Tag: news

• Espirito Santo Financial Suspends Shares, Bonds on ESI Exposure (BBG)
• Europe Stocks Drop for Fifth Day as Espirito Santo Sinks (BBG)
• Espirito Santo Creditors Doubt Containment on Missed Payment (BBG)
• French Stocks Seen Extending Losses on Economy Concern (BBG)
• Stocks Slide With Portugal Bonds as Yen Gains; Oil Drops (BBG)
• U.S. Probes Hacking of Government Computers at Personnel Agency (WSJ)… finds terabytes of porn 
• It’s Congress’ fault: Obama rejects criticism over border crisis (Reuters)
• Israel Mobilizes 20,000 Troops for Possible Gaza Invasion (BBG)
• Chinese hackers pursue key data on U.S. workers (NYT)
• Donetsk Primed for Siege as Ukraine Army Hems In Rebels (BBG)
• Regulators Ready Money-Fund Rules (WSJ)
• Are Investors Complacent About Risk? Concern Raised in June Fed Meeting (BBG)
• Gaza Rockets Threaten Nuclear Plant as Israel Vows Force (BBG)
• China June trade data misses forecasts, doubts over economy linger (Reuters)

 

Overnight Media Digest

WSJ

* Federal Reserve officials agreed at June’s policy meeting to end their bond-buying program in October, putting an explicit end date on the experiment for the first time. Most officials at the June meeting also indicated that they expect an interest rate hike to come next year. (http://on.wsj.com/VLc1vo)

* IBM on Wednesday pledged to spend $3 billion over five years on semiconductor research. The money will be directed toward two major tasks: tackling technical obstacles to the miniaturization of circuitry on conventional silicon chips and developing alternative materials and technologies to keep boosting computing speed while consuming less energy. (http://on.wsj.com/1nffCfJ)

* The Education Department says it was unaware of the dire state of Corinthian Colleges Inc’s finances before it moved June 12 to restrict access to federal student-aid dollars, which made up 80 percent of Corinthian’s revenue. The aid freeze was designed to pressure the company to comply with an investigation into recruiting tactics, administration officials say, not to force its closure. (http://on.wsj.com/1szTnRZ)

* Chinese exports grew in June on the back of strengthening U.S. consumer demand, in a positive sign for China’s crucial factory sector and for the global outlook. The pace of export growth disappointed some economists, though others blamed the lingering impact of distortions in last year’s Chinese trade numbers used to make the comparison. (http://on.wsj.com/1ra3L2H)

* European Union antitrust officials have started questioning rival firms about Facebook Inc’s proposed $19 billion acquisition of messaging service WhatsApp, ahead of a formal review that could be a test case for how to apply EU competition law to the new world of social media. (http://on.wsj.com/1n7ifLz)

* U.S. regulators are poised to complete long-awaited rules intended to prevent a repeat of the investor stampede out of money-market mutual funds that threatened to freeze corporate lending during the 2008 financial crisis. The Securities and Exchange Commission is expected to vote on a plan as early as this month that would require certain money funds catering to large, institutional investors to abandon their fixed $1 share price and float in value like other mutual funds, these people said. (http://on.wsj.com/1ol2KkG)

 

FT

AbbVie Chief Executive Richard Gonzalez was on Wednesday forced to retract comments made by him while discussing shareholder support for the U.S. drugmaker’ s 30 billion pound ($51.1 billion) bid for Shire after being caught out by British takeover rules.

Citigroup Inc is close to shelling out more than $7 billion to resolve a long-running investigation by the U.S. government into its sale of mortgage-backed securities, according to people familiar with the matter.

Germany’s Lufthansa may launch a no-frills long-haul airline as part of wider plans by the company to stave off competition from low-cost and Middle Eastern carriers.

European Union antitrust regulators fined have fined six drugmakers including France’s Servier a whopping 428 million euros ($583.8 million) for blocking the entry of cheaper generic competition to an expensive branded drug.

Britain’s financial watchdog is launching a review of competition in the wholesale securities market as it eyes the practices used by high-frequency traders to get ahead on other investors.

Germany’s Aldi is the global leader among discount food retailers that offer limited assortment grocery. Schwarz, which owns Lidl, took second place, according to a study by research firm Planet Retail.

A cross-selection of peer-to-peer (P2P) loans has gotten a credit rating from Standard & Poor’s, marking the first time that a major credit rating agency has agreed to formally evaluate a securitisation from the fast-growing P2P sector.

 

NYT

* With countries in the European Union obliged to reduce their debt as a percentage of their economies, the quantifying of vice is expected to make growth rates look rosier. (http://nyti.ms/1ol0Twa)

* Chinese hackers in March broke into the computer networks of the United States government agency that houses the personal information of all federal employees, according to senior American officials. They appeared to be targeting the files on tens of thousands of employees who have applied for top-secret security clearances. (http://nyti.ms/1mL8sRb)

* A growing category in health care promises an alternative to the hospital emergency room and perhaps the family practitioner, with low fees and extended hours. Once derided as “Doc in a Box” medicine, urgent care has mushroomed into an estimated $14.5 billion business. (http://nyti.ms/1mBdPAK)

* Europe’s top antitrust enforcer said several drug makers, including Servier, kept more affordable forms of a popular heart treatment off the market. (http://nyti.ms/1mBehix)

* The Taxi and Limousine Commission declared Lyft, a car-summoning start-up, an “unauthorized service” in New York City on Wednesday, two days before its planned debut. The start-up, however, did not come to an operation agreement with New York City regulators beforehand, prompting the commission’s action on Wednesday evening. (http://nyti.ms/1xVJoJD)

