A.M. Links: Senate To Hold Hearing on Digital Currencies, Google Implements Anti-Child Porn Software, Deadly Tornadoes Hit the Midwest

  • The Senate is holding its
    first ever hearing
    on how to regulate digital currencies today.
    It will take place before the Senate Homeland Security and
    Governmental Affairs Committee.
  • Google is
    implementing software
    to block links to child pornography.
    Executive Chairman Eric Schmidt explained that Google as well as
    Microsoft and other corporations already work with law enforcement
    to eliminate illegal images.
  • Mary Cheney, daughter of Dick Cheney, criticized her sister and
    Wyoming Senate candidate Liz Cheney for her
    opposition to gay marriage
    .
  • Tornadoes tore across the Midwest yesterday,
    killing at least six
    in Illinois, injuring many more, and
    leveling towns.
  • Israel has
    indefinitely detained
    an alleged Al Qaeda weapons specialist
    for over three years without charges or a trial.
  • A gunman
    opened fire today
    in the building of left-wing French
    newspaper, Liberation, leaving one man seriously
    injured.

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from Hit & Run http://reason.com/blog/2013/11/18/am-links-senate-to-hold-hearing-on-digit
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…And There Goes Gold

As Bitcoin soars over $600, another alternative to the fiat currency system is being monkey-hammered lower this morning as status quo support does everything it can to rotate stocks above the key levels we discussed earlier… because stocks rising on anything but fundamentals cannot be exposed for the liquidity-fueled excesses a rising precious metals price would unveil.

Gold is still holding above recent lows but Silver has broken to fresh 3-month lows…


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/WcSLuwDOf7Y/story01.htm Tyler Durden

Bitcoin Soars Above $600: Rises 20% In One Day Ahead Of Senate Hearing

While the relentless multiple expansion (if not so much earnings growth and certainly not revenue contraction) looks set to push all three main stock indices over the key psychological levels of 16000, 1800 and 4000, with the all time bubble high on the Nasdaq increasingly looking like the next big target, the stock market mania has nothing on Bitcoin, which only yesterday crossed $500 for the first time ever, and as of this morning is already 20% higher, having just crossed $600 minutes ago. Which means that anything prices in Bitcoin has entered bear market in just the past day. How high BTC goes, is nobody’s guess (Raoul Pal had a truly stunning price target): once the buying frenzy kicks in, step aside, especially since China is increasingly looking like it may be jumping on board the latest mania.

So is there any catalyst that has driven a more than  100% increase in the USD value of the currency in November alone? As previously noted, one event that may be promoting much broader acceptance in China is that the currency is now accepted for payment for real estate:

Bitcoin acceptance in China has now extended into real estate with a residential developer in Zhangjiang Hi-Tech park in Shanghai finding a new way to promote sales through the acceptance of Bitcoin virtual currency.

 

Shanda Group, one of the large IT giants in China, through its real estate development arm, opened sales of its first real estate investment project on October 25th, 2013. 300 apartments in the soon to be built buildings ranging from 42-81sqm were available for sale and sold out in a few minutes as demand far outstripped supply.

 

As part of the promotion, Shanda accepted Bitcoins for payment. Although the exchange rate was ‘fixed’ at 1,000 Chinese Yuan (CNY) to one Bitcoin and the developer reserved the right to adjust the rate, the deal represents one of the first times that Bitcoin could be used for such a large scale ‘public’ purchase. The exchange rate was about 1,200 CNY : 1 Bitcoin on BTCChina that day, so the developer was obviously trying to hedge a bit in case Bitcoin fell through, but considering the rate is rapidly reaching nearly 2,000 CNY : 1 Bitcoin, it would have been a great deal for the developer – Bitcoin is one of the few investments in China that has been increasing faster than real estate in 2013.

The rate now is much higher. However, as reported over a week ago, that may change depending on what comes out of the Senatorial hearing on Bitcoin sheculed for later today:

The Department of Justice and Securities and Exchange Commission are telling a U.S. Senate committee that Bitcoins are legitimate financial instruments, boosting prospects for wider acceptance of the virtual currency.

 

Representatives from the agencies told the U.S. Senate Committee on Homeland Security and Governmental Affairs ahead of a hearing today that the digital money offers benefits and carries risks, like any other online-payment system, according to letters they released before the meeting.

 

The committee scheduled the hearing “to explore potential promises and risks related to virtual currency for the federal government and society at large” after the Silk Road Hidden Website was shut down in October. The closing of the marketplace, where people could obtain drugs, guns and other illicit goods using Bitcoins, is helping fuel a rally in the virtual currency as speculators bet that the digital money will gain more mainstream acceptance.

 

“The FBI’s approach to virtual currencies is guided by a recognition that online payment systems, both centralized and decentralized, offer legitimate financial services,” Peter Kadzik, principal deputy assistant attorney general, wrote in a letter yesterday. “Like any financial service, virtual currency system of either type can be exploited by malicious actors, but centralized and decentralized online payment systems can vary significantly in the types and degrees of illicit financial risk they pose.”

Tune in at 3pm when we will carry the Bitcoin hearing live.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/nv1wpK-qm3I/story01.htm Tyler Durden

Frontrunning: November 18

  • What can possibly go wrong: Tepco Successfully Removes First Nuclear Fuel Rods at Fukushima (BBG)
  • Japan’s Banks Find It Hard to Lend Easy Money (WSJ)
  • U.S. Military Eyes Cut to Pay, Benefits (WSJ)
  • Airbus to Boeing Cash In on Desert Outpost Made Field of Dreams (BBG); Dubai Air Show: Boeing leads order books race (BBG)
  • Sony sells 1 million PlayStation 4 units in first 24 hours (Reuters)
  • Russian Tycoon Prokhorov to Buy Kerimov’s Uralkali Stake (WSJ)
  • Google Opening Showrooms to Show Off Gadgets for Holidays (BBG)
  • Need. Moar. Prop. Trading: Federal Reserve considering a delay to Volcker rule (FT)
  • Raghuram Rajan plans ‘dramatic remaking’ of India’s banking system (FT)
  • SAC Capital’s Steinberg faces insider trading trial (Reuters)
  • Six killed as tornadoes rip through U.S. Midwest (Reuters)
  • High-Risk Patients Fuel More Health-Law Worry (WSJ)
  • Greece has fired or suspended 116 tax inspectors, deputy minister says (Kathimerini)
  • J.P. Morgan Reaches $4.5 Billion Settlement With Investors (WSJ)
  • Iceland Tells Hedge Funds Not to Bet on 75% Claims Writedown (BBG)

 

Overnight Media Digest

WSJ

* The U.S. military’s top commanders, amid a shrinking Pentagon budget, have agreed to a plan that would curb the growth of pay and benefits for housing, education and health.

