Monday, July 11, 2011

Alcoa Q2 profit jumps on metal prices

by Reuters

Alcoa Inc, often viewed as a bellwether of the U.S. economy, posted a big jump in second-quarter profit on Monday partly due to soaring prices for aluminum and its raw material alumina.

Net earnings were $322 million, or 28 cents per share, compared with $136 million, or 13 cents per share in the same quarter of 2010, the Pittsburgh-based company said. Income from continuing operations, excluding one-time items, was 32 cents a share.

Revenue rose 27 percent to $6.6 billion, helped by rising prices for aluminum.

Aluminum sold in a range of $2,500 to $2,600 a tonne on the London Metal Exchange during the second quarter, up from $1.977 in the same quarter a year earlier.

(Reporting by Steve James, editing by Bernard Orr)

(This story is corrected in paragraph three to show revenue is $6.6 billion, not $6.66 billion)



The Cost Of Obama's Latest TV Appearance: $112.5 Million Increase In The US Deficit, $150 Million Increase In US Debt

by Tyler Durden

The most meaningful summary of Obama's most recent (in a long series) speech, which this time was only 14 minutes delayed: the US Deficit increased $112.5 million during the president's latest teleprompted appearance (9m deficit $973 bn ; $108 bn / mo ; $3.6 bn / day ; $150 mm / hr ; $2.5 mm / minute). Since US debt increases at a rate about 30% higher than the actual deficit, the actual new debt incurred was about $146 million. And that's all you need to know about the latest episode in the political tragicomedy charade.
Some other observations from the CBO on the May 2011 budget.

Net interest on the public debt grew the most, rising by $31 billion (or 18 percent) above the outlays recorded through June 2010, primarily because of the large increase in the public debt during the past year. In contrast, defense spending increased by 1 percent through June, considerably below the three-quarter average of 9 percent experienced over the past 10 years. 

The three largest entitlement programs continued to grow. Compared with outlays in the first nine months of 2010, spending for Medicaid grew by $13 billion (or 6 percent), and spending for Social Security and Medicare combined grew by $33 billion (or about 4 percent each). For the latter two programs, that growth was less than the average of 6 percent and 8 percent, respectively, experienced in the same period of the year over the past 10 years.

Offsetting those increases in outlays were declines inseveral areas, including net payments to GSEs (down by $38 billion, or 93 percent), deposit insurance (down by $32 billion, excluding receipts from prepayments of premiums), and unemployment benefits (down by $29 billion, or 23 percent). Spending for “Other Activities” excluding deposit insurance and reestimates of credit subsidies rose by $21 billion (or 2.5 percent).

The best president in the last 150 years

Sottolineando di aver governato più a lungo di Alcide De Gasperi Berlusconi ha aggiunto: 

“Credo sinceramente di essere stato, e di essere, di gran lunga il miglior presidente del Consiglio che l’Italia abbia potuto avere nei 150 anni della sua storia”

Se questi sono i risultati ridatemi subito il peggiore ...

Italian Mia Culpa - Big time!

by Bruce Krasting

I have written on a number of occasions over the past eighteen months that Italy was a “Core” country. Mine was a PIGS; it was not a PIIGS. It’s looking like I was wrong all along. The following slides tell the story. (Note: all prices have deteriorated since I got these graphs a few hours ago.)

This is the current 10-year. It was issued in February with a 4.75% coupon. It’s now pushing 94, so a year and a half’s worth of interest is thrown out the window. Can you say dog?

This is a seasoned bond. Notice that it lost 6% of its value since July 1. This is death to a global bond fund manager. They have to mark this dreck to market. (The banks don’t; ha ha!)

You might say, “Who cares about the stupid bondholders”. The problems are much deeper than that. Italy is being forced out of the Short Term capital markets as well. Look what has happened to six-month yields. If we are not at the crisis point, we are very close, based on this:

Italian equities have just collapsed of late. Down 23% in the past sixty days. How would you feel if the S&P took a dump like that? Answer: Your confidence would fall and that would bring about a recession. That is exactly what is happening in Italy today. It's happening at lightening speed:

If you are an Italian equity investor (and believe in the buy and hold) then this chart will really hurt. In the past few days we have taken out multi-year lows.

The very rapid pace of this proves one thing. I was not alone in thinking that Italy was an “insider”. A huge amount of money is being forced to rethink what is “safe” and what is not. That this is all happening in the middle of July is not helpful either. The whole country is about to go on holiday.

This last slide shows the pricing for all maturities of Italian debt. Note that there is only one issue trading above par. This is all credit spread deterioration. We are just a week or two before Italy gets locked out of the capital market. I’m not sure than any of the global markets are priced for that event.

Ambrose Evans-Pritchard at the Telegraph wrote about this today. I think he’s got it right.

Once again Europe's debt crisis has metastasized, and once again the financial authorities face systemic contagion unless they take immediate and dramatic action.

“Metastasized” is a horrible word. It’s fitting. I (now) doubt that the "immediate and drastic" action he suggests is needed is, in fact, going to happen. Gulp!

