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Monthly Archives: July 2013

China Export Data Unexpectedly Disappoints

“Chinese exports fell 3.1% year-over-year (YoY) in June, missing expectations for a 3.7% rise.

Meanwhile, imports fell 0.7% YoY, missing expectations for a 6% rise.

Trade balance also came in shy of expectations, widening to $27.1 billion.

This compares with a 1% rise in exports and 0.3% fall in imports in May.

Export growth was expected to stay muted because of a weak global economic environment….”
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America’s Woes May Boost Corporate Cash Flows

“Corporate earnings are expected to be poor for the second quarter, perhaps the worst in three years, or the worst since the end of the recession. Each of these predictions has been made with conviction. However, the bottom line buffer for many companies may be ongoing layoffs or, at least, the unwillingness to add jobs.

While the economy added 195,000 jobs last month, the rate is nowhere near enough to replace jobs lost in the recession. Many targets for healthy unemployment put a signal of a full recovery at below 6%. Corporate job additions are not near a pace to bring the joblessness number down that far.

One of the most commonly used actions to keep labor costs down is to retain workers on a part-time basis. Bureau of Labor Statistics data for June showed that trend ongoing:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 322,000 to 8.2 million in June. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

Companies that absolutely must have workers for productivity can get them at below the market costs that existed before the recession. There is no end in sight for that practice. As a matter of fact, it seems to work very well….”

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Gapping Up and Down This Morning



Symb Last Change Chg %
GIMO.N 30.82 +3.62 +13.31
NRZ.N 6.78 +0.32 +4.95
DATA.N 62.86 +2.76 +4.59
SUNE.N 8.50 +0.37 +4.55
SSNI.N 25.61 +1.04 +4.23


Symb Last Change Chg %
EARN.N 15.34 -1.48 -8.80
WLH.N 22.24 -2.01 -8.29
AGI.N 12.01 -0.67 -5.28
TRMR.N 7.12 -0.38 -5.07
DMB.N 12.00 -0.64 -5.06



Symb Last Change Chg %
ORMP.OQ 9.35 +2.07 +28.43
AFOP.OQ 28.51 +4.01 +16.37
PBMD.OQ 2.58 +0.36 +16.22
CLDX.OQ 21.27 +2.62 +14.05
FFBH.OQ 9.79 +1.19 +13.84


Symb Last Change Chg %
MEAD.OQ 3.79 -0.51 -11.86
WRLD.OQ 78.20 -10.51 -11.85
HGSH.OQ 7.27 -0.86 -10.58
PNRG.OQ 38.20 -3.76 -8.96
USMD.OQ 22.89 -2.17 -8.66



Symb Last Change Chg %
FU.A 3.55 +0.11 +3.20
TXMD.A 2.62 +0.05 +1.95
REED.A 5.44 +0.09 +1.68
ORM.A 9.25 +0.14 +1.54
ALTV.A 9.50 +0.10 +1.06


Symb Last Change Chg %
OGEN.A 2.81 -0.19 -6.33
SAND.A 5.72 -0.25 -4.19
CTF.A 19.01 -0.39 -2.01
FCSC.A 6.00 -0.11 -1.80
NSPR.A 2.20 -0.04 -1.79

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$GS Sees 3% on the 10 Year Soon and 4% by 2016

“…we are revising up our 10-year yield forecasts for the US by 25bp across the forecast horizon out to end-2016. We now see yields entering 2014 at 2.75-3.00%, roughly in line with the forwards and our model estimates, and climbing to 4.00% by 2016 – above the forwards.  At this point, we are not making changes to forecasts for other markets relative to those published in the June issue of our Fixed Income Monthly. This implies wider yield differentials between the US and the European and Japanese bond markets. …”

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Heads Up on This Week’s Fed Speak

“The big show this week will be a speech on Wednesday from Fed Chair Ben Bernanke.

It’s titled: “The First 100 Years of the Federal Reserve: The Policy Record, Lessons Learned, and Prospects for the Future” and there’s going to be a Q&A.