* The Obama administration’s overtures to Iran are straining the U.S. alliance with Israel in ways not seen in decades, compounding concerns about the White House’s ability to manage the Middle East’s proliferating security crises.

* The dearth of borrowers illustrates the reality behind Japan’s economic-policy experiment: It is easier to increase the money supply than to get people to put the cash to work.

* The asset-management industry is pushing back against a powerful, yet little known Treasury Department office that is laying the groundwork for tougher federal regulation of mutual funds and other asset managers.

* Boeing formally launched its 777X jetliner with record orders, as jet-buying commitments at the Dubai Airshow for Boeing and rival Airbus highlighted the growing ambition of Persian Gulf airlines.

* The committees that control consolidated data feeds for Nasdaq OMX Group and NYSE Euronext are nearing agreement on a plan to back up their data streams, according to people familiar with the matter.

* More than 15 percent of the factories in Wal-Mart Stores Inc’s initial round of safety inspections in Bangladesh failed their audits and had to make improvements to keep doing business with the giant retailer.

* Suntech Power Holdings Co, mired in more than $2.3 billion in debt, would pay back about 30 percent of what it owes to Chinese creditors in a deal that would also keep its solar-equipment factories humming under new management.

* Bloomberg LP’s news division will lay off about 50 people or about 2 percent of its newsroom, according to people familiar with the company’s plans, the latest financial news and data provider to make job reductions

 

FT

The chair of the European Banking Authority has warned that Europe’s ability to deal effectively with the next financial crisis risks being undermined, if decision-making is not streamlined and nationalist tendencies contained.

Gulf airlines splashed out over $150 billion on new plane deals on day one of the Dubai Airshow, underlining their status as powerful forces in global aviation.

Less than a week after Barclays slashed 1700 jobs at its UK branches, the bank’s global retail head has warned of further job cuts as the bank tries to trim its cost-heavy high-street business.

Edmond de Rothschild is preparing to launch a London-based merchant banking business this week as the Franco-Swiss private banking group seeks to turn London into its fourth major business centre.

Directors’ pay at the UK’s biggest listed companies has risen 14 percent, as company bosses reap the benefits of a windfall from long-term incentive plans.

Former U.S. Treasury Secretary Timothy Geithner is joining private-equity firm Warburg Pincus as president and managing director.

 

NYT

* The push to reshape financial oversight hinges on negotiations in the coming weeks over the so-called Volcker Rule, a regulation that strikes at the heart of Wall Street risk-taking.

* Mobile games are a major growth opportunity, and analysts say a recent flop underscores the challenges Walt Disney faces in a shifting marketplace.

* As many as 4.8 million people could be affected by expiring jobless benefits through 2014, and there is little sign that Congress will act before it adjourns in two weeks.

* J. Craig Venter, the maverick scientist, is looking for a new world to conquer – Mars. He wants to detect life on Mars and bring it to Earth using a device called a digital biological converter, or biological teleporter.

* The flood of orders at the Dubai Airshow, including the sale of 225 of Boeing’s new 777X jets, highlighted how the big money in aviation is shifting to the Middle East and Asia.

* Timothy Geithner will join the private equity firm Warburg Pincus as president, the firm said on Saturday. It would be his first prominent position since leaving office as Treasury secretary this year.

* Were the young founders of Snapchat, a mobile-messaging start-up, delusional for turning down a multibillion-dollar buyout offer? Greedy to think they might get more later? Or courageous to chase their dreams? The decision they faced – to cash out or remain independent – is one that all successful technology entrepreneurs eventually confront.

 

Canada

THE GLOBE AND MAIL

* In a historic showdown, Rob Ford faces formal repudiation from Toronto city council, which will vote on Monday on a motion stripping him of virtually all of his powers as mayor, after three tumultuous weeks of disclosures over his use of crack cocaine and a
lcohol.

* A line of severe storms swept across southern and eastern Ontario Sunday night, bringing heavy rain and winds gusting to 90-kilometres an hour.

Reports in the business section:

* On two week-long trips to Australia in the past month, the CEO and vice-chairman of Saputo Inc has travelled hundreds of kilometres in the state of Victoria to meet with dairy farmers who own shares of Warrnambool Cheese and Butter Factory Co.

* Malaysia’s Petronas is lining up Asian energy players to help build a Canadian liquefied natural gas megaproject, but there is a catch. Before anyone joins the ownership team, the prospective partners must sign long-term contracts to buy LNG.

NATIONAL POST

* Canada’s auditor general has found that the billions of dollars set aside for the federal government’s shipbuilding plan won’t be enough to get the navy the vessels it was promised, or needs.

* A lawyer representing embattled Toronto Mayor Rob Ford said Sunday it was “highly unlikely” he would seek a court-ordered injunction to block Toronto city council from moving forward Monday with a motion to further diminish the mayor’s power.

FINANCIAL POST

* It’s not exactly the 11th province just yet, but Canadian companies have been gobbling up property in the United States like never before.

* The highly anticipated next-generation gaming consoles from Sony Corp and Microsoft Corp are expected to re-energize earnings growth and boost share prices across the industry.

 

China

SHANGHAI SECURITIES NEWS

– Insurance regulators are considering accelerating the establishment of shipping insurance pilot programs in the Shanghai Free Trade zone, and plan to establish an offshore insurance market.

CHINA SECURITIES JOURNAL

– An official with the State-owned Assets Supervision and Administration Commission (SASAC) and enterprise reform gave an interview to the China Securities Journal in which he said reforms would concentrate on institutions managing state-owned enterprises.