* In small trials, two drugs go far in soothing symptoms of Eczema and Psoriasis. An experimental drug for eczema relieved severity of symptoms in 85 percent of those who took it. A drug for psoriasis cut severity of symptoms in as many as 82 percent of those who took it. (http://nyti.ms/1mLqVgH)

* A merger of Comcast and Time Warner Cable and a joining of AT&T and DirecTV would both pose competitive threats, Dish said. (http://nyti.ms/1mLnQNn)

* Harley-Davidson is recalling 66,421 Touring and CVO Touring motorcycles from the 2014 model year because their front wheels can lock up without warning. The company said it knew of five crashes and two minor injuries related to the defect, which it discovered last fall through warranty claims.(http://nyti.ms/TU7QMr)

 

Canada

THE GLOBE AND MAIL

** Heavy rain is not the only reason the Assiniboine River is flooding in the height of summer and threatening a swath of communities across southern Manitoba this week, a new report suggests. The elimination of vast numbers of small ponds and wetlands across the Canadian prairie has removed a crucial buffer that can temporarily store water on the landscape during periods of excessive precipitation. (http://bit.ly/1rawNiP)

** Canada should “come off the sidelines” to take a more active role in South Sudan as that country’s humanitarian crisis deepens, the head of Amnesty International’s Canadian branch says. Alex Neve made the comments after a 10-day visit to South Sudan, where a violent conflict is causing widespread upheaval in the world’s newest country. (http://bit.ly/1ngOQU2)

Reports in the business section:

** Multimillionaire geologist Charles “Chuck” Fipke has sold his remaining stake in Ekati, the first-ever Canadian diamond mine he discovered two decades ago in the Arctic tundra of the Northwest Territories. The native Albertan sold his 10 percent interest to Dominion Diamond Corp for a total of $67 million (http://bit.ly/1nad8KL)

NATIONAL POST

** A father opened fire at a suburban Houston home Wednesday, killing four of his children as well as two adults who were with them, and critically wounding his 15-year-old daughter, authorities said. The suspected gunman eventually surrendered after a three-hour standoff with deputies who had cornered him. (http://bit.ly/1rayexz)

** The Conservative government is examining a whole new business model to effectively buy, sell and use the time and skills of federal employees: Meet the BURO-crat. The government has been planning a pilot project at some federal agencies that would apply “market principles” to more efficiently use federal bureaucrats and help smooth out busy and slow work periods, according to government records. (http://bit.ly/W05QUP)

FINANCIAL POST

** The Canadian arm of China Petrochemical Corp may shelve work on its Northern Lights oil sands lease or sell the property entirely, as Chinese companies begin to rethink future investment prospects in the world’s No. 3 crude reserve. Sinopec, as the company is known, could delay efforts to develop the property or seek to sell its interest in the lease entirely as it consolidates its North American assets, a person familiar with board-level discussions in Beijing said. (http://bit.ly/U5bLX7)

** CNOOC Ltd subsidiary Nexen Energy ULC is restructuring its operations and letting go staff despite pledges to Ottawa by China’s largest offshore oil producer to keep all employees and senior management and turn the Calgary-based company into a platform for growth, industry sources say. (http://bit.ly/1tquxZ3)

 

China

CHINA SECURITIES JOURNAL

Qianhai, the special economic zone in China’s southern city of Shenzhen, plans to publish new rules that will expedite investment by Hong Kong companies and accelerate financial cooperation between the two neighbouring cities.

SHANGHAI SECURITIES NEWS

China has vowed to improve insurance services to stimulate innovation in social governance, the State Council said in a statement on Wednesday. Competent insurers are encouraged to roll out commercial pension and health care plans, invest in the pension sector, participate in the integration of the health sector and develop new products. Insurance will be incorporated into the disaster prevention system and funds will be encouraged to invest in urbanization, infrastructure and residential renovations.

21st CENTURY BUSINESS HERALD

– A residential land parcel in downtown Shanghai was sold at a record price of nearly 60,000 yuan per square metre, making it the most expensive plot sold in the country so far this year. The 6.885-square metre plot was acquired by a subsidiary of Lai Fung Holdings Ltd, which is the property and investment arm of the Lai Sun Group.

SHANGHAI DAILY

– China’s chief climate official, Xie Zhenhua, said the nation should not be subject to the same rules for greenhouse gas emissions as the U.S. and other developed countries, and that Beijing will oppose attempts to impose them on China at next year’s world climate conference.

CHINA DAILY

– Bank of China on Wednesday denied helping to launder money for people planning to emigrate by ignoring the annual cap on foreign exchange for individuals. According to a report by broadcaster CCTV, the country’s largest foreign exchange bank has frequently allowed wealthy customers to transfer as much money as they want overseas.

 

Britain

The Times

CABLE HIRES MYNERS TO DEFUSE FLOAT ANGER

Vince Cable has attempted to head off what will be an excoriating attack on him by MPs later this week over the sale of Royal Mail by calling in a former Labour City minister to head an inquiry into government privatisations.

APPLAUSE FILLS AISLES AS KING CHECKS OUT

In the end there was no valedictory, no finger pointing and no barracking from the floor. Justin King stood down as the chief executive of J Sainsbury after ten years and fifteen weeks yesterday with the sound of applause ringing in his ears.

INSURERS PROMISE TO BE MORE OPEN WITH CUSTOMERS ON COSTS

Motorists and householders renewing their annual insurance policies could be told at the same time what their cost of cover was the previous year under an industry drive to be more open with customers.

The Guardian

BANK OF ENGLAND’S NEMAT SHAFIK SIGNALS THAT INTEREST RATE RISE EDGES CLOSER

The Bank of England’s new deputy governor has signalled that an interest rate rise is edging closer after telling MPs the amount of spare capacity in the economy is lower than the bank predicted in May.

