Month: September 2014

Retail Sales rose 0.6% in August –  as expected – with July revised from 0.0% to +0.3% but Ex-Autos the +0.3% growth is the slowest since January. The ‘control group’ (ex food, auto dealers, and building materials) missed expectations at +0.4% vs +0.5% exp slipping to its slowest growth in 3 months. Under the surface it appears the gains in sales are driven mostly by a 1.5% rise in auto sales – as more subprime credit is loaded onto the US consumer.

 

Ex-Autos, sales slipped to its slowest since January…

 

As the headline growth was driven largely by Auto Sales…

 

Sustainable?

via Zero Hedge http://ift.tt/1qrl029 Tyler Durden

It appears the ‘broad coalition’ that President Obama so confidently described just two days ago is crumbling faster than the Iraqi army. First UK and Germany deny support for airstrikes in Syria and now Turkey refuses to allow a U.S.-led coalition to attack jihadists in neighboring Iraq and Syria from its air bases, nor will it take part in combat operations against militants, a government official. US Secretary of State John Kerry arrived in Ankara this morning to ‘build the coalition’ but, as AFP reports, Turkish officials have already made their position clear, “Turkey will not be involved in any armed operation but will entirely concentrate on humanitarian operations.” Their ‘excuse’: “our hands and arms are tied because of the hostages,” but follows PM Erdogan’s recent shunning of Obama.

 

As AFP reports,

US Secretary of State John Kerry arrived in Ankara Friday for talks aimed at building a coalition against Islamic State jihadists, a visit that comes after Turkey said it would not allow its air bases to be used for strikes on the extremists.

 

The top US diplomat, touring the Middle East to establish a coalition of more than 40 countries, is to meet with Turkey’s leaders including President Recep Tayyip Erdogan for talks on measures to defeat the militants in Iraq and Syria.

 

Turkey, a NATO member and Washington’s key ally in the region, is reluctant to take part in combat operations against Islamic State militants, or allow a US-led coalition to attack jihadists from its territory.

 

On the eve of the visit, a Turkish official told AFP: “Our hands and arms are tied because of the hostages.”

 

The official added that Turkey will “not be involved in any armed operation but will entirely concentrate on humanitarian operations.”

 

IS militants hold 49 Turks hostage, including diplomats and children, abducted from the Turkish consulate in Mosul in Iraq in June.

Turkey is the only Muslim country in a coalition of 10 countries who agreed to fight ISIS at the NATO summit in Newport.

Turkey can open Incirlik Air Base in the south for logistical and humanitarian operations in any U.S.-led operation, according to the official who stressed that the base would not be used for lethal air strikes.

 

“Turkey will not take part in any combat mission, nor supply weapons,” he said.

*  *  *

This is not an entire surprise given Erdogan’s shunning of Obama and the decision echoes the country’s refusal to allow the U.S. to station 60,000 troops in Turkey in 2003 to invade Iraq from the north, which triggered a crisis between the two allies.

via Zero Hedge http://ift.tt/1pWw69a Tyler Durden

Yesterday’s YouGov poll, which saw the “No” camp regain the lead with 52% of the vote, was said by some to be the end of the “Yes” momentum observed last weekend when the Yes posted its first majority since polling began, Then moments ago, the momentum in the momentum changed once again, with the Guardian releasing the latest Scottish referendum poll by ICM which took place between September 9-11 polling a “a representative sample of 1,000 people”, and where the vote was said to be “too close to call“, as the margin collapsed once again, this time shifting the momentum in favor of the Yes vote, which received 49% of the vote, and No getting 51%, however 17% of the voters are “yet to make up their minds.”

From the Guardian:

Despite a week of intense political campaigning by pro-union politicians and repeated warnings from business about the dangers of independence, the poll finds support for no on 51% and yes on 49% once don’t knows were excluded.

 

The Guardian/ICM poll is based on telephone interviews conducted between Tuesday and Thursday, the first such survey ICM has conducted during the campaign. Previous polls suggesting that the race for Scotland could go to a photo-finish have been based on internet-based surveys.

 

The period of the survey not only witnessed the three UK party leaders absenting themselves from prime minister’s questions to campaign in Scotland, but also a growing rumble of news stories about the economic risks of independence: Mark Carney of the Bank of England gave new warnings over the currency, some financial institutions such as RBS signalled readiness to move their headquarters out of Edinburgh, and there have been warnings about a mortgage drought.

 

Despite all of this, and the most recent suggestions that supermarket prices could have to rise, everything remains to play for in the final days of the campaign, because 17% of voters in the overall sample say they have yet to make up their mind. Including them in mix, the rounded figures leave yes on 40%, and no on 42%.

 

The unprecedented political engagement generated by the campaign shines through in the poll, which finds 87% of respondents describing themselves as “absolutely certain to vote”, far more than the 55% who said the same thing about the next Westminster election in the most recent UK-wide Guardian/ICM poll.

And some curious breakdown by age group:

• young people are almost as engaged as their elders, with 82% of 16- to 24-year-olds and 87% of 25-34s insisting that they are 10 out of 10 sure that they will cast a vote; many will have already done so through postal voting.
• The 25-34s in particular are heavily inclined to back independence – leaning yes, by 57% to 43%.
• Respondents aged 65+ are staunch unionists, being inclined to vote no by 61% to 39%.

Commenting on the age contrast, Martin Boon, director of ICM explains – “the generational divide a crucial dividing line in Scottish politics right now: each campaign’s success in motivating the particular cohorts that favour them looks crucial to the outcome”.

And then there is gender:

• Scottish women remain loyal to the UK, by 55% to 45%, while Scottish men by contrast are, by 52% to 48%, in favour of independence.

