Wall Street Breakfast: Must-Know News 31 comments
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- Escalating trade tensions. On Friday, the U.S. announced a tariff on Chinese tires in a move some say may actually be a precursor to a campaign to reduce trade barriers. Each of the four presidents that served before Obama moved to protect domestic industries early in their term before making a push for freer trade. Whatever the end goal may be, China 'strongly opposes' the tariffs and said it may turn to the WTO to intervene, and yesterday announced it's initiating antidumping procedures against imported U.S. chicken and auto products.
- Obama renews push for financial reforms. Just ahead of the one year anniversary of Lehman Brothers' collapse, Obama is heading to Wall Street to explain how the government plans to unwind its involvement in the financial sector and to renew his push for regulatory reform. Obama is expected to ask for the support of the financial community in implementing new market regulations and will call for greater global coordination on financial oversight. In conjunction with Obama's remarks, the Treasury will release a document called "The Next Phase" (.pdf), outlining ways in which emergency measures are being reduced.
- Deutsche Telekom sprints for next deal. Just days after announcing plans to merge U.K. operations with France Telecom (FTE), Deutsche Telekom (DT) is reportedly considering a bid for Sprint Nextel (S). Deutsche Telekom, a distant fourth in the U.S. market behind Sprint, Verizon Wireless (VZ) and AT&T (T), has apparently been researching a possible Sprint tie-up for over a year, but began serious due diligence three months ago. A potentially costly offer could be submitted in the next few weeks. DT -1.4%, S +10.1% premarket (7:00 ET).
- J&J renegotiates Elan deal. Johnson & Johnson (JNJ) is reportedly in talks to cut the price of its $1.5B deal with Elan (ELN), following a court order that the J&J tie-up violates a partnership between Elan and Biogen Idec (BIIB). J&J wants to reduce the deal's price tag by at least $100M, and new terms could be announced in the coming days.
- Plenty of suitors for JAL. American Airlines (AMR) and Delta Air Lines (DAL) are both said to be considering rival investments in Japan Airlines, with Delta prepared to inject up to ¥50B in a tie-up that would include code sharing on international flights. American Airlines is looking to buy equity in JAL in part to prevent it from switching over to a rival airline network, though both American and Delta also see this as a way to grow revenue from Asia. JAL is Asia's largest airline by revenue but lost $1B last quarter and is under pressure to cut costs and raise money.
- BIS: Higher taxes for larger banks. The Bank for International Settlements [BIS] published its Quarterly Review (.pdf) yesterday, expressing 'cautious optimism' on the state of the global economy but noting that interbank lending fell $812B during the previous quarter. The BIS recommended that big banks pay higher taxes to offset the disproportionately large systemic risks they pose.
- BlackRock plans internal trading platform. BlackRock (BLK) is set to create its own global trading platform, allowing BlackRock clients to conduct deals with one another through internal trades that completely bypass Wall Street. BlackRock says it's not trying to marginalize Wall Street, though the move is certainly a sign of increased resistance to paying fees for securities trades that have small margins and rely on large volumes to achieve profitability. The plan is still in early stages, and will probably be introduced for stocks first, followed by fixed income.
- Gas firms give go-ahead on Gorgon. Chevron (CVX), Exxon Mobil (XOM) and Royal Dutch Shell (RDS.A) approved development of the Gorgon liquefied natural gas project in Australia, paving the way for a venture that could earn A$300B ($258B) in gas sales to China, India and Japan in its first twenty years. The project's first phase will cost A$43B with the first LNG exports expected in 2014.
- China in power-plant talks with AES. Sovereign wealth fund China Investment Corp. is said to be in talks to take a significant minority stake in power-plant developer AES Corp. (AES). Sources said the two sides are also discussing a possible joint venture in which China Investment Corp. would contribute capital to fund AES' plans to develop power plants around the globe.
- Friday failures. Three more bank failures on Friday, bringing this year's total to 92 and costing the FDIC's insurance fund around $2B. Most of those losses come from the seizure of Corus Bank, whose 11 branches and $7B in deposits will be assumed by MB Financial (MBFI). (Read the FDIC's press releases: I, II, III)
Today's Markets
Asia closed mostly down. European markets and U.S. futures start the week in the red.
- In Asia, Nikkei -2.3% to 10,202. Hang Seng -1.1% to 20,932. Shanghai +1.2% to 3,027. BSE -0.3% to 16,214.
- In Europe at midday, London -0.7%. Paris -1%. Frankfurt -0.8%.
- Futures: Dow -0.6%. S&P -0.7%. Nasdaq -1%. Crude -1.1% to $68.53. Gold -0.8% to $998.80.
Monday's Economic Calendar
- 8:35 Fed's Duke speaks on regulatory reform
12:30 PM Fed's Lacker speaks on financial regulation
3:50 PM Fed's Yellen speaks on the economic outlook
Seeking Alpha editor Eli Hoffmann contributed to this post.
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This article has 31 comments:
I doubt the Chinese are going to stop eating so the chickens should be save, at least the sale of them that is.
Chinese tires? Now that's a scary thought. What safety issues will we find out about later.
On Sep 14 08:04 AM doubleguns wrote:
> Looks like the chickens are coming home to roost in china.
>
> I doubt the Chinese are going to stop eating so the chickens should
> be save, at least the sale of them that is.
>
> Chinese tires? Now that's a scary thought. What safety issues will
> we find out about later.
On top of all this debt, there's government debt to be paid off; and that comes from our tax dollars, and will be a drain on all of us for years to come.
When will the government reign in its spending and stop creating useless jobs that only cost us more, and finally get to grips with the US's finances? I don't see any sign yet.
