Bloomberg:
- Iraqi Militants Capture Two Oil Fields in North, Kurdish Towns. Militants from Islamic State, a breakaway al-Qaeda group, took control of two oil fields and some predominantly Kurdish towns in northern Iraq following clashes, according to the Northern Oil Co. The Ain Zala and Batma oil fields, which together have an output of 30,000 barrels per day, are under full control of the group, according to a statement by the state-run Northern Oil Co. The Sunni Islamist militants last month occupied the Qayyara oil field north of Baghdad. Islamic State, which was previously known as Islamic State in Iraq and Levant, has seized territory in northern and western Iraq, taking over oil wells and fighting for control of refineries.
- Israel Announces 7-Hour Cease-Fire as Diplomatic Efforts Falters. Israel announced a seven-hour cease-fire for much of Gaza after renewed violence yesterday, including the shelling of a United Nations shelter, tripped up diplomatic efforts to end four weeks of conflict. The “humanitarian window” will apply from 10 a.m. to 5 p.m. local time in all areas of Gaza except those where the Israel Defense Forces are currently operating, the IDF said in an e-mailed statement. “The IDF will respond to any attempt to exploit this window to harm Israeli civilians and IDF soldiers,” then IDF said in the statement.
- Portugal Announces $6.6 Billion Banco Espirito Santo Rescue. Portugal’s central bank took control of Banco Espirito Santo SA, once the country’s largest lender by market value, in a 4.9 billion-euro ($6.6 billion) bailout that will leave junior bondholders with losses. The Bank of Portugal’s Resolution Fund will move Banco Espirito Santo’s deposit-taking operations and most of its assets to a new company, Novo Banco, which it will own outright. The fund will finance the rescue with a Treasury loan to be repaid by Novo Banco’s eventual sale. Espirito Santo shareholders and junior bondholders will be left with the most “problematic” assets, including loans to other parts of the Espirito Santo Group and the lender’s stake in its Angolan operation, according to a central bank statement yesterday.
- China Central Bank Signals No Broad Monetary Easing. The People’s Bank of China warned that the country’s credit and money supply have increased rapidly and indicated that it will refrain from broader monetary easing to support growth. “The total debt level has been rising relatively quickly,” the PBOC said in its second-quarter monetary policy report on Aug. 1. “Our existing money supply and credit are already relatively large and their growth is also high.” The International Monetary Fund said last week that China’s reliance on debt and investment has created “rising vulnerabilities” and that failure to change its growth pattern increases the likelihood of a sharp economic slowdown. The Washington-based lender urged the nation’s leaders to lower the country’s annual expansion target, rein in credit and speed up reforms. “Restructuring and reform of the economy remains an arduous task,” the central bank said in its 54-page report. “It’s not appropriate to expand overall liquidity sharply to solve structural problems.”
- China’s Fraught IPOs. China’s Internet companies are exploding in value, so foreign investors naturally want a piece of the action. A little problem: Chinese law restricts foreign investment in Internet businesses (along with those in banking, mining and private education). Not to worry — where there’s a will, there’s a way, in this case an exotic corporate structure that magically turns a Chinese company into a foreign one with shares that overseas investors can buy. And they have.
- Armenia-Azeri War Risks Grow as Clashes Intensify. The leaders of Armenia and Azerbaijan plan to meet this week in a bid to defuse escalating tensions between the two countries after at least 15 soldiers were killed in the worst clashes in two decades. The fighting in the past week in the disputed region of Nagorno-Karabakh has been the deadliest since the two former Soviet states signed a cease-fire in 1994. Armenian President Serzh Sargsyan will hold talks with his Azeri counterpart Ilham Aliyev in the Russian city of Sochi on Aug. 8-9, Armenian Prime Minister Hovik Abrahamyan said on the government’s website.
- Asian Stocks Fall, Extending Biggest Drop in Three Months. Asian stocks fell, after the regional benchmark index last week capped its biggest daily drop in almost three months, as a smaller-than-forecast increase in U.S. payrolls overshadowed a bailout for Portugal’s Banco Espirito Santo SA. Honda Motor Co., which gets 47 percent of its auto sales in North America, fell 1.3 percent in Tokyo. Kubota Corp., a Japanese maker of industrial and farm machinery, lost 3 percent, leading losses among industrial shares. Horizon Oil Ltd., an Australian oil explorer, slumped 8.1 percent on speculation Roc Oil Co. may end plans to combine with Horizon Oil. The MSCI Asia Pacific Index lost 0.2 percent to 147.41 as of 9:24 a.m. in Tokyo.
