iftttwall

While the noise and seasonality of the various measures of employment (or lack thereof) in the US make interpretation nigh on impossible (for all but the most linear extrapolators), many strategists recognize that their is a correlated (if not causative) relationship between the rate of unemployment and the S&P 500. However, as Bloomberg’s Chase Van Der Rhoer notes, using the unemployment rate to predict the S&P 500 Index may be an oversimplification, but doing so yields surprisingly robust results and suggests the index is overvalued to the tune of 150 points.

 

 

Chart: Bloomberg Briefs

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PUJTJ1Qryyw/story01.htm Tyler Durden

While the noise and seasonality of the various measures of employment (or lack thereof) in the US make interpretation nigh on impossible (for all but the most linear extrapolators), many strategists recognize that their is a correlated (if not causative) relationship between the rate of unemployment and the S&P 500. However, as Bloomberg’s Chase Van Der Rhoer notes, using the unemployment rate to predict the S&P 500 Index may be an oversimplification, but doing so yields surprisingly robust results and suggests the index is overvalued to the tune of 150 points.

 

 

Chart: Bloomberg Briefs

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PUJTJ1Qryyw/story01.htm Tyler Durden

Asian economic growth (or lack thereof) is often seen as the bellwether to global growth. While the following heatmap (covering 10 Asian economies across 8 measures of macro-economic health) has its fair share of red (growth upswing) indications, as Bloomberg’s Rob Subbaramam notes, a closer inspection reveals a theme on extremely uneven economic performance – and is expected to become more prominent. However, based on a GDP-weighted perspective the heatmap would signal cooling in aggregate for Asian growth.

 

 

The economies of Korea, Taiwan, Singapore and the Philippines seem to be hot, or heating up, whereas the economies of China, India, Indonesia and Thailand appear to be cold, or cooling down. From a global perspective, however, it is worth noting that the cells of our heat-map are not weighted by GDP. If they were, the heat-map would signal cooling aggregate Asian growth.

Ominously, bank lending remains the strongest of the eight indicators. This is being fuelled by the very low interest rate environment, the resumption of strong capital inflows and buoyant asset markets. While supporting growth, we remain concerned that the steep rise in Asia’s domestic private credit-to-GDP ratios is building financial-stability risks for the future.

 

Chart: Bloomberg Briefs

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/otKlzvXiupA/story01.htm Tyler Durden

Asian economic growth (or lack thereof) is often seen as the bellwether to global growth. While the following heatmap (covering 10 Asian economies across 8 measures of macro-economic health) has its fair share of red (growth upswing) indications, as Bloomberg’s Rob Subbaramam notes, a closer inspection reveals a theme on extremely uneven economic performance – and is expected to become more prominent. However, based on a GDP-weighted perspective the heatmap would signal cooling in aggregate for Asian growth.

 

 

The economies of Korea, Taiwan, Singapore and the Philippines seem to be hot, or heating up, whereas the economies of China, India, Indonesia and Thailand appear to be cold, or cooling down. From a global perspective, however, it is worth noting that the cells of our heat-map are not weighted by GDP. If they were, the heat-map would signal cooling aggregate Asian growth.

Ominously, bank lending remains the strongest of the eight indicators. This is being fuelled by the very low interest rate environment, the resumption of strong capital inflows and buoyant asset markets. While supporting growth, we remain concerned that the steep rise in Asia’s domestic private credit-to-GDP ratios is building financial-stability risks for the future.

 

Chart: Bloomberg Briefs

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/otKlzvXiupA/story01.htm Tyler Durden

Still think houses are extremely affordable? Still think rents, especially for rental stream-securitized offerings by Blackstone et al to widows and orphans , will continue rising in perpetuity? Think again. As the following chart from Bloomberg Brief shows, mortgage payments as a % of average consumer incomes has risen to 40%, up from the higher 20% as recently as a year ago, is still rising, and is now back to levels last seen in 2008.

Bloomberg has more:

The average monthly mortgage payment Mortgage Payments Now 40 Percent of Average Consumer Incomes for a new home in the U.S. rose by $300 between December and August, providing a potential red flag for U.S. Federal Reserve officials debating when to reduce their special asset purchases. The rise was due to a combination of rising home prices and mortgage rates.

 

In August an average monthly mortgage payment of $1,287.57 equates to about 40 percent of consumers’ average income, up from 31 percent in December, placing additional strain on household finances. While this jump is substantial, it is still far below the housing bubble peak of 65 percent registered in June 2006.

