Daily US Opening News And Market Re-Cap: August 29
by Zero Hedge - August 29th, 2011 8:18 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
From RanSquawk
- German Chancellor Merkel said she was sure that her coalition MP’s would back measures to increase the powers of the EFSF in next month’s Bundestag vote
- Moody’s said Spain’s proposed fiscal rule is credit positive for the sovereign
- European officials dismissed a suggestion by the IMF’s chief Lagarde regarding a mandatory recapitalisation of European banks
- According to a government spokesman, German Chancellor Merkel has never called for Eurozone economic government
- The NYMEX plans to open for trade on Monday as per regular schedules according to a CME spokesman. Meanwhile, NYSE and NASDAQ said they expect to operate normally on Monday despite potential Hurricane impact on New York City
Market Re-Cap
Positive comments from German Chancellor Merkel on her coalition’s support towards enhancing the power of the EFSF, together with comments from Moody’s that the Spanish proposed fiscal rule is credit positive for the sovereign promoted risk-appetite during the session. European equities traded higher with particular strength seen in financials after European officials dismissed a suggestion by the IMF’s chief Lagarde on a mandatory recapitalisation of European banks. Elsewhere, weakness in the USD-Index provided support to EUR/USD, GBP/USD and commodity-linked currencies, however EUR did come under some pressure following lower than expected German states’ CPI data. In other forex news, weakness in CHF was observed across the board, however no confirmation of any intervention has surfaced. Meanwhile, according to a document, Finland has proposed the creation of a Luxembourg-based company to hold Greek assets as security for new loans to Greece. The document further said that in case of a Greek default on the EFSF loans, ownership of holding company shares would transfer to the member states.
Moving into the North American open, markets look ahead to economic data from the US in the form of personal income/spending, core PCE and pending home sales. In fixed-income, another Fed’s Outright Treasury Coupon Purchase operation in the maturity range of Nov’18-Aug’21, with a purchase target of USD 2.75-3.5bln is also scheduled for later.
Asian Headlines:
Yoshihiko Noda won party vote to become the next prime minister of Japan. Noda received 215 votes, whereas Kaieda only received 177 votes. In other news, the Japanese government should never discuss making the BoJ directly underwrite government debt, according to Japan’s economy minister Yosano. (Sources/RTRS)
US Headlines:
Hurricane Irene knocked out…
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DiggFrontrunning: August 29
by Zero Hedge - August 29th, 2011 8:15 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
- Noda Wins Party Election (WSJ)
- Tremonti out? Italy readies austerity changes (Reuters)
- European officials round on Lagarde (FT)
- China to Lock Up More Cash to Tighten Liquidity (Bloomberg)
- Central Bankers Worry Economy Still in Peril (WSJ)
- Italy Tests Appetite for Debt When ECB Is Absent: Euro Credit (Bloomberg)
- As U.S. Households Save, Economy Sputters (WSJ)
- China’s oil groups ready for more deals (FT)
- Irene Forecasters Missed Intensity While Getting Path Right (Bloomberg)
- Rebels push to Gaddafi hometown (Reuters)
Global headlines from Egan Jones
- Argentina will raise its minimum wage by 25% to keep pace with inflation.
- Asia stocks, Won gain on US economic outlook. Gold and the Swiss franc fall.
- Bernanke said the US economic recovery will accelerate.
- Central bankers gathered at an annual retreat in Jackson Hole, urge govts on expansion.
- China to lock up more cash to tighten liquidity.
- IMF approves final $450M funding for Iceland.
- UK housing demand weaken further after August price drop, Hometrack says.
- ABN Amro said it returned to a profit in H1, and will cut an additional 2,350 jobs.
- Anglo Irish sells US loans of face value $9.5B to two banks and Lone Star.
- ANZ is eyeing Tokyo Star Bank or Aozora Bank Ltd. as possible acquisition target.
- Apple won a further delay in the release of Samsung’s newest tablet in Australia.
- Dresser-Rand plans $150M in buybacks, which represents 5% of its outstanding stock.
- Eurobank Ergasias and Alpha Bank, Greece’s second and third-biggest banks, to merge.
- Fed to hold public hearings on Capital One Fincl Corp.’s acquisition of ING Direct USA.