– Alibaba’s payment unit has partnered with Intime Retail (Group) Co Ltd to allow customers at Intime’s department stores to shop using their mobile phones, potentially leading to a shake-up of China’s Point of Sales (POS) market.

SECURITIES TIMES

– There will be 570 million people in China who use their mobile phones to access the Internet by the end of this year, according to a forecast by consultancy iMedia Research.

CHINA DAILY

– The end of the controversial “reform through labour” detention system, announced after the third party plenum, is expected to come no earlier than the end of November.

– The Chinese small and medium enterprise (SME) confidence index from Standard Chartered declined to 52.04 in the third quarter, down from the previous quarter, as small businesses remain cautiously optimistic. The article said surveys indicate SMEs are having an easier time getting loans this year.

SHANGHAI DAILY

– China is set to have the largest number of lung cancer patients in the world by 2025, according to experts at a forum in Beijing.

PEOPLE’S DAILY

– In an editorial, People’s Daily called on China to further liberate people’s mind, social productivity and vibrancy.

 

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Baxter (BAX) upgraded to Outperform from Neutral at Credit Suisse
Diebold (DBD) upgraded to Buy from Hold at KeyBanc
Goldcorp (GG) upgraded to Buy from Neutral at Citigroup
Kirkland’s (KIRK) upgraded to Buy from Neutral at SunTrust
Kosmos (KOS) upgraded to Buy from Neutral at Mizuho
Lamar Advertising (LAMR) upgraded to Overweight from Equal Weight at Evercore
MSC Industrial (MSM) upgraded to Buy from Hold at BB&T
PS Business Parks (PSB) upgraded to Outperform from Market Perform at BMO Capital
Penn National (PENN) upgraded to Outperform from Market Perform at Wells Fargo
PennantPark Floating Rate (PFLT) upgraded to Outperform at Keefe Bruyette
Sappi Ltd. (SPP) upgraded to Buy from Sell at UBS
Swift Transportation (SWFT) upgraded to Outperform from Neutral at RW Baird
Vitamin Shoppe (VSI) upgraded to Conviction Buy from Buy at Goldman

Downgrades

Alpha Natural (ANR) downgraded to Sell from Neutral at Citigroup
Bill Barrett (BBG) downgraded to Neutral from Buy at Goldman
Bona Film (BONA) downgraded to Market Perform from Outperform at Cowen
CONSOL Energy (CNX) downgraded to Neutral from Buy at Citigroup
Commercial Metals (CMC) downgraded to Neutral from Buy at Citigroup
Corporate Office (OFC) downgraded to Market Perform from Outperform at BMO Capital
GSE Holding (GSE) downgraded to Market Perform from Outperform at Cowen
Halcon Resources (HK) downgraded to Sell from Neutral at Goldman
Interactive Brokers (IBKR) downgraded to Market Perform at Keefe Bruyette
MercadoLibre (MELI) downgraded to Underweight from Equal Weight at Morgan Stanley
Microsoft (MSFT) downgraded to Underperform from Neutral at BofA/Merrill
NVIDIA (NVDA) downgraded to Underweight from Equal Weight at Morgan Stanley
Nucor (NUE) downgraded to Neutral from Buy at Citigroup
Renewable Energy (REGI) downgraded to Hold from Buy at Canaccord
SuperValu (SVU) downgraded to Sell from Neutral at Goldman
Synchronoss (SNCR) downgraded to Neutral from Outperform at RW Baird
Walter Energy (WLT) downgraded to Neutral from Buy at Citigroup

Initiations

Cyberonics (CYBX) initiated with a Buy at Citigroup
Gaming and Leisure Properties (GLPI) initiated with a Neutral at Credit Suisse
Gastar Exploration (GST) re-initiated with an Outperform at Imperial Capital
Stonegate Mortgage (SGM) initiated with an Outperform at FBR Capital

HOT STOCKS

JPMorgan (JPM) reached $4.5B agreement with 21 institutional investors
Lloyds (LYG) sold asset management business to Scottish Widows Investment Partnership
Boeing (BA) launched 777X program at Dubai Airshow with over $95B in agreements
GE (GE) received $26B in agreements at Dubai Air Show
Royal Bank of Scotland (RBS) said making progress on IP&ED unit sale
FDA classified Medtronic’s (MDT) voluntary field action on guidewires a Class I recall
Media General (MEG), DISH (DISH) reached retransmission consent agreement
Insight (NSIT) announced it will be reseller of Google Chromebooks (GOOG)
Oracle (ORCL) acquired Bitzer Mobile, terms not disclosed

NEWSPAPERS/WEBSITES

  • The Dubai Airshow is shaping up to be an order extravaganza for Boeing (BA), but that doesn’t mean rival Airbus (EADSY) has ceded the field, and has reported respectable numbers  as well, the Wall Street Journal reports
  • The asset-management industry (BLK) is pushing back against the Financial Stability Oversight Council, a powerful, yet little-known Treasury Department office that is laying the groundwork for tougher federal regulation of mutual funds and other asset managers, the Wall Street Journal reports
  • Capital ratios at U.S. banks have strengthened and bank lending is quite strong, Boston Fed President Eric Rosengren said today at a financial regulation conference in the United Arab Emirates, Reuters reports
  • Daimler (DDAIF) and its Chinese partner BAIC Motor will sign a new strategic cooperation agreement tomorrow, with Daimler becoming an “important partner” with shareholding rights, Reuters reports
  • Google (GOOG) is opening showrooms called Winter Wonderlabs in six U.S. cities, promoting its latest products and stepping up retail efforts against Apple (AAPL) and Microsoft (MSFT) as the year-end holiday shopping season gets under way, Bloomberg reports
  • Salesforce.com (CRM )introduced an overhauled version of its mobile software, seeking to en
    sure clients and partners will be able to use more features of the company’s sales, marketing and customer service software, Bloomberg reports

BARRON’S

Kimberly Clark (KMB) shares expensive despite spin-off
Blount (BLT) could offer a dividend buyback
Carlyle Group (CG) could return over 20% next year
Discovery (DISCA) could rise 20%
US Airways (LCC) could reward investors (AAMRQ)

SYNDICATE

Ascent Capital Group (ASCMA) files to sell 253,333 shares for holders
MetLife (MET) files automatic mixed securities shelf
The Bancorp (TBBK) files $100M mixed securities shelf
UPS (UPS) files automatic mixed securities shelf


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/jokjgI5T-GI/story01.htm Tyler Durden

Jacob Sullum on How Cops Got Access to David Eckert's Guts

After New Mexico
cops launched an exhaustive exploration of David Eckert’s digestive
tract that found no trace of the drugs they said they thought
they’d find, their boss insisted that “we follow the law in
every aspect.” The really horrifying thing about Eckert’s ordeal,
says Jacob Sullum, is that the courts might agree with
Gigante. 

