Ally Financial (Formerly GMAC) Admits DoJ Subpoenas On Mortgage-Related Activities

If yesterday’s Citi debacle was a buying opportunity (which it is according to the pre-market), then news that Ally Financial (formerly GMAC) is under regulatory and DoJ investigation must be great news:


Of course, do not forget that GM itself recently admitted to the DoJ probing its subprime auto loan underwriting practices. But, but, but – isn’t this exactly what FHFA’s Mel Watt wants?


Via Ally’s 10-Q

Ally and its subsidiaries, including Ally Bank, are or may become involved from time to time in reviews, investigations, and proceedings (both formal and informal), and information-gathering requests, by government and self-regulatory agencies, including the FRB, FDIC, Utah Department of Financial Institutions (UDFI), Consumer Financial Protection Bureau (CFPB), U.S. Department of Justice (DOJ), SEC, and the Federal Trade Commission regarding their respective operations.


Such requests currently include subpoenas from each of the SEC and the DOJ. The subpoenas and document requests from the SEC include information covering a wide range of mortgage-related matters, and the subpoenas received from the DOJ include a broad request for documentation and other information in connection with its investigations of potential fraud and other potential legal violations related to mortgage-backed securities, as well as the origination and/or underwriting of mortgage loans.


In addition, we recently received a document request from the SEC in connection with its investigation related to subprime automotive finance and related securitization activities.


Further, in December 2013, Ally Financial Inc. and Ally Bank entered into Consent Orders issued by the CFPB and the DOJ pertaining to the allegation of disparate impact in the automotive finance business, which resulted in a $98 million charge in the fourth quarter of 2013. The Consent Orders require Ally to create a compliance plan addressing, at a minimum, the communication of Ally’s expectations of Equal Credit Opportunity Act compliance to dealers, maintenance of Ally’s existing limits on dealer finance income for contracts acquired by Ally, and monitoring for potential discrimination both at the dealer level and within our portfolio of contracts acquired across all dealers. Ally formed a compliance committee consisting of certain Ally and Ally Bank directors to oversee Ally’s execution of the Consent Orders’ terms. Failure to achieve certain remediation targets could result in the payment of additional amounts in the future.


Investigations, proceedings, regulatory actions, or information-gathering requests that Ally is, or may become, involved in may result in material adverse consequences including without limitation, adverse judgments, settlements, fines, penalties, injunctions, or other actions.

*  *  *

And this comes on the heels of GM Financial’s admission of Subprime Auto Loan Probes (via Bloomberg)

Investigations of the subprime auto finance business are spreading as General Motors Co. (GM) said its lending arm received additional subpoenas seeking details of its underwriting practices.


GM Financial, which specializes in loans to people with spotty credit, said in a regulatory filing yesterday that attorneys general of states it didn’t identify and other government offices are demanding documents related to its business of making car loans and pooling them into bonds that are sold to investors. The Detroit-based lender, along with Santander Consumer USA Holdings Inc., disclosed a similar probe by the U.S. Department of Justice in August.


The scrutiny is intensifying at the same time more borrowers are falling behind on their payments and sales of securities backed by the loans increase. Auto-finance firms that lend to people with bad credit lowered their standards amid increased competition as new entrants flooded the business to capitalize on cheap funding, according to Moody’s Investors Service.


“Subpoenas travel in packs,” Erik Gordon, a professor at the Ross School of Business at the University of Michigan, said by telephone. “There’s never one company in an industry subpoenaed because they’re mostly all doing the same thing.”

*  *  *

But, but, but – isn’t this exactly what FHFA’s Mel Watt wants?

via Zero Hedge Tyler Durden

Charting Banzainomics: What The BOJ’s Shocking Announcement Really Means

Still confused what the BOJ’s shocking move was about, aside from pushing the US stock market to a new record high of course? This should explains it all: as the chart below show, as a result of the BOJ’s stated intention to buy 8 trillion to 12 trillion yen ($108 billion) of Japanese government bonds per month it means the BOJ will now soak up all of the 10 trillion yen in new bonds that the Ministry of Finance sells in the market each month.

In other words. The Bank of Japan’s expansion of record stimulus today may see it buy every new bond the government issues.

This is what full monetization looks like.

More from Bloomberg:

The central bank is already the largest single holder of Japan’s bonds, and the scale of its buying could fuel concerns it is underwriting deficits of a nation with the heaviest debt burden. The BOJ could end up owning half of the JGB market by as early as in 2018, according to Takuji Okubo, chief economist at Japan Macro Advisors in Tokyo.


“Kuroda knows when to go ALL in,” Okubo wrote in a note. “The BOJ is basically declaring that Japan will need to fix its long-term problems by 2018, or risk becoming a failed nation.


The unprecedented efforts to stoke inflation could scare bond investors, said Chotaro Morita, the chief rates strategist in Tokyo at SMBC Nikko Securities Inc.


Kuroda said earlier this month that while the BOJ holds only about 20 percent of Japan’s outstanding government bonds, the Bank of England holds approximately 40 percent of U.K. government debt.

We wish Japan the best of luck in avoiding becoming a “failed nation.”

Then again there is something to be said about a nation which is now desperately, and obviously to everyone, trying to unleash hyperinflation… and, for now at least, is failing.

via Zero Hedge Tyler Durden

Despite Surprise Rate-Hike, Russian Ruble Crashes Most In 6 Years

Yesterday’s record-breaking surge in the Ruble appears, as we warned, to have been front-running today’s rate-hike announcement… and despite its surprise size, it is disappointing the market. The 5%-plus swing higher in the Ruble yesterday has been notably retraced as the Russian currency plunges (biggest drop in almost 6 years) after the central bank hiked rates 150bps (expectations were broadly of a 50bps hike) but it appears the ‘whisper’ number was a 200bps hike and a shift in FX policy to more active intervention. The inituial rip rally instantly faded and despite low liquidity due to Russian holidays, USDRUB is back over 43 – which would be a new record low close if it holds.