MONTHLY HOUSE PRICES FOR JUNE DROP 0.6 PCT, HALIFAX REPORTS

House prices experienced a bigger monthly fall than analysts had expected in June, knocking 1,100 pounds ($1,900) off the average property value, according to a survey carried out by mortgage lender Halifax.

The Telegraph

UBS PREDICTS SAVINGS FLIGHT FROM SCOTLAND IN THE EVENT OF ‘YES’ VOTE

Savers may rapidly move their money south of the border if Scotland were to vote for independence, analysts at one of Europe’s biggest banks have predicted.

QATAR CUTS HOLDING IN LONDON STOCK EXCHANGE BY A THIRD

Qatar Holding is to trim its 15 percent stake in the owner of the London Stock Exchange by a third ahead of a $1.6 billion rights issue by the British bourse to fund its acquisition of Russell Investments.

SHALE ‘COULD MEET 41 PCT OF UK’S GAS NEEDS’, SAYS NATIONAL GRID

Shale gas produced in the UK could provide more than a third of the nation’s gas supplies within 20 years, a report has found.

Sky News

RAC OWNER CARLYLE HOLDS TALKS ABOUT 2 BLN STG SALE

The owners of the RAC roadside recovery service have been holding secret talks about a 2 billion pound sale in the wake of a modest stock market debut by the AA, its main rival.

SYRIA ‘LIKELY’ USED UK CHEMICALS TO MAKE SARIN

Chemicals exported by British firms to Syria in the 1980s are likely to have been used to make the nerve agent sarin, UK Foreign Secretary William Hague said.

 

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of July 5 at 8:30–consensus 315K
Wholesale trade inventories for May at 10:00–consensus up 0.6%

ANALYST RESEARCH

Upgrades

Alcoa (AA) upgraded to Overweight from Equal Weight at Morgan Stanley
Allscripts (MDRX) upgraded to Strong Buy from Buy at ISI Group
Autodesk (ADSK) assumed with an Overweight from Equal Weight at Barclays
CommonWealth REIT (CWH) upgraded to Buy from Hold at Stifel
MB Financial (MBFI) upgraded to Buy from Neutral at Sterne Agee
MRC Global (MRC) upgraded to Neutral from Underperform at BofA/Merrill
PrivateBancorp (PVTB) upgraded to Buy from Neutral at Sterne Agee
Starwood (HOT) upgraded to Buy from Hold at MLV & Co.
TCF Financial (TCB) upgraded to Buy from Neutral at Sterne Agee
Tractor Supply (TSCO) upgraded to Outperform from Neutral at Credit Suisse

Downgrades

Lumber Liquidators (LL) downgraded to Hold from Buy at Jefferies
Lumber Liquidators (LL) downgraded to Neutral from Outperform at Credit Suisse
T. Rowe Price (TROW) downgraded to Equal-Weight from Overweight at Evercore
UnitedHealth (UNH) downgraded to Hold from Buy at Jefferies
Waddell & Reed (WDR) downgraded to Neutral from Buy at Citigroup

Initiations

American Express (AXP) initiated with an Underperform at Macquarie
Aon plc (AON) initiated with an Overweight at Evercore
Associated Banc-Corp (ASBC) assumed with a Neutral at Sterne Agee
CIT Group (CIT) initiated with an Underperform at Macquarie
Cepheid (CPHD) initiated with an Outperform at Wells Fargo
Discover (DFS) initiated with an Outperform at Macquarie
EZCORP (EZPW) initiated with a Neutral at Macquarie
Envision Healthcare (EVHC) initiated with an Outperform at RW Baird
Exterran Partners (EXLP) initiated with a Neutral at Goldman
FirstMerit (FMER) initiated with a Neutral at Sterne Agee
Foresight Energy (FELP) initiated with an Outperform at Cowen
Freeport McMoRan (FCX) initiated with an Overweight at HSBC
MDU Resources (MDU) initiated with a Market Perform at Wells Fargo
Marsh & McLennan (MMC) initiated with an Overweight at Evercore
Model N (MODN) initiated with an Outperform at Northland
Nexstar (NXST) initiated with a Hold at Noble Financial
NorthStar Asset Management (NSAM) initiated with an Outperform at FBR Capital
QIAGEN (QGEN) initiated with a Market Perform at Wells Fargo
Quidel (QDEL) initiated with a Market Perform at Wells Fargo
Santander Consumer (SC) initiated with a Neutral at Macquarie
ServiceNow (NOW) initiated with a Neutral at BofA/Merrill
Springleaf (LEAF) initiated with a Neutral at Macquarie
TAL International (TAL) initiated with a Neutral at Macquarie
Team Health (TMH) initiated with an Outperform at RW Baird
Textainer (TGH) initiated with a Neutral at Macquarie
Trovagene (TROV) initiated with a Buy at Maxim
Willis Group (WSH) initiated with an Equal-Weight at Evercore
World Acceptance (WRLD) initiated with a Neutral at Macquarie

COMPANY NEWS

Boeing (BA) projected demand for 36,770 new airplanes over the next 20 years valued at $5.2T
IBM (IBM) announced a $3B cloud, big data systems research initiative
Harley-Davidson (HOG) recalled 66,421 motorcycles due to potential wheel lock-up
Google Ventures (GOOG) said it would launch a new venture fund in Europe with initial funding of $100M
Costco (COST) reported June SSS up 6%
Zynga (ZNGA) appointed Google (GOOG) executive Dr. Regina Dugan to the company’s board
Regado Biosciences (RGDO) said the FDA placed a clinical hold on the company’s ongoing Phase 3 REGULATE-PCI trial
Worldwide PC shipments totaled 75.8M units in Q2, a 0.1% increase from 2Q13. According to IDC’s Worldwide Quarterly PC Tracker, worldwide PC shipments totaled 74.4M units in Q2 (HPQ, TOSBF, AAPL, MSFT, IBM)