Earnings Season Expectations

by Bespoke Investment Group

Earnings season kicks off after the close today when Alcoa (AA) reports second quarter results. In assessing sentiment heading into earnings season, there seems to be a dichotomy between analysts and investors. As we noted last week, sentiment on the part of analysts has been in the dumps with a seemingly relentless stream of decreased optimism. 

Investors, on the other hand, seem to be more optimistic. On an anecdotal basis, there seems to be a popular view among commentators that last quarter's strong earnings reports will carry over into this quarter and help investors forget about the debt issues going on in Europe. However, while last quarter's earnings results for S&P 500 companies was impressive (74% EPS beat rate), the results for all US companies was much less robust. In fact, last quarter was the first time since Q4 2008 that the EPS beat rate for all US companies was below 60%. So, while the largest companies in the US seemed to be cruising last quarter, among a broader universe of stocks, there were several more companies stalled out on the shoulder.

Graham Summers Weekly Market Forecast (Risk Off Edition)

by Graham Summers

The financial world is beginning to break down in a big way today. In the currency markets, the second Greek bailout is turning out to be precisely the dud I said it would.

After all, it was only one year ago that Greece received its first bailout. Having now asked for extensions on returning those funds AND a second bailout, it’s bizarre that anyone would think giving more money to Greece would fix its problems.

Italy, Spain, and Portugal are all on equally shaky ground. The last of those three was actually just downgraded to “junk” status by Moody’s last week. So it’s not too surprising that the Euro is breaking down in a big way this morning.

We look to have broken out of the triangle pattern I talked about before. We’re now coming up against major support at 140. If we break this line it’s 136 in short order.

The drop in the Euro has coincided with an explosive jump in the US Dollar this morning, which in turn is kicking stocks and commodities (with the exception of Gold and Silver) down in a big way.

I said before that I thought the ramp job in stocks was more manipulation and performance gaming than anything else. If the S&P 500 breaks below 1325 and stays there I’ll be proven right as we’re then going to 1,300 if not 1,275 in very short order.

Meanwhile, Gold is on the verge of challenging its all-time high in US Dollars (and Euros) once again asserting that it is in fact a currency, NOT a commodity. If we break 1,550 and stay there then the next leg up in the precious metal will have begun.

In plain terms, the financial world is on RED ALERT this week as there is really little to hold the markets up anymore (QE 2 ended). Meanwhile the whole financial system is showing signs of extreme duress.

European banks (and nations!) continue to remain insolvent and we will be seeing defaults in the near future. 

The situation there has not ended by a long shot and I am certain the Euro will no longer exist in its current form within 12 months.

Meanwhile, China’s inflation is spinning out of control. A liquidity crisis is brewing over there that could rival the Lehman Brothers collapse, as the vast majority of local government debt in China is toxic. Indeed, China just failed to sell half of its intended local government debt in a recent bond auction.

And then of course there is the US, where we have officially breached the debt ceiling and are stealing from pension funds to meet new debt issuance. Indeed, things are now so bad with the US that Tim Geithner is potentially jumping ship.

My question is:

How bad must things be getting that Geithner, a man who has lied and swindled the American people with impunity, and has never once suffered the consequences of his actions, is voluntarily “getting out of Dodge”?

The answer: BAD.

Indeed, I think we could very easily see a repeat of the May 2010 Collapse, if not another 2008 type event in the near future. Only this time, the Crisis will be far far worse because the financial world will have realized that the central banks CANNOT solve the problems that brought about 2008.

When that happens, the REAL Crisis will start along with stock crashes, currency defaults, food shortages, and the like. Which is why if you’re not taking steps to prepare for what’s coming now, you need to start moving.

Weak 2nd Quarter Results and Employment Cuts Imminent For Wall Street

by IBT

Wall Street banks are reported to post poor second quarter results this week, accounting for nearly a 20 percent drop in sales and trading revenues and prompting another round of layoffs, according to the New York Times.

Namely affecting JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley, prospects for recovery appear grim for core trading revenue, as stated by researchers, which is projected to fall by nearly 25 percent from the reported success in the first quarter when the market was more favorable.

Amidst reports of quarterly results to come on Thursday, the underperformance comes as no surprise as Bank of America hinted last month that it will implement plans to respond to the dip. Not to mention, shares have been down more than 10 percent since March due to a lag in investor activity and fixed-income and commodities group.

The indisposed state of Wall Street prompts the need for banks to grow and prosper, as minimal loan growth and tough regulation standards stemmed from a lagging economy heighten pressure.

"We are undoubtedly being impacted by lower levels of activity," said William Tanona, a financial services analyst with UBS. "There is a lot of uncertainty out there."

The overall trading declines due to the debt crisis in Europe and undefined debt ceiling in United States are the key reasons for the uncertainty. The effect: Most investors are hesitant to take big risks in an economy with little prospect to grow in the near future regardless of the fact that prices of gold, oil and metals skyrocketed early this year.

This decline in investors lead to the drop of prices, causing traders, who were turned off by the pitfalls in salvaging economic health, to pull out of the market subsequently leaving a surplus of inventory acquired to smooth over trading.