Russian Central Bank disappointed…


22 of 31 economists in Bloomberg survey forecast 50bps increase; 2 predicted move to 9%; increases of 25bps and 75bps forecast by 1 each; 5 economists projected no change

The reaction:



Biggest plunge in almost 6 years


Analysts react:


The weakness has prompted furtherremarks from the central bank:


via Zero Hedge Tyler Durden

Consumer Spending Tumbles At Fastest Rate Since October 2009

Goodbye GDP hopes… Consumer Spending tumbled 0.2% against expectations of growing 0.1%, dropping at the fastest pace since October 2009. This is the biggest miss since Jan 2014 – in the middle of the PolarVortex… did it snow in October?



Chart: Bloomberg

via Zero Hedge Tyler Durden

Bank of Japan Reaction Context: Nikkei 225 Is Up 1000 Points In 7 Hours

You know the world’s financial markets have become farce when the broad Nikkei 225 stock market of Japan rises 1000 points in 7 hours… The meme that stock ‘markets’ move on fundamentals not central bank liquidity is officially dead. Let that sink in for a moment…



Chart: Bloomberg

via Zero Hedge Tyler Durden









(Michael Jackson’s Thriller)



It’s Midnight this late October night and

Banksta Zombies Lurking in the Dark.

Under The Moonlight,

You See A Sight That Almost Stops Your Heart.

You Try To Scream,

But Terror Takes The Sound Before You Make It.

Markets Start To Freeze,

As Horror Looks You Right Between Your Day Trader Eyes,

Your Paralyzed

You Hear The Door Slam,

And Realize There’s Nowhere Left To Run.

You Feel The Cold Take Hold,

And Wonder If You’ll Ever See another Market Run

You Close Your Eyes,

And Hope That This Is Just Imagination,

But All The While,

You Hear The Grim Market Reaper

Creepin’ Up Behind

You’re Out Of Trading Time

They’re Out to Get You,

There’s Alghoul Trading Demons Closing In On Every Side.

They Will Possess You,

Unless You Change The Number On Your Skype.

Now Is the Time for You and Your Trading Bros to huddle Close Together

All Thru The Night,

It’ll Save You From The Terror On The Bloomberg Screen,

It’ll Make You See:


(narrated by Vincent Price)

Darkness Falls Across O-Bola Land,

The Asian Trading Day Is Close At Hand.

Bottom Feeders Crawl In Search Of Blood…

To Fraudclose on Your Neighborhood

And Whosoever Shall Be Found Without

The Soul For Economic Bust

Must Stand And Face The Hounds Of Subprime Hell,

And Rot Inside Lehman’s Bankrupt Shell.

The Foulest Stench Is In The Air

The Funk Of One Gazillion Bailout Bucks

And trading Ghouls From Every Banksta Trading Room

Are Closing In To Seal Your Doom

And Though You Fight To Stay Alive

Your P&L Starts To Shiver

For No Banksta Gangsta Can Resist

The Evil Of The Bailout Thriller


‘Cause this Is Thriller,

TARP Bailout Thriller Night

and No-ones Gonna Save You from the Beast about to Strike.

You Know its Thriller,

TARP Bailout Thriller Night

You’re fighting for Your Monetary Life inside a Killer, Thriller.

Thriller, TARP Bailout Night


It can thrill you More Than Any Keynesian Ghoul Could ever try.

(Thriller, Bailout Night)

So Let Me Hold You Tight And Share A Killer, Chiller, Mega Fiscal Massacre
Thriller Here Tonight.

‘Cause this Is Thriller, TARP Bailout Thriller night

It Will Thrill You More Than Any Kenynesian Ghoul Could ever dare


Any Ghoul could ever Dare…

via Zero Hedge williambanzai7

Goldman On BOJ’s Banzainomics: “We Highlight The Potential For Harsh Criticism Of Further Cost-Push Inflation”

It was about several months ago when Goldman, which initially was an enthusiastic supporter of BOJ’s QE, turned sour on both Abenomics and the J-Curve (perhaps after relentless mocking on these pages), changed its tune, saying an unhappy ending for Abenomics is almost certainly in the cards.

Not surprisingly then, in its post-mortem of the BOJ’s overnight action, already being affectionately called Banzainomics, is hardly glowing, and is summarized as follows: “We maintain our view that unless the yen continues to depreciate significantly, as a result of the latest QQE action, the BOJ is unlikely to meet its scenario for inflation to stably reach 2% during FY2015. From a political perspective, with nationwide local elections looming in April 2015, we also highlight the potential for harsh criticism of further cost-push inflation driven by the weaker yen among nonmanufacturers, SMEs, and households. Irrespective of the latest easing moves, we believe the BOJ is treading a very narrow path.

Full note from Goldman’s Naohiko Baba:

Further QQE and move to a fully open-ended easing program

The Bank of Japan announced further quantitative and qualitative easing (QQE) action at its Monetary Policy Meeting on October 31 (Exhibit 1). It also officially removed the 2-year timing target for achieving 2% price stability, making the timeframe completely open ended (by a vote of 5 to 4). While the latter announcement was within the scope of our expectations, the first came as a surprise (we had assumed further easing action would be announced in January 2015). The additional QQE measures are as follows:

1. Pace of monetary base increase will be stepped up by ¥10 tn-¥20 tn per year, to around ¥80 tn per year.

2. Long-term JGB purchases will be stepped up so that the outstanding JGB portfolio will increase by around ¥80 tn annually, an acceleration of around ¥30 tn. The average remaining maturity of the BOJ’s JGB purchases will be extended to 7-10 years (extension of a maximum 3 years). In addition, the outstanding ETF portfolio will be increased at an annual pace of ¥3 tn, tripled from the current pace of ¥1 tn, and annual REIT purchases will triple to ¥90 bn, from ¥30 bn. The JPX-Nikkei 400 index is newly added to eligible ETF purchases by the BOJ.

