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It is becoming increasingly clear that the US election will come down to a handful of “must win” battleground states, and with Hillary Clinton pulling away from Trump in recent polling, many had written off the republican candidate. However, momentum may be shifting Trump’s way after the latest poll from Bloomberg showed that Donald Trump has regained a slim advantage in one of the most important battleground states, Florida, as key independent voters narrowly broke his way.

The poll found that the Republican presidential nominee has 45% to Democrat Hillary Clinton’s 43% among likely voters when third-party candidates are included, the poll found. In a hypothetical two-way race, Trump holds on to a fractional lead with 46% to Clinton’s 45%. Most notable is that among independents, Trump gets 43% to Clinton’s 41% in a head-to-head contest. When third-party candidates are included, Trump picks up 1 point with independents while Clinton drops to 37%, with Libertarian Gary Johnson taking 9 percent and the Green Party’s Jill Stein getting 5 percent.

The surprising poll result promptly sent the Mexian peso, considered a market indicator of Trump’s victory chances, lower when it was announced early this morning.

Cited by Bloomberg, pollster J. Ann Selzer, who oversaw the survey said that “this race may come down to the independent vote,” said . “Right now, they tilt for Trump. By a narrow margin, they opted for Obama over Romney in 2012.” President Barack Obama won independents in 2012 by 3 percentage points, and the overall state by less than a point, his narrowest victory that year.

Trump’s showing in this poll is stronger than in other recent surveys in the state. Clinton had an advantage of 3.1 percentage points in the RealClearPolitics Florida average on Tuesday.

Despite the turnaround in the state, it would not be sufficient on its own: Florida, one of two states Trump calls home, is rated by major election forecasters as a toss-up or leaning toward Clinton. If Trump won all the states Mitt Romney did in 2012, plus Florida’s 29 Electoral College votes, he’d still be 35 electoral votes short of the 270 needed to win the White House.

Bloomberg notes that this poll was conducted Friday through Monday, covering the first two days of Trump’s three-day campaign swing there. Both campaigns are focusing heavily on the state in terms of advertising and time. Clinton planned to be there Wednesday for the second day in a row and Obama will stump there on her behalf on Friday.

The survey included 953 registered voters who said they’d already cast ballots or plan to do so, including an oversample of 148 Hispanics to allow for a more statistically solid analysis of their views. The margin of error on responses from just Hispanics is plus or minus 6.7 percentage points.

Demographic details:

• Clinton gets 51 percent of the Sunshine State’s Hispanic vote and 49 percent of those under age 35 in the two-way contest, while Trump has 51 percent of seniors and 50 percent of those without college degrees. Other groups Clinton wins handily in the two-way contest include non-whites (+33 points), those in the Miami area (+30 points), and those with college degrees (+10 points).
• Demographics where Trump is recording some of his biggest advantages over Clinton also include rural residents (+31 points), those in the more conservative northwest Florida Panhandle (+14 points), and those without college degrees (+9 points).
• Half of Trump’s supporters say they’re either mostly skeptical or convinced that Florida ballots won’t be counted accurately, while 54 percent of Clinton supporters are completely convinced voting counting will be precise.

“This poll suggests Trump has more opportunity in Florida than some think is realistic given his poor standing with Hispanics,” Selzer said. “But he does well with groups that are key to winning there, including older, more reliable voters. Clinton depends on younger voters and a strong presence at the polls of black and non-Cuban Hispanics.”

One of the key recent variables is newsflow surrounding the price surge in Obamacare, coming at a critical time for Hillary Clinton, who according to national polls, enjoys a comfortable lead. However, as we previewed back in May, the official admission surrounding Obamacare’s price hikes, expected to lead to double-digit price increases in 2017, will likely play a deciding role in turning if not the core voter base, then some of the key independent voters.

We expect that Trump will continue hammering on the message of Obamacare, and specifically its repeal, as a key factor in turning opinion his way with promises of repealing the broadly unpopular tax. Sure enough, moments ago Trump suggested that Obamacare will be a core focus of his upcoming campaigning over the last two weeks of the presidential cycle.

REPEAL AND REPLACE OBAMACARE!

— Donald J. Trump (@realDonaldTrump) October 26, 2016

via http://ift.tt/2euBRQT Tyler Durden

After economic optimism based on “soft” surveys and stronger than expected earnings lifted stocks around the globe in the first two days of the week, it was the turn of earnings to push them down again. European, Asian stocks and S&P futures all fall as oil prices slumped and Apple Inc.’s results disappointed.

Yesterday, the S&P 500 ended the day with a -0.38% drop led by declines in the consumer discretionary sector. Following disappointing earnings reports there were double digit declines for Under Armour and Whirlpool in the sector, while General Motors also tumbled -4% as investors looked through better than expected Q3 numbers and decided that we may have seen the peak in auto sales. Other corporates to feel the pinch yesterday following earnings were 3M, where shares closed down nearly -3%, and also Caterpillar.

