Joined Nov 11, 2007
31,929 Blog Posts
Fed Has No Change in Bond Purchase Program, Economy Expanding at a Moderate Pace
No taper comments by the fed, unemployment rate remains slightly elevated, downside risks have diminished, 2 members decent to current policy with Bullard saying the Fed is not paying enough attention to inflation risks…
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A Preview to the Most Important Fed Speak in Quite a While
“The whole world has been anxiously waiting for this moment.
The Federal Reserve will wrap up its 2-day Federal Open Market Committee (FOMC) meeting today.
At 2:00 PM ET, it will publish its FOMC statement as well as an update to its economic forecasts.
Then at 2:30 PM ET, Fed Chairman Ben Bernanke will hold a press conference, which will include a Q&A with economics reporters.
Expectations
Economists expect the Fed to announce no change in its benchmark interest rate target, which is currently at 0% to 0.25%. Furthermore, they expect no change in its quantitative easing (QE) program, which consists of the Fed buying $85 billion worth of bonds each month to keep interest rates low.
However, there is little agreement on when the Fed will begin to scale back its easy monetary policy.
Recently, there has been tons of speculation…”
Comments »Rosenberg: The End All Chart to Predicting Recession
“….If there is one metric that has worked so well over time it is household assessments of the labour market — the consumer sector tends to get it right. Specifically, the University of Michigan survey component that measures consumer expectations on expected changes in unemployment rate. As the chart clearly illustrates, recessions start when this metric slips below 65 without fail…..”
Comments »Bond Market Suffers a Huge Sell-Off Into Fed Speak
“All eyes are on the release of the Federal Reserve’s monetary policy statement from its latest FOMC meeting at 2 PM ET and Fed Chairman Ben Bernanke’s subsequent press conference and Q&A, which begins at 2:30.
Stocks are flat and trading sideways today, heading into the big event this afternoon.
However, the bond market is selling off…”
Comments »Oil Traders Confirm Price Fixing
“The process for setting benchmark oil prices has never been particularly transparent, depending as it does on self-reporting by traders of offer and sale prices to energy pricing agencies like Platts, a division of McGraw Hill Financial Inc. (NYSE: MHFI). Platts, which depends on the truthfulness of traders, then
A report in today’s Wall Street Journal indicates that it ought to be fairly easy for the European Commission (EC) to substantiate charges of price fixing in the world’s oil markets. Last month the EC raided the offices of Royal Dutch Shell PLC (NYSE: RDS-A), BP PLC (NYSE: BP), Statoil ASA (NYSE: STO) and Platts to collect information on the charges. Italian oil major Eni SpA (NYSE: E) was also asked to provide information, but was not included in the raids.
One trader told the WSJ how the fiddling works. He offers to sell a small quantity of oil at a loss, driving down the price that he reports to the pricing agency. Once the lower benchmark price is published, he then buys larger quantities at the lower price.
Traders do not believe the practice is illegal…”
Comments »Gapping Up and Down This Morning
Upgrades and Downgrades This Morning
Upgrades – ADBE, CX, GEVO, ING, KERX, NBIX, SONC, SPN, SKT, TEVA, UNFI, KO,
Downgrades – AEO, BBRY, CENX, CLF, KLAC, NVO, S, TTEK,
Comments »In Play and On the Wires
Chrysler to Recall 2.7 Million Jeeps
“After a public disagreement that threatened to blow up into a larger battle, Chrysler said Tuesday that it agreed to recall 2.7 million Jeep vehicles that a government safety watchdog said could potentially erupt into fire if rear-ended.
Chrysler had been expected to file papers Tuesday refusing to comply with a National Highway Traffic Safety Administration’s voluntary recall request sent earlier this month. That request covered Jeep Grand Cherokees in model years 1993 to 2004 and Libertys in model years 2002 to 2007.
NHTSA had warned after investigations that a crash from behind on these vehicles could puncture the fuel tank, located in the rear of the models, spill fuel and potentially cause a fire. NHTSA said the defect may have been responsible for up to 51 deaths.
Chrysler had disagreed with NHTSA’s assessment.
“As a result of the agreement, Chrysler Group will conduct a voluntary campaign with respect to the vehicles in question that, in addition to a visual inspection of the vehicle will, if necessary, provide an upgrade to the rear structure of the vehicle to better manage crash forces in low-speed impacts,” Chrysler said in a statement…”
Comments »Softbank Likely to Capitalize as $DISH Fails to Up Bid for $S
“TOKYO/NEW YORK (Reuters) – Japan’s SoftBank Corp cleared a major hurdle in its attempt to buy U.S. wireless provider Sprint Nextel Corp, as rival bidder Dish Network Corp declined to make a new offer after SoftBank sweetened its own bid last week.
SoftBank Chief Executive Masayoshi Son is now a step closer to sealing the largest overseas acquisition by a Japanese company in history, after winning support from a key shareholder by raising SoftBank’s offer to $21.6 billion from $20.1 billion last week.
Son, a rare risk-taker in a cautious Japanese corporate environment, has been determined to thwart a rival bid from Dish – led by Chairman Charlie Ergen, known for aggressive takeover attempts – in an effort to break into the U.S. market.