- KPMG plans to put aircraft-parts supplier Aero Inventory up for sale next month.
- LG Display Co. is planning around $2.8B of capital expenditure in 2012.
- Multi-Color to acquire York Label Group for $356M.
- Pfizer Inc. won U.S. approval to sell a drug to treat lung cancer.
- PG&E proposes spending $769M to test gas pipelines.
- Sinopec posted record half-year profit that beat analysts’ estimates.
- Softbank will sell its 4% stake in Yahoo Inc. to repay loans from Citibank.
- Tiffany’s fiscal second-quarter earnings rose 33% on strong international sales.
- UBS AG said it may begin levying a temporary charge on Swiss franc deposits.
Economic Calendar: Personal Income & Spending, PCE Prices, Pending Home Sale to be released.
Earnings Calendar: ABM, CFI, CWST, DCI, HPOL, LDK, SCMR, TIER, WINN.
Today’s Economic Data Docket – Personal (Lack Of) Income, Pending Home Sales And Dallas Fed
by Zero Hedge - August 29th, 2011 7:55 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Three B-grade economic updates today to serve as an appetizer to the ISM release on Thursday and the NFP data (very likely negative – more shortly) on Friday.
8:30: Personal income and outlays (July): A pickup? Following a weak June report—during which income rose 0.1% and spending declined by 0.2%—Goldman looks for a pickup in personal income (+0.4%) and spending (+0.5%) in July. The July Consumer Price Index suggests that core PCE prices rose by 0.21% in July.
Income: GS +0.4%; Consensus: +0.3%; Last +0.1%.
Spending: GS: +0.5%; Consensus: +0.5%; Last -0.2%. MAP: 1
Core PCE prices: GS: +0.2%; Consensus: +0.2%; Last +0.1%.
10:00: Pending home sales (June): Another drop? The pending home sales index—which tracks signed home sales contracts, and leads the official count of existing home sales by 1-2 months—rose by 2.4% in June after a 8.2% gain in May. The consensus expects a small setback (-0.9%) in this month’s report.
Consensus: -2.0%; Last +8.2%. MAP: 2
10:30: The Dallas Fed’s Texas Manufacturing Outlook will complete the available reports for the factory sector from various District Banks. There is no reason to think that it will offer a different picture from most of the other reports. There has been a decided softening in the activity indexes that reflects sluggish new orders and shipments, and a slowing in hiring and the workweek.
11:00: QE Lite POMO – The Open Market Desk will buy nominal Treasury coupons in the 11/15/2018 – 08/15/2021 maturity range.
11:30: Treasury will auction a combined $56.0 billion of 3- and 6-month bills.
Source: GS, SMRA and ZH
Greece Ups the TBTF Ante With Merger Of Alpha Bank And Eurobank, Creates Largest (Jointly Insolvent) Bank In Southeast Europe
by Zero Hedge - August 29th, 2011 7:49 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
As of minutes ago, the speculation that Greek Alpha Bank and Eurobank are merging, in the process creating the largest Greek bank, and first TBTF candidate, has been confirmed, leading to a 30% jump in the stock prices of both Alpha and Eurobank. Not only that, but as AP reports, “the news triggered a Greek share rally, with the benchmark General Index on the Athens bourse gaining more than nine percent in early trading. On Friday, it had hit its lowest in nearly 15 years due to concerns over the future of the country’s latest rescue package. The banking sector was up nearly 20 percent, while shares in National Bank of Greece, the country’s largest lender, were up 29 percent.” This move, which is nothing more than an attempt to pool deposit bases at these two very troubled institutions and thus prevent a bank run, needed a back stop to be credible: sure enough here comes the Petrodollar patsy: “Qatar Investment Authority (QIA), which is already an Alpha shareholder, is expected to take a bigger stake in the new bank. QIA holds 5% of Alpha and is expected to take 15% of the merged entity.” The new bank will be the biggest bank in southeastern Europe, with assets of 146bn euros ($212bn; £129bn) and 1,300 branches. Eurobank shareholders will receive five new Alpha Bank shares for every seven Eurobank shares they own. And what would a bank merger be without ridiculous talk of synergies: The banks estimate that the merger will create about 650 million euros of synergy saving per year. Naturally nobody cares about this, as long as the first stake in the Greek bid for TBTFness proceeds as planned. That this step only delays the inevitable is irrelevant: for now the buying spree must resume. We fully expect the pro forma entity to eventually subsume all other Greek banks before finally it reverse mergers with the hollow ECB shell.
