Author: admin

• EU Works to Punish Russia as MH17 Bodies Leave Rebel Area (BBG)
• Bodies From Malaysia Airlines Flight Begin Long Trip to Netherlands (WSJ)
• Israel pounds Gaza as Kerry arrives (Reuters)
• U.S. judge dismisses Republican lawsuit over Obamacare subsidy for Congress (Reuters)
• Israel Soldier Missing Amid Assault on Hamas in Gaza (WSJ)
• Detroit Retirees Vote in Favor of Pension Cuts (WSJ)
• Russia Axes 1st Bond Sale in 3 Months as Ukraine Drives Up Yield  (BBG)
• Wall Street Cut From Guest List for Jackson Hole Fed Meeting (BBG)
• Credit Suisse to Exit Commodities, Posts Big Quarter Loss (BBG)
• Draghi Cedes Euro Control to Yellen on Fed Rate Wagers (BBG)
• Turkish Businesses Boycotting Israeli Products Because of Gaza (INN)
• Soros Chart Shows Euro-Yen Reaching 2008 High (BBG)
• Next iPhone Will Offer Bigger Screens; Apple Tells Suppliers to Gear Up for 4.7-inch and 5.5-Inch Screen Sizes (WSJ)
• Sterling Trust Could Face Default on Loans if Clippers Aren’t Sold, CFO Says (WSJ)
• Saudi to Open Up $531 Billion Stock Market to Foreigners (BBG)

 

Overnight Media Digest

WSJ

* Separatists in Ukraine released the bodies of victims in the downing of Malaysia Airlines Flight 17 and agreed to hand over the aircraft’s data recorders, allowing the focus to tighten on establishing who brought the jetliner down. (http://on.wsj.com/Uoe1bR)

* Workers and retirees approved pension cuts in Detroit’s bankruptcy, the city said Monday, a crucial step to emerging from the largest municipal insolvency in U.S. history. The city disclosed results from two months of balloting, which ended July 11. (http://on.wsj.com/1wTrViJ)

* European ministers are expected to approve sanctions that will target Russian oligarchs in response to the suspected downing of a Malaysian jetliner by Moscow-backed rebels in eastern Ukraine. (http://on.wsj.com/1nvUB1w)

* Apple Inc is preparing for its largest initial production run of iPhones this year, betting that larger-screen models will lure consumers now attracted to similar phones from Samsung Electronics Co. The company is asking suppliers to manufacture between 70 million and 80 million units, larger than the initial order last year of 50 million to 60 million versions of the iPhone 5S and 5C. (http://on.wsj.com/1qZBAm3)

* The U.S. owner of a meat supplier in Shanghai apologized and promised a swift response after McDonald’s Corp and Yum Brands Inc suspended purchases in China in the wake of allegations it sold expired chicken and beef to restaurants. China’s Food and Drug Administration halted on all business activities of Shanghai Husi and launched a nationwide investigation of the company. (http://on.wsj.com/1jSycdP)

* Washington’s regulatory machine is altering Wall Street in fundamental ways, four years after the Dodd-Frank financial law became reality. Banks are selling off profitable business lines, pulling back from the short-term funding market, cutting ties with businesses that could attract extra regulatory scrutiny, and building up defenses to help weather future crises. (http://on.wsj.com/1ua2Eoi)

* Spending on mobile ads is expected to jump 83 percent this year, but given how much time Americans spend on their devices, mobile-ad spending could be much higher. (http://on.wsj.com/1loxQqs)

* The family trust that owns the Los Angeles Clippers is in danger of defaulting on loans if a planned sale of the NBA team doesn’t go through, an executive testified Monday. (http://on.wsj.com/Wuj8sv)

* Allergan, which is trying to avoid being acquired by Valeant Pharmaceuticals International Inc, said it would cut 13 percent of its work force and reduce drug research, to boost its profits over the next six years. Valeant also had similar plans of restructuring, if it acquired Allergan. (http://on.wsj.com/WzRuuz)

* Netflix Inc said its second quarter earnings more than doubled as it added 1.7 million subscribers world-wide but cautioned that a more aggressive international expansion would hurt profits in third quarter. (http://on.wsj.com/1wTaZc1)

* Venezuela’s auto industry, once the third largest in South America, is seizing up as manufacturers struggle to produce a few vehicles a day. Car makers like Ford Motor Co, Fiat Chrysler Automobiles, General Motors and Toyota Motor Corp, have cut output by more than 80 percent in the first six months of the year, due to lack of dollars to pay part suppliers. (http://on.wsj.com/1nv5BMM)

* Activist investor Jana Partners LLC has built a stake worth more than $1 billion in Apache Corp and is calling on the oil and gas producer to sell off its international holdings to drill exclusively on American soil. It also wants the company to exit some projects to free up cash flow. (http://on.wsj.com/UkTOUB)

* Crocs is trimming jobs and reducing the number of stores as the maker of colorful plastic clogs said it needs to get smaller to improve profitability. (http://on.wsj.com/1u9SQuJ)

 

FT

Time Warner Cable Inc, which owns cable networks TNT and CNN, scrapped a rule that allows investors to call a shareholder meeting in a bid to block a potential hostile takeover by Rupert Murdoch’s Twenty-First Century Fox.

Portugal’s largest-listed lender, Banco Espirito Santo is to appoint a special financial adviser to help improve its balance sheet days after one of its holding companies filed for creditor protection.

Barclays Plc U.S. dark pool slips from second to 12th place in terms of volumes traded as customers flee following a lawsuit that alleged the lender misled clients about frequency activity in its private trading venue.

China’s MMG Ltd shareholders approve purchase of the Las Bambas copper project in Peru from Glencore Plc for $5.85 billion.

British engineering contractor Babcock International’s order book for the coming year rose to 13.5 billion pounds ($23.1 billion), helped by recent contract wins and its acquisition of helicopter transport firm Avincis.