Some final observations:

Friday’s poll also interrogates what is motivating supporters of the two camps – asking respondents to choose the two or three issues that incline them to vote as they intend. Among no supporters, feelings towards the UK are the single most important factor – named by 53%, followed by 37% who suggest that continuation of the union would be better for Scottish pensions and public services. Economic fears of separation, the principal focus of Better Together campaign over most of the course of the year, rank as less important, nominated by just 33% of nos.

 

On the yes side, the single most important factor are feelings about Westminster’s politics, which is named by 51%, while 40% express the hopes that independence would deliver a more prosperous future. Despite a recent emphasis on the risks of English-inspired NHS privatisation, among yes supporters feelings about public services and pensions are less important – identified as especially important in determining their decision by just 24%.

 

Asked “how risky” they think independence is, little more than a quarter of Scots (26%) say it represents “a huge risk”, considerably more than the mere 13% who believe that it is “no risk at all”, but less than 56% who rank the dangers as somewhere in between the two. Sticking with the UK is, not surprisingly, seen as a safer option – only 19% regard that as “a huge risk”, as against 32% who rate it as “no risk at all”. The difference between the two propositions as measured by the average scores on the five point riskiness scale (where 5 represents a huge risk) is substantial, but not perhaps as large as might be expected. The mean score for sticking within the union is 2.7, compared with 3.2 for going it alone.

Cable has wobbled on the news, although it is largely unchanged from before last night’s YouGov poll was released:

via Zero Hedge http://ift.tt/X6iQZ1 Tyler Durden

• Russia faces new U.S., EU sanctions over Ukraine crisis (Reuters)
• Glasgow pulls no punches in welcome to ‘Save the Union Express’ (Guardian)
• Pound Seen Tumbling Up to 10% on Scottish Yes Vote (BBG)
• Moscow stifles dissent as soldiers return in coffins (Reuters)
• Ukraine’s leader sees no military solution of crisis, eyes reforms (Reuters)
• Venezuela Threatens Harvard Professor for Default Comment (BBG)
• Australia Raises Terror Alert to Highest Level in a Decade (BBG)
• Activist Investors Build Up Their War Chests (WSJ)
• Russians Skip Riviera Jaunt as Sanctions Ground Private Jets (BBG)
• Yahoo Faced Big U.S. Fines Over User Data (BBG)
• Why Musk Is Building Batteries in a Desert When No One Is Buying (BBG)
• Madoff Son Andrew Leaves More Than $15 Million in Will (BBG)
• Allies Pledge to Help U.S. Fight Islamic State (WSJ)
• Sanctions Over Ukraine Put Exxon at Risk (WSJ)
• Wall Street watchdog to pick insider as arbitration head – source (Reuters)

 

Overnight Media Digest

WSJ

* Washington’s international allies didn’t make clear how far they would go to join military operations even as they pledged their support. (http://on.wsj.com/X0Z7ts)

* Sanctions against Russia put Exxon in the middle of U.S. foreign policy and threaten to hurt one of the company’s best chances to find significant, and much needed, amounts of crude oil. (http://on.wsj.com/1rYORjN)

* The Treasury Department is monitoring U.S. banks that are shifting some trading operations overseas to avoid tough U.S. swaps rules, according to a department official. (http://on.wsj.com/YBNsTz)

* A number of the largest activists are raising billions of dollars, in an effort to take advantage of their increasing clout in boardrooms and above-average hedge-fund returns. (http://on.wsj.com/1qOCbbr)

* Starboard Value said it would take a number of steps to boost the value of Darden Restaurants, owner of Olive Garden, if the activist hedge fund wins control of the entire board. (http://on.wsj.com/1sxfDxL)

* Americans living abroad are being cut off by banks and brokerages as financial institutions seek to steer clear of a U.S. crackdown on money laundering and tax evasion. (http://on.wsj.com/1rQVPRV)

* Verizon Communications Inc could launch a digital video service over the Internet by the middle of next year, Chief Executive Lowell McAdam said at an investor conference on Thursday. (http://on.wsj.com/1uqrXAp)

 

FT

Savings and insurance firm Engage Mutual said it plans to merge with Family Investments, provider of child trust funds. The combined business is expected to have 2 million customers and 6 billion stg ($9.74 billion) of assets.

Banco Espirito Santo SA secretly loaned money to its 25 percent shareholder, Espirito Santo International, through ES Bank Panama for two years.

Air France KLM SA’s chief executive threatened to stop the development of the Franco-Dutch airline group’s budget carrier in France and its expansion in Europe, if Transavia France does not reach an agreement with the French pilots, before the strike next week.

German taxi drivers hired a driver from Uber, the app-enabled car service, as a part of the sting operation, to serve an injunction backed by threat of six month jail sentence or a fine of 25000 euros.

Manufacturing company Weir Group PLC said it would consider relocating its headquarters in the event of a “yes” vote in the Scotland independence referendum next week.

 

NYT

* The U.S. government was so determined to collect the Internet communications of foreign Yahoo customers in 2008 that it threatened the company with fines of $250,000 a day if it did not immediately comply with a secret court order to turn over the data. The threat, which was made public Thursday as part of about 1,500 pages of previously classified documents that were unsealed by a federal court, adds new details to the public history of a fight that unfolded in secret at the time. (http://nyti.ms/WQtemY)

* RadioShack Corp, the struggling electronics retailer that is quickly running out of cash, said on Thursday that it might have to file for bankruptcy protection, or even liquidate, if it cannot arrange a lifeline. (http://nyti.ms/1uyuqbo)

* Chinese regulators fined Volkswagen AG and Fiat’s Chrysler for violating antitrust laws, announcing on Thursday the first monetary penalties against large multinational carmakers swept up in a broad investigation. The fines, which totaled $46 million, were the latest in a series of tough measures by China against what it considers monopolistic practices. (http://nyti.ms/1tOxwdm)

* Subprime lenders have surprised everyone in recent years by churning out billions of dollars in loans that have not led to a pileup of bad debts. But this month, some signs have appeared that suggest subprime lenders are pushing this spree to the limit. The problems are occurring when they extend credit to particularly risky borrowers or make loans that are harder to repay. (http://nyti.ms/YC2o40)

* For the banks and credit card networks, Apple Pay could threaten some revenue streams, as the technology giant looks to assume a more central role in the financial universe. But the eager participation of banks and card companies suggests both Apple Inc’s clout, and the recognition among financial institutions that they face broader challenges from upstart technology ventures, many of which are not as eager or willing as Apple to work with the incumbent financial industry. (http://nyti.ms/1AEL8Xt)

 

Canada

THE GLOBE AND MAIL

** World oil prices sank to their lowest intraday level in more than two years on Thursday after the West’s energy security watchdog cut its forecast for demand growth, threatening the earnings momentum that had returned to the Canadian oil patch. The International Energy Agency said in its September oil market report that economic weakness in Europe and China prompted it to temper its outlook for global oil demand in 2014 and 2015. (http://bit.ly/1nPUidE)

** It could be as long as a week before Toronto Mayor Rob Ford has a diagnosis for the tumor in his abdomen and a course of treatment is determined, news that continues to leave his political future in question. Zane Cohen, a colorectal surgeon and director of the Zane Cohen Centre for Digestive Diseases at Toronto’s Mount Sinai Hospital, said Ford had a mass in his lower abdomen and would continue to undergo tests Friday. (http://bit.ly/1qMm9Pn)

** The roughly 70 special forces soldiers Canada is deploying to Iraq have yet to start their mission, but these elite troops would be able to teach Kurdish fighters everything from marking targets for air strikes to operating high-tech communications gear. Stephen Harper has committed Canadian soldiers to Iraq for a 30-day assignment, although it is widely believed Ottawa will ultimately extend what the government insists is not a combat mission. (http://bit.ly/1uqPwt2)

NATIONAL POST

** If there are worries about falling oil prices, Canadian companies aren’t showing it. At a panel discussion about the oil sands at an energy conference this week in Toronto, companies seemed more concerned about pipeline shortages and acquiring ‘social licenses’ than the weakening price of a barrel of crude. “Commodity price remains the largest risk overall, but we are generally mostly bullish on the price of oil given the growth and demand outside of North America,” Ivor Ruste, chief financial officer at Cenovus Energy Inc, said in an interview. (http://bit.ly/1qMyYdY)

** The Canadian government proposes to slash public servants’ paid sick leave to five days a year and introduce an unpaid seven-day waiting period before they qualify for new short-term disability benefits. Treasury Board negotiators presented the government’s long-awaited bargaining position on a new sick-leave regime late Wednesday at closed-door talks with the giant Public Service Alliance of Canada. (http://bit.ly/1xQh5jb)

** At 4 a.m. Tuesday, a ring of police officers roused Antonio Coluccio from slumber inside a house in Siderno, a village on Italy’s picturesque coast that has stubbornly remained a stronghold for the Mafia, arresting him – again – and putting another dent in his hope of returning to his home and family in Canada. Coluccio, 44, lived in Richmond Hill, north of Toronto, until he was pressured to leave in 2010 by Canada’s immigration authorities who said he was involved in organized crime, accusations he denied. (http://bit.ly/1syxrIR)

 

China

CHINA SECURITIES JOURNAL

– The combined daily transaction volume at the Shanghai and Shenzhen stock exchanges increased to 431.4 billion yuan ($70.38 billion) on Thursday, the highest level in nearly four years, on the back of a running rally.

SHANGHAI SECURITIES NEWS

– CNOOC Ltd is trying to offload its 50 percent stake in AEGON-CNOOC Life Insurance Co Ltd for auction to potential buyer Tsinghua Tongfang Co Ltd. AEGON-CNOOC posted a net loss of 92.5 million yuan ($15.09 million) in 2013.

CHINA DAILY

– President Xi Jinping said China and Russia should begin early work on a natural gas pipeline project and increase bilateral energy cooperation when he met his Russian counterpart, Vladimir Putin on the sidelines of the summit of the Shanghai Cooperation Organization on Thursday.

– More than 100 internet companies in Beijing signed a pledge to identify and prevent the transmission of illegal and improper information online.

SHANGHAI DAILY

– China’s bank-card consumer confidence index hit the lowest level since the beginning of 2013 in August amid the country’s sluggish macro-economic situation, China UnionPay Co said in a report on Thursday.

PEOPLE’S DAILY

– President Xi Jinping proposed to build an economic corridor linking China, Mongolia and Russia during a meeting of the three heads of state on the sidelines of the 14th summit of the Shanghai Cooperation Organization Thursday.

 

Britain

The Times

NORTH KOREA COMES OUT FOR SCOTLAND’S SALMOND

The Yes campaign in Scotland received an unlikely ally yesterday when it emerged that North Korea was quietly backing the independence movement. The country often described as the hermit kingdom is allegedly keen to increase trade with an independent Scotland, according to officials of the Pyongyang regime. (thetim.es/Ziqcty)

NEW RUSSIA SANCTIONS SET TO HIT BP AND EXXONMOBIL

BP and ExxonMobil could be caught up in the escalating trade war between Russia and the West today when a fresh round of economic sanctions are announced. (thetim.es/1pUeZ7S)

The Guardian

‘POISON PILL’ PRIVATISATION CONTRACTS COULD COST 300 MLN STG-400 MLN STG TO CANCEL

Taxpayers will face a 300 million stg ($487.56 million) to 400 million stg penalty if controversial probation privatisation contracts are cancelled after next May’s general election under an “unprecedented” clause that guarantees bidders their expected profits over the 10-year life of the contract. (bit.ly/1sv6SUP)

INDEPENDENT SCOTLAND ‘FACES DOUBLING OF BBC LICENCE FEE

The BBC is under political pressure to reveal details of a highly charged internal study which found that viewers in an independent Scotland would have to pay almost double their current licence fee if they wanted to continue watching and listening to the same BBC shows. (bit.ly/YBmtHH)

The Telegraph

JUDGE THOKOZILE MASIPA RIPS APART PROSECUTION CASE AGAINST OSCAR PISTORIUS FOR MURDER OF REEVA STEENKAMP

Judge Thokozile Masipa, who tried the Oscar Pistorius case without a jury, said prosecutors had failed to prove beyond reasonable doubt that Pistorius intended to kill his girlfriend at his Pretoria home on Valentine’s Day last year. (bit.ly/1tO5xu8)

SCOTLAND’S ALEX SALMOND GOES TO WAR WITH BBC OVER RBS ‘LEAK’

An irate Alex Salmond today declared war on the BBC after the Corporation disclosed Royal Bank of Scotland Group’s decision to move its headquarters to England if there is a Yes vote. (bit.ly/X3ePEr)

Sky News

NEW POLL GIVES ‘NO’ SMALL LEAD IN SCOTLAND VOTE

The Better Together campaign in Scotland is retaining a marginal lead, according to a new poll that puts No on 52 percent and Yes on 48 percent. The YouGov poll of 1,300 people on the issue of Scottish independence for The Sun and The Times was taken over Tuesday to Thursday. (bit.ly/1tDOlnz)

AMAZON TO CREATE THOUSANDS OF JOBS IN LONDON

Amazon has announced plans to open a new London office with the potential for more than 3,000 extra jobs. The online retailer, which already employs 1,700 people in its existing UK offices, said its main corporate office would switch to a building in Shoreditch in 2017. (bit.ly/WZhlLT)

The Independent

SCOTTISH INDEPENDENCE: PRICES WILL RISE WITH YES VOTE, JOHN LEWIS BOSS WARNS

Prices in Scottish branches of John Lewis, Waitrose and Next are likely to be higher than in the rest of the UK if the country votes to become independent next week. (ind.pn/1pUs29f)

SPORTS DIRECT TO BE SUED BY ZERO-HOUR WORKERS AFTER THEY MISS OUT ON A £160M BONUS

Workers at the Sports Direct chain of stores who were left out of a 160 million stg bonus scheme because they are on zero-hour contracts are preparing to take legal action. (ind.pn/1paomAl)

 

 

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Retail sales for August at 8:30–consensus up 0.6%
Import prices for August at 8:30–consensus down 0.9%
University of Michigan consumer confidence for September–consensus 83.3
Business inventories for July at 10:00–consensus up 0.4%

ANALYST RESEARCH

Upgrades

Cedar Realty Trust (CDR) upgraded to Buy from Hold at KeyBanc
Genuine Parts (GPC) upgraded to Buy from Hold at BB&T
Inland Real Estate (IRC) upgraded to Buy from Hold at KeyBanc
Littelfuse (LFUS) upgraded to Outperform from Perform at Oppenheimer
Netflix (NFLX) upgraded to Equal Weight from Underweight at Barclays
Noranda Aluminum (NOR) upgraded to Buy from Neutral at Goldman
OCI Partners (OCIP) upgraded to Buy from Neutral at Citigroup
Ramco-Gershenson (RPT) upgraded to Buy from Hold at KeyBanc
Sprint (S) upgraded to Market Perform from Underperform at Cowen
The Advisory Board (ABCO) upgraded to Outperform from Market Perform at Wells Fargo

Downgrades

Annie’s (BNNY) downgraded to Sector Perform from Outperform at RBC Capital
DDR Corp. (DDR) downgraded to Neutral from Buy at UBS
Investors Real Estate (IRET) downgraded to Underperform at RBC Capital
OCI Resources (OCIR) downgraded to Neutral from Buy at Citigroup
PMFG (PMFG) downgraded to Market Perform from Outperform at William Blair

Initiations

Acuity Brands (AYI) initiated with an Outperform at Cowen
Aerohive Networks (HIVE) initiated with an Equal Weight at Morgan Stanley
Alibaba (BABA) initiated with an Outperform at Wedbush
Allison Transmission (ALSN) initiated with a Positive at Susquehanna
AmSurg (AMSG) initiated with a Buy at KeyBanc
Aruba Networks (ARUN) initiated with an Equal Weight at Morgan Stanley
Aviv REIT (AVIV) initiated with a Buy at Stifel
CareTrust REIT (CTRE) initiated with a Hold at Stifel
Chart Industries (GTLS) initiated with a Market Perform at Cowen
Community Health (CYH) initiated with an Outperform at Leerink
Cree (CREE) initiated with a Market Perform at Cowen
Dollar General (DG) initiated with a Buy at UBS
Dollar Tree (DLTR) initiated with a Buy at UBS
Epizyme (EPZM) initiated with a Buy at Mizuho
Family Dollar (FDO) initiated with a Neutral at UBS
HCA Holdings (HCA) initiated with an Outperform at Leerink
Hanesbrands (HBI) initiated with a Buy at Wunderlich
Itron (ITRI) initiated with a Market Perform at Cowen
L Brands (LB) initiated with a Buy at Wunderlich
LifePoint Hospitals (LPNT) initiated with a Market Perform at Leerink
Maxwell (MXWL) initiated with an Outperform at Cowen
Methanex (MEOH) initiated with a Buy at Citigroup
NewLink Genetics (NLNK) initiated with a Buy at Mizuho
PVH Corp. (PVH) initiated with a Buy at Wunderlich
Pacific Ethanol (PEIX) initiated with an Outperform at Cowen
Performance Sports Group (PSG) initiated with an Outperform at Imperial Capital
Perry Ellis (PERY) initiated with a Buy at Wunderlich
Polypore (PPO) initiated with an Outperform at Cowen
Ruckus Wireless (RKUS) initiated with an Underweight at Morgan Stanley
Salix (SLXP) initiated with an Underperform at Credit Suisse
Silver Spring Network (SSNI) initiated with an Outperform at Cowen
Streamline Health (STRM) initiated with a Market Perform at Cowen
Synchrony Financial (SYF) initiated with a Neutral at UBS
Tenet (THC) initiated with a Market Perform at Leerink
Ubiquiti Networks (UBNT) initiated with an Equal Weight at Morgan Stanley
Universal Health (UHS) initiated with an Outperform at Leerink
Vitesse (VTSS) initiated with a Buy at Ascendiant
Volaris (VLRS) initiated with an Equal Weight at Barclays