Yes, it can go higher. And it will. What is most ironic is that it desperately has to, at least according to boththe TBAC, Wall Street and the Treasury. Recall from the May TBAC presentation:

Simply stated, the Fed is desperate for housing to return to its status as a source of “high quality collateral”, hence repoable credit money, instead of a byproduct of cheap credit affordable only to the 1%.  It is then and only then that the Fed can even consider to withdraw, and explains also why the Fed needs a housing bubble. After all, without the broader US population scrambling en masse into housing, there can by definition not be a bubble. Sadly for the Fed, the incipient housing bubble seems to have already popped, which is why a brand new concerted effort to make housing, paradoxically, less affordable and thus more disrable, is coming down the line, and why more and more people realize that Yellen’s first flow adjustment will not be down but up.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/VEjyluAKvto/story01.htm Tyler Durden

With better US labor market data, the key event in the upcoming week could well be the Yellen nomination hearing in the Senate Banking Committee. Yellen will likely deliver brief prepared remarks followed by questions from members of the committee. Yellen is expected to be relatively circumspect in discussing potential future Federal Reserve policy decisions in the hearings. Nonetheless, the testimony may help clarify her views on monetary policy and the current state of the economy. Yellen has not spoken publicly on either of these topics since the spring of this year. In addition to the nomination hearing, there will be a series of Fed speeches again, including one by Chairman Bernanke.

The pure macro data schedule is fairly quiet with the exception of a flurry of GDP releases in the second half of the week, including in Japan, the Eurozone, France, Germany, Czech Republic, Hungary, Italy, Poland, Malaysia, Peru and Hong Kong. In this list the first two will be the most important. From an FX point of view we will have a look at the US trade balance, though it is unlikely that there has been much change compared to last month’s deficit.

Monday, Nov 11

• Israel MPC minutes
• India Trade Balance (Oct): previous $-6.8bn
• Hungary Trade Balance (Sep, prelim.): previous EUR+613mn
• Malaysia IP (Sep): consensus 2.0%, previous +2.3% yoy
• Mexico IP (Sep): consensus -0.5% yoy, previous -0.7% yoy
• Also interesting: Norway CPI (Oct), Czech Republic CPI (Oct)

Tuesday, Nov 12

• Indonesia MPC: consensus unchanged at 7.25%
• Fed speakers: Kocherlakota (FOMC non-voter), Lockhart (FOMC non-voter)
• ECB speakers: Asmussen, Nowotny
• Germany Harmonised CPI (Oct, final): previous +1.3%yoy (Flash)
• UK CPI (Oct): consensus +0.3%mom, previous +0.4%mom
• India CPI (Oct): previous +9.8%yoy
• India IP (Oct): previous +0.6% yoy
• Israel Trade Balance (Oct): previous $1.8bn
• Poland Current Account Balance (Sep): consensus EUR-823mn, previous EUR-719mn
• Czech Republic Current Account Balance (Sep): consensus CZK -1.0bn, previous CZK-14.24bn
• Also interesting: UK RICS Housing Market Survey (Oct), Italy Harmonised CPI (Oct, final), Sweden CPI (Oct), Hungary CPI (Oct, final)

Wednesday, Nov 13

• Japan Machinery Orders (Sep): consensus -2.0%mom, previous +5.4%mom
• South Korea MPC: We and consensus expect the repo rate to remain unchanged at 2.5%
• Fed speakers: Fisher (FOMC non-voter), Pianalto (FOMC non-voter), Chairman Bernanke
• UK Bank of England Inflation Report (Nov)
• Hungary MPC minutes
• US Federal Budget Balance (Oct)
• UK Unemployment (Sep): consensus 7.6%, previous 7.7%
• Euro Area IP (Sep): previous -2.1%yoy
• Turkey Current Account Balance (Sep): consensus $-2.73bn, previous $-2.0bn
• Indonesia Current Account Balance (Q3): last -4.4% of GDP
• Also interesting: Spain Harmonised CPI (Oct, final), Brazil retail sales (Sep)

Thursday, Nov 14

• Fed speakers: Plosser (FOMC non-voter), Janet Yellen testifies in front of the Senate Banking Committee ahead of her nomination to lead the Federal Reserve.
• Japan Real GDP (Q3, adv.): previous +3.8%. Among the demand components, public fixed investment and housing investment are expected to accelerate, but consumption is likely to dip on weather effects. Exports have also slowed, where we expect net export contribution to turn negative for the first time in three quarters.
• US Initial Jobless Claims: consensus 330k, last 336k
• US Trade Balance (Sep): consensus -$39.0bn, last -$38.8bn
• US Unit Labour Costs (Q3, prelim.): consensus +0.4%, last flat
• US Business Inventories (Sep): consensus +2.0%, last +2.3%
• US Empire Manufacturing (Nov): consensus +5.0, last +1.5
• Euro Area Real GDPs (Q3): consensus +0.1% qoq, previous 0.3% qoq
• UK Retail Sales ex-Autos (Oct): consensus -0.1%mom, previous +0.7%mom
• Also interesting: Japan Reuter Tankan (Nov), Czech Republic Real GDP (Q3), Hungary Real GDP (Q3), France Harmonised CPI (Oct), Canada New Housing Price Index (Sep)

