General News:
– US trade deficit was slightly better at $58.5 billion. A deficit of $63.5 billion was expected. Exports were up 0.2%, but imports were down -1.9%. This is weak data showing weak economic activity.
– Oil imports fell 0.2% and exports rose 2.1%
– The money flowing into US mutual funds fell $356 million. ETFs saw a downturn in investment as well, falling $1952 million.
– However, international mutual fund inflows rose $3.4 billion with an ETF inflow of $576 million.
– $1.5 billion flowed out of treasury custodial holdings as well.
– The Wall Street Journal says that a rate hike may slow down the corporate M&A activity.
– The US CFO (Cash Flow from Operations) shows that earnings growth rose 8.6%, capital spending was up 5.2%, employment was 0.4%, outsourced employment was 7.1%, and wages came at the higher end of the 2-year range at 4.2%
– Chicago Federal Reserve President, Michael Moskow, said that the bond sell off was interesting and that investors need to take a longer term view. The Fed will look at the entire economy and not just the market.
– Treasuries saw aggressive selling overnight with massive liquidation. The carry trade (yen/dollar) is becoming unwound. The 10-year swap rate hit a one year high. The 30 year swap spread is at the highest level investors have seen since 2002.
Asia/Europe:
Asia:
– China’s CSI 300 was up 0.94% while most other countries sold off.
– Japan’s machine orders rose 2.24% month over month. However, 4.5% was expected.
– Japanese bank lending, including trusts, rose 0.9%, 1.1% was expected.
– Vice Foreign Minister, Watanabe, said that the economy was on a stead growth path and the carry trade being unwound is very small. The current unwinding is of no immediate risk.
– There is a government source leak in China that the CPI may rise to 3.5% from 3.0% in April.
– China’s National Development & Reform Commission warned the People’s Bank of China that they should be more concerned about asset prices and the prevention of bubbles from entering the economy.
– China reports that vehicle sales were up 21% year over year.
– India’s M3 grew 19.6% in 2 weeks.
Europe:
– German trade balance is in line with expectations.
– German imports rose 0.8%, but 2.0% was expected. While exports rose 0.9% when 1.5% was expected.
– German Industrial Production fell 2.3%, 0.6% was expected.
– German Council of Economic Advisors member, Bert Ruerup, said that the ECB will raise rates more and that rates right now are neutral.
– ECB, Garganas, says that a rise in oil price is an inflation danger and that the ECB will take steps to insure price stability.
Corporate News:
– National Semiconductor (NSM) reported strong numbers and announced a share buyback.
– The International Trade Commission issued a statement saying that it has decided to ban imports of all wireless devices that contain chips made or designed by Qualcomm The ruling stems from a patent dispute battle between the company and rival chipmaker Broadcom Corp, which has accused Qualcomm of illegally using its wireless technology in its chip designs.
– Quiksilver Inc. (ZQK) reported strong earnings, Vail Resorts (MTN) & Kellwood Co. (KWD) report strong numbers, and China Mobile Limited (CHL) is upgraded at Goldman Sachs.
– Amazon (AMZ) may make an acquisition.
– Xilinx (XLNX) is lowering its revenue forecast.
– Deutsche Bank makes unfavorable comments about Starbucks (SBUX) and Panera Bread Co (PNRA).
– United Microelectronics Corp. (UMC) reported poor May sales at -3.3% year over year.
– Taiwan Semiconductor Manufacturing (TSMC) is also reporting sluggish sales at -6.3% year over year.
– CIBC is reporting that Wynn Resort (WYNN) may postpone its opening in Macau.
Favorable Comments:
– Forest Laboratories (FRX) and CEC Entertainment (CEC) upgraded at Matrix.
– Southwest Airlines (LUV) and Genworth Financial (GNW) upgraded at Morgan Stanley.
– Qwest Communications (Q) and Emerson Electric Co. (EMR) upgraded at Bank of America.
– Nordstrom (JWN) upgraded at Bear Stearns.
– Genentech Inc. (DNA) upgraded at Deutsche Bank.
Negative Comments:
– Dean Foods (DF) and Nationwide Health Properties (NHP) downgraded at Stifel.
– Tellabs Inc. (TLAB) downgraded at Goldman Sachs.
– Nike (NKE) and Foot Locker (FL) downgraded at BofA.