Since its steady decline the past two years, difficulty continues for mortgage trading as interest and prices of mortgage-backed securities plummet. In direct proportion, a decrease in loans from disinterested borrowers, both consumers and businesses added insult to injury to banks.

An increase in financial regulations over the past few years triggered the multibillion-dollar hit to banks, as overdraft charges and credit and debit card fees were closely monitored and adjusted.

The second quarter slump comes as no shock, as many banks have recently hinted to the results. Last month, Bank of America made its recovery plans known with the announcement to offer $20 billion in charges and legal costs to eradicate issues stemmed from the failure of mortgage-backed securities.

Many worry that employment cuts in an already unstable job market will be a major part of cost cutting initiatives. Glodman Sachs has already drafted plans to cut more than 200 jobs in New York this year while Morgan Stanley will also rid of employees while reducing $1 billion in noncompensation expenses.

Repeating pattern ...

by Kimble Charting Solutions

Italian Bank Problems Now At The Forefront.

The news today continues the rumoring that Italian banks and bonds are going to see problems this year or early next year. This follows an interesting email exchange (dated the 8th) that I had concerning our European bank and soveriegn research from last year.
Of note, please look at the charts from Mish.

Italy has clearly recently broken the 5% support, and if on a tech point of view, a quick 40bp is guaranteed, to 5.4% (the previous range was 4.6%-5% so 40bp wide), given the context, and given that German yields are going DOWN, this is the sign of something much much bigger, like what happened to Spain and perhaps Portugal. Youve seen the info as well on the recent volatility in Italian banks, and headlines shifting to Italy, I now believe the big move is happening right now. The european leaders must be shitting in their pants.

Actually even the spread France vs Germany seems to be going out of its range, thats a new thing. There can be gaps if a new bond is issued, but I've noticed a much bigger than usual gap this day, so something is going on, I've asked a trader as well if something was going on with french oats, there is definitily a significant move.

European stocks fell for a second day as concern grew that the region’s debt crisis will spread to Italy and China’s inflation surged to a three-year high. Asian shares and U.S. index futures slid.

Intesa Sanpaolo SpA (ISP) retreated as Italy’s second-biggest bank was downgraded at HSBC Holdings Plc.

Page 6 of our proprietary Italian banking research - ( Italian Banking Macro-Fundamental Discussion Note) reveals what we percieved to be weakness in this bank back in February of 2010 with an increasing Texas ratio and increasig proportional NPAs.

Now, it didn't take a genius to figure out this would happen. As a matter of fact a slight dose of common sense (when was the last time you got something for nothing, really?), a little historical perspective or a BoomBustBlog subscription would have sufficed.

May 11 (Bloomberg) — China’s inflation accelerated, bank lending exceeded estimates and property prices jumped by a record, increasing pressure on the government to raise interest rates and let the currency appreciate.
Consumer prices rose 2.8 percent in April from a year earlier, the fastest pace in 18 months, and property prices jumped 12.8 percent, the statistics bureau said in statements today. New lending of 774 billion yuan ($113 billion), announced by the central bank, was more than any of 24 economists forecast.
Excerpts from the HSBC forensic analysis featured in this post:

See the original article >>

Italian bank stocks down again on debt woes

(Reuters) - Shares in UniCredit SpA (CRDI.MI) and other Italian banks extended losses on Monday after a sell-off last week due to concerns Italy could be drawn into the euro zone debt crisis and worries about the strength of their capital.

UniCredit, Italy's biggest bank by assets, turned negative after seesawing in early trade and was down 0.7 percent at 1.22 euros by 1123 GMT, adding to a 20 percent drop over the past week.

On Friday alone, the stock fell 7.9 percent, leading Italian banks down and weighing on Milan's FTSE MIB blue-chip index.

Intesa Sanpaolo SpA (ISP.MI), Italy's biggest retail bank, fell 5.6 percent after briefly advancing into positive territory following last week's 13.5 percent drop.

Italian banks have been hit mainly by fears that Italy, which has one of the world's biggest public debts and is the euro zone's third-largest economy, could be sucked into the debt crisis that has forced Greece, Ireland and Portugal to take bailouts.

Underscoring those concerns, the premium investors demand to buy Italian bonds instead of German paper shot to a euro lifetime high on Monday.

The 10-year yield spread between Italian and German debt widened to 268 basis points ahead of an emergency European Union meeting on Greece and the worsening situation in Italy.

The higher spread in turn weighed on banks, which hold around 200 billion euros ($290.2 million) of Italian debt and are seeing their funding costs rise.

"It is the high reliance on wholesale funding markets and the elevated holdings of domestic government bonds that leaves Italian banks vulnerable," said analysts at JP Morgan.

They said Italian banks' government bond holdings as a percentage of their assets stood at 6.33 percent, second only to Greek banks at 10 percent.

"This increases the sensitivity of Italian banks to their own sovereign, risking a creation of a vicious circle."
Worries about exposure to Italy also hit shares in French banks. According to data from the Bank for International Settlements, foreign banks' exposure to Italy stood at $1.097 trillion at the end of December, and French banks accounted for 35 percent of that.


