Month: August 2014

The fourth (or is it fifth?) dead cat bounce in the US housing market is rapidly fading, as we just confirmed by the latest Case-Shiller Home Price Index data for the month of June, which saw a Y/Y increase in home prices of just 8.07%, below the 8.3% expected, and the slowest increase since December 2012. As the report noted, “for the first time since February 2008, all cities showed lower annual rates than the previous month.” On a monthly basis, the NSA index, Case-Shiller’s preferred, rose by 1.0% for the 10 and 20-City composite, with the Seasonally Adjusted composite declining for the second consecutive month: the last time there were two consecutive monthly declines during a price declining phase was in late 2010.

But while the housing index may be declining at the national level, some regional markets continue to stand out on the upside, likely attracting offshore laundered money by Chinese, Russian, European and Arab “investors” – broken down by cities, New York led the cities with a return of 1.6% and recorded its largest increase since June 2013. Chicago, Detroit and Las Vegas followed at +1.4%. Las Vegas posted its  largest monthly gain since last summer.

On the other hand, all 20 tracked cities saw their year-over-year rates weaken in June. For the second consecutive month, San Francisco saw its rate decelerate by almost three percentage points – from 18.4% in April to 12.9% in June. Phoenix showed its smallest year-over-year gain of 6.9% since March 2012. Cleveland showed a marginal increase of 0.8% over the last 12 months while Las Vegas led with a gain of 15.2%.

Finally, on a seasonally adjusted basis, for those who care about such things, 13 out of 20 cities posted a sequential decline.

And the commentary from the report:

“Home price gains continue to ease as they have since last fall,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “For the first time since February 2008, all cities showed lower annual rates than the previous month. Other housing indicators – starts, existing home sales and builders’ sentiment – are positive. Taken together, these point to a more normal housing sector.

 

“The monthly National Index rose 0.9% in June. While all 20 cities saw higher home prices over the last 12 months, all experienced slower gains. In San Francisco, the pace of price increases halved since late last summer. The Sun Belt cities – Las Vegas, Phoenix, Miami and Tampa – all remain a third or more below their peak prices set almost a decade ago.

 

“Bargain basement mortgage rates won’t continue forever; recent improvements in the labor markets and comments from Fed chair Janet Yellen and others hint that interest rates could rise as soon as the first quarter of 2015. Rising mortgage rates won’t send housing into a tailspin, but will further dampen price gains.”

Which, perhaps, is another reason why despite all the rhetoric, rates simply won’t rise.

via Zero Hedge http://ift.tt/1lbI7vQ Tyler Durden

When two of the richest presidents in the world currently met this morning in Minsk, the tensions was palpable. As Poroshenko (net worth ~$1.3 bn) and Putin (~$440bn) prepared for talks, the threats, promises, and hopes were everywhere…

• *POROSHENKO SAYS ‘OPTIMISTIC’ ABOUT TODAY’S MEETINGS IN MINSK, INTERESTED IN EU, CUSTOMS UNION AGREEMENTS

But Vladimir Putin – having reminded everyone that Russian capital represents 32% of the Ukraine banking system (threat or statement?) warned any EU association pact may force Russia to scrap trade preferences.

 

The handshake…

 

As AP reports,

The presidents of Russia and Ukraine sat down for talks Tuesday, meeting face-to-face for the first time since June on the fighting that has engulfed Ukraine’s separatist east.

 

Russia’s Vladimir Putin and Ukraine’s Petro Poroshenko were joined by the presidents of Belarus and Kazakhstan and three senior officials from the European Union in the Belarusian capital of Minsk.

 

“The fate of my country and Europe is being decided here in Minsk today. The interests of Donbass (eastern Ukraine) have been and will be taken into account,” Poroshenko said Tuesday as the talks began.

The hope…

• *POROSHENKO SAYS `OPTIMISTIC’ ABOUT TODAY’S MEETINGS IN MINSK
• *POROSHENKO SAYS INTERESTS OF DONBAS MUST AND WILL BE RESPECTED
• *POROSHENKO SAYS UKRAINE READY TO RESOLVE ALL TRADE ISSUES
• *POROSHENKO: UKRAINE INTERESTED IN EU, CUSTOMS UNION AGREEMENTS
• *POROSHENKO: EU TRADE PACT COMPATIBLE WITH CUSTOMS UNION RULES
• *POROSHENKO: OPEN TO TALKS ON EXIT OPTIONS FOR SIDES TO CONFLICT

As ITAR-TASS reports,

The Ukrainian economy’s transition to EU standards will cost it €165 billion over ten years while Russia may lose up to €100 billion ($2.7 billion) from its economy’s forced readjustment, President Vladimir Putin said on Tuesday.

 

“The refusal to use technical norms common in the CIS countries and adaptation to EU standards will cost Ukraine €165 billion within 10 years,” Putin said at a meeting of the leaders of the Customs Union member states and the Ukrainian president.

 

The economies of Russia, Belarus and Kazakhstan that form the Customs Union will also be affected, Putin said.

 

“In the most modest estimates, damage to the Russian economy alone may total 100 billion rubles. Entire sectors of our industry and agribusiness will be affected with all ensuing consequences for economic growth rates and employment,” Putin said.

 

“Losses will also be sustained by Belarus and Kazakhstan,” Putin said.

 

Russia will have to cancel preferences for Ukrainian imports as a measure to protect its market and introduce the standard trade regime in the conditions of Ukraine’s agreement on association with the EU, President Vladimir Putin said on Tuesday.

 

“In full compliance with the provisions of the CIS Free Trade Agreement and WTO norms we will have to cancel preferences for imports from Ukraine,” Putin said.