View this article.

from Hit & Run http://reason.com/blog/2013/11/18/jacob-sullum-on-how-cops-got-access-to-d
via IFTTT

Jacob Sullum on How Cops Got Access to David Eckert’s Guts

After New Mexico
cops launched an exhaustive exploration of David Eckert’s digestive
tract that found no trace of the drugs they said they thought
they’d find, their boss insisted that “we follow the law in
every aspect.” The really horrifying thing about Eckert’s ordeal,
says Jacob Sullum, is that the courts might agree with
Gigante. 

View this article.

from Hit & Run http://reason.com/blog/2013/11/18/jacob-sullum-on-how-cops-got-access-to-d
via IFTTT

Today's Only Numbers That Matter: 1800, 16000 And 4000

The only numbers that matter today are 16000, 4000 and 1800: those are the Fed’s closing targets for the Dow Jones, the Nasdaq and the S&P. Following last night’s Chinese euphoria which saw the Shanghai Composite surge by 2.87%, or up 61.4 to just under 2,200 on renewed hopes for Chinese reform by 2020, the Fed’s price targets should all be quite easily achievable. And not even the rising home prices in 69 out of 70 cities year over year, and 65 over month – the same as last month, with new nome price inflation at 0.6% overall and 0.8% for the first tier cities, was able to put a dent in the reflationary spirits in the Mainland. Additionally, news that China would join the US and Europe in “adjusting” its GDP calculation method, which would add R&D expensing into the bottom line, and as a result boost the overall number, is, well, helping things.

Finally, with today’s POMO a rather whopping $3-$4 billion, it is only a matter of time before all three of the previously noted psychological resistances are promptly taken out by the Fed’s open markets desk.

Not much on deck today, aside from more speeches from Dudley, Plosser and Kocherlakota which will incite even more multiple expansion.

US reports:

  • US: NAHB housing market index, cons 56 (10:00)
  • US: sells $32bn 3m and $28bbn 6m bills (11:30)
  • US: Fed speakers Dudley (12:15 and 15:45), Plosser (13:30)

Market Re-Cap from RanSquawk

Stocks in Europe this morning trade relatively higher
with the FTSE MIB leading the way this morning with Italian Banks
including Banco Popolare providing upward momentum for Italian
equities. Following the positive sentiment observed across Asia
overnight, the German DAX has managed to print an all time high above the 9200 level. In terms of underperforming indices the FTSE-100 is being weighed
down by Petrofac who are trading with significant losses this morning
following reports that the company expected group net income in 2014
to show flat to modest growth Y/Y. However, the FTSE-100 is being
supported by Aberdeen Asset management following reports that Lloyds
are to sell asset management SWIP for about GBP 560mln. In terms of
sector performance, utilities are leading the way after RWE were upgraded to outperform vs neutral at Exane.

From a fixed income perspective, markets are struggling to find direction with little in the way of news flow and volumes coming out of this morning’s quiet session. In terms of FX markets, overnight AUD gained and broke above the 0.9400 level as markets reacted positively to the release of Friday’s Chinese Plenum reform document which saw stocks rally overnight. Furthermore, market participants will be keeping an eye on EUR/USD which is trading in close proximity to an option expiry at 1.3500.

Looking
ahead for the session there is little in the way of tier-1 data for the
session. However, there are a few scheduled speakers which includes the likes of Fed’s Dudley and Plosser after-market.

Overnight bulletin summary from Bloomberg and RanSquawk:

  • The Shanghai Composite finished with gains of 2.9% as markets had their first chance to react to Friday’s Chinese Plenum document release. Furthermore, The Chinese National Bureau of Statistics is planning to change the way it calculates GDP to reflect changes in international standards which should see a boost to GDP readings.
  • Stocks in Europe reacted positively to the news with the German DAX printing an all-time high above the 9200 level.
  • Treasuries steady, 10Y at 2.70% holding just above 50-DMA at 2.677% before speeches from Dudley and Plosser after Yellen last week signaled ongoing easing.
  • ECB Executive Board member Yves Mersch said risk scenarios in upcoming stress tests on bank balance sheets are likely to use 2016 as their end-point
  • Defaults as a proportion of total lending at Spanish banks increased to a record in September as more borrowers missed loan payments in an economy with unemployment at 26%
  • Obama pressed top U.S. insurers to help consumers cope with the rocky start of his health-care law as the House passed a bill that would let Americans keep their current policies through 2014; 39 Democrats supported the Republican bill
  • Sovereign yields mostly higher, EU peripheral spreads mixed. Shanghai Composite surges nearly 3%; European stocks, U.S. equity-index futures higher. WTI crude, copper and gold lower

Asian Headlines

The Chinese National Bureau of Statistics is planning to change the way it calculates GDP to reflect changes in international standards according to Xu Xianquan, Deputy Heads of the NBS. The new method may boost Chinese GDP. This saw the Shanghai Composite, finish with gains of 2.9% at 2,197.22

Japan’s USD 1.2trl public pension fund should be remade as a new, independent entity, a panel tasked with proposing an overhaul of the fund are likely to recommend. The move could unleash a flood of cash into global markets and change the way trillions of JPY is invested. As a guide, a 1ppt move in the allocation to domestic stocks could send JPY 1.2trl into the market.