Meanwhile, the big earnings focus was Apple’s Q4 numbers. While revenues for the fourth quarter confirmed the first annual decline in revenue since 2001, the headline sales number was in line with the consensus while earnings were a fraction ahead. Shares were initially up 3% in extended trading with that news however once the details were sifted through, shares reversed and were actually down over -3%. Guidance on margins for the December quarter was a little lower than hoped, while some also pointed towards a disappointing decline in selling prices for its smartphones.

Analysts were generally not happy with the world’s largest company by market cap: “Apple’s forward expectations aren’t great and it’s susceptible to more of a pullback,” said James Audiss, Sydney-based senior wealth manager at Shaw and Partners Ltd., which oversees about $7.5 billion. “Apple does speak directly to the region as a lot of its supply chain is in Asia, and that will add to weakness,” said Michael McCarthy, chief market strategist in Sydney at CMC Markets. Asian earnings have been generally positive so far, he said.

Putting earnings season to date in context, the S&P has have barely moved since Alcoa Inc. kicked off the reporting season two weeks ago as U.S. and European earnings failed to offer clear cause for optimism. While the big banks, namely Goldman, Citigroup and JPMorgan started off Q3 season strong and beat forecasts, disappointing results from Lloyds Banking Group Plc, Daimler and Caterpillar, among others, have muddied the outlook for global growth. That leaves earnings from companies including Amazon.com, Deutsche Bank and Volkswagen in focus this week. Exacerbating the uncertainty: skepticism about major oil producers’ ability to agree output reductions.

The good news, at least for now, is that concern over the outcomes of the U.S. presidential election and Federal Reserve policy has eased, reducing overall volatility. Bank of America Merrill Lynch’s GFSI Market Risk Index, a measure of future price swings implied by options trading on global equities, interest rates, currencies and commodities, has fallen to the lowest since 2014. Hillary Clinton’s odds of victory in next month’s vote are close to the highest on record at 86.5 percent, according to forecaster FiveThirtyEight, and futures trading indicates a 73 percent chance of a U.S. interest-rate hike by December.

After yesterday’s blistering move in commodities, especially metals, higher, crude oil slid 1.3% to $49.29 a barrel in New York in early trading as the market focused on a warning by Russia which confirmed our warning from the weekend, namely that output cuts aren’t an option for Russia, according to Interfax. American supplies rose by 4.75 million barrels last week, industry data showed before Wednesday’s release of official figures.  Putting further pressure on oil is the ongoing collapse in Brent time-spreads, with the Z6-Z6 spread, shown below, now the widest since January.

“The recent drop in oil prices is partially responsible but also indices continue to struggle for momentum as they attempt to break above their recent highs,” said Craig Erlam, senior market analyst at OANDA.

In FX, the big movers was the Australian dollar which strengthened 0.6 percent after consumer prices in Australia increased 1.3% from a year earlier, in the latest quarter exceeding the previous period’s 1 percent gain.

Asia stocks slipped amid the declines in oil prices following a larger than expected build in the latest API report, with Apple earnings, especially among AAPL suppliers, pressuring local markets. Energy companies led declines on the MSCI Asia Pacific Index, which slipped 0.2 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong slid 1.4 percent, led by an 11 percent drop in Great Wall Motor Co. after recommendation downgrades. South Korea’s Kospi index declined 1.1 percent after Hyundai Heavy Industries Co. tumbled 5.1 percent on mounting concern the shipbuilding industry faces more job cuts.  The ASX 200 (-1.5%) underperformed after strong Australian Q3 CPI figures beat expectations, reducing the likelihood of further RBA easing. The Nikkei 225 (+0.15%) traded flat for a bulk of the session.

The Stoxx 600 lost 0.9 percent at 10:38 a.m. in London. The equity gauge has failed to post a daily increase since Thursday as investor sentiment oscillates on mixed earnings. Energy producers slipped with oil Wednesday, while miners declined after reaching their highest prices since August of last year. 

Among European companies moving on corporate results, as summarized by Bloomberg:

• Lloyds fell 1.8 percent as Britain’s largest mortgage lender posted a slide in profit after taking a charge to compensate customers who were wrongly sold loan insurance.
• Vinci SA dropped 1.8 percent, dragging construction companies lower, as its revenue fell.
• Bayer AG retreated 2.4 percent as its prescription-drugs unit, which is at risk of being sidelined after the takeover of Monsanto Co., spurred better-than-forecast earnings.
• Heineken NV fell 2.3 percent as Exane BNP Paribas noted that, while its third-quarter volumes beat forecasts, the “whisper” consensus estimate was probably higher than the official one.
• Kering SA, the owner of Gucci, led retailers to the best performance of the Stoxx 600’s 19 industry groups, rallying 7.6 percent after posting its fastest sales growth since 2012.
• Logitech International SA jumped 12 percent as the Swiss electronics manufacturer beat earnings and revenue projections.
• Banco Santander SA rose 0.9 percent after posting better-than-expected third-quarter profit.