 

“I’d like to say that we are not going to discriminate against anybody, we won’t do this,” the Russian president said.

 

“We will just have to introduce the standard trade regime for Ukraine; the same that is applied also between Russia and the EU,” he added.

The threats…

• *PUTIN SAYS MILITARY ESCALATION WON’T SOLVE UKRAINIAN CONFLICT
• *PUTIN SEES COST OF EU PACT AT BILLIONS OF EUROS FOR UKRAINE
• *PUTIN SEES NO UKRAINE RESOLUTION WITHOUT TALKS WITH EAST ENVOYS
• *PUTIN: UKRAINE’S EU PACT MAY PROMPT RUSSIA TO DEFEND ITS MARKET
• *PUTIN: RUSSIAN CAPITAL MAKES UP 32% OF UKRAINE’S BANKING SYSTEM
• *PUTIN: UKRAINE CLOSELY INTEGRATED INTO EX-SOVIET ECONOMIC SPACE

*  *  *

Doesn’t exactly sound de-escalation-y to us?

via Zero Hedge http://ift.tt/1svbgAQ Tyler Durden

The headline print of a record-breaking 22.6% gain – smashing the 8.0% expectation – hides the extremely obvious factor of the largest civilian aircraft orders (an entirely one-off non-repeatable factor). Durables ex Transportation collapsed from a 3% gain to a 0.8% drop – the biggest drop in 2014, missing expectations by the most in 8 months. Perhaps even more concerning, non-defense ex-aircraft new orders dropped 0.5% (missing expectations of a 0.2% gain).

 

One-off…

 

Boeing orders from UK air show lead to nondef aircraft orders increased 318%

Transportation Equipment orders in July were $133 billion, up from $76.3 billion in June; driven by Nondefense aircraft and parts new orders at $70.3 billion, up from $16.9 billion

Here is a chart of what happens as everyone scrambles to order Boeing jets ahead of what may be the upcoming “expiration” of the ExIm bank: nothing short of an outlier print for transportations nondefense aircraft and parts new orders:

 

Reality is much less pretty, with the 0.8% drop in ex-transports the largest of 2014.

 

via Zero Hedge http://ift.tt/1pC8VFP Tyler Durden

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The Status Quo is dysfunctional because its model of how the world works is broken.
 

But all these discussions of our dysfunctional politics ignore the larger truth, which is the entire model of the Status Quo is broken. Even if reformers succeeded in ridding the political system of cronyism and favors-for-campaign-contributions–two essentially impossible reforms, given the legalistic cover provided for cronyism and bought and paid for representatives, the basic model of "how the world works" that dominates the world-view of leaders across the political spectrum would remain broken.

 

The Status Quo is dysfunctional because its model of how the world works is broken. It won't matter if gridlock remains in place or one of the parties gets to impose its "brand" of policy-tweaks; since no one on the political spectrum has any concept that the current model described in these 12 points is broken, fixing the political dysfunction won't fix the systemic dysfunction.

via Zero Hedge http://ift.tt/1vKrHvs Tyler Durden

Moments ago, Russian president Vladimir Putin arrived in Minsk, Belarus where upon the initiative of Belarusian President Alexander Lukashenko a summit between the Customs Union (Russia, Belarus and Kazakhstan) and Ukraine will be held on Tuesday. As Interfax adds, the meeting will also be attended by three European commissioners – EU High Representative for Foreign Affairs and Security Policy Catherine Ashton, Trade Commissioner Karel De Gucht and European Commission Vice President, Energy Commissioner Gunther Oettinger.

Amusingly, Putin’s arrival did not proceed without incident…

Putin is running late, and the Ukrainian delegation is annoyed that he keeps everyone waiting.

— Nataliya Vasilyeva (@NatVasilyevaAP) August 26, 2014

This will be second meeting in the past three months between Putin and Ukrainian President Petro Poroshenko organized with the mediation of a president a third country. However, official confirmation that a separate meeting between Putin and Poroshenko will take place does not yet exist.

As noted earlier, the main reason for the recent ramp in futures is because someone activated the de-escalation algo sending futs promptly from overnight lows to highs, on hopes there will be some resolution of Ukraine’s proxy civil war, and maybe a detente between Russia and Europe, where the latter is now on the verge of a triple-dip recession due to “costs” against Russia.

And yet, a potential complication may arise following the release of a video just hours before the meeting which allegedly shows Russian soldiers who were captured on Ukraine territory on Tuesday, “sharply escalating a dispute over Moscow’s alleged backing for separatist rebels in the east of the former Soviet republic” according to Reuters. Alas, that’s not what the de-escalation algo thinks which is currenly buying up everything in sight, now that Ukraine has cried invading wolf one too many times.

As Reuters reports, a Moscow military source told Russian news agencies that a group of soldiers had surrendered to Ukrainian forces after crossing the border by accident. Needless to say, Ukraine didn’t buy it: “This wasn’t a mistake, but a special mission they were carrying out,” military spokesman Andriy Lysenko said in a televised briefing.

He also said separatists were attacking the southeastern border town of Novoazovsk “at this very minute” and Ukrainian forces had destroyed 12 armoured infantry vehicles in the area.

Reuters further notes that Russia has always denied assertions by Ukraine, backed by the United States and the European Union, that it has been sending arms and troops across the border to support the pro-Moscow separatists. “Tuesday’s video provided the strongest evidence yet to back up Kiev’s claims of direct Russian military involvement, which Moscow has always disputed. It came a day after Ukraine’s state security service said it had detained 10 Russian paratroopers who had crossed the border in a column of several dozen armed infantry vehicles.”