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
DragonWave (DRWI), CHC Group (HELI)

Companies that missed consensus earnings expectations include:
Helen of Troy (HELE), WD-40 (WDFC)

Lumber Liquidators (LL) sees Q2 EPS 59c-61c, may not compare to consensus 90c
Lumber Liquidators (LL) lowers FY14 EPS view to $2.65-$3.00 from $3.25-$3.60
DragonWave (DRWI) sees Q2 revenue growth 25%-40% relative to Q1
Ventas (VTR) sees Q2 normalized FFO at least $1.09, consensus $1.09
Helen of Troy (HELE) backs 2015 adjusted EPS view $4.30-$4.40, consensus $4.38
Zumiez (ZUMZ) raises Q2 EPS, revenue outlook

NEWSPAPERS/WEBSITES

HP (HPQ) sources deny bid made for Rackspace (RAX), Re/code reports
Holder refuses meeting with BofA (BAC) CEO, Reuters says
News Corp’s (NWSA) HarperCollins selling books directly to readers to bypass Amazon (AMZN), FT reports
Shareholders urge Allergan (AGN) to make large acquisition, FT reports
Bank of America (BAC) requests 5c dividend reapproval, WSJ reports
Commerzbank (CRZBD) could resolve U.S. probe by paying $600M-$800M, Reuters says
Investigation into ousted American Apparel (APP) CEO to end soon, Reuters reports
Schlumberger (SLB) can continue higher, Barron’s says

SYNDICATE

Crestwood Equity (CEQP) files to sell 26.3M common units for holders
Eros International (EROS) 7M share Secondary priced at $14.50
Kosmos (KOS) files to sell 17M shares of common stock
Malibu Boats (MBUU) 4.8M share Secondary priced at $18.50
Memorial Production (MEMP) files to sell 8.6M common units for partners
Ocera Therapeutics (OCRX) files to sell common stock
Sotherly Hotels (SOHO) announces $23.4M ‘at-the-market’ equity offering

via Zero Hedge http://ift.tt/1raNY3E Tyler Durden

Today’s AM fix was USD 1,343.25, EUR 985.22 and GBP 784.61 per ounce.
Yesterday’s AM fix was USD  1,322.50, EUR 971.71 and GBP  773.08 per ounce.

Gold climbed $8 or 0.61% yesterday to $1,327.70/oz and silver rose $0.07 or 0.33% to $21.11/oz.

Silver is outperforming again today. It is up 2% to its highest since mid-March at $21.54/oz. It’s currently on track for a sixth consecutive week of gains, a feat it hasn’t pulled off since early 2011, according to Reuters.

Gold In U.S. Dollars and 50, 100, 200 Simple DMA – 5 Years

Gold surged above strong resistance at $1,334/oz this morning and is looking better and better from a technical perspective.  There was strong chart resistance at $1,334/oz as this was the 61.8% retracement of the March to June retreat. Traders bought gold once we breached that level and there was an acceleration in gold’s move higher.

Gold has now broken convincingly above the key 50, 100 and 200 day moving averages (see chart).  Gold futures trading volume this morning in London was 62% above the average for the past 100 days, data compiled by Bloomberg show.

Gold climbed to the highest in more than three months as Middle East tension led to renewed safe haven demand and after the dollar weakened following the U.S. Federal Reserve minutes.

Israel has mobilized 20,000 soldiers for a possible ground invasion of the Gaza Strip, as militants there extended their rocket barrage and the Palestinian death toll increased.

The technicals and fundamentals are increasingly aligned and this sets the stage for a rally to test resistance at $1,400/oz. Geopolitical risk from the Middle East, both Iraq, Iran and Israel, continues to be under appreciated. The price rise could be a delayed reaction to deterioration of the situation in Israel.

The Nikkei dipped late in trading in Asia and stock indices are in the red in Europe and this risk off sentiment could be another contributory factor to gold’s gains today.

European stocks fell for a fifth day as shares of lenders declined to their lowest level this year. U.S. index futures also slid.

Banco Espirito Santo tumbled 16%, dragging the Portuguese benchmark PSI 20 Index (PSI20) down for its biggest seven-day drop since August 2011.

Palladium reached a new 13 year high after the longest run of gains since 2000.

As ever, it is impossible to pinpoint singular financial and economic breaking news or developments and point to them as the factor driving prices in the short term but it seems likely that the BES bond sell off and bond rout in Portugal may be creating jitters in European and wider markets.

There have been many bullish developments in the precious metal markets in recent weeks which have failed to ignite prices however the fundamentals appear to be re exerting themselves.

Gold is 11% higher this year as the Fed said it would continue ultra loose monetary policies and keep interest rates low for a “considerable time,” amid growing conflict in the Middle East and tension between Russia, China and the U.S. and western powers.

The Fed’s June meeting minutes released yesterday showed some officials expressed concern investors may be complacent about the economic outlook.  Something we have been warning of in recent weeks.

Silver Fix – Thomson Reuters and CME To Be ‘Crowned’ New Fixers
CME Group Inc.  and Thomson Reuters Corp  are expected to be ‘crowned’ the new operators of the London silver fix this week, a person with knowledge of the matter told the Wall Street Journal overnight.

