MindaNews » Rep. Rodriguez mum on Emano-Moreno rivalry

MindaNews » Rep. Rodriguez mum on Emano-Moreno rivalry

Morning Brief: 29 July 2011

BSP raises bank reserve requirement Inflationary pressure seen from forex inflows By: Michelle V. Remo Philippine Daily Inquirer The Bangko Sentral ng Pilipinas on Thursday raised the reserve requirement for banks and quasi-banks by another percentage point, citing the need to curb inflationary pressures stemming from inflows of foreign hot money.The move brings the reserve requirement, the proportion of deposits that banks and quasi-banks must keep with the BSP as reserves, at 21 percent, back to where it was prior to the latest global financial and economic crisis. The one-percentage-point increase in the reserve requirement follows a similar move made by the BSP in June. BSP Deputy Governor Juan de Zuñiga, officer in charge of the central bank while Governor Amando Tetangco Jr. is out of the country, said in a briefing that expectations that foreign capital inflows would rise further in the months ahead prompted the central bank to raise the reserve requirement. “The Monetary Board [of the central bank] is of the view that sustained foreign exchange inflows, driven by upbeat market sentiment over the brighter prospects for the Philippine economy, could fuel a further acceleration of domestic liquidity growth that could pose risks to future inflation,” De Zuñiga said. In the same briefing, BSP Assistant Governor Ma. Cyd Tuaño-Amador explained that raising the reserve requirement was the preferred move over raising the key policy rate to curb inflationary pressures. Ms. Amador said that when price pressures were created by rising foreign portfolio investments, it was impractical to raise interest rates because such a move could lead to an increase in yields of financial instruments, thereby attracting more foreign portfolio investments. The increase in the reserve requirement, meantime, does not have the same adverse consequence. A higher reserve requirement simply reduces the amount of available cash that banks may lend, thereby tempering future growth of loans that, in turn, help temper a rise in inflation-inducing consumption. Amador said the slow growth rates in industrialized economies and the fast growth rates in emerging markets in Asia like the Philippines were attracting more foreign investments in stocks, bonds and other securities in the latter. While the surge in foreign capital inflows indicated the confidence of investors, these were normally less favored compared with foreign direct investments because foreign portfolio investments, in huge amounts, only cause volatility in the exchange rate without resulting in substantial job-generating investments. Besides increasing the reserve requirement twice this year, the BSP likewise raised the key policy rates twice earlier this year.

Stocks in U.S. Retreat as Optimism Over Debt-Ceiling Compromise Subsides U.S. stocks fell, dragging the Standard & Poor’s 500 Index lower for a fourth day, as lawmakers indicated they were no closer to reaching an agreement to increase the debt ceiling and avoid default.The Dow Jones Industrial Average erased an advance of as much as 82 points after optimism faded that Democrats and Republicans would be able to compromise over cutting the federal deficit. Exxon Mobil Corp. (XOM) slipped 2.2 percent as its earnings trailed analysts’ estimates. Technology stocks led gains in the S&P 500, with Cisco Systems Inc. (CSCO) climbing 2 percent after Goldman Sachs Group Inc. advised buying the stock. The S&P 500 dropped 0.3 percent to 1,300.67, its lowest level for the month, at 4 p.m. in New York. The Dow slipped 62.44 points, or 0.5 percent, to 12,240.11. “There is no positive news on the debt discussions out of Washington,” Brad Pleimann, head of equity trading at Piper Jaffray & Co. in Minneapolis, wrote in an e-mail before the market closed. “Everyone believes, or at least hopes, that a deal will get done, but as we approach the close with no new news traders begin to unwind risk.” The S&P 500 retreated 3 percent over the previous three days amid concern lawmakers will fail to agree on an increase in the U.S. debt ceiling by an Aug. 2 deadline in order to avoid a default. A House vote on Republican John Boehner’s debt-ceiling measure scheduled for 6 p.m. tonight in Washington was delayed, though a spokeswoman for Majority Leader Eric Cantor said the vote would take place “this evening.” U.S. Contingency Plan Gives Bondholders Priority The U.S. Treasury will give priority to making interest payments to holders of government bonds when due if lawmakers fail to reach an agreement to raise the debt ceiling, according to an administration official. The official requested anonymity because no announcement has been made. The Treasury has said about $90 billion in debt matures on Aug. 4 and more than $30 billion in interest comes due Aug. 15. Overall, more than $500 billion matures in August. The $90 billion in six-month Treasury bills maturing Aug. 4 pared losses after the comments. Obama administration officials will brief the public no earlier than after financial markets close tomorrow on priorities for paying the nation’s bills if the $14.3 trillion limit isn’t raised, a Democratic Party official said earlier. “The announcement is reassuring, but there’s really no alternative to favoring the bondholders,” said Christian Cooper, head of U.S. dollar derivatives trading in New York at Jefferies Group Inc., which as one of the 20 primary dealers is obligated to bid in Treasury sales. “The alternative would point to a default” Treasury Secretary Timothy F. Geithner has repeatedly said the government’s authority to borrow will run out on Aug. 2 unless Congress raises the debt ceiling. Republicans and Democrats have been unable to agree on an increase in the debt cap or budget cuts, leading to concerns that the U.S. will lose its AAA credit rating.