The U.S will auction $34 billion of five-year nominal notes and $15 billion of two-year floating-rate debt. The yield on U.S. Treasuries due in a decade was little changed at 1.76 percent. American sovereign debt is saddling investors with losses for the third month in a row as speculation mounts that inflation will quicken and the Fed will boost interest rates. “The cyclical low for inflation rates has almost certainty past,” said Peter Jolly, the global head of markets research at National Australia Bank Ltd. in Sydney, who predicts headline consumer-price gains in the U.S. will rise above 3 percent early next year if oil prices remain at current levels. “That will help change market perceptions of inflation ahead, and put to rest deflation fears for now.” China’s 10-year government bonds fell for a third day amid concern policy makers are looking to increase scrutiny of wealth-management products, a move that would curb the flow of funds to the debt market.

Bulletin Headline Summary from RanSquawk

• European equities trade lower across the board in a continuation of softer energy prices and participants digesting large cap earnings — most notably Apple
• Limited movement in the major FX pairings this morning, with some much welcome calm returning to the GBP pairs as Cable reclaims 1.2200
• Looking ahead, highlights include US services PM! and New Home sales, DoE inventories and a host of earnings including GSK, Coca-Cola and Comcast

* * *

Market Snapshot

• S&P 500 futures down 0.4% to 2129
• Stoxx 600 down 0.8% to 340
• FTSE 100 down 1% to 6946
• DAX down 1% to 10649
• German 10Yr yield up 2bps to 0.05%
• Italian 10Yr yield up 4bps to 1.42%
• Spanish 10Yr yield up 3bps to 1.11%
• S&P GSCI Index down 0.7% to 370.5
• MSCI Asia Pacific down 0.2% to 140
• Nikkei 225 up 0.2% to 17392
• Hang Seng down 1% to 23325
• Shanghai Composite down 0.5% to 3116
• S&P/ASX 200 down 1.5% to 5360
• US 10-yr yield up less than 1bp to 1.76%
• Dollar Index down 0.27% to 98.45
• WTI Crude futures down 1.4% to $49.27
• Brent Futures down 1.3% to $50.12
• Gold spot up less than 0.1% to $1,274
• Silver spot down less than 0.1% to $17.76

Top Healdine News

• Deutsche Bank Said to Weigh Alternatives to Cash Bonuses: Options said to include giving shares in non-core unit or bank
• Lloyds Shares Fall on Capital Questions, Quarterly Profit Drop: Some analysts discount capital boost driven by accounting move
• Apple Holiday Forecast Disappoints Given Samsung’s Troubles: Investors expected a more optimistic forecast for iPhone sales
• Big Oil Braces for Profit Pain as Refining Safety Net Slips: Global oil-processing margins shrank 42% last quarter: BP data
• Chevron’s 28 Years of Dividend Growth on the Line Amid Rout: ‘No one wants to be the CEO who breaks the streak.’ – analyst
• IBM Teams Up With Slack to Build Smarter Data-Crunching Chatbots: The two companies will release a developer toolkit that includes Watson technologies and can integrate easily into Slack
• Turbines From Outer Space Lift Lockheed Into New Energy Frontier: Company looking to commercialize its lithium-ion batteries

Looking at regional markets, we start in Asia where stocks slipped amid the declines in oil prices following a larger than expected build in the latest API report, while Apple earnings also added to the softer tone in which the tech giant missed on its revenue despite an EPS beat. ASX 200 (-1.5%) underperformed following weak sales growth from Wesfarmers (-5%), while losses in the index were exacerbated after Australian Q3 CPI figures beat expectations, subsequently reducing the likelihood of further RBA easing. Shanghai Comp (-0.5%) and Hang Seng (-1.0%) tracked lower with the latter hampered by a spate of mixed earnings, while Great Wall Motors shares crashed amid reports that Beijing are to restrict the number of vehicles on road. The Nikkei 225 (+0.15%) traded flat for a bulk of the session with Apple suppliers pressured in Asia after its revenue declined 9%. In credit markets, JGB’s traded in subdued fashion, up marginally by 5 ticks. Australian bonds weakened in the wake of the CPI figures, in which the 10-yr yield pulled off session lows, while the curve saw some notable flattening.

