Syrian tension hits global stocks. U.S. stock futures and European shares were lower at the time of writing, while most Asian equities also fell, on the increasing prospects that the U.S. will take military action against Syria after John Kerry accused the Assad regime of using chemical weapons on its citizens. The Turkish lira hit a record low of 2.0299 to the dollar, although the yen was up, with the USD-JPY -0.8% at 97.71. Oil was +0.9% at $106.90 a barrel.
White House mulls strategy as debt cap looms. President Obama's advisers are reportedly divided over how best to reach an agreement with Republicans over the budget and increasing the U.S.'s $16.7T debt ceiling, which Jacob Lew has confirmed is due to be reached in mid-October. Obama's economic team is pushing for a deal that would replace sequestration with targeted spending measures, whether they be cuts or increases, although political aides believe that the bigger the ambition, the more likely it is to fail.
Ackman sells entire J.C. Penney stake. Bill Ackman's Pershing Square hedge fund has sold all 39.1M of its shares in J.C. Penney (NYSE:JCP) to Citigroup (NYSE:C), which is now offering the stock to the market at $12.90 each. That's well below yesterday's close of $13.35 and is just over half the amount of about $25 a share that Pershing Square paid for the 18% holding in 2010 and 2011. Ackman's exit follows a public dispute with JCP's board over finding a new CEO, and a disastrous run for the retailer for which the activist investor could be receiving a lot of blame. Shares were -1.5% premarket.
Top Stock News
Nasdaq, NYSE point fingers at each other over outage. Nasdaq (NASDAQ:NDAQ) and NYSE (NYSE:NYX) are reportedly blaming each other for the three-hour outage on Nasdaq on Thursday last week. The trading halt was preceded by connectivity problems between the NYSE's electronic stock market Arca and Nasdaq's Securities Information Processor (SIP), which collects and distributes stock prices to the market. The big question is whether those problems were because of faults at Arca or with the SIP.
Schulze to begin selling Best Buy shares. Best Buy (NYSE:BBY) founder Richard Schulze plans to soon start selling some of his 20% stake in the retailer as "part of his personal long-term strategy for asset diversification and liquidity." Schulze returned to the struggling electronics chain as Chairman Emeritus in March after giving up efforts to acquire the company - or at least a sizable minority stake. Shares fell 1% in post-market trading.
Top Economic & Other News
German business confidence rises again. Germany's Ifo index of business confidence has risen to its highest level since April 2012, increasing to 107.5 this month from 106.2 in July and topping consensus of 107. The current assessment and the expectations indices improved as well. The business climate indicator for manufacturing increased significantly and also hit the highest level in 16 months, with companies expecting exports to strengthen.
Rupee dives to more fresh lows after food bill passed. India's rupee has dropped to another record low of 66.075 to the dollar and shares have plunged after the country's Lower House of Parliament approved a $20B plan to provide cheap grain for the poor, or almost 70% of the country's 1.2B people. The bill has prompted concerns that it will add to India's fiscal deficit. The currency has plummeted this year for a variety of reasons, including the lack of economic reform and the Fed's prospective tapering.
Growth in Chinese industrial profits accelerates. Net income at Chinese industrial companies rose 12% on year in July, up from 6.3% in June, providing further evidence that the economy is stabilizing following a two-quarter slowdown in growth and a credit squeeze in June. The data helped Chinese shares buck the global downtrend and rise 0.3%. Meanwhile, Yi Gang, a deputy governor of the People's Bank of China, believes that the Fed's tapering may only have a "limited" impact on his country compared with other emerging nations.
Japan needs $257B just to service its debts. Japan's Ministry of Finance reportedly wants to allocate a record ¥25.3T ($257B) to service the country's mammoth debt of ¥1,000T ($10T) - which is double the size of its economy - for the next fiscal year. The expected provision is 13.7% higher than for this FY. The speculation comes as Japan debates whether to increase sales tax, a move seen as important for dealing with the country's debt but also as possibly hurting its nascent growth.
Harrisburg, creditors reach deal to end crisis. The receiver for insolvent Harrisburg and creditors who are owed $362.5M have agreed to proposals to end the city's financial crisis and avoid another bankruptcy filing. The capital of Pennsylvania plans to sell its waste-to-energy plant and lease its parking system as part of the plan. The creditors include bond insurer Assured Guaranty (NYSE:AGO) and Dauphin County, which would receive $210M out of claims of almost $300M.
Study links removal of oil, water to tremors. The removal of large amounts of oil and water from South Texas' Eagle Ford Shale has probably helped trigger a recent wave of small tremors by allowing the surrounding rock and sand to settle, a new study shows. However, the research hasn't found much evidence that the fracking process is causing the small earthquakes. The study contrasts with other research that has linked fracking to seismic activity.
Alpha-Rich Stock Movers and Great Calls
1) On Thursday, fund manager Ted Barac said Lee Enterprises (NYSE:LEE) could double again as it pays off debt and the newspaper industry stabilizes. Shares are +11.2% since. Read article »
2) On May 24, Jeffrey Dow Jones argued that Carnival Cruises (CCL, CUK) could sail higher on several favorable tailwinds. The stock is +13.6% since. Read article »
Alpha-Rich Stocks To Watch
1) Uranium One's (OTC:SXRZF) buyout has a wide spread that offers investors up to a 40%+ annualized return, according to hedge fund manager Chris Demuth. Read article »
2) Janus (NYSE:JNS) has compelling long-term upside thanks to tailwinds such as increasing AUM and consolidation within the financial services industry. Read article »
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In Asia, Japan -0.7% to 13542. Hong Kong -0.6% to 21875. China +0.3% to 2104. India -3.2% to 17968.
In Europe, at midday, London -0.7%. Paris -1.3%. Frankfurt -1.4%.
Futures at 6:20: Dow -0.5%. S&P -0.5%. Nasdaq -0.5%. Crude +0.9% to $106.90. Gold +1.3% to $1410.90.
Today's economic calendar:
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:00 Richmond Fed Mfg.
1:00 PM Results of $34B, 2-Year Note Auction
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