EU & UK Headlines

ECB’s Coene (dove, Belgian) does not see the need for more rate cuts.

ECB’s Praet (neutral – executive board, Belgian) said that should interest rates be lowered to zero, ECB could still deploy quantitative measures, including buying government bonds, or injecting capital into banks; but added that “we are not at this point”.

German finance minister Schaeuble said Germany will not face sanctions on trade surplus.
ECB’s Nowotny says that the ECB still has measures to fight low inflation if needed.
Eurozone Current Account NSA (Sep) M/M 14.0bln vs. Prev. 12.0bln (Rev. 12.4bln)
Current Account SA (Sep) M/M 13.7bln v. Prev. 17.4bln (Rev. 17.9bln)

US Headlines

According to the FT Obama’s Presidency is not over but is failing, saying that with the exception of the debt ceiling, he has fallen at almost every hurdle.

After opening lower amid touted profit taking from last weeks significant gains, stocks across Europe are now trading mostly in the green with the FTSE MIB leading the way following strong performances from Italian banks. Of note, Aberdeen Asset management are helping prop up the FTSE 100 and halt the downward pressure being exerted on the indicie with Petrofac currently down around 14% following company expected group net income in 2014 to show flat to modest growth Y/Y. Furthermore the German DAX has printed record highs in this mornings trade above the 9200 level.

FX

In FX markets, overnight, AUD managed to gain from the positive sentiment from the Asian session and NZD saw upside following New Zealand PMI (Oct) M/M 58.2 vs. Prev. 55.6 (Prev. 56.4) – highest since November 2007. This morning much of the movement across the market is being observed as a result of EUR/USD which is currently heading towards a touted option expiry at 1.3500. Markets will also be keeping an eye of EUR/GBP with market talk of offers mooted at 0.8390 with stops tipped above 0.8400. With little left in the session in terms of macroeconomic data releases, markets may be looking ahead to any comments from Fed’s Dudley and Plosser.

Commodities

Heading into the North American open, WTI crude and brent futures trade in minor negative territory with WTI crude futures falling after data from the Join Organisations Data Initiative showed that Saudi Arabia exported more oil in Septembe
r than in any month since November 2005. Furthermore, prices have seen further downside following reports that Russian President Putin believes there is a real chance to resolve the dispute over Iran’s nuclear programme.

Citigroup have reduced their Brent price forecast amid a growing bullish outlook with the bank forecasting Q4 Brent at USD 105 per barrel and USD 98 per barrel by 2014.

Libya has resumed gas exports to Italy after protesters left the North African country’s Mellitah port, and expects to begin loading condensate there on today according to the the NOC. Elsewhere, the Oil Ministry says Ras Lanuf is Libya’s only refinery still shut.

SocGen’s summarizes the main macro events of the day:

Risk assets gave the thumbs up to Janet Yellen’s testimony by pushing the S&P into unchartered territory, and the index now sits within striking distance of 1,800 having marked an 8% gain over the past month. US 10y yields and swaps have gone up a puny 3bp over the same period, and the broad dollar index has gained just 0.6% (0.4% vs the EUR and 1.6% vs the JPY). The S&P beats Eurostoxx hands down (the latter having rallied only 5.8%), from which we can infer that because of the resilience of the EUR and the negative impact on corporate profits, investors are more reluctant to invest in the euro area. However, the flip side is that falling inflation and a dovish ECB are turning euro-area debt into a more attractive proposition than US debt, though weak nominal growth may dampen some of the enthusiasm. Even if Fed tapering is delayed until March 2014, the prospect of higher yields is greater in the US (and the UK) than it is in the eurozone.

Nothing stands in the way of the US Senate formally completing the nomination of Janet Yellen, and a vote planned for this week will ensure that the handover happens after the January FOMC meeting. The immediate focus for the rates and FX markets is the minutes of the October FOMC meeting this Wednesday. Yellen’s testimony did not suggest that tapering is imminent, but details of the discussions will be scrutinised for any hint that asset purchases could be reduced earlier than March.

The advance eurozone PMIs and the German ZEW survey will attract most of the interest this week, with investors on the lookout for an update on growth momentum in Q4. Spain and Italy were singled out on Friday by the European Commission under its new budgetary surveillance exercise, and it warned that the 2014 budget plans for both countries are at risk of not complying with new debt and deficit rules (link). The forecasts approved by the Spanish parliament envision a budget deficit of 5.9% of GDP in 2014 and 6.6% in 2015, well above the EU-mandated 3% threshold for 2016, but the EC’s observations could well entail fresh spending cuts and a delayed strengthening of domestic demand.

In EM, the South African Reserve Bank is expected to keep its benchmark rate unchanged at 5.0% this Thursday. With headline inflation running at 6% and the ZAR having lost 4% vs the USD since the September meeting, will the SARB take a more hawkish policy line? USD/ZAR and EUR/ZAR have started to retrace from overbought levels, but the case of Indonesia last week demonstrated that raising rates is not the silver bullet that will stop the currency depreciating.

DB’s Jim Reid complete the overnight recap:

Can China be the best it can be going forward? Well markets are this morning more positive on the additional details released on Friday night from China’s Third Plenary Meeting that ended early last week. This has been better received than last week’s official post-meeting communiqué. Asian equities are enjoying robust gains this morning led by the Hang Seng China Enterprises Index (+5.2%), which was also up 3.0% on Friday as talk of the release of the reform details gathered steam. There is hope among analysts that the reforms will mark a turnaround for Chinese equities which have been one of the underperforming bourses this year (Year to date performance: HSCEI –-1.6%, Shanghai Comp –1.9%) and which have lost between 15-30% of their value since 2009. Indeed there has been a fairly strong grab for Chinese equity assets from offshore investors overnight, as evidenced by the fact that a number of offshore A-share ETFs are now trading at a premium to NAV, whereas they have been generally trading at a discount in recent history. Other Asian equity bourses are up between 1-2% overnight. The story in other Chinese-growth related assets are mixed though including copper which is down -0.1% and Australian mining shares – perhaps due to the fact that the reform packages also emphasise a reduction in overcapacity which has affected some parts of the Chinese economy to-date. The Shanghai Composite is up a relatively muted 1.8%.