COMPANY NEWS

Hertz (HTZ) reached an agreement-in-principle with Carl Icahn to add three directors to its board
Alliance Data (ADS) to acquire Conversant (CNVR) for $35 per share, or $2.3B
Starboard releases detailed transformation plan for Darden (DRI), which includes a company-wide operational improvements designed to generate more than $300M in EBITDA improvements; a turnaround plan for Olive Garden; a value enhancing strategy for Darden’s real estate assets; a separation of concepts into the most logical groupings; and a new franchising program believes transformation plan can unlock $19-$38 per share in value
U.S. had threatened Yahoo (YHOO) with $250,000/day fine over not providing user data
Barclays (BCS) said John McFarlane to succeed David Walker as chairman
Lexicon’s (LXRX) publication of Phase 2b study showed LX4211 provides a meaningful benefit for patients with type 2 diabetes

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Sportsman’s Warehouse (SPWH), Ulta Salon (ULTA)

Companies that missed consensus earnings expectations include:
Intrawest Resorts (SNOW)

Companies that matched consensus earnings expectations include:
Green Bancorp (GNBC)

NEWSPAPERS/WEBSITES

Dollar General (DG) waiting on FTC feedback for Family Dollar (FDO) deal, NY Post reports (DLTR)
Verizon (VZ) could launch digital video service by mid-2015, WSJ reports
Applied Materials (AMAT)/Tokyo Electron filing doesn’t satisfy MofCom, Bloomberg says
General Motors (GM) issues ‘stop delivery’ order for new Corvettes, WSJ reports
Citi’s (C) Diners Club attracts attention of banks in Japan, Bloomberg reports
Apple’s (AAPL) website crashes as users look to pre-order iPhone 6, BI reports
Sprint (S) CEO says looking for partnerships to broaden scale, Reuters reports
Sell lululemon (LULU) during rally, Barron’s says

SYNDICATE

HD Supply (HDS) announces sale of 20M shares by holders
Health Care REIT (HCN) files to sell 15.5M shares of common stock
Inventure Foods (SNAK) 3.59M share Secondary priced at $12.85
TriNet (TNET) 12M share Secondary priced at $25.50

via Zero Hedge http://ift.tt/1qraTKt Tyler Durden

While today’s key news event will be the preannounced latest, third, round of anti-Russian sanctions and the Russian retaliation, the reality as DB notes, is that the market seems to be seeing “some fatigue” in this story with the ECB, Scotland and next week’s Fed meeting taking center stage. As a result, and ahead of expectations of change in Fed language which should carry a more hawkish tone, the dollar has been bid up some more overnight, leading to fresh multi-year highs in the USDJPY, and the now-paired TSY trade, with 10Y yields up to 2.57%, although this may now be in short-term oversold territory. The latest Scottish poll appears to have dented some of the “Yes” momentum, with 52% of the polled saying they would vote No in the referendum, although right now neither side has a clear majority when factoring in the undecideds: which means it will come down to the wire next week, with clear implications for Europe’s secessionist movements if the Yes vote still manages to prevail, not to mention massive ramifications for the UK.

Overnight in Asia, China’s latest lending data was released. China’s credit growth rebounded sharply in August following a weak July. New loans in August came in at RMB702.5bn up from RMB385.2bn in July and was around market consensus. M2 was up 12.8pct yoy, lower than the 13.5yoy growth in July (and consensus) but this was previewed by Premier Li’s speech earlier this week. Markets are range bound in the Asia with the Nikkei up +0.4% and the Shanghai Composite up +0.2% although the Hang Seng is down -0.3%. MSCI Asia Pacific down 0.2% to 146. Nikkei 225 up 0.2%, Hang Seng down 0.3%, Kospi up 0.4%, Shanghai Composite up 0.9%, ASX down 0.3%, Sensex up 0%

European equities trade mixed, with minor outperformance in both the FTSE-100 and the IBEX-35 as recent independence campaigns from Scotland and Catalonia lose some steam. Yesterday’s YouGov poll showed Salmond’s Independence bid only briefly holding the lead over the ‘No’ vote, as unionists reclaimed the top spot just six days away from referendum polling. Nonetheless, Spain’s IBEX-35 has suffered throughout the week on Catalonia’s break-up bid, with today’s upside only trimming the weekly losses to 2.2%.  14 out of 19 Stoxx 600 sectors rise. 55.7% of Stoxx 600 members gain, 41.2% decline. Eurostoxx 50 -0.1%, FTSE 100 +0.2%, CAC 40 -0.2%, DAX -0.3%, IBEX +0.3%, FTSEMIB +0%, SMI -0.3%.

