Morning Note Sept 6th

September 6, 2011


US Equity futures are trading lower relative to fair value, playing catch-up after yesterday's sharp selloff in Europe as global growth worries and heightened concern in dealing with the region's sovereign debt crisis continue to take center stage. Attention will focus later today on August growth in the service sector due at 10:00 ET.



Libor fixings 

Overnight Libor: Dollar: 143% vs prior n/a ; Sterling: 0.581% vs prior 0.584%; Euro: 0.831% vs prior 0.834%
1-month Libor: Dollar: 0.226% vs prior n/a ; Sterling: 0.663% vs prior 0.660%; Euro: 1.289% vs prior 1.296%
3-month Libor: Dollar: 0.336% vs prior n/a ; Sterling: 0.893% vs prior 0.890%; Euro: 1.475% vs prior 1.478%


WTI ($1.90) at $84.57

Natural gas +$0.03 at $3.90

Spot Gold ($15.40) at $1884.80

10-yr yield 1.99%
30-yr yield 3.29%


Asian Markets

Most Asian markets followed Europe down today, though losses weren’t as steep. Lower prices sent resource stocks down. A late short-covering rally pushed Hong Kong to finish slightly higher. In extremely low volumes, China declined slightly. Carmakers and steelmakers limited South Korea’s fall on bargain hunting. Banks fell 2-3% on worries that the economy may lead to increases in their bad loans and decreases in their bottom lines.
Banks and resource stocks took Australia lower. Banks in Australia fell when the country’s regulator said it wants institutions to conform with Basel III requirements sooner than international guidelines require them to. Reserve Bank of Australia leaves cash rate unchanged at 4.75%, as expected.
Banks slumped in Japan on worries about European debt. Taiwan, which closes earliest in the region, was not open to benefit from Europe’s trading higher; banks dragged the market down. The yen is trading at 77.35 to the US dollar.


European Markets

European equity markets opened mixed, defying early indications of falls for major indices of around (1%), and indices have generally traded in positive territory in choppy trading. Swiss shares lead the regions gains up over +4% buoyed by the news that the Swiss National Bank sets minimum exchange rate at CHF 1.20 per euro effective immediately, with ECB noting the SNB's decision, "which has been taken by the SNB under its own responsibility." Macro and political concerns, that led to sharp falls yesterday across European markets, remain in the background. Germany, Finland and Dutch finance ministers are due to meet today to discuss Finnish demands for collateral in the Greek bailout and the Italian senate discusses the additional austerity measures and the 2012 budget with the CGIL union calling an 8 hour general strike today in 100 cities across Italy against the budget bill. Greece T-Bill auction: Sells €1.3B 6M T-Bills, average yield 4.80% vs prior auction 4.85%, bid to cover ration 3.02 vs prior 3.06. EuroZone Q2 GDP +1.6% y/y vs consensus +1.7% and flash +1.7%. EuroZone Q2 GDP +0.2% q/q vs consensus +0.2% and flash +0.2%. Germany July Industrial orders (2.8%) m/m vs consensus (1.5%) and prior +1.8%. UK Aug new car registrations +7.3% y/y at 59,346 units. The pound and the euro are trading at $1.6145 and $1.4229 respectively


Today's Economic Releases (Eastern Time)

05:00 Eurozone GDP y/y (Q2); actual +1.6%; consensus +1.7%
06:00 Germany July Industrial orders (2.8%) m/m vs consensus (1.5%) and prior +1.8%
07:45 US ICSC-Goldman Chain Store (03-Sep); consensus n/a
08:55 US Redbook Chain Store (03-Sep); consensus n/a
10:00 US ISM Non-Manufacturing Index (Aug); consensus 51.3
16:30 US API Crude Inventories (02-Sep); consensus n/a 

Today's Key Events (Eastern Time)

07:30 Sanofi IR Thematic Seminar "Strategy & Outlook"
13:10 Fed's Kocherlakota speaks
17:30 Citi meeting with Saks CEO and Personal Shopper Event
—:— Altera mid-quarter update, post market
—:— Citigroup Technology Conference 


Company Specific News

Positive News
DAI.GR (Daimler Mercedes-Benz brand Aug sales up +7.9% y/y to 87,384 vehicles)

M&A
SHAW (Shaw subsidiary to exercise options to sell investment in Westinghouse)
SUN (Sunoco to exit refining and conduct strategic review of the company. SUN announced that it plans to exit its refining business and has begun a process to sell its refineries located inPhiladelphia and Marcus Hook, Penn.)

