What We’re Reading: Bizarro Kelly’s Heroes

by CC June 14, 2011 8:45 am • Commentary

Seeking Alpha

Today’s Markets

  • In Asia, Japan +1.1% to 9548. Hong Kong -0.1% to 22496. China +1.1% to 2730. India +0.2% to 18309.
  • In Europe, at midday, London +0.3%. Paris +0.9%. Frankfurt +1.5%.
  • Futures at 7:00: Dow +0.4%. S&P +0.65%. Nasdaq +0.4%. Crude -0.3% to $97.01. Gold +0.2% to $1519.30.

Tuesday’s Economic Calendar


BEIJING (MNI) – The People’s Bank of China said Tuesday it will raise the commercial bank reserve requirement for a sixth time this year as the government continues its attempts to mop up excess liquidity in the interbank market.

The 50 basis point adjustment will take effect on June 20 and will leave the ratio for China’s largest banking institutions at a record 21.5%.

The central bank, which has raised the reserve requirement every month so far this year, took the unusual step of announcing the hike during Asian trading hours.

The announcement came just hours after the National Bureau of Statistics said consumer inflation rose to a 34-month high of 5.5% y/y in May.


Taken together, the Chinese data show that additional steps to combat inflation were needed, and that Beijing had room to rein in lending conditions without stifling overall economic growth.

“Inflation was higher than expected, and growth was stronger than expected,” said Dariusz Kowalczyk, an economist at Crédit Agricole in Hong Kong. “That means that there is room to tighten interest rates further.”

At the same time, the economic statistics Tuesday also helped ease fears that China, the biggest economy in the world after the United States, could experience too steep a slowdown.

Worries about a potential hard landing and excessively rapid tightening by the authorities have weighed on stock markets in China and elsewhere in recent months and have helped send the Shanghai composite index in mainland China lower by about 10 percent since mid-April.


Best Buy beat quarterly profit and sales estimates and backed its earnings outlook for the year, as strong demand for mobile phones, calling plans and tablets offset weakness in its TV business.

The retailer, seen as a bellwether in consumer electronics, said its first-quarter net profit was $136 million, or 35 cents a share, compared with $155 million, or 36 cents a share, a year earlier.

Analysts on average were expecting a profit of 33 cents a share, according to Thomson Reuters.

Sales rose 1.4 percent to $10.94 billion, beating the analysts average estimate of $10.71 billion.


Federal banking regulators have extended a deadline for the nation’s largest mortgage servicers to submit plans for revamping their business practices, in particular loan modifications and foreclosures.

In April, 10 mortgage services agreed to deliver plans to the Office of the Comptroller of the Currency, the Federal Reserve and the soon-to-be defunct Office of Thrift Supervision.

By delaying the deadline, the regulators are granting a separate group of state and federal officials more time to work out a broader settlement with the firms over allegations of abuses in their foreclosure practices.

The April deal represented the first major action by federal regulators after widespread reports and lawsuits charged that mortgage servicers were using fake documents, forged signatures and other shortcuts to quickly evict families from their foreclosed homes. The revelations prompted servicers to temporarily halt foreclosures.


Nokia Corp. and Apple Inc. entered into a patent license agreement settling all patent litigation between the two companies, both companies said Tuesday, ending a lengthy legal battle between two of the world’s largest mobile giants.

Apple, which manufactures the iPhone and iPad among other mobile devices, will make a one-off payment to Nokia and pay continuing royalties for the term of the agreement, Nokia said. It declined to provide specific financial terms. Nokia said the deal should boost the Finnish handset maker’s recently revised second-quarter outlook.

Bonus 6.6 Billion in Cash Robbery

This month, the Pentagon and the Iraqi government are finally closing the books on the program that handled all those Benjamins. But despite years of audits and investigations, U.S. Defense officials still cannot say what happened to $6.6 billion in cash — enough to run the Los Angeles Unified School District or the Chicago Public Schools for a year, among many other things.

For the first time, federal auditors are suggesting that some or all of the cash may have been stolen, not just mislaid in an accounting error. Stuart Bowen, special inspector general for Iraq reconstruction, an office created by Congress, said the missing $6.6 billion may be “the largest theft of funds in national history.”