Monday, July 26, 2010

• Tens of thousands of classified documents related to the Afghan war released

without authorization by the group Wikileaks.org reveal in often excruciating
detail the struggles U.S. troops have faced in battling an increasingly potent
Taliban force and in working with Pakistani allies. – Washington Post
• On July 23, the Committee of European Bank Supervisors (CEBS) announced the
results of stress tests of 91 banks, covering at least 50% of each domestic market
and 65% of the overall EU banking sector. The results were in accordance with
analysts' expectations that five to 10 banks, none of them large, would fail the
test: five Spanish cajas, Germany's Hypo Real Estate (HRE) and Greece's
ATEbank didn't meet criteria. The recapitalization needs amount to €3.5 billion
(US$4.5 billion). The tests, which the CEBS says were more severe than those in
the U.S., do not assume a sovereign default as this is seen as unlikely. The head of
the CEBS says that the released findings on total exposure to sovereign debt by
individual banks are detailed enough for investors and analysts to build their own
scenarios. – RGE Monitor
• Americans' confidence in U.S. banks remains near its all-time low at 23% --
essentially unchanged from 22% last year, and far below the 41% pre-recession
level of June 2007. – Gallup
• The federal budget deficit, which hit a record $1.4 trillion last year, will exceed
that figure in 2010 and 2011, according to a White House forecast released
Friday. The $1.47 trillion budget gap predicted for 2010 represents a slight
improvement over the administration's February forecast, but the outlook for 2011
has darkened considerably, primarily due to a drop in expected tax receipts.
• Bush tax cuts will become the major issue on Capital Hill when Congress returns
from recess in Sept; Republicans want all the cuts extended while Dems are more
divided (there are big articles in the NYT, FT, and WSJ on this issue) – JPM
• Bill Gross/PIMCO’s move into equities – discussed in the Washington Post –
Gross thinks the 30+ yr bond rally will fizzle out; “bonds have seen their best
days”. “The king of bonds is now talking up stocks as a better long-term
investment. He said that as U.S. Treasury returns fall, investors will have to take
more risk with high-yield bonds, equities and, eventually, real estate” –
Washington Post
• GS – the Financial Crisis Inquiry Commission is still pursuing Goldman and
demanding the co overturn information pertaining to derivatives; Goldman has
said it doesn’t keep records for the type of information sought by the FCIC; the
FCIC is threatening to bring in outside accountants to comb through Goldman’s
records – FT
• GOP to launch new “substantive campaign agenda” in the next few weeks; the
campaign will focus on: “create incentives for new jobs, cut federal spending, and
clean up Congress” Politico
• Gold – has growing risks over the next few years – Barron’s
• BP: 1) BP’s board will meet tomorrow and will discuss their Q2 earnings (which
get reported on Tues Jul 27) and the future of CEO Hayward; the BBC says that
Hayward’s departure will be announced within the next 24 hours and that he will
be replaced by Bob Dudley. 2) BP’s latest effort to plug the well, a “static kill”,
could commence within the next 3-5 days – Reuters