From AP:
Greece is in the throes of a major financial crisis, and only avoided bankruptcy after two international bailouts agreed over the past two years, worth a combined total of €219 billion ($315 billion). Central bank and government officials have repeatedly urged bank consolidation, arguing it will afford them greater protection from the fallout of
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Sol Sanders | Follow the money No. 81 | The Great American Heresy
by Zero Hedge - August 29th, 2011 7:43 am
Courtesy of ZeroHedge. View original post here.
Submitted by rcwhalen.
Latest from Uncle Sol. A version of this column is scheduled for publication in The Washington Times, Monday, August 28, 2011. — Chris
Follow the money No. 81 -- The Great American Heresy
Sol Sanders solsanders@cox.net
More than a hundred years ago, the brilliant philosopher and father of modern psychology, William James, warned his American compatriots against “scientism”. James saw an increasing tendency to extend the then budding scientific method of controlled experiments in the physical sciences into intractable social and political problems. He warned it would not work, perhaps as much based on his psychological understanding as his philosophical logic, that is, as the old saying goes, people will be people.
Not too many listened to James then — or since. The old logical fault has taken on new vast proportions since the invention of the computer and the incredible ability to accumulate virtually limitless numbers as well as “soft” information. Now the digital revolution has given us the capacity for virtually unlimited mathematical calculations. Listen to that fountain of politically correct wisdom, National People’s Radio, almost any morning or afternoon, and you will hear another long dissertation on some social or political issue, usually foisted on us by the tenuratti, backed up by voluminous, if often irrelevant, statistics.
Nowhere has the disease taken root more than in the business schools, pickled there by management experts, often practitioners of what has been termed “the dismal science” but more accurately, the pseudoscience. A few years ago, I was flattered to be asked to “lecture” a class at the prestigious University of Virginia business school. A professor had somehow learned I had written a popular [not so popular as I would have wished] biography of Soichiro Honda, the Japanese investor and industrialist.
I sat in on the tailend of the professor’s presentation of Honda as “a case study”. I was worried the gentleman might fall off the edge of his lecture platform when, spelling out Honda’s success, writing an algebraic [?] formula across the blackboard, he began to run out of space. Luckily, he left the room after introducing me. I picked up the monologue, telling my young audience I would possibly be going off on a different tangent since I had written an anecdotal book. There were, I must…
Gold Fell 2.96% Last Week – Further Falls Possible But Downside Limited
by Zero Hedge - August 29th, 2011 7:25 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
From GoldCore
Gold Fell 2.96% Last Week – Further Falls Possible but Downside Limited
Gold has fallen in U.S. dollars and in most currencies but is higher in Swiss francs due to concerns of fees on Swiss franc deposits. Asian (except for China’s CSI300) and European equities are higher as investors judge the recent sell off as excessive. Risk appetite has risen on hopes that the U.S. and global slowdown will not be sharp.
Gold is trading at USD 1,818.80, EUR 1,254.10 , GBP 1,110.90, CHF 1,482.50 and JPY 139,340 per ounce.
Cross Currency Table
There is no London AM Fix this morning with London closed due to a holiday. Friday’s London AM Fix was USD 1,787.00, EUR 1237.10, GBP 1094.17 per ounce.
Sterling did not see weakness despite U.K. house prices falling for a fourth month in August. Property researcher Hometrack said demand for homes may weaken further this year due to “weak consumer sentiment, pressure on household incomes and the uncertain economic outlook.”
U.S. personal income and spending are at 1230 GMT and pending home sales are at 1400 GMT. ECB President Jean-Claude Trichet takes questions at 1300 GMT from the European Parliament’s economic committee in the first of a two-part hearing on key issues facing the euro zone.
When the dust settled on gold’s volatile week, despite much “noise” from uninformed commentators, it showed that gold fell 2.96% on the week. This must be put in context.