Looking to the day ahead, in Europe we have the Spanish August inflation read (expected in at +0.1% MoM), Italian and euro area July Industrial Production (expected in at -0.2% and +0.7% MoM). In the US we have August Retail Sales reads with the advanced MoM expected in at +0.6%, the September UoM Confidence read (expected at 83.3) and July Business Inventories data (expected in at 0.4%). In geopolitics, today sees the strengthened EU sanctions on Russia take effect. Implementation had been delayed in light of the ceasefire announcements last week but yesterday leaders and diplomats agreed to now bring them in. The US looks set  to follow suit and President Obama yesterday said he would provide more details today. We seem to be seeing some fatigue in this story with the ECB, Scotland and next week’s Fed meeting taking center stage. However the regions problems are clearly yet to be resolved and the aim of bringing in the new sanctions today is to keep up pressure on Russia (BBC). Russia has said it is preparing its own sanctions in response.

Market Wrap

• S&P 500 futures up 0% to 1988.3
• Stoxx 600 up 0.1% to 344.6
• US 10Yr yield up 1bps to 2.56%
• German 10Yr yield up 3bps to 1.07%
• MSCI Asia Pacific down 0.2% to 146
• Gold spot down 0.3% to $1237.7/oz

Bulletin Headline Summary from RanSquawk and Bloomberg

• T-Notes and Bund futures remain close to weekly lows, as traders look ahead to next week’s FOMC meeting, where consensus is growing that the Fed could revise their statement
• AUD and JPY remain the week’s two poorest performing currencies, as carry trade unwind continues to benefit the USD over most others
• Treasuries lower, head for second consecutive weekly loss, amid speculation Fed may next week amend statement language and signal rate increase next year.
• BofAML now sees first rate hike in June 2015, previously expected September; economist Ethan Harris cites stronger than forecast growth data, inflation in line with Fed forecast
• China’s broadest measure of new credit trailed analyst estimates in August, adding to the government’s challenge to meet its economic-growth target amid a slumping property market and a pullback in manufacturing
• U.S. House and Senate leaders are backing Obama’s call to train and equip Syrian rebels even as Republicans’ demand for a broader offensive to defeat Islamic State extremists may delay congressional action
• Scotland’s nationalists suffered a second straight setback in the polls after YouGov Plc showed them trailing less than a week after overtaking the anti-independence campaign for the first time
• GBP/USD has the potential to tumble 10% should the Scots vote for independence from the U.K., according to economists surveyed by Bloomberg
• Russia threatened retaliation against a U.S./EU decision to stiffen sanctions against Moscow because of Ukraine and may ban some imports including clothing and used cars
• Abe will need a JPY5t ($47b) fiscal stimulus package to cushion the impact of a further increase in Japan’s sales tax, a survey by Bloomberg News show
• Sovereign yields higher. Asian stocks mostly lower, European stocks mostly higher, U.S. equity-index futures gain. WTI crude higher, gold higher, copper little changed
• Attention turns to a slew of tier 1 US data, with August Retail Sales due at 1330BST/0730CDT and prelim University of Michigan Confidence due to follow at 1455BST/0855CDT

US Economic Calendar

• 8:30am: Retail Sales Advance, Aug., est. 0.6% (prior 0%)
• Retail Sales Ex Auto, Aug., est. 0.3% (prior 0.1%)
• Retail Sales Ex Auto and Gasoline, Aug., est. 0.5% (prior 0.1%)
• Retail Sales Control Group, Aug., est. 0.5% (prior 0.1%)
• 8:30am: Import Price Index, Aug., est. -1.0% (prior -0.2%)
• Import Price Index y/y, Aug., est. -0.6% (prior 0.8%)
• 9:55am: UofMich Confidence, Sept. preliminary, est. 83.3 (prior 82.5)
• 10:00am: Business Inventories, July, est. 0.4% (prior 0.4%)

FIXED INCOME

Both T-notes and Bund futures fell throughout the morning, as traders hesitantly look ahead to next week’s FOMC meeting, where expectations of a hawkish turn from the Fed continue to grow. As such, peripheral European yield spreads are generally tighter against Germany, however Dec-14 Bund futures have found some support at the weekly lows of 148.02.

EQUITIES

European equities trade mixed, with minor outperformance in both the FTSE-100 and the IBEX-35 as recent independence campaigns from Scotland and Catalonia lose some steam. Yesterday’s YouGov poll showed Salmond’s Independence bid only briefly holding the lead over the ‘No’ vote, as unionists reclaimed the top spot just six days away from referendum polling. Nonetheless, Spain’s IBEX-35 has suffered throughout the week on Catalonia’s break-up bid, with today’s upside only trimming the weekly losses to 2.2%.

The French utilities sector (GDF Suez, EDF) sharply underperforms after the French state council ruled out any increase in power prices, despite an industry-wide call for the French regulators to do so.

FX

GBP only briefly benefited from yesterday’s YouGov poll as long liquidation and the continued jitters over Edinburgh’s bid for separation keeps traders from committing to longer-term position. 1-week GBP/USD implied vols now at 4yr highs as independence vote and forthcoming polls promote uncertainty for the GBP. AUD and JPY remain the week’s two weakest currencies, with AUD down another 65 pips today (weekly losses now stand at approx. 325 pips) and JPY down 30 pips (weekly losses of approx. 215 pips) as the carry trade unwind continues to benefit the USD.

COMMODITIES

WTI and Brent crude futures trade higher, as the energy complex recovers from recent multi-month and multi-year lows. Nonetheless, the WTI-Brent spread remains close to the tightest levels of the week as Brent’s upside is capped by looming Libyan supply, dwindling Chinese demand and OPEC’s comfort with falling crude prices. Precious metals remains under pressure, with gold touching late January lows at USD 1,232.33 as silver tumbles to June 2013 lows at USD 18.47 on a stronger USD and expectations of a hawkish Fed meeting next week.