Crude Oil Falls, Heads for Weekly Decline, on U.S. Debt Ceiling Dispute Oil fell in New York, heading for the first weekly decline in five weeks, as concern that a failure to reach a deal on raising the U.S. debt limit countered signs that the economy is improving.Futures slipped as much as 0.5 percent after House Speaker John Boehner delayed a planned vote on debt-limit legislation as Senate leaders stood ready to kill the measure should it get to their chamber. Applications for unemployment benefits dropped more than forecast last week to the lowest since April, while contracts to buy previously owned homes rose in June. “We’re waiting for a resolution to the impasse in a white- knuckle fashion,” said Jason Schenker, president of Prestige Economics LLC in Austin, Texas. The impact of the economic numbers “was limited because of the worries about a default.” Crude for September delivery fell as much as 44 cents to $97.00 a barrel in electronic trading on the New York Mercantile Exchange, and was at $97.15 at 8:57 a.m. Sydney time. The contract yesterday rose 4 cents to $97.44. Prices are 2.8 percent lower this week and 1.8 percent higher the past month. Brent oil for September settlement declined 7 cents to settle at $117.36 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract settled at a premium of $19.92 a barrel to New York futures, compared with a record close of $22.63 on July 14.

Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com 

BDO UNIBANK INC. 

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher 
(632) 858-3001 

Food Safety Management Forum

July 28, 2011

Dear Members,

The TUV SUD PSB Philippines, Inc. through your Chamber-- the OROCHAMBER, is pleased to invite you or your representative to attend the upcoming Food Safety Management Forum which is set on August 18, 2011 at 9:00am-11:30am at the OROCHAMBER Business Development Centre, Macapagal Drive, Pueblo de Oro Township, Cagayan de Oro City.

As the leading Testing, Certification and Inspection firm with headquarters in Germany, TUV SUD PSB will try to help local companies achieve quality, safety and competitiveness through experience sharing and advisory.

THIS IS A FREE-OF-CHARGE FORUM for Chamber members in good standing while other members will have to pay Php 200 each.

Due to the limited availability of seats, we could only allow one (1) representative per company.

For further inquiries and confirmation, please feel free to call us at (088) 859-1426 / 859-3016 or email us at orochamber@gmail.com.
Thank you for your active support!

Very truly yours,

ANTONIO D. UY
President

Philippine Markets: 28 July 2011

28 July 2011 

USD/PhP:          42.22 (as of 12:00pm)        PSEi:             4482.80                        - 0.09 
USD/JPY:           77.85                        PFINC:                   1020.82                        + 2.00 
EUR/USD:         1.4353                        BDO:                  63.70                        + 0.45 
GBP/USD:         1.6421                        BPI:                  59.25                        unch 
PDSTF3M:         2.4827                        MBT:               77.10                        + 0.15 
Prices as of  12:00pm                        Source: Bloomberg, Reuters 


Local shares closed unchanged 

PSEi closed almost unchanged from yesterday's session, just down by 0.09 points to close at 4482.80 despite the 1.59 percent drop in US Dow Jones last night.  US equities weakened last night as lawmakers remained in deadlock over the US debt ceiling issue.  Asian equities were also down today  by 0.50% - 1.50% as of this writing due to uncertainties in the US.  However, local markets showed resilience despite bloodbath in other countries as investors remain optimistic on earnings prospects.  Local markets await BSP monetary decision today wherein most analysts expect benchmark rate to remain unchanged at 4.50% 


BDO UNIBANK, INC. 

