Monday, July 12, 2010

Today’s Top Stories; “Secret gold swap has spooked the market” Fin reg reform - Looks like a final vote on Dodd-Frank in the Senate won't come until Thursday or Friday at the earliest

Today’s Top Stories

· Japan’s ruling Democratic Party of Japan suffers defeat in Sun elections; PM says he will not step down; PM Kan’s DPJ won just 44 seats while its partner party, the People’s New Party, won none; the outcome was short of expectations that the DPJ would win 50 seats and below Kan’s goal of winning 54 (RTRS)

· China import/export #s out over the weekend - China’s June exports rose better-than-expected at 43.9%oya (J.P.Morgan and consensus: 38.0%) 

· China property market – Chinese gov’t relaxes some real estate restrictions - Banks in China's first-tier cities, including Shanghai and Shenzhen, have all resumed lending to third homes; however, a prominent Chinese developer says there has been no relaxation of policies("The current policy will last for a pretty long period of time," he told a forum. "The government will not lightly ease policy.") – Reuters

· China’s property prices in 70 cities rose 11.4 percent in June from a year earlier, according to a report in the statistic bureau’s newspaper, China Information News. That compares with 12.8 percent in April and 12.4 percent in May; on a M/M basis, Chinese property prices fell 0.1% M/M, the first decline in 16 months – Bloomberg 

· Australiathe country’s new PM could call an election within days; new polls show her achieving small victory – Reuters 

· In Europe, newsflow remains centered on Financials as European Finance Ministers meet today in Brussels to debate how much detail on the Bank Stress Tests to release. The FT says that Europe’s bankers are considering the creation of a private vehicle that could help banks raise capital in the event of another market crisis which could be an option instead of governments imposing a levy on bank balance sheets.

· On the worldwide economic front - in addition to a larger trade surplus out of China, the UK Q1 current accounts reverted to a deficit from a surplus last Q and Japan’s Reuters Tankan Manufacturing DI rose further in July.

· Equity correlations rising to 1 as individual stocks move together; correlation at highest level since ’87 crash, sparking worry among experts (WSJ) 

· Wall St firms are picking up the hiring pace, anticipating a strong rebound – NYT 

· White House considering a review of the business regulations that corporate leaders have complained inhibit job creation (WSJ) 

· As census winds down, jobs will be cut – w/the census largely over, the Census Bureau is shedding hundreds of thousands of workers (~225K in just the last few weeks); the bulk of the cuts will be done by Sept – NYT  

· AON buying HEW for $50/shr ($4.9B); deal 41% premium to Fri’s close. 

· BP – co swapped out the cap on the GOM well w/a newer one that could be capable of capturing 80K BPD (effectively staunching the leak); BP says the new cap could be in place within the next few days; separately, the London Times discusses how BP is in talks w/APA to sell ~$10-12B worth of assets and that the White House has told XOM and CVX that it wouldn’t block a takeover of BP. 

· Fin reg reform - Looks like a final vote on Dodd-Frank in the Senate won't come until Thursday or Friday at the earliest. A temporary replacement for late-Sen. Robert Byrd (D-W.Va.) may not be named this week. That would leave Democrats needing three Republicans.  Politico. 

· “Secret gold swap has spooked the market” – London Telegraph discusses the large BIS gold swap of several days ago that has received so much attention.

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