Category: zerohedge

• Obama open to appointing Ebola ‘czar’, opposes travel ban (Reuters)
• Schools Close as Nurse’s Ebola Infection Ignites Concern (BBG)
• How the World’s Top Health Body Allowed Ebola to Spiral Out of Control (BBG)
• European Stocks Rise Amid Growing Pressure for Stimulus (BBG)
• Putin Threatens EU Gas Squeeze Raising Stakes for Ukraine (BBG)
• ECB to Start Asset Purchases Within Days, Says Central Banker Coeuré (WSJ)
• Investors search for signs of end to stock market correction (Reuters)
• Putin’s talks with EU and Poroshenko ‘difficult, full of misunderstandings’: Kremlin (Reuters)
• Monaco Murders Reveal Six Hidden Real Estate Billionaires (BBG)
• In Liberia, U.S. Soldiers Race Ebola (WSJ)
• Islamic State training pilots to fly in three jets: Syria monitