U.S. manufacturing shrank for a third month in August in the longest decline since the recession ended in 2009, threatening to deprive the world’s largest economy of a driver of growth.The Institute for Supply Management’s factory index fell to 49.6 last month, the lowest since July 2009, from 49.8 in July, the Tempe, Arizona-based group said today. Economists in the Bloomberg survey projected an August reading of 50, which is the dividing line between expansion and contraction. Measures of orders and production dropped to three-year lows.Enlarge image
A worker reaches for glass to assemble a double-pane window frame at Crystal Windows & Doors IL Manufacturer in Chicago. The Institute for Supply Management’s U.S. factory index fell to 49.6 in August from 49.8 a month earlier, the Tempe, Arizona-based group said today. Photographer: Tim Boyle/Bloomberg
2:57Sept. 4 (Bloomberg) -- Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ, talks about the Institute for Supply Management's manufacturing index and U.S. vehicle sales for August. The ISM's factory index fell to 49.6 last month, the lowest since July 2009, from 49.8 in July. (Source: Bloomberg)Stocks fell early on concern American factories, which sparked the U.S. expansion three years ago, are succumbing to a manufacturing slowdown that stretches from Asia to Europe. The data underscore Federal Reserve Chairman Ben S. Bernanke’s view that the economy is too weak to spur hiring and may require additional monetary stimulus.“Manufacturing has been one of the stalwarts of an otherwise lackluster recovery but it’s starting to show some cracks,” said Richard Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama, who correctly forecast the index. “Until we get more clarity on the fiscal policy outlook here, more clarity on Europe and some signs on the course of China’s economy, manufacturing is just going to languish.”The Standard & Poor’s 500 Index, which had fallen as much as 0.7 percent, dropped 0.1 percent to 1,404.94 at the close inNew York as shares of Apple Inc. rallied. The yield on the benchmark 10-year Treasury note climbed to 1.57 percent from 1.55 percent on Aug. 31.Automobile Sales
Demand for autos may prevent bigger declines in manufacturing. U.S. sales at Chrysler Group LLC, Ford Motor Co. and General Motors Co. rose more than analysts’ estimates last month, industry figures showed today. Chrysler deliveries increased 14 percent, while Ford’s rose 13 percent and GM’s climbed 10 percent.Estimates for the supply managers’ index from the 81 economists surveyed ranged from 48.7 to 51.5. A reading above 42.5 generally indicates an expansion in the overall economy, the ISM has said. The gauge averaged 55.2 in 2011 and 57.3 a year earlier.http://www.bloomberg.com/news/2012-09-04/ism-index-of-u-s-manufacturing-decreased-to-49-6-in-august.htmlMired Shares Await Word on Europe
By REUTERS
Published: September 4, 2012
McDonald’s plans to open vegetarian-only restaurants in India
(McDonald’s Corp./ Associated Press ) - This undated image provided by McDonald’s Corp. shows an item available in it’s soon to open vegetarian-only restaurants in India. The company already offers menu items that cater to local tastes, such as the Maharaja Mac, which is a Big Mac except with chicken patties instead of beef.
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Senator Carl Levin’s panel probed Wall Street for two years following the 2008 financial crisis. Photographer: Andrew Harrer/BloombergLevin’s Permanent Subcommittee on Investigations is seeking testimony from those who worked in or helped lead JPMorgan’s chief investment office, according to the people, who asked not to be identified because the inquiry isn’t public. The unit’s London staff lost at least $5.8 billion this year on the botched wagers, which were large enough to shift markets.Tara Andringa, a spokeswoman for Levin, didn’t respond to a message seeking comment, and Joe Evangelisti at JPMorgan declined to discuss the panel’s inquiry. “As always, the company has fully cooperated with all regulatory and governmental requests around this matter,” Evangelisti said.The bank, led by Chief Executive Officer Jamie Dimon, 56, faces a panel of lawmakers that in recent years brought executives from Goldman Sachs and London-based HSBC toCapitol Hill, barraging them with questions that challenged their version of events. JPMorgan said in July that its internal review found traders may have tried to obscure the full amount of losses they faced on their transactions.The market value of JPMorgan, the nation’s largest bank by assets, has dropped more than $22 billion since Bloomberg News first reported on April 5 that the firm amassed a large and illiquid position in credit derivatives in the London office. The bank lost $5.8 billion on the trades during the first six months of this year and has said it could lose as much as $7.5 billion total while closing out the position.