Top Asian News

• With Economy Stable, China Steps Up Quest to Rein in Credit Risk: PBOC said to trial monitoring some wealth management products
• Tata Surprise Raises Deleveraging Doubts for Bond Investors: Tata Group was focused on being fiscally prudent under Mistry
• Jailed Former CNPC Head Says He Wrongly Approved Oilfield Sales: Former Chairman Jiang serving 16-year sentence for corruption
• Galaxy Casino Beat Quarterly Profit Estimates on Tourist Visits: Profit jumps 28%, lifted by mass market as VIP revenue fell
• Hyundai Motor Profit Declines 29% as Strikes Cut Production: Stronger won against U.S. dollar eroded repatriated earnings
• A Wary Japan Quietly Opens Its Back Door for Foreign Workers: Number of foreign workers almost doubles over eight years

In Europe, equities have opened softer this morning, (EuroStoxx -0.5%) following on from their Asian counterparts amid the fall in oil prices overnight and the fallout from earnings releases on both sides of the pond. Auto names underperform due to news of usage caps from the fastest growing market China, although Renault are in the green (+1.6%) due to a stellar earnings report. In the financial sector, Lloyds reported a slight miss on expectations and, adding to their woes, PPI issues remain unresolved with a further GBP lbin in charges (-3.1 %). In fixed income markets Gifts are softer this morning and drag the asset class lower as markets digest BoE’s Carney’s comment from yesterday, with some analysts noting that the comments point to no additional QE measures in November if at all. Supply today in the US comes in the form of a US 5yr and 2yr FRN.

Top European News

• Paschi CEO Sees Slow Pace of Consolidation Among Italian Banks: Investors are looking for ‘long-term stability,’ CEO says
• Ericsson Names Wallenberg Insider as CEO to Revive Its Fortunes: Analyst: ‘Hard to see this as a fresh wind coming in’
• Bayer Confident It Can Resolve Monsanto Product Overlap: Bayer crop business is resilient in difficult environment, CEO Werner Baumann says in Bloomberg TV interview
• Dong Hired JPMorgan for Advice, Hasn’t Decided to Divest Oil&Gas: not considered long-term strategic commitment

In FX, the Bloomberg Dollar Spot Index fell 0.1%, extending Tuesday’s retreat from a seven-month high. The euro strengthened 0.2 percent. The Australian dollar strengthened 0.6 percent versus the greenback, the best performance among major currencies. In the last quarter, consumer prices in Australia increased 1.3 percent from a year earlier, exceeding the previous period’s 1 percent gain. Australia’s two-year bond yield increased by two percentage points to a one-week high of 1.69 percent. The probability that the central bank will cut interest rates by mid-2017 dropped to 29 percent in the swaps market, from 37 percent on Tuesday.

In commodities, crude oil slid 1.3 percent to $49.29 a barrel in New York. Output cuts aren’t an option for Russia, the nation’s envoy to the Organization of Petroleum Exporting Countries said, according to Interfax. American supplies rose by 4.75 million barrels last week, industry data showed before Wednesday’s release of official figures. U.S. natural gas futures extended their decline to a seven-week low before Energy Information Administration data on Thursday that’s forecast to show fuel inventories probably grew last week. Warmer-than-normal temperatures are also expected through most of the U.S. from Oct. 30-Nov. 4, reducing demand for heating. Aluminum in Shanghai jumped as much as 5.2 percent to its highest level since 2014, extending a rebound on speculation that transport bottlenecks may have created a shortage for some users in China. The metal rose 0.3 percent in London. French electricity for delivery next month soared to a record after Electricite de France SA and the nation’s nuclear safety authority said that investigations at a third of the country’s 58 atomic reactors would unveil new anomalies. EDF’s reactors supply almost three quarters of France’s power.

Looking now at the day ahead, the highlight will likely be the remaining October flash PMI’s (both services and composite prints due). Also important is the advance goods trade balance reading for September where a slight widening in the deficit is expected. This might be one of the few remaining releases which could influence forecasts for Friday’s GDP print. Also due out is the wholesale inventories reading for last month, and new home sales data. Expect earnings to also continue to be front and centre with 43 S&P 500 companies due to report. The highlights include Coca-Cola and Boeing prior to the open. In Europe results from GSK and Bayer are also due.

* * *

US Event Calendar

• 7am: MBA Mortgage Applications, Oct. 21 (prior 0.6%)
• 8:30am: Advance Goods Trade Balance, Sept., est. -$60.5b (prior -$58.4b, revised -$59.2b)
• 9:45am: Markit US Services PMI, Oct. P, est. 52.5 (prior 52.3)
• 10:00am: New Home Sales, Sept., est. 600k (prior 609k)
• 10:30am: DOE Energy Inventories

DB’s Jim Reid concludes the overnight wrap

The S&P 500 ended the day with a -0.38% decline with the consumer discretionary sector in particular enduring a tough day. Following disappointing earnings reports there were double digit declines for Under Armour and Whirlpool in the sector, while General Motors also tumbled -4% as investors looked through better than expected Q3 numbers and decided that we may have seen the peak in auto sales. Other corporates to feel the pinch yesterday following earnings were 3M, where shares closed down nearly -3%, and also Caterpillar. The latter’s earnings are always an interesting read given that Caterpillar is bit of a bellwether for the industrial sector. While earnings bettered expectations for Q3, revenues slid more than expected while the outlook for the remainder of 2016 and 2017 was a bit more subdued than hoped. Indeed it was noted that 2017 sales are not expected to be significantly different than 2016 and that the balance of risks, particularly in the first half of the year, was tilted to the downside. While management pointed towards the improvement in commodity prices, it was also acknowledged that many trucks remain idle and there has been little evidence of a pickup in orders for new equipment.