Other News
(Spains airport operator says its received bids from six groups for Madrid and Barcelona airports)
(WTO's Appellate Body rejects Chinese appeal over US imposing trade barriers on tires imported from China. China appealed aspects of the Panel's earlier finding that, in imposing the safeguard measure in respect of imports of certain passenger vehicle and light truck tyres from China, the United States did not act inconsistently with its obligations)



Newspaper Articles / Headlines

All Things Digital
- Market's post-Labor-Day performance holds key to when, whether Groupon IPO will proceed. Sources close to the situation tell All Things D that the company has not decided to delay or abandon its listing -- yet. The management and board want to see if the market will get better or worse over the next few weeks before they make any decisions.

Barron's
- The Trader: The market fell at the end of last week due to lack of job creation and a slowdown in manufacturing while semiconductor and chip-equipment stocks still remain in the bear market
- International Trader (Europe): Germany's DAX looks like a buy; reccomends iShares MSCI Germany ETF (EWG)
- International Trader (Asia): Discusses Sany Heavy Industry's pending IPO (600031.HK)
- Current Yield: Bond traders anticipate Operation Twist 2.0 from the Federal Reserve
- The Striking Price: September and October are historically volatile; recommends hedging portfolios with VIX calls
- Commodities Corner: Platinum, palladium are ready to rally
- Up and Down Wall Street: Discusses Augusts poor job numbers
- StreetWise: Notes that history suggests September will be a difficult month for stocks
- D.C. Current: The U.S. needs to begin serious spending on infrastructure
- Technology Trader: Investors want tech companies to pay bigger dividends instead of make acquisitions
- Plugged In: AT&T's is prepared to contest the Justice Department's move to block the T-Mobile purchase
- ETF Focus: Brazil, Korea and Taiwan are favorites for big investors; reccomends ETFS for investors who want to maintain broad exposure
- Fund of Information: The SEC is considering changing its fund rules after mutual-fund investors' interest shifts to more exotic offerings that use derivatives.
- Electronic Investor: Reveals websites that help investors find stocks with high total returns and potential windfall payouts
- Economic Beat: Lack of job growth does not indicate a recession
- Follow- up: Bank of New York Mellon (BK) remains a buy; positive on Costco (COST)
- Barron's interviews Dan Chung, Alger CEO. Chung tells Barron's that he is bullish on the U.S. and believes companies most proficient with the internet will reward long-term investors. Chung also tells Barron's that he does not think Steve Jobs resignation will have an effect on Apple. Chung's top picks include: Apple (AAPL), Qualcomm (QCOM), Bringham Exploration (BEXP), OpenTable (OPEN).
- Barron's profile features Robert Zagunis, chairman and founder of Jensen Investment Management. Barron's notes that Zagunis has a conservative investing style and focuses on the long-term when it comes to the company's main fund, the Jensen J (JENSX). The way that the firm selects its holdings is by screening some 10,000 publicly traded U.S. companies to find those that have returned at least 15% on equity per year for the last 10 years; about 160 ventures. Then, according to Barron's, the managers pick the companies that have the best prospects, based on intrinsic value relative to market value. The company's top 10 holdings include: United Tech (UTX), PepsiCo (PEP), 3M (MMM), Omnicom (OMC), Adobe Systems (ADBE), Emerson Electric (EMR), T Rowe Price (TROW), Microsoft (MSFT), Abbott Labs (ABT), Stryker Corp (SYK).
- Barron's suggests asset-allocation funds for investors looking for more enticing returns. The article notes that asset-allocation funds are favorites of investors looking for easy diversification since they can bet across the investment spectrum, rather than being limited to only value stocks or municipal bonds or U.S. Treasuries, for example. Barron's highlights three funds in particular, including: Pimco All Asset (PASAX), Ivy Asset Strategy (WASAX), BlackRock Global Alloc (MDLOX).
- Barron's feature lists 22 companies that are due for a rebound. Barron's argues that it may be time for a rebound for 22 companies that have had triple-digit profit gains in the past 10 years and P/Es as low as mid-single digits but trade below the level they were 10 years ago. Barron's notes that the main reason for the weak performance of these stocks is that 10 years ago there were elevated prices which support the fact that investors should focus on valuation basics when sizing up the companies. The companies include: Forest Labs (FRX), Amgen (AMGN), Best Buy (BBY), Walgreen (WAG), Nvidia (NVDA), Kohl's (KSS), Cisco (CSCO), Texas Instruments (TXN), Medtronic (MDT), Capital One (COF), Microsoft (MSFT), Dow Chemical (DOW), Xilinx (XLNX), KLA-Tencor (KLAC), JPMorgan Chase (JPM), Computer Sci (CSC), Dell (DELL), H&R Block (HRB), Gap (GPS), Omnicom (OMC), Total System (TSS), Sysco (SYY), Whirlpool (WHR), Paychex (PAYX), Intel (INTC)
- Barron's feature positive on Motorola Solutions. Barron's argues that Motorola Solutions' (MSI) strong cash flow and great business make the stock a buy. The article notes that MSI, now an independent company, will be able to use its strong cash flow to expand the business, buy back stock and pay dividends. Barron's cites portfolio manager Todd Lowenstein of HighMark Capital Management., who thinks MSI's shares could climb more than 40%, to $60, in a year, as the company reduces costs and presents new technology.
The article notes that MSI has a 65% share of the North American business, and has been very involved in developing industry standards for decades.
Barron's notes that MSI hopes to benefit by providing network infrastructure as well as providing first-responders with new devices that feature GPS, texting, video, mapping and the mobile Internet.