Friday, Nov 15

• US Empire Manufacturing Index (Nov): Consensus +5.0, last +1.5
• US IP (Oct): consensus +0.2% mom, last +0.6%
• Euro Area Harmonised CPI (Oct, final): After the weak preliminary reading and the ECB response the final numbers are worth a look to see if the initial weakness has been confirmed.
• Malaysia GDP (Q3): consensus +4.7%, previous +4.3%
• Also interesting: Argentina Real GDP and CPI (Oct), Ukraine Trade Balance (Sep), Malaysia Real GDP (Q3), Israel CPI (Oct), Poland Core Inflation (Oct)

 

In table format from SocGen:

And again from SocGen, here are the top issues for the week ahead:

EURO AREA RECOVERY SHORT-LIVED

GDP reports for the third quarter from France, Germany and Italy are in our view likely to indicate that economic growth in the euro area as a whole remains elusive. After the 0.3% qoq expansion in Q2 for the euro area as a whole, we expect stagnation in Q3. To a considerable extent this will be the reflection of a renewed and sharp contraction in Italy, but slower growth will also be driven by stagnation in France and weaker growth in Germany, the euro area’s supposed growth engine that has consistently fallen short of actually fulfilling that role.

JAPAN GDP TO RAISE DOUBTS ON ABENOMICS

Although economic growth in Japan will almost certainly have been notably stronger than in the euro area, Q3 data on Thursday are nevertheless expected to point to a sharp slowdown from the first half of the year when GDP expanded at an average quarterly annualized pace of 3.9%. We expect growth of a mere 2.0% annualized (0.5% qoq), and that is above consensus (0.4% qoq). The marked slowdown is likely to give rise to doubts that Abenomics provided only a short-term fillip to the Japanese economy. We disagree with this interpretation, and expect GDP to re-accelerate in Q4 and Q1, ahead of the April 2014 consumption tax hike. That said, the crucial so-called ‘third arrow’ of structural reforms to boost Japan’s growth potential remains vague. Mr Abe has made the right noises, for example his Wall Street Journal editorial about Womanomics, and has made some promising moves, such as entering into various free trade negotiations which will require opening up key sectors of the Japanese economy, but few concrete proposals have been formulated, let alone implemented. Markets will not be patient forever.

CHINA CP PLENARY MEETING TO STRESS REFORM

On Tuesday China’s Communist Party will conclude its plenary meeting with a statement that is likely to stress continued structural reforms especially in the  area of financial market and corporate sector liberalisation, and perhaps fiscal reforms and changes to the Hukou system. However, detailed reform proposals are unlikely to be specified, and clarity about the content of the behind closed doors discussions is only likely to emerge when new policies are presented and implemented in coming weeks and months. Meanwhile, latest indicators suggest the economy has maintained solid momentum in Q4, but  beyond that we continue to expect slowing growth.

Source: Goldman, Socgen

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/2UinYlUct8U/story01.htm Tyler Durden

• Philippines Left Reeling in Wake of Storm (WSJ)
• Khamenei controls massive financial empire built on property seizures (RTRS)
• Race to Bottom Resumes as Central Bankers Ease Anew (BBG)
• U.S. Postal Service to deliver Amazon packages on Sundays  (LA Times)
• Obama Stocks Among Best After Re-Election as Rally Tested (BBG)
• Health-Law Rollout Weighs on Obama’s Ratings, Agenda (WSJ)
• Twitter in Celebrity Spat With Facebook as Rivalry Builds (BBG)
• Iran deputy industry minister shot dead (AFP)
• Financier of Taliban-linked group shot dead in Pakistan (RTRS)
• Obama: The Lonely Guy (Vanity Fair)
• Shire Buys ViroPharma for $4.2 Billion to Grow in Rare Diseases (BBG)
• Apple Finds Surprising Growth Market in Japan (WSJ)
• U.S. retailers tread tight path in shortened holiday race (Reuters)
• They Loved Your G.P.A. Then They Saw Your Tweets (NYT)
• Acer’s CEO Is Out, Another Victim of the iPad (BBG)
• Worry Over Inequality Occupies Wall Street (WSJ)
• IPhone App Wipes Out Population to Show Contagion Risks (BBG)

 

Overnight Media Digest

WSJ

* Johnson & Johnson and Amazon.com Inc are clashing over complaints that Amazon isn’t doing enough to prevent people from selling damaged or expired J&J products-Tylenol painkillers and Rogaine baldness treatments, among others-on its website.

* A political stalemate could persuade Office Depot to move more than 2,000 jobs out of Illinois as lawmakers grouse about the growing number of companies seeking special tax treatment.