 

NYT

* Netflix Inc reported its business grew in the second quarter thanks to international customers and little adverse effect from an announced price increase. The company said it surpassed 50 million total members for its streaming service, including free trial memberships, in the second quarter of this year. Netflix has announced plans to introduce its service to a number of European markets in September, including Austria, Belgium, France, Germany, Luxembourg and Switzerland. (http://nyti.ms/1lodcae)

* In response to an article about the political connections of some of its shareholders, Alibaba Group Holding Ltd <IPO-BABA.N> discounted the notion that their backgrounds helped drive its business. In a strongly worded statement on Monday in Chinese on its account on Weibo, a Twitter-like social media network, Alibaba said The Times article “mistakenly described” Alibaba’s relationship with the investors. (http://nyti.ms/1n7qLzq)

* Yahoo Inc announced Monday that it had agreed to acquire Flurry, a mobile ad and analytics company. Flurry’s advertising expertise could help Yahoo as it tries to build a meaningful mobile ad business. Although more than half of Yahoo’s monthly audience visits come on mobile devices, revenue from mobile ads is still so small that the company does not break it out. (http://nyti.ms/Ul2utY)

* Time Warner Inc on Monday amended its corporate bylaws and removed a provision that allowed shareholders to call a special board meeting. In a filing with the Securities and Exchange Commission, Time Warner said the change was effective immediately. Without the ability to call a special meeting, shareholders supportive of a Twenty-First Century Fox offer would not be able to replace Time Warner’s board of directors before the company’s next annual meeting, which would likely come next June. (http://nyti.ms/UodPcn)

* Malaysia Airlines’ two crashes in less than five months are sending tremors through the aviation insurance market – not least because the carrier’s $2.25 billion overall liability policy is mysteriously missing a standard clause that usually limits insurers’ payments for search-and-rescue costs. (http://nyti.ms/1wTlbS7)

* A Senate investigation has found that hedge funds – in particular, James Simons’ Renaissance Technologies – used complex financial structures to claim billions of dollars in tax savings. Between 1998 and 2013, more than a dozen hedge funds conducted hundreds of billions of dollars in trades using hundreds of structures, known as “basket options,” created by Barclays Plc and Deutsche Bank AG, the Senate Permanent Subcommittee on Investigations said in a report on Monday. (http://nyti.ms/1n7EsOT)

* Goodwill Industries International, a nonprofit agency that operates thrift stores around the country, said on Monday that it was investigating a potential security breach that may have led to the theft of customers’ credit card data. (http://nyti.ms/1qZZ5vl)

* Hedge funds are not new to farmland. For nearly a decade they have scoured the corners of the globe for cheap land as food prices have soared, positioning themselves to profit from the growing demand. Hedge funds now have $14 billion invested in farmland, according to the data provider Preqin. With its steady income stream, farmland is proving to be a ripe offering for sophisticated investors. (http://nyti.ms/1nPkbc0)

 

Canada

THE GLOBE AND MAIL

* A Chinese man accused of being the “directing mind” behind a corporate-espionage conspiracy to steal jet-fighter secrets from Pentagon contractors is a Canadian immigrant who is being stripped of his residency status. (http://bit.ly/1n8LvH3)

* The mysterious shooting death of a respected Florida law professor originally from Toronto took a sinister turn on Monday as investigators revealed that Dan Markel was the victim of a targeted attack. (http://bit.ly/1A0wwEi)

Reports in the business section:

* Mark Brock has been growing corn near London, Ontario, for decades but he has never seen a market quite like this with prices plummeting so fast he may not even try to sell some of his crop this year. Like many farmers, Brock has been trying to protect his profits by forward selling as much of his corn as possible. (http://bit.ly/1uaPR4Z)

NATIONAL POST

* The New Democratic Party is vigorously defending allegations it improperly put parliamentary staff in so-called satellite offices in Quebec before a meeting by the House of Commons panel that monitors spending by members of parliament. (http://bit.ly/WvqFqU)

* Senator Mike Duffy allegedly charged the Senate for personal travel to funerals, and disbursed money to three people for illegitimate expenses under the guise of a consulting contract. The allegations are contained in newly released court documents. The documents were made public on Monday, several days after the Royal Canadian Mounted Police announced that it was charging the suspended senator with 31 criminal counts. (http://bit.ly/1lppSgW)

FINANCIAL POST

* Rogers Publishing announced a small shakeup to its magazine mastheads on Tuesday, with three top editors cut loose, as part of an effort to streamline its editorial structure. According to an internal staff memo, the position of editor-at-large, held by Dianne de Fenoyl, would be eliminated, and de Fenoyl would be leaving after nearly a decade with the company. (http://bit.ly/1n8QZ4q)

* Fashion industry veteran Mario Grauso has been promoted to president of Loblaw Companies Ltd’s in-house apparel brand Joe Fresh. The move comes as part of a major management shuffle at the country’s biggest grocery chain last week, which saw Galen Weston named president of the retailer and the exit of president Vicente Trius. (http://bit.ly/1kONJqg)

 

China

SHANGHAI DAILY

– New residential property sales remained sluggish in Shanghai, staying below the 150,000-sq. m. threshold for the second straight week. In the nearby city of Hangzhou, home buyers remain reluctant to buy property even though housing prices have started to fall, as they expect prices to decline further.

CHINA DAILY

– China Mobile Ltd, the world’s No. 1 telecom carrier by subscriber numbers, said on Monday it was removing its premium customer lounges at the nation’s airports in a bid to cut back on operating expenses. The firms also plans to close down the majority of its customer clubs, a type of value-added service introduced a few years ago to lure new subscribers.

– China’s railway track should total more than 200,000 km by 2030, in line with the nation’s economic goals, and at least 10 percent of it will be for high-speed rail, the former chairman of China South Locomotive and Rolling Stock Co Ltd, and an adviser to the China Institute for Innovation and Development Strategy, said. China had 103,144 km of track, including 11,028 km for high-speed rail, the longest in the world.

CHINA SECURITIES JOURNAL

– China Financial Futures Exchange Board Chairman Zhang Shenfeng wrote an article advocating further reform and technical improvements to the market interest rate system.

 

Hong Kong

SOUTH CHINA MORNING POST

— Hong Kong does not need a controversial HK$30 billion ($3.87 billion) upgrade of its centralised wastewater treatment system as the water in the harbour is clean enough, at least for now, the city’s environment officials say. (bit.ly/1rlh3uf)

— The chief executive of the Hong Kong Monetary Authority, Norman Chan Tak-lam, defended the city’s strict banking rules as some of the best in the world, amid a flurry of recent international concern over the territory’s banking system. (bit.ly/1jSmZKm)

THE STANDARD

— Health and wellness products retailer OTO Holdings has been censured by the Hong Kong stock exchange for breaching the bourse’s listing rules of twice failing to timely disclose its weaker results, along with its executive directors neglecting their undertaking to the bourse. (bit.ly/1rwQHHv)

— Electronic books could soon turn a page to greater popularity in Hong Kong, says an e-book provider. Sino United Electronic Publishing content director Ivan Tsoi Yiu-ming said he is optimistic about e-books due to the popularity of tablet computers and smartphones. (bit.ly/UnUCHM)

— Tissue paper firm Vinda International said net profit fell 21.8 percent in the first half to HK$222.18 ($28.66) million, from a year earlier, due to foreign exchange losses as the yuan weakened against the U.S. dollar. (bit.ly/1qZjEYT)

HONG KONG ECONOMIC JOURNAL

— Morgan Stanley has raised its stake in Wing Hang Bank to 5.03 percent from 4.84 percent, according to data from the Hong Kong stock exchange.