BOJ sharply lowers Outlook Report FY2014 growth forecast

In the biannual Outlook Report published today, the BOJ sharply lowered its FY2014 real GDP growth forecast to +0.5% yoy, from +1.0%, in line with our expectation. It only made minor revisions to its price outlook, however, adjusting its CPI forecast to +1.2%, from +1.3%, for FY2014 and to +1.7%, from +1.9%, for FY2015. It therefore maintained its scenario that inflation is likely to reach around 2% sometime in FY2015 (Exhibit 2). We believe the bank has factored the impact of the additional QQE mentioned above into its outlook.

Further easing to stop inflation expectations receding

However, in the risk assessment section of the Outlook Report, the BOJ noted that risks to its price outlook are to the downside. It explained that sustained weakness in post-tax-hike demand and downward price pressure from the decline in crude oil prices could pose a risk of delayed improvement in inflation expectations that could create downside risks to prices per se. It said it had taken additional QQE measures to prevent the risk of a delayed turnaround in deflationary mindset from materializing. Although denied by Governor Kuroda at the press conference, we think the bank may have sought to give its support to a second consumption tax hike (slated for October 2015, decision to be taken early December) at a time when increasing number of voters as well as politicians are expecting the timing of the next tax hike to be pushed back. Amid a slew of weak macro data following the April tax hike, we think the Japanese government has a strong desire to lift share prices as far as possible and thereby improve corporate and household sentiment to make it easier for Prime Minister Abe to commit to a second tax increase. In our view, it is no coincidence that GPIF portfolio changes (lowering of domestic bond allocation, increase in equity allocation) and the BOJ’s adding easing measures were announced the same day.

Attaining 2% price stability target still looks very challenging

Prices have trended broadly in line with our outlook over the past six months or so. The September national core CPI, announced today, slowed to +1.0% yoy and has now reached the bottom end of the previous assumption of the BOJ’s 1.0%-1.5% range. With the October Tokyo core CPI also slowing further, crude prices trending downward and the post-tax-hike economy weakening more than anticipated, we think the CPI could dip below +1.0% near term. We maintain our view that unless the yen continues to depreciate significantly, as a result of the latest QQE action, the BOJ is unlikely to meet its scenario for inflation to stably reach 2% during FY2015. From a political perspective, with nationwide local elections looming in April 2015, we also highlight the potential for harsh criticism of further cost-push inflation driven by the weaker yen among nonmanufacturers, SMEs, and households. Irrespective of the latest easing moves, we believe the BOJ is treading a very narrow path.


Exhibit 1: BOJ expands monetary easing
BOJ Quantitative and Qualitative Easing


Exhibit 2: BOJ sharply lowers Outlook Report FY2014 growth forecast
BOJ Outlook Report

via Zero Hedge Tyler Durden

Frontrunning: October 31

  • Futures rally after BOJ ramps up stimulus (Reuters), Japan’s central bank shocks markets with more easing as inflation slows (Reuters)
  • Kuroda Jolts Markets With Assault on Deflation Mindset (BBG)
  • Japan Mega-Pension Shifts to Stocks (WSJ)
  • Russia Raises Interest Rates (WSJ)
  • Not anymore, the BOJ is here: Fed Exit Could Spark Slump in All Markets, ATP CEO Says (BBG)
  • Oil-Price Drop Has Saudi Officials Divided (WSJ)
  • Wal-Mart Weighs Matching Online Prices from Amazon (WSJ)
  • Euro-Area Inflation Picks Up From Five-Year Low on Stimulus (BBG)
  • Big Banks Brace for Penalties in Probes  (WSJ)
  • Ex-UBS Trader Defense Could Be Threat to U.S. Forex Cases (BBG)
  • Democrats Lose Their Grip on Voters With Keys to the House (WSJ)
  • Weak Wages Stir Voter Ire at Obama Amid Gridlock (BBG)
  • Central Banker Hero Becomes Face of Failure in Swedish Tale (BBG)
  • Shale Boom Redraws Oil Routes as Alaskans Ship to Korea (BBG)
  • TD’s Masrani Says U.S. Buying Spree Is History (BBG)


Overnight Media Digest


* Big banks in the United States and Europe are stockpiling billions to pay for a potential trans-Atlantic settlement of allegations that they manipulated foreign-exchange rates as talks heat up with regulators on both continents. (

* The U.S. economy expanded at a healthy 3.5 percent annual pace during the third quarter, a sign of sustained growth fueled by government spending and a narrower trade deficit despite mounting concerns about the health of overseas economies. (

* Wal-Mart is testing a program to match online prices from rivals like Amazon this holiday season, a move that could make the discounter more competitive but cut into profits. (

* Consumers are spending more and using cash less, a combination that is driving profits higher at MasterCard Inc and Visa Inc, the largest credit-card payment networks in the world. (

* The National Highway Traffic Safety Administration ordered air bag maker Takata to disclose emails and other information on what it knows about millions of defective air bag systems in older vehicles on the road. (

* Bank of America Corp’s decision to make Brian Moynihan chairman as well as chief executive is drawing fire from some influential shareholders. Three of the largest pension systems in the United States are pushing back on the bank’s move, announced earlier this month. (

* Pacific Investment Management Co in the past month pulled all its futures-clearing business from a unit of State Street Corp after State Street asked Pimco to reduce some positions, said people familiar with the matter. (



Overview U.S. prosecutors have reopened an investigation into Standard Chartered Plc on suspicions that the bank tucked away transactions that violated sanctions laws as it was settling a related action two years ago, people familiar with the matter said.