In footage posted on the official Facebook page of the Ukrainian government’s “anti-terrorist operation”, the men were shown dressed in camouflage fatigues. One of them, who identified himself as Ivan Milchakov, listed his personal details, including the name of his paratroop regiment, which he said was based in the Russian town of Kostroma.

 

“I did not see where we crossed the border. They just told us we were going on a 70 km (45-mile) march over three days,” he said. “Everything is different here, not like they show it on television. We’ve come as cannon fodder,” he said in the video. Another man in the footage, who gave his name as Sergeant Andrei Generalov, said: “Stop sending in our boys. Why? This is not our war.”

 

Russian news agencies quoted a defence ministry source as confirming that Russian servicemen had crossed into Ukraine but saying they did so inadvertently.

 

“The soldiers really did participate in a patrol of a section of the Russian-Ukrainian border, crossed it by accident on an unmarked section, and as far as we understand showed no resistance to the armed forces of Ukraine when they were detained,” the source said.

So, accidental invasion (into what is technically the Donetsk Republic) then? Judging by the market’s reaction it is merely confirmation of more pent-up de-invasions.

Full clip below:

via Zero Hedge http://ift.tt/1vKrGYa Tyler Durden

• That will teach the UAE who’s boss: U.S. Won’t Consult Syria on Militant Strikes: White House (BBG)
• Putin Set to Meet Poroshenko as Ukraine Tensions Escalate (BBG)… but the de-escalation algo?
• Tim Hortons’ Canadian Fans Squeamish of American Hookup (BBG)
• Israeli air strikes target more Gaza high-rises (Reuters)
• How Steve Ballmer Became a Rookie Basketball Mogul (WSJ)
• Buffett to Help Finance Burger King Tax-Saving Deal (BBG)
• U.S. Factories Keep Losing Ground to Global Rivals (WSJ)
• Boehner, Camp Profit From Corporate Bid to Avoid U.S. Tax (BBG)
• Experimental U.S. hypersonic weapon destroyed seconds after launch (Reuters)
• The Neo-Neocons (WSJ)
• China Said to Consider $16 Billion EV-Charging Fund (BBG)
• California wine country quake losses seen in the billions (Reuters)
• Automotive Customer Satisfaction Dips for Second Straight Year (WSJ)
• Soros-Backed Insurer Tops Paulson Bets as U.S. Rules Loom (BBG)
• Ackman Gains 30% With Burger King, Herbalife Wagers (BBG)

 

Overnight Media Digest

WSJ

* Berkshire Hathaway Inc chairman and CEO Warren Buffett is helping finance Burger King Worldwide Inc’s takeover of Canadian coffee-and-doughnut chain Tim Hortons Inc , according to people familiar with the matter, in a surprise twist that thrusts the billionaire into a debate over U.S. taxes. (http://on.wsj.com/1vIpQae)

* The Pentagon is preparing to send surveillance aircraft, including drones, into Syrian airspace to gather intelligence on Islamist targets, laying the groundwork for a possible expansion of the limited U.S. military air campaign beyond Iraq.(http://on.wsj.com/VLdxNW)

* America’s shale boom has raised hopes of a revival in U.S. manufacturing, in part fueled by cheaper energy. But U.S. factories still are losing ground to rivals in Asia and Europe. (http://on.wsj.com/1zvGfzk)

* Amazon.com Inc said on Monday that it has agreed to buy live-streaming gaming network Twitch Interactive Inc for about $970 million in cash.(http://on.wsj.com/1lsYepk)

* A federal judge ruled against a new law in Hawaii curbing genetically modified crops, handing a victory to seed and chemical companies in a battle over modern agricultural techniques. (http://on.wsj.com/YVUcvp)

* Amid the strongest market for commercial trucks in eight years, U.S. sales of natural-gas powered haulers are just inching ahead, slowed by premium prices, limited infrastructure and more efficient diesels. (http://on.wsj.com/1wuwYLv)

* Some of the largest financial institutions in the US say Lehman Brothers Holdings Inc needs to set aside $12.14 billion to settle claims over certain soured mortgage loans, more than double what the failed investment bank has currently set aside for the dispute. (http://on.wsj.com/1mKRnCB)

* A group of hedge funds that hold 1.3 billion euros ($1.72 billion) of Argentine government bonds has filed a suit against Bank of New York Mellon seeking to gain access to interest payments they are owed. (http://on.wsj.com/1tDN5SG)

 

FT

Amidst an escalating standoff with Russia, Petro Poroshenko, Ukraine’s pro-western president, called for snap parliamentary elections on Monday.

French President Francois Hollande on Monday evicted his Socialist government of leftwingers opposed to EU austerity.

The UK head of accounting firm Deloitte has warned that political uncertainty surrounding the general election in the United Kingdom next year is at the top of the corporate agenda.

Shares of fast-food chains Burger King and Tim Hortons rose on Monday after the companies revealed they were working on a potential merger that would result in tax savings for both companies.

Lufthansa has asked the German pilots’ union VC to return to talks after the breakdown of pay discussions sparked fears of another costly strike.

Cyber security firm is in talks with banks and major financial services companies to create an alternative to Bloomberg instant messaging.

