Financial Breakfast: Morning News Summary for September 30, 2011
by Insider Scoop - September 30th, 2011 7:45 am
Courtesy of Benzinga.
This is your Benzinga news summary and traders’ outlook for Friday, September 30, 2011, covering headlines from overnight and Friday’s pre-market session.
Today in domestic pre-market trading, U.S equity futures are trading lower. At last check, Dow futures are down by about 120 points or 1.09% and the U.S. dollar trades higher near the $78.90 level.
Earlier this morning, Wunderlich upgraded Edison International (NYSE: EIX) to Buy. View all of today’s upgrades here.
Morgan Stanley downgraded Cosan (NYSE: CZZ) to Equal-Weight. View all of today’s downgrades here.
JP Morgan lowered Mosaic’s (NYSE: MOS) price target to $62 from $74 and raised McCormick’s (NYSE: MKC) price target to $54 from $48. View all other of today’s analyst ratings here.
Overseas, European markets are lower in afternoon trading. Britain’s FTSE 100 lost 1.7%, Germany’s DAX tumbled 3% and France’s CAC 40 slid 2.1% on the session. Asian stocks ended the session lower as well. China’s Shanghai Index lost 0.25%, Japan’s Nikkei 225 traded flat, and Hong Kong’s Hang Seng Index tumbled 2.32%.
On the economic calendar, Personal Income, Spending, and Core PCE is set to report at 8:30 a.m. Chicago PMI is due at 9:45 a.m. and Michigan Confidence is to report at 9:55 a.m.
On the commodity front, gold and silver futures are mixed in pre-market trading, with gold trading higher by about 0.3%. Energy futures are lower with crude oil down over 1% near the $81.25 level and gasoline futures are trading lower by about 0.7%. Natural Gas futures are slightly lower and copper futures are trading over 0.75% lower this morning.
On the earnings front yesterday, Micron Technologies (NYSE: MU) reported Q4 EPS loss of $0.14 on revenues of $2.14 billion; The Street was looking for $0.02 per share on revenues of $2.13 billion.
In corporate news, The United States Justice Department launched an investigation in US-based Chinese companies for the ongoing claims of fraud in the companies accounting practices.
This concludes your news summary for September 30, 2011.
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DiggToday’s Economic Docket: For What It’s Worth, Here Are The Scheduled Economic Headlines
by Zero Hedge - September 30th, 2011 7:33 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
While the deranged, schizophrenic market could not care less about actual facts and data, and continues to trade purely on month end liquidations, and the now traditional bailout rumors, here is what to expect in terms of scheduled releases today: Personal income and spending, Chicago NAPM and consumer sentiment indexes. Also today the Fed will announce the first Operation Twist schedule which will consists of 13 bond purchases in October, as well as 6 sales.
8:30: Personal income and outlays (August): Weak growth. Both average hourly earnings and total hours worked (private payrolls times the average workweek) declined during August, suggesting limited growth in nominal incomes. In addition, relatively soft retail sales suggest only a moderate gain in consumer spending—and probably a drop in real terms.
Income: GS +0.1%; Consensus: +0.1%; Last +0.3%.
Spending: GS: +0.1%; Consensus: +0.2%; Last +0.8%. MAP: 1
Core PCE prices: GS: +0.1%; Consensus: +0.2%; Last +0.2%.
9:45: Chicago purchasing managers’ index (September). Another decline? The Chicago purchasing managers’ index is still elevated compared to other regional manufacturing surveys (e.g. the Empire State and Philadelphia Fed indexes). Goldman has forecast another decline this month—to 54.5 from 56.5 previously. The large drop in the Goldman Sachs Analyst Index (GSAI) points to possible downside risks.
GS: 54.5; Consensus: 55.0; Last: 56.5. MAP: 4
9:55: Reuters/University of Michigan consumer sentiment (September-final): Steady? Consensus forecasts expect an unchanged result for the final Consumer Sentiment reading for September. The Rasmussen daily confidence index deteriorated late in the month, suggesting possible downside risks to the consensus forecast.
Consensus: 57.8; Last: 57.8 (September-prelim).
11:00: St. Louis Fed President James Bullard scheduled to speak (topic TBD). Q&A expected.
Source: GS
Ingersoll Rand Lowers Q3 and Full-Year 2011 Earnings Estimates
by Insider Scoop - September 30th, 2011 7:01 am
Courtesy of Benzinga.
Ingersoll-Rand plc (NYSE: IR) announced today that it has revised its estimated guidance range for third-quarter 2011 earnings per share from continuing operations to $0.77 to $0.80. The previous third-quarter estimate was for EPS of $0.85 to $0.95 from continuing operations.
