Thursday, July 8, 2010

Today’s Top Stories $BP $CAF ($AA LOWERS EPS )

Today’s Top Stories

· In AsiaPac, China lagged while Japan and Australia  rallied 2%+. China underperformed after the announcement that the gov't will extend a tax on oil, gas and coal extraction to the entire nation to fund government spending and commentary that the property market was still a "little bit" overvalued. The PBOC also commented that China's economy was moving in the right direction but that the bank still faces challenges in managing inflation expectations and maintaining fast and stable growth. The Australian jobs market continues to surprise to the upside with the economy adding another 45.9K jobs last month (J.P. Morgan: +5,000, consensus: +15,000), more than double the jobs gains of 22,800 in May.  Japan saw machinery orders decline sharply although, per JPM's M. Nakamura, "the result, together with the maintained uptrend in capital goods shipments in the IP report, was still consistent with our view that business capital spending is recovering firmly."

· In the Eurozone, German exports surged 9.2% in May (vs. St. +4.0%), the Spanish Cajas consolidation continues to move along (two separate Spanish savings banks have launched binding bids to buy their peer CajaSur which was recently seized by the Bank of Spain) and Russian bank bonds rallied, demonstrating that the IIB default is being seen as a "one-off" event. JPM's European trading desk noted early in the session that it has been better for sale into today's strength w/buyers mainly concentrated in the financials and that volumes remain relatively subdued.

· BP sets new (earlier) goal to cap well – the co is now aiming to have the well caped by the time the firm reports earnings on Jul 27 (if they are successful, this would be weeks earlier than their prior goal); BP wants to have made progress by Jul 20, when UK PM Cameron is scheduled to meet w/Obama at the White House (WSJ) (in response to this, BP says that it reiterates guidance that it is unlikely to plug the leaking well until Aug).

· IMF bumps ’10 growth from +4.2% to +4.6%; ’11 unchanged; warns on European risks.

· Maersk lifts 2010 guidance on shipping rebound....saying on Thursday its container shipping business had rebounded faster than expected.  "The upgrade is due to a combination of (freight) rates and cost reductions," (RTRS) 

· Washington reaches out to business community – Geithner tells major US execs that White House is a fan of business…embarks on “charm offensive” – Fox Business

· Geithner tells L Kudlow in CNBC interview that White House hopes to keep cap gains and dividend tax rates @ 20% - "We're going to make sure that we keep at 20 percent the existing rates on dividends and capital gains," Geithner said. "We think that's good policy.". 

· AA – earnings preview published this morning from JPMorgan’s M Gambardella - We are lowering our 2Q10E EPS for AA to $0.10 from $0.15 for the mark-to-market of Q2 aluminum prices (the St is at .12), while our estimates for the back half of the year are moving down to reflect the marking of 3Q aluminum prices to the current 3-month forward price. 

· Steel prices – WSJ had neg. article Wed morning and now Thurs morning Reuters has article w/similar tone; says prices could continue to slump before bottoming later this summer. 

· Hedge funds “frozen in headlights” says Bloomberg article; have scaled back trading; prime brokers report that HFs are borrowing less money and sitting on cash (Credit Suisse says its HF clients held 24% of their assets in cash in June vs. 19% 3 months earlier) – Bloomberg 

· MasterCard Advisors SpendingPulse report out for June (ahead of full reports from retailers later this morning) - said that specialty apparel sales rose 3.3% in June. Electronics rose 2.0%, in part because of the launch of Apple's (AAPL) iPhone 4. Department-store sales posted a 1.3% increase, the first rise since November 2006.  Luxury sales fell 3.9% in June from a year earlier, the first decline for the category since November. Furniture sales fell 5% (WSJ) 

· Weddings – more coup

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