“We look forward to receiving the FCC (Federal Communications Commission) and shareholder approvals which will allow us to close in early July and begin the hard work of building the new Sprint into a meaningful 3rd competitor in the US market,” Softbank said in a statement.
SoftBank, one of Japan’s top mobile operators, has promised that Sprint would be able to save money on equipment such as smartphones by getting bulk-buy discounts from vendors. It can also lend its expertise in wireless technology, an area in which Son has said Dish’s Ergen has no experience.
“The advantage of SoftBank is really about the synergy between the two firms … in terms of distribution, branding and retailing,” said Hiroshi Yamashina, a senior telecommunications analyst at BNP Paribas in Tokyo.
Dish’s promise was additional wireless spectrum that it has bought in recent years as well as the opportunity to expand its video services to cellphone users.
Shares of SoftBank rose 4.2 percent in Tokyo, outpacing a 1.8 percent rise in the benchmark Nikkei average.
CLEARWIRE BATTLE…”
Comments »$ADBE Beats Expectations
“Adobe Systems Inc. (ADBE) reported second quarter 2013 earnings of 24 cents per share, beating the Zacks Consensus Estimate of 21 cents. Adjusted earnings per share exclude one-time items but include stock-based compensation expense. Following the earnings release, share price rose 5.21% in after-hours trading.
Revenues
Adobe’s total revenue was $1.011 billion, up 0.3% sequentiallybut down 10.1% year over year. Reported revenues were within management’s guided range of $975.0 million to $1.025 billion. The sequential increase was attributable to increased adoption of Adobe’s Creative Cloud.
Products generated 64.0% of Adobe’s revenues but were down 26.0% year over year. Subscription comprised 25.0% of total revenue, up 59.6% year over year while Services & Support brought in the balance, increasing 18.3% year over year….”
Comments »$FDX Misses on Estimates and Guides Below Expectations
“FedEx Corp., the world’s largest cargo airline, forecast full-year earnings below analysts’ estimates amid tepid economic growth and customers’ preference for less costly international shipping services.
Earnings per share for fiscal 2014 will rise as much as 13 percent to $7.04, Memphis, Tennessee-based FedEx said today in a statement. Analysts projected $7.28 a share, the average of estimates compiled by Bloomberg.
FedEx is seen as an economic bellwether because of the variety of goods it ships worldwide. The company is parking older planes sooner than planned and cutting capacity to Asia to help trim $1.7 billion in costs as customers opt for cheaper deliveries. About 3,600 workers will leave the company under a voluntary buyout program, FedEx said today….”
Comments »$ALU To Sell $1.3 Billion in Assets
“Alcatel-Lucent SA (ALU) Chief Executive Officer Michel Combes plans to sell at least 1 billion euros ($1.3 billion) of assets and reduce costs by another 1 billion euros to stem losses and focus on businesses including ultra-high speed Internet.
Shares jumped as much as 5.6 percent after Combes said that the time the plan is fully executed in 2015, the company will have positive free cash flow and be more tightly focused on its most remunerative areas after cutting out legacy operations.
“It’s a strategic turning point for the company,” he said during a conference call. “For the first time, it’s making strong industrial choices.”
Combes, who took over almost three months ago after predecessor Ben Verwaayen’s asset sales and firings failed to achieve a turnaround, wants to execute his plan by 2015 to keep the French network equipment vendor’s cash from further dwindling after seven consecutive years of decrease. Alcatel then will look to cut its debt by 2 billion euros by selling shares on the stock market or through further asset sales, the Paris-based group said in a statement.
Alcatel-Lucent shares were up 5.2 percent at 1.49 euros at 9:04 a.m. in Paris, more than double what they were worth when they hit a 23-year low in October.
Narrowing Business…”
Comments »The Aussie Dollar Continues Scrape the Bottom of the Barrel
“The Australian dollar remained lower following a three-day loss against the greenback before theFederal Reserve concludes a policy meeting today.
The Aussie fell to the lowest in almost a week ahead of a news conference by Fed ChairmanBen S. Bernanke that could provide clues on when policy makers will begin scaling back quantitative easing that tends to debase the U.S. currency. New Zealand’s kiwi dollar advanced after data showing a narrowing in the nation’s current-account deficit and the first gain in whole-milk powder prices in two months.
“I think the message is very much nervous, choppy price action going into Bernanke,” saidRobert Rennie, a Sydney-based chief currency strategist at Westpac Banking Corp. (WBC)“Aussie hasn’t traded well. I do think though, that we’re showing some signs of building a base in this 94, 94.50 U.S.-cent region.”
The Australian dollar was little changed at 94.84 U.S. cents as of 4:42 p.m. in Sydney from yesterday, when it dropped 0.6 percent. It earlier touched 94.35, the lowest since June 13. The kiwi rose 0.2 percent to 80.03 U.S. cents, following a 1.6 percent slide over the previous three sessions….”
Comments »Black Gold Hits Nine Month Highs
“West Texas Intermediate crude rose to a nine-month high after an industry report showed U.S. inventories dropped last week.