It was a similar end for markets in Europe too. The Stoxx 600 closed -0.35% and erased an early gain of as much as +0.40% with earnings in the healthcare sector in particular weighing (Novartis and Roche). European Banks (-0.34%) also ended a run of five straight sessions of gains. A big chunk of the blame was on the Italian Banking sector after Banca Monte dei Paschi swung incredibly, from an early 20% gain, to a -15% decline by the close. The intraday high to low change was actually 39%.

Meanwhile, the big focus since markets closed last night has been on the Apple Q4 numbers. While revenues for the fourth quarter confirmed the first annual decline in revenue since 2001, the headline sales number was in line with the consensus while earnings were a fraction ahead. Shares were initially up 3% in extended trading with that news however once the details were sifted through, shares reversed and were actually down a little over -2%. Guidance on margins for the December quarter was a little lower than hoped, while some also pointed towards a disappointing decline in selling prices for its smartphones.
This morning in Asia major bourses have generally followed the lead from the US yesterday. The Hang Seng (-0.69%), Shanghai Comp (-0.37%), Kospi (-1.33%) and ASX (-1.76%) are all currently in the red, while US equity index futures are also trending lower following those Apple numbers. Only the Nikkei (+0.06%) is up as we go to print.

Also weighing on bourses this morning is the decline for Oil with WTI currently -1.22% at $49.30/bbl as we type and the lowest level this month. That comes following a -1.11% decline yesterday with the finger of blame being pointed at Russia after the nation’s envoy at OPEC said that production cuts aren’t ‘an option for us’. That mirrors similar comments we heard from Iraq earlier this week. The latest American Petroleum Institute inventory numbers haven’t helped either, with the data showing that crude inventories rose 4.8m barrels last week. The official EIA inventory numbers are due today.

Elsewhere, the big mover in FX markets is the Aussie Dollar which is up over half a percent after headline CPI (+0.7% qoq vs. +0.5% expected) rose more than expected in Q3. That has seemed to offset the concern about lingering soft core inflation with the average of the RBA measures coming in at just +0.3% qoq for the quarter. There has also been some data in China where the Westpac consumer sentiment reading for this month has increased 1.9pts to 117.1 and the highest since April.

Moving on. As has so often been the case in the last couple of months, Sterling was one of the other main stories in markets yesterday. At one stage in the early afternoon the Pound tumbled to an intraday low of $1.2083, or some -1.27% lower. However as BoE Governor Carney spoke the Pound recovered. His comments weren’t particularly groundbreaking but it was enough of a calming influence for the market. Speaking in front of the House of Lords, Carney said that there were limits to officials’ willingness to look beyond an overshoot of their inflation target and that officials’ were not ‘indifferent to the exchange rate’. The Pound recovered a decent amount of that fall to close ‘just’ -0.41% lower at $1.2188. It’s holding that level this morning as we type. Weakness in Sterling did however help the FTSE 100 (+0.45%) to outperform yesterday.

Staying with the macro, yesterday’s data in the US was a bit of a mixed bag but it was the underwhelming consumer confidence reading which caught the eye and ultimately contributed to that damper mood for risk. The headline 98.6 print for this month was down from 103.5 in September (which was revised down) and also lower than the market consensus of 101.5. The details showed that both the present conditions (120.6 from 127.9) and expectations (83.9 from 87.2) gauges fell, while the share of those who said jobs were plentiful also decreased to 24.3% from 27.6%.

Elsewhere, there was better news in the latest IBD/TIPP economic optimism reading which was up 4.6pts and more than expected to 51.3 (vs. 47.5 expected) this month. The Richmond Fed manufacturing index reading was up 4pts and in line with the market at -4. Finally the latest housing market data showed that house prices in the 20 largest US cities were up +0.24% mom and a bit more than expected in August according to the S&P/Case-Shiller index. That puts the YoY rate at +5.13% from +4.98%. Meanwhile in Europe the highlight was the Germany IFO survey which revealed a 1pt increase in the headline business climate reading to 110.5 (vs. 109.6 expected). Sovereign bond markets were quiet again yesterday. 10y Bund yields edged up just shy of 1bp to 0.028% while 10y Treasury yields (+3bps to 1.766%) continue to remain stuck in this 1.70-1.80% range that they’ve been in for the best part of 3 weeks now.

Speaking of rates, ECB President Draghi had a few things to say on the subject yesterday. He argued that ‘the type of actions we need, if we want interest rates at higher levels, are those that can raise the natural rate’ and that ‘this requires a focus on policies that can address the root causes of excess saving over investment – in other words, fiscal and structural policies’.