 

NYT

* Amazon.com Inc said it would buy Twitch, the most popular website for watching people play games for $1 billion. To win in its bid for Twitch, Amazon had to outmaneuver a who’s who of the tech world, including Google Inc, strongly suggesting that these companies think the era of video-game viewing is just starting. (http://nyti.ms/1t7O53I)

* The long fight over Hewlett-Packard Co’s $11.1 billion purchase of Autonomy got a new wrinkle on Monday, which might spell more legal pressure on Autonomy executives. On Monday, Judge Charles Breyer of United States District Court in San Francisco said that HP and the lawyers suing the company must file a revised proposed settlement agreement. (http://nyti.ms/1p6dLG2)

* A group of hedge funds, including George Soros’s Quantum Partners and Kyle Bass’s Hayman Capital, is seeking a 226 million euro ($298.4) interest payment on Argentine bonds from Bank of New York Mellon that was blocked by a United States judge last month. (http://nyti.ms/1APjBEE)

* Ann Inc, the parent company of the Ann Taylor stores, is being pressed to explore options, including a sale by the activist investor Engine Capital and the hedge fund Red Alder. In a letter made public on Monday, Engine Capital and Red Alder said they believed that the company could be worth $50 to $55 a share to an acquirer, or a 33 to 46.5 percent premium to its stock price as of Friday.(http://nyti.ms/1BX8kmZ)

* A cashless society is still a long way off, but automated machines that turn traditional money into virtual currency are cropping up across the globe. The trend has come to New York – Flat 128, a retailer that sells British jewelry and accessories in the West Village, is home to the first such machine in Manhattan and is becoming a destination for Bitcoin enthusiasts. Yet this new Bitcoin ATM is only a means for users to deposit cash and convert it to Bitcoins for their accounts; it does not offer cash withdrawals. (http://nyti.ms/1t81YP6)

* DraftKings, a fantasy sports site, is expected to announce that it has raised $41 million in a new round of financing. The investment was led by the Raine Group, a merchant bank that specializes in media and technology deals, and included three existing investors Redpoint Ventures, GGV Capital and Atlas Venture. (http://nyti.ms/1pb2ydm)

* Governor Jerry Brown of California on Monday signed into law a measure that requires smartphones sold in California to include smarter antitheft technology, a feature that lawmakers hope will help reduce phone theft. The bill, introduced by State Senator Mark Leno and sponsored by George Gascon, San Francisco’s district attorney, requires a so-called “kill switch”, which would render a smartphone useless after it was stolen, to be included on all smartphones sold in California starting in July 2015. (nyti.ms/1t7Z0KK)

* Thousands of hours of television programming are becoming available to rerun on digital networks and cable channels after new residual agreements between studios and Hollywood’s three largest guilds. The shows now freed from “residual gridlock” include old broadcast series like “Charlie’s Angels” and “The Flying Nun” and newer made-for-cable programs like “Breaking Bad” and “Sons of Anarchy,” according to John Weiser, president of United States distribution for Sony Pictures Television. (http://nyti.ms/1APmEwr)

 

Canada

THE GLOBE AND MAIL

** Billionaire investor Warren Buffett will be helping to finance Burger King Worldwide Inc’s planned merger with Tim Hortons Inc, the Wall Street Journal reported. Buffett’s agreement with Burger King would likely take the form of preferred shares and be valued at around $10 billion, accounting for possibly up to 25 percent of the deal, the Journal said, citing sources familiar with the matter. (http://bit.ly/1qe36ND)

** The need to boost employment was at the forefront of New Brunswick’s election campaign on Monday as the Liberals promised to improve roads and bridges while the governing Tories committed to a strategy for the shipping industry to create jobs. Liberal leader Brian Gallant announced in Moncton that he would spend C$900 million ($820.3 million) over six years on infrastructure, a plan he said would sustain about 1,700 jobs annually. (http://bit.ly/1ltn3l1)

** Canada’s premiers are expected to renew their call for a public inquiry into murdered and missing aboriginal women when they gather this week in Charlottetown as the Council of the Federation. But with Prime Minister Stephen Harper continuing to reject the idea, national aboriginal leaders meeting with premiers this week will push for an alternative that would see key federal ministers sit down with aboriginal leaders to discuss the issue and potential courses of action. (http://bit.ly/1p5tnd6)

NATIONAL POST

** Corporate America is making a mad rush to the exits in a bid to lower its tax bill. But experts say the odds of political intervention in the stampede have increased as a result of U.S. Burger King Worldwide Inc’s plans to become Canadian. It’s an issue that’s gotten enormous attention in the United States. “They’re declaring they’re based someplace else even though most of their operations are here,” U.S. President Barack Obama said of the trend in July. (http://bit.ly/1laYdG3)

** Data centers are booming in Canada as demand grows from companies wanting to store information within borders and amid growing concern about data privacy, prompting the likes of industry giants Salesforce.com Inc and SAP SE to expand their footprint within the country. (http://bit.ly/1qIRuje)

** The British embassy in Washington, D.C., was forced to apologize on Sunday for a tweet playfully commemorating the 200th anniversary of the burning of the White House, when troops from present-day Canada ransacked the presidential palace. The embassy apologized for the joke two hours later, following many outraged tweets from Americans who didn’t find the episode quite as funny. (http://bit.ly/1nwLoRU)

** The delay in moving Department of National Defence employees into the former Nortel campus is costing taxpayers millions of dollars, according to documents leaked to the Ottawa Citizen. The government spent C$208 million to buy the Nortel complex. At a December 2013 briefing for journalists, defence officials said it will cost another C$506 million to refit the buildings and C$41 million in “transition costs,” which are the costs of existing leases at other sites throughout Ottawa and Gatineau. But a January 2014 internal document noted that additional costs were being incurred because of the delay in moving employees to the campus. (http://bit.ly/1t8yLng)

 

China

CHINA SECURITIES JOURNAL

– Inner Mongolia Baotou Steel Rare-Earth Group Hi-Tech Co Ltd plans to invest nearly 8 billion yuan ($1.30 billion) to tackle environmental problems at its smelting plants and Baotou Huamei Products Co Ltd, the company said in an announcement late on Monday.