So he could really talk about anything, including, perhaps, his own future (fingers crossed).

Fedspeak is always a market obsession, but lately that obsession has been turned to 11, given all of the concern about slowing the pace of QE, and how far we are from the first rate hike. Lately the “ZIRP4EVA” crowd has gone pretty silent, and markets are pricing in the possibility of a rate hike sometime in late 2014, in part due to shifts in the Fed’s language, and in part because the pace of job creation has accelerated. In recent months, the economy has been averaging nearly 200K jobs created, which is a nice step up from the approximately 150K pace from months’ previous.

So Bernanke’s speech on Wednesday will be watched ultra-closely.

What will he say?…”

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Egypt Experiences Violent Crashes Keeping Black Gold Near Highs

“(Reuters) – At least 42 people were killed on Monday when Islamist demonstrators enraged by the military overthrow of Egypt’s elected President Mohamed Mursi said the army opened fire during morning prayers at the Cairo barracks where he is being held.

But the military said “a terrorist group” tried to storm the Republican Guard compound and one army officer had been killed and 40 wounded. Soldiers returned fire when they were attacked by armed assailants, a military source said.

The emergency services said more than 320 were wounded in a sharp escalation of Egypt’s political crisis, and Mursi’s Muslim Brotherhood urged people to rise up against the army, which they accuse of a military coup to remove the elected leader.

At a hospital near the Rabaa Adawia mosque where Islamists have camped out since Mursi was toppled on Wednesday, rooms were crammed with people wounded in the violence, sheets were stained with blood and medics rushed to attend to the wounded.

As an immediate consequence, the ultra-conservative Islamist Nour party, which initially backed the military intervention, said it was withdrawing from stalled negotiations to form an interim government for the transition to fresh elections.

The military has said that the overthrow was not a coup, and it was enforcing the will of the people after millions took to the streets on June 30 to call for his resignation….”

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Quebec Rail Crash to Bring Scrutiny Over Oil Transport

“(Reuters) – The deadly train derailment in Quebec this weekend is set to bring intense scrutiny to the dramatic growth in North America of shipping crude oil by rail, a century-old practice unexpectedly revived by the surge in shale oil production.

At least five people were killed, and another 40 are missing, after a train carrying 73 tank cars of North Dakota crude rolled driverless down a hill into the heart of Lac-Megantic, Quebec, where it derailed and exploded, leveling the town center.

It was the latest and most deadly in a series of high-profile accidents involving crude oil shipments on North America’s rail network. Oil by rail – at least until now – has widely been expected to continue growing as shale oil output races ahead far faster than new pipelines can be built.

Hauling some 50,000 barrels of crude, the train was one of around 10 such shipments a month now crossing Maine, a route that allows oil producers in North Dakota to get cheaper domestic crude to coastal refiners. Across North America, oil by rail traffic has more than doubled since 2011; in Maine, such shipments were unheard of two years ago.

“The frequency of the number of incidents that have occurred raises legitimate questions that the industry and government need to look at,” said Jim Hall, managing partner of consultants Hall & Associates LLC, and a former chairman of the U.S. National Transportation Safety Board….”

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Rookie Pilot at the Helm of $BA Plane Crash in San Fran

“(Reuters) – The pilot of the crashed Asiana plane at San Francisco airport was still “in training” for theBoeing 777 when he attempted to land the aircraft under supervision on Saturday, the South Korean airline said.

Lee Kang-kuk, whose anglicized name was released for the first time on Monday and differed slightly from earlier usage, was the second most junior pilot of four on board the Asiana Airlines aircraft. He had 43 hours of experience flying the long-range jet, the airline said on Monday.

The plane’s crew tried to abort the descent less than two seconds before it hit a seawall on the landing approach to the airport, bounced along the tarmac and burst into flames.