* JPMorgan and Credit Suisse are considering blocking employees from computer chat rooms that have become pervasive tools of the modern trading floor, but which face mounting scrutiny from regulators.

* The second film in the God of Thunder franchise from Walt Disney’s Marvel Studios grossed $86.1 million in North America following a huge international haul.

* Sony and Microsoft are preparing for one of the biggest holiday battles in years, as the companies overhaul their videogame consoles. But software could be a decisive weapon this time.

* The EU and the United States open a second round of trade talks Monday. The biggest economic gains are expected to come from chipping away at trade barriers, but the two sides have different approaches to regulation.

* The Washington state legislature completed passage of key elements of an incentive package Saturday aimed at guaranteeing Boeing will locate manufacturing work for its 777X jetliner in Puget Sound.

* The U.S. government has been fighting to try to seize a Midtown Manhattan skyscraper it says is secretly owned by the Iranian government. After the U.S. won a ruling, a court monitor has signed a long-term lease for the retail space to a venture including one of the city’s top landlords.

* Luxury-car brand Mercedes-Benz, facing stagnant sales in Europe and troubles in China, is doubling down on expansion in the United States as part of its plan to overtake rivals BMW AG and Volkswagen AG’s Audi in global luxury sales.

* Cooper Tire & Rubber Co isn’t yet entitled to an order forcing India’s Apollo Tyres Ltd to close its takeover of the Ohio-based tire maker at the agreed-on $2.2 billion price, a Delaware judge said over the weekend.

 

FT

Renault-Nissan would miss its target for global sales of electric cars, chief executive Carlos Ghosn said in an interview, adding that the market is failing to live up to his expectations.

BP Plc for the first time challenged directly payments for losses not caused by its 2010 oil spill in the Gulf of Mexico basing its arguments on the issue of causation in a fresh attempt to limit the cost of its compensation settlement, according to court documents filed by the company late last week.

JPMorgan Chase & Co is one of several banks considering banning traders from electronic chat rooms, which face scrutiny from regulators as a platform exchange of market information, as part of a probe into the foreign exchange market, according to people familiar with the matter.

Co-operative Group said it would scrap dividend payments to its 7.6 million members as part of a review to help pay for a 1.5 billion pound ($2.4 billion) rescue of its banking division.

Analysts are forecasting a profit warning from Serco Group Plc this week as the outsourcing firm continues to grapple with problems with contracts for UK prisons and Australian asylum centres.

China Investment Corporation is set to buy Chiswick Park, a west-London office development, from U.S. private equity group Blackstone for about 800 million pounds ($1.3 billion), according to people familiar with the matter.

 

NYT

* The CBS news magazine issued a rare retraction and apology for its report on an attack on Americans in Libya, saying it was misled by a source.

* Start-ups are gathering data and analyzing it much faster than was possible even a couple of years ago, aiming to project economic trends from seemingly unconnected information.

* Labor leaders and businesses are closely watching a Supreme Court case to be argued this Wednesday that involves a popular strategy used by unions to successfully organize hundreds of thousands of workers.

* Twitter is counting on millions of websites to link to the service and encouraging legions of independent developers to find creative new uses for its platform, driving up activity and the number of advertisements that Twitter users see.

* In their efforts to attract children, television networks are starting to show programs online before they appear on old-fashioned TV.

* Vox Media, a company with three strong digital brands, including the technology site The Verge, is adding to its portfolio. The company plans t
o announce on Monday that it is buying Curbed.com LLC, which runs three web publications that deliver in-depth neighborhood coverage, with attitude, of real estate, dining and retailing.

* The Treasury’s schedule of financing this week includes the regular weekly auction of new three- and six-month bills on Tuesday, delayed for the Veterans Day holiday, and an auction of four-week bills on Wednesday.

* The saving of BlackBerry may represent a patriotic calling to Prem Watsa, but he is not used to dealing in as public an arena as the company does. ()

 

Canada

THE GLOBE AND MAIL

* Western Canadian farmers and grain handlers are struggling to move a record crop amid a shortage of railcars that some say is worsened by the surge in the energy industry’s oil shipments by rail.

* Negotiators at the United Nations climate summit are searching for broad agreement that will lead to a new treaty requiring deeper cuts to each country’s greenhouse gas emissions after 2020, even as Canada struggles to achieve its existing commitments.

Reports in the business section:

* As discounter Wal-Mart Canada Corp ramps up its food aisles and U.S. arch rival Target Corp expands in this country, conventional chains such as Loblaw Companies Ltd and Metro Inc feel the mounting pressure.

* Economists have been surprised by the degree to which Canada home sales have bounced back from the pounding they took in the summer of 2012, when Finance Minister Jim Flaherty tightened the mortgage insurance rules.