SHANGHAI SECURITIES NEWS

– China’s insurance funds have shown growing interest in the primary market’s non-public offering on the back of increased funding activities. Their interests also reflect a structural change in the insurance industry that could bring a new group of institutional investors in the stock market, the paper said in a commentary.

– Jiangsu Hengli Highpressure Oil Cylinder Co Ltd plans to acquire a 51 percent stake in a European counterpart in the amount of 2.5 million euros ($3.3 million), according to a company announcement.

SECURITIES TIMES

– Some 42 companies planning initial public offerings (IPO) have been blacklisted for six months due to breach of conduct, according to a report by the Securities Association of China.

CHINA DAILY

– Alipay, China’s largest online payment provider, announced on Monday the official launch of Zhaocai Bao, an Internet finance platform that aims to reshape financing for small businesses to the tune of 1 trillion yuan ($162 billion) within 3 years.

– Chinese nuclear companies are preparing to export nuclear power reactors as they increase involvement in foreign projects and establish a complete industry chain, company officials and engineers said. Exporting plants will help domestic manufacturers improve their technology levels and recover the huge costs of research and development.

SHANGHAI DAILY

– Sales of new homes in Shanghai in August are likely to be very sluggish after seven-day transactions remained below 150,000 sq m for the third straight week. Purchases of new homes, excluding government-funded affordable housing, fell 0.98 percent to 129,700 sq m last week, Uwin Real Estate Information Services Co said in a report.

 

Britain

The Times

BIG SIX WAIT FOR INVESTIGATION TO ROLL THE DICE

Some time in May or June next year – in all likelihood after the general election on May 7 – the Competition and Markets Authority will publish the initial findings of its investigation into the energy market. It is an indication of the task facing the authority that analysts are not remotely confident about predicting the outcome.

The Guardian

POLL: 71 PCT FIND ALEX SALMOND VICTORIOUS IN SECOND SCOTTISH INDEPENDENCE DEBATE

Alex Salmond emerged as the clear winner of the second Scottish independence debate, besting Alistair Darling by a 71 percent to 29 percent margin, according to an instant Guardian/ICM poll of Scots who had watched the debate.

CO-OP MEMBERS WARNED MANAGEMENT SHAKEUP MAY NOT GO FAR ENOUGH

As members of the Co-Operative Group prepare to vote on sweeping changes to the way the troubled chain of supermarkets, chemists and funeral homes is managed, they have already been warned that the proposed shakeup may not go far enough.

The Telegraph

BRITAIN DENIED KEY EU ROLE FOR NOT PICKING A WOMAN Jean-Claude Juncker expresses frustration that “despite my repeated requests,” most governments, including Britain, have put forward men for the most important positions in Europe.

ALEX SALMOND DECLARED VICTOR OF SECOND INDEPENDENCE TV DEBATE AFTER HEATED CLASH

Alex Salmond has been declared the victor of the second independence TV debate with Alistair Darling after the showdown descended into an angry shouting match.

 

 

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Durable goods orders for July at 8:30–consensus up 5.1%
S&P Case-Shiller 20-city composite home price index for June at 9:00–consensus up 8.4% from prior year
Consumer confidence for August at 10:00–consensus 89.5

ANALYST RESEARCH

Upgrades

Macerich (MAC) upgraded to Outperform from Market Perform at BMO Capital
SandRidge Permian (PER) upgraded to Outperform from Market Perform at Raymond James

Downgrades

Arcos Dorados (ARCO) downgraded to Neutral from Buy at BofA/Merrill
Bancolombia (CIB) downgraded to Underweight from Neutral at HSBC
Cemig (CIG) downgraded to Underweight from Neutral at JPMorgan
InterMune (ITMN) downgraded to Hold from Buy at Jefferies
InterMune (ITMN) downgraded to Market Perform from Outperform at JMP Securities
InterMune (ITMN) downgraded to Neutral from Overweight at JPMorgan
LIN Media (LIN) downgraded to Equal-Weight from Overweight at Evercore
Qihoo 360 (QIHU) downgraded to Neutral from Outperform at Credit Suisse
Simon Property (SPG) downgraded to Market Perform from Outperform at BMO Capital
Tim Hortons (THI) downgraded to Neutral from Buy at Longbow

Initiations

Cray (CRAY) initiated with a Buy at Stifel
Enphase Energy (ENPH) initiated with a Buy at Needham
FCB Financial (FCB) initiated with a Buy at UBS
FCB Financial (FCB) initiated with an Overweight at JPMorgan
Goldman Sachs (GS) initiated with a Buy at MKM Partners
HealthEquity (HQY) initiated with a Neutral at RW Baird
Jarden (JAH) initiated with a Buy at Deutsche Bank
Loxo Oncology (LOXO) initiated with an Outperform at JMP Securities
Macrocure (MCUR) initiated with a Buy at Nomura
Marinus Pharmaceuticals (MRNS) initiated with an Outperform at JMP Securities
Mobileye (MBLY) initiated with a Buy at Deutsche Bank
Mobileye (MBLY) initiated with a Neutral at Goldman
Mobileye (MBLY) initiated with a Neutral at RW Baird
Mobileye (MBLY) initiated with an Outperform at Wells Fargo
Mobileye (MBLY) initiated with an Overweight at Barclays
RAIT Financial (RAS) initiated with an Outperform at JMP Securities
SunEdison (SUNE) initiated with an Outperform at FBR Capital
Transocean Partners (RIGP) initiated with an Equal Weight at Barclays
VTTI Energy (VTTI) initiated with an Outperform at Wells Fargo