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher 
(632) 858-3001 

Philippine Markets: 27 July 2011

27 July 2011 

USD/PhP:          42.11      - 0.115        PSEi:             4482.89                        + 17.02 
USD/JPY:           77.65                        PFINC:                   1018.82                        + 6.20 
EUR/USD:         1.4486                        BDO:                  63.25                        + 1.05 
GBP/USD:         1.6430                        BPI:                  59.25                        + 0.25 
PDSTF3M:         2.5481                        MBT:               76.95                        + 0.50 
Prices as of  4:00pm                        Source: Bloomberg, Reuters 


Local stock prices rebound 
By: Doris C. Dumlao 
Philippine Daily Inquirer 

MANILA, Philippines—Most local stock prices rebounded on Wednesday as optimism about second-quarter corporate results overshadowed offshore jitters over US debt ceiling uncertainties.

The main-share Philippine Stock Exchange index added 17.02 points or 0.38 percent to finish at 4,482.89.

Investors scooped up stocks from the financial, industrial, holding firms and property counters but locked up gains from services and mining/oil.

Turnover improved to P5.1 billion from the previous day’s P4.31 billion.  There were 72 advancers, which narrowly outnumbered 70 decliners while 44 stocks were unchanged.

Analysts said the local market was looking forward to some positive surprises in the forthcoming stream of second-quarter corporate results.

Megaworld, Banco de Oro, Philex, Metrobank, FLI, Ayala Corp. and BPI led the index higher.  Non-index stocks GERI, Atlas, ORE and San Miguel Corp.

On the other hand, the PSEi’s gains were tempered by the decline of SM Investments, Lepanto “A” (reserved for local investors) and “B” (open to both local and foreign investors), PLDT, AGI, EDC and First Gen.

Meanwhile, the stalemate over the US debt ceiling limit has continued to temper risk-taking. Overnight, the closely watched Dow Jones Industrial Index fell by 91.5 points or 0.73 percent to 12,501.30.


BDO UNIBANK, INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher
(632) 858-3001 

Morning Brief: 26 July 2011

Aquino stresses need for sustained reforms PLEDGES to stamp out corruption and implement sweeping reforms were reiterated by President Benigno S. C. Aquino III in his second State of the Nation Address (SONA) yesterday, a focus he stressed was needed for the Philippines’ growth.Central to his nearly hour-long speech was a revised take on a policy announced shortly after he became president: a ban on government officials’ use of “wang-wang” (sirens). The issue was yesterday elevated to a societal malaise. “Ang panlalamang matapos mangakong maglingkod -- iyan po ang utak wang-wang (Abusing privilege despite promising to serve -- this is the wang-wang mind-set; this is the mind-set of entitlement),” Mr. Aquino said. “Do you want the corrupt held accountable? So do I. Do you want to see the end of wang-wang, both on the streets and in the sense of entitlement that has led to the abuse that we have lived with for so long? So do I. Do you want to give everyone a fair chance to improve their lot in life? So do I,” he added, in Filipino. He announced the appointment of retired Supreme Court Associate Justice Conchita Carpio-Morales as the new Ombudsman, replacing Ma. Merceditas N. Gutierrez who resigned in May amidst controversy over her handling of cases. Mr. Aquino, in his speech, lauded Ms. Carpio-Morales -- who was part of the audience in the Batasan Complex -- and said he expected more graft cases to be filed this year against those who had abused their positions. “Inaasahan ko nga po na sa taon na ito, masasampahan na ng kaso ang lahat ng nagkuntsabahan sa katiwalian, at naging sanhi ng sitwasyong ating inabutan (I expect that within this year, we will have filed cases against the corrupt and their accomplices, those who caused the situation we inherited),” Mr. Aquino said. There was no direct reference to former President and now Pampanga Rep. Gloria Macapagal-Arroyo, whose administration has been criticized by Mr. Aquino as having fostered corruption. Cases against former Arroyo administration officials, among them Ms. Gutierrez, are being pursued. Mrs. Arroyo, who did not attend yesterday’s SONA, was rushed to the hospital late yesterday for a still-undisclosed ailment. Mr. Aquino admitted that he was taking the fight against corruption personally, saying the view should be adopted by every Filipino. “Personal dapat ito sa ating lahat, dahil bawat Pilipino ay biktima nito (It should be personal for us all as every Filipino is a victim),” he said, adding that the mind-set of sweeping things under the rug should be abandoned. The appointment of Ms. Carpio-Morales was no surprise; she has enjoyed Mr. Aquino’s trust since he became president, having administered his oath of office instead of Chief Justice Reynato S. Puno, whose appointment by Mrs. Arroyo just before her term ended was faulted by Mr. Aquino. In his speech, the president outlined what he referred to as the result of the campaign against the wang-wang system, pointing out that fiscal prudence and a review of programs and projects had led to the more efficient use of scarce government funds. “The budget is the clearest manifestation of the straight path upon which we tread. I say to those who would lead us astray: if you will further disadvantage the poor, do not even think about it. If all you would do is to fill your own pockets, do not even think about it...,” said Mr. Aquino, in Filipino. In an echo of his first SONA, Mr. Aquino spoke of past indiscretions in state-owned firms, citing millions of pesos in bonuses received by officials of Philippine National Construction Corporation. He also provoked laughs in pointing out that Philippine Amusement and Gaming Corp. had spent P1 billion on coffee alone. “At P100 per cup, that would be ten million cups of coffee over the last several years. Where did all that coffee go?” he asked. Mr. Aquino spoke of holding local governments accountable, and criticized the private sector as also having adopted thewang-wang mentality. “Mukhang marami rin po kasi ang nagwawang-wang sa pribadong sektor (It looks like a lot in the private sector have the wang-wang attitude,” he said, pointing out that with around 1.7 million self-employed and professional taxpayers, the P9.8 billion in taxes paid last year would mean each one paid only P5,783 and were earning just P8,500 per month. Reform efforts, he claimed, have led to fewer Filipinos going hungry, more jobs, record stock market gains, and successive credit ratings upgrades by Moody’s, Standard & Poors, Fitch Ratings and the Japan Credit Ratings Agency, among others. Touching briefly on the legislative agenda, Mr. Aquino thanked Congress for passing priority measures such as compensation reforms at state-owned firms and the postponement of this year’s Autonomous Region in Muslim Mindanao elections. He enjoined legislators to pass the 2012 budget before the year ends, noting that the early approval of the 2011 General Appropriations Act had allowed the government to implement needed interventions. “The timely passage of the budget allowed projects to be implemented more quickly. Tomorrow we will deliver to Congress our budget proposal for 2012. I look forward once again to its early passage so that we can build on our current momentum,” Mr. Aquino said. He also touched on the Spratlys dispute with China, declaring: “Wala tayong balak mang-away, pero kailangan ding mabatid ng mundo na handa tayong ipagtanggol ang atin (We do not want to start a fight, but the world must know that we are ready to defend what is ours).” Of his future agenda, Mr. Aquino cited the following: due compensation to the victims of Martial Law; granting house help the salaries and benefits that they deserve; improving the pension system for retired soldiers; expansion of the scope of science scholarships; advancement of universal quality health care; responsible environment management and facilities for calamity mitigation; and the development of the Bureau of Corrections, National Bureau of Investigation, National Electrification Administration and state-owned PTV 4. “Iyan naman po talaga ang plano: siguruhin na patas ang laban, itigil ang panlalamang ng mga makapangyarihan, at tiyakin na ang dating sistema na kung saan nakikinabang ang iilan ay magiging bukal na oportunidad para sa lahat (This has always been the plan: level the playing field; stop the abuse of authority; and to ensure that the system where just a few benefited becomes a source of opportunities for all),” Mr. Aquino said. “Tinutuldukan na po natin ang wang-wang: sa kalsada, sa gobyerno, sa kalakhang lipunan. Ito po ang manganganak ng kumpiyansya na magdadala ng negosyo; ito rin ang sisiguro na ang pondo ng taumbayan ay mapupunta sa dapat nitong kalagyan: imprastruktura na titiyak sa tuluyang pag-angat ng ekonomiya at pagmumulan ng trabaho at serbisyong panlipunan na sisigurong walang mapag-iiwanan (We are putting an end to the wang-wang attitude: on the roads, in government, society as a whole. This is what will foster confidence and business; it will also ensure that the people’s money goes to where it should: infrastructure that will ensure sustained economic growth, generate jobs and public service that will make certain no one is left behind).” -- JPDP

U.S. Stocks Extend Declines as Lawmakers Wrangle Over Federal Debt Plans U.S. stocks retreated, pulling the Standard & Poor’s 500 Index down from a two-week high, as Republicans and Democrats wrangled over separate plans to raise the federal debt limit and avoid a government default.Phone companies led losses among 10 groups in the S&P 500, losing 1.4 percent. Kimberly-Clark Corp. slipped 2.1 percent after reporting a decline in second-quarter profit, hurt by higher commodity prices. E*Trade Financial Corp. jumped 5.6 percent after agreeing to hire Morgan Stanley to explore a sale. The S&P 500 fell 0.6 percent to 1,337.43 at 4 p.m. in New York after slumping as much as 1 percent. The index rallied to within 1.4 percent of a three-year high last week. The Dow Jones Industrial Average lost 88.36 points, or 0.7 percent, to 12,592.80 today. “The market is trying to balance the macro risks of the debt ceiling negotiations and European contagion with good company earnings,” Rafi Zaman, managing director of global equities at DuPont Capital Management in Wilmington, Delaware, said in a telephone interview. His firm oversees about $26 billion. “The market is so volatile and moving depending on what’s in the forefront.” Negotiations over the nation’s debt limit have whipsawed stocks. The S&P 500 jumped 1.6 percent on July 19, the biggest gain since March, amid optimism President Barack Obama and congressional Republicans would agree to raise the ceiling before the Aug. 2 deadline. Stocks fell the next day on concern a Senate plan to help the nation avoid default faced resistance from House Republicans. Treasury Yield Four Basis Points From Two-Week High Before Obama Address Treasury yields were within four basis points of a two-week high as President Barack Obama prepared a television address seeking to break the impasse over how to raise the U.S. debt ceiling and avoid a default. Traders increased bets on inflation, driven by concern the U.S. will have its debt rating cut, weakening the dollar and increasing costs in the economy. The Treasury is scheduled to sell $35 billion of two-year debt today, the first of three note auctions this week totaling $99 billion. “A weaker dollar would result in higher inflation,” said Tomohisa Fujiki, an interest-rate strategist at BNP Paribas Securities Japan Ltd. in Tokyo. BNP’s U.S. unit is one of the 20 primary dealers that trade directly with the Federal Reserve. “Most market participants don’t see the risk of a default but they do see the possibility of a downgrade.” Benchmark 10-year yields were little changed at 3 percent as of 9:43 a.m. in Tokyo, according to Bloomberg Bond Trader pricing. The 3.125 percent security maturing in May 2021 traded at 101 1/32. The rate climbed to 3.04 percent on July 21, a level not seen since July 11. The yield compares with the 10-year average of 4.05 percent. Japan’s 10-year bond yielded 1.09 percent, compared with this year’s low of 1.06 percent set July 19.