The revised third-quarter estimate includes $0.04 of EPS from Hussmann operations and excludes the impact of impairment charges. Hussmann results will be reclassified from discontinued to continuing operations for the third quarter of 2011 and all prior periods.
Third-quarter reported revenues are now expected to be in the range of $3.90 to $3.95 billion, including approximately $200 million of revenue from Hussmann. The midpoint of the revised revenue range is $175 million below the midpoint of the prior guidance range of $4.05 to $4.15 billion, including approximately $200 million of revenue from Hussmann. Revenues were negatively affected by slower than expected end-markets in several businesses.
Consumer-related businesses, such as residential heating, ventilation and air conditioning, golf and residential security, were the most significantly affected, accounting for the majority of the lower volume since the previous guidance. Commercial security activity was also slower than expected. Transport, industrial and commercial HVAC revenues have remained strong. Operating income for the third quarter was negatively impacted by lower volumes and by unfavorable product mix in the residential and security segments.
Full-year EPS from continuing operations, excluding impairment charges, are preliminarily projected to be in the range of $2.70 to $2.80, including approximately $0.07 per share from Hussmann. Previous guidance, including approximately $0.07 per share from Hussmann, was for EPS of $2.90 to $3.10 from continuing operations.
Full-year reported revenues are now expected to be in the range of $14.85 to $15.00 billion, including approximately $600 million of revenue from Hussmann. The midpoint of the revised revenue range is approximately $450 million below the midpoint of the prior guidance of $15.30 to $15.50 billion, including approximately $600 million of revenue from Hussmann.
Concord Medical Services Announces $20M Share Repurchase Program
by Insider Scoop - September 30th, 2011 7:01 am
Courtesy of Benzinga.
Concord Medical Services Holdings Limited (NYSE: CCM) today announced that its board of directors approved a share repurchase program, effective immediately.
Under the program, and subject to applicable United States federal securities laws, Concord Medical is authorized to repurchase up to $20 million of its outstanding American depositary shares (“ADSs”) from time to time, depending on market conditions and other factors. The share repurchase program will be funded with the Company’s available working capital. As of June 30, 2011, the Company had approximately 47.5 million ADSs outstanding, and cash of approximately RMB417.9 million, or $64.7 million.
IMF Scrambles To Double Bail Out Capacity To $1.3 Trillion, May Issue Bonds
by Zero Hedge - September 30th, 2011 6:58 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
The scariest news out of the IMF overnight is not that the scandalized bailout agency telegraphed that the global sovereign debt crisis is about to get into even higher gear after the Dow Jones reported it is “exploring” ways to double its gross lending power to $1.3 trillion (which means that in addition to the EFSF’s proposed $3 trillion expansion, global bailout capacity will soon hit $5 trillion), nor is it that the US middle class will soon be on the hook for tens of billions more in real European-facing exposure (over an above the hundreds of billions in USD FX swaps that the Chairman is about to unleash on the world), but that the IMF is in fact considering issuing its own bonds. The reason why this is disturbing to the G-7/8/20 is that such a move would take the SDR one step closer to being an alternative gold-backed reserve currency, an dilute the hegemony of the Western axis much to the delight of Russia and China (which however may be having problems of their own). Well, that’s bad, but we take it back – just as bad is that the IMF is about to have $1.3 trillion in bailout power. And yes, they wouldn’t scramble to get it if they didn’t need it. What next: unlimited rescue capacity, and unlimited exposure for US taxpayers?
From Dow Jones:
The International Monetary Fund, looking to assure markets that it has the financial firepower to deal with deepening problems in Europe and also crises elsewhere, is exploring how it can have at least $1.3 trillion in lending power, according to officials involved with the discussions.
The IMF currently has about $630 billion in usable resources; about two-thirds of that could be lent under IMF rules.
Under the plan be considered, the fund would need to make permanent a $590 billion temporary lending facility that was put in place in response to the 2008 financial crisis.
The IMF is also counting on member nations to finally enact a doubling of IMF member country dues, totaling $750 billion, which have already been approved in principle. Approvals by national parliaments are expected in early 2012.