In an attempt to curb price volatility after Friday's sell-off, Italian market regulator Consob introduced new disclosure requirements on short-selling on Sunday.

UniCredit, the only big Italian bank that has not carried out a capital increase in recent months, has been hit harder than its Italian peers by expectations that it will need to boost its capital base after the results of EU-wide stress tests are made public later this week.

Also weighing on the stock is the fate of Libya's 7.5 percent stake in the bank, which is frozen because of international sanctions against Libyan leader Muammar Gaddafi.

UniCredit CEO Federico Ghizzoni said in a newspaper interview on Monday that the bank has had signs of interest in the stake and hopes for a quick clarification of the situation in Libya.

The Central Bank of Libya holds just under 5 percent of UniCredit and the Libyan Investment Authority has 2.6 percent.

Asked what would happen if Tripoli wanted to pull out of UniCredit at short notice, Ghizzoni said: "I believe that they would not have trouble doing it through us or by themselves. The signs of interest are there already."

Asked about a capital increase, Ghizzoni said UniCredit was waiting for clarification about regulators' norms on systemically important financial institutions.

He said he was unconcerned about capital levels, adding: "Today we all agree that capital should be higher than in the past. But I don't agree about raising capital to such a level that there are significant problems with profitability."
See the original article >>

Currency Flag Patterns ...

by Kimble Charting Solutions

Jobs crumble! Debt talks failing!

Everything we’ve been warning you about is starting to happen — fast! 

The U.S. job market is crumbling … the Washington debt talks are failing … and the unprecedented convergence of both these events is mandating urgent steps by all prudent investors. 

Here’s what I recommend:

Did the Great Recession Ever End?

Obama administration economists have repeatedly sworn that the answer is “yes.” Since early last year, they’ve told you the recession is “history” — and nearly every day since, they’ve had a chant to cheerlead the “recovery.” 

For reasons I’ll explain in a moment, I have always found that quite remarkable. But what’s even more remarkable is that nearly everyone has believed it. 

Widespread belief in the existence of an economic recovery has been the underlying assumption behind virtually every new piece of economic legislation, every new policy initiative by the U.S. Treasury, and every decision by the Federal Open Market Committee (FOMC). 

It has been the basis for estimates of corporate earnings, government tax revenues, and global growth projections. 

It has guided corporate boardrooms, fund managers, and average investors. 

And in the debt debate between the White House and Congress, it has been the fundamental underpinning of every single understanding or misunderstanding, agreement or disagreement. But now …

Suppose — just suppose — that, one day, with no prior warning, it suddenly begins to dawn on millions of financial decision-makers, big or small, that we never had a true economic recovery to begin with. 

Suppose it’s revealed that the U.S. economic growth since 2009 was nothing more than (a) bad data, (b) misinterpretation of numbers, plus (c) some knee-jerk reactions to massive stimulus.

In other words …
Suppose nearly everyone suddenly realizes that the economic recovery was mostly a hoax!
All hell will break loose! 

And that’s essentially what began to happen this past Friday with the release of the official unemployment numbers — the nation’s broadest and most widely watched measures of the state of the economy.
Hard to believe? Then consider the facts …
chart1 stocks

Fact #1. We have the worst long-term unemployment in recorded history.

On average, once someone loses a job, it takes more than 25 weeks to find a new one. 

That’s not just a wee bit worse than during prior bad recessions.

It’s more than 2.5 times worse than during the mid-1970s, when the U.S. suffered its worst recession since World War II! 

It could even be worse than during the Great Depression, but we’ll never know; no similar records were taken during that period. 

Most important, since the recession officially began in 2008, this all-important measure has NEVER — not once — shown any improvement. Quite the contrary, it has continually telegraphed the message that the U.S. job market has been in a rapid, nonstop decline all along! 

If you find this unbelievable, just check out the chart above. Look how this official stealth measure of the recession’s severity has literally gone through the roof! Note how there was no intermediate improvements — not even the faintest hint of recovery! 

Fact #2. Just as we’ve been warning all along, this dire truth has now begun to finally seep into the more traditional measures as well. As master trader Kevin Kerr highlighted in his video update on Friday …
  • U.S. employers added 18,000 workers in June. That was 82% less than the 105,000 job gain that economists had forecast. They missed their target by a country mile!
  • A separate government survey, believed to be more accurate, showed that the economy actually lost 445,000 jobs in June.
  • Despite the rising cost of living, average hourly earnings didn’t go up by one iota. In fact, they actually fell by 1 cent to $22.99.
Fact #3. The broadest, most reliable measure of unemployment in the United States has gotten progressively worse throughout most of the so-called recovery.

This measure comes from John Williams, editor of Shadow Government Statistics (, who has been persistent in his warnings that data distortions and manipulations have long been hiding the truth about the continually deteriorating job market.