Bloomberg
- German ministry of Economy denies KFW to buy Daimler's stake in EADS

Changjiang Times
- China's Commerce Ministry approves Nestle's purchase of 60% of Yinlu Food Group. A Nestle spokesperson tells the Changjiang Times that the company still needs approval for the purchase from three local governments.

Digitimes
- China Unicom (762.HK), China Mobile (941.HK) launch cheap own-brand 3.5G smartphones. Industry sources tell DigiTimes that the phones retail for less than CNY1,000 ($156), which is about 25% of the cost of an iPhone.
- NAND flash memory contract prices stopped falling in late August, says DRAMeXchange. Industry sources tell DigiTimes that they expect prices to get support from device launches over the next few months, though they say the industry capacity coming online in Q4 may be greater than the higher demand.

Economic Times
- Tata Consultancy Services (TCS.IN) offers $500M for 80% of Lufthansa IT Systems. People familiar with the bidding process tell the Economic Times that TCS is also trying to negotiate a multi-year contract with Lufthansa that could be worth more than $2B. One source says Hewlett Packard-EDS (HPQ) and IBM (IBM) are competing for the purchase, but TCS might be the favorite.

Financial Times
- 3 CEO fears rivals will attempt to delay 2012 auction of radio spectrum. David Dyson tells the FT that since Ofcom is letting Everything Everywhere (DTE.GR/FTE.FP), O2 (TEF.SM), and Vodafone (VOD.LN) reallocate their spectrum, they have far less incentive to allow the auction, which might give 3 an in, to proceed on schedule.
- AGs offer deal to banks accused of improper mortgage practices. People with direct knowledge of the discussions tell the FT that the prosecutors are offering to basically remove any legal liability for the practices in exchange for a multibillion-dollar settlement. But the banks want a greater degree of immunity than is currently on the table, and the article indicates that the AGs of New York, Delaware, Massachusetts, and Nevada think the current offer already goes too far.
- Bank of Georgia to list on London Stock Exchange. Without citing sources, the FT reports that the bank is expected to announce today that it will move to a full premium listing from its current status of having global depositary receipts on the LSE.
- Total to merge refining division, chemicals business. Without citing sources, the FT reports that the plan will be announced next month, and unions may not welcome it. The idea will save hundreds of millions of euros a year, and Total has promised that no jobs will be lost, but CGT thinks the move is the first step on a path that will eventually lead to firings.
- Lloyds Banking Group willing to raise number of current accounts it is selling to satisfy Independent Commission on Banking. People close to the situation tell the FT that in a bid to appease regulators, Lloyds has told the ICB it will start offering current accounts at Cheltenham & Gloucester, in hopes that it will be able to make a larger sale when it offloads the operations. The sources say that Lloyds is targeting a 6.1% market share vs the current 4.6% for a buyer to take on.
- Statoil remains interested in shale gas in China. CEO Helge Lund tells the FT that he hopes China will be able to separate its issues with Norway from the potential for a business deal with Statoil. China was unhappy that the 2010 Nobel Peace Prize -- which is presented in Oslo -- was awarded to Liu Xiaobo. Lund says that while Statoil is two-thirds owned by Norway, the company is apolitical.
- DIRECTV no longer in running for Hulu. The Financial Times reports that, according to people familiar with the situation, DirectTV was ruled out of the auction for Hulu for submitting a bid that was too low. The article notes that Amazon (AMZN), Dish Network (DISH) and Yahoo (YHOO) are the three remaining bidders and one source tells the FT that the three leading bids for Hulu are in the $1.5B-$2B range.
- Loterías y Apuestas del Estado hopes to list by end of October. The FT notes that the decsion to go through with the IPO comes despite turbulent markets and a likely change in Spanish government pending in November.