As for IMF bond issuance (unclear if it will be century bonds like Greece):
…
Greek Banana Republic Status Upgraded To AAA After Sit-Ins At Eight Ministries Prevent Troika Inspections
by Zero Hedge - September 30th, 2011 5:46 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
A day after we learned that the Greece tragicomedy just gets better and better after it had run out of ink to print tax forms, and hence is unable to collect taxes, and were forced to got over a minute long bout of hysterical laughter having learned that Greece plans on refinancing its rolling debt (which trades at over 100%) with Century Bonds, no seriously and this under the sage advice of BNP Paribas, Deutsche Bank, HSBC and Lazard, we now get the latest update in this progression of relentless Banana Republic upgrades after learning that the Troika is unable to conduct its much needed inspections of Greek deficit cut progress due to sit ins by protesting government workers at 8 ministries. From Kathimerini: “The troika has been in Athens since Wednesday but its monitoring of Greek finances is running into a variety of problems, as besides the disagreement with the government on a number of issues, the representatives of the country’s international creditors had to deal with sit-ins at the building they were about to visit on Thursday. Public sector employees blocked the entrance to the Finance Ministry and the Hellenic Statistical Authority (ELSTAT) in protest at the planned measure of putting thousands of them on labor standby status.” Seriously what else? News that government workers start shredding debt indentures for fun? In the meantime the Troika is having official meetings with what’s left of the government at the local Starbucks…
From Kathimerini:
The inspectors met with Finance Minister Evangelos Venizelos at the deputy prime minister’s office on Zalocosta Street instead, a meeting that went relatively well according to reports, making amends for a rather disastrous meeting in late August that had led to the troika’s hasty departure.
The new snags concern the labor standby system, closed-shop professions and the privatizations.
By Monday, the troika will need to have completed its assessment, while the government must have approved the labor standby system, as well as the new public sector salary system, the 2012 budget draft and the new midterm fiscal plan. Venizelos therefore had an extraordinary meeting with Administrative Reform Minister Dimitris Reppas on Thursday evening, and there will be an extraordinary cabinet meeting on Sunday.
Public sector workers also staged
…
China CDS Soars On Continued Hard Landing Concerns
by Zero Hedge - September 30th, 2011 5:02 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
This is an emergency announcement for bubble watchers: China CDS has soared to 194.5 bps, +14.5 in the past few hours (a trend first noted here about a week earlier), the biggest relative mover in the sovereign realm, which has just hit the widest it has been since March 2009. Ironically the incremental newsflow was mildly positive after the Final September HSBC PMI came at 49.9, still contractionary, but modestly better than the Preliminary 49.4, and unchanged from the August print. That however brought little solace to China bulls, who have seen their local stock holdings drop significantly in the last few days now that the China “Hard Landing” scenario is becoming widely accepted. Not helping is a just released UBS report which now expects Q1 2012 GDP to drop to below stall speed at 7.7%. Whether or not the country can land softly, or hardly, or at all, with that kind of growth drop, is certainly unknown. Look for more widening in CDS spreads as the China crash thesis permeates the vigilante community which has now picked its next target.
Bloomberg recaps the UBS piece:
- Weakened global growth prospects, aggravated by financial market turmoil which might further hurt consumer and corporate confidence, will cause export growth to slow to single digits in coming quarters, which will adversely affect manufacturing investment and consumption, UBS says.
- “We expect GDP growth to decelerate to around 8% y/y in Q4 2011 and 7.7% y/y in Q1 2012,’’ write Tao Wang and Harrison Hu, economists at UBS, in note today
- Expected drop in developed-markets growth will hurt China’s exports and related investment, so UBS has lowered its GDP growth forecasts from 9.3% to 9% in 2011 and from 9% to 8.3% in 2012
- When exports slow sharply, and if industrial production falters, government would likely ease macro policy, probably starting with fiscal policy: UBS
- Says CPI inflation likely to end 2011 at 4.0%-4.5%, and to ease further to 3.5% in 2012
- Forecasts CNY to appreciate gradually, trading at about 6.2 by year-end and 6.0 by end-2012 vs USD, unless EUR/USD weakens beyond 1.2
Guest Post: QE And The “Crowding Out” Of The Bond Market Vigilante
by Zero Hedge - September 30th, 2011 4:44 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Submitted by Global Macro Monitor
QE and the “Crowding Out” of the Bond Market Vigilante
We’ve updated our chart of the sources of financing of the U.S. budget deficit from the Fed’s Flow of Funds data released on September 16th. The chart illustrates how the Fed and foreign central banks have been indirectly fully funding the massive U.S. budget deficit for the last three quarters. It will be interesting to see the data for the quarter ending today as no doubt there will be less yellow with the end of Q2 on June 30 and more “flight to quality” blue (domestic) and red (rest of world).
Ronald McKinnon, professor of international finance at Stanford University, has an excellent piece in today’s Wall Street Journal about the damage the Fed’s zero interest rate policy (ZIRP) is doing to the U.S. and global economy. One of his main points is the Fed and other central banks, who are not yield sensitive, have been financing the U.S. budget deficit and crowding out the now extinct U.S. bond market vigilante.
As you know the Global Macro Monitor is not a fan of ZIRP and believes it one factor that ails the economy not what will cure it. We take comfort to be the same company of such an intellectual heavyweight as Professor McKinnon.
The professor makes several excellent points in his piece,
Without the [bond market] vigilantes in 2011, the federal government faces no immediate market discipline for balancing its runaway fiscal deficits.