It was Lee’s first attempt to land a 777 at San Francisco airport, although he had flown there 29 times previously on other types of aircraft, said South Korean transport ministry official Choi Seung-youn. Earlier, the ministry said he had accumulated almost 10,000 flying hours, including 43 at the controls of the 777….”

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S&P Boosts Price Growth by 11% Going Into Earnings Season

“The same equity analysts who lowered second-quarter profit growth predictions to almost nothing in 2013 are raising price forecasts, convinced the economy is growing fast enough to lure more investors and boost valuations.

Standard & Poor’s 500 Index earnings rose 1.8 percent last quarter, down from a projection of 8.7 percent six months ago, according to more than 11,000 analyst estimates compiled by Bloomberg. At the same time, share-price targets for companies from GameStop Corp. (GME)to Goldman Sachs Group Inc. are rising at the fastest rate in two years. The U.S. equity gauge will increase 8.9 percent to a record 1,777.91 should the forecasts prove accurate….”

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Morningstar Reports Credit Card Info Leak

“Investment-research firm Morningstar said personal information, including credit-card details, of about 2,300 users of its Morningstar Document Research service may have been compromised due to a security breach last year.

The incident on April 3, 2012 may also have led to the leakage of names, addresses, email addresses and passwords, the company said in a filing on Friday.

Morningstar Document Research, formerly 10-K Wizard, provides a global database and search tool for company filings.

An additional 182,000 clients who had email addresses and user-generated passwords on the system may also have been affected, Morningstar added…”

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$WFM Recalls Cheese Due to Listeria Breakout

Whole Foods is recalling Crave Brothers Les Freres cheese in response to an outbreak of a bacterial infection that has sickened people in several states and killed at least one person.

Whole Foods says the cheese may be contaminated with Listeria monocytogenes. It was sold in 30 states and Washington DC under names including Les Freres and Crave Brothers Les Freres. The cheese was cut and packaged in clear plastic wrap and sold with Whole Foods Market scale labels. The company is posting signs in its stores to inform customers about the recall.

Officials said cases have been identified in at least three states…”

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Thompson Reuters Will Stop Disseminating Information Early to Selected Clients

“Thomson Reuters said it would suspend its early provision to a small group of clients of the widely watched Thomson Reuters/University of Michigan consumer sentiment data at the request of the New York Attorney General.

The news and information company has an agreement with the University of Michigan to allow some of its clients to receive the data 2 seconds before its other clients.

But the arrangement is the subject of a review by the office of New York Attorney General Eric Schneiderman, Thomson Reuters said in a statement on Sunday.

The review follows a series of media reports about the early release of the twice-monthly data and a lawsuit by a former Thomson Reuters employee, who says he was fired for whistle-blowing activity.

Thomson Reuters did not disclose how much clients paid for the data or how much it payed the University of Michigan.

The New York Times said on Sunday that some clients paid more than $6,000 a month for the 2-second advantage….”

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Greece is Expected to Be Approved for a $10.4 Billion Aid Program

“Euro-area finance ministers will probably approve the latest disbursement of bailout aid toGreece when they meet in Brussels later today, a European Union official said.

Teams from the so-called troika that oversees euro-zone bailouts reached a staff-level agreement with the Greek authorities on the policies needed to ensure that the country’s aid program “is on track to reach its objectives,” the troika said in a statement.

The troika comprises the European Commission, the European Central Bank and the International Monetary Fund. The IMF’s Executive Board is also due to consider approving the Greek review this month, according to the statement.

Approval of the agreement at the meeting of euro-area finance ministers that begins at 3 p.m. in the Belgian capital would be a first step toward Greece, which has been unable to tap bond markets since 2010, receiving payments of 8.1 billion euros ($10.4 billion)….”

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European Markets Rally on Portugal Holding Coalition Together, Hopeful of a Brighter Future

European stocks rose, rebounding from their biggest decline in almost two weeks, amid speculation that economic data will improve and as Portugal’s politicians reached an agreement to hold the governing coalition together. U.S. index futures gained and Asian shares fell.