Silver in U.S. Dollars – 5 Years

An announcement is expected Thursday or Friday to mark the end of a nearly-two-month-long hunt for a replacement to the benchmark, despite an 11th-hour attempt to muscle in on the action by the London Metal Exchange and Autilla Inc., a brokerage technology provider.

The results of a survey of members of the silver industry and of an independent consultation found broad support for the CME/Thomson Reuters proposal, according to two people with knowledge of the matter. Neither CME Group nor Thomson Reuters would comment.

CME/Thomson Reuters will have about a month to get their electronic system ready before the existing fix—a daily chat among a small group of banks—is set for a final time Aug. 14. The fix, a venerable 117-year-old City of London institution, provides a benchmark for mining companies to settle sales contracts and, more recently, to price such derivatives as exchange-traded funds, totaling billions of dollars each year.

We are now offering a price match guarantee and will match prices offered by bullion dealers internationally >> Bullion Coin And Bar Price Match Guarantee

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

But… but… the VIX said everything is ok, and European rates were the lowest they have been in centuries… How can something possibly go wrong?

It just did.

The scandal which we first reported yesterday, after observing the record collapse in the bonds of troubled Portuguese lender Espirito Santo International following the failure to make a bond payment, has quickly escalated and overnight went nuclear.

Early on in the European trading session, following a report in Diario that E.S. International is considering an insolvency request, Espirito Santo Financial Group, which holds 25% of Banco Espirito Santo, fell as much as 16.15% to EU1.09 and traded over 15% lower at EU1.10, at the same time as Banco Espirito Santo fell as much as 7.15% to EU0.571.This was aggravated by creditors concerns that anything was contained after yesterday’s failed damage control attempt by the parent.

Then things went from bad to worse after Espirito Santo Financial announced it has suspended trading in its shares and bonds due to its exposure to ESI, adding the decision was taken due to “ongoing material difficulties” at its largest shareholder Espirito Santo International, according to regulatory filing.  ESFG says it “is currently assessing the financial impact of its exposure to ESI”. ESFG also suspends bond issued by fully owned subsidiary Espirito Santo Financiere. We will have the full, convoluted, org chart of Espirito Santo shortly.

At that point the genie was out of the bottle and thanks to Europe’s still completely insolvent banking system, linked intimately to the sovereign as the ECB has done absolutely nothing to break the bank-sovereign link, promptly hit the sovereign sector, leading to a blow out in the Portuguese 5Y yield +16bps to 2.616%, sending the 10Y yield pushing wider +12bps to 3.896%, and the 10Y spread vs bunds +15bps to 270bps, highest since May 21. And not only in Portugal but other peripheral spreads widened also, with Greece (which is supposed to sell 3Y bonds today – good luck) and Ireland expanding most in 10Y.

Then the safe haven trade came back with a vengeance and the September German Bund future rose as much as 46 ticks to a contract high 147.79, and sending 10 Year yields to all-time lows of 1.17%.

Then, the contagion spread to stocks as first European shares tumbled, with the banks and travel & leisure sectors underperforming and personal & household, telco outperforming. The Italian and Spanish markets are the worst-performing larger bourses, the U.K. the best. Then, it moved across the atlantic as S&P futures have tumbled the most in months in the premarket.

Adding insult to Portuguese bank injury, was very disappointing French (-1.7%, Exp. 0.2%, Last 0.3%), Italian (-1.2%, Exp. 0.2%, Last 0.5%) and Dutch (-1.9%, Exp. 0.3%, Last 2.3%) industrial Production data, confirming any illusions about a European recovery absent a fix of the broken credit channel are utterly ridiculous, and that the ECB was once again wrong focusing on boosting the carry trade – the very same reason why Portugal is today picking up the pieces as Draghi forced traders in the very same trades which today are halted in Portugal!

In other news commodities decline, with nickel, WTI crude underperforming and silver outperforming. But not gold and silver: the precious metals have exploded this morning, with gold trading north of $1340 (but… but… Morgan Stanley said…) and silver at $21.50.

Finally, US equity futures are tumbling. This may be the day contagion and volatility finally comes back with a vengeance, which is great news for all those who plodded through months of centrally-planned boredom and artificial stability. Let the games finally begin.

Market Wrap

• S&P 500 futures down 0.5% to 1958.2
• Stoxx 600 down 0.8% to 337.4
• US 10Yr yield down 2bps to 2.53%
• German 10Yr yield down 3bps to 1.2%
• MSCI Asia Pacific down 0.1% to 146.5
• Gold spot up 0.1% to $1329.8/oz

EUROPE MARKET

• All 19 Stoxx 600 sectors fall; personal & household, telco outperform, banks, travel & leisure underperform
• 13.5% of Stoxx 600 members gain, 84.8% decline
• Eurostoxx 50 -0.7%, FTSE 100 -0.4%, CAC 40 -0.9%, DAX -0.8%, IBEX -1.6%, FTSEMIB -1.7%, SMI -0.4%

ASIA MARKET

• Asian stocks little changed  with the Sensex outperforming and the Nikkei underperforming.
• MSCI Asia Pacific down 0.1% to 146.5
• Nikkei 225 down 0.6%, Hang Seng up 0.3%, Kospi up 0.1%, Shanghai Composite down 0%, ASX up 0.2%, Sensex up 1.5%
• 5 out of 10 sectors rise with energy, utilities outperforming and telcos, health care underperforming