Apple Inc. shares surpassed $700 in late trading after announcing record first-day orders for the latest iPhone. Photographer: David Paul Morris/BloombergShares climbed as high as $700.44 after reaching a record $699.78 at the close in New York. The stock has advanced 73 percent this year.The iPhone 5, which features a bigger screen, faster chip and a lighter body, sold 2 million units in first-day orders, more than double a record set by the previous model, Apple said. Since its 2007 debut, the device has become Apple’s top-selling product, accounting for about two-thirds of profit. Signs of robust demand reinforced expectations that Apple will withstand accelerating competition from Samsung Electronics Co. (005930) and Google Inc. (GOOG) in the $219.1 billion smartphone market.“It leaves me in awe,” said Rex Ishibashi, chief executive officer of Callaway Digital Arts Inc. (2326), which develops games for the iPhone. “It’s reflective of how important these devices and these digital technologies have become in our lives.”Apple’s surge gathered steam Sept. 14, after it began taking orders for iPhone 5. Apple’s website said new orders wouldn’t ship until Sept. 28, a week after the handset is due in stores, an indication that supply may be running thin.“The initial batch is sold out,” Shaw Wu, an analyst at Sterne Agee & Leach Inc., said in an interview. He raised his sales estimate for the quarter ending in September to 26 million units, from 23 million. “We think that could turn out to be conservative.”
Jobseekers queue at an employment office in Barcelona. Photographer: Stefano Buonamici/Bloomberg
Bears say declining estimates for companies from Daimler AG to UniCredit SpA show analysts doubt Europe’s economy will strengthen and that stocks have risen too far, too fast. Photographer: Akos Stiller/Bloomberg
Shipping containers are stacked at the Yangshan deep water port in Shanghai. Photographer: Kevin Lee/Bloomberg
Food inflation accelerated for the first time in five months, rising 3.4 percent from a year earlier. Consumer prices increased 0.6 percent from the previous month, the biggest rise since January, while food prices increased 1.5 percent from July. Photographer: Nelson Ching/BloombergThe data underscore risks that full-year growth in the world’s second-biggest economy will slide to its lowest in more than two decades and undermine support for the ruling Communist Party during its once-a-decade power transition to a new generation of leaders later this year. The rebound in inflation, excess capacity in some industries and banks’ bad loan risks from past monetary easing highlight the potential cost of ramping up stimulus efforts.“Politicians want a benign backdrop for their party congress gathering and slumping stock prices and a worsening growth slowdown could spoil the party,” said Lu Ting, chief China economist at Bank of America Corp. in Hong Kong. “Putting together the economic fundamentals and the timing of major political events, there will be a second round of policy easing including cuts to banks’ reserve requirements and some fiscal stimulus.”
John Fredriksen, the world's biggest tanker owner, is betting $11 billion to extend his dominance over the transportation of energy. Photographer: Henry Bourne/ Bloomberg Markets via BloombergAs he navigates the worst shipping market since the 1970s, Fredriksen’s instincts are telling him to buy, Bloomberg Markets magazine reports in its October special issue on the 50 Most Influential people in global finance. He’s investing $7 billion in 18 rigs to pump oil from beneath the ocean floor and $4 billion in about four dozen new vessels to transport liquefied natural gas, gasoline, propane and other fuels. While Fredriksen loves tankers -- images of crude carriers are etched on the water glasses in his office -- he’s now trying to increase his dominance over the global circulation of liquid energy in most of its forms.Fredriksen, 68, is making the biggest wager in a swashbuckling career that has brought billions of dollars in windfalls as well as bitter setbacks -- such as the almost four months he spent in a Norwegian jail charged with fraud. A stout man with the weathered face of a mariner, Fredriksen is fond of joking that 42 of the 50 years he has worked in the tanker trade have been awful.
Andre Esteves, chief executive officer of Grupo BTG Pactual, jokes that his bank's initials stand for `Better Than Goldman.' Photographer: Gabriel Rinaldi/ Bloomberg Markets via BloombergWith UBS’s cash crunch deepening in 2009, Esteves and some former partners offered $2.5 billion to repurchase their firm. This time, UBS accepted. Since then, Esteves, 44, has fashioned what’s now Grupo BTG Pactual into a regional power to challenge weakened global rivals and still-sturdy local institutions, Bloomberg Markets magazine reports in its October special issue on the 50 Most Influential people in global finance.With his bank No. 1 in Brazilian equity underwriting, Esteves jokes that BTG -- officially Banking and Trading Group - - stands for Better Than Goldman.Esteves is leading a shift from a Wall Street-dominated universe as he amasses clout in the largest emerging economy after China. Aiding him is what he calls global finance’s worst moment: misbehavior ranging from JPMorgan Chase & Co. (JPM)’s multibillion-dollar derivatives loss to the rigging by Barclays Plc and other firms of the London interbank offered rate.
A man sweeps the sidewalk outside the JP Morgan Chase Inc. headquarters in New York. Photographer: Peter Foley/BloombergThe solution: At least seven banks plan to let customers swap lower-rated securities that don’t meet standards in return for a loan of Treasuries or similar holdings that do qualify, a process dubbed “collateral transformation.” That’s raising concerns among investors, bank executives and academics that measures intended to avert risk are hiding it instead.“The dealers look after their own interests, and they won’t necessarily look after the systemic risks that are associated with this,” said Darrell Duffie, a finance professor at Stanford University who has studied the derivatives and securities-lending markets. “Regulators are probably going to become aware of it once the practice gets big enough.”Adding to the concern is the reaction of central clearinghouses, which collect from losers on derivatives trades and pay off winners. Some have responded to the collateral shortage by lowering standards, with the Chicago Mercantile Exchange accepting bonds rated four levels above junk.