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DB’s Jim Reid concludes the overnight recap

Indeed this time next week we’ll know the state of the union in the UK. Virtually every new day now sees a new poll ahead of next week’s big vote. Yesterday was no different with last night’s YouGov poll (which excluded don’t know’s) confirming this week’s bounce in the NO vote with 52% of the vote vs the Yes campaign’s 48%. It marks the first You Gov polling gain by the No campaign since early August although with just a 4% gap the vote still looks set to be close. There was a small +0.2% gain in Sterling vs the Dollar post the release but the damage from the weekend’s YES votes has yet to be corrected.

Next we have an update on the latest HY fund flow data. This week saw outflows across the HY world, especially from North American funds which saw funds lose -0.4% of NAV. It’s fair to say that the past two weeks of outflows have been nowhere near the scale we saw in the weeks leading up to early August and outside of Western Europe the 4 week flows moving average remained in positive territory. This is certainly a story to continue to keep an eye on. If we did get a more hawkish Fed next week it could upset a market that hasn’t regained its pre-summer swagger. In the PDF today we include the chart of North American fund flows as % of NAV.

In terms of other newsflow yesterday, we had the French CPI August inflation read which dropped (as expected) to +0.5% YoY whilst US Initial Jobless Claims came in higher at 315k (vs 300k expected). In terms of market reaction it was a mixed day for markets yesterday with equities notably underperforming fixed income. In Europe the Stoxx 600 was down -0.2% with the UK and periphery markets leading the losses as the FTSE 100 and Ibex 35 fell -0.5%. European credit was generally more positive with a marginal widening in iTraxx Main (+0.5bps) whilst Xover, Fin Sen and Fin Sub tightened -3bps, -0.1bps and -3bps respectively. In the US the S&P 500 closed the day flat whilst CDX IG and HY widened +0.5bps and +3bps respectively.

Another interesting story yesterday was the IEA’s downward revision of its oil demand forecast for 2014 and 2015 on the back of weaker outlook for economic growth in Europe and China. The institution noted that global oil demand growth had slowed to below 500k bbl/day in Q2 which is a first in 2.5 years. We’ve flagged a few times now on how the recent decline in Crude oil is somewhat telling given the various geopolitical uncertainties globally and whilst a stronger Dollar may explain some of these moves, in reality demand weakness is difficult to ignore. Brent Futures fell over 1% yesterday morning before rallying back strongly after Russian sanctions were confirmed (see below). It’s trading around -0.2% lower overnight at around $97.80. Overall we’ve now seen a decline for seven of the last eight weeks. Whilst historically such falls in oil prices might be seen as an economic positive, with the world’s regions, most notably the Eurozone, fighting disinflation these developments will add to the downward pressure. Will this free up the ECB and slow down the Fed?

Overnight in Asia, China’s latest lending data was released. China’s credit growth rebounded sharply in August following a weak July. New loans in August came in at RMB702.5bn up from RMB385.2bn in July and was around market consensus. M2 was up 12.8pct yoy, lower than the 13.5yoy growth in July (and consensus) but this was previewed by Premier Li’s speech earlier this week. Markets are range bound in the Asia with the Nikkei up +0.4% and the Shanghai Composite up +0.2% although the Hang Seng is down -0.3%.

Looking to the day ahead, in Europe we have the Spanish August inflation read (expected in at +0.1% MoM), Italian and euro area July Industrial Production (expected in at -0.2% and +0.7% MoM). In the US we have August Retail Sales reads with the advanced MoM expected in at +0.6%, the September UoM Confidence read (expected at 83.3) and July Business Inventories data (expected in at 0.4%). In geopolitics, today sees the strengthened EU sanctions on Russia take effect. Implementation had been delayed in light of the ceasefire announcements last week but yesterday leaders and diplomats agreed to now bring them in. The US looks set  to follow suit and President Obama yesterday said he would provide more details today. We seem to be seeing some fatigue in this story with the ECB, Scotland and next week’s Fed meeting taking center stage. However the regions problems are clearly yet to be resolved and the aim of bringing in the new sanctions today is to keep up pressure on Russia (BBC). Russia has said it is preparing its own sanctions in response.

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Submitted by James E. Miller via Mises Canada blog,

Labor unions are a dying breed. According to the Pew Research Center, union membership in America “is at its lowest level since the Great Depression.” In 1983, there were approximately 17.7 million union workers. Today, that number stands at 14.5 million, with every estimate showing a continued downward trajectory. Clearly, the Norma Raes of the world are going extinct.

But as Samuel Johnson quipped, one should never dismiss the triumph of hope over experience. In celebration of Labor Day, the leftie rag New Republic recently published an interview with labor strategist Rich Yeselson defending the role of unions in the U.S. As a labor organizer, Yeselson’s bias is on full display. Instead of giving an objective view of stagnating union membership, he obfuscates to boost his own profession.

When asked if unions are dead, Yeselson rightly says “no” while pointing out that millions of Americans are still active members. Unions not only retain fairly hefty membership, but also own valuable real estate in big cities and pension funds worth billions of dollars. Despite declining membership, there is still plenty of capital left over from organized labor’s heyday.

Fancy buildings and promised retirement benefits aren’t enough to reverse the downward trend however. Public opinion about unions is also on the decline. Between Volkswagen plant workers voting against joining the United Auto Workers and the confectionary company Hostess declaring bankruptcy to rid itself of unionized employees, there is a growing perception of greed directed at labor organizers. There is also the uncomforting fact that state and local governments – the industry most heavily unionized in the country – are underwater on their pension obligations. Even politicians are starting to face the truth: there is less money in government coffers than was promised. New Jersey Governor Chris Christie recently toured his state telling voters that pension funds “will go bankrupt if we don’t make significant changes to it.” He won’t be the last to break the bad news.