COMPANY NEWS

Amazon (AMZN) confirmed the acquisition of Twitch Interactive for approximately $970M
DISH Network (DISH) petitioned FCC to deny Comcast (CMCSA), Time Warner Cable (TWC) merger
Comtech (CMTL) confirmed it is exploring strategic alternatives
Western Digital (WDC) said CFO Tim Leyden to retire and be succeeded by Olivier Leonetti
Premier (PINC), which reported Q4 results and provided FY15 guidance, said it will acquire Aperek for $48.5M
Kite Pharma (KITE) announced positive phase 1-2a results, demonstrating the potential to treat aggressive non-Hodgkin’s lymphoma with an anti-CD19 chimeric antigen receptor, or CAR, T cell therapy

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Taomee (TAOM), Tech Data (TECD), Renren (RENN), Premier (PINC)

Companies that missed consensus earnings expectations include:
Sanderson Farms (SAFM), Regis (RGS), Prospect Capital (PSEC), iKang Healthcare (KANG), Adept Technology (ADEP), Immunomedics (IMMU)

NEWSPAPERS/WEBSITES

Berkshire (BRK.A) may provide 25% of financing for Burger King (BKW)/Tim Hortons (THI) deal, WSJ says
Time Warner (TWX) to offer buyouts to 4% of cable unit’s staff, Reuters reports
Burger King (BKW) wants merger despite problems with dining combos, NY Times reports (THI)
Microsoft’s (MSFT) web browser, media player targeted in China probe, Telegraph reports
Cliffs Natural (CLF) CEO supports sale of non-core assets ‘at right price,’ WSJ says
Fairchild (FCS) to shed 15% of workforce, WSJ reports
Madison Square Garden (MSG) has more room for gains, Barron’s says

via Zero Hedge http://ift.tt/1zxHHRR Tyler Durden

It is unclear exactly why stock futures, bonds – with European peripheral yields hitting new record lows for the second day in a row – gold, oil and pretty much everything else is up this morning but it is safe to say the central banks are behind it, as is the “de-escalation” algo as a meeting between Russia and Ukraine begins today in Belarus’ capital Minsk. Belarusian and Kazakhstani leaders will also be at the summit. Hopes of a significant progress on the peace talks were dampened following Merkel’s visit to Kiev over the weekend. The German Chancellor said that a big breakthrough is unlikely at today’s meeting. Russian FM Lavrov said that the discussion will focus on economic ties, the humanitarian crisis and prospects for a political resolution. On that note Lavrov also told reporters yesterday that Russia hopes to send a second humanitarian aid convoy to Ukraine this week. What he didn’t say is that he would also send a cohort of Russian troops which supposedly were captured by overnight by the Ukraine army (more shortly).

Asian equity markets haven’t really followed suit the US/European rally with bourses in Japan, Hong Kong, and China down 0.6%, 0.4% and 1%. The Dollar is softer against the Yen which perhaps added some pressure on Japanese equities. There isn’t much Asian headlines this morning and we suspect parts of the market (HK/China) are still busy with the ongoing earnings season. Asian credits are doing better in relative terms led by sovereigns. Indonesia’s USD bonds continued its march higher (helped by Treasuries) whilst its 5yr CDS spreads are marked 4bps tighter overnight. Asian stocks fall with the Kospi outperforming and the Shanghai Composite underperforming. MSCI Asia Pacific down 0.2% to 148.4. Nikkei 225 down 0.6%, Hang Seng down 0.4%, Kospi up 0.3%, Shanghai Composite down 1%, ASX up 0%, Sensex up 0%. 2 out of 10 sectors rise with health care, energy outperforming and utilities, telcos underperforming

European shares remain mixed though are off intraday lows with the tech and basic resources sectors underperforming and travel & leisure, retail outperforming. The German and Swedish markets are the worst-performing larger bourses, the Spanish the best. The euro is little changed against the dollar. Spanish, Portuguese, Greek, Irish, French 10yr bond yields fall; U.K. yields increase. Commodities gain, with soybeans, copper underperforming and silver outperforming. 7 out of 19 Stoxx 600 sectors rise; travel & leisure, retail outperform, tech, basic resources underperform; 51.7% of Stoxx 600 members gain, 45% decline; Eurostoxx 50 -0.2%, FTSE 100 +0.2%, CAC 40 +0%, DAX -0.4%, IBEX +0.3%, FTSEMIB -0.1%, SMI +0%.

In terms of today we are expecting a handful of data from the US including durable goods orders (Aug), the S&P/Case Shiller home price index, Conference Board Consumer Confidence (Aug) and the Richmond Fed Manufacturing (Aug). It will be a quiet day for European data flow but looking at the week ahead in Europe we have French Business Confidence surveys on Wednesday and German August unemployment and inflation data on Thursday as well as Eurozone and Italian Business Confidence surveys. Friday will see the release of German and Spanish July retail sales figures and Italian unemployment data.