Britain’s Treasury has dodged a request from Bank of England to be granted powers over buy-to-let lending, saying it wants to gather more evidence on how the market works. The Treasury on Thursday issued a consultation paper suggesting to give the bank’s Financial Policy Committee new legal tools to control residential mortgage lending. The move would allow the Treasury to set mandatory limits on loan-to-value ratios and debt-to-income ratios in residential lending.

Under pressure from Britain’s Treasury, the Democratic Unionist party and Sinn Fein, two biggest parties in the devolved administration in Belfast, agreed to back a budget drafted by the Northern Ireland government that will see public spending be hurt by deep cuts. The budget would likely lead to public spending cuts of up to 1 billion pounds ($1.60 billion).

The Scotland Labour Party is facing a potential electoral defeat in Scotland, with a new poll conducted by Ipsos Mori poll for STV that shows just 23 percent of voters would back the Labour Party if a general election were to be held immediately, compared with 52 percent who would back the Scottish National Party. That would imply 41 Westminster seats that were won in Scotland in 2010 to be no longer in hands of the Labour Party.



* Russian and Ukrainian officials reached an agreement on Thursday night to resume Russian deliveries of natural gas to prevent shortages over the winter. The deal caps months of laborious talks under the aegis of European Union authorities on how much, and how soon, Ukraine needed to pay Russia for gas it has already consumed, and on the terms for future deliveries. (

* Timothy D. Cook, Apple Inc’s chief executive, said on Thursday he was gay – the most striking example of how he is in many ways making Apple a more open, less secretive company. (

* A U.S. government report on Thursday estimated that the nation’s economic output rose at a healthy 3.5 percent annual rate in the third quarter, driven by gains across the board, bolstered by an unusual burst of military spending and a more favorable trade balance. (

* Citigroup Inc startled investors on Thursday with an announcement that it had to lower its third-quarter profit by $600 million because of “rapidly-evolving regulatory inquiries and investigations”. Citigroup reported its results for the quarter two weeks ago, just before the legal development arose. (

* Andy Rubin, a high-ranking Google Inc executive who spearheaded the company’s entrance into mobile phones and tablets and was in charge of the company’s nascent robotics group, has left the company to start a tech incubator focused on start-ups interested in building hardware. (




** Alberta’s new political leadership is calling on Ottawa to take another look at foreign investment rules blamed for a dramatic drop in energy investments from China. “We are urging a review of some of the quick changes that were done to our Investment Canada Act,” said Ron Hoffmann, the province’s newly named senior representative for the Asia-Pacific Basin. (

** Canadian warplanes are poised to start striking targets in Iraq, with the government saying bombing of Islamic militant forces should begin very shortly. “They haven’t launched strikes yet, but it could happen at any moment,” one government source said. (

** Prime Minister Stephen Harper has unveiled a package of family-focused tax cuts worth nearly C$27-billion ($24.12 billion) over six years that will shape the political debate heading into the 2015 election campaign. (


** TransCanada Corp’s twin-cities news conference Thursday to announce the filing of its Energy East application to the National Energy Board was pipeline theatre at its finest. After 18 months of planning, the company presented to the world a 30,000-page document – filling 68 binders in 11 official-looking boxes – to provide evidence in support of the C$12-billion project. (

** A chaotic Ottawa police traffic stop on Bank Street in which a plainclothes Ontario Provincial Police officer fired a single shot at a man was part of a Royal Canadian Mounted Police national security investigation, Postmedia News has learned. (

** The Liberal government will reintroduce an updated version of the sex education curriculum for Ontario schools that it withdrew in 2010 because of objections from religious leaders, Education Minister Liz Sandals said Thursday. (




– Chinese carmaker SAIC Motor Corp Ltd expects to launch its “Internet car” in 2016, the firm’s chairman Chen Hong said. The car is being jointly developed with internet giant Alibaba.


– Twenty brokerages have been approved to be involved in a pilot project to issue short-term bonds, the China Securities Regulatory Commission said in a statement.


Companies listed in Shanghai and Shenzhen in China saw profits grow 8.75 percent in the first nine months of the year, according to company filings. This was a slowdown from 14.18 percent growth in the same period last year.


Authorities in Shanghai have closed down two restaurants located within city parks in a crackdown on official extravagance and corruption, the local parks authority said.


– Close to three-quarters of fish species in eastern Shandong province have died out since the 1970s due to severe water pollution and overfishing, the local government said.


The Times


Rio Tinto Plc appeared set to take a $2.5 billion writedown on its huge but troubled copper project in Mongolia. Construction of the $5 billion Oyu Tolgoi mine has become ensnared in a tax dispute with the government. The mine has the potential to transform an economy that is on a par with Angola or Swaziland in national income per head. The International Monetary Fund says that it will be responsible for a third of the country’s GDP growth by the time it is operational. (


Barclays Plc has set aside 500 million pounds ($799.75 million) to pay for the cost of the foreign exchange manipulation scandal and warned that its large investment banking arm had a disappointing third quarter. The forex provision comes as the bank prepares to settle with regulators over its role in allegedly attempting to rig foreign exchange benchmarks for its own gain. (


The giant oilfield that gave the Brent crude index its name and kicked off the North Sea boom in the 1970s is closer to being decommissioned after Shell retired two of its remaining three platforms. The Anglo-Dutch group, which operates the Brent field, said the two platforms were “no longer economical”, but it added that Brent Alpha and Brent Bravo had “significantly exceeded’ their original expected production duration after producing oil and gas for more than 35 years. (

The Telegraph


Britain’s banks will be forced to maintain significant financial safety nets under rules announced on Friday that industry leaders say could raise the cost of mortgages and penalise building societies. The Bank of England is expected to go beyond global standards in revealing the leverage ratio, the level of financial reserves banks must hold to protect against a downturn, it expects banks to adopt. (


BP Plc has stepped up calls for the man in charge of the Gulf of Mexico compensation fund to be sacked, after discovering a trove of new evidence that allegedly casts doubt on his impartiality. The oil giant had already asked a U.S. court to remove Patrick Juneau from his post overseeing payouts to victims of the Deepwater Horizon disaster, after he was accused of misleading the court about a potential conflict of interest. (


Several proposed offshore wind farms may be scrapped in coming months because the government is not awarding enough subsidies, the head of energy giant ScottishPower has said. Keith Anderson, chief corporate officer, said it was cutting the size of its planned 240-turbine East Anglia offshore wind farm because the budget for subsidies to be awarded this year was “not big enough”. The project could be scrapped altogether if it did not secure a subsidy contract this year. (


A logistics firm that counts the former Tesco Plc boss Sir Terry Leahy among its directors is drawing up plans for a share sale that would crystallise multi-million pound fortunes for its investors. MetaPack, which provides Internet delivery services to leading retailers such as Marks and Spencer, has appointed GP Bullhound, a technology-focused investment bank, to work on the fundraising. (


Royal Bank of Scotland Group Plc (RBS) is leaning towards appointing the smallest of the Big Four accountancy firms as its new auditor, a move that would spell the end of its relationship with Fred Goodwin’s erstwhile employer. RBS is closing in on an agreement to hand EY its lucrative audit mandate, although insiders insisted that a final decision had not yet been made and that a rival could yet emerge as the winner. KPMG is also in contention for the role, and an announcement is not expected to be made alongside RBS’s third-quarter results on Friday. (


Fly On The Wall Pre-Morning Buzz


Domestic economic reports scheduled for today include:
Chicago PMI for October at 9:45–consensus 60.5
University of Michigan consumer sentiment index for October at 9:55–consensus 86.4



AXT, Inc. (AXTI) upgraded to Buy from Neutral at B. Riley
Acadia (ACHC) upgraded to Buy from Hold at Deutsche Bank
Atmel (ATML) upgraded to Outperform from Market Perform at FBR Capital
Blue Nile (NILE) upgraded to Buy from Neutral at BofA/Merrill
CEVA (CEVA) upgraded to Buy from Hold at Wunderlich
Coty (COTY) upgraded to Buy from Hold at Stifel
Higher One (ONE) upgraded to Neutral from Sell at Compass Point
Imperva (IMPV) upgraded to Overweight from Neutral at Piper Jaffray
Incyte (INCY) upgraded to Neutral from Sell at Goldman
Intrepid Potash (IPI) upgraded to Market Perform from Underperform at BMO Capital
Medical Properties upgraded to Outperform from Market Perform at JMP Securities
MercadoLibre (MELI) upgraded to Buy from Neutral at BofA/Merrill
Mohawk (MHK) upgraded to Strong Buy from Outperform at Raymond James
SandRidge Mississippian Trust II (SDR) upgraded to Market Perform  at Raymond James
Seattle Genetics (SGEN) upgraded to Hold from Sell at Cantor
Veeco (VECO) upgraded to Positive from Neutral at Susquehanna


ARMOUR Residential (ARR) downgraded to Neutral from Buy at Compass Point
Aegerion (AEGR) downgraded to Hold from Buy at Deutsche Bank
Aegerion (AEGR) downgraded to Hold from Buy at Jefferies
Aegerion (AEGR) downgraded to Neutral from Overweight at JPMorgan
American States Water (AWR) downgraded to Hold from Buy at Brean Capital
Audience (ADNC) downgraded to Hold from Buy at Topeka
Audience (ADNC) downgraded to Sector Perform from Outperform at Pacific Crest
Avon Products (AVP) downgraded to Hold from Buy at Stifel
Avon Products (AVP) downgraded to Neutral from Buy at B. Riley
Bottomline Technologies (EPAY) downgraded to Hold from Buy at Canaccord
Bottomline Technologies (EPAY) downgraded to Outperform at Raymond James
CACI (CACI) downgraded to Neutral from Overweight at JPMorgan
Canadian Utilities (CDUAF) downgraded to Underweight from Equal Weight at Barclays
Chesapeake Utilities (CPK) downgraded to Hold from Buy at Brean Capital
Consolidated Communications (CNSL) downgraded to Hold from Buy at Jefferies
Hyster-Yale Materials (HY) downgraded to Neutral at Global Hunter
Legacy Reserves (LGCY) downgraded to Outperform from Top Pick at RBC Capital
M.D.C. Holdings (MDC) downgraded to Neutral from Buy at Sterne Agee
Midcoast Energy (MEP) downgraded to Neutral from Outperform at Credit Suisse
Pacira (PCRX) downgraded to Neutral from Buy at BofA/Merrill
Park Sterling Bank (PSTB) downgraded to Market Perform from Outperform at Raymond James
Regional Management (RM) downgraded to Hold from Buy at Jefferies
Regional Management (RM) downgraded to Market Perform at JMP Securities
Regional Management (RM) downgraded to Market Perform from Outperform at FBR Capital
STAAR Surgical (STAA) downgraded to Hold from Buy at Canaccord
STAAR Surgical (STAA) downgraded to Market Perform from Outperform at William Blair
TASER (TASR) downgraded to Sell from Fair Value at CRT Capital
Time Warner Cable (TWC) downgraded to Hold from Buy at Brean Capital
Trupanion (TRUP) downgraded to Equal Weight from Overweight at Barclays
Ultra Petroleum (UPL) downgraded to Neutral from Buy at UBS
Vectren (VVC) downgraded to Hold from Buy at Brean Capital
WGL Holdings (WGL) downgraded to Hold from Buy at Brean Capital
Walter Energy (WLT) downgraded to Underweight from Hold at BB&T
Westport (WPRT) downgraded to Hold from Buy at Deutsche Bank