Going into further detail, China’s reform package was officially titled “Decision on Major Issues Concerning Comprehensively Deepening Reforms”, and was issued on Friday, a few days after the conclusion of “The 3rd Plenum of China’s Communist Party’s (CCP) 18th Congress”. The reform package includes 60 measures. Within these, DB’s Chief Chinese economist Jun Ma believes reforms related to deregulation, opening up of industries, fiscal, financial liberalisation, land and hukou, resource pricing, SOE, social security, two-child policy will have the most profound economic implications. Jun describes the “Decision” as having met 100% of his already extremely bullish expectations and are by far the most profound reforms in a decade, if not decades, in terms of scope, depth, and impact. Indeed, in areas such as SOE and pension reforms the aggressiveness of the reform package surprised him. Jun estimates that relative to the “no-reform” scenario, deregulation will boost the average annual real output growth of the private sector by 3ppts per year in the coming decade. Given these reform benefits, as well as his view that China will experience a cyclical recovery in 2014, our China team expect 20-25% potential upside to MSCI China in the coming 12 months from its current level.

So what’s missing from these reforms? Our view is that while these reforms are a step in the right direction, the difficulty will be in the implementation given there are interest groups in government and in the state-owned sector which will be resistant to change. Some have criticised the reforms as not going far enough on political reforms. Others have suggested that the reforms do not directly address Bank NPLs. On this point, DB’s Jun Ma notes that under the reform plan, the government will permit local governments to issue municipal bonds independently to gradually replace current local government financing mechanisms. Jun argues this will remove a major overhang on bank’s asset quality. This is clearly an evolving story, but one which will have a large ripple effect across DM and EM in the months and years to come. The
proof will be in the implementation. With the weekend newsflow elsewhere relatively quiet, it won’t be too long before we get back to US monetary policy headlines. Indeed there are plenty of Fed speakers to listen to this week starting with Bernanke’s Economists Club speech tomorrow and the October FOMC meeting minutes on
Wednesday. Regarding the FOMC minutes, markets will be scanning for clues on the timing of tapering and whether there is anything on strengthening forward guidance. The other key Fed speakers to watch this week are the Philly Fed’s Plosser (today), the Chicago Fed’s Evans (tomorrow), the NY Fed’s Dudley and St. Louis Fed’s Bullard (Wednesday) and Richmond Fed President Lacker (Thursday). This week’s data releases include the NAHB housing market index later today, followed by CPI, retail sales and existing home sales on Wednesday. On Thursday, we have PPI and the Philadelphia Fed survey. A number of US retailers report earnings on Thursday, which should provide further detail on holiday trading outlooks.

Across the Atlantic,
Draghi’s speech in Berlin on Thursday will of some interest given the recent talk of the provision of additional liquidity across the euroarea, potentially in the form of asset purchases. The ECB’s Weidmann, Noyer, Praet and Nowotny are also set to speak this week. In terms of Eurozone data, watch for the ZEW survey tomorrow, flash PMIs and consumer confidence on Thursday. German trade and the IFO survey round out the weekly data docket on Friday. The BoE’s monetary policy meeting minutes are scheduled for release on Wednesday. In Asia, the BoJ meeting and China’s HSBC flash manufacturing PMI scheduled on Thursday are the main highlights.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1dP4LU42nA4/story01.htm Tyler Durden

Today’s Only Numbers That Matter: 1800, 16000 And 4000

The only numbers that matter today are 16000, 4000 and 1800: those are the Fed’s closing targets for the Dow Jones, the Nasdaq and the S&P. Following last night’s Chinese euphoria which saw the Shanghai Composite surge by 2.87%, or up 61.4 to just under 2,200 on renewed hopes for Chinese reform by 2020, the Fed’s price targets should all be quite easily achievable. And not even the rising home prices in 69 out of 70 cities year over year, and 65 over month – the same as last month, with new nome price inflation at 0.6% overall and 0.8% for the first tier cities, was able to put a dent in the reflationary spirits in the Mainland. Additionally, news that China would join the US and Europe in “adjusting” its GDP calculation method, which would add R&D expensing into the bottom line, and as a result boost the overall number, is, well, helping things.

Finally, with today’s POMO a rather whopping $3-$4 billion, it is only a matter of time before all three of the previously noted psychological resistances are promptly taken out by the Fed’s open markets desk.

Not much on deck today, aside from more speeches from Dudley, Plosser and Kocherlakota which will incite even more multiple expansion.

US reports:

  • US: NAHB housing market index, cons 56 (10:00)
  • US: sells $32bn 3m and $28bbn 6m bills (11:30)
  • US: Fed speakers Dudley (12:15 and 15:45), Plosser (13:30)

Market Re-Cap from RanSquawk

Stocks in Europe this morning trade relatively higher
with the FTSE MIB leading the way this morning with Italian Banks
including Banco Popolare providing upward momentum for Italian
equities. Following the positive sentiment observed across Asia
overnight, the German DAX has managed to print an all time high above the 9200 level. In terms of underperforming indices the FTSE-100 is being weighed
down by Petrofac who are trading with significant losses this morning
following reports that the company expected group net income in 2014
to show flat to modest growth Y/Y. However, the FTSE-100 is being
supported by Aberdeen Asset management following reports that Lloyds
are to sell asset management SWIP for about GBP 560mln. In terms of
sector performance, utilities are leading the way after RWE were upgraded to outperform vs neutral at Exane.

From a fixed income perspective, markets are struggling to find direction with little in the way of news flow and volumes coming out of this morning’s quiet session. In terms of FX markets, overnight AUD gained and broke above the 0.9400 level as markets reacted positively to the release of Friday’s Chinese Plenum reform document which saw stocks rally overnight. Furthermore, market participants will be keeping an eye on EUR/USD which is trading in close proximity to an option expiry at 1.3500.

Looking
ahead for the session there is little in the way of tier-1 data for the
session. However, there are a few scheduled speakers which includes the likes of Fed’s Dudley and Plosser after-market.

