Today’s Markets
- In Asia, Japan +0.3% to 9720. Hong Kong -0.2% to 23626. China +0.0% to 2744. India +0.6% to 18609.
- In Europe, at midday, London -0.2%. Paris -0.1%. Frankfurt -0.2%.
- Futures at 7:00: Dow -0.1%. S&P -0.1%. Nasdaq -0.2%. Crude -0.3% to $102.35. Gold -0.25% to $1532.00.
Wednesday’s Economic Calendar
- Auto sales
7:00MBA Mortgage Applications
7:30Challenger Job-Cut Report
7:45ICSC Retail Store Sales
8:15ADP Jobs Report
8:55Redbook Chain Store Sales
10:00ISM Manufacturing Index
10:00Construction Spending
12:00 PMFed’s Pianalto: Labor Markets and Federal Reserve Policy’
12:30 PMFed’s Tarullo: ‘U.S. and international financial regulatory reform’
2:00 PMHearing: Fed Lending Disclosure
China’s manufacturing expanded at the slowest pace in nine months in May as the government extended a campaign to cool inflation and the property market, a survey of companies indicated.
The Purchasing Managers’ Index was at 52 from 52.9 in April, the China Federation of Logistics and Purchasing said in an e-mailed statement. The number was higher than the median forecast of 51.6 in a Bloomberg News survey of 16 economists. The index has a seasonal pattern of falling in May, economists said before the release.
The recovery of Citigroup and Bank of America provided famed hedge fund managers like Lee Ainslie and Jeff Altman some of their biggest gains last year, but now the smart money is getting out while the getting is good.
With Ainslie’s Maverick Capital, Altman’s Owl Creek Asset Management and other major funds backing away from the banking sector in the first quarter, financials suffered the biggest decrease in sector holdings among the Smart Money 30, a group of some of the largest stock-picking hedge funds.
China internet watcher Bill Bishop and advisor to iChinaStock, has strong words of caution for foreign investors in China: “That Longtop Financial (NASDAQ: LFT), with its blue chip underwriters, investors and accounting firm and experienced foreign CFO, turned out to be a fraud just reconfirms that investors should trust no one else when it comes to their money. The US has plenty of frauds too–WorldComm, MCI, Lehman–so only invest in things you can research yourself. And for most investors China is not accessible, so they should probably invest elsewhere.
Yahoo! Inc., owner of the largest U.S. Web portal, reached an agreement with China’s Alibaba Group Holding Ltd. over online-payment business Alipay, Reuters reported, citing people close to the matter.
The accord requires the consent of Softbank Corp. founder Masayoshi Son, who sits on the board at Alibaba Group, Reuters said. Sunnyvale, California-based Yahoo, the biggest shareholder of Alibaba Group, has been negotiating with the Chinese company over the loss of Alipay.
Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven’t been resolved.
“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said at the Foreign Correspondents’ Club of Japan in Tokyo today in response to a question about price swings. “Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”
The total value of derivatives in the world exceeds total global gross domestic product by a factor of 10, said Mobius, who oversees more than $50 billion. With that volume of bets in different directions, volatility and equity market crises will occur, he said.
Bonus crazy theory of the day that may be true
There may also be a medical reason for the decline in crime. For decades, doctors have known that children with lots of lead in their blood are much more likely to be aggressive, violent and delinquent. In 1974, the Environmental Protection Agency required oil companies to stop putting lead in gasoline. At the same time, lead in paint was banned for any new home (though old buildings still have lead paint, which children can absorb).
Tests have shown that the amount of lead in Americans’ blood fell by four-fifths between 1975 and 1991. A 2007 study by the economist Jessica Wolpaw Reyes contended that the reduction in gasoline lead produced more than half of the decline in violent crime during the 1990s in the U.S. and might bring about greater declines in the future. Another economist, Rick Nevin, has made the same argument for other nations.