Hong Kong Economic Journal
- Dell (DELL) to partner with Baidu to make tablet computers, smartphones. A Dell spokesperson does not tell the HKEJ when the products will be introduced, but citing a person with knowledge of the matter, Sina News reports that the smartphones could reach market in November or December.

Independent
- Big miners could embark on a takeover run; no specifics are named in terms of targets or acquirers. "Vague rumors of a possible approach" for Caretech Holdings (CTH.LN) for 180p/share; the column notes that interest has been rumored before.
- Orange close to signing deal with Deezer. Without citing sources, the Independent says an announcement could be made today

Investor Business Daily
- The following changes were noted in the latest IBD 50 List. Added: PCLN, EDU, ARCO, IPGP, ACOM, SBNY, DG, BVN, NEM. Deleted: BPI, NFLX, HIBB, CHKP, WCN, LO, SOHU, THOR, AVGO

Les Echos
- Air France-KLM looking for €700M to €800M in cost cuts. Citing sources the newspaper reports that the company may be looking to cut costs by €700M to €800M a year if the company enters a recession like it did in 2008. Measures announced yesterday are relatively modest (freeze in hiring, next summer traffic will be lowered), but the company wants to prepare itself for a much harder downturn with seaving reaching €700M to €800M while the Challenge 2012 plan had initially planned for €470M in cost cuts.

London Times
- Unite, GMB, Usdaw unions to hold strike ballot at Unilever in response to closure of final-salary pension scheme

Los Angeles Times
- Tesla Motors CEO/chairman Elon Musk says company plans to bring Model S to market in mid-2012.

New York Post
- No NBA would make $1B of ad money available. An ad executive tells the NY Post that companies that had planned to spend their money on NBA games are preparing for the possibility that the season will be shortened or canceled. The article says Spike (VIA), Comedy Central, and FX (NWSA) are looking to attract the floating money, and ESPN/ABC (DIS) and TNT (TWX) stand to be the main losers.

New York Times
- NYT looks at Amazon.com's efforts to get California sales-tax law repealed. The article is a summary, not really adding anything to what California papers reported last week, though on an anecdotal level, it does point out that a fair number of Democratic politicians are basically boycotting Amazon. Because they need some votes from Republicans, Democratic legislators face a tall order to pass an urgency bill they have drawn up that would make Amazon's desired referendum on the issue irrelevant.
- AT&T plans to approach Justice Department to discuss T-mobile merger. The New York Times reports that, according to people close to the transaction, AT&T plans to approach the Justice Department to discuss conditions, including the sale of assets or the transfer of subscribers to other companies, that would allow AT&T to complete its merger with T-Mobile.
The article notes that it will be a challenge for AT&T to balance its fight with the Justice Department in court and as well as its hopes to get close to the antitrust officials and regulators by promising to shed assets and agreeing to monitoring and regulation that the antitrust division would likely require for the merger to proceed. The NYT reports that two people close to the transaction say that AT&T intends to begin laying out its case later this month, although no date has been set for a settlement meeting with the Justice Department.

Nikkei
- Honda Motor looks to double minicar sales as a proportion of total sales within five years. The Nikkei, without citing sources, seems to be talking about Honda's domestic goal. The company would like to raise the ratio to more than 40% of total sales.

Reuters
- IMF chief urges German stimulus package. Speaking in an interview to Der Spiegel, Chrisitne Lagarde warned of a reversion into recession, calling on countries to abandon fiscal austerity and switch to stimulus measures , warning that the global economy faces a "threatening economy downward spiral". Christine Lagarde said the outlook had darkened suddenly over the summer. Lagarde also defended the statement by IMF experts, that the banking sector in Europe could be missing up to €200B in equity.