Let me explain …
chart2a stocks
As you can see in the chart, Williams tracks three unemployment rates:
  1. The “official unemployment” number that the government and the press headline (called “U-3″). This is the most narrow and least accurate, because it includes only workers actively looking for full-time work. But even that number rose from 9.1% to 9.2% last month.
  2. The all-inclusive unemployment according to the government (“U-6″). This measure does include workers who are not currently looking for jobs or have been forced to accept lower-paying, part-time jobs. And even the government admits this number is terrible, surging in June from 15.8% to 16.2%, the highest this year.
  3. But what I want you to focus your attention on is Williams’ Shadow Government Statistics estimate of the true, all-inclusive unemployment (the “SGS Alternate”). Why are the government’s numbers wrong? Because in 1994, the Clinton administration decided to stop counting workers who had been looking for a job for more than a year. If you include them, says Williams, the true unemployment rate in the U.S. is now about 22.7%!
Here’s the key: While the government’s numbers improved somewhat during the recent “recovery,” this broadest measure of all continued to deteriorate — another confirmation that the recovery was largely bogus.
chart3 stocks

Fact #4. The housing market!

This is where the Great Recession began. And this is where it would have to end. But it has done nothing of the kind!

In fact, except for a momentary pop in response to massive government infusions of capital and tax incentives, it’s been getting worse almost every quarter since the “recovery” supposedly began.

Now, U.S. median home prices have fallen BELOW their lowest level of the debt crisis (see chart). And now, home foreclosures are at or near their worst level of all time.

Does this look like a recovery to you?

How much longer do you think Washington and Wall Street can maintain the “recovery” charade?

The Real Reason the Debt
Ceiling Talks Are Failing

As I said at the outset, the entire assumption of the debt talks in Washington was that we did have a recovery of sorts, albeit a weak one. 

Now, as the realization sinks in that the recovery was bogus to begin with, any chance of a grand compromise has been dashed.
Instead of the $4 trillion in cuts discussed last week, both the 
White House and Republican leadership now admit that, at best, they’ll probably wind up with $2 trillion in cuts.

What’s worse, it looks like our leaders are getting ready to pull the same trick they’ve pulled for decades — promise big savings in later years, but do little more than tinker with the deficits of current years.

Bottom line: We can expect …
Too little, too late in savings — far from enough to save the country from fiscal Armageddon, but …
Too much, too soon in cuts — a big blow to an economy with sinking job and housing markets.
Too pessimistic for you? Sorry, but until and unless America faces the facts and collectively makes the needed sacrifices, that’s the dire reality of our era.

You have only one choice: To ignore the Wall Street hype and prepare for the worst.

Here’s What to Do …

See the original article >>

Siamo di nuovo al sell off, Milano -2,50%

by WSI

Milano - Tornano di nuovo pesanti le vendite sia sul mercato azionario che sui titoli di stato italiani, dopo il tonfo del 3,5% registrato lo scorso venerdì dal Ftse Mib; sempre venerdì l'indice di riferimento dei bancari Ftse Italia All-Share Bank Index  è crollato fino al 4,5%, scivolando al minimo in tre anni, con Unicredit (che in totale la scorsa settimana ha lasciato sul terreno il 20%) che ha perso venerdì fino al 8%, testando il livello più basso dall'aprile del 2009.

 Dopo la speranza che oggi le cose potessero andare diversamente, il Ftse Mib torna a cedere pesantemente terreno. Siamo punto e a capo.

 L'indice Ftse Mib torna a perdere verso le 13.30 ora italiana più del 2% circa, il 2,50% e continua ad arrancare sotto quota 19.000 punti. La misura comunicata ieri dalla Consob  alla fine non sortisce effetti: la Commissione ha deciso che, a partire da oggi, gli investitori che detengano posizioni ribassiste rilevanti sui titoli azionari negoziati sui mercati regolamentati italiani sono tenuti a darne comunicazione alla Commissione. Da segnalare comunque che la Consob non ha imposto un divieto stretto alle vendite allo scoperto, ma ha solo imposto nuove norme di trasparenza. Inoltre, dagli Usa è arrivato tra l'altro un giudizio molto negativo anche sull'operato della Consob. Critiche sulla manovra tardiva della Consob sono arrivate anche da un analista italiano.

 E un altro esperto tntervistato da Class, Cnbc Marco Capurro di Banca Carige SGR, afferma che, nonostante le misure della Consob, "la situazione delle banche in Italia rimane sempre la stessa. Certo, in un'ottica di investimento se si guarda alle valutazioni dell'indice le valutazioni non sono così tremende, ma per il risparmiatore privato andare sui titoli rappresenta un rischio altissimo, se ci considera anche l'elevata volatilità. Noi siamo stati venditori e abbiamo sull'azionario una view neutral che va verso il negative".

 Niente di buono neanche dal mercato dei titoli di stato italia, con lo spread BTP/Bund, che ha toccato un nuovo massimo. E non solo. La tensione sui mercati dei titoli di stato porta i rendimenti del decennale a balzare fino al 5,4%, al nuovo record assoluto di 11 anni, cioe' dall'introduzione dell'euro nel 1999. Il BTP 4 3/4 21 quota 95.385. E il prezzo dei CDS, (credit default swap) a 5 anni relativi al debito sovrano dell'Italia non ferma la sua corsa, e tocca anch'esso il nuovo massimo assoluto.