…the vigilantes have been crowded out by central banks the world over. [see the yellow/red bars in the chart]
Central banks generally are not yield-sensitive.
True, in the last two months, this “bubble” of hot money into emerging markets and into primary commodities has suddenly burst with falls in their exchange rates and metal prices. But this bubble-like behavior can be traced to the Fed’s zero interest rates.
Beyond just undermining political discipline and creating bubbles, what further economic damage does the Fed’s policy of ultra-low interest rates portend for the American economy?
First, the counter-cyclical effect of reducing interest rates in recessions is dampened…
Second, financial intermediation within the banking system is disrupted…
Third, a
…
Seton Hall to lower tuition rate by $21K matching Rutgers; Cost of College Education will Crash; Moronic Educators Object to Lower Costs
by ilene - September 30th, 2011 1:43 am
Courtesy of Mish
I have been waiting for and expecting news headlines just like this one: Seton Hall will lower tuition rate by $21K to match Rutgers for some incoming freshmen
Getting good grades and high SAT scores could save some Seton Hall University freshmen more than $21,000 a year in tuition costs under an unusual new program that could pit the Catholic school against Rutgers University for some of the state’s top students.
Starting next fall, Seton Hall will match Rutgers’ tuition — which is currently $10,104 a year for most in-state undergraduates — if freshmen score at least 1,200 on the combined reading and math sections of their SAT tests and graduate in the top 10 percent of their high school class.
Other students on the South Orange campus will continue to pay Seton Hall’s regular annual tuition rate, which is currently $31,440 before room, board and other fees are added.
Expect Plans to Spread
Drew University in Madison rejected the plan as a publicity stunt. However, I expect such plans to spread. I also expect more competition from online classes.
If Congress really wants to do something about the high cost of education, it would:
- Cancel student loan programs
- End support for the University of Phoenix and all for-profit universities
- Accredit more online universities
- End collective bargaining of public unions
Cost of College Education will Crash Within a Decade
The cost of college education would sink like a rock with those four structural improvements.
Interestingly, even with piss poor government policies, places like Seton Hal, prices have collapsed for some students. Right now the opening toss applies to 10% of the students. Next year it may be 25% of students and offered at more universities.
For those who have kids in grade school, I would not advise programs that lock in today’s rates if paid in advance.
The cost of college education will crash within a decade, simply because it has to. Moreover, the free market would lower costs sooner and far more dramatically, if only given the chance. Wages are not supportive of current education costs.
Addendum:
I wrote the above quoting the New Jersey Start Ledger article written yesterday. I received two emails just now pointing to additional articles in the Wall Street Journal and New York Daily News.
Please consider the Journal Article Seton Hall Cuts Cost For High Achievers…
The Moral Question
by ilene - September 30th, 2011 1:20 am
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Courtesy of Robert Reich
We dodged another shut-down bullet, but only until November 18. That’s when the next temporary bill to keep the government going runs out. House Republicans want more budget cuts as their price for another stopgap spending bill.
Among other items, Republicans are demanding major cuts in a nutrition program for low-income women and children. The appropriation bill the House passed June 16 would deny benefits to more than 700,000 eligible low-income women and young children next year.
What kind of country are we living in?
More than one in three families with young children is now living in poverty (37 percent, to be exact) according to a recent analysis of Census data by Northeastern University’s Center for Labor Market Studies. That’s the highest percent on record. The Agriculture Department says nearly one in four young children (23.6) lives in a family that had difficulty affording sufficient food at some point last year.
We’re in the worst economy since the Great Depression – with lower-income families and kids are bearing the worst of it – and what are Republicans doing? Cutting programs Americans desperately need to get through it.
Medicaid is also under assault. Congressional Republicans want to reduce the federal contribution to Medicaid by $771 billion over next decade and shift more costs to states and low-income Americans.
It gets worse. Most federal programs to help children and lower-income families are in the so-called “non-defense discretionary” category of the federal budget. The congressional super-committee charged with coming up with $1.5 trillion of cuts eight weeks from now will almost certainly take a big whack at this category because it’s the easiest to cut. Unlike entitlements, these programs depend on yearly appropriations.
Even if the super-committee doesn’t agree (or even if they do, and Congress doesn’t approve of their proposal) an automatic trigger will make huge cuts in domestic discretionary spending.
It gets even worse. Drastic cuts are already underway at the state and local levels. Since the fiscal year began in July, states no longer receive about $150 billion in federal stimulus money — money that was used to fill gaps in state budgets over the last two years.
The result is a downward cascade of budget cuts – from the federal government to state governments and then to local governments – that are hurting most Americans but kids and lower-income families in particular.
So far…
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