Novartis AG (NOVN) climbed 1.7 percent after saying a psoriasis treatment met all its objectives in a clinical study. Lloyds Banking Group Plc (LLOY) advanced 2.7 percent after a person with knowledge of the matter said a former Standard Chartered Plc executive may mount a bid for a stake in the U.K.’s biggest mortgage lender. Bovis Homes Group Plc jumped 4.6 percent as the company said that profit increased in the first half.

The Stoxx 600 increased 1.4 percent to 292.26 at 11:10 a.m. inLondon. Standard & Poor’s 500 Index futures added 0.6 percent after the equity benchmark rose 1 percent on July 5 after a better-than-forecast payrolls report. The MSCI Asia Pacific Index slid 1.5 percent today.

“The world looks rosy to investors again, after the U.S. market rallied on much better-than-expected employment numbers that investors finally seem to be interpreting as good news,” John Plassard, who helps oversee $28 billion as vice president at Mirabaud Securities LLP in Geneva, wrote. “We have reached a point where markets will reflect the real economy more.”

In Portugal, Prime Minister Pedro Passos Coelho proposed that Paulo Portas, leader of the junior party in the governing coalition, become vice premier. The appointment helps cement a deal to hold the coalition together. Portugal’s PSI 20 Index retreated 2.7 percent last week when Portas resigned after Coelho appointed a new finance minister.

Finance Ministers

Euro-area finance ministers meeting at 3 p.m. in Brussels will discuss Greece’s progress in meeting the conditions needed to obtain further aid from the International Monetary Fund,European Central Bank and European Commission. Greece’s Finance Minister, Yannis Stournaras, said the Greek government will probably reach a deal with international creditors before today’s Eurogroup meeting….”

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The Pound Sterling Hits an Eleven Week Low

“The pound approached an 11-week low against the euro amid speculation the Bank of Englandwill maintain stimulus measures that typically debase the currency.

Sterling was within one U.S. cent of the weakest in almost four months after U.K. policy makers led by Governor Mark Carney signaled last week they will keep interest rates at a record low for longer than investors anticipated. Britain’s currency slumped below $1.49 to the lowest in more than three months last week. U.K. government bonds were little changed. Economists predict a report tomorrow will will show industrial production expanded in May.

“The Bank of England want to keep a cautious outlook and that should keep the pound on the back foot,” said John Hardy, head of foreign-exchange strategy at Saxo Bank A/S in London. “If the data begins to turn the wrong way again you have a compelling case for more pound weakness.”

The U.K. currency fell less than 0.1 percent to 86.21 pence per euro at 12:01 p.m. London time after depreciating to 86.33 on July 4, the weakest level since April 17. Sterling traded at $1.4907 after dropping to $1.4858 on July 5, the lowest since March 12.

The U.K. recovery “remains weak” by historical standards and rising market borrowing costs pose a threat to the expansion, the central bank said in a statement after its July 3-4 meeting. The nine-member Monetary Policy Committee kept its benchmark interest rate at a record-low 0.5 percent and its asset-purchase target at 375 billion pounds.

Pound’s Decline

The pound has weakened 2 percent this year, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The dollar strengthened 7.9 percent and the euro gained 4.9 percent….”

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The Greenback Hits a 3 Year High Going Into Fed Speak

“The Dollar Index rose to a three-year high before Federal Reserve Chairman Ben S. Bernanke speaks this week amid speculation signs of U.S. economic growth will encourage the central bank to slow stimulus.

The dollar climbed to the strongest in five weeks versus the yen as the Fed prepares to release the minutes of its June meeting on Wednesday at which Bernanke said policy makers may begin slowing bond purchases. A U.S. report last week showed payrolls rose in June. Sweden’s krona weakened after a report showed a manufacturing slump in the economy deepened. The euro rose against most of its major counterparts amid optimism Greece will get the next aid payout…”

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The Aussie Dollar Hits a Three Year Low

“Australia’s dollar traded near its lowest in almost three years versus the greenback on speculation the Reserve Bank may cut interest rates as soon as next month.