Sunday Telegraph
- RWE explores sale of UK co-owned Urenco. The Sunday Telegraph reports that RWE has appointed advisers for a strategic review of Urenco, a nuclear power company RWE co-owns with the British and Dutch government. The article points out that RWE is in final discussions with Gazprom (GAZP.RU) regarding a potential split of its assets and operations, including Npower in theUK. The Sunday Telegraph notes that RWE could be split up and sold to other buyers, such as Centrica (CNA.LN), if no deal is reached with Gazprom by the 15-Oct deadline. An inside source tells The Sunday Telegraph that the decision to look at Urenco follows RWE's current strategy.
- David Cameron wants to weaken reforms from Independent Commission on Banking significantly. Senior Whitehall sources tell the Sunday Telegraph that the Prime Minister is worried that a large bank could leave the country, and he therefore thinks promoting economic growth should take precedence over regulatory reform. The sources say that this is not a simple delay, but rather an entire rethinking of the idea that retail and investment banks should be split.

Telegraph
- News International to sell 15-acre Wapping site; could raise £200M. The Telegraph reports that News International says it has decided not to redevelop the site, which could have been sold three years ago for a £200M residential development.

This Day Live
- Gazprom may abandon its proposed $2.5B investment in Nigeria. Oil industry sources familiar with the deal tell This Day Live that Gazprom may be edging out of the 2008 MoU it signed with the Nigerian National Petroleum Corporation because the country has yet to pass its Petroleum Industry Bill.

Wall Street Journal
- General Electric CEO Jeff Immelt plans to keep GE Capital. Immelt tells the WSJ that investors are undervaluing the financial unit.
- Battle heating up for online supremacy among clothing retailers as European parties enter US market. The article is basically a summary, breaking no news. The WSJ notes that Zara (ITX.SM) will start online sales in the US tomorrow, and H&M (HMB.SS) will start an online shop for the US this spring.
- WSJ is cautious on miners. A "Heard on the Street" column says that commodity prices are unlikely to remain high forever, partially because supply will outstrip demand for many commodities as soon as next year. But it says that the real danger is that China may at some point decline to pay the through-the-roof prices it has been willing to thus far.
- PepsiCo, NFL to announce ten-year extension of sponsorship deal today. A person with knowledge of the deal tells the WSJ that Pepsi will be the league's official marketing partner for about $100M annually, and could spend $1.3B more on marketing et al through the 2022 playoffs.
- BP CEO Bob Dudley says company is making progress. The WSJ reports that Dudley sent an internal email yesterday (5-September in Europe) that didn't really say anything surprising. Dudley claims: The company is doing fine in Moscow, though he concedes disappointment that the JV with Rosneft (ROSN.RU) didn't work out Investments through TNK-BP (TNBP.RU) are performing well
Halliburton's (HAL) lawsuit contains claims that are "neither relveant nor accurate"
- Libya's new governing authority examining deals struck by Societe Generale. The WSJ reports that SocGen declines to comment on its business relationship with the Libyan Investment Authority; officials think some money the bank paid to an intermediary may have wound up with people close to Col. Moammar Gadhafi's regime. SocGen deals with the LIA totaled almost $2B.
- Toshiba (6502.JP) in talks to buy Shaw Group's 20% of Westinghouse Electric. People familiar with the matter tell the WSJ that a deal could be announced tomorrow; no price is given.
- South Korea's Financial Supervisory Service cautions Royal Bank of Scotland over improper business practices
- Honda Motor to recall 962K cars globally to repair problems with power windows, computer equipment
- Amazon.com redesigns website; introduces tablet computer. The WSJ reports that Amazon.com is testing a significant redesign of its website which, according to online-commerce experts, is expected to make the site easier to use and to navigate on a tablet computer. The WSJ notes that the new site will emphasize Amazon's digital goods over its physical ones. The article also notes that people familiar with the device have said that Amazon is expected to introduce a tablet computer in coming weeks.
- ConocoPhillips shutdown at Peng Lai 19-3 Field to take an extra day. The WSJ reports that ConocoPhillips (COP) said it will require an additional day to complete a shutdown of its oil rigs on China's largest offshore field. The article notes that, in a statement Sunday, ConocoPhillips suggested that halting the large operation will take time and noted that its teams spent the day flushing pipelines and "working to progress the production suspension in a safe and timely manner, and in a way that preserves the field's operating integrity." The WSJ reports that ConocoPhillips hopes to complete the shutdown jobs by Monday.

