people, who requested anonymity because the decision isn’t public. The relief applies to portfolio accounts that hold credit swaps tied to single securities as well as indexes. 
  • AIG(AIG), Prudential(PRU) Named Systemically Important by Panel. American International Group Inc. (AIG), Prudential Financial Inc. (PRU) and a unit of General Electric Co. were identified by U.S. regulators as potential risks to the financial system in a step toward putting the firms under tighter government scrutiny. AIG and Prudential, in statements after a meeting today of the Financial Stability Oversight Council, said they were notified of the proposed designations. Russell Wilkerson, a spokesman for GE Capital, said in an e-mail that his company also received a notice.
  • Senators Near Plan to Abolish Fannie Mae, Shrink U.S. Role. A bipartisan group of U.S. senators is putting the final touches on a plan to liquidate Fannie Mae and Freddie Mac (FMCC) and replace them with a government reinsurer of mortgage securities behind private capital. The proposed legislation, which could be introduced this month, would require private financiers to take a first-loss position adequate to cover price declines as steep as those seen during recessions over the past century, according to a draft obtained by Bloomberg News.
Wall Street Journal: 
  • Japan's Market Has Bulls Reeling. At a hedge-fund conference in Las Vegas last month, Michael Novogratz, a principal at New York's Fortress Investment Group, called Japan "the most exciting place to invest in the world." Now, following four stock-market routs in the span of less than two weeks, Japan has become one of the world's scariest places to invest, and foreign investors are caught in the middle. Hedge funds and other overseas buyers pumped more than $25 billion into Tokyo's stock market in the seven months before the Las Vegas conference, according to EPFR Global, which tracks such flows. They were lured by a new government's plans for radical action to boost Japan's economy after two decades of stagnant growth and falling prices known as deflation. 
  • Weak Signs For U.S. Output. Factories Suffer Worst Slump Since End of Recession. U.S. factories in May posted their worst month since the end of the recession, as weakness overseas overwhelmed a still-shaky manufacturing recovery at home.
  • Supreme Court: Police Can Take DNA Samples in Arrests. A divided Supreme Court held Monday that police can take DNA samples from people under arrest in the hope of tying them to unrelated crimes, in a ruling that touched both on fast-changing technology and age-old issues of citizens' rights against state searches.
Fox News: 
  • 'Something to hide?' Republicans reject DOJ explanation of Holder testimony. Republican leaders of the House Judiciary Committee on Monday accused Attorney General Eric Holder of having "something to hide," after the Justice Department issued a formal defense of his questionable testimony on reporter surveillance -- a defense Republicans rejected as inadequate. "This response is insulting and further proof that Attorney General Holder refuses to hold himself accountable," Rep. Jim Sensenbrenner, R-Wis., said. Holder was facing a Wednesday deadline, set by the committee, to explain his May 15 testimony.
CNBC: 
  • BRIC Powerhouses Risk 'Middle-Income Growth Trap'. Growth in the powerhouses of Brazil, Russia, India and China (BRIC) is slowing precipitously. Last week, India reported its slowest growth in a decade, while Brazil reported growth of just 1.9 percent for its first quarter, compared to a year-ago. "There is a growing risk that BRIC markets, along with other emerging economic, fall into the middle income trap. Cheap cash breeds complacency and record low interest rates and soaring capital inflows have pumped up growth in the emerging market world,while structural reforms have lagged behind," Frederic Neumann, co-head of Asian economic and global research at HSBC told CNBC. The "middle-income trap" is commonly reached when developing economies grow quickly but struggle to maintain that growth because of a lack of structural reforms, labor market development and industrial growth. 
  • Market Strife Puts Japan Policies in a Flux. Japan's radical plans to get the world's third largest economy back on track, which have created investor euphoria in recent months, seem to be losing momentum just as quickly as markets succumb to a triple whammy impact of plunging stocks, a strengthening yen and a volatile bond market.
Zero Hedge:
  • Why the Fed Can't Stop Fueling The Shadow Bank Kiting Machine. No one knows when the bubble will pop, but when it does a donnybrook is going to break out over that thin wedge of collateral whose ownership is spread across counterparties around the world, each looking for relief from their own judges, politicians, bureaucrats, and taxpayers. 
Business Insider: 
New York Times:
