CSC

• As Goldman's money-printing tentacle Carney arrives, everyone else leaves: Tucker to Leave BOE (WSJ)
• So much for pent up demand: Refinancings Plunge as Bond Yields Rise (WSJ)
• Singapore Censures 20 Banks for Attempts to Rig Benchmark Rates (BBG)
• Behind the Big Profits: A Research Tax Break (WSJ)
• While working for spies, Snowden was secretly prolific online (Reuters)
• Turkey to Await Ruling on Park as Erdogan Meets Protesters (BBG)
• Iran votes for new president, Khamenei slams U.S. doubts (Reuters)
• NSA revelations, modified wheat cast a pall on U.S. trade talks with Europe (WaPo)
• Euro zone inflation subdued as employment keeps falling (Reuters)

• As scandals mount, White House springs into damage control (Reuters)
• Glencore Xstrata chairman ousted in surprise coup (Reuters), former BP CEO Tony Hayward appointed as interim chairman (WSJ)
• JPMorgan Chase asks Bloomberg for data records (Telegraph)
• Platts Retains Energy Trader Confidence Amid Price-Fix Probe (BBG)
• Syrian Internet service comes back online (PCWorld)
• Japan Q1 growth hits 3.5% on Abe impact although fall in business investment clouds optimism for recovery (FT)
• Soros Joins Gold-Stake Cuts Before Bear Market Drop (BBG)
• Factory Ceiling Collapses in Cambodia (WSJ)
• Sony’s $100 Billion Lost Decade Supports Loeb Breakup (BBG)
• Snags await favourite for Federal Reserve job (FT)
• James Bond’s Pinewood Turned Down on $300 Million Plan (BBG)

• Here come the low margin products: Apple Tests Designs for TV (WSJ)
• Obama and Republicans Trade Offers to Avert Fiscal Crisis (BBG)
• Carney broaches dumping inflation target (FT)
• Bernanke Critics Can’t Fight Bonds Showing No Inflation (BBG)
• Corporate Taxes on Table in Cliff Talks (WSJ)
• US business chiefs back tax rise (FT)
• Greece Confident Bond Buyback Needed for Aid Succeeded (BBG)
• New Faith in Europe's Banks (WSJ)
• European Bank Sees Little Room for Rate Cuts (WSJ)
• North Korea Claims Success in Rocket Launch (WSJ)

• Union solidarity rubs up against slow economy in LA port strike (Reuters)
• Geithner predicts Republicans will allow higher tax rates (Reuters). And "no risk" of a US downgrade, "no risk"
• Geithner takes hard line on fiscal cliff (FT)
• Narrowing LDP lead points to Japan post-election confusion (Reuters) - not to mention, USDJPY plunges if LDP loses
• Vietnam Says China Must Avoid Trade Weapon in Maritime Spat (Bloomberg)...  and real one, one hopes
• Greece unveils bond buyback plan (FT)
• ECB Can’t Deliver Spain Spread Rajoy Wants, Wellink Says (Bloomberg)
• UK’s euro trade supremacy under attack (FT)
• Merkel Signals Debt Write-Off Possible as Buyback Begins (Bloomberg)
• ECB's Noyer Says Bond-Buying Plan 'Is Bearing Fruit' (WSJ) - as long as just plan, and not execution.

• Israel Ready to Invade Gaza If Cease-Fire Efforts Fail (Bloomberg)
• Petraeus: A Phony Hero for a Phony War (NYT)
• IMF'S Lagarde says Greek deal should be "rooted in reality" (Reuters) "rooted" or "roofied"? And where was it until now?
• ECB's Asmussen says Greece to need aid beyond 2014 (AP)
• EU makes budget plans without (FT)
• Japanese Poll Shows LDP Advantage Ahead of Election (WSJ)
• Shanghai Composite Dips Below, Regains 2,000 Level (Bloomberg)
• Bond investor takes big punt on Ireland (FT)
• Noda defends BoJ’s independence (FT) Indewhatnow?
• Inaba Says BOJ Could Ease More If Government Reins in Debt (Bloomberg) Actually it's the other way around
• Miles Says Bank of England Can Do More If U.K. Slump Persists (Bloomberg) So much for the end of QE
• US tax breaks worth $150bn face axe (FT)

• Obama to address Congress on September 8 (Reuters)
• China Says Fighting Inflation Is Priority (WSJ)
• Katia a hurricane; another storm likely in Gulf (Reuters)
• IMF and eurozone clash over estimates (FT)
• Japan’s New Leader Oversaw Biggest Intervention Since 2004 (WaPo)
• Asia feels impact of global slowdown (FT)
• Germany's Resiliency Buoys Europe (WSJ)
• EU Reaches Deal to Expand Syria Sanctions (WSJ)
• Goldman Takes Dark View in Private Note (WSJ) or is the European bailout really $1 trillion?