HONG KONG ECONOMIC TIMES

— HK Electric Investments Ltd posted a profit of HK$967 million ($124.75 million) for the first half of 2014 while distributable income amounted to HK$1.46 billion.

MING PAO DAILY NEWS

— The average monthly rental of Hong Kong’s 85 major residential developments stood at HK$23.2($2.99) per square foot in June, the highest monthly rental in 19 years, according to a report from property agent Centaline.

Britain

The Times

RBS PAYS 900,000 POUNDS FINE FOR AUSTRALIAN RATE-RIGGING

(http://thetim.es/1pxlC1F) Australian regulators have fined Royal Bank of Scotland nearly 900,000 pounds after the bank admitted its role in attempts to manipulate the country’s equivalent of the Libor benchmark borrowing rate.

BANK OF ENGLAND’S COURT OPENS DOOR TO WOMEN CHIEFS

(http://thetim.es/1p3Lpgp)

The female chief executives of the telecoms company TalkTalk and the Yorkshire-based power plant Drax are among the new appointees to the board of the Bank of England, which was heavily criticised for having insufficient women in senior positions.

The Guardian

HEDGE FUNDS USED ‘DUBIOUS’ MEANS TO BYPASS TAX RULES, SENATORS SAY

(http://bit.ly/1sH5Wh8)

More than a dozen hedge funds, with assistance of Barclays and Deutsche Bank, used “dubious” financial products to claim billions in unjustified tax savings and circumvent rules meant to limit risky bets, a Senate subcommittee investigation has found.

COMPETITION REGULATOR MUST FORCE BANKS TO IMPROVE SERVICE, MPS SAY

(http://bit.ly/1ySroAs)

MPs have called on the competition watchdog to force high street banks to improve standards and the way they treat their customers after the Competition and Markets Authority signalled it would investigate the industry.

The Telegraph

ESPIRITO SANTO CRISIS COULD AFFECT PORTUGAL’S ECONOMY, WARNS PRESIDENT ANIBAL CAVACO SILVA

(http://bit.ly/Wt84vU)

The president of Portugal has warned that the financial crisis gripping the Espirito Santo family could affect the country’s economy.

JUNCKER FACES POLITICAL TEST AS FINES LOOM ON ILLEGAL GERMAN TRADE SURPLUS

(http://bit.ly/UnMual)

Germany’s current account surplus is the largest ever recorded in proportional terms and far above the threshold for EU sanctions, posing a major political test for the incoming commission of Jean-Claude Juncker.

Sky News

GLENFIDDICH EYES 100 MLN STG DRAMBUIE SCOTCH MERGER

(http://bit.ly/1p8mlrp)

The family-owned business behind Glenfiddich and Grant’s is examining a 100 million pound takeover of Drambuie, the liqueur reputed to be made from a recipe concocted by Bonnie Prince Charlie.

BBA IN TALKS ABOUT PAYMENTS COUNCIL MERGER

(http://bit.ly/1wQFvUa)

The banking industry’s main lobbying group, British Bankers’ Association, is considering proposals to merge with at least two of its peers amid pressure from leading members to reduce costs levied by trade organisations.

 

Fly On The Wall Pre-Market Buzz

ANALYST RESEARCH

Upgrades

Allergan (AGN) upgraded to Buy from Neutral at UBS
American Axle (AXL) upgraded to Neutral from Underweight at JPMorgan
Diamondback Energy (FANG) upgraded to Buy from Neutral at Roth Capital
Digital Realty (DLR) upgraded to Buy from Hold at Deutsche Bank
Five Below (FIVE) upgraded to Outperform from Market Perform at Wells Fargo
Gas Natural (EGAS) upgraded to Buy from Hold at Wunderlich
Hasbro (HAS) upgraded to Overweight from Equal Weight at Barclays
Huntington Bancshares (HBAN) upgraded to Outperform at Keefe Bruyette
Realogy (RLGY) upgraded to Buy from Neutral at Citigroup
Sanmina (SANM) upgraded to Hold from Sell at Deutsche Bank
Trex Company (TREX) upgraded to Buy from Hold at Stifel
VCA Inc. (WOOF) upgraded to Hold from Sell at Stifel
Valspar (VAL) upgraded to Conviction Buy from Neutral at Goldman

Downgrades

Amazon.com (AMZN) downgraded to Neutral from Buy at Citigroup
Arcos Dorados (ARCO) downgraded to Underweight from Neutral at HSBC
Cadence Design (CDNS) downgraded to Neutral from Overweight at JPMorgan
Matador (MTDR) downgraded to Hold from Buy at Stifel
SunTrust (STI) downgraded to Equal-Weight from Overweight at Evercore

Initiations

Abengoa Yield (ABY) initiated with an Equal Weight at Morgan Stanley
Actinium Pharmaceuticals (ATNM) initiated with a Buy at Canaccord
Chambers Street Properties (CSG) initiated with a Neutral at SunTrust
Minerals Technologies (MTX) initiated with an Outperform at Wedbush
NextEra Energy Partners (NEP) initiated with a Buy at BofA/Merrill
NextEra Energy Partners (NEP) initiated with a Hold at Deutsche Bank
NextEra Energy Partners (NEP) initiated with a Hold at KeyBanc
NextEra Energy Partners (NEP) initiated with a Neutral at Goldman
NextEra Energy Partners (NEP) initiated with a Neutral at UBS
NextEra Energy Partners (NEP) initiated with an Equal Weight at Morgan Stanley
NextEra Energy Partners (NEP) initiated with an Outperform at BMO Capital
QIWI (QIWI) initiated with a Positive at Susquehanna
Quality Systems (QSII) initiated with a Buy at Topeka
Trinseo S.A. (TSE) initiated with a Buy at Deutsche Bank
Trinseo S.A. (TSE) initiated with a Buy at Goldman
Trinseo S.A. (TSE) initiated with a Buy at Jefferies
Trinseo S.A. (TSE) initiated with a Neutral at Citigroup
Trinseo S.A. (TSE) initiated with an Equal Weight at Morgan Stanley
Trinseo S.A. (TSE) initiated with an Outperform at Wells Fargo
Washington Prime Group (WPG) initiated with a Neutral at SunTrust

COMPANY NEWS

Johnson & Johnson (JNJ) announced a $5B share repurchase program
Credit Suisse (CS) said it will exit commodities trading business
CIT Group (CIT) to acquire OneWest Bank for $3.4B in cash and stock
Time Warner (TWX) amended by-laws to block holders ability to call special meeting (FOXA)
TG Therapeutics announced preliminary clinical results from its ongoing Phase I study of TG-1101, and said 100% of CLL/SLL patients had significant nodal reduction with either a normalization of or greater than or equal to 80% reduction in Blood Lymphocyte Count.
Kindred Healthcare (KND) offered to acquire Gentiva Health (GTIV) for $17.25 per share. Kindred said it is willing to consider further increasing its offer for Gentiva
Netflix reported Q2 total streaming net additions of 1.69M. Said policy goal is for DOJ/FCC to block Comcast (CMCSA), TWC (TWC) deal