Market Wrap

• S&P 500 futures little changed at 1995.7
• Stoxx 600 little changed at 340.4
• US 10Yr yield down 1bps to 2.37%
• German 10Yr yield down 1bps to 0.94%
• MSCI Asia Pacific down 0.2% to 148.4
• Gold spot up 0.9% to $1287.9/oz

Bulletin Headline Summary from Bloomberg and RanSquawk

• Continued speculation over an ECB QE programme has provided fixed income markets with further direction as the Italian and Spanish 10yr yields print record lows for the second consecutive session.
• Markets continue to hold their ground ahead of the key meeting between Russian President Putin and Ukraine President Poroshenko where the leaders are due to hold talks on the de-escalation of tensions between the two nations.
• US durable goods orders is due for release at 1330BST/0730CDT and is expected to show a sharp rise from the previous month (8.00% vs. Prev. 0.70%) following Boeing’s order book at the Farnborough Airshow. At 1:00PM markets will be looking out for the results of the US 2y note auction.
• Treasuries gain as rally in EU sovereigns continues; Italian and Spanish 10Y yields fall to new record lows, UST 10Y/bund spread widest since 1999.
• UST curve spreads continue flattening before week’s auctions begin with $29b 2Y; 0.528% WI bid vs 0.544% award in July
• Treasuries also may be supported by month-end index extension; Barclays estimated 0.12yrs for Treasury Index, biggest since May
• Muni bonds will be excluded from the group of easily sellable assets that banks can use to show they’re able to survive a credit crunch, according to a person familiar with the rule
• Russia’s Putin is set to meet his Ukrainian counterpart, Petro Poroshenko, as tensions flare on the two nations’ border; Ukraine said yesterday an armored column entered from Russia while Moscow announced plans to send a second convoy with humanitarian aid into rebel-held Ukrainian territory
• French President Hollande’s firing of malcontent minister Arnaud Montebourg risks unleashing the ruling Socialist Party’s chief critic of budget cuts, adding to an austerity backlash stirring across Europe
• The U.S. has begun surveillance flights over Syria after Obama gave the OK, U.S. officials said, a move that could pave the way for airstrikes against Islamic State militant targets there: AP
• Obama, who this month ordered airstrikes against Islamist militants in Iraq, hasn’t reached a conclusion about similar actions in Syria, White House press secretary Josh Earnest said yesterday
• Twice in the last seven days, Egypt and the United Arab Emirates have secretly launched airstrikes against Islamist-allied militias battling for control of Tripoli, Libya, four senior American officials said, in   a major escalation of a regional power struggle sparked by the Arab Spring: NYT
• Warren Buffett is helping to finance Burger King’s planned takeover of Tim Hortons, according to people familiar with the matter, backing a buyer that would move its headquarters to Canada where corporate taxes are lower
• Obama has criticized inversion deals, while Buffett has supported Obama’s push to increase personal income taxes on wealthiest individuals
• Sovereign yields extend declines. Asian and European stocks  mostly lower, European equities gain. U.S. stock futures decline. WTI crude and gold higher, copper lower

US Economic Calendar

• 8:30am: Durable Goods Orders, July, est. 8% (prior 0.7%, revised 1.7%)
  • Durables Ex-Transportation, July, est. 0.5% (prior 0.8%, revised 1.9%)
  • Capital Goods Shipments Non-Defense Excluding Aircraft, July, est. 0.7% (prior -1%, revised -0.3%)
  • Capital Goods Orders Non-Defense Excluding Aircraft, July, est. 0.2% (prior 1.4%, revised 3.3%)
• 9:00am: FHFA House Price Index m/m, June, est. 0.3% (prior 0.4%); House Price Purchase Index, 2Q, est. 3.15% (prior 1.3%)
• 9:00am: Standard & Poor’s/Case Shiller 20-City m/m SA, June, est. 0.0% (prior -0.31%)
  • S&P/CS Composite-20 y/y, June, est. 8.3% (prior 9.34%)
  • S&P/CS Home Price Index, June, est. 172.84 (prior 170.64)
  • S&P/CS U.S. HPI NSA, 2Q (prior 150.76)
  • S&P/CS U.S. HPI y/y, 2Q (prior 10.35%)
• 10:00am: Consumer Confidence Index, Aug., est. 89 (prior 90.9)
• 10:00am: Richmond Fed Manufacturing Index, Aug., est. 6 (prior 7)
• 11:00am POMO: Fed to purchase $2b-$2.5b in 2020-2021 sector

FIXED INCOME

Following on from yesterday’s Draghi inspired gains in peripheral fixed income markets, both the Spanish and Italian 10yr yields have printed record lows for the second consecutive session as participants weigh the prospect of an imminent QE programme (note the ECB meetin next on Sept. 4th). This has subsequently provided a boost for UK Gilts, although the upside has been limited as UK participants react to hawkish comments from over the weekend by BoE’s Broadbent after UK markets were closed yesterday. Elsewhere, Bunds have also extended on yesterday’s gains and 2/10’s have reached their lowest level since 2008 with markets now awaiting further direction ahead of the carefully watched meeting between Ukraine President Poroshenko and Russian

President Putin. Ahead of which, NATO’s Rasmussen has said in an FT interview that he believes Russia’s convoy is a mask for military action in Ukraine.
Prelim Barclays month end extension for Pan-Euro Agg at +0.03y (Prev. 0.12yrs, 12m average +0.03yrs)
Prelim Barclays month end extension for Sterling Agg Tsy at +0.08y
Prelim Barclays month end extension for US Treasuries +0.12yrs (Prev. 0.08yrs, 12m average +0.09yrs)

EQUITIES

European equities trade relatively mixed heading into the North American open, with a lack of downside catalyst to weigh on prices. The FTSE 100 (+0.3%) outperforms as the UK plays catch up from yesterday’s substantial gains in European indices yesterday which saw the Eurostoxx 50 close with gains of over 2%. On a sector basis, utilities names have lagged throughout the session after GDF Suez were subject to a downgrade by UBS, which has subsequently weighed on E.ON and RWE.