  • Behind the Rise in House Prices, Wall Street Buyers. Large investment firms have spent billions of dollars over the last year buying homes in some of the nation’s most depressed markets. The influx has been so great, and the resulting price gains so big, that ordinary buyers are feeling squeezed out. Some are already wondering if prices will slump anew if the big money stops flowing.
The Blaze:
Reuters: 
  • Fitch cuts Illinois rating over failure to fix pensions. Illinois' lowest-among-states credit rating took a new hit on Monday as Fitch Ratings downgraded the state just days after Illinois lawmakers left the state capitol last week without addressing a huge public pension funding crisis. "Fitch believes that the burden of large unfunded pension liabilities and growing annual pension expenses is unsustainable," the rating agency said in a statement. It said the failure to achieve reform measures despite the substantial focus on the topic exacerbates concerns about management's willingness and ability to address the state's "numerous fiscal challenges."
Financial Times:
  • US packaged car loan deals slump. The securitisation of car loans to prime US borrowers has slumped by almost a quarter so far this year, in one of the few pockets of the credit markets where issuance is not booming. The data suggest that lenders, including big US banks and car manufacturers, are finding alternative sources of cheap funding, such as customer deposits or unsecured borrowing.
  • French minister accuses Amazon(AMZN) of dumping. France’s culture minister has attacked Amazon, the online retailer, for deliberately undercutting traditional rivals to create a “quasi-monopoly”, in the latest assault by the socialist government on internet companies. “Today, everyone has had enough of Amazon which, through dumping practices, smashes prices to penetrate markets to then raise prices again once they are in a situation of quasi-monopoly,” said Aurélie Filippetti, the culture minister.
Telegraph: 
  • Global shock as manufacturing contracts in US and China. Manufacturing has begun to contract in the US and China for the first time since the Lehman crisis, raising fears of a synchronized downturn in the world’s two largest economies. The closely-watched ISM index of US factories tumbled through the “boom-bust line” of 50 to 49, far below expectations. It is the lowest since the depths of the crisis in mid-2009 and a clear sign that US budget cuts are starting to squeeze the economy. New orders plunged 3.5 to 48.8 on weak foreign demand and reduced federal contracts.
    The news came hours after HSBC said its index for China also fell below 50, a major inflexion point for the world’s industrial workshop.
Yonhap News:
  • U.S. Institute Says North Korea Set to Restart Reactor. New commercial satellite imagery shows North Korea is making "important progress" in activating the 5mw reactor, citing U.S.-Korea Institute at the Johns Hopkins Schools of Advanced International Studies.
Asahi:
  • U.S., Japan will hold a military drill in California on June 10 as scheduled, citing government officials. China asked for the drill to be canceled in light of Chinese President Xi Jinping's meetings with U.S. President Barack Obama in California starting June 7.
21st Century Business Herald:
  • China to Try New Investment Statistics Methods. China may change methods for compiling statistics on investment in a trial program in the cities of Jincheng, Xi'an and Wuxi and Guizhou province, citing a meeting arranged by Ma Jiantang, head of the National Bureau of Statistics. Guizhou, Gansu and Qinghai reported investments more than their gdp last year, prompting suspicions that the statistics were inflated, the report said.
China Information News:
  • China Local Govts Should Stop Competing on Growth. China's local governments should stop competing over economic growth rates and focus on raising the "quality and efficiency" of their development, China's statistic bureau website posted a commentary by a reporter.
Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are -1.0% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 120.0 +3.75 basis points.
  • Asia Pacific Sovereign CDS Index 104.0 +3.75 basis points.
  • FTSE-100 futures +.38%.
  • S&P 500 futures -.14%.
  • NASDAQ 100 futures -.06%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (DG)/.71
  • (BOBE)/.64
  • (MFRM)/.35
Economic Releases
8:30 am EST
  • The Trade Deficit for April is estimated to widen to -$41.1B versus -$38.8B in March.
9:45 am EST
  • ISM New York for May is estimated to fall to 55.0 versus 58.3 in April.
10:00 am EST
  • The IBD/TIPP Economic Optimism Index for June is estimated to rise to 50.0 versus 45.1 in May. 
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Fisher speaking, Fed's George speaking, Fed's Sarah Bloom Raskin speaking, Spain Unemployment report, Austrian GDP report, RBA rate decision, weekly retail sales reports, JPMorgan Industries Conference, CSFB Energy Conference, BoA Merrill Telecom/Media Conference and the BoA Merrill Tech Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and real estate shares in the region. I expect US stocks to open modestly higher and weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
0 comments