NATIONAL POST

* Officials have been sent to the Philippines to assess whether Canada should send a military team to provide medical care and water to typhoon victims, Canada’s foreign affairs minister said.

* Ontario Provincial Police are confirming five people have died in a plane crash in northwestern Ontario near the community of Red Lake. They have also confirmed there were two survivors.

 

China

PEOPLE’S DAILY

– A commentary by the mouthpiece of the ruling Communist Party of China (CPC) said the country’s new leadership has launched a slew of innovations aimed to building up a democratic political system since they came into power a year ago. The commentary was issued as the party is convening a crucial central commission plenum.

CHINA DAILY

– China will take major steps to reform its gigantic state-owned enterprises, allowing private capital to have easier access to invest in the state sector, after the four-day Third Plenum of the CPC’s 18th Central Committee, which started on Saturday, said Huang Shuhe, vice-chairman of the State-owned Assets Supervisions and Administration Commission.

SHANGHAI SECURITIES NEWS

– Chongqing Iron and Steel Co said the China Securities Regulatory Commission (CSRC) has approved its plans to issue new shares to its parent and other parties to raise money to buy new assets from its parent, a move expected to narrow its losses sharply next year.

– Oil giant Sinopec Corp said its parent on Friday bought back 39 million yuan-denominated A shares. The parent last week announced a plan to spend an estimated maximum of $17.7 billion to buy back a 2 percent stake in Sinopec’s Shanghai-listed entity over the next year, in a move to support the mainland’s sagging stock market.

CHINA SECURITIES JOURNAL

– China has quietly opened the second-batch tenders for high-speed trains this year worth an estimated 56-57 billion yuan ($9.18-$9.34 billion). The country in August lifted a suspension of tenders of high-speed trains imposed after a crash that killed dozens of passengers in 2011.

– A total of 757 companies are now on the waiting list to launch initial public offerings (IPOs) in the mainland’s stock exchanges, CSRC data shows. China quietly suspended IPOs one year ago to help check a slide in the domestic stock market .

SECURITIES TIMES

– The Shenzhen Stock Exchange will blacklist those companies that announce poorly conceived merger and acquisition plans aimed at boosting their own share prices.

CHINA DAILY

– An editorial by a senior editor criticized Hangzhou-based Alibaba Group’s IPO strategy in Hong Kong, saying Hong Kong was right to reject Alibaba’s proposal to list under a tiered share structure that would allow management and preferred shareholders to retain control after listing, in contravention of the Hong Kong Exchange’s rules.

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Alon USA Energy (ALJ) upgraded to Neutral from Underperform at Credit Suisse
American Tower (AMT) upgraded to Buy from Neutral at Citigroup
BT Group (BT) upgraded to Overweight from Neutral at JPMorgan
Best Buy (BBY) upgraded to Buy from Neutral at UBS
Concho Resources (CXO) upgraded to Buy from Hold at Canaccord
LPL Financial (LPLA) upgraded to Neutral from Sell at UBS
Mueller Water (MWA) upgraded to Neutral from Sell at Goldman
Netgear (NTGR) upgraded to Sector Perform from Underperform at RBC Capital
Rocket Fuel (FUEL) upgraded to Outperform from Market Perform at BMO Capital
TD Ameritrade (AMTD) upgraded to Outperform from Market Perform at Raymond James
WEX Inc. (WEX) upgraded to Buy from Neutral at Janney Capital
Youku Tudou (YOKU) upgraded to Buy from Hold at Brean Capital

Downgrades

AGCO (AGCO) downgraded to Sell from Neutral at Goldman
Deutsche Telekom (DTEGY) downgraded to Sell from Neutral at Goldman
Diodes (DIOD) downgraded to Outperform from Strong Buy at Raymond James
Eli Lilly (LLY) downgraded to Sell from Neutral at Goldman
Hill-Rom (HRC) downgraded to Underweight from Equal Weight at Morgan Stanley
KLA-Tencor (KLAC) downgraded to Negative from Neutral at Susquehanna
Penn National (PENN) downgraded to Equal Weight from Overweight at Barclays
Range Resources (RRC) downgraded to Perform from Outperform at Oppenheimer
Teekay Offshore Partners (TOO) downgraded to Neutral from Buy at BofA/Merrill