• Analysts warn China facing pressure from US, EU debts (China Daily)
• U.S. May Back Refinance Plan for Mortgages (NYT)
• US budget watchdog cuts debt forecast (FT)
• ECB ‘Stands Ready’ to EaseDollar-Market Tensions, Dombret Says (Bloomberg)
• Merkel Rejects Seeking Collateral in European Bailouts as Splits Emerge (Bloomberg)
• Europe Banks Lean More on Emergency Funding (WSJ)
• Apple’s Steve Jobs Resigns as CEO, Will Be Succeeded by Tim Cook (Bloomberg)
• Bernanke Signaling No QE Backed by Higher Data (Bloomberg)

• France's Lagarde launches IMF bid, BRICs complain (Reuters)
• Greek assets could go to ‘fund of experts’ (FT)... and gold "could" go to central banks
• U.K. Economy Grew 0.5% in First Quarter (Bloomberg)
• OECD cuts Japan GDP forecast again, urges easy monetary policy (Reuters)
• Kan targets structural issues after quake (FT)
• Shanghai Composite down 10% in six weeks, officially enters correction territory (FT)
• Banks Face $17 Billion in Suits Over Foreclosures (WSJ)
• EU Juncker: Still In Favor Of 'Reprofiling' Greek Sovereign Debt (WSJ)

• PBOC Reiterates Inflation Control Is Its Top Priority (Shanghai Daily)
• Portugal Reaches Deal on €78bn Bail-Out (FT)
• China Allows Firms to Sell Bonds via Private Placement (WSJ)
• Demand for Bank Loans Mounts in Emerging World, Survey Says (WSJ)
• China 2011 Growth Seen Solid, Inflation to Quicken: Reuters Poll (Reuters)
• Yemen-based Jihadist Has Potential to Fill Role (FT)
• Netflix Said to Seek TV, Film Rights for Latin America Service (Bloomberg)
• Palestinian Factions Prepare to Sign Deal (FT)
• Outcry Over Syria Rises Amid Wider Crackdown (FT)
• Waiting for Dollars in Belarus Puts Lukashenko on Unrest Alert (Bloomberg)
• U.K. Regulator Expands Its Reach (WSJ)

Stock and credit markets closed weaker today as Europe came back to the party from their long weekend. Equities underperformed credit (beta-adjusted) and HY underperformed IG as we see the debt-equity relationship starting to wave caution flags and skew compression enabling some downside.

Headlines will crow of the strength in equities and credit today. However, the lack of high beta participation in credit, the underperformance of financials, and the clear continuation of the somewhat more risk-averse up-in-quality trade in credit and equity markets remains a concern.

Only a very few names managed gains in both equity and credit today (an interesting bunch - MAR, TOL, HOT, DHI, PEP, and SVU) as homebuilders were interestingly near the tope on the list of better performers in credit (which we suspect was related to the underperformance of the CMBX and ABX tranche markets as well as the higher beta exposure in some of the credit indices). Every sector was in agreement between credit and equity with a deteriorating move today as we note financials, leisure, and media were the worst beta-adjusted in credit relative to stocks on the day. Capital Goods, Utilities, and Consumer Noncyclicals performed the relative worst in stocks versus credit. The up-in-quality theme in credit is increasingly leaking into vol as we saw much less impact higher in vols in better-rated credits than in lower-rated credits. This was also the picture in credit though we did see the very highest rated names underperforming (financials?). This picture was somewhat different in equity-land where BB-rated and below names saw their stocks drop far less than A- rated and above names - once again we think this is to do with both financials dominating performance as well as the typical ratings/momentum correlation unwind.

The world today is riddled with unique economic, political, and demographic risks. Finding attractively priced assets that will perform well in spite of these challenges is excruciatingly difficult. For investors, though, one segment of the market – the highest-quality stocks – still offers attractive risk-adjusted returns.

• Beijing city to raise minimum wage 21%; Second move in 6 months amid inflation concerns.
• Brazil raises duties on China-made baby dolls as Real gains hurt toymakers.
• China cuts rare earths export quota for 2011.
• Chinese CEOs reduces support for a stronger yuan as they criticize U.S. monetary easing
• Euro marks higher after disappointing US economic data, buys at $1.3151.
• Housing Starts seen rising to three-year high with belated US jobs boost.
• Oct. Case-Shiller home price down 0.8%; Non-adjusted house prices down 1.3%.
• Oil trades near 26-month high on Retail sales, supply forecast.
• Taiwan may increase interest rate to damp prices after countering inflows.

• Irish parliament to vote on EU/IMF bailout (Reuters)
• China Consumers Signal Deepest Inflation Concern Since 1999 in PBOC Survey (Bloomberg)
• Japan Confidence Deteriorates for First Time Since Crisis (Bloomberg)
• Japan Cuts Corporation Tax in Growth Bid (FT)
• U.S. at Risk of Rare Earths Supply Disruption (Reuters)
• US SEC's ABS Quandary Still Pending Business (Market News)
• George Soros Op-Ed: Europe should rescue banks before states (FT)
• The countless exemptions, credits and deductions cost the government more than $1 trillion annually in foregone revenue. It's time for an overhaul. (LA Times)
• Germany Stiffens Opposition to Bigger Bailout in ECB Face-Off (Bloomberg)