Looking now at the day ahead. This morning in Europe we’re kicking off in Germany where the September import price index reading will be released, along with the latest consumer confidence print. France will also release its latest consumer confidence print a short time after. This afternoon in the US the highlight will likely be the remaining October flash PMI’s (both services and composite prints due). Also important is the advance goods trade balance reading for September where a slight widening in the deficit is expected. This might be one of the few remaining releases which could influence forecasts for Friday’s GDP print. Also due out is the wholesale inventories reading for last month, and new home sales data. Away from the data the only notable speaker on the cards today is the ECB’s Praet this evening. Expect earnings to also continue to be front and centre with 43 S&P 500 companies due to report. The highlights include Coca-Cola and Boeing prior to the open. In Europe results from GSK and Bayer are also due.

via http://ift.tt/2dJuKAo Tyler Durden

Spain is facing international criticism as it reportedly prepares to refuel a flotilla of Russian warships en route to bolstering the bombing campaign against the besieged Syrian city of Aleppo. El País reported that the Spanish ministry of foreign affairs was reviewing the permit issued to the Russian flotilla to stop at Ceuta. Politicians and military figures condemned the support from a NATO member as "scandalous," and "wholly inappropriate," while the head of the alliance indicated Madrid should rethink the pit stop.

As The Guardian reports, warships led by the aircraft carrier Admiral Kuznetsov are expected to take on fuel and supplies at the Spanish port of Ceuta after passing through the Straits of Gibraltar on Wednesday morning.

Spanish media reported that two Spanish vessels, the frigate Almirante Juan de Borbón and logistical ship Cantabria, were shadowing the warships as they passed through international waters, and that the Admiral Kuznetsov, along with other Russian vessels and submarines, would dock at Ceuta to restock after 10 days at sea.

 

Late on Tuesday night, El País reported that the Spanish ministry of foreign affairs was reviewing the permit issued to the Russian flotilla to stop at Ceuta.

 

Last week British Royal Navy vessels monitored the Russian warships as they moved through the English Channel. The vessels were shadowed by the navy as they passed through the Dover Strait .

 

 

The enclave of Ceuta sits on the tip of Africa’s north coast, across the Straits of Gibraltar from mainland Spain, and bordering Morocco, which also lays claim to the territory. Although Ceuta is part of the EU, its Nato status is unclear, and since 2011 at least 60 Russian warships have docked there.

Nato said the prospect of Russia’s only aircraft carrier heading to the region does not “inspire confidence” that Moscow is seeking a political solution to the Syrian crisis.

The naval group is made up of Russia’s only aircraft carrier, Admiral Kuznetsov, as well as a nuclear-powered battle cruiser, two anti-submarine warships and four support vessels, likely escorted by submarines, Nato officials said.

The naval deployment, a rare sight since the end of the Soviet Union, is carrying dozens of fighter bombers and helicopters and is expected to join around 10 other Russian vessels already off the Syrian coast, diplomats said.

But, as The Telegraph reports, Spain is facing anger and criticism from all asunder at their decision to allow the refueling to occur…

Nato secretary-general Jens Stoltenberg warned on Tuesday that Russian warships heading for Syria could be used to target civilians.

“We are concerned and have expressed very clearly by the potential use of that battle group to increase air strikes on civilians in Aleppo,” Stoltenberg said, adding that it was “up to each nation to decide whether these vessels may obtain supplies and refuel at different ports along the route to the eastern Mediterranean”.

 

“The battle group may be used to increase Russia’s ability to take part in combat operations over Syria and to conduct even more air strikes against Aleppo,”

Guy Verhofstadt, former prime minister of Belgium and now the EU’s representative on Brexit talks with the UK, called Spain’s decision to allow the refuelling “scandalous”.

Spain signed EU statement on Russian war crimes in #Aleppo last week; today helps refuel fleet on way to commit more atrocities. Seriously? http://pic.twitter.com/a0lYtMN3cV

— Guy Verhofstadt (@GuyVerhofstadt) October 25, 2016

 Sir Gerald Howarth  MP, a former Defence Minister, said it would be “wholly inappropriate” for a Nato member to refuel the Russian vessels.

“Spain is a member of Nato and Nato is already facing challenges from Russia, not least in the Baltics.

 

“The Russians stand accused of indiscriminate bombing in Aleppo and Syria and it would be inappropriate to render them military assistance.”

Former Royal Navy chief Lord West told the newspaper:

“There are sanctions against Russia and it’s an extraordinary thing for a Nato ally to do.”

*  *  *

Spain’s Foreign Ministry told the Telegraph requests from the Russian navy were considered on a “case by case basis, depending on the characteristics of the ship concerned”. A spokesman said: “Russian navy vessels have been making calls in Spanish ports for years”. But in an indication Madrid was feeling increased diplomatic pressure not to help Moscow, the Spanish government said it was reviewing the Russian request. The spokesman said:

“The latest requested dockings are being revised at the current time in light of information we are receiving from our allies and from the Russian authorities.”