Initiations

Ann Inc. (ANN) initiated with a Sell at Goldman
Antero Resources (AR) initiated with a Hold at Deutsche Bank
Burlington Stores (BURL) initiated with a Buy at SunTrust
Burlington Stores (BURL) initiated with a Neutral at Goldman
Burlington Stores (BURL) initiated with an Overweight at JPMorgan
Discovery Labs (DSCO) initiated with an Overweight at Piper Jaffray
Empire State Realty (ESRT) initiated with a Buy at KeyBanc
Empire State Realty (ESRT) initiated with a Neutral at Goldman
Express (EXPR) initiated with a Buy at Goldman
Franklin Resources (BEN) initiated with a Sector Perform at RBC Capital
Gaming and Leisure Properties (GLPI) initiated with an Equal Weight at Barclays
Gulfport Energy (GPOR) initiated with a Buy at Deutsche Bank
Mazor Robotics (MZOR) initiated with an Overweight at Barclays
Movado (MOV) initiated with a Hold at KeyBanc
Veeva Systems (VEEV) initiated with a Buy at Canaccord
Veeva Systems (VEEV) initiated with a Buy at Deutsche Bank

HOT STOCKS

Shire (SHPG) acquired ViroPharma (VPHM) for $50 per share or $4.2B
Mitel (MITL) to acquire Aastra for C$392M
IntercontinentalExchange (ICE) said NYSE Euronext (NYX) deal to close November 13
PepsiCo (PEP) announced targeted investment of $5.5B in India by 2020
State of Washington worked out incentives to keep Boeing 777X work, WSJ reports
Transocean (RIG) announced agreement with Carl Icahn (IEP)
Amazon.com (AMZN) announced USPS to deliver packages on Sunday
Suntech (STP) received approval for a provisional liquidation from Cayman Islands
Denbury (DNR) to initiate quarterly dividend, increased share repurchase authorization

EARNINGS

Companies that beat consensus earnin
gs expectations last night and today include:
Sterling Construction (STRL), CTI Industries (CTIB), Enzymotec (ENZY), Arkansas Best (ABFS)

Companies that missed consensus earnings expectations include:
RadNet (RDNT), Rexford Industrial (REXR), Ballantyne Strong (BTN), Nordic American Tanker (NAT), Tesoro Logistics (TLLP)

NEWSPAPERS/WEBSITES

Johnson & Johnson (JNJ) and Amazon.com (AMZN) are clashing over complaints that Amazon isn’t doing enough to prevent people from selling damaged or expired J&J products on its website, the Wall Street Journal reports
Big banks (JPM, CS, RBS, BCS, UBS, C) are considering blocking employees from computer chat rooms that have become pervasive tools of the modern trading floor, but which face mounting scrutiny from regulators as potential venues for collusion and market manipulation, the Wall Street Journal reports
U.S. retailers (AMZN, WMT, TGT, M) have little room for error in the fast-approaching and shortened holiday shopping season, a period that typically generates 30% of annual sales. Plus, a late Thanksgiving has cut six days off the gift-buying season, Reuters reports
Even with the flawed roll out of health-care reform and uproar over spying, President Obama is enjoying one of the best stock markets for a re-elected president. Signs are building that it might not last, Bloomberg reports
Cooper Tire & Rubber (CTB) isn’t yet entitled to an order that would force Apollo Tyres to pay a contractually agreed $35 a share for the company, a judge said in a weekend letter to lawyers. Cooper must prove it had satisfied all the conditions of the $2.5B buyout agreement, Bloomberg reports
Panasonic (PCRFY) said it can afford a deal worth $1B as the maker of electric-car batteries and solar panels looks to expand its automotive and housing businesses, Bloomberg reports

BARRON’S

GulfMark Offshore (GLF) could rally another 30%
International Paper (IP), Hanesbrands (HBI), Xerox (XRX), L-3 (LLL) are bargains
Devon Energy (DVN) is undervalued by 25%
Twitter’s (TWTR) prices indicates investors’ bet on advertising plan (GOOG)

SYNDICATE

Bright Horizons (BFAM) files to sell 7.5M shares for holders
CDW Corporation (CDW) files to sell 15M shares for holders
Hansen Medical (HNSN) files to sell 5.29M and 62.6M shares for holders
Wisdom Tree (WETF) files to sell 835,000 shares for holders

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/g8gc3E0vt54/story01.htm Tyler Durden

Bond markets may be closed today for Veterans’ Day, but equities and far more importantly, FX, are certainly open and thanks to yet another overnight ramp in the ES leading EURJPY, we have seen one more levitation session to start off the week, and an implied stock market open which will be another record high. There was little overnight developed market data to digest, with just Italian Industrial Production coming in line with expectations at 0.2%, while the bulk of the attention fell on China which over the weekend reported stronger Industrial Production and retail sales, while CPI was just below expectations and additionally China new loans of CNY 506 billion (below est. of CNY 580bn) even as M2 in line, should give the Chinese government the all clear to reform absolutely nothing. That all this goldilocks and goalseeked data is taking place just as the Third Plenum (just as theatrical and just as meaningless as any session of Congress, because everyone knows that China will not initiate reforms until it has to at which point it will be too late) picks up pace was not lost on anyone.