The previous week alone gold had risen 6.2%. Despite the 3% sell off last week gold remains up 11.6% in dollar terms (and by similar amounts in other currencies) so far in August with just three trading days left in the month.
Meanwhile, global stock markets are down by similar amounts in August, with the FTSE down 11.7%, the DAX down 21.6%, the S&P down 8.95% and the MSCI World down 10.95%.
Thus, gold has again proven its hedging and safe haven status.
On Friday, we looked at the very robust demand being seen for physical bullion internationally as seen in tight supplies and good premiums, particularly in Asia. Physical demand is a primary importance to the medium and long term outlook for gold and silver bullion.
To get a read on the short term outlook for gold and silver it…
Even As Overnight Borrowing From ECB Drops To Zero, Bank Deposits With ECB Soar By €17.2 Billion To €121 Billion
by Zero Hedge - August 29th, 2011 7:10 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
A quick update at the liquidity conditions in Europe comes courtesy of the ECB’s posting of data on the Friday Marginal lending facility (aka emergency overnight) as well as the Deposit facility (last recourse cash dump), which paints a mixed picture. Because while the Marginal Lending saw its first zero usage, down from €1 million on Thursday, the lowest since August 5, Deposit Facility usage once again rose from €104 billion to €121.2 billion. The latter is a concern as it means that the only place that European banks would be willing to allocate excess capital, is the safety of the European money printing poliburo. Next up from the ECB we get data on SMP usage, i.e., secondary debt purchases, in the past week: somewhere between €10 and 15 billion, although it could easily be greater.
Charts
by Zero Hedge - August 29th, 2011 6:52 am
Courtesy of ZeroHedge. View original post here.
Submitted by thetrader.
The Market tanked big time in August. September, is historically a bad month for bulls, but as the market is tricking everybody, we could see further short term upside in the market, and a decline in volatility. As we argued last week, volatility should come down short term, as people started pricing risk too aggressively. Some chart levels below, DAX; STOXX;SPX;NDX and VIX.
RANsquawk European Morning Briefing – Stocks, Bonds, FX etc. – 29/08/11
by Zero Hedge - August 29th, 2011 6:52 am
Courtesy of ZeroHedge. View original post here.
Submitted by RANSquawk Video.
News That Matters
by Zero Hedge - August 29th, 2011 2:57 am
Courtesy of ZeroHedge. View original post here.
Submitted by thetrader.
Ft.com
European officials rounded on Christine Lagarde on Sunday, accusing the managing director of the International Monetary Fund of making a “confused” and “misguided” attack on the health of Europe’s banks. Ms Lagarde, the former French finance minister who replaced Dominique Strauss-Kahn as head of the IMF in July, used her address at an annual meeting of central bankers in Jackson Hole, Wyoming, to call for an “urgent” recapitalisation of Europe’s weakest lenders, saying that shoring up the banking system was key to cutting “chains of contagion” across the region. http://www.ft.com/intl/cms/s/0/fcb6037e-d194-11e0-89c0-00144feab49a.html#axzz1WOELnKbv
German “bad bank” agencies holding billions of euros of Greek debt have still to decide whether to join a bond swap designed to cut Athens’ refinancing burden as part of an EU bail-out. Two ofthe German banks that are among the country’s largest holders of Greek bonds have also to commit themselves to the €135bn debt swap plan set to be launched next month. The uncertainty over which institutions will support the deal comes as Greece is warning that the swap might not go ahead if fewer than 90 per cent of private investors agree to participate.http://www.ft.com/intl/cms/s/0/49eb8d24-d151-11e0-89c0-00144feab49a.html#axzz1WOELnKbv
Anna Hazare, the Indian anti-corruption campaigner, ended his public hunger strike on Sunday after a rattled Congress party-led government bowed to his demands for tougher laws. The 74-year-old social activist broke his 13-day fast with a cup of coconut water at the Ramlila Ground in central Delhi sitting on a dais surrounded by children and dwarfed by a giant poster of Mahatma Gandhi, the Indian liberation leader whose example Mr Hazare invokes.http://www.ft.com/intl/cms/s/0/2b7a2cf8-d15e-11e0-89c0-00144feab49a.html#axzz1WOELnKbv
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