Financial News Summary 06-30-11

The day's financial news summary highlights progress in Europe and effort towards it in the United States. The Greeks passed the second critical legislation tied to austerity today, allowing for the distribution of the next tranche of aid from the EU and IMF. German banks promptly joined the French in guaranteeing the rollover of near-term maturing Greek debt. In the States, S&P levied a warning to the U.S. that a downgrade is imminent should the government not raise the debt ceiling in time to avoid technical default. Congress is working overtime to ensure that doesn't happen. Meanwhile, mixed economic data reached the wire today amidst a bit of corporate news too.

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Relative tickers include: NYSE: MHP, NYSE: MCO, NYSE: TM, NYSE: F, NYSE: GM, OTC: MZDAY.PK, OTC: NSANY, NYSE: HMC, NYSE: LLY, Nasdaq: NTAP, Nasdaq: CACI, OTC: EADSY.PK, OTC: NISTY.PK, Nasdaq: APOL, NYSE: AZZ, Nasdaq: CAMP, Nasdaq: CARV, NYSE: CBK, NYSE: STZ, NYSE: DRI, Nasdaq: DMAN, NYSE: GY, Nasdaq: LBIX, NYSE: MKC, NYSE: MEI, Nasdaq: MITL, NYSE: MSM, Nasdaq: QTWW, Nasdaq: SCHN, Nasdaq: SWHC, NYSE: WOR, Nasdaq: XRTX.

Financial News Summary

Rating Agencies Levy Threats at Congress
Standard & Poor’s (NYSE: MHP) warned the public today that it would immediately slash the United States’ highest possible credit rating to “selective default” if the August 4 deadline comes to pass without a debt ceiling hike. A director of the company said U.S. Treasuries maturing on the 4th of August would be downgraded to D, while other treasuries would also be cut as a result. Earlier this month, Moody’s (NYSE: MCO) also warned of a downgrade of the United States should the deadline come to pass.

Senate Determines to Cancel Holiday Vacation
The U.S. Senate, at the prodding of the President, has determined to cancel it’s week long vacation for the Independence Day holiday, and will return to session on Tuesday the 5th of July. Treasury Secretary Timothy Geithner has already warned Congress not to push this issue to the midnight hour or to use it as a political prong, and I agree fully. Today I listened to an economist correctly depict the issue as akin to playing Russian roulette with a fully loaded gun.

Greece Passes Austerity Implementation Legislation
Why it had to be a two-phased process, we’ll never know, but the Greeks increased the drama today as they passed phase 2 of the austerity legislation. This effectively cleared the way for the release of the next tranche of aid from the EU and IMF that will keep Greece solvent into September. German banks promptly reacted to the passage, committing to rollover all debt extended to Greece that is due to mature through 2014. This accounts for nearly half of all Greek debt held by German institutions, and with the commitment from the French institutions adds some further clarity to Greece’s fiscal future – a risk is hedged.

Jobless Claims Stick Too High
Weekly Initial Jobless Claims were reported today for the period ending June 25. Claims fell by 1,000 to 428K. The stubborn state of employer non-hiring is clearly evident in the four-week moving average of jobless claims, which increased by 500 to 426,750.

Chicago PMI Improved Significantly
The Chicago Purchasing Managers Index (PMI) report for the month of June showed the Business Barometer Index rose to 61.1, from 56.6 in May. Economists were looking for a much lower result of 53.0, based on Bloomberg’s survey. Production and New Orders grew, while Order Backlogs declined. The index is a total barometer of Midwestern business activity, and may reflect gains of U.S. automakers like Ford (NYSE: F) and GM (NYSE: GM) on Japanese producers like Toyota (NYSE: TM) in June.

Consumers Find Some Confidence
Bloomberg’s Consumer Comfort Index, a weekly measure of the consumer mood, showed improvement this week. The index moved to negative 43.9 though, from negative 44.9 the week before.

Natural Gas Inventory
The latest Natural Gas Report from the EIA, covering the period ending June 24, showed an increase of 78 Bcf, taking it to a level 243 Bcf below the mark set last year and 63 Bcf below the five-year average for this time of year. We are currently in a build period for natural gas, and moderate temperatures have helped to stave off summer demand for electricity.

Fed Speak
St. Louis Federal Reserve Bank President James Bullard briefed reporters after a conference on quantitative easing. Thomas Hoenig also addressed an audience today. Treasury Secretary Timothy Geithner is addressing the Clinton Global Initiative meeting.

Corporate News
The corporate wire highlights Mazda Motor’s (OTC: MZDAY.PK) launch of a remodeled Demio subcompact. Companies meeting with analysts or investors include Eli Lilly (NYSE: LLY), NetApp (Nasdaq: NTAP), CACI International (Nasdaq: CACI), EADS (OTC: EADSY.PK) and Nippon Steel (OTC: NISTY.PK). The day’s EPS schedule includes Apollo Group (Nasdaq: APOL), AZZ Inc. (NYSE: AZZ), CalAmp (Nasdaq: CAMP), Carver Bancorp (Nasdaq: CARV), Christopher & Banks (NYSE: CBK), Constellation Brands (NYSE: STZ), Darden Restaurants (NYSE: DRI), DemandTec (Nasdaq: DMAN), GenCorp (NYSE: GY), Leading Brands (Nasdaq: LBIX), McCormick (NYSE: MKC), Methode Electronics (NYSE: MEI), Mitel Networks (Nasdaq: MITL), MSC Industrial Direct (NYSE: MSM), Quantum Fuel Systems Technologies (Nasdaq: QTWW), Schnitzer Steel (Nasdaq: SCHN), Smith & Wesson (Nasdaq: SWHC), Worthington Industries (NYSE: WOR) and Xyratex (Nasdaq: XRTX).

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