Overnight bulletin summary from Bloomberg and RanSquawk:

  • The Shanghai Composite finished with gains of 2.9% as markets had their first chance to react to Friday’s Chinese Plenum document release. Furthermore, The Chinese National Bureau of Statistics is planning to change the way it calculates GDP to reflect changes in international standards which should see a boost to GDP readings.
  • Stocks in Europe reacted positively to the news with the German DAX printing an all-time high above the 9200 level.
  • Treasuries steady, 10Y at 2.70% holding just above 50-DMA at 2.677% before speeches from Dudley and Plosser after Yellen last week signaled ongoing easing.
  • ECB Executive Board member Yves Mersch said risk scenarios in upcoming stress tests on bank balance sheets are likely to use 2016 as their end-point
  • Defaults as a proportion of total lending at Spanish banks increased to a record in September as more borrowers missed loan payments in an economy with unemployment at 26%
  • Obama pressed top U.S. insurers to help consumers cope with the rocky start of his health-care law as the House passed a bill that would let Americans keep their current policies through 2014; 39 Democrats supported the Republican bill
  • Sovereign yields mostly higher, EU peripheral spreads mixed. Shanghai Composite surges nearly 3%; European stocks, U.S. equity-index futures higher. WTI crude, copper and gold lower

Asian Headlines

The Chinese National Bureau of Statistics is planning to change the way it calculates GDP to reflect changes in international standards according to Xu Xianquan, Deputy Heads of the NBS. The new method may boost Chinese GDP. This saw the Shanghai Composite, finish with gains of 2.9% at 2,197.22

Japan’s USD 1.2trl public pension fund should be remade as a new, independent entity, a panel tasked with proposing an overhaul of the fund are likely to recommend. The move could unleash a flood of cash into global markets and change the way trillions of JPY is invested. As a guide, a 1ppt move in the allocation to domestic stocks could send JPY 1.2trl into the market.

EU & UK Headlines

ECB’s Coene (dove, Belgian) does not see the need for more rate cuts.

ECB’s Praet (neutral – executive board, Belgian) said that should interest rates be lowered to zero, ECB could still deploy quantitative measures, including buying government bonds, or injecting capital into banks; but added that “we are not at this point”.

German finance minister Schaeuble said Germany will not face sanctions on trade surplus.
ECB’s Nowotny says that the ECB still has measures to fight low inflation if needed.
Eurozone Current Account NSA (Sep) M/M 14.0bln vs. Prev. 12.0bln (Rev. 12.4bln)
Current Account SA (Sep) M/M 13.7bln v. Prev. 17.4bln (Rev. 17.9bln)

US Headlines

According to the FT Obama’s Presidency is not over but is failing, saying that with the exception of the debt ceiling, he has fallen at almost every hurdle.

After opening lower amid touted profit taking from last weeks significant gains, stocks across Europe are now trading mostly in the green with the FTSE MIB leading the way following strong performances from Italian banks. Of note, Aberdeen Asset management are helping prop up the FTSE 100 and halt the downward pressure being exerted on the indicie with Petrofac currently down around 14% following company expected group net income in 2014 to show flat to modest growth Y/Y. Furthermore the German DAX has printed record highs in this mornings trade above the 9200 level.

FX

In FX markets, overnight, AUD managed to gain from the positive sentiment from the Asian session and NZD saw upside following New Zealand PMI (Oct) M/M 58.2 vs. Prev. 55.6 (Prev. 56.4) – highest since November 2007. This morning much of the movement across the market is being observed as a result of EUR/USD which is currently heading towards a touted option expiry at 1.3500. Markets will also be keeping an eye of EUR/GBP with market talk of offers mooted at 0.8390 with stops tipped above 0.8400. With little left in the session in terms of macroeconomic data releases, markets may be looking ahead to any comments from Fed’s Dudley and Plosser.

Commodities

Heading into the North American open, WTI crude and brent futures trade in minor negative territory with WTI crude futures falling after data from the Join Organisations Data Initiative showed that Saudi Arabia exported more oil in September than in any month since November 2005. Furthermore, prices have seen further downside following reports that Russian President Putin believes there is a real chance to resolve the dispute over Iran’s nuclear programme.

Citigroup have reduced their Brent price forecast amid a growing bullish outlook with the bank forecasting Q4 Brent at USD 105 per barrel and USD 98 per barrel by 2014.

Libya has resumed gas exports to Italy after protesters left the North African country’s Mellitah port, and expects to begin loading condensate there on today according to the the NOC. Elsewhere, the Oil Ministry says Ras Lanuf is Libya’s only refinery still shut.

SocGen’s summarizes the main macro events of the day:

Risk assets gave the thumbs up to Janet Yellen’s testimony by pushing the S&P into unchartered territory, and the index now sits within striking distance of 1,800 having marked an 8% gain over the past month. US 10y yields and swaps have gone up a puny 3bp over the same period, and the broad dollar index has gained just 0.6% (0.4% vs the EUR and 1.6% vs the JPY). The S&P beats Eurostoxx hands down (the latter having rallied only 5.8%), from which we can infer that because of the resilience of the EUR and the negative impact on corporate profits, investors are more reluctant to invest in the euro area. However, the flip side is that falling inflation and a dovish ECB are turning euro-area debt into a more attractive proposition than US debt, though weak nominal growth may dampen some of the enthusiasm. Even if Fed tapering is delayed until March 2014, the prospect of higher yields is greater in the US (and the UK) than it is in the eurozone.

Nothing stands in the way of the US Senate formally completing the nomination of Janet Yellen, and a vote planned for this week will ensure that the handover happens after the January FOMC meeting. The immediate focus for the rates and FX markets is the minutes of the October FOMC meeting this Wednesday. Yellen’s testimony did not suggest that tapering is imminent, but details of the discussions will be scrutinised for any hint that asset purchases could be reduced earlier than March.

The advance eurozone PMIs and the German ZEW survey will attract most of the interest this week, with investors on the lookout for an update on growth momentum in Q4. Spain and Italy were singled out on Friday by the European Commission under its new budgetary surveillance exercise, and it warned that the 2014 budget plans for both countries are at risk of not complying with new debt and deficit rules (link). The forecasts approved by the Spanish parliament envision a budget deficit of 5.9% of GDP in 2014 and 6.6% in 2015, well above the EU-mandated 3% threshold for 2016, but the EC’s observations could well entail fresh spending cuts and a delayed strengthening of domestic demand.