The Aussie held a three-week drop before data this week forecast to show the job market stagnated in June. The South Pacific nation’s yield advantage over the U.S. is deteriorating as the Federal Reserve considers scaling back its quantitative easing program this year. New Zealand’s kiwi dollar rose after a report showed house prices gained last month.

“It’s inevitable that Aussie pushes lower,” said Robert Rennie, the chief currency strategist atWestpac Banking Corp. (WBC) in Sydney. “Lower rates are clearly required.”

The Australian dollar slid 0.2 percent to 90.51 U.S. cents as of 4:47 p.m. in Sydney from July 5. It reached 90.37 on July 3, the lowest since September 2010. New Zealand’s dollar climbed 0.2 percent to 77.24 U.S. cents, rebounding from a 1.6 percent slide on July 5.

The yield on Australia’s 10-year government bond rose eight basis points, or 0.08 percentage point, to 3.9 percent, after earlier touching 3.998 percent, the highest since June 24.

The top forecaster of the Australian dollar over the past year predicts a further slump, capping the worst annual loss since the 2008 global financial crisis. Canadian Imperial Bank of Commerce expects it to fall to 87 U.S. cents by Dec. 31, for a 16 percent decline this year. The median estimate of 53 economists surveyed by Bloomberg is 91 U.S. cents.

‘Good Thing’

The Aussie’s depreciation so far this year “does provide some support to manufacturers, and exporters in particular, and that’s a good thing,” Australian Treasurer Chris Bowen said in an interview broadcast by Sky News yesterday. It’s dropped 13 percent this year. “The terms of trade have fallen since the budget. Against that, the Australian dollar has come down, so there’s a countervailing impact.”…”

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China Stocks Melt Down the Most in Two Weeks

Chinese stocks dropped the most in two weeks as indexes tracking energy, materials and industrial companies sank to the lowest levels since November 2008.

China Shenhua Energy Co., the nation’s biggest coal producer, slipped 3.6 percent, taking its loss this year to 38 percent. Yunnan Tin Co. plunged 8.7 percent after saying its chairman is under investigation. Zijin Mining Group Co. (601899), China’s largest gold producer, declined for the first time in six days after saying first-half profit probably decreased. Goldman Sachs Group Inc. cut its earnings forecasts for Chinese mining companies, citing lower metal prices and sales.

The Shanghai Composite Index (SHCOMP) fell 2.4 percent to 1,958.27 at the close, after climbing 1.4 percent last week. The CSI 300 Index slid 2.8 percent to 2,163.62. The Hang Seng China Enterprises Index (HSCEI) retreated 1.1 percent in Hong Kong. The ChiNext index of smaller companies lost 2.5 percent.

“There’s a lack of confidence in the economy,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. “There’s also concern about possible capital outflows. There’s nothing positive for stocks.”

U.S. employers added more workers than economists expected in June, data July 5 showed, stoking expectations the Fed will be able to taper asset purchases that prompted capital flows into emerging markets.

China’s State Council, headed by Premier Li Keqiang, pledged last week to improve the effectiveness of financial support for the economy after a cash crunch. Misallocation of capital is hampering the restructuring of the economy and the financial sector must play a better role in helping the overhaul, the cabinet said July 5 after equity markets closed. The State Council said it will maintain its “prudent” monetary-policy stance while ensuring a reasonable supply of money and credit.

Inflation Data…”

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S&P Cuts Softbank to Junk Status

SoftBank Corp. (9984), led by billionaire Masayoshi Son, had its credit rating cut to junk by Standard & Poor’s after winning approval from the Federal Communications Commission for its $21.6 billion bid to buy Sprint Nextel Corp. (S)

The rating was cut to BB+, the highest non-investment grade, from BBB, with a stable outlook, S&P said in a statement today. The FCC announced July 5 that the deal is in the public’s interest, giving Son a position in the U.S. market…..”

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