Wirtschafts Blatt
- Austrian People's Party wants country to sell its holdings in OMV (OMV.AV), Oesterreichische Post (POST.AV), Telekom Austria (TKA.AV). The article is an interview with (ÖVP) chairman Karl Heinz Grasser, but what he says does not really live up to or add any detail to the article's teaser.

Yicai.com
- Shanghai Stock Exchange international board may not be coming soon. A source with knowledge of the matter tells yicai.com that the fact that government officials have temporarily stopped discussing the launch may indicate that the regulatory department is slowing down preparations for the launch. The article implies, but does not state, that the source is referring to the China Securities Regulatory Commission. The source says the delay is probably because the global economy and Chinese stock markets are in a funk.


Research

Canaccord Genuity: upgraded GPRO; downgraded KMGB
Citi: upgraded X
CLSA: upgraded SPWRA
Credit Suisse: upgraded BBBT, SNV
Evercore Partners: upgraded CIT
HSBC: downgraded NKE
Morgan Stanley: downgraded PEP, PHG
UBS: upgraded IR


Options

As we discussed last week, September is a back-half loaded month as far as important events are concerned. The most important of these include a 9/20-9/21 FOMC meeting (Fed members seem deeply divided over the necessity of further action) and a 9/29 German parliamentary vote on the expanded powers of the EFSF (a loss has greater implications for Merkel’s chancellorship),  both of which occur after September expiration.

The existence of quarterly options (expiring 9/30) on both the SPY and IWM, make for a convenient “forward-vol” trade whereby an investor can sell Sep options (9/17 expiry) to buy the quarterlies. 

In IWM, look at selling the Sep 67 puts to buy the Sep quarterly 67 puts for $1.00*
In SPY look at selling the Sep 115 puts to buy the Sep quarterly 115 puts for $.1.10*

*indicative.