Eros International (EROS) initiated with an Outperform at Macquarie
New Media (NEWM) initiated with a Buy, $41 price target at Citigroup
Sabra Health Care (SBRA) initiated with a Market Perform at Wells Fargo


Citigroup (C) lowered Q3 results due to $600M increase in legal accruals
Omega Healthcare (OHI) to acquire all outstanding shares of Aviv REIT (AVIV) in stock-for-stock deal valued at $3B
Royal Bank of Scotland (RBS) CEO said cost reduction remains on track, has ‘long list of conduct and litigation issues’
FDA expressed willingness to conduct ‘rolling review’ of Sarepta (SRPT) eteplirsen NDA
Starbucks (SBUX) said it plans to begin food, beverage delivery service in FY15
Boyd Gaming (BYD) announced that it is evaluating possibility of forming REIT with its real estate assets
LinkedIn (LNKD) reported Q3 members 332M vs. 313M last quarter


Companies that beat consensus earnings expectations last night and today include:

GoPro (GPRO), LinkedIn (LNKD), Groupon (GRPN), Mylan (MYL), Exelis (XLS), Aon plc (AON), Newell Rubbermaid (NWL), GAIN Capital (GCAP), CommScope (COMM), Genesee & Wyoming (GWR), Tesoro (TSO), Investors Bancorp (ISBC), The Bancorp (TBBK), Empire District Electric (EDE), Green Bancorp (GNBC), Oil States (OIS), AptarGroup (ATR), Heritage Oaks (HEOP), Immersion (IMMR), Oplink Communications (OPLK), Energen (EGN), Ziopharm (ZIOP), TeleNav (TNAV), Ashford Hospitality Prime (AHP), Mercer (MERC), Greatbatch (GB), Baylake Corp. (BYLK), eHealth (EHTH), Cohu (COHU), FreightCar America (RAIL), Globus Medical (GMED), Emulex (ELX), Audience (ADNC), MasTec (MTZ), World Fuel Services (INT), Newpark Resources (NR), Boston Beer (SAM), Zendesk (ZEN), Control4 (CTRL), Vocera (VCRA), MaxLinear (MXL), Ellie Mae (ELLI), Bottomline Technologies (EPAY), Midcoast Energy (MEP), AXT, Inc. (AXTI), YRC Worldwide (YRCW), Lantronix (LTRX), Synageva (GEVA), Brightcove (BCOV), ServiceSource (SREV), Scansource (SCSC), GenMark (GNMK), Westport (WPRT), Seattle Genetics (SGEN), Molina Healthcare (MOH), Silicon Image (SIMG), AMN Healthcare (AHS), Trecora Resources (TREC), Imperva (IMPV), Green Dot (GDOT), Fluor (FLR), Electro Scientific (ESIO), DigitalGlobe (DGI), Live Nation (LYV), NeuStar (NSR), AtriCure (ATRC), FleetCor (FLT), National Instruments (NATI), MercadoLibre (MELI), Cytokinetics (CYTK), Expedia (EXPE), OncoGenex (OGXI), Castlight Health (CSLT), Western Union (WU), Federated National (FNHC), Columbia Sportswear (COLM), Affymetrix (AFFX)

Companies that missed consensus earnings expectations include:

NTELOS (NTLS), Pattern Energy (PEGI), Vantage Drilling (VTG), MB Financial (MBFI), Key Energy (KEG), Tesoro Logistics (TLLP), A.V. Homes (AVHI), , Eldorado Gold (EGO), Erie Indemnity (ERIE), Saul Centers (BFS), QuinStreet (QNST), Cheniere Energy (LNG), WSFS Financial (WSFS), Alliqua (ALQA), First Financial Bancorp (FFBC), CSP Inc. (CSPI), ON Semiconductor (ONNN), Meta Financial (CASH), Trimble (TRMB), Alphatec (ATEC), Tempur Sealy (TPX), Ikanos (IKAN), Digi International (DGII), Aegerion (AEGR), Republic Services (RSG), Unwired Planet (UPIP), NuVasive (NUVA), Tallgrass Energy (TEP), American Vanguard (AVD), Theravance (THRX), A10 Networks (ATEN), Boyd Gaming (BYD), First Bancorp (fbnc), Omnicell (OMCL), STAAR Surgical (STAA), Standard Pacific (SPF), Chemed (CHE), Outerwall (OUTR), Regional Management (RM), Fluidigm (FLDM)

Companies that matched consensus earnings expectations include:

Starbucks (SBUX), Cheniere Energy Partners (CQH), PCTEL, Inc. (PCTI), Territorial Bancorp (TBNK), Kofax (KFX), Cavco Industries (CVCO), Select Medical (SEM), Spansion (CODE), Endologix (ELGX), Microchip (MCHP), TeleCommunication Systems (TSYS), Pixelworks (PXLW), SciQuest (SQI), Virtusa (VRTU), PerkinElmer (PKI), Bally Technologies (BYI), Addus HomeCare (ADUS), Tuesday Morning (TUES)


McDonald’s (MCD) reorganizing U.S. structure to respond to customers’ tastes, WSJ reports
Stratasys (SSYS) CEO sees growth despite HP (HPQ) 3D printing plans, Reuters reports
Sony (SNE) sees ‘significant reduction’ in Chinese mobile market, FT reports
Twitter (TWTR) demotes head of product Daniel Graf, WSJ reports
Google’s (GOOG) robotics head Andy Rubin leaving company, WSJ reports
Russia, Ukraine reach deal on natural gas, NY Times reports (OGZPY, E, TOT, BP, RDS.A, RDS.B)


Chimerix (CMRX) 3.65M share Secondary priced at $29.00
Corporate Office Properties (OFC) files to sell 4.8M shares of common stock
La Quinta (LQ) files to sell 20M shares of common stock for holders

via Zero Hedge Tyler Durden

Shocking Bank Of Japan Trick And QE Boosting Treat Sends Futures To Record High

Two days ago, when QE ended and knowing that the market is vastly overstimating the likelihood of a full-blown ECB public debt QE, we tweeted the following:

Little did we know how right we would be just 48 hours later.