Monday, June 03, 2013

Stocks Higher into Final Hour on Central Bank Hopes, Euro Bounce, Short-Covering, Metals&Mining/Drug Sector Strength

Posted by Gary .....at 3:43 PM
Broad Market Tone:
  • Advance/Decline Line: About Even
  • Sector Performance: Mixed
  • Volume: Slightly Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 16.63 +1.84%
  • ISE Sentiment Index 75.0 -22.68%
  • Total Put/Call .89 -24.58%
  • NYSE Arms .61 -58.30%
Credit Investor Angst:
  • North American Investment Grade CDS Index 79.79 +.87%
  • European Financial Sector CDS Index 155.61 +6.1%
  • Western Europe Sovereign Debt CDS Index 83.41 +1.1%
  • Emerging Market CDS Index 283.45 +1.55%
  • 2-Year Swap Spread 16.75 +.5 bp
  • TED Spread 24.25 -.25 bp
  • 3-Month EUR/USD Cross-Currency Basis Swap -13.75 +.5 bp
Economic Gauges:
  • 3-Month T-Bill Yield .03% unch.
  • Yield Curve 181.0 -1 bp
  • China Import Iron Ore Spot $111.90/Metric Tonne +1.36%
  • Citi US Economic Surprise Index -22.60 -8.2 points
  • 10-Year TIPS Spread 2.19 unch.
Overseas Futures:
  • Nikkei Futures: Indicating -131 open in Japan
  • DAX Futures: Indicating +35 open in Germany
Portfolio: 
  • Slightly Higher: On gains in my retail sector longs and emerging markets shorts
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 50% Net Long
1 comments