Breakdown of China M2 and CNY loans:

And China’s total social financing for October:

Today’s session will be quiet with nothing on the US docket which means much more low volume levitation especially with no bond selloff to keep equities in some sort of pseudo check, while this week’s key event will be Yellen’s confirmation hearing on Thursday before the Senate Banking Committee. She has not discussed monetary policy since April so there will be an immense amount of interest. As DB notes, it may be a politicised hearing and one where Yellen may have to be more balanced than her natural dovish tendencies to broaden her appeal to the members.

Market Recap

Stocks in Europe recovered following a lacklustre open and edged into positive territory, although telecommunications sector underperformed throughout the session, with BSkyB trading lower by almost 10% after BT Group announced that it will pay USD 1.4bln for exclusive live broadcast rights for the UEFA Champions League tournaments. Deutsche Telekom shares also fell sharply after analysts at Goldman Sachs downgrade co. to sell and also lowered price target by 14%. Overall, the price action was relatively muted across various asset classes today, with trade volumes declining, as market participants observed Armistice Day in Europe and Veteran’s Day in the US. Looking elsewhere, EUR gained ground across the board, as market participants used the heavy selling pressure observed last week as a buying opportunity. As a result, consequent pressure on the Greenback ensured that USD/JPY was able to recover losses made during the overnight session in Asia and in turn move into positive territory. Going forward, there are no major economic releases set for the second half of the session

 

Overnight news bulletin

Trade volumes fell as market participants observed Armistice Day in Europe and Veteran’s Day in the US.

ECB’s Coeure said ECB can trim interest rates further and provide the banking systems with liquidity.

Short-sterling strip steepened this morning as market participants positioned for the release of the Quarterly Inflation Report by the BoE this week.

 

Asian Headlines

Chinese CPI (Oct) Y/Y 3.2% vs. Exp. 3.3% (Prev. 3.1%)
– PPI (Oct) Y/Y -1.5% vs. Exp. -1.4% (Prev. -1.3%)
– Industrial Production YTD (Oct) Y/Y 9.7% vs. Exp. 9.6% (Prev. 9.6%)
– Industrial Production (Oct) Y/Y 10.3% vs. Exp. 10.0% (Prev. 10.2%)
– Retail Sales YTD (Oct) Y/Y 13.0% vs. Exp. 13.0% (Prev. 12.9%)
– Retail Sales (Oct) Y/Y 13.3% vs. Exp. 13.4% (Prev. 13.3%)

As China’s Third Plenum party meeting continues, comments remain few and far between before the end of the meeting on Tuesday, however a brief statement has been released, with the Communist Party stating China needs a new engine of growth and reduce its reliance on “crude investments”.

EU & UK Headlines

ECB split stokes German backlash fears. (FT-More) Sources said divisions between northern and southern representatives on the ECB board have been mounting since market pressures on the eurozone relaxed, with council members freed up to revert to national interests.

ECB’s Coeure said ECB can trim interest rates further and provide the banking systems with liquidity.

Short-sterling strip steepened this morning as market participants positioned for the release of the Quarterly Inflation Report by the BoE this week. The central bank is widely expected to upgrade its growth forecasts for the UK economy this week and pave the way for an earlier interest rate rise.

US Headlines

Fed’s Williams (non-voter, soft dove) said US monetary medicine is working and evidence is in jobs gains and jobless rate. Williams said that he sees unemployment declining in 2014 and 2015. 

Equities

Stocks recovered from a lower open and edged into positive territory, though telecommunications sector underperformed from the get-go, where BSkyB shares in London fell almost 10% after BT Group announced that it will pay USD 1.4bln for exclusive live broadcast rights for the UEFA Champions League tournaments. In addition to that, Deutsche Telekom shares also fell sharply after analysts at Goldman Sachs downgrade co. to sell and also lowered price target by 14%.

SocGen’s macro recap morning briefing

We finally have lift off. Or have we? Friday’s US employment report blew away many uncertainties and vindicated the Fed for not issuing a more dovish statement at it last meeting. The impact of the government shutdown on the economy has been trivial and we can now look forward to hopefully undistorted period data to form a judgement on underlying momentum and implications for the Fed. Although we still see the probability of Fed tapering as quite remote in December, the likelihood of the Fed reducing asset purchases has inevitably gone up sooner rather than later and that alone now means we should see some decent trends across markets until early December.

The strong US jobs data (overshadowed again by a lower participation rate) obviously puts the USD in a pole position to strengthen and US 10y yields to rise and the curve to steepen. It also argues for the US/EU 10y spread to keep widening towards 100bp given the contrasting picture for employment in the euro area and a dovish ECB. The rise in 10y US yields above 2.70% challenges our downward revised year-end forecast but adds support to our bearish EUR/USD call. A retest of last week‘s 1.3293 low is a distinct possibility as long EUR positions are chopped, but bears may not pause for breath until we reach 1.3200.