Futures rose as much as 0.6 percent. Crude stockpiles fell by 4.3 million barrels in the week ended June 14, the American Petroleum Institute said. An Energy Information Administration report today may show supplies shrank by 500,000 barrels, according to a Bloomberg News survey. Russian President Vladimir Putin agreed to sign a statement at the Group of Eight summit calling for a “transitional government” in Syria. The U.S. Federal Reserve will release a statement and economic forecasts when its meeting ends today.
“The API offered a little more support,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in an e-mail today. “Geopolitical concerns are also supportive. The long-running conflict in Syria has little fundamental market impact, but it is fears for a spillover to neighboring oil producers that will see jittery Brent trading this summer.”
WTI for July delivery, which expires tomorrow, rose as much as 57 cents to $99.01 a barrel, the highest intraday price since Sept. 17. Futures were at $98.63 in electronic trading on theNew York Mercantile Exchange as of 12:56 p.m. London time. The volume of all futures traded was 40 percent above the 100-day average. Prices climbed 67 cents to $98.44 yesterday. The more-active August contract gained 7 cents to $98.74.
Brent for August settlement increased 36 cents to $106.38 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $7.54 to WTI. It was $7.35 yesterday, the narrowest based on closing prices since January 2011.
Gasoline Supplies…”
Comments »The Greenback Falls Before Fed Speak
“The dollar fell against the majority of its most-traded peers amid bets Federal Reserve Chairman Ben S. Bernanke will signal the central bank plans to maintain bond purchases that risk debasing the currency.
Europe’s 17-nation currency traded at almost its highest level against the dollar since February and the yen rallied before the U.S. central bank also releases revised economic forecasts. Sweden’s krona rose to a two-month high versus the dollar after the jobless rate unexpectedly fell in May and a government research institute said the central bank won’t cut its main lending rate further.
“The market is expecting Bernanke to express some discomfort with the rise in long-term interest rates and is probably looking for something relatively dovish from the press conference,” said Adam Cole, head of Group-of-10 currency strategy at Royal Bank of Canada in London. “The market is setting itself up for the big event of the day. In the long-run, I expect the yen to strengthen versus the dollar.”
The dollar fell 0.3 percent to 95.08 yen at 7:57 a.m. in New Yorkafter weakening 1.1 percent in the previous two days. Japan’s currency rose 0.2 percent to 127.39 per euro. The euro was little changed at $1.3399 after appreciating to $1.3416 yesterday, the highest since Feb. 13.
Fed News….”
Comments »Abenomics Helps Japan’s Exports to Beat Estimates
“Japan’s exports rose more than forecast in May as a weaker yen boosted the value of overseas sales, underscoring the profit boon for manufacturers from Prime Minister Shinzo Abe’s reflation campaign.
The value of shipments abroad increased 10 percent in May from a year earlier, the most since 2010 and exceeding the 6.4 percent median estimate in a Bloomberg News survey of economists, a Finance Ministry report showed in Tokyo. At the same time, export volumedropped 4.8 percent.
Today’s data reflect an almost 12 percent slide in the yen against the dollar in the past six months that stoked criticism from trade partners including South Korea that Japan’s monetary stimulus is distorting commerce. The key for Abe is that exporters from Nintendo Co. (7974) to Mazda Motor Corp. (7261) use profit gains to boost wages and investment at home.
“The yen’s exchange rate, even though it has been adjusted a bit recently, is still weaker than last year’s level and giving a lot of impetus for Japan’s export drive,” said Long Hanhua Wang, an economist at Royal Bank of Scotland Group Plc in Tokyo. “The volume of exports is still unimpressive as the economic growth of China is stagnating and Europe’s expansion remains weak.”
The nation’s 11th straight monthly trade deficit was 993.9 billion yen ($10.4 billion) as imports gained 10 percent, today’s report showed. The shortfall was the third largest on record, and the largest ever in May. The yen’s decline boosted the costs of imports, while nuclear-plant shutdowns added to energy demand…..”
Comments »Global Markets Trade Down While U.S. Futures are Flat Waiting on Clam Testimony
A Duo of Doom Outline Risks at the Fed
” “Be sure your seatbelt is fastened, because nothing has really come to rest. We have entered the New Abnormal, a period in which every market assumption must be questioned and the wise investor is prepared to be surprised.”
And that’s how famed economist Nouriel Roubini and Ian Bremmer, the president of Eurasia Group, launch into an eight-screenInstitutional Investor assault on all that’s going wrong with the global economy right now and on how new crises are most certainly headed our way.
Calling it the G-Zero world — referring to a leadership void where it’s every nation for itself — the two pepper the essay with warnings about China growth, another Europe meltdown or turmoil in the Middle East, a region they definitely see as not OK. Oh, and forget about the BRICS bailing out global growth.
Fast-fowarding past all that, central banks, mostly the Fed, get the last salvo from the doomsday duo, who devote several paragraphs largely to how that easy money policy is going to land us all in trouble. What markets and economist are hoping for as that two-day Fed meeting kicks off Tuesday is a slow and steady easy out of QE. That’ll fix everything, right? Wrong; …”
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