Russia’s military visits are estimated each to bring in more than $400,000 to the city through a combination of mooring fees, fuel and supplies, and the money spent by sailors during their time onshore.

"As long as the Spanish government hasn't banned it, it is a commercial matter like any other vessel stopping to take on supplies, even if it concerns military ships,"

via http://ift.tt/2feNtJc Tyler Durden

Perhaps it was inspired by events in neighboring Brazil, where in August, elected president Dilma Rouseff was impeached after a full court press by various just as corrupt politicians sought to silence her amid ongoing embezzlement probes. Whatever the reason, on Tuesday Venezuela’s opposition-led National Assembly voted to open a political trial against President Nicolas Maduro for violating democracy Reuters reported. Unfortunately, unlike Brazil which at least has some semblance of a functioning democracy, the Venezuelan move was largely “meaningless” and was quickly dismissed as such by the socialist government which, ironically, has been acting just as dictatorial as described by the opposition, with the explicit support of the army.

The political standoff in the (formerly) oil rich nation worsened since last week’s suspension of an opposition push to hold a referendum to recall the widely disliked Nicolas Maduro, as both Venezuela’s economy and society disintegrate.  So with that avenue closed, the opposition coalition raised the stakes, using its power base in congress to begin legal action against Hugo Chavez’s unpopular successor. Alas a trial against Maduro would be yet another mostly symbolic event given the government and Supreme Court have declared congress illegitimate.

How’s that for a harbinger of what is coming

“Legally, the National Assembly does not exist,” said vice-president Aristobulo Isturiz on Tuesday, referring to Supreme Court rulings that measures in congress are null and void until it removes three lawmakers linked to vote-buying claims.

For obvious reason, the opposition has accused Maduro of veering into dictatorship by sidelining the legislature, detaining opponents and leaning on compliant judicial and electoral authorities to block a plebiscite on his rule. “We will show clearly to Venezuela and the world that in this crisis, responsibility for breaking the constitution has clearly been Nicolas Maduro’s,” said majority leader Julio Borges.

The problem is that with the outside world oblivious (at least as long as Venezuela keeps paying its bond interest payments), nobody outside of Venezuela cares; as for within the country, as long as the army is on the side of Maduro, nothing can change.

Still, that did not stop the National Assembly from ordering Maduro to appear at a session next Tuesday, spoiler alert: he won’t, and saying it would also consider charges of abandoning his duties. Maduro’s opponents accuse him of wrecking the OPEC nation’s economy, where food shortages and soaring prices have left many skipping meals and spending hours in long lines. Polls have shown the majority of Venezuelans want a referendum on Maduro which he would have likely lost, triggering a presidential election had it taken place this year.

But the just as corrupt election board nixed the process, citing court orders after government allegations of fraud in an initial signature drive. Ironically, until recent revelations by Wikileaks, this kind of political “process” would be the purest definition of banana republic. Alas, following recent leaked email exchanges, we are not so sure that Venezuela is that much more corrupt than the US.

“In Venezuela we are battling Satan!” said opposition leader, Henrique Capriles, ratifying plans for nationwide rallies on Wednesday that the opposition have dubbed ‘The Takeover of Venezuela’.

Meanwhile, Venezuela’s government has said it is the victim of an international conspiracy against socialism led by the United States and fanned by servile foreign media. Ironically, having observed disastrous US foreign policy in action, it just may be right.

Maduro also blames a two-year slump in global oil prices and a U.S.-fostered “economic war” for Venezuelans’ suffering, and has accused political foes of seeking a violent coup against Maduro, a former bus driver and union activist who became Chavez’s long-serving foreign minister then vice-president.

Maduro came back to Venezuela later on Tuesday after a tour of oil-producing nations and meetings with the Pope and U.N. Secretary General-designate Antonio Guterres.

“I bring the blessings of the world for Venezuela,” he said at an airport ceremony. “In the world, they admire our battle for truth, dignity and independence.”

And just to scare the population into not getting any revolutionary ideas, red-shirted Maduro loyalists marched through Caracas to welcome him home and denounce the National Assembly.

For now Maduro is safe, entirely thanks to the army which continues to side with him: Defense Minister Vladimir Padrino criticized congress, vowed the armed forces’ loyalty to Maduro, and accused foes of seeking a foreign intervention.

We can only guess how many millions have been donated to the “Padrino Family Foundation” as the rest of the population has to live without toilet paper. 

via http://ift.tt/2dISvsb Tyler Durden

Via GEFIRA,

Some say that the common currency prevents less productive economies from cheating by weakening their national currencies and forces them to become more efficient and competitive. Industrial production data shows that it is not the case. Italy, France, Greece and Portugal have not only stopped producing more; they are producing now less than in 1990! The decay started immediately after the introduction of the euro in 2002!