FINANCIAL SYSTEM AT RISK !
Friday afternoon the FHFA sued 17 banks, and a significant number of executives associated with those banks. The FHFA contends that these banks and their executives knowingly misrepresented the characteristics of home mortgages sold to the two GSEs, Fannie Mae and Freddie Mac. Moreover, there is some evidence that this is the beginning of a number of similar lawsuits that the FHFA intends to make against banks. More could be coming.
Potential Results: This action is so sizable that it requires thinking about its implications in both specific banking and broader economic terms. Issues that must be considered include: The impact on the banks; The reaction of other parties that have lost money on mortgage backed securities; The impact on the housing finance system. The impact on the United States economy in terms of: This lawsuit may insure that the United States will enter a protracted recession that will push unemployment meaningfully higher. Moreover, it is possible that this lawsuit will be the final push needed to force other nations to flee the United States currency. Three institutions have been put at risk: BAC, JPM & CS. BAC & JPM, are liable for $90.5B or 46.1% of the total in question. It is notable that these two banks actually did not underwrite the majority of the securities being questioned.
Initial Conclusion: The FHFA has launched a major set of lawsuits against the banking industry. It is assumed that it will prevail in many of these actions. Some banks will suffer losses but only three of the ones followed here appear to be at risk. These companies will shrink rapidly to adjust to the new environment. The lawsuits may have more significant impacts outside of banking, however, and these will be explored below.
BROADER ECONOMIC AND FINANCIAL ISSUES���.CONTINUED FROM ABOVE���
The probability that a number of major banks are about to shrink their assets and others are leaving the mortgage sector altogether raises questions as to what will happen to mortgage finance in the United States. The housing system in place for the past 75 years is broken and it needs to be replaced by a new one. The new one taking shape is based on loans being originated and held by regional banks. This system will meaningfully slow the origination of mortgages and provide significantly fewer dollars for housing. This means that housing is still an area of risk and not an area of potential growth for the United States economy. Trust is gone. Underwriters at banks no longer simply accept the data they are being given.
Further, banks are no longer willing to lose on the origination process. The fees charged for checking data are being raised to cover completely the new (actually old) origination process.
Second Conclusion
The actions of the government are forcing a total restructuring of the home finance industry in the United States. The systems created over the past 75 years have been judged to be no good. The new system that is emerging is unlikely to generate the funds necessary to stimulate growth or even recovery in housing.
Third Conclusion
The desire to demonize banks rather than solve the nation�s financial and economic problems has led to the dismantling of large parts of the financial system. Through these actions money is being cut off from the economy. This is slowing growth and increasing unemployment among small commercial enterprises.
GLOBAL NEWS
? SWITZERLAND�
1. The Swiss central bank imposed a ceiling on the franc�s exchange rate for the first time in more than three decades and pledged to defend the target with the �utmost determination.�
2. Swiss private bankers  are pursuing acquisitions to boost profits as punitive tax agreements make the nation less attractive for rich foreign clients.
? GREECE�
1. Greece�s deepening recession may be making a second international bailout agreement obsolete even before it�s put in place.
2. Ministers from Germany, Finland and the Netherlands meet today to discuss Finnish demand for collateral in bailout for Greece.
3. Greek Woes Mount as Market Confidence in Fix Wanes
? GERMANY�
1. Factory orders fell more than economists forecast in July, led by a drop in export demand as the global economy cooled.
2. German Euro-Rescue Ruling Will Focus on �Yesterday�s Chapter�
? EUROPE�
1. World Bank President Robert Zoellick indicated that risks to the global economy are intensifying, with the euro region�s outlook dependent on European leaders making the right decisions.
2. Euro-area 2Q consumption, investment, spending miss estimates after figures revised from first release; 2Q GDP up 0.2%, in line with Aug. 16 est.
3. 17 European banks were sued by the U.S. over the sale of mortgage-backed securities and on continuing investor concern over interbank lending.
4. Three years after the collapse of Lehman, financial shares in Europe are under assault, the cost of insuring bank debt is at records, and bankers see worrying parallels to that time.
5. Global fund managers are bullish on stocks for the third quarter, as the turmoil in financial markets offers investors �attractive buying opportunities,� according to a HSBC survey.
? U.S.A.�
1. U.S. options volume rose to a record last month, driving stock price swings in the last hour  of trading to the widest since the bull market began.
2. Tax Cuts Exceeding Republican Plans Said Considered by Obama
3. Obama Approval Rating Drops to Record Low, Washington Post Says
? JAPAN�
1. Japanese policy makers are "unlikely" to follow Switzerland�s lead in setting a ceiling for their currency to stem appreciation.
2. The cost of insuring Japan�s largest lenders� bonds is falling more than for any domestic company after the Moody�s Investors Service downgrade of the nation�s credit rating sent bank credit-default swaps to a record.
3. Nomura Slides to a 37-Year Low on Business Growth Concerns
? CHINA�
1. Temasek Buys Construction Bank Shares for Up to $2.8 Billion
2. China�s State-Owned CNPC Wins Bid for North Afghan Oilfield
? ITALY� Italian Senate expected to debate $64B austerity plan amid strike today.
? RUSSIA� Russia is facing the biggest jump in borrowing costs in at least five months as falling oil prices shake investor confidence in the world�s largest energy exporter.
? SOUTH KOREA� South Korea�s GDP Expands 0.9%, More Than Initially Estimated
? NORWAY�Norway May Seek Credit Curbs as Indebtedness at Two-Decade High
? LIBYA�
1. Libyan Militia Surrounds Qaddafi Holdouts, Prepares Attack
2. Qaddafi Forces Flee to Niger as Deal Reached on Town�s Surrender
? SYRIA-- Syria Kills 18 Protesters, Says Soldiers Die in Terror Attack
? LOUISIANA-- Tropical Storm Lee Makes Louisiana Landfall, Cuts Oil Output
BAC� BAC�s bid to resolve mortgage liabilities with an $8.5B settlement faces drawn-out litigation and may require a bigger payout as investors and regulators scrutinize the deal.


Bank of America, JP Morgan weakness a buying opportunity, says Susquehanna at
Susquehanna - Susquehanna said the recent weakness in Bank of America (BAC)
and JP Morgan (JPM) should be used by investors to add to positions.  The
firm said both companies are well reserved against mortgage related claims as
well as a significant defense for their practices.


*FBR'S MILLER RAISES ESTIMATE OF PUTBACK LOSSES TO $120 BILLION
BANK OF AMERICA PUTBACK LOSSES MAY TOTAL $66 BLN, FBR SAYS








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