Bulletin headline summary from RanSquawk and Bloomberg

• Treasuries gain as bank stocks lead European equities lower, peripheral sovereign yields surge, with Portugal’s 10Y yield +22bps amid concern over problems at the nation’s second largest bank.
• Shares of Banco Espirito Santo SA tumbled more than 14%, bonds to record lows; central bank assurances that it is protected after parent company missed debt payments are failing to ease creditor concern they may also suffer losses
• Spain’s Banco Popular postponed a planned euro benchmark offering of PNC5 AT1 notes, citing heightened volatility in secondary markets; IPT had been 7%/7.25%
• China’s exports trailed estimates in June, suggesting support for growth from global demand will be limited as leaders try to defend their economic-expansion goal of about 7.5% this year
• Japan’s machinery orders fell the most on record in May, suggesting that companies remain cautious about deploying record cash reserves into investment
• Israel has mobilized 20,000 soldiers for a possible ground invasion of the Gaza Strip, as militants there extended their rocket barrage and the Palestinian death toll climbed to at least 75
• Donetsk is steeling itself for a siege as troops encircle separatists who’ve pulled back to the biggest city in Ukraine’s conflict zone after months of bloody unrest
• Four months after Vladimir Putin’s government annexed Crimea, the U.S. and EU have failed to deliver on threats to cripple Russia’s economy, penalizing fewer than 100 people and companies
• Sovereign yields lower with the exception of peripheral Europe; Greek, Spanish and Italian 10Y spreads to Germany all above 100-DMAs. Euro Stoxx Banks index slides 3.2%, at lowest since January. Asian stocks mixed; Japan and China fall.  European equities, U.S. stock futures decline. WTI crude and copper lower; gold surges 1.2%

US Event Calendar

• 8:30am: Initial Jobless Claims, July 5 est. 315k (prior 315k); Continuing Claims, June 28 est. 2.565m (prior 2.579m)
• 8:45am: Bloomberg July U.S. Economic Survey
• 9:45am: Bloomberg Consumer Comfort, July 6 (prior 36.4)
• 10:00am: Wholesale Inventories m/m, May, est. 0.6% (prior 1.1%); Wholesale Trade Sales m/m, May (prior 1.3%) Central Banks
• 11:00am: Fed to purchases $450m-$600m TIPS in 2018-2044 sector
• 1:00pm: U.S. to sell $13b 30Y bonds in reopening

ASIA NEWS

Mixed performance overnight with the Nikkei 225 finishing the session down 0.56% weighed upon by a stronger JPY and a record decline in Japanese machine tool orders (M/M -19.5% vs Exp. +0.7%), whereas the Chinese equity market finished with marginal gains despite Chinese Trade Balance missing expectations (USD 31.56bln vs Exp. USD 36.95bln) as exports saw a third consecutive month of growth.

FIXED INCOME

German bund yields have printed fresh all-time lows this morning below 1.2%, weighed on by very disappointing French, Italian and Dutch industrial Production data, as Bund futures hit fresh contract highs. Notably the GR/GE 10y spread is wider by 14bps, with reports that the Greek PDMA is to price 3y bond at 3.5% yield and not below 3% that was expected. This coupled with the Portuguese bank debt worries lead the Portuguese/German 10y spread to widen 16.3bps to a session high of 268bps, the widest since late March 2014. Note that today’s moves may well be also exacerbated by the thin summer volumes with the bund future only trading 200k contracts at the time of writing.

EQUITIES

DAX futures have printed multi-month lows and are approaching the 100DMA, with the PSI 20 in Portugal down once again weighed by lingering concerns over the health of Espirito Santo Financial (ESF PL) after the Co. missed a short-term debt payment earlier in the week prompting weakness across European financials.

FX

In the forex market the USD has recouped some of its lost ground that was seen post the FOMC minutes allied to the general risk off sentiment. This move has consequently weighed on both the EUR and GBP currencies with EUR/USD trading just around the 1.3600 level where there is a cluster of option expiries due for today’s NY cut.

COMMODITIES

A combination of risk averse sentiment and failure by the India government to alter gold import duty, continue to prove supportive for gold and silver prices, both trading at its highest levels since March. Earlier this morning, Indian jewellery industry said that expected tax on gold imports to be cut and that Indian gold prices, premiums may rise as import curbs retained. Jewellers in Mumbai were quoted as saying that people had held back on purchases expecting a duty cut and may well now come back to the market. Elsewhere, COMEX copper is under pressure following somewhat less than impressive Chinese trade balance data overnight.

via Zero Hedge http://ift.tt/1qn9dOD Tyler Durden

Submitted by John W. Whitehead via The Rutherford Institute,

“The most dangerous man, to any government, is the man who is able to think things out for himself…Almost inevitably, he comes to the conclusion that the government he lives under is dishonest, insane, and intolerable.”—H.L. Mencken, American journalist

It’s vogue, trendy and appropriate to look to dystopian literature as a harbinger of what we’re experiencing at the hands of the government. Certainly, George Orwell’s 1984 and Animal Farm have much to say about government tyranny, corruption, and control, as does Aldous Huxley’s Brave New World and Philip K. Dick’s Minority Report. Yet there are also older, simpler, more timeless stories—folk tales and fairy tales—that speak just as powerfully to the follies and foibles in our nature as citizens and rulers alike that give rise to tyrants and dictatorships.

One such tale, Hans Christian Andersen’s fable of the Emperor’s New Clothes, is a perfect paradigm of life today in the fiefdom that is the American police state, only instead of an imperial president spending money wantonly on lavish vacations, entertainment, and questionable government programs aimed at amassing greater power, Andersen presents us with a vain and thoughtless emperor, concerned only with satisfying his own needs at the expense of his people, even when it means taxing them unmercifully, bankrupting his kingdom, and harshly punishing his people for daring to challenge his edicts.