On Sep 14 08:45 AM Night_Rider wrote:
> My buddy had Chinese tires on his van........ So just how much money >do we save buying Chinese tires?
Contrary to popular sentiment, I look upon this as good news. There was a drastic oversupply of banks in the American economy. Any one who owned a tie could open a bank, and anyone who could make his mark on a piece of paper could get a credit card or a home loan. Enough.
However, I would like to think that this correcting reduction in banking capacity could result in an increased capacity in medical clinics using the closed bank real estate under "ObamaCare". But being the cynic that I am, I realize that this will only lead, ultimately, to an undersupply of mortuary's
Ha! Ha! Ha! (*****)
On Sep 14 10:17 AM Shaggieman wrote:
> Poor China put up with our Firestone 500 tires exploding all over
> there then limited roads so now it's payback time. Tire go boom!
> Ha! Ha! Ha!
On Sep 14 10:06 AM TBill wrote:
> Are ANY tires made in the US anymore?
On Sep 14 10:23 AM Buckoux wrote:
> Firestone tires is owned by the Japanese tire company, Bridgestone.
>
> Ha! Ha! Ha! (*****)
www.blackswantrading.c...
American multinational companies are gutting domestic manufacturing with these antiAmerican deals.
You REALLY do get what you pay for. You just gotta do the legwork to determine what you want.
Moodys just reported that US banks have taken less than half the losses so far on mortgage and securitues gone bad. The FDIC "watch list" of troubled banks has grown from mid - two digits to mid - three digits.
Regardless of what the Kudlows and Bartiromos say, it ain't over. It's just begun.
?Green shoots ?? Nah, it's moss on an economic rock that's no longer moving.
1. Beyond anecdotes, is there any data showing that Chinese tires are unsafe? If so, the Consumer Products Safety Commission - or some other such group - should be in the lead.
2. Have the Chinese violated WTO rules on fair trade? TBD.
3. How can we and the Chinese government reach an understanding of how to migrate toward a balanced, sustainable trade relationship? If this is an opening shot with that objective, perhaps it is a good thing. If it is just a random data point, it may make good politics for the short run, but damage things in the long run. Lets hope that the administration "gets it".
Same tihng with Mexican produce and meat - ecoli city.
Advertisers used to be required to state country of origin in their ads and now they can get away with "imported."
"Cost reduction" has been such a mantra for decades at so many organizations and bonuses were all tied to "cutting costs" that executives all went with outsourcing skills as well as outsourcing manufacturing to cheaper sources.
There needs to be more education in the business schools teaching future executives that there is no such thing as a new $5,000 Rolls-Royce. You want the engineering and performance - you pay for it. And conversely, there is no such thing as a Formula One Yugo. For $5,000 you are not going to do 0-60 in 3.5 seconds.
You get what you pay for.
The general buzz yesterday in the WSJ was "Oh my God, there will be a tire shortage and higher prices and where will we find another place to import them". No joke. No mention of actually making more here with U.S. jobs. What a country.
On Sep 14 09:08 AM buoy wrote:
> As far as I'm concerned, Chinese tires can stay in China.
On Sep 15 12:45 PM JAMES CARLINI wrote:
> Don't bash the producer - bash the corporate executive who made the
> decision to replace a factory here with a cheaper factory there (or
> a supplier-owned factory supplying the product under the "corporate"
> name)
>
> "Cost reduction" has been such a mantra for decades at so many organizations
> and bonuses were all tied to "cutting costs" that executives all
> went with outsourcing skills as well as outsourcing manufacturing
> to cheaper sources.
>
> There needs to be more education in the business schools teaching
> future executives that there is no such thing as a new $5,000 Rolls-Royce.
> You want the engineering and performance - you pay for it. And conversely,
> there is no such thing as a Formula One Yugo. For $5,000 you are
> not going to do 0-60 in 3.5 seconds.
>
> You get what you pay for.
On Sep 14 12:07 PM axelrod608 wrote:
> Yes, there are American made tires.Last time I bought tires I researched
> them on the Tire Rack site. I bought Fuzions, which are made in two
> countries, each of which place a code on the tires so you can tell
> where a given tire was made. I specified American made and the dealer
> had 4 American made tires in stock. So far so good.
>
> You REALLY do get what you pay for. You just gotta do the legwork
> to determine what you want.
On Sep 14 12:05 PM notsosmart wrote:
> its hard to do but just avoid chinese products whenever & whereever
> you can.we were safe ( i think) by not giving our grandchildren anything
> from china.we are retired & far from rich but i will spend a
> few xtra $ to buy american. now thats not a 100% either but the odds
> are better.i think the cooper tire is the only american tire left.wonder
> what the insurance rates will be on the chinese junk cars that will
> arrive here soon?invest in china? not me.our scoundrel run system
> is great compared to their shennanigans.
On Sep 14 01:05 PM bbowen7 wrote:
> There are several separate questions in the Chinese tire dispute,
> and much of the initial reaction doesn't involve much factual information
> on any of them:
>
> 1. Beyond anecdotes, is there any data showing that Chinese tires
> are unsafe? If so, the Consumer Products Safety Commission - or some
> other such group - should be in the lead.
>
> 2. Have the Chinese violated WTO rules on fair trade? TBD.
>
> 3. How can we and the Chinese government reach an understanding of
> how to migrate toward a balanced, sustainable trade relationship?
> If this is an opening shot with that objective, perhaps it is a good
> thing. If it is just a random data point, it may make good politics
> for the short run, but damage things in the long run. Lets hope that
> the administration "gets it".
On Sep 14 10:06 AM TBill wrote:
> Are ANY tires made in the US anymore?
On Sep 14 03:56 PM doubleguns wrote:
> Looks like a chinese tire sales man came throught rating the blogs.
>