 I motivi di questi continui attacchi all'Italia vanno individuati nella debolezza del governo, negli scontri continui ra ministri economici, e soprattutto (e' almeno questa la visione da Londra) per l'arresto di Marco Milanese, il piu' stretto collaboratore del ministro dell'Economia Giulio Tremonti, per corruzione e associazione a delinquere. Un fatto molto preoccupante, intollerabile per la comunità dei grandi investitori esteri.

 Intanto arriva anche la conferma secondo cui gli hedge funds americani starebbero scommettendo al ribasso contro i bond italiani. La notizia e' del Financial Times, che nell'edizione online scrive: "I fondi speculativi di New York stanno piazzando massicci ordini scommettendo sul calo dei titoli di stato emessi dal governo italiano, shortando direttamente i bond della terza maggiore economia dell'eurozona".

 Oggi però non si può dire che la maglia nera spetti a Milano. Tra gli altri listini europei, Madrid cede infatti il 2,22, Lisbona è arrivata a perdere il 2,6%, anche Atene ha fatto -2%; meglio Parigi (-1,69%), Francoforte (-1,19%) e soprattutto Londra, che si limita un calo di poco più di mezzo percentuale circa. Da segnalare oggi l'incontro straordinario dell'Unione europea, per discutere sugli aiuti alla Grecia e anche del caso Italia, anche se le informazioni a tal proposito sono molto contrastate.

 Il quadro azionario globale è in generale negativo: i listini asiatici hanno chiuso in calo, e lo scorso venerdì anche Wall Street è stata oggetto di vendite, causa il dato "inaccettabile" del rapporto sull'occupazione.

 Sul fronte valutario l'euro continua a perdere terreno, scontando i timori sul rischio italiano e in generale sul futuro dei Piigs. Il rapporto usd/usd scende così sotto quota $1,42, a $1,4106, al livello più basso dallo scorso 27 giugno. La moneta unica scivola anche a 113,78 nei confronti dello yen.

 Tornando a Piazza Affari, ad alimentare di nuovo le tensioni sono i bancari, che in mattinata avevano segnalato, in alcuni casi, un lieve tentativo di recupero, e che ora tornano invece a perdere terreno. Unicredit vira infatti in rosso e fa ora -0,24%, dopo aver ceduto il 20% la scorsa settimana; ancora peggio fanno BPM (-2,02%), Mediolanum arretra del 3,17%, così come anche Mediobanca. Azimut Holding cede il 3,14%, Mps perde l'1,65% e Intesa SanPaolo ora arriva a fare -3,75%.

See the original article >>

June's Abysmal Jobs Report is Just the Beginning

By Kerri Shannon

The June jobs report was abysmal - bud sadly it's just the beginning.

After just a few months of modest, stimulus-induced improvement the jobs market is again sliding backwards into a "new normal" characterized by even higher rates of unemployment.

"Unfortunately, I expect chronic high unemployment to be with us for years, and to borrow a phrase from Bill Gross of PIMCO, that's the real ‘new normal,'" said Money Morning Chief Investment Strategist Keith Fitz-Gerald.

The dismal job growth boosted the unemployment rate to 9.2% in June from 9.1% the month prior. The labor force declined by 270,000, and the total amount of people out of work, including those who have stopped looking, is up to 16.2%, from 15.8% the month before.

"It is about as bad as anyone could imagine," Nigel Gault, chief U.S. economist for IHS Global Insight, told MarketWatch. "On face value it does suggest we are grinding to a halt," he said.

Indeed, the meager 18,000 jobs added in June actually led some analysts to question the report's accuracy.

"At first, when I heard it, I thought maybe they had announced the wrong numbers, they were so bad," Robert Brusca of Fact and Opinion Economics told CNN.

Economists had expected an increase of 125,000 jobs, just enough the economy needs to compensate for population growth.

Worse yet, May and April job numbers were revised to show results that were even worse than previously reported. The May gain of 54,000 jobs was lowered to 25,000, and the number of jobs added in April fell to 217,000 from 232,000.

"You look at the charts for private sector growth and you could see we were building a nice, steady crescendo," Brusca said. "All of a sudden the bottom fell out!"

The total number of unemployed workers who are actively looking for work is now 14.1 million, with 6.3 million out of work for six months or more.

Some economists had high hopes for the June jobs report, since alternate measures of employment statistics had shown promise. The ADP payrolls report last Thursday showed 157,000 private-sector jobs had been added.

But according to the Labor Department the private sector added just 54,000 jobs, and that gain was offset by a loss of 39,000 government jobs.

No More Jobs to Give

Private-sector employees account for 70% of the workforce. And as more government jobs are cut, private employment won't be able to bolster job numbers since it's experiencing a long-term slowdown of its own.