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Verizon (VZ), Polaris Industries (PII), Signature Bank (SBNY), New Oriental Education (EDU), PLX Technology (PLXT), Crocs (CROX), First Interstate (FIBK), First Defiance Financial (FDEF), Helix Energy (HLX), Crown Holdings (CCK), Ultra Clean (UCTT), Texas Instruments (TXN), Artisan Partners (APAM), Zions Bancorp (ZION), PolyOne (POL), Waste Connections (WCN), Woodward (WWD), Rambus (RMBS), Cadence Design (CDNS), Sanmina (SANM), Trustco Bank (TRST), Chipotle (CMG), MainSource Financial (MSFG)

Companies that missed consensus earnings expectations include:
Carlisle (CSL), Del Frisco’s (DFRG), Brown & Brown (BRO), BBCN Bancorp, Inc. (BBCN), Old Line Bancshares (OLBK), AptarGroup (ATR), EMC Insurance (EMCI), TG Therapeutics (TGTX), Wilshire Bancorp (WIBC), Washington Trust Bancorp (WASH), Netflix (NFLX)

Companies that matched consensus earnings expectations include:
Regions Financial (RF), DuPont (DD), BancorpSouth (BXS), Steel Dynamics (STLD), Consumer Portfolio (CPSS), Healthstream (HSTM), Rent-A-Center (RCII), Hexcel (HXL)

NEWSPAPERS/WEBSITES

Apple (AAPL) asking suppliers to produce 80M large-screen iPhones, WSJ reports
JANA investor letter discloses $1B position in Apache (APA), Bloomberg says
China food scandal spreads, drags in Starbucks (SBUX), Burger King (BKW) and McDonald’s (MCD) products in Japan, Reuters reports
Yahoo (YHOO) paying over $200M for Flurry, TechCrunch reports
Viacom’s (VIA) music group and Spotify form music streaming partnership, WSJ reports
Global notebook shipments to increase 4.3% in Q3, DigiTimes Research says
McDonald’s (MCD) stock doesn’t look ready for gains, Barron’s says

SYNDICATE

Blue Hills Bank (BHBK) 27.8M share Secondary priced at $10.00
Diamondback Energy (FANG) 5M share Secondary priced at $87.00
FBR & Co. (FBRC) announces self-tender offer to purchase up to 1M shares
Pretium Resources (PVG) files to sell $60M in common stock
Regency Energy Partners (RGP) files to sell 8.3M units for limited partners
Tallgrass Energy (TEP) files to sell 7M units representing limited partners

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

Following the overnight ramp in various JPY crosses (dragging equity futures higher, and the Nikkei up 0.8%) it is as if the market is desperate to put all of last week’s geopolitical events in the rearview mirror, and while yesterday there were no economic events of note, today’s CPI and existing home prints should provide at least some distraction from the relentless barrage of one-line updates on Ukraine and Gaza. Still, that is precisely where the biggest risk remains, with an emphasis on the possibility of more Russian sanctions, this time by Europe.

Today will likely see more headlines on the situation as EU foreign ministers meet as well as the Russian Security Council. Watch out for headlines from all angles. Perhaps the most market-friendly outcome is that EU leaders talk very tough but do not agree on intensifying sanctions against Russia. Reuters thinks that despite all the tough talk, the EU is unlikely to punish Russia beyond the speeding up of the imposition of already agreed individual sanctions. A summit of EU leaders on July 16, the day before the airliner was downed, agreed the EU would punish Russian companies that help to destabilize Ukraine. According to Reuters, diplomats said Tuesday’s meeting in Brussels was still not expected to go much further than agreeing on the people and possibly companies to be hit with asset freezes under the framework agreed last week. Previously, they had only said they would decide on the list by the end of July. Citing unnamed diplomats, Reuters said moving towards more sweeping economic sanctions could only be decided by heads of government. The next scheduled summit of EU leaders is on August 30, though EU members could call for another emergency meeting.

An unknown element today will be the Dutch, who have previously advocated caution in imposing sanctions against Russia, but are likely going to be a large swing factor today. The Netherlands previous caution with respect to Russia was perhaps to due to its significant economic ties, but they will be forced into action given the loss of life they have experienced in the MH17 tragedy. In terms of the Russian Security Council meeting, not a lot has been reported on what to expect from this. Putin will chair the meeting to discuss “issues connected with safeguarding the sovereignty and territorial integrity of the Russian Federation,” the Kremlin said in a statement on Monday.

Turning to Asia, we’re seeing a tentative but positive tone to trading ahead of today’s events which include the EU foreign ministers meeting, US CPI and a number of important corporate earnings. There are solid gains being recorded across the Hang Seng (+1.15%), HSCEI (+1.5%) and Japan has return from holidays with a 0.8% gain in the Nikkei. There is an interesting article on Bloomberg today, suggesting that there is a rift within the Bank of Japan’s board with respect to the ability of the central bank to meet its inflation target. According to the article, a majority of the nine members disagree with Kuroda’s view that the BoJ’s QQE program is sufficient to get 2% inflation, and most conclude it cannot be done without government steps to raise Japan’s growth potential, citing unnamed sources. USDJPY is broadly unchanged today. Elsewhere Indonesia remains a focus with official election results to be announced later today. IDR continues to rally and is a further 0.3% stronger today while Indonesian USD sovereign paper is trading stronger.  MSCI Asia Pacific up 0.6% to 147.8; Nikkei 225 up 0.8%, Hang Seng up 1.7%, Kospi up 0.5%, Shanghai Composite up 1%, ASX up 0.1%, Sensex up 0.9%.

Equity markets in Europe shrugged off the lower close on Wall Street as the strong performance from Asia-Pacific equities prompted a gap higher at the open, with the energy and materials sectors outperforming on a recent rebound in commodities prices. Earnings in Europe have been received favourably, with ARM Holdings (ARM LN), IG Group (IGG LN) and Actelion (ATLN VX) outweighing a poor update from Credit Suisse (CSGN VX), who have been forced to close their commodities trading unit in order to offset losses prompted by US tax fines. 17 out of 19 Stoxx 600 sectors rise; basic resources, oil & gas outperform; retail, media underperform. 73.2% of Stoxx 600 members gain, 24.8% decline. Eurostoxx 50 +0.5%, FTSE 100 +0.6%, CAC 40 +0.3%, DAX +0.5%, IBEX +0.5%, FTSEMIB +0.6%, SMI +0.2%

Today’s calendar looks more interesting than that of the last 24 hours. The EU foreign ministers’ meeting starts at 8:30am London time this morning. Ahead of that we have some European corporate earnings with Credit Suisse (which were a bigger miss than expected) and Norsk Hydro’s results. Today’s US earnings calendar today features results from a number of megacaps including the likes of McDonalds, Coca-cola Co, Verizon (before the open) and Apple and Microsoft (after-market). A major focus today is on US CPI. Consensus is +2.1% YoY and +2.0% in headline and core respectively. There is also existing home sales today. Both pieces of data have the capacity to move treasury markets. Hungary’s central bank also holds its rate meeting today.