Because as previously reported, the reason why this morning futures are about to surpass record highs is because while the rest of the world was sleeping, the BOJ stunned those few who were looking at Bloomberg screens with a decision to boost QE, announcing it would monetize JPY80 trillion in JGBs, up from the JPY60-70 trillion currently and expand the universe of eligible for monetization securities. A decision which will forever be known in FX folklore as the great Halloween Yen massacre.

In retrospect, the BOJ’s announcement should have been anticipated. Recall that yesterday, the biggest non-story was the regurgitated headline that the Japanese Pension fund would boost its holdings of domestic and foreign stock from 12% to 25%, while slashing its Japan bond holdings from 60% to 35%, something that had been leaked previously. The full changes:

  • Domestic stocks raised to 25% from 12%
  • Japan bonds cut to 35% from 60%
  • Overseas shares 25% from 12%
  • Foreign debt 15% from 11%

But while Japan’s eagerness to bet its retirees lifetime savings on GoPro had been well-known previously, it also meant that someone would have to step in and buy the hundreds of billions of JGBs the GPIF had to sell in what over the past year became the world’s most illiquid bond market, often going for days without a single transaction.

That someone, a few hours ago, was revealed to be the Bank of Japan, which in addition to now clearly becoming the only buyer of only resort for Japanese bonds, has tipped its hands that it is going all in on pushing the Nikkei higher at all costs, even if it means crushing the domestic economy, something which even Keynesian “experts” say will be the outcome if the Yen continues to slide below 110 for the dollar.

So for all those wondering why futures are back to all time highs, here is the reason:


No wait, sorry, that’s reality – something that hasn’t mattered to markets since 2008. Here is the reason, all thanks to CTRL-P:


In other words, several days after Larry Fink mysteriously visited Abe, the BOJ announced it would do everything in its power push the Nikkei into green for the year, which it did with its announcement overnight, and to truly crush the local population’s buying power.

Kuroda also had some truly comedic one liners:


And now that Japan has gone all in on runaway inflation, we expect that Abe’s reign of terror to be cut short as finally the people’s anger at this Keynesian madman on top of it all will finally explode.

The good news in all of this is that the desperation is increasingly palpable, and since Japan is about to go pro in deflation exporting to the US and mostly Europe, expect even more violent reprisals from the world’s other central banks and so on until finally it is only central banks left trading with each other. Much like today.

In the meantime, here is what is going on:

  • S&P 500 futures up 1.2% to 2011.6
  • Stoxx 600 up 1.4% to 335.5
  • US 10Yr yield up 1bps to 2.32%
  • German 10Yr yield down 1bps to 0.84%
  • MSCI Asia Pacific up 1.3% to 142.2

And the punchline:

  • Gold spot down 2.2% to $1172.3/oz

Because in the new normal diluting your currency even more is even more negative for undilutable currencies.

Some more details on what the latest massive central bank intervention did to what only laughably can one now call “markets” via BBG: European shares rise with the bank and financial services sectors outperforming and media, retail underperforming. Asian stocks rise led by Nikkei as Bank of Japan’s Kuroda raises stimulus to another record. Euro-area inflation data matched forecasts. Companies including RBS, WPP, IAG, Banco Popular, BNP, AB-InBev released results. German Xetra trading halted by computer malfunction. The French and Italian markets are the best-performing larger bourses, Swedish the worst. The euro is weaker against the dollar. French 10yr bond yields fall; Irish yields decline. Commodities decline, with silver, gold underperforming and natural gas outperforming.

Bulletin headline from Bloomberg and RanSquawk

  • The BoJ takes centre stage overnight after unexpectedly increasing their QQE programme by JPY 10trl, sending the Nikkei 225 surging higher by 4.8% to its highest level since 2007, the e-mini S&P through 2,000, USD/JPY above 111.00 to its highest level since Jan’08 and spot gold to its lowest level since 2010.
  • ECB’s Nowotny lifts Bunds after deviating from his usual hawkish script by adopting a never say never approach to an ECB QE programme.
  • Looking ahead, attention turns towards US personal income & spending, Chicago PMI and Univ. of Michigan confidence.
  • Treasuries extend second week of losses after Fed ends QE as Bank of Japan expands what was already an unprecedentedly large monetary-stimulus program, boosting stocks and sending the yen tumbling.
  • BOJ, which also cut its forecasts for inflation and growth, voted to raise annual target for enlarging the monetary base to JPY80t ($724b), up from JPY60t-JBP70t
  • Japan’s $1.1t Government Pension Investment Fund announced it will put half its holdings in local and foreign stocks, start investing in alternative assets and cut its domestic bond allocations to 35% of assets from 60%
  • Euro-area inflation rose 0.4% in October, up from a five-year low in October and in line with median estimate in Bloomberg survey; a separate report showed unemployment holding at 11.5% in September
  • Russia’s central bank increased its key interest rate to 9.5% from 8%, more than forecast, bringing it to the highest level since it was introduced 13 months ago to halt a currency run that’s stoking inflation
  • Chinese bank deposits dropped following a crackdown on lenders manipulating their numbers and “illicit” means of attracting money, threatening to weigh on credit growth and hinder efforts to reignite the economy
  • Hong Kong protesters said they may attempt to visit Beijing next week to seek talks with China’s top leaders while the nation plays host to a global summit
  • Lloyds Banking Group Plc may still register Scottish Widows Plc, its 200-year-old Scottish insurance division, in England even after voter rejected independence in a referendum last month, said two people with direct knowledge of the deliberations
  • Critics and allies agree Israel PM Netanyahu has much to gain on home front by defying Obama; the latest falling-out was sparked by Israel’s plan to build more than 1,000 homes for Jewish residents in areas of Jerusalem the Palestinians claim for their hoped-for state
  • Sovereign yields mostly lower. Asian stocks surge, led by Nikkei +4.8% to highest in seven years. European stocks, U.S. equity-index futures gain. Brent crude lower, copper -1.1%, gold -2.2%