In EM, the South African Reserve Bank is expected to keep its benchmark rate unchanged at 5.0% this Thursday. With headline inflation running at 6% and the ZAR having lost 4% vs the USD since the September meeting, will the SARB take a more hawkish policy line? USD/ZAR and EUR/ZAR have started to retrace from overbought levels, but the case of Indonesia last week demonstrated that raising rates is not the silver bullet that will stop the currency depreciating.

DB’s Jim Reid complete the overnight recap:

Can China be the best it can be going forward? Well markets are this morning more positive on the additional details released on Friday night from China’s Third Plenary Meeting that ended early last week. This has been better received than last week’s official post-meeting communiqué. Asian equities are enjoying robust gains this morning led by the Hang Seng China Enterprises Index (+5.2%), which was also up 3.0% on Friday as talk of the release of the reform details gathered steam. There is hope among analysts that the reforms will mark a turnaround for Chinese equities which have been one of the underperforming bourses this year (Year to date performance: HSCEI –-1.6%, Shanghai Comp –1.9%) and which have lost between 15-30% of their value since 2009. Indeed there has been a fairly strong grab for Chinese equity assets from offshore investors overnight, as evidenced by the fact that a number of offshore A-share ETFs are now trading at a premium to NAV, whereas they have been generally trading at a discount in recent history. Other Asian equity bourses are up between 1-2% overnight. The story in other Chinese-growth related assets are mixed though including copper which is down -0.1% and Australian mining shares – perhaps due to the fact that the reform packages also emphasise a reduction in overcapacity which has affected some parts of the Chinese economy to-date. The Shanghai Composite is up a relatively muted 1.8%.

Going into further detail, China’s reform package was officially titled “Decision on Major Issues Concerning Comprehensively Deepening Reforms”, and was issued on Friday, a few days after the conclusion of “The 3rd Plenum of China’s Communist Party’s (CCP) 18th Congress”. The reform package includes 60 measures. Within these, DB’s Chief Chinese economist Jun Ma believes reforms related to deregulation, opening up of industries, fiscal, financial liberalisation, land and hukou, resource pricing, SOE, social security, two-child policy will have the most profound economic implications. Jun describes the “Decision” as having met 100% of his already extremely bullish expectations and are by far the most profound reforms in a decade, if not decades, in terms of scope, depth, and impact. Indeed, in areas such as SOE and pension reforms the aggressiveness of the reform package surprised him. Jun estimates that relative to the “no-reform” scenario, deregulation will boost the average annual real output growth of the private sector by 3ppts per year in the coming decade. Given these reform benefits, as well as his view that China will experience a cyclical recovery in 2014, our China team expect 20-25% potential upside to MSCI China in the coming 12 months from its current level.

So what’s missing from these reforms? Our view is that while these reforms are a step in the right direction, the difficulty will be in the implementation given there are interest groups in government and in the state-owned sector which will be resistant to change. Some have criticised the reforms as not going far enough on political reforms. Others have suggested that the reforms do not directly address Bank NPLs. On this point, DB’s Jun Ma notes that under the reform plan, the government will permit local governments to issue municipal bonds independently to gradually replace current local government financing mechanisms. Jun argues this will remove a major overhang on bank’s asset quality. This is clearly an evolving story, but one which will have a large ripple effect across DM and EM in the months and years to come. The
proof will be in the implementation. With the weekend newsflow elsewhere relatively quiet, it won’t be too long before we get back to US monetary policy headlines. Indeed there are plenty of Fed speakers to listen to this week starting with Bernanke’s Economists Club speech tomorrow and the October FOMC meeting minutes on
Wednesday. Regarding the FOMC minutes, markets will be scanning for clues on the timing of tapering and whether there is anything on strengthening forward guidance. The other key Fed speakers to watch this week are the Philly Fed’s Plosser (today), the Chicago Fed’s Evans (tomorrow), the NY Fed’s Dudley and St. Louis Fed’s Bullard (Wednesday) and Richmond Fed President Lacker (Thursday). This week’s data releases include the NAHB housing market index later today, followed by CPI, retail sales and existing home sales on Wednesday. On Thursday, we have PPI and the Philadelphia Fed survey. A number of US retailers report earnings on Thursday, which should provide further detail on holiday trading outlooks.

Across the Atlantic, Draghi’s speech in Berlin on Thursday will of some interest given the recent talk of the provision of additional liquidity across the euroarea, potentially in the form of asset purchases. The ECB’s Weidmann, Noyer, Praet and Nowotny are also set to speak this week. In terms of Eurozone data, watch for the ZEW survey tomorrow, flash PMIs and consumer confidence on Thursday. German trade and the IFO survey round out the weekly data docket on Friday. The BoE’s monetary policy meeting minutes are scheduled for release on Wednesday. In Asia, the BoJ meeting and China’s HSBC flash manufacturing PMI scheduled on Thursday are the main highlights.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1dP4LU42nA4/story01.htm Tyler Durden

Steve Chapman on Head Start and Other Federal Failures

Head StartFor
decades, Head Start has consistently disappointed anyone who
expected it to make a real difference in the fortunes of the poor.
A 2010 study by the Department of Health and Human Services
concluded that though there were modest benefits to participating
kids, they soon evaporated. “The benefits of access to Head Start
at age four are largely absent by first grade for the program
population as a whole,” it admitted. “For 3-year-olds, there are
few sustained benefits.” Our elected officials generally agree that
withholding money from social programs shortchanges the poor,
writes Steve Chapman. They fail to notice that for the most part,
providing money has the same effect.

View this article.

from Hit & Run http://reason.com/blog/2013/11/18/steve-chapman-on-head-start-and-other-fe
via IFTTT

Shooting Reported In Front Of SocGen Towers In Paris

Another day, another shooting, this time however in Paris, and one involving French mega bank SocGen.

From SocGen’s official twitter account.

More as we see it.


    



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