Today's Headlines

Posted by Gary .....at 3:16 PM
Bloomberg:
  • Spanish Deficit Reprieve Raises Risks Bonds Ignore: Euro Credit. Spanish Prime Minister Mariano Rajoy's reprieve in how long he has to tackle the biggest budget gap in the European Union is bad news for bondholders. "To return to sustainable growth, the government should promote investments and hiring," said Georg Grodzki, who helps oversee $515 billion as head of credit research at Legal & General Investment Management in London. "The danger is that in the name of reducing the pain, a bloated civil service and rigid work and pension rules are preserved." 
  • European Stocks Drop for Second Day to One-Month Low. European stocks declined for a second day, extending a one-month low, amid speculation the Federal Reserve will scale back its debt-buying program. Roche Holding AG (ROG) sank the most since 2011 after a study showed that its Avastin drug failed to extend the lives of patients with a type of brain cancer. Munich Re and Hannover Re slipped more than 2.5 percent, leading reinsurers lower, as storms across central Europe caused rivers to swell, flooding Prague. Polymetal International Plc (POLY) added 1.9 percent after JPMorgan Chase & Co. raised its rating on the shares. The Stoxx Europe 600 Index dropped 0.8 percent to 298.59 at the close of trading, the lowest level since May 2.
  • Japan Fails to Plow Weak Yen Profits Back Into Capital Spending. The Abenomics euphoria that’s boosted the Japanese stock market 28 percent this year has yet to convince chief executives to invest more in factories and equipment in the world’s third-largest economy. In the first full quarter of Prime Minister Shinzo Abe’s tenure, capital spending excluding software fell 5.2 percent from a year earlier, according to a survey from the Ministry of Finance released yesterday. Spending by Japan’s biggest companies dropped 4.9 percent in January-March, the biggest decline since the quarter after the March 2011 earthquake.
  • China Growth Limited by Struggling Small Manufacturers. Chinese manufacturing indexes showed small businesses struggling, sapping momentum in the economy and underscoring the need for the government to shift support away from larger, state-backed companies. The official Purchasing Managers’ Index for smaller companies fell to 47.3 in May from 47.6 the previous month, even as the broader gauge rose to 50.8 from 50.6, the government said June 1. A private manufacturing index today that includes small enterprises fell more than forecast to 49.2, an eight-month low, from 50.4. Levels below 50 signal contraction.
  • U.S. Farmland Values Seen Declining as World Grain Output Rises. Rising global production of wheat, soybeans and corn will decrease the U.S. share of world agriculture trade and may reduce the value of farmland, according to a study by Ohio State University. “A declining competitive advantage for U.S. crops will ultimately reduce the relative advantage of U.S. farmland and thus the price it can command,” Carl Zulauf and Nick Rettig, economists at Ohio State, said in a report May 31. Revenue per acre may drop amid falling prices and because of “relative yield declines. In short, the U.S. crop sector may be as vulnerable as it was in the late 1970s.” 
  • Freight Trader Offers Subsidized Coal Shipping Amid Biggest Glut. A freight trader operating more than 40 vessels offered to subsidize the cost of delivering coal to Europe as the biggest glut of Panamax-class ships for at least two decades drives down rates for the carriers globally. GMI Resources UK LLC will contribute $2,000 a day to take about 74,000 metric tons of Australian or Indonesian coal to buyers in the Atlantic region, Steve Rodley, the company’s London-based co-chairman, said by phone today. The supply of Panamaxes expanded more than 50 percent since 2008, when record rates spurred unprecedented vessel ordering, according to data from Clarkson Plc, the world’s largest shipbroker. “It’s a result of chronic over-ordering of ships three or four years ago,” Rodley said by phone today, adding that the vessel surplus is “comfortably” the biggest since he joined the industry in 1994. “All the ships are delivering in the market and demand has not kept pace.Gold Advances as Manufacturing Unexpectedly Contracts in U.S.
  • Assad’s Hezbollah Ally Prepares Northern Attack, Opposition Says. Thousands of troops loyal to Syrian President Bashar al-Assad and allied Hezbollah militiamen are preparing to enter the province of Aleppo, a rebel stronghold close to the Turkish border, activists said. Assad’s forces will seek to enter the province’s northern region, Al-Jazeera television said, citing unidentified rebels.
  • Illinois Awaits Further Credit Cut After Latest Pension Flop. With handshakes, hugs and a few kisses, Illinois lawmakers left the capitol May 31 without repairing a leaking pension system that they have been saying for years must be fixed. Now they wait to discover the consequences of inaction; Illinois, already the lowest-graded state in the nation, faces yet another credit-rating cut. 
Wall Street Journal: 
Fox News:
MarketWatch:
CNBC:

Zero Hedge: 
Business Insider: 
New York Times: 
Reuters: 
  • European car sales show little sign of upturn. French, Italian and Spanish car sales fell in May, bringing the crisis-hit European market closer to a two-decade low and dampening the hopes of manufacturers for any recovery in 2013. Automakers suffering from weak economies and excess plant capacity had taken heart when demand picked up a little in April, suggesting a slide of almost 10 percent in Europe's first-quarter car sales would not play out in the full year. But the decline in French sales deepened last month, with a slide of 10.3 percent after a 5.2 percent fall in April. In Italy, Europe's fourth-largest market, car sales fell 7.9 percent in May, although the drop was less steep than a 10.8 percent fall in April. In Spain, they fell 2.6 percent in May, a month after recording their first year-on-year gain since last August, the Spanish car industry association said on Monday.
Telegraph: 
  • IMF halves German 2013 growth forecast. Germany's 2013 growth prospects have been cut in half by the International Monetary Fund, as it warned that the outlook for Europe's strongest economy could worsen if a eurozone recovery fails to materialise. 
  • ILO warns 'more than 200m jobless by 2015'. More than 200m people across the world are predicted to be jobless in 2015, a report has claimed, with employment rates not expected to return to pre-crisis levels for another four years.  

Handelsblatt:
  • German Family-Led Companies Say Economy Worsens. Germany's family-led companies are turning more pessimistic on economy's prospects, citing "spring survey" for Deutsche Bank, BDI Industry Association. Some 54% deem situation good or very good, down from 73% in study a year earlier.
Euromoney:
Restructuring: Flowers slams Europe over inaction
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
  • Restructuring: Flowers Slams Europe Over Inaction. Danger of 'Lehman-Type Event'; Advocates US Model of Receivership. 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.
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
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