Oil Trades Near Two-Day Low in New York on U.S. Debt Ceiling Stalemate Oil traded near a two-day low in New York on concern a failure to reach a deal on raising the U.S. debt limit may cause the nation to default.Futures were little changed after declining for the first time in five days yesterday. Republicans and Democrats prepared dueling plans on how to tackle the country’s $14.3 trillion debt and quell fears of a default on Aug. 2. An Energy Department report tomorrow may show U.S. crude stockpiles dropped for an eighth week, according to a Bloomberg News survey. “Everything is so focused on the U.S. debt ceiling that there isn’t much more to the movement in crude than that,” Matt Smith, a commodities analyst for Summit Energy Services Inc. in Louisville, Kentucky. “Unless we see some sort of resolution, we’re going to continue to be choppy this week with an emphasis to the downside.” Crude for September delivery was at $99.14 a barrel, down 6 cents, in electronic trading on the New York Mercantile Exchangeat 8:53 a.m. Sydney time. The contract yesterday slipped 67 cents, or 0.7 percent, to $99.20, the lowest since July 21. Prices are 26 percent higher the past year. Brent oil for September settlement fell 73 cents, or 0.6 percent, to $117.94 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract settled at a premium of $18.74 a barrel to U.S. futures, compared with a record close of $22.63 on July 14.

Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com 

BDO UNIBANK INC. 

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher 
(632) 858-3001 

Philippine Markets: 26 July 2011

26 July 2011 

USD/PhP:          42.225           - 0.165        PSEi:             4465.87                        - 14.63 
USD/JPY:           78.08                        PFINC:                   1012.62                        - 2.77 
EUR/USD:         1.4505                        BDO:                  62.20                        + 0.25 
GBP/USD:         1.6344                        BPI:                  59.00                        - 0.45 
PDSTF3M:         2.5596                        MBT:               76.45                        - 0.55 
Prices as of  4:00pm                        Source: Bloomberg, Reuters 


Philippine stocks weaken day after SONA 
By: Doris C. Dumlao 
Philippine Daily Inquirer 

MANILA, Philippines—Local stocks fell on Tuesday due to prolonged debates on the US borrowing limit and lack of market-moving news from President Benigno Aquino III’s State of the Nation Address .

The main-share Philippine Stock Exchange index lost 14.63 points or 0.33 percent to 4,465.87.

Trading was mixed across counters, with the financial, industrial and holding firm counters losing ground while the services and mining/oil counters staying afloat.

On Monday, investment guru Mark Mobius said the Philippine stock market was getting very expensive but that there were still opportunities in the services and commodities sectors.

Value turnover was thin at P4.31 billion.  There were 53 advancers versus 79 decliners while 49 stocks were unchanged.

The index was weighed down by Aboitiz Power, Metrobank and AEV. Non-index stocks Semirara, San Miguel Corp. and Leisure & Resorts also traded in the red.

PLDT led the services counter to a positive close.  Other index gainers were Megaworld, EDC, Banco de Oro, Philex, Lepanto “A” (reserved for local investors) and ICTSI.  The non-index stocks that went up in heavy volume were Basic Energy, Vista Land, GERI, ORE and Zeus Holdings.


BDO UNIBANK, INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher
(632) 858-3001 

SONA 2011

Watch the full length video of SONA 2011 at the website of The Rotary Club of West Cagayan de Oro:
http://rcwestcdo.blogspot.com

Philippine Markets: 25 July 2011

25 July 2011 

USD/PhP:          42.39        - 0.01                PSEi:             4480.50                        + 2.14 
USD/JPY:           78.24                        PFINC:                   1015.39                        + 1.18 
EUR/USD:         1.4348                        BDO:                  61.95                        - 0.55 
GBP/USD:         1.6284                        BPI:                  59.45                        + 0.15 
PDSTF3M:         2.7442                        MBT:               77.00                        + 0.45 
Prices as of  4:00pm                        Source: Bloomberg, Reuters 


Stocks slightly up ahead of Aquino’s SONA 
By: Doris C. Dumlao 
Philippine Daily Inquirer 

MANILA, Philippines—The local stocks index was marginally up on Monday ahead of President Aquino’s second State-of-the-Nation-Address.
The main-share Philippine Stock Exchange index added 2.14 points or 0.048 percent to finish at 4,480.50.

Trading was mixed across counters.  The financial, holding firms and property counters firmed up while the industrial, services and mining/oil counters traded in the red.

Value turnover was thin at P4.3 billion as financial markets awaited what the President had to say during the SONA Monday afternoon.

Despite the slight index gain, there were 75 advancers which were edged out by 80 decliners while 39 stocks were unchanged.