FX

Overnight, the USD index ebbed lower after failing to break above yesterday’s session highs, which subsequently saw USD/JPY break back below the 104.00 level. The USD weakness also saw EUR/USD recoup some of yesterday’s heavy losses in early trade, although these gains have since been trimmed with no pertinent fundamental newsflow. Although there is talk doing the rounds that an informal agreement was reached at Jackson Hole with Draghi wanting to see a much weaker EUR and Yellen a stronger USD, acting as a de facto tightening and thus potentially limiting the upside to US rate hikes. Finally, NZD/USD has pulled off its 6-month lows set after New Zealand trade balance data showed the first deficit since October 2013.

COMMODITIES

Heading into the North American open, both WTI and Brent crude futures are trading relatively unchanged with Brent crude futures failing to break above the USD 103.00bbl level as well supplied markets continues to supress prices. In the precious metals complex, spot gold has been seen higher from the get-go after breaking above the 200DMA at USD 1284.50 alongside the weaker USD, with participants also positioning themselves ahead of the meeting between Poroshenko and Putin.

* * *

DB’s Jim Reid concludes the overnight recap

Whilst Yellen’s Jackson Hole remarks were a bit of a non-event, Draghi’s luncheon speech was surprisingly dovish which has managed to keep the markets going since then. In terms of some of the highlights of his speech, our FX strategist Alan Ruskin noted there is an asymmetric policy bias to err on the easy side as well as an emphasis for more action going forward. Draghi was fairly explicit in noting that monetary policy can and should play a central role in stimulating demand which currently means an accommodative monetary policy for an extended period of time. On upcoming policy, Draghi also signalled the first TLTRO in September and noted that the ECB’s preparation for outright purchases in asset-backed security (ABS) markets is ‘fast moving forward’.

On the back of those we saw European government bond yields fall sharply yesterday to multiple record lows across the board. The 10yr Italian and Spanish yields were down 10bps and 12bps, closing at new lows of 2.479% and 2.260%, respectively. The 10-year Bund yield dropped 3bps also to a fresh low of 0.948%. The 2yr Bund yield fell further into negative territory to -0.032% at the close. We can’t help to think that the widespread rally in European yields will probably continue help anchor other developed government bond markets for the time being. On that note the 10-yr Treasury edged 2bp lower to 2.38% yesterday but that is still about 12bps ‘wider’ than its Spanish equivalents. With hopes of more ECB liquidity in the making, yesterday also proved to be a positive day for stocks on both sides of the Atlantic. The CAC, DAX, IBEX and FTSEMIB were all up +2.1%, +1.8, +1.8% and +2.3% on the day, respectively. The S&P 500 added +0.48% and is now just 2pts away from celebrating the 2,000 mark.

Having said all that Asian equity markets haven’t really followed suit the US/European rally with bourses in Japan, Hong Kong, and China down 0.4%, 0.1% and 0.4%, respectively as we type. The Dollar is softer against the Yen which perhaps added some pressure on Japanese equities. There isn’t much Asian headlines this morning and we suspect parts of the market (HK/China) are still busy with the ongoing earnings season. Asian credits are doing better in relative terms led by sovereigns. Indonesia’s USD bonds continued its march higher (helped by Treasuries) whilst its 5yr CDS spreads are marked 4bps tighter overnight.

Draghi’s dovishness may have also helped cushion some of the geopolitical headlines from markets over the last 24 hours. Indeed we technically don’t have a government in France as we type this morning after French PM Manuel Valls yesterday announced that he would dissolve his government after a disagreement in his cabinet whether fiscal tightening measures (at the urge of Germany and Brussels) were impeding France’s recovery (NYT). This was the second major shakeup since Mr Hollande took over presidency in 2012. Mr. Hollande has asked PM Valls to form a new government which is expected to be announced today.

In Ukraine, the President Poroshenko yesterday tweeted that he has taken a decision to early dissolve the parliament. This comes as a delicate time with both leaders from Russia and Ukraine being scheduled to come together in Minsk today. Belarusian and Kazakhstani leaders will also be at the summit. Hopes of a significant progress on the peace talks were dampened following Merkel’s visit to Kiev over the weekend. The German Chancellor said that a big breakthrough is unlikely at today’s meeting. Russian FM Lavrov said that the discussion will focus on economic ties, the humanitarian crisis and prospects for a political resolution. On that note Lavrov also told reporters yesterday that Russia hopes to send a second humanitarian aid convoy to Ukraine this week.

In terms of data the US releases yesterday was mixed with activity surveys and housing coming in on the softer side. New home sales fell -2.4% in July against a +5.8% growth expected by the market. Dallas Fed manufacturing survey came in at 7.1 which is also below consensus of 12.8. The Markit US composite PMI also fell to 58.8 in August from 60.6 in July. The Chicago Fed National Activity Index was the better though (0.39 v 0.20 expected) for July. Away from the US, Germany’s IFO readings for August were lower across the board. Business Climate, Current Assessment and Expectations came in at 106.3, 111.1, 101.7 versus consensus of 107.0, 112.0, and 102.1, respectively.

In terms of today we are expecting a handful of data from the US including durable goods orders (Aug), the S&P/Case Shiller home price index, Conference Board Consumer Confidence (Aug) and the Richmond Fed Manufacturing (Aug). It will be a quiet day for European data flow but looking at the week ahead in Europe we have French Business Confidence surveys on Wednesday and German August unemployment and inflation data on Thursday as well as Eurozone and Italian Business Confidence surveys. Friday will see the release of German and Spanish July retail sales figures and Italian unemployment data.

Over in the US we will get initial jobless claims and the second read on Q2 GDP and July Core PCE inflation as well as the Kansas City manufacturing index all on Thursday. We close the week on Friday with July personal income growth and core PCE inflation data as well as the August Chicago purchasing managers index and University of Michigan confidence index reads.

via Zero Hedge http://ift.tt/1ww9beq Tyler Durden