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Monthly Archives: August 2011

BoA to exit Canada, Europe credit card businesses

NEW YORK (Reuters) – Bank of America Corp (NYSE:BAC – News) plans to sell its credit card business in Canada to TD Bank Group and will exit its card business in the UK and Ireland.

The agreement with TD Bank covers an $8.6 billion card portfolio, according to a Bank of America statement on Monday. It did not disclose the value of the transaction.

TD Group said it will pick up 1.8 million active accounts from the deal and that it would pay a “modest premium” for the card receivables.

The proposed card sale comes as the biggest U.S. bank seeks ways to bulk up its capital cushion as it fights lawsuits and credit problems related to its ill-fated acquisition of home mortgage lender Countrywide Financial three years ago.

The bank has lost more than $22 billion in its consumer mortgage division in the last four quarters. It agreed in June to pay $8.5 billion to mortgage securities investors and is fighting numerous lawsuits challenging the settlement and other mortgage issues.

Bank of America said it agreed on August 3 to sell its card business in Spain to Apollo Capital Management. In April, it sold a small business lending portfolio in the UK to Barclays (LSE:BARC.L – News).

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Germany refutes euro bonds

BERLIN (AP) — Two leading German ministers reiterated their opposition to issuing jointly guaranteed European government bonds as a means to end the eurozone’s crippling debt crisis, a day ahead of a summit between German Chancellor Angela Merkel and French President Nicolas Sarkozy.

Finance Minister Wolfgang Schaeuble told German news magazine Der Spiegel in its edition dated Monday that so-called eurobonds are out of the question as long as the currency zone’s 17 nations still run their own fiscal policy, and that different interest rates for eurozone nations were needed to provide “incentives and the possibility of sanctions to enforce solid financial policy.”

Schaeuble acknowledged that the EU must, and will, beef up its response to the crisis to assist the heavily indebted nations, but that “there won’t be a collectivization of debt or unlimited assistance.”

Merkel has long ruled out eurobonds, and Economy Minister Philipp Roesler joined the chorus Monday, describing jointly guaranteed debt as “the wrong way” out of the crisis.

“Eurobonds would mean that everybody shares the same interest burden which would be a punishment for (financially) sound nations,” he was quoted as saying by German news agency dapd. “We cannot want this for Germany and for all other good states.”

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Debt commision stacked with representatives from defense states

WASHINGTON (AP) — For the dozen lawmakers tasked with producing a deficit-cutting plan, the threatened “doomsday” defense cuts hit close to home.

The six Republicans and six Democrats represent states where the biggest military contractors — Lockheed Martin, General Dynamics Corp., Raytheon Co. and Boeing Co. — build missiles, aircraft, jet fighters and tanks while employing tens of thousands of workers.

The potential for $500 billion more in defense cuts could force the Pentagon to cancel or scale back multibillion-dollar weapons programs. That could translate into significant layoffs in a fragile economy, generate millions less in tax revenues for local governments and upend lucrative company contracts with foreign nations.

The cuts could hammer Everett, Wash., where some of the 30,000 Boeing employees are working on giant airborne refueling tankers for the Air Force, or Amarillo, Texas, where 1,100 Bell Helicopter Textron workers assemble the fuselage, wings, engines and transmissions for the V-22 Osprey tilt-rotor aircraft.

Billions in defense cuts would be a blow to the hundreds working on upgrades to the Abrams tank for General Dynamics in Lima, Ohio, or the employees of BAE Systems in Pennsylvania.

For committee members such as Sens. Patty Murray, D-Wash., Rob Portman, R-Ohio, and Pat Toomey, R-Pa., the threat of Pentagon cuts is an incentive to come up with $1.5 trillion in savings over a decade. Failure would have brutal implications for hundreds of thousands workers back home and raise the potential of political peril for the committee’s 12.

“I think we all have very good reasons to try to prevent” the automatic cuts, Toomey told reporters last week when pressed about the impact on Pennsylvania’s defense industry. “That is not the optimal outcome here, the much better outcome would be a successful product from this committee.”

