General News:
– CPI rose 0.7%, 0.6% was expected with a “core” rise of only 0.1%, indicating that inflationary pressures from the consumer side are still tepid.
The CPI breakdown:
– Food was up 0.3%. Dairy up 0.5% but fruits and veggies were down.
– Housing rose 0.2%. Rents were flat while insurance fell 1.0%.
– Apparel fell 0.3%, which represents the third straight drop.
– Transportation rose 2.8%. The big surprise in Transport was the drop in public transportation, however. Vehicle prices dropped as well.
– Medical was up 0.3%. The inflation in the Hospital industry remains a concern.
– “Other” goods and services rose 0.3%.
– There is a lot of press concerning the subprime mortgage industry especially on earnings news from Bear Stearns (BSC). There is a high rate of delinquency and foreclosures.
– Washington Post ran a story concerning food inflation and the price of corn.
– Mutual fund data came in: US equity mutual funds saw an inflow of $620 million. Domestic ETFs had an inflow of $9.038 billion. – International equity mutual funds saw and inflow of $2.567 billion. International ETFs saw an outflow of $169 million.
– The M2 money supply fell $1.6 billion, while M1 rose $28.1 billion. (***Remember: M2 includes M1 as well as deposits, non-institutional money market funds and savings deposits. M1 includes all physical money like coins and currency along with checking accounts and NOW accounts. Economists use this number to judge how much money is in circulation.***)
– The Senate is trying to pass a bill which would change the tax assessment for private-equity. This is timely as Blackstone is just about to launch their IPO.
– A study reports that global capital markets would be able to withstand a doubling of the US deficit up to $1,600 billion by 2012.
– US and Europe saw wheat prices hit the highest level in a decade, resulting from massive droughts and floods.
Asia/Europe:
Asia:
– Bank of Japan left rates unchanged as planned.
– Bank of Japan’s, Fukui, said that more certainty about the economy is needed before they raise rates. He also noted that the weak yen is not an immediate risk, but the situation is being watched closely.
– Chinese regulators are looking into eight banks that made credits which were improperly directed to the market.
– Chinese investment rose 25.9%.
– There was a Chinese government official who noted that the resource tax (The taxpayers for the resource tax are the companies and individuals using taxable mineral products and production of salt.) may be raised to boost efficiency and reflect the price of products.
– A report was issued that 328,000 new brokerage accounts were opened on June 13th in China, which is the highest since June 1st.
– Household yuan deposits fell $36.4 billion in May, representing the first drop since February 2003. Instead the money is going into the equity market.
– India’s inflation rate fell to 4.80%, a nine month low.
– Australia’s central bank is unlikely to raise interest rates in the near term.
Europe:
– European Central Bank’s, Weber, said that emerging economies could lend to inflation when China and India reach capacity. He also noted that there is a need to moderate wage gains in Germany.
– The EU’s trade chief warned that the EU should embrace genetically altered crops or it will fall out of favor with global rules.
– A German finance ministry report shows that public spending in Germany fell sharply over the past three years and is approaching UK levels of spending.
Corporate News:
– Colgate Palmolive was in debate with China over the safety of its products when counterfeit versions of its toothpaste were found to have a poisonous chemical.
– There is a pay vote at TIAA-CREF, one of the largest fund managers in the US, as its giving its 3 million insurance policyholders say on the salary of its top execs.
– There is a $20 billion US contract for military transport aircraft which could be considerably more in additional contracts for Alenia North America, a US subsidiary of Italy’s Finmeccanica.
– There is resistance to Tyco’s three-part split as bondholders decide whether the company met its obligations.
– An executive at UK-based Intercontinental Hotels has resigned after a review of his academic record.
– Citigroup has sold the biggest samurai bond in history in a deal worth $2.2 billion or 270 billion yen. (A samurai bond is a yen-denominated bond by a foreign company but subject to Japanese regulations, which gives the issuer the access to investment capital in Japan.)
– NYMEX (NMX) may sell to NYSE Euronext (NYX).
– The Home Depot (HD) received a bid for its contractor unit from a private equity group.
– Sony (SNE) may cut the price to its PS3 as consumers are demanding a more affordable price.
– Video game software sales and data were strong.
– Adobe (ADBE) reported a strong quarter.
– Illinois Tool Works (ITW) is in line with guidance.
– Monsanto (MON) guides were up.
– Build-A-Bear Workshop (BBW) guides were down with flat estimates.
– Winnebago Industries (WGO) reported weaker than expected results.
Favorable Comments:
– Intel (INTC), Hansen Natural (HANS) upgraded at Goldman.
– LG.Philips LCD Co. (LPL), Nationwide Financial Services (NFS) upgraded at Citigroup.
– Foundry Networks (FDRY) received good comments from Jeffries.
– Nokia’s (NOK) target was raised at Oppenheimer.
– Marvel Entertainment (MVL) and Tekelec (TKLC) upgraded at Matrix.
– The drilling sector, which includes Noble Corp. (NE), Ensco International (ESV), and Globalsantafe Corp. (GSF), received favorable comments from Friedman Billings.
– Pantry Inc. (PTRY) upgraded at Jeffries.
– Gold Fields Ltd. (GFI) upgraded at BMOC.
Negative Comments:
– Molson Coors Brewing Company (TAP) downgraded at Goldman.
Boeing Co. (BA) received poor comments from Citigroup.
