Bloomberg:
- U.S., EU Escalate Russia Sanctions as Putin Holds Firm. The Obama administration, acting in concert with the European Union, imposed sanctions on Russian banks, energy companies and defense firms in the latest attempt to punish the country over Ukraine. The U.S. and EU, which say Russia is supporting the rebels in Ukraine, sought to squeeze the country’s $2 trillion economy by limiting access to financing. Among the companies hit by the U.S. penalties were OAO Rosneft (ROSN), Russia’s largest oil company, natural gas producer OAO Novatek (NVTK), OAO Gazprombank, the country’s third-largest lender, and state economic development lender Vnesheconombank, the U.S. Treasury Department said today.
- Israel Agrees to Cease-Fire as Troops Prepare for Invasion. Israel agreed to a United Nations request for a temporary cease-fire on humanitarian grounds even as it prepared its troops for a possible ground invasion. The truce will last five hours starting at 10 a.m. local time today to allow civilians to resupply provisions, the army said in an e-mailed statement late yesterday. Any attacks launched at Israel during that time will be met “firmly and decisively,” it said. Hamas and other factions also agreed to a five-hour truce, Al-Jazeera reported, without saying how it obtained the information. Al-Jazeera didn’t identify the other factions.
- China Rallying for All Wrong Reasons to Top-Rated Analyst. The more China does to boost economic growth, the more bearish David Cui gets on the nation’s stock market. The Bank of America Corp. (BAC) strategist, ranked No. 1 by Institutional Investor magazine, says the state spending and monetary stimulus that drove a 14 percent rally in the Hang Seng China Enterprises Index (HSCEI) from this year’s low in March are only making equities less appealing as leverage rises and free cash flow dwindles. He predicts the gauge will drop to 9,600 by year-end, or 8.4 percent below yesterday’s close. Cui’s pessimistic outlook for the largest emerging market puts him at odds with bulls at some of the biggest banks and money-management firms, including Goldman Sachs Group Inc. and BlackRock Inc. He says policy makers’ unwillingness to endure the “short-term pain” of slower growth, needed to cut debt and shift the economy toward a consumption-based model, will prevent a sustainable rally. “Given that growth is still being driven by the usual factors, it means the core issue is getting worse as people are building up debt,” Cui said in a phone interview on July 14. “The issue is whether this growth is good quality and sustainable. My belief is that it’s not.”
- China Finds Debt Addiction Hard to Break in Growth Quest. China’s leaders are having trouble breaking their addiction to debt-fueled investment. Outstanding credit rose to 206.3 percent of gross domestic product last quarter from 202.1 percent in January-to-March, according to data compiled by Bloomberg from government releases the past two days. Investment in fixed assets, a typical outlet for loans, accelerated in June for the first time since August. President Xi Jinping’s government is aiming for about 7.5 percent economic expansion this year, and a deeper slowdown could complicate structural changes he’s implementing -- such as bringing more private capital into state-owned enterprises. The central bank has eased constraints on bank lending in recent months and ceased referring to a November projection that China might undergo an unwinding of its debt build-up. “There are reasons to continue wondering how this is going to end,” said Louis Kuijs, Royal Bank of Scotland Group Plc’s chief Greater China economist in Hong Kong, who formerly worked at the World Bank.
- Brazil Holds Key Rate at 11% as Economy Risks Stagflation. Brazil kept borrowing costs unchanged for the second straight meeting, as slowing growth gives the central bank no leeway to raise rates with inflation running above the upper limit of its target. The bank’s board, led by its President Alexandre Tombini, today held the benchmark Selic at 11 percent, as forecast by all 57 economists surveyed by Bloomberg. The central bank lifted borrowing costs by 375 basis points in the year through April before halting May 28.
- Australia Scraps Carbon Price as Abbott Meets Election Vow. Australia’s Senate voted to scrap the nation’s price on carbon, fulfilling a key election pledge by Prime Minister Tony Abbott and leaving the nation without an approved mechanism to tackle emissions. The repeal bill was passed 39 votes to 32 in the 76-member upper house today, dismantling a law introduced by the previous Labor government that initially charged polluters A$23 ($21.50) per ton of greenhouse gases emitted. Repealing the carbon price may put Australia, which is hosting the Group of 20 nations summit in November, at loggerheads with President Barack Obama, who is seeking to form a worldwide agreement to combat climate change.
- Las Vegas(LVS) Sands Profit Misses Estimates as Macau Slows. Las Vegas Sands Corp. (LVS), the world’s largest casino operator, reported second-quarter sales and profit that missed analysts’ forecasts, as gambling slowed industrywide in Macau, the No. 1 market. Sands, with leadership in the mass market, contended with an industrywide drop in betting in Macau, the only part of China where casino gambling is legal. The action was clipped by lower spending from high-rollers known as VIPs, with industry revenue in June shrinking 3.7 percent to 27.2 billion patacas ($3.4 billion).
- Asian Stocks Advance for a Fourth Day Led by Materials. Asian stocks rose for a fourth day, with the regional benchmark index on course for the longest winning streak in more than a month, as material and industrial shares led the advance. BHP Billiton Ltd. (BHP), the world’s largest miner, gained 1.5 percent and Fortescue Metals Group Ltd. climbed 3.5 percent in Sydney as iron-ore prices held near a seven-week high. Taiwan Semiconductor Manufacturing Co. (2330) slumped 4.6 percent, leading declines on the regional gauge, after the world’s largest contract maker of chips said it will face stiffer competition next year. The MSCI Asia Pacific Index gained 0.2 percent to 147.47 as of 9:33 a.m. in Hong Kong.