Yeselson plays stupid to this fiscal reality. Throughout the interview, he defends the legacy of unions with sophistry and economic inanity. Yeselson acknowledges that unions often try to “take the wage out of competition.” But, he asserts, this is not a problem. With locked-in wages, “the quality of the product, innovation, etc. are the ways that companies, ideally, compete.”

This is patent nonsense. Wages are an integral part of running a business. Management can’t determine costs without accounting for the price of labor. Competition in wages means business can attract the best and brightest workers. An industry without workers who compete for wages is stagnant, unable to innovate to its full capacity. For someone on the side of worker well-being, Yeselson doesn’t want to see business competing for employees by offering higher wages or more generous benefits.

The biggest whopper of the Yeselson interview comes when he asserts that unions are “inherently conservative institutions which historically developed parallel with the development of capitalism itself.“ Ezra Klein backs him up on this point by claiming “you’ll find unions pretty much everywhere you’ll find capitalism.” This is a classic mistake of correlation with causality. Just because the labor movement accelerated with American economic power during the twentieth century doesn’t mean it helped in the process. If anything, unionization inhibited the ability of the entrepreneurs to succeed. Yeselson says unions “are as much a part of capitalism as Henry Ford or Apple.” That’s also incorrect; Henry Ford and Steve Jobs created products for the marketplace. Unions don’t produce anything for consumers. They leech off the profits of business.

Yeselson even has the gall to say that unions are inherently capitalist because they “use contracts…to link their members to the fortunes of the companies they contract with.” Clearly, Yeselson needs to brush up on his common law. Contracts aren’t contracts when they have the implicit use of force at their backing. Business either chooses to bargain with unions by choice or by force. The National Labor Relations Act – passed at the height of the New Deal – compels some private U.S. companies to bargain with unionized employees. Yeselson tries to say that “contracts are not unilaterally imposed at gunpoint upon terrified managers” but “are bargained between two institutions who have both common and conflicting interests.” Again, why must management bargain to begin with? Why are there deliberations over wages and benefits?

With government acting as the muscle behind unions, there is no choice. Company owners must bargain or face the threat of fines or jail time. This isn’t an amicable relationship. It’s a thuggish shakedown. Is it any wonder why Jimmy Hoffa is such an intolerable brute?

Ayn Rand had unions pegged best when she declared their purpose has never been to empower the average worker. “Unions and trade associations,” she wrote, “are not directed against employers or the public but against the best among their own members.” The goal has never been about “raising the weak in any way whatever, but simply forcing the strong down to the level of the moron.”

Yeselson ends his futile attempt to defend unions by bringing out the classic trope: “Unions, as the old saying goes, the folks who brought you the weekend.” This is nothing but an elementary school myth. A bunch of greasy-haired petition-gatherers didn’t create the weekend. Capital accumulation and rising productivity make it possible for people to take off work at the end of the week. Otherwise, the drop in commercial activity would render a business unprofitable, and thus unable to keep the lights on. This has always been the great secret behind unionist fiction.

With economic growth still staggering, the decline of union membership can’t come soon enough. Freed from the demands of overpaid bargainers, innovation and productivity inevitably rise. Increasing numbers of Americans are migrating to states with less strenuous union laws. When given a choice, workers go where the money is; not where there’s tough talk about bargaining rights. Labor is important; business is important; and solidarity is important. They are all no doubt conservative principles worth maintaining. But the right of every man to choose for himself takes precedent over all. You can’t build without capital; just as you can’t organize without sovereign will. Unions violate the spirit of voluntary association by the very fact they have government-backing. Yeselson is lying to himself if he sees forced collective bargaining as a necessary component of capitalism. And he is doing workers a great disservice by encouraging the formation of unions.

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How many times in the last few years have you (or any of Europe’s less-than-core leaders) said to yourselves- “EU, what’s the point?” All this ceding of sovereignty, centralization of power, relinquishment of decision-making; and for what? The answer – of course – free-er trade, a customs union enabling cross-border trade to flourish and in the great economics textbooks of the world for each member state to do what they do best (German VWs and Greek yogurt?) and maximally profit from that. That all sounds wunderbar in practice… except this rather uncomfortable truth-seeking chart shows that the last decade has seen an accelerating decline in intra-European-Union trade, especially in the last 4 years – to levels that are now below those pre-EU. So, once again, “what’s the point?”

 

Source: Bruegel

Note: The above figure shows intra-EU and intra-Eurozone shares of export on total export of the two groups respectively. Each of the two lines were constructed taking into account the changing composition of the European Union and the Euro Area over time, meaning that a given country is included in the series only by the time it joined the EU or the Euro. However, further calculations shows results do not change dramatically if considering a fixed group of countries in either series.

 

The share of the intra-EU export of the EU total export experienced a steady rise since the early 80’. In fact, the rise was up to 8 percentage points in that period. However, after stagnating from the mid-90’s until the end of the 2000’s, intra-EU saw a sharp downward trajectory in the last four years, implying global trading partners have become and are becoming more important. Interestingly, the data also show that the Euro Area has been following nearly the exact same pattern as the European Union as a whole, suggesting the common currency might not have had the expected effect on trade between Euro Area members.

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If Barroso and his muppets can’t even get the customs union right, what hope is there for them to reform their way out of this ever-shrinking paper bag of EU fragility. Perhaps, EUR is declining, not on QE-debasement-jawboning hope; but on a realization that it’s all over again.

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