The new problem facing the workforce is not that U.S. companies don't have money to hire, it's that they don't need as many workers. Businesses are learning to survive with fewer employees, relying more on increased productivity and efficiency. When companies do have enough cash to spend, they put it toward new technology or M&A activity instead of hiring.

Companies have been regaining profitability, but the increase is not mirrored in the labor market, widening the gap between capital spending and employment.

"Today companies are producing more goods and services than ever before," said Bernard Baumohl, chief global economist at The Economic Outlook Group. "The GDP now is bigger than it ever has been before. And the economy is able to do that with 7 million fewer workers. If we can do so much with so much less, where is the incentive to hire?"

A Bank of America Merrill Lynch report released in March stated inventory rebuilding, low borrowing costs and equipment tax breaks had encouraged companies to spend - not hire.

And the companies that are hiring aren't doing so in the United States. They're looking elsewhere.

"America's stubbornly high unemployment rate is not likely to drop much in the future because - among other reasons - the biggest employers in this country have been exporting jobs overseas," said Money Morning Contributing Editor Shah Gilani. "General Electric Co. (NYSE: GE), Caterpillar Inc. (NYSE: CAT), and Cisco Systems Inc. (Nasdaq: CSCO), are just a few of the U.S. stalwarts that in the past decade have expanded their overseas operations at the expense of U.S. employment."

Jeffrey Immelt, GE's chief executive, told The Wall Street Journal that this shift doesn't reflect a relentless search for the lowest wages, but instead a search for active consumers.

"We've globalized around markets, not cheap labor," said Immelt. "The era of globalization around cheap labor is over," he said in a speech in Washington this spring. "Today we go to Brazil, we go to China, we go to India, because that's where the customers are."

What Investors Need to Watch

As the U.S. job market continues to disappoint, and U.S. companies shift their business focus to overseas markets, investors need to watch where the money goes.

"It doesn't take more than a quick glance to see that the capital flowing out of the United States and into other countries has been very beneficial for a lot of corporations," said Gilani. "Those are the corporations whose shares you should be buying."

Some of the companies with the best opportunities are those that invest in foreign consumer growth, as the United States continues to struggle with high unemployment and a rocky recovery. Netflix Inc. (Nasdaq: NFLX) is one of the latest companies to charge into emerging markets, announcing last week it will start service in 43 countries in Latin America and the Caribbean.

"Continue to buy global growth and global income because the U.S. is holding things back even as other markets with adult supervision charge ahead," said Money Morning's Fitz-Gerald.

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Misure Consob, non funzionerà

by PierGiorgio Gawronski

Scrivo nella notte fra domenica e lunedì. Le misure della Consob contro la speculazione ribassista sono doverose. Riguardano il periodo estivo, quando i volumi dei titoli scambiati si assottigliano, prestando il fianco a manovre speculative illegali delle ‘mani forti’. Ora, se qualcuno bara, sarà più facile individuarlo.

Tuttavia le misure adottate – o altre simili – non fermeranno l’ondata di ribassi. Perché è sul mercato dei titoli pubblici di Portogallo, Irlanda, Italia, Grecia e Spagna (PIIGS) che si gioca la partita decisiva.

È appena iniziato un incendio. Gli incendi si sviluppano in modo non lineare. Per fermarli, è decisivo quello che si fa (o non si fa) all’inizio.

Le cause principali dell’incendio sono due: i debiti pubblici, e la crescita anemica (o negativa) della base imponibile. Per spegnere il fuoco sul nascere bisogna agire rapidamente, e in modo decisivo, su entrambe le cause.

I paesi summenzionati dovrebbero ridurre il debito, tagliando la spesa pubblica e/o alzando le tasse. L’Italia dovrebbe fare subito la manovra per il 2013 e 2014, che per ora è solo un vago libro dei sogni. Tremonti: “Chi ci chiede di fare di più, o di anticipare ad oggi le misure previste per il prossimo triennio, non ha capito nulla. Se lo facciamo, ammazziamo il paese”. Eh no! Signor Ministro, è lei che non ha capito. Non Le si chiede di concentrare i sacrifici in un anno, ma di votare subito misure concrete e credibili, che mettano a posto i conti anche negli anni a venire.

Ma in questa congiuntura depressa, post ‘crisi finanziaria globale’, la spesa pubblica ‘tagliata’ non viene sostituita da nulla, e si traduce perciò inesorabilmente in una nuova caduta delle vendite delle imprese, della base imponibile, e delle entrate fiscali. Lo si è già visto in Grecia, in Irlanda, in Portogallo. Fare austerità in questo modo è inutile e dannoso: ci si ritrova quasi con lo stesso deficit, e tanti disoccupati in più.

Manca una gamba della strategia: il sostegno alla domanda privata, per compensare i tagli alla spesa pubblica e stabilizzare le vendite delle imprese . Sono convinto che oggi solo la Banca Centrale Europea ha i mezzi per stimolare la domanda del settore privato. Qualcuno dovrebbe dirglielo.

Oppure ci vorrebbero ministri economici talmente competenti in macroeconomia da sostenere la domanda ‘a costo zero’.