US Event Calendar

  • 8:30am: Employment Cost Index, 3Q, est. 0.5% (prior 0.7%)
  • 8:30am: Personal Income, Sept., est. 0.3% (prior 0.3%)
  • Personal Spending, Sept., est. 0.1% (prior 0.5%)
  • PCE Deflator m/m, Sept., est. 0.1% (prior 0.0%); PCE Deflator y/y, Sept., est. 1.5% (prior 1.5%)
  • PCE Core m/m, Sept., est. 0.1% (prior 0.1%); PCE Core y/y, Sept., est. 1.5% (prior 1.5%)
  • 9:00am: ISM Milwaukee, Oct., est. 60 (prior 63.18)
  • 9:45am: MNI Chicago Business Barometer (purchasing managers), Oct., est. 60 (prior 60.5)
  • 9:55am: UofMich. Consumer Sentiment Index, Oct. final, est.86.4 (prior 86.4)


JGBs trade up 6 ticks at 146.68, after paring their earlier sharp gains as Japan’s GPIF panel approved cutting JGB allocation to 35%, according to sources. Prices touched a fresh record high after the BoJ unexpectedly increased its JGB purchases by JPY 30trl per year. The Nikkei 225 closed up 4.8%, at its highest level since 2007, after the BoJ unexpectedly increased their QQE program. Furthermore, the index was also supported by reports that Japan’s GPIF panel approved raising domestic stock holding to 25%, according to government sources. The Hang Seng closed up 1.3% after opening at its best levels since Sep. 25, while the Shanghai Comp closed up 1.2%, both indices bolstered by several upbeat corporate earnings.


The aforementioned action taken by the GPIF very much set the tone for the European open, with cash futures opening firmly in the green (Eurostoxx 50 currently +1.7%). On a sector specific basis, financial names lead the way for Europe following strong earnings reports from RBS (+3.4%) and BNP (+3.9%). However, gains for the sector have been capped following further downward momentum for Italian banks after Moody’s have initiated a review for a potential downgrade on various peripheral banks.

Despite opening lower, the downside for Bunds was short-lived following some comments from ECB’s Nowotny who went against the grain of his usual hawkish rhetoric, more specifically, the central banker said never say never to QE in Eurozone, while refusing to rule out expanding the purchasing programme to include more corporate bonds. This saw a gradual turnaround in Bunds as they broke above 151.00, with further positive sentiment provided by, a weak German retail sales report and the fact that the GPIF have increased ratio of foreign bonds to 15% vs. Prev.11%.


The main focus for FX markets today has been the broad-based USD strength which has dominated a bulk of the price action in FX markets and pushed JPY lower against its major counterparts with USD/JPY breaking above 111.00 to reach its highest level since Jan’08. Elsewhere, NZD saw some strength overnight after Fonterra announced that China has lifted its temporary suspension on base powder exports which has been in place since August 2013. Despite initially, being out-muscled by the greenback, the RUB clawed back some ground after the Russian central bank unexpectedly hiked rates by 150bps, with the market looking for just a 50bps cut. However, the move lower in USD/RUB was capped by the bank not abolishing rule-based interventions.


Movements in the USD-index have dictated the state of play for the commodity complex, with spot gold falling to its lowest level since 2010, while both WTI and Brent crude futures reside in the red. For base metals, copper is poised for its first monthly advance since July ahead of tomorrow’s Chinese official PMI release with the red metal benefitting from improved Asian investor appetite. More specifically for energy prices, Brent crude is heading for a sixth consecutive loss which would be the longest decline since 2002 as global supplies and the stronger USD continue to weigh on investor sentiment.

via Zero Hedge Tyler Durden

Markets Explodes As Bank Of Japan Goes All-In-er; Increases QQE To JPY 80 Trillion

In a surprise move given all the recent congratulatory bullshit from Abe and Kuroda on breaking the back of Japan’s deflation and bring about recovery (forgetting to mention record high misery index, surging bankruptcies and a crushed consumer), the Bank of Japan (by a 5-4 vote) raised its bond-buying program from JPY 70 trillion to 80 trillion… and increases its ETF buying to JPY 3 trillion. This move, on the heels of more confirmation of broader foreign asset purchases in Japan’s GPIF sent USDJPY instantly gapping 1 big figure higher to 110.30 and Nikkei futures instantly rose 400 points. S&P futures are also surging. Gold and silver are tanking.


BoJ Statement




Nikkei 225 is up 700 points from this afternoon’s 2-week old headline and broken markets!!


S&P futures are surging…


Gold was pushed lower…


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It seems money does grow on trees…

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Welcome to your fundamental-driven markets!! The farce is almost complete.

via Zero Hedge Tyler Durden