- Most Base Metals Drop for Second Day on Rising Supplies. Most industrial metals fell as copper dropped to a two-week low after Goldman Sachs Group Inc. forecast commodities will drop over the next five years on increasing supplies. Copper for delivery in three months on the London Metal Exchange retreated as much as 0.4 percent to $7,049 a metric ton, the lowest price since July 2, and was at $7,057.50 by 10:45 a.m. in Tokyo. The metal has lost 4.1 percent this year, the most among the six main metals on the bourse.
- Bubble Fears Setting in as S&P 500 Surge Stirs Angst. Two years of uninterrupted gains in U.S. stocks are sowing anxiety among financial professionals, with three in five saying the market is on the verge of a bubble or already in one, the Bloomberg Global Poll found. Forty-seven percent of those surveyed said the equity market is close to unsustainable levels while 14 percent already saw a bubble, according to a quarterly poll of 562 investors, analysts and traders who are Bloomberg subscribers. Almost a third of respondents called the market for lower-rated corporate debt overheated and most said stock swings will increase within six months, the July 15-16 poll showed.
- Top Justice Official Tells Banks Lawsuits May Be Coming. The Justice Department official leading the high-stakes talks with the nation’s largest banks over soured mortgage securities suggested Wednesday that lawsuits could be coming against institutions that don’t offer to pay large enough settlements and admit past misconduct.
- China Plays a Big Role as U.S. Treasury Yields Fall. Record Chinese Purchases of Treasury Bonds, Notes Could Help Explain Falling Yield on U.S.'s 10-Year Note. Investors wrestling with what is driving the surprise U.S. bond rally of 2014 got a clue Wednesday fingering a familiar suspect: China. The world's most populous nation boosted its official holdings of Treasury debt maturing in more than a year by $107.21 billion for the first five months of 2014, according to U.S. data released Wednesday. That is the biggest first-five-month increase since record keeping began in 1977 and surpasses the $81 billion bought by China for all of 2013, according to Ian Lyngen, senior government-bond strategist at CRT Capital Group LLC.
- BofA(BAC), Justice Remain Far Apart on Mortgage Pact. Bank Reaches Separate Settlement With AIG, Reports 43% Profit Drop.
- Jack Lew's Flee America Plan. The Obama Treasury wants to drive more U.S. companies overseas.
- The Meaning of Russia's Military Campaign Against Ukraine. Moscow has broken the trust that many worked long to build. Now NATO must adapt to this new security threat.
CNBC:
Zero Hedge:
- "Good News Is Bad News", BofA Says "Reduce Risky Assets" Because Jobs Are Improving So Fast. (video)
- Peak Animal Spirits. (graph)
Reuters:
- Supply constraints hits SanDisk's(SNDK) forecast, shares fall. SanDisk Corp gave a current-quarter revenue forecast that was below Wall Street's estimate, warning that it would be unable to the meet the booming demand for solid-state drives and memory chips, and its shares fell 9 percent in extended trading. The company also reported second-quarter profit and revenue that barely beat analysts' expectations, disappointing investors who have seen the company blow past Wall Street's forecasts for at least the past eight quarters.
- Yum's(YUM) China rebound dimmed by India, Pizza Hut weakness. Yum Brands Inc on Wednesday said its KFC business bounced back in China, its No. 1 market, but its stock fell more than 2 percent in extended-hours trading on disappointing quarterly results from its India, Taco Bell and Pizza Hut divisions.
Obama takes on coal with first-ever carbon limits
Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.99
Telegraph:Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.99
- Fed kicks off global dollar squeeze as Janet Yellen turns hawkish. A vast wash of dollars flooded the global financial system when the Fed cut rates near zero and then bought $3.5 trillion of bonds. This may now go into reverse.
- None of note
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 101.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 70.50 -1.0 basis point.
- FTSE-100 futures -.24%.
- S&P 500 futures -.25%.
- NASDAQ 100 futures -.20%.
Earnings of Note
Company/Estimate
- (MTB)/1.90
- (KEY)/.26
- (BHI)/.90
- (AN)/.87
- (SHW)/2.93
- (POOL)/1.61
- (ADS)/2.73
- (BX)/.72
- (PPG)2.79
- (DHR)/.94
- (UNH)/1.26
- (MAT)/.18
- (FITB)/.43
- (PM)/1.24
- (BAX)/1.22
- (MS)/.56
- (SYK)/1.08
- (COF)/1.82
- (IBM)/4.31
- (GOOG)/6.25
- (SLB)/1.36
- (CY)/.12
8:30 am EST
- Housing Starts for June are estimated to rise to 1020K versus 1001K in May.
- Building Permits for June are estimated to rise to 1035K versus 991K in May.
- Initial Jobless Claims are estimated to rise to 310K versus 304K the prior week.
- Continuing Claims are estimated to fall to 2580K versus 2584K prior.
- Philly Fed Business Outlook Index for July is estimated to fall to 16.0 versus 17.8 in June.
- None of note
- The Fed's Bullard speaking, Eurozone inflation data, (GM) CEO testimony to Congress, Bloomberg Economic Expectations Index for July, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory report could impact trading today.
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