Market Wrap

• S&P 500 futures up 0.1% to 1967.7
• Stoxx 600 up 0.5% to 339.7
• US 10Yr yield up 1bps to 2.48%
• German 10Yr yield up 1bps to 1.16%
• MSCI Asia Pacific up 0.6% to 147.8
• Gold spot down 0.4% to $1307.5/oz

Bulletin Headline Summary from RanSquawk and Bloomberg

• EUR/USD approached YTD lows at 1.3477 this morning, after July’s support at 1.3491 was broken. Real money supply and strong demand for USD/CHF lifted the USD-index to six week highs as thin trade exacerbated price action
• All eyes on Brussels as the EU foreign affairs presser is expected to unveil further sanctions on the Russian arms and dual-use industrial goods sector
• US earnings calendar thick and fast today, with Apple, Microsoft, Verizon, Coca-Cola, McDonalds, Lockheed Martin and Altria all due today
• Treasuries decline, led by 7Y and 10Y notes as global stocks rally; 5/30 curve touches new 5-year tight in overnight trading.
• EU governments labored to identify more Russian businesspeople and companies to sanction and pressed Putin to speed a probe into the downing of Malaysian Air flight MH17 or face isolation
• 54% of jobs in the EU are at risk of advances in computerization, according to a study by economist Jeremy Bowles published by Bruegel, a Brussels-based research organization.
• U.S. Secretary of State Kerry put the onus on the Gaza Strip’s Hamas rulers to halt two weeks of fighting with Israel that has killed more than 600 people, the overwhelming majority of them Palestinians
• Credit Suisse said it will exit commodities trading as a $2.6b fine to settle a U.S. tax investigation pushed the Swiss bank to its biggest quarterly loss since 2008
• Texas Governor Rick Perry said he will send as many as 1,000 National Guard troops to help secure the border with Mexico; about 57,000 unaccompanied minors have arrived at the border since October, double the total from fiscal 2013
• U.S. Senator Ron Johnson’s lawsuit challenging an Obamacare provision subsidizing health insurance for members of Congress and their aides was dismissed by a judge who found the lawmaker failed to show he’d been harmed
• Sovereign yields mostly higher. Euro Stoxx Banks +1.54%. Asian and European stocks equities gain, U.S. stock futures rise. WTI crude and copper higher, gold declines

US Event Calendar

• 8:30am: CPI m/m, June, est. 0.3% (prior 0.4%)
  • CPI Ex Food and Energy m/m, June, est. 0.2% (prior 0.3%)
  • CPI y/y, June, est. 2.1% (prior 2.1%)
  • CPI Ex Food and Energy y/y, June, est. 2% (prior 2%)
  • CPI Core Index SA, June, est. 238.227 (prior 237.776)
  • CPI Index NSA, June, est. 238.535 (prior 237.9)
• 9:00am: FHFA House Price Index m/m, May, est. 0.2% (prior 0.0%)
• 10:00am: Richmond Fed Manufacturing Index, July, est. 5 (prior 3)
• 10:00am: Existing Home Sales, June, est. 4.99m (prior 4.89m)
  • Existing Home Sales m/m, June, est. 2% (prior 4.9%) Supply

ASIAN HEADLINES

The Nikkei 225 (+0.84%) managed to pull back the majority of Friday’s losses after yesterday’s market closure, with Chinese and Hong Kong markets (Shanghai Comp +1.02%, Hang Seng +1.69%) benefiting from the PBoC choosing not to drain liquidity overnight.

FIXED INCOME

Fixed income markets trade softer, with strong equity markets weighing, as Bund futures continue to retreat from contract highs at 148.49 printed on Friday. Furthermore, relatively poorly received (bid/cover 1.84 vs. prev. 2.04) Gilt supply (circa 30K Gilt futures contracts) has pressed prices lower. Italian and Spanish 10yr yield spreads trade slightly tighter, as markets take a favourable view on consolidation in the Italian banking sector, after Banca Carige unveiled plans to offload assets. Barclays Prelim Pan Euro Agg Month-end Extension +0.11y (Prev. month 0.09y, 12m ave. 0.08y), Prelim Treasury Month-end Extension +0.08y (Prev. month 0.08y, 12m ave. 0.09y)

EQUITIES

Equity markets in Europe shrugged off the lower close on Wall Street as the strong performance from Asia-Pacific equities prompted a gap higher at the open, with the energy and materials sectors outperforming on a recent rebound in commodities prices. Earnings in Europe have been received favourably, with ARM Holdings (ARM LN), IG Group (IGG LN) and Actelion (ATLN VX) outweighing a poor update from Credit Suisse (CSGN VX), who have been forced to close their commodities trading unit in order to offset losses prompted by US tax fines.

FX

EUR/USD tripped stops on the way through 1.35 to hit the lowest level since February at 1.3481, with real money supply weighing on the currency as USD/CHF buying lifted the USD-index by almost 0.2%. Traders now eye a base in EUR/USD at the yearly lows of 1.3477, with analysts at IFR noting talk of option barriers at 1.3475 and 1.3450.

COMMODITIES

Oil trades slightly higher ahead of the NYMEX open as continued instability in the Middle-east and eastern Europe keeps a floor under prices. Nonetheless, expectations of a resumption of shipping from Libya’s Brega oil port could keep a cap on Brent price action. Precious metals markets have fallen alongside fixed income, as EU sanctions on Russia are seen sparing the resources and commodities sectors. Near-term focus shifts to the API crude oil inventories due after market and the August WTI option expiries due at the pit close

* * *

DB’s Jim Reid Concludes the Overnight Summary

Ever since news broke that Thursday’s tragic plane crash may have been caused by a missile fired by pro-Russia separatists I’ve felt that this story was an incredibly dangerous one for global stability and also the global economy. However most of these major geopolitical events do eventually pass even if concerns heighten so maybe the market is correct to be relatively sanguine. Will this be another such occasion? In my mind the market is not assigning a high enough probability of this situation escalating to uncomfortable levels but the reality is the most likely outcome is that it doesn’t. Therein lies the dilemma of investing. Do you position for the most likely outcome along with the crowd or do you stand more alone and position for the lower probability but higher impact outcome. Over a career you’ll probably get higher overall returns with the latter strategy but you may have more uncomfortable moments explaining and surviving frequent small under-performance. Also trading liquidity is shallow enough at the moment, especially in assets like cash credit, that it doesn’t necessary pay to try to capture short-term moves. So we’re not changing our recommendations at the moment but it’s fair to say we feel uneasy at developments over the past few days.

