Thursday, July 1, 2010

Todays Top Stories; “Dark omen threatens stock-market bulls Hedge funds hope ‘Volcker rule’ will clip banks’ wings

President George W. Bush welcomes German Chanc...


Today’s Top Stories

· “Dark omen threatens stock-market bulls” – WSJ headline – the 50day MA is about to cross under the 200day MA, a neg. development for the market – WSJ  

· In China, both manufacturing PMIs stepped down again in June w/the official NBS manufacturing PMI series falling from 53.9 in May to 52.1 in June (JPMorgan: 53.5; consensus: 53.2) and the Markit PMI similarly declined to 50.4 (JPMorgan: 52.4) vs. 52.7 in May (note both stayed above the expansionary threshold of 50).

· Australia & miners apparently have agreed to a deal on the mining tax; official announcement could come Fri morning; Australia's PM To Meet With Miners In Canberra Later Thursday; the government made concessions in talks with miners on the headline 40 percent tax rate, the Sydney Morning Herald said (Reuters/DJ)

· ECB 6-day tender results published this morning - EU111.2B demand at today's 6-day tender; 78 banks bid for 6-day cash; people were watching the 3-month demand on Wed and today's 6-day tender to see how well the market's were handling the 12-month expiration.  The EU111.2B inline-to- a bit higher than expected and makes the 3-month demand yesterday not seem so low (although combined, the 3-month + 6-day less than the 12-month expiring today and were less than people feared).  CNBC/Reuters/DJ

· ECB lending continues to hit record highs (rose to above Eur900B for the first time ever yesterday) and Euribar continues to move higher amid signs of stress in the European money markets (rose to 0.782% Thursday, reaching its highest level since 9/8/09).

· Spain debt sale (Thurs morning) – 5yr sale sees reduced demand – Spain sold EU3.5B worth of 5yr paper, at the high-end of the target amount, but demand fell vs. the May 6 auction; The bond was 1.7 times oversubscribed compared to a bid-to-cover ratio of 2.35 for the previous issue.  Reuters 

· German banks – following the publication of the EU bank stress tests, some German banks are expected to seek capital from the county’s rescue fund (FT) 

· Germany - In Germany, Merkel’s candidate for president was voted into office, although this is hardly being seen as an endorsement of the chancellor (it took three votes for Wulff to make it across the line as Merkel continues to hold only slim majorities in parliament).  From the London Telegraph – “Angela Merkel's political woe punctures market euphoria…..Fears over the political survival of German Chancellor Angela Merkel sent tremors through European markets late on Wednesday”

· Outside of the China PMIs, eco data out overnight was generally positive w/the BoJ’s quarterly Tankan survey stronger than expected and Eurozone June Manufacturing PMI fell inline w/expectations

· Hedge funds hope ‘Volcker rule’ will clip banks’ wings – FT article - “Banks will have to scale back. There will be less competition. That’s good for me, that’s good for the industry,” the chief executive of one of America’s biggest hedge fund managers tells the Financial Times. “Way to go Paul – keep pounding the banks hard,”   FT   

· Small business borrowing levels falls to lowest amount in 7 months during May – data released by PayNet revealed the decline on Thurs.  Sign recovery has stalled.  Reuters 

· Tech spending – Gartner cuts its ’10 WW IT spending forecast from +5.3% to +3.9% b/c of problems in Europe and the weakening euro.  "Private-sector economic activity will likely be hindered because of the direct impact of austerity measures on key government suppliers and the indirect impact caused by the 'ripple effect,'"  Reuters/DJ 

· WSH - Major losses from the Chile earthquake and storms in Australia in the first quarter of 2010 have had little impact on pricing in the global reinsurance market, which continued to soften this renewal season. The exception was on Chilean-specific renewals, which have seen rate increases of between 40 and 70 percent

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