BDO UNIBANK, INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher
(632) 858-3001 

Morning Brief: 25 July 2011

Congress to pass budget, priority bills THE 15TH CONGRESS starts its second regular session today with approval of next year’s P1.816-trillion national budget and the administration’s priority measures on its to-do list.Legislators yesterday claimed the proposed 2012 outlay, which Malacañang said it would submit to the House of Representatives tomorrow, would be approved by yearend. “The budget will surely be passed by December,” Senate Majority Leader Vicente C. Sotto III said in a phone interview. “Definitely,” House Speaker Feliciano R. Belmonte, Jr. (4th district, Quezon City) also said. Similar promises were made by Senator Franklin M. Drilon and Cavite Rep. Joseph Emilio A. Abaya, chairmen of the budget committees. Aside from the budget, lawmakers said they would also be busy debating the remaining 20 of the Palace’s 23 priority measures. Of the bills endorsed by the Legislative Executive Development Advisory Council, only those streamlining compensation at state-owned firms, deferring this year’s Autonomous Region in Muslim Mindanao elections and lifting the prohibition against night work for women have so far been signed into law. Congress leaders said that among the priority measures to be approved during the second regular session that will last until June next year are the anti-trust, fiscal incentives rationalization, government procurement reform, land use and public-private partnership development acts; changes to the anti-money laundering and power industry reform laws; establishing the country’s archipelagic sea lanes; witness protection and whistleblower laws; and creation of the Department of Housing and Urban Development. Priority bills that may take more time include the Armed Forces of the Philippines Modernization Act, increasing the number of years for basic education, and water utilities reforms. Ramon C. Casiple, political analyst at the University of the Philippines, said: “the burden now is in the second regular session. Both Senate and House would have to be more productive ... committees have already been organized and the LEDAC already convened”.