The focus in G10 for this week will be on eurozone Q3 GDP data from Thursday onwards. In the UK, the BoE inflation report is due this Wednesday. Upward revisions to near-term inflation and growth forecasts are highly likely and might result in the bank bringing forward a decline in the unemployment rate to 7% from late 2016. That will challenge the timing of a first rate hike and should boost GBP vs CHF, EUR and JPY.

Emerging markets were hit badly last week and the toxic combination of higher US 10y yields and a warning on Brazil’s credit rating by S&P
lifted USD/BRL above 2.3340. Investors will brace for a return to the summer highs above 2.40 if US data keep coming in strong. The focus this week is on the possible outcome of the 3rd Plenum of China and the guidelines for economic policy. Though expectations over announcements are limited, a focus

DB’s Jim Reid rounds out the overnight recap

The growth momentum in China appears to have improved over the past few months and the weekend’s October Chinese data provided further indication of this. Industrial production rose 10.3% YoY which was ahead of expectations of 10.0% and was slightly firmer than last month’s 10.2%. DB’s Jun Ma believes this adds some upside risk to Q4 GDP growth. Retail sales growth also accelerated in October (13.0% YoY vs 12.9% previous) which was in line with consensus, and fixed asset investments continued to grow at a 20%+ YoY rate. Jun describes the October CPI outcome of 3.2% YoY in October (3.3% expected) as remaining in the comfort zone, though it came in at an eight month high. PPI deflation widened to 1.5% YoY in October from 1.3%yoy in September but Jun expects that PPI inflation will recover to zero by the end Q1 next year.

Coming back to markets, the clear outperformer on Friday was DM equities where the S&P 500 (+1.3%) came back from early lows of 1747 following payrolls, before staging a remarkable recovery to close at a new all time high of 1770. The tone in emerging markets was in stark contrast, where it was a disappointing day across both equities and fixed income. The +15bp and 0.57% increase in UST yields and the Dollar index was clearly a problem. Brazilian and Mexican 10yr rates jumped by around 13bp and 7bp respectively, while the CDX EM index added 20bp in spread terms, in its weakest performance since June. The MSCI EM equity index (-1.5%) recorded its seventh straight loss which is the longest losing streak since March 2013. The weaker tone in EM on Friday is weighing on sentiment in Asia this morning including in Asian FX where a number of currencies are weaker including the KRW (-0.7%), THB (-0.7%) and IDR (-0.9%) against the USD. Asian EM sovereign credit has opened weaker particularly in Indonesia and Phillipines (both 5yr sovereign CDS are +5bp wider) but flows have been balanced in general. Despite the strong finish to DM equity markets last week, Asian equities are trading lower across most bourses with the exception of the TOPIX (+0.7%) following the payrolls-inspired gain in USDJPY. There is a fair bit of volatility in Chinese equities on the back of reports in domestic media including China Daily of potential reform plans filtering out from the Third Plenum meeting.

Across the rest of the week, there will be a lot of focus on the Fed’s thoughts on the latest payrolls data and its implications for Fed policy. Indeed, apart
from Yellen’s confirmation meeting on Thursday, we’ll get further clues to the Fed’s thinking when Bernanke speaks on Wednesday. We also have a number of other Fed speakers scattered throughout this week beginning with Kocherlakota and Lockhart tomorrow. Today is Veteran’s Day in the US, so things will probably be on the quiet side, especially on the fixed income side where a number of markets are shut (equity markets will stay open). Staying Stateside, we get our usual post-Payrolls lull in data flow. The key releases over the week will be jobless claims on Thursday together with industrial production and the NY Empire Fed manufacturing survey on Friday.

Across the Atlantic, the week gets off to a similarly slow start before we reach what will likely be the highlight for the week in the form of first estimates of Q3 GDP for the Eurozone as well as individual GDP reports for Germany, France and Italy (Thursday). Our European economists expect a growth number of around 0.2% QoQ. A two day Eurogroup/ECOFIN finance ministers’ meeting is scheduled to commence on Thursday, as will a three day Germany’s SPD party convention where we may hear more about the party’s intentions with respect to a coalition agreement with Merkel’s conservatives.

Italian industrial production (Sep) is due later today, followed by German/Italian/UK inflation on Tuesday. We get Eurozone industrial production and UK employment stats on Wednesday. The BoE publishes its quarterly inflation report on Wednesday.

In China, we’ll probably start to get further reports of various reforms being considered by the government following the conclusion of the country’s Third Plenum of the 18th Party Congress of the Communist Party on Tuesday. In Japan, money supply (Tues) and 3Q GDP (Thurs) are scheduled during the week. Japan’s economy minister Amari delivers a speech on the country’s growth strategy to parliament on today.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Fu1ZSq-fkAM/story01.htm Tyler Durden