Indeed the newsflow continues in this story with no signs of an imminent solution or escalation yet. However with Russia seemingly not keen on accepting the West’s version of events, President Obama putting some pressure on them yesterday afternoon and EU foreign ministers meeting today there is a real possibility of a ratcheting up of sanctions on Russia later this week – including possibly more hard-hitting “level 3” sanctions. The US may find it economically easier to deal with this outcome than Europe though. On a client call yesterday (call replay details included at the end), DB’s Yaroslav Lissovolik, DB’s Head of Research (Russia) discussed Putin’s likely next actions and commented that opinion polls in Russia are suggesting war fatigue, with two thirds against continued support for the pro-Russian separatists. Given this there is a chance that Putin may wish to de-escalate the situation if possible, although Yaroslav noted that Putin may decide to escalate the situation further in the near-term in order to de-escalate at a later point. Also on the call was Frank Kelly, DB’s geopolitical go-to man, who gave his view on the US position. After watching Obama’s press conference yesterday he sees the White House’s position as giving Putin the opportunity to save face and help de-escalate the situation before the stepping up of sanctions. For example Frank thinks we need to see Putin call for a ceasefire and take actions to support it and/or help secure the MH17 crash site. If these actions aren’t forthcoming he believes the US will announce further sanctions on Russia.

As we mentioned earlier, today will likely see more headlines on the situation as EU foreign ministers meet as well as the Russian Security Council. So watch out for headlines from all angles. Perhaps the most market-friendly outcome is that EU leaders talk very tough but do not agree on intensifying sanctions against Russia. Reuters thinks that despite all the tough talk, the EU is unlikely to punish Russia beyond the speeding up of the imposition of already agreed individual sanctions. A summit of EU leaders on July 16, the day before the airliner was downed, agreed the EU would punish Russian companies that help to destabilize Ukraine. According to Reuters, diplomats said Tuesday’s meeting in Brussels was still not expected to go much further than agreeing on the people and possibly companies to be hit with asset freezes under the framework agreed last week. Previously, they had only said they would decide on the list by the end of July. Citing unnamed diplomats, Reuters said moving towards more sweeping economic sanctions could only be decided by heads of government. The next scheduled summit of EU leaders is on August 30, though EU members could call for another emergency meeting.

An unknown element today will be the Dutch, who have previously advocated caution in imposing sanctions against Russia, but are likely going to be a large swing factor today. The Netherland’s previous caution with respect to Russia was perhaps to due to its significant economic ties, but they will be forced into action given the loss of life they have experienced in the MH17 tragedy. In terms of the Russian Security Council meeting, not a lot has been reported on what to expect from this. Putin will chair the meeting to discuss “issues connected with safeguarding the sovereignty and territorial integrity of the Russian Federation,” the Kremlin said in a statement on Monday.

So we may get a short term relief rally if the EU foreign ministers meeting ends today with no concrete steps towards further sanctions – but this doesn’t take away from the fact that we still face a potentially dangerous threat to global stability. Following yesterday’s speech from Obama, we saw a small relief rally as the US president said he still preferred a diplomatic resolution for Ukraine and did not announce any level 3 sanctions. Some also highlighted that Obama chose to discuss the situation in the Middle East first, before the Ukraine/Russia crisis, and was perhaps trying to play the situation down a touch. Either way, US equities bottomed just before Obama’s comments, and from there the S&P500 recovered around 0.33% to close at -0.23% on the day. Rates closed marginally stronger (10yr yield at 2.47%, -1.5bp) although yields also bottomed shortly before Obama spoke and traded upwards towards the end of the NY session. However, this didn’t stop the US30yr yield (3.26%, -3bp) closing at its lowest level in more than a year.

Turning to Asia, we’re seeing a tentative but positive tone to trading ahead of today’s events which include the EU foreign ministers meeting, US CPI and a number of important corporate earnings. There are solid gains being recorded across the Hang Seng (+1.15%), HSCEI (+1.5%) and Japan has return from holidays with a 0.96% gain in the Nikkei. There is an interesting article on Bloomberg today, suggesting that there is a rift within the Bank of Japan’s board with respect to the ability of the central bank to meet its inflation target. According to the article, a majority of the nine members disagree with Kuroda’s view that the BoJ’s QQE program is sufficient to get 2% inflation, and most conclude it cannot be done without government steps to raise Japan’s growth potential, citing unnamed sources. USDJPY is broadly unchanged today. Elsewhere Indonesia remains a focus with official election results to be announced later today. IDR continues to rally and is a further 0.3% stronger today while Indonesian USD sovereign paper is trading stronger.

As we noted in last Friday’s EMR, one corner of the fixed income market worth watching closely is US high yield. The Fedchair has warned repeatedly that she sees worrying signs in the HY market and last week’s flow data from Lipper suggested that perhaps US retail investors are beginning to take heed of those warnings. According to Lipper, retail-cash outflows from HY funds in the week ended July 16 were the single largest one-week redemption in 11 months. The latest EPFR data also confirmed the same, with their data showing that retail investors’ redemptions from US HY funds hit 57 week highs for the week ending July 16th. ETFs were the major contributing factor to that week’s outflows and yesterday we saw the major US high yield ETFs resume their downward moves in price. The iShares iBoxx High Yield ETF closed 0.17% lower (its 9th down day in the last 12 sessions). In addition, the ETF’s 10-day average premium to NAV is now in negative territory (i.e. trading at a discount to NAV), which last occurred last summer. So certainly some evidence of retail selling of the HY asset class. Something to watch over the next few weeks.

On a separate but somewhat related theme, the US Securities and Exchange Commission is expected to vote tomorrow on a plan that may require some money market funds to float the value of their fund’s shares, rather than sticking to the norm of a fixed $1 per share. If the five-member commission on July 23 votes for the plan, institutional money market funds would float the value of their fund’s share price, thus creating a potentially sensitive situation where these perceived low-risk funds could “break the buck”, i.e. trade lower than $1/share. The SEC is also considering the introduction of withdrawal restrictions and exit fees on these funds. Similar to the HY situation described above, in a world accustomed to central bank liquidity, it’s difficult to understand how markets will behave if flows go the other way and perhaps the SEC’s proposals to introduce “gates” on redemptions is a reflection of that unknown.