For those unfamiliar with the tale, the Emperor, a vain peacock of a man, is conned into buying a prohibitively expensive suit of clothes that is supposedly visible only to those who are smart, competent and well-suited to their positions. Surrounded by yes men, professional flatterers and career politicians who fawn, simper and genuflect, the Emperor—arrogant, pompous and oblivious to his nudity—prances through the town in his new suit of clothes until a child dares to voice what everyone else has been thinking but too afraid to say lest they be thought stupid or incompetent: “He isn’t wearing anything at all!”

Much like the people of the Emperor’s kingdom, we, too, have been conned into believing that if we say what we fear, if we dare to suggest that something is indeed “rotten in the state of Denmark,” we will be branded idiots and fools by the bureaucrats, corporate heads, governmental elites and media hotshots who have a vested interest in maintaining the status quo—or who at least are determined to maintain the façade that is the status quo. Yet the truth is staring us in the face just as surely as the fact that the Emperor was wearing no clothes.

Truth #1: The U.S. is on the brink of bankruptcy, as many economists have been warning for some time now, with more than $16 trillion in debts owned by foreign nationals and corporations. As one financial news site reports: “Internationally, the world is fed up with The Fed and the U.S. government’s unabashed debt growth. China, Russia, Iran, India and a host of other countries are establishing trade relationships that are bypassing the U.S. dollar altogether, a move that will soon see the world’s reserve currency lose purchasing power and status. In anticipation of this imminent collapse gold is being hoarded by private and public entities from Berlin to Beijing in an effort to preserve wealth before the Tsunami hits.”

Truth #2: We no longer have a government that is “of the people, for the people and by the people.” What we have now is a feudal monarchy, run by wealthy overlords and financed with the blood, sweat and labor of the underclasses who are kept in check by the increasingly militarized police. This sorry state of affairs is reinforced by a study which found that average citizens have “little or no independent influence” on the policy-making process. A similar study published by the Political Research Quarterly revealed that members of the U.S. Senate represent their wealthiest constituents while ignoring those on the bottom rung of the economic ladder.

Truth #3: Far from being a benevolent entity concerned with the well-being of its citizens, whether in matters of health, safety or security, the government is concerned with three things only: power, control and money. As an often quoted adage says, “Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.” Unfortunately, the master-servant relationship that once had the government answering to “we the people” has been reversed. Government agents now act as if they are the masters and we are the servants. Nowhere is this more evident than in the transformation of police officers from benevolent keepers of the peace to inflexible extensions of the military hyped up on the power of their badge.

Truth #4: Our primary use to the government is as consumers, worker bees and bits of data to be collected, catalogued, controlled, mined for information, and sold to the highest bidder. Working in cahoots with corporations, the government has given itself carte blanche access to our phone calls, emails, bank transactions, physical movements, even our travels on foot or in our cars. Cybersecurity expert Richard Clarke envisions a future where data about every aspect of our lives will be collected and analyzed. Thus, no matter what the U.S. Supreme Court might have said to the contrary, the government no longer needs a warrant to spy on your cell phone activity or anything else for that matter. As the Washington Post recently revealed, 9 out of 10 people caught up in the NSA’s surveillance net had done nothing wrong to justify such intrusions on their privacy. Clearly, the government now operates relatively autonomously, answering only to itself and unbridled by the courts, Congress, the will of the people or the Constitution.

Truth #5: Whatever problems we are grappling with in regards to illegal immigrants flooding over the borders has little to do with the fact that the borders are porous and everything to do with the government’s own questionable agenda. How is it that a government capable of locking down roads, open seas, and air routes is unable to prevent tens of thousands of women and children from crossing into the U.S. illegally? Conveniently, the Obama administration is asking Congress for $3.8 billion in emergency funding to send more immigration judges to the southern border, build additional detention facilities and add border patrol agents. The funds would be managed by the Departments of Justice, Homeland Security, State and Health and Human Services, the very same agencies responsible for bringing about a rapid shift into a police state.

Truth #6: The U.S. government is preparing for massive domestic unrest, arising most likely from an economic meltdown. The government has repeatedly made clear its intentions, through its U.S. Army War College report alerting the military to prepare for a “violent, strategic dislocation inside the United States,” through its ongoing military drills in cities across the country, through its profiling of potential homegrown “dissidents” or extremists, and through the proliferation of detention centers being built across the country.

Truth #7: As Gerald Ford warned, “A government big enough to give you everything you want is a government big enough to take from you everything you have.” Too often, Americans have fallen prey to the temptation to let the government take care of whatever ails them, whether it be financial concerns, health needs, childcare. As a result, we now find ourselves caught in a Catch-22 situation wherein the government’s so-called solutions to our problems have led to even graver problems. In this way, zero tolerance policies intended to outlaw drugs and weapons in schools result in young children being arrested and kicked out of school for childish behavior such as drawing pictures of soldiers and crying too much; truancy laws intended to keep students in school have resulted in parents being arrested and fined excessively; and zoning laws intended to protect homeowners have been used to prosecute residents who attempt to live off the grid.

Truth #8: The U.S. is following the Nazi blueprint to a “t,” whether through its storm trooper-like police in the form of heavily armed government agents, to its erection of an electronic concentration camp that not only threatens to engulf America but the rest of the world as well via NSA surveillance programs such as Five Eyes. Most damning of all is the Department of Homeland Security’s self-appointed role as a national police force, a.k.a. standing army, the fundamental and final building block for every totalitarian regime that has ever wreaked havoc on humanity. Indeed, just about every nefarious deed, tactic or thuggish policy advanced by the government today can be traced back to the DHS, its police state mindset, and the billions of dollars it distributes to police agencies in the form of grants.