Stocks: Big week ahead NEW YORK (CNNMoney) -- Strap in for an eventful week in the markets.The debt ceiling clock is ticking and politics is strangling policy in Washington. At stake: The creditworthiness of the United States. Meanwhile, the end of the week will bring an important report on the economy: The first official reading on growth in the second quarter -- a period when the recovery lost steam. Finally, 180 companies in the S&P 500 report quarterly financial results. Among them are oil titan Exxon Mobil (XOM, Fortune 500), industrial conglomerate 3M (MMM, Fortune 500), automaker Ford (F, Fortune 500) and drug maker Merck (MRK, Fortune 500). Earnings season has been solid so far. Of the 143 members of the S&P that have reported results, 75% have beaten analysts' expectations, according to data provided by Thomson Reuters. "Corporate America is doing very well, and earnings continue to grow and companies are continuing to increase their guidance," said Kate Warne, investment strategist with Edward Jones. "It's a great indication for stock prices going forward." While earnings remain strong, investors' attention has been elsewhere -- particularly on the U.S. debt crisis. The Aug. 2 deadline for raising the debt ceiling is rapidly approaching. On Capitol Hill, legislative leaders spent the weekend in talks to try to strike a deal, which has proven elusive for weeks. House Speaker John Boehner said he wants to make an announcement about a solution for the crisis on Sunday before the Asian markets open. Markets in Tokyo open at 8 p.m. ET. Market observers say they remain confident that Congress will raise the legal borrowing cap in time, but each day that passes with more political rhetoric and no agreement adds to investor anxieties. "While the economic data and company earnings are important, they pale in comparison if the news is that the president and the speaker have reached a deal," said Phil Orlando, market strategist with Federated Investors. Stocks posted solid gains last week, with the Dow rising more than 1% and the S&P 500 and Nasdaq rising more than 2%. Analysts cited seeming progress on both the U.S. debt ceiling issue and the ongoing European debt crisis as partial reasons. In the week ahead, investors will get several economic reports. Second-quarter U.S. gross domestic product is at the top of the list. Economists surveyed by Briefing.com expect that the U.S. economy grew at a mediocre 1.6% annual rate in the second three months of the year, as the Japanese earthquake, bad weather and high commodity prices weighed on economic activity. On the Docket: Monday: After the market close, investors will get results from chip maker Texas Instruments (TXN, Fortune 500) and video rental company Netflix (NFLX). The results from Netflix will be closely watched, in part due to the massive run Netflix shareshave had this year -- up nearly 60%. Analysts expect that Netflix will post a profit of $1.11 a share, while Texas Instruments is expected to earn 53 cents per share. There is no economic data scheduled for release on Monday. Tuesday: Investors will have a busy day on Tuesday, with companies such as 3M, Ford, US Steel (X, Fortune 500) and First Solar (FSLR) reporting results. Shipping giant UPS (UPS, Fortune 500), which is typically considered an economic bellwether, also reports before the bell on Tuesday. The company is expected to post a profit of $1.04 per share. The S&P Case-Shiller home price index is scheduled for release at 9 a.m. ET. The Conference Board's July consumer confidence report and the Commerce Department's new home sales report will be out at 10 a.m. ET. Economists expect that home prices fell 4.4% in May, while consumer confidence fell to a reading of 56.0 in July. New home sales are expected to remain roughly unchanged at 320,000 units. Video game publisher Electronic Arts (ERTS) and online retailer Amazon.com (AMZN, Fortune 500) are scheduled to report their results after the closing bell. Wednesday: Wall Street will get quarterly results from Dow component Boeing (BA, Fortune 500) before the bell on Wednesday. Analysts expect the aerospace giant will post a profit of 96 cents a share, according to Thomson Reuters. Other companies reporting before the bell include Dow Chemical (DOW, Fortune 500), glass maker Corning (GLW, Fortune 500) and oil conglomerate ConocoPhillips (COP, Fortune 500). The Commerce Department will release June durable goods figures at 8:30 a.m. ET. The Federal Reserve releasing its July "Beige Book" at 2 p.m. ET. Economists surveyed by Briefing.com expect that durable good orders rose by 0.4% in June. After the closing bell, credit card processing company Visa (V, Fortune 500) will report its results. Thursday: Oil giant Exxon Mobil reports its quarterly numbers before the opening bell. Analysts expect that Exxon earned $2.33 a share, helped in part by elevated oil prices. The Labor Department will put out its weekly jobless claims numbers at 8:30 a.m. ET; economists expect claims fell by 3,000 to 415,000. Investors will also get results from MetLife (MET, Fortune 500) and Starbucks (SBUX, Fortune 500) after Thursday's closing bell. Friday: Two Dow members will report their results before Friday's bell: drug maker Merck (MRK, Fortune 500) and oil giant Chevron (CVX, Fortune 500). Analysts are looking for Merck to post a profit of 95 cents a share, while Chevron is expected to earn $3.56 a share. Investors will get the first reading on second-quarter GDP at 8:30 a.m. ET. Out after the bell is the Chicago purchasing managers index and the University of Michigan consumer sentiment survey.

Oil Falls in New York After U.S. Lawmakers Fail to Reach Debt Agreement Oil declined for the first time in five days in New York after lawmakers failed to increase the debt limit in the U.S., the biggest crude-consuming nation.Futures slipped as much as 0.9 percent after House Speaker John Boehner told Republicans that there’s no agreement on a plan for raising the ceiling before a default threatened for Aug. 2. A Republican congressional official said Boehner, speaking by telephone to lawmakers, is reporting that discussions are continuing. The impasse has boosted the chance Standard & Poor’s will cut the U.S. credit rating from AAA within three months to 50 percent, the company said July 21. “Politicians in Washington will try their best to avert the U.S.’s first default in history,” said Ehsan Ul-Haq, a senior market analyst with KBC Energy Economics in Walton-on- Thames, England. “But if they fail to agree, markets will most probably react negatively. However, the reaction is not likely to be as severe as in the case of fears of Greek debt contagion spreading to other European countries.” Crude for September delivery fell as much as 85 cents to $99.02 a barrel in electronic trading on the New York Mercantile Exchange and was at $99.23 at 8:57 a.m. Sydney time. The contract advanced 2.7 percent last week, its fourth weekly gain. Prices are 26 percent higher the past year. Brent oil for September settlement dropped as much as 67 cents, or 0.6 percent, to $118 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract traded at a premium of $18.87 a barrel to U.S. futures, compared with a record close of $22.63 on July 14.

Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com 

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Jonathan Ravelas
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Rhys Cruz
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