The OECD industrial production data analysis leads to the following conclusions:

1. since 1990 industrial production (manufacturing and construction included) has been growing in volume at large, even in the most developed countries;

 

2. the disproportion between industrial output in Germany and two other biggest euroarea economies, Italy and France, occurred already just after the 2001-2002 crisis;

 

3. Southern Europe’s economies have lost their ability to rebound in industrial production alongside the adoption of the euro.

1. Industrial output can increase

In most of the most developed countries in the world industrial production has grown in volume since 1990, although a great deal of manufacturing capacities have been moved from the West to the emerging markets. Moreover, in countries like the USA, Israel, Switzerland, Austria and Germany the output has surpassed the 2008 pre-crisis levels. However, if we take a look at the euroarea or the Group of Seven (G7), then numbers are still lower than in 2008 but definitely higher than in 1990.

Source: OECD

2. The euroarea has a problem

A closer look at the European industrial production numbers gives a clear signal: something bad has happened after 2000. Before the introduction of euro, production trends ran more or less in the same direction. Meanwhile after the 2001-2002 crisis, French and Italian output did not rebound, while production in Germany expanded enormously and was able to reach the 2008 level quickly after the last crisis. Industry in France and Italy not only has not rebounded but also has started to curb.

 

3. Southern Europe will not rebound with the euro

Countries with a sovereign currency can easily build up their economies because of one simple mechanism: depreciation. A relatively strong currency (strong in comparison to the economic condition) would not have to be a problem for Italy or Greece if there still were some capacities for more debt. Then internal consumption could prop up industrial production. But Spain, Greece, Italy and Portugal have had neither a weak sovereign currency nor the possibility of incurring more debt.

 

Industry is very important for the economy, as it creates jobs and innovations. The euroarea in the current form is preventing Southern Europe’s industry from developing  because of a different type of the economy there. “Roman” economies are not worse than than Germany’s. They just need other tools, so restricting all these various economies in the German fashion will destroy the euro as well as the European unity.

via http://ift.tt/2eKsRpv Tyler Durden

By Chris at http://ift.tt/12YmHT5

I was interviewed recently by Vesper Capital, a fund which manages a fund of funds for FX trading strategies. The interview was broken into 3 parts.

In the first part we discuss formative years:

(click on the image to listen to the podcast)

Then in part 2, we discuss assessing risk, how psychology can interfere with investing, and much more:

(click on the image to listen to the podcast)

And in part 3, we cover capital allocation, position sizing, and how the Capitalist Exploits blog came to be:

(click on the image to listen to the podcast)

I hope you enjoy them!

– Chris

“Biology gives you a brain. Life turns it into a mind.”  – Jeffrey Eugenides

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Liked this podcast interview? Don’t miss our future articles and podcasts, and

get access to free subscriber-only content here.

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via http://ift.tt/2e9tdUU Capitalist Exploits

As we reported one week ago, the latest Treasury International Capital report revealed something disturbing: not only had foreign central banks sold a record amount of US Treasurys in the past 12 months, some $346 billion worth…

 

… but America’s largest foreign creditor, China, sold a record $34 billion in US paper in the latest month, and bringing its total holdings to the lowest since 2012.

 

This led to an obvious question: is China dumping all of its foreign reserve holdings proportionately, or is Beijing strategically offloading its US paper, for financial, political reasons or otherwise, as it buys other foreign government bonds. The answer, at least according to the Nikkei, is the latter.

As the Japanese owner of the Financial Times reports, China is on a shopping spree, and has been “gobbling” up Japanese government bonds, adding that Beijing bought close to a net 9 trillion yen ($86.6 billion) worth of JGBs in the January-August period, more than tripling the amount from the same period last year. Incidentally that’s almost equivalent to the number of US Treasurys sold by China.

A simple explanation for the shift is that the People’s Bank of China has been reducing its holdings of U.S. Treasurys in anticipation of higher U.S. interest rates and shifting some of its money to JGBs, where higher rates – courtesy of 250% in debt/GDP – are largely guaranteed to never arrive. 

But more importantly, and this could explain the perplexing recent strength in the Yuan, this trend may be a reason behind the yen’s appreciation in foreign exchange markets in recent months.

According to Japan’s Ministry of Finance, China invested 8.9 trillion yen in Japanese securities in net terms between January and August. Buying started to exceed selling more often on a monthly basis in the second half of 2015. In April, net buying surpassed 3 trillion yen. Curiously, China is not buying the Japanese bonds for the “yield”, but rather for liquidity: most of the securities purchased by the PBOC are bonds with maturities of one year or less.

Judging by the latest TIC data, China’s selling of US paper is accelerating, which also suggests that just as China has been a factor pushing the Yuan higher, the dollar has been pressured lower by the ongoing Chinese liquidation. One wonders how much higher the USD will jump if and when China decides to halt its selling of US paper, and how much lower the Yuan will then tumble in response, leading to even faster capital outflows from China.

via http://ift.tt/2f6huvm Tyler Durden