It Looks Like Greece Is Angry At All The Attention Italy Is Getting

Everyone has moved on to Italy -- it even got the NYT treatment today -- but Greece seems miffed at no longer being the center of attention.

We only say that because Greek yields are surging to totally brand new records: over 31% for 2-year debt, after having briefly dipped to near 25% right after the Hellenic Parliament passed the bailout.
Of course, now that "selective default" is on the table as a Greek option, it makes sense that bondholders are eager to dump whatever they're still hanging onto.

And yes, this blowout is the story across Europe today.

Italian short-term yields are at fresh highs vs. German Bunds.

Portuguese yields up.

You get the drill...

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Morning markets: cotton leads decline on China, euro jitters


Agricultural commodities could not maintain their ability to swim against the tide.
External markets continued on Monday the slide with which they ended last week, given an extra shove by data over the weekend showing Chinese inflation reaching a three-year high of 6.4% in the year to June.
This increase, spurred by a 14.4% rise in food prices, spurred thoughts that further interest rate rises might be in the wings, with associated risks for economic growth in the Asian powerhouse.
"We reckon [on] at least one interest rate hike in the third quarter, and view inflation will become 'structurally' higher for the following years," Australia & New Zealand Bank said.
Spread to Italy?
While Shanghai stocks managed a, typical, counterintuitive move, adding 0.2%, with separate data showing a rise to $22.2bn in China's trade surplus last month, other Asian stock markets failed to see the upbeat side.
Tokyo's Nikkei index shed 0.7%. Fresh concerns for eurozone sovereign debt gave a further dent to sentiment, after the European Union called a meeting of senior officials amid concerns that jitters could spread to Italy, the region's third-ranked economy, after Germany and France.
Furthermore, the Financial Times reported that some European leaders are considering allowing some default by Greece, the region's worst affected economy.
The euro dipped, and the dollar added 0.5% against a basket of currencies as of 07:50 GMT (08:50 UK time), making dollar-denominated assets such as many commodities that much less competitive as exports.
'Rain interruptions'
Prices of many raw materials fell, with New York crude down 1.3% at $95.00 a barrel.
And, among farm commodities, wheat was among the weakest, down 1.7% at $6.40 a bushel for September and 1.7% to $6.79 ¾ a bushel for the December lot in Chicago.
Kansas wheat for September fell 1.7% to $7.15 a bushel for September.
Pressure from harvests picking up pace in Europe too added pressure, despite some rain interruptions in France, the EU's top producer, and "further thunderstorms forecast for this Wednesday," according to Agritel.
Still, in northern France, the consultancy added that "yields seem less impacted by drought occurred this spring", helped by their late development which allowed them to benefit more from early summer rains.
Any sellers left?
Corn fell 0.5% to $6.38 a bushel against for September and 0.9% to $6.31 ½ a bushel for the best-traded, new crop December contract, given some support by fresh signs of demand.
South Korean feedmaker Nonghyup Feed bought 110,000 tonnes of corn for delivery between October and November.
Furthermore, there are some doubts as to the weight of selling left likely in corn, given the liquidation which funds have already undertaken in corn.
Regulatory data out late on Friday showed that large funds "have blown out of another 36m+ bushels of ownership which would have them reducing their length by nearly two-thirds since the beginning of April", Jon Michalscheck at Benson Quinn Commodities said.
In the latest week (to last Tuesday), "speculators liquidated a quarter of their net long position in corn, and positioning is now much closer to 'neutral'", ANZ said.
China damage
Even soybeans lost their grip on their gentle strength of late, which has been spurred by official data last month showing US sowings of the oilseed were below forecasts, at a time when supplies already look tight.
The news on China, the top importer of the oilseed, sent Chicago's best-traded November lot down 0.3% to $13.43 a bushel, with the old crop August contract shedding 0.2% to $13.44 ¼ a bushel.
Still, that was better than cotton, of which China is also the biggest buyer, which tumbled 2.2% to 111.41 cents a pound for the best-traded December contract.
The lot earlier hit 110.82 cents a pound, its weakest for five months. The decline also took the fibre below its 200-day moving average, near about 111.73 cents a pound, below which is has not fallen since August, according to Mike Mawdsley at Iowa-based broker Market 1.
Luke Mathews at Commonwealth Bank of Australia also noted the depressant to prices offered on Friday by a "bearish US jobs report and another week of [cotton] net export sales reductions in the US".
'Powerful heat dome'
More will be known on US shipments later, with the weekly data on export inspections.
Also potentially to effect market moves will be the prospect on Tuesday of the latest US Wasde report on world crop supply and demand estimates, which are of particular interest this time given the changes two weeks ago to estimates for US crop sowings, and unexpected stocks data too.
And the weather could, as ever, move the markets, particularly with attention on a US "heat dome" set to hit the Midwest – after some cooler weather and thunderstorms over the next few days.
"A powerful heat dome continues to appear in all the models," weather service said.
"The dome develops around July 15 and spreads into the western Corn Belt on the 16th and looks to last for several days.
"The greatest heat is going to be from the Mississippi River westward towards of the Rockies."

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