- Gold Industry Takeovers Reach Three-Year High as Hunters Feast. There’s no sign of a let up in gold industry takeovers as a surge in acquisitions by producers, led by Agnico Eagle Mines Ltd. (AEM) and Yamana Gold Inc. (YRI), has pushed deals to a three-year high. Mid-sized and small producers are seizing on assets discarded by larger competitors as they trim portfolios to focus on their most profitable operations after gold last year notched up the biggest annual drop in more than three decades.
- Euro Near Eight-Month Low as Short Bets Surge to Most Since 2012. The euro was 0.4 percent from its lowest level versus the dollar since November as investors held the largest position in two years betting on a drop in the currency before the region’s central bank meets this week. Europe’s common currency slid 3.2 percent in the past three months amid unprecedented stimulus as the European Central Bank acted to spur inflation that slowed in July to the weakest in almost five years. Policy makers meet again Aug. 7. Australia’s dollar rose a second day after retail sales in the nation climbed at twice the pace economists forecast. The greenback held gains versus most major peers with data tomorrow predicted to show growth in services activity accelerated.
- U.S. Credit Risk Gauge Caps Biggest Jump in Six Months. A measure of U.S. credit risk posted its biggest weekly increase in six months as a regulator suspended trading of shares in a Portuguese bank and Argentina defaulted on its debt. The Markit CDX North American Investment Grade Index, a credit-default swaps benchmark used to hedge against losses or to speculate on creditworthiness, climbed 7 basis points this week to 66.6 basis points, the biggest advance since the period ended Jan. 24, according to data compiled by Bloomberg. As the Federal Reserve moves closer to curbing its unprecedented stimulus measures, Argentina failed to make an interest payment and Banco Espirito Santo SA shares were suspended by Portugal’s securities regulator. “We’re having a short-term panic,” said Brian Reynolds, chief market strategist for brokerage firm Rosenblatt Securities Inc. in New York. “Argentina being legally declared in default was the switch that made everyone pile onto bearish positions, betting on spread widening and a decline in stock prices.”
- Evercore to buy Hyman’s ISI to Add Research and Trading. Evercore Partners Inc. (EVR) agreed to buy closely held International Strategy & Investment Group LLC in an all-stock transaction as it seeks to expand its research and trading business.
- Junk-Debt Liquidity Concerns Bring Sales. Investors Worry Exiting Positions Could Get Harder. A shakeout in the junk-bond market is drawing only cautious interest from bargain-hunters, underscoring investor fears that many once-hot securities could prove hard to sell in an increasingly difficult trading environment. U.S. funds investing in debt rated below investment grade lost an average 1.33% last month, according to a Barclays PLC index, their second-worst monthly performance since November 2011. In June 2013, after the...'
- Jihadists Extend Control Into Lebanese City. Islamic State Seizes Territory in Lebanon. A jihadist group that has already seized control of large swaths of Syria and Iraq extended its territorial claims into Lebanon on Sunday, taking over a small city there after overrunning police posts and a military barracks. Fighters from the extremist group, which calls itself the Islamic State, streamed across the border from Syria in what Lebanon's defense minister called a premeditated attack after one of its commanders was...
- Quake Jolts China's Yunnan Province. Magnitude 6.1 Temblor in Southwest China Kills Hundreds.
- Warning: That plunge in stocks is just the beginning. (graph) Investors brace for the return of volatility.
- 3 market warning signs predict 20% stock tumble. Insight: When these indicators flash together, it’s time to sell.
CNBC:
- China services data shows 6-month low. Growth in China's services sector slipped to a six-month low in July as new orders rose at their weakest rate in at least a year, data showed, taking some of the shine off an industry that has been a bright spot in the Chinese economy this year. The official Purchasing Managers' Index (PMI) for the non-manufacturing sector slowed to 54.2 in July from June's 55, the National Bureau of Statistics said on Sunday. That is the weakest reading since January.
Business Insider:
Weekend Recommendations
Barron's:Weekend Recommendations
- Bullish commentary on (EMC), (USTR), (DSW), (FTD) and (DHI).
- Bearish commentary on (TWTR), (HLF) and (CSC).
- Asian indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 109.0 +.5 basis point.
- Asia Pacific Sovereign CDS Index 75.50 +.5 basis point.
- FTSE-100 futures +.27%.
- S&P 500 futures +.33%.
- NASDAQ 100 futures +.23%.
Earnings of Note
Company/Estimate
- (CAH)/.81
- (L)/.67
- (VNO)/1.20
- (THC)/.00
- (MRO)/.75
- (MDR)/-.17
- (CAR)/.61
- (CNA)/.82
- None of note
- None of note
- The Eurozone Investor Confidence, Eurozone PPI, HSBC China Services PMI, Reserve Bank of Australia Decision and the ISM New York for July could also impact trading today.
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