Truth #9: Not only does the U.S. government perpetrate organized, systematic violence on its own citizens, especially those who challenge its authority nonviolently, in the form of SWAT team raids, militarized police, and roaming VIPR checkpoints, but it gets away with these clear violations of the Fourth Amendment because the courts grant them immunity from wrongdoing. Expanding its reach, the U.S. also exports its violence wholesale to other countries through armaments sales and the use of its military as a global police force. Yet no matter how well trained, well equipped and well financed, America cannot police the world. As history shows, military empires, once over extended, inevitably collapse into chaos.

Truth #10: As I make clear in my book A Government of Wolves: The Emerging American Police State, the United States of America has become the new battlefield. In fact, the only real war being fought by the U.S. government today is the war on the American people, and it is being waged with deadly weapons, militarized police, surveillance technology, laws that criminalize otherwise lawful behavior, private prisons that operate on quota systems, and government officials who are no longer accountable to the rule of law.

So there you have it: facts rather than fiction, so naked that a child could call it for what it is, and yet so politically inconvenient, incorrect and uncomfortable that few dare to speak of them.

Even so, despite the fact that no one wants to be labeled dimwitted, or conspiratorial, or a right wing nut job, most Americans, if they were truly paying attention to what’s been going on in this country over the past few decades and willing to be truthful, at least to themselves, would have to admit that the outlook is decidedly grim. Indeed, unless something changes drastically for the good in the near future, it looks like this fairytale will not have a happy ending.

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

The utilization of the Chinese market as both policy tool and ‘wealth’ creator – as The Fed has done with the S&P 500 – remains less than the PBOC would like. It appears the Chinese prefer their ‘risk’ in Baccarat and real estate and don’t trust those stock markets shisters… so the government is doing something about it. While American investors have to worry about high-frequency traders front-running them; in China, it’s a low-frequency trade called “rat trading” where fund managers use personal accounts to buy shares cheaply, then sell them at a profit after purchases from the funds they manage have boosted their value. China’s securities regulator has decided enough is enough and has stepped up its probe into insider trading, taking on “rat traders” in an attempt to restore confidence in the country’s stock market.

 

As The FT reports, insider trading is widely viewed as commonplace on China’s domestic bourses, in a market weighed down by poorly performing state-controlled companies… and the government has had enough…

China’s securities regulator has stepped up its probe into insider trading, taking on “rat traders” in an attempt to restore confidence in the country’s stock market, which is widely viewed as being rife with corruption.

 

Rat trading is a form of front-running in which fund managers use personal accounts to buy shares cheaply, then sell them at a profit after purchases from the funds they manage have boosted their value.

And they are serious…

The China Securities Regulatory Commission said it had uncovered evidence of criminal wrongdoing by five former fund managers at Shanghai-based HFT Investment Management, which is part-owned by BNP Paribas. The CSRC on Friday said that it had turned the cases over to police.

 

The CSRC has opened 25 insider trading investigations since the start of the year, up from 22 for all of 2013, and has referred 29 cases to police and prosecutors, up from 21 in 2013, according to data from the CSRC published in late June.

 

At least 178 fund managers have left their jobs during the first six months of this year, compared with 150 during all of 2013, according to an analysis of official figures by Z-Ben.

*  *  *
The corruption probe appears to be showing results but for now the Shanghai Composite remains underwhelmed in terms of dragging investors back into the risk pool.

On a side note – if China can do this, why can’t the SEC?

via Zero Hedge http://ift.tt/1qLO0zN Tyler Durden

With the mainstream media having moved on in the news cycle to Dow ‘almost’ 17,000 and the ‘Border Crisis’ Scandal, it seems The Islamic State (the terrorists formerly known as ISIS) have stepped up their game and come out swinging… by seizing 88 pounds of nuclear material (uranium compounds) from Mosul University. As Iraq’s UN Ambassador warned, “these nuclear materials, despite the limited amounts mentioned, “can be used in manufacturing weapons of mass destruction… or in combination with other materials in its terrorist acts.”

 

As Reuters reports, insurgents in Iraq have seized nuclear materials used for scientific research at a university in the country’s north, Iraq told the United Nations in a letter appealing for help to “stave off the threat of their use by terrorists in Iraq or abroad.”

Nearly 40 kilograms (88 pounds) of uranium compounds were kept at Mosul University, Iraq’s U.N. Ambassador Mohamed Ali Alhakim told U.N. Secretary-General Ban Ki-moon in the July 8 letter obtained by Reuters on Wednesday.

 

“Terrorist groups have seized control of nuclear material at the sites that came out of the control of the state,” Alhakim wrote, adding that such materials “can be used in manufacturing weapons of mass destruction.”

 

“These nuclear materials, despite the limited amounts mentioned, can enable terrorist groups, with the availability of the required expertise, to use it separate or in combination with other materials in its terrorist acts,” said Alhakim.

The US is playing down the threat (for a change)

A U.S. government source familiar with the matter said the materials were not believed to be enriched uranium and therefore would be difficult to use to manufacture into a weapon.

 

Another U.S. official familiar with security matters said he was unaware of this development raising any alarm among U.S. authorities.

But, ironicaly, it is is Iraq that is most worried about the nukes…

“The Republic of Iraq is notifying the international community of these dangerous developments and asking for help and the needed support to stave off the threat of their use by terrorists in Iraq or abroad,” Alhakim wrote.

 

…

 

“It also provides for expanded cooperation between and among states regarding rapid measures to locate and recover stolen or smuggled nuclear material, mitigate any radiological consequences of sabotage, and prevent and combat related offences,” according to the IAEA.

*  *  *

Another great addition to ISIS Annual Report and another potentially terrifying prospect for the rest of the world… all this as rockets from Gaza fall around Israel’s Dimona nuclear facility also… Should be good for guaranteeing Dow 17,000 tomorrow…

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