The panel has until Thanksgiving to come up with recommendations. If they deadlock or if Congress rejects their proposal, $1.2 trillion in automatic, across-the-board cuts kick in. Up to $500 billion would hit the Pentagon.

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Funds slash commodity bets by most in 18 months

Read here:

Funds reduced bets on rising commodity prices by the most in any week since February 2010 on mounting concern that a weakening global economy will slow demand for raw materials.

In the week ended Aug. 9, speculators cut their net-long positions in 18 commodities by 19 percent to 989,110 futures and options contracts, government data compiled by Bloomberg show. Copper holdings plunged 61 percent, the most since June 2010, and bullish gold bets fell to a five-week low.

The Standard & Poor’s 500 Index slumped 13 percent in the three weeks ended Aug. 11. About $2.3 trillion was erased from U.S. equity values over the period amid Europe’s debt crisis, speculation that the economy is slowing and S&P’s downgrade of the government’s AAA credit rating. The benchmark gauge for U.S. shares dropped to within 11 points of a bear market.

“The shock waves felt through commodities, currencies, stock and bond markets over the last 10 days, that’s the primary driver,” James Dailey, who manages $200 million at TEAM Financial Management LLC, said in a telephone interview from Harrisburg, Pennsylvania on Aug. 12. Funds reduced holdings on signs “that the global economy is continuing to slow fairly rapidly,” he said.

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Upgrades and Downgrades This Morning

upgrades

IBM – IBM upgraded to Buy from Neutral at Goldman

VMW – VMware upgraded to Outperform from Neutral at Credit Suisse

CEA – China Eastern Airlines upgraded to Neutral from Underperform at Credit Suisse

GM -General Motors upgraded to Buy at Ticonderoga

SUN  – Sunoco upgraded to Outperform from Neutral at Macquarie

NTAP – NetApp upgraded to Overweight from Neutral at Piper Jaffray

THS – TreeHouse Foods upgraded to Buy from Hold at BB&T

V – Visa added to Conviction Buy List at Goldman

RAH – Ralcorp Holdings upgraded to Buy from Hold at BB&T

LVS – Las Vegas Sands added to Focus List at JP Morgan

FTNT – Fortinet upgraded to Outperform at Pacific Crest

WFC – Wells Fargo upgraded to Buy from Neutral at Rochdale

ABC – AmerisourceBergen upgraded to Buy at Stifel Nicolaus

GDOT – Green Dot upgraded to Buy from Neutral at Goldman

SYK – Stryker upgraded to Mkt Outperform at Rodman & Renshaw

FFIV – F5 Networks upgraded to Neutral from Sell at Goldman

TSN – Tyson Foods upgraded to Outperform from Market Perform at BMO Capital

downgrades

JNPR – Juniper Networks downgraded to Neutral from Buy at Goldman

TSS – Total System downgraded to Neutral from Buy at Goldman

CTSH – Cognizant Tech removed from Conviction Buy List at Goldman

PC – Panasonic downgraded to Underperform from Outperform at Credit Agricole

OAS – Oasis Petroleum upgraded to Buy from Neutral at UBS

RGLD – Royal Gold downgraded to Neutral from Buy at UBS

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Gapping Up and Down This Morning

Gapping up

ASTI +67.1%, RIMM +6.7%, NOK +5%, S +3.4%, BIDU +1.2%, BAC +2.6%,  AA +2%,BHP +2.4%, OXPS +2.2%, AA +2%, BBL +1.9%, ZAGG +13.4%, MT +1.2%, RIO +0.9%, VALE +0.9%, SYY +2.5%, C +1.6%, MT +1.2%, RIO +0.9%, RAH +8.1%,

Gapping down

CS -2.4%, BRCD -2.3%, LXK -1.2%, JNPR -2.2%UBS -1.3%, HD -0.8%, CBOU -3.2%, SORL -7.4%, EL -5.8%, LOW -4.7%, GOOG -3%, CS -2.4%, UBS -1.3%,

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