Today’s calendar looks more interesting than that of the last 24 hours. The EU foreign ministers’ meeting starts at 8:30am London time this morning. Ahead of that we have some European corporate earnings with Credit Suisse and Norsk Hydro’s results. CS is expected to report a negative headline earnings number following recent settlements with US regulators, but as is usually the case of late; markets will be more interested in the underlying earnings. Today’s US earnings calendar today features results from a number of megacaps including the likes of McDonalds, Coca-cola Co, Verizon (before the open) and Apple and Microsoft (after-market). A major focus today is on US CPI. Consensus is +2.1% YoY and +2.0% in headline and core respectively. There is also existing home sales today. Both pieces of data have the capacity to move treasury markets. Hungary’s central bank also holds its rate meeting today.

via Zero Hedge http://ift.tt/1A0QRct Tyler Durden

Bank of England officials led by Mark Carney, the Bank of England governor, are attempting to bridge sharp differences among leading G20 countries as they prepare a landmark set of proposals aimed at tackling the problem of “too big to fail” banks according to the Financial Times today.

Talks under the auspices of the global Financial Stability Board (FSB) over the summer are approaching a key stage as officials aim to clinch an agreement on bail-ins and the bailing in of creditors including depositors of banks.

Finance officials are hoping to pave the way for proposals to be tabled at the G20 leaders meeting at the Brisbane summit in November.

The issue is of major consequence to globally systemic lenders such as Citigroup, Barclays and BNP Paribas, as some will have to issue billions of dollars of fresh bonds earmarked to carry losses.

The issue is of major consequence also to depositors who could see their savings confiscated as happened in Cyprus.

The complexity of the topic and differences between countries’ legal regimes and corporate structures are raising questions over how detailed any framework will be.

Japan is one of the countries with problems with bail-in plans amid concerns that they are not easily compatible with the structure of its banking system. Its banks are heavily deposit-funded, and officials are uncomfortable about the idea of bail-ins.

Japanese banks are already vulnerable and bail-ins could hurt consumer sentiment in the already struggling Japanese economy. Concerns in Tokyo are said to be sufficiently profound for it to push its case right up to the summit itself.

China is also sceptical about the notion of private sector bail-ins given its banks are state-owned. “There are some very entrenched positions,” one official told the FT.

Russia is likely to oppose the coming bail-in regime as well as many other large creditor nations.

Mr Carney, who also chairs the FSB, said in March he wanted to “break the back” of the too big to fail issue this year. He said regulators sought by Brisbane to have cracked two major issues – on the loss  absorbing capacity that big banks have to hold and on contractual provisions in derivatives contracts.

Bail-ins are coming to banks in the western world with consequences for depositors.

Must read guide to and research on deposit confiscation and banks that are vulnerable to deposit confiscation can be read here:
Protecting Your Savings In The Coming Bail-In Era

via Zero Hedge http://ift.tt/1lpnS8y GoldCore

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

The more I’ve thought about potential solutions to the gigantic mess we have found ourselves in as a species, the more I have come to believe we need to break apart into a vast multitude of city-states. The revolutionary concept of America in the first place was this idea of “self-governance,” something we do not posses an iota of in this day and age. As was noted recently in an academic paper published by Princeton and Northwestern, these United States have mutated into nothing short of an oligarchy. In fact, the study demonstrated that the will of the people has essentially zero impact on legislation whatsoever.

In centuries prior, the idea of “representative-democracy” in which people elect people to represent their interests in a far off capital seemed like a reasonable solution to a very real problem. Information took a very long time to get from one place to another, so you had to trust someone else to essentially negotiate for you on issues of national significance. Moreover, in such a disconnected world, centralization was not only more efficient, it seemed like the only way. As such, things became highly centralized, so much so that things have now morphed into a global oligarchy that wields almost total power. Meanwhile, the billions of plebs have no say whatsoever in the affairs that govern their lives; including whether they will be financially secure, posses any civil liberties at all or end up in jail for a wide litany of non-violent “crimes.”

With the incredible tools we now possess, thanks primarily to the Internet, we no longer need centralization of government. Nor do we really need representatives to vote for us on the issues that most greatly affect out lives. As any American understands, the diversity of cultural, economic, and political sentiments vary greatly throughout the land. It’s not just the obvious ones, such as the differences between “northerners” and “southerners,” but wide discrepancies exists within states themselves. For example, Austin is nothing like much of the rest of Texas, and the Denver/Boulder area where I live is very distinct from much of the rest of Colorado. The examples are simply too many to list, but I am of the belief that people are capable of, and should be free to, decide the most important things that affect their lives at a local level (with the exception of obvious things such as violence or aggression toward one another).

The founding fathers’ original idea of many “United States” allowed for different ideals to be expressed in a wide variety of ways, and is in my opinion one of the most advantageous attributes of our nation. But why stop there? Why not allow different areas and municipalities break off even further into far more autonomous type structures than we have today?

Of course many people will answer, what about slavery? The truth of the matter is that this abomination in the United States seemingly had to be resolved through a bloody conflict given the economic interests in the south at the time. The founders decided one war  was enough, and let this horrible practice be tackled almost a hundred years later through violent conflict. I hope that we have advanced enough as a species that we can come to a global consensus that certain things are illegal everywhere. Slavery, murder, rape, etc. Other than these (and other) obvious evils we can all agree on, decentralized legislation seems to make sense to me in this day and age. While I strongly disagree with “global government” a global consensus on certain things we can all agree upon as reprehensible anywhere on earth seems completely reasonable.

With that in mind, the man who recently purchased the entire 30,000 Silk Road Bitcoins from the feds has proposed to break California into six separate parts. The measure has already collected “far more than the 800,000 signatures” needed to to get it on the state ballot.

From Wired:

Like Hollywood or Manhattan, Silicon Valley occupies a singular place on the American cultural and economic landscape. Unlike those other locales, however, the Valley’s more idiosyncratic political leanings have led to murmurings of secession more typical of rural hinterlands that already feel cut off through sheer physical isolation. That chatter has culminated in a measure that appears headed for the statewide ballot to split California into six separate states, of which Silicon Valley would be one.

 

While ostensibly a plan to make the entire state of 38 million people more governable, the six-state initiative is being led and funded by a member of the Silicon Valley elite, many of whom would no doubt welcome the increased political clout that would likely come from carving out their own statehood. In the hands of most, the six-state initiative would look like a pure stunt. But with Silicon Valley behind it, this effort’s chances at the ballot box can’t be dismissed out of hand. Unlike most other would-be revolutionaries, Silicon Valley has a long record of taking ideas that sound outlandish at the time—affordable computers in every home, private rocket ships—and managing to make them real. It also has a seemingly endless stream of money that, combined with heavy doses of ingenuity and shamelessness, give its goofball ideas the fuel they need to take off.

 

Leading the six-state push is Tim Draper, a wealthy third-generation venture capitalist known for his theatrics. He hosts the superhero-themed Draper University of Heroes, a kind of motivational cram session for would-be startup entrepreneurs, and once wore a Captain America costume himself on a magazine cover. Last month, he bought nearly 30,000 bitcoins auctioned off by the U.S. Marshals Service after authorities had seized them from online black market Silk Road. In short, he’s exactly the kind of guy with the time, money, and temperament to push a wacky-sounding ballot measure.

 

“Our gift to California is this—it’s one of opportunity and choice,” Draper said at a press conference yesterday where he announced the campaign had collected far more than 800,000 signatures needed to get the measure on the ballot. “We’re saying, make one failing government into six great states.”

 

The campaign in favor of the measure argue that six states will mean six state governments more responsive to local concerns, rather than the unwieldy process of orchestrating the state’s 158,000 square miles entirely from Sacramento.

 

With the six-state proposal, the Californian Ideology appears to be seeking out its final, fullest, most ironic realization by underwriting Silicon Valley’s emancipation from California itself.

 

And why wouldn’t Silicon Valley seek to be free? Through the lens of its own sensibility, at least, California looks like the worst kind of incumbent, an ancient and inefficient institution mired in old ways of doing business, a monopolist that holds onto power through manipulation, not innovation. To six-state supporters, holding onto the idea of a single California represents, at best, an irrational sentimentality, a commitment to the past grounded in lazy logic and unexamined assumptions. Breaking up California is exactly the kind of “disruption” that titillates the venture capitalist imagination. In the process, the new state of Silicon Valley—which would stretch from San Francisco to Monterey–would also, conveniently, separate its great and greatly concentrated wealth from the poorer parts of the state.

 

The Valley’s “hacker way” has so far proven a clumsy fit for the strategic complexity of the political process, which relies more on realism than idealism. Before California would officially break up, per the U.S. Constitution, the existing state legislature would still have to sign off, which it’s unlikely to do for a host of reasons, not least being the tax revenue lost to Silicon Valley seceding. Congress would also have to approve what would amount to the dilution of its own power by granting California twelve senators instead of the current two.

At this point, I’d like to make it clear I don’t think this will become a reality in the near-term. In fact, it is likely that decentralization will first occur in the economic and technological areas of human society way before it happens on the political level. The reasons for this should be obvious.  

We are already seeing decentralization take over in all sorts of economic areas. Information flow in general and alternative media specifically, currency (Bitcoin), transportation (Uber, Lyft), and manufacturing (3D-printing). When the political process fully implodes in the West, we’ll look to decentralized successes in other areas and apply them to politics.

I believe the current overly centralized paradigm parasitically engulfing the planet will experience a series of spectacular collapses in the years ahead that will make 2008 look like practice. As the centralized beast episodically implodes upon itself, we will have a historic chance to remake our world in a new way that will better serve humanity. That new paradigm will consist of freedom through decentralization, and I can’t wait to see it.

In fact, it’s already started.

For recent articles on our generation’s most significant battle; Centralization vs. Decentralization, check out the following articles:

Ex-CIA Officer Claims that Open Source Revolution is About to Overthrow Global Oligarchy

Networks vs. Hierarchies: Which Will Win? Niall Furguson Weighs In

via Zero Hedge http://ift.tt/1wTdr2r Tyler Durden

Submitted by Andy Tully via OilPrice.com,

A leading Vietnamese military officer said July 16 that China’s decision to remove a huge oil rig from waters claimed by both countries shows that it is backing down in a dispute that has raged since May.

Maj. Gen. Le Ma Luong told PetroTimes, a Vietnamese news outlet, that China was moving the rig because of Vietnam’s “strong reactions” to its presence in the South China Sea near the Paracel Islands. The region is near the Vietnamese coast but Beijing considers it Chinese territory.

In the interview, Luong dismissed a suggestion by the Voice of Vietnam, a state run news agency, that the rig was being moved to protect it from the approaching Typhoon Rammasun. The general called that “just an excuse.”

The China National Petroleum Corp. said the operation was ending now that the rig had found “signs of oil and gas.” It said the company would assess the findings before deciding on its next steps.

Meanwhile, it said, the rig was being moved to undisputed waters near the Qiongdongnan basin.
In Beijing, the Chinese Foreign Ministry said moving the rig should not be interpreted as a retreat from inclement weather or from Vietnam, but simply that it had completed its work of exploring for oil in the area. It also reiterated the assertion that the Paracel Islands are Chinese territory.

Still, China may be motivated by a desire to improve relations with neighboring Vietnam, according to Bonnie Glaser, who specializes in Asian affairs at the Center for Strategic and International Affairs, a Washington think tank. “It could be a face-saving way to end the over two-month-long standoff with Vietnam,” she said.

Beijing set up the oil rig, the $1 billion Haiyang Shiyou 981, on May 1 in the disputed waters, triggering violent and often deadly demonstrations in Vietnam. There also were daily confrontations at sea between Vietnamese boats that tried to approach the rig and Chinese coast guard vessels sent to protect it.

Regardless of why China withdrew the rig, the move is likely to ease fears harbored by arge majorities of Asians that Beijing’s overall territorial claims could lead to war, according to a survey by the Pew Research Center in Washington.

The poll was conducted in 11 Asian countries from March – even before China moved the oil rig off Vietnam’s coast – to June. In the Philippines, 93 percent of respondents feared war, 85 percent in Japan shared that concern, and 84 percent in Vietnam felt the same.

Fully 83 percent of those surveyed in South Korea, which enjoys warm commercial relations with China, expressed concern for peace in the region, and that worry was shared by 62 percent of respondents in China itself.

All told, Pew reports, majorities in nine of the 11 countries feared military conflict.

via Zero Hedge http://ift.tt/1sHP5Lj Tyler Durden

Presented with little comment aside to ask, if everything’s so hunky-dory over in China then why, on the first day in a while that the PBOC decides not to conduct repo operations (i.e. inject a bucketload of cheap money), does the 7-day repo rate (the cost of borrowing money) spike to 6-month highs? (Hint: it’s a rhetorical question)

 

 

Simply put – you can kiss goodbye any hopes of China ceasing its exuberant credit creation… (especially now that the CCFD ponzi scheme has been exposed via Qingdao -and drastically reduced that channel). Reforms are all talk and the bubble will just grow bigger with fewer and fewer attractive outlets for that hot money (now that the US real estate transmission channel has been identified and likely closed)… cue real inflation.

via Zero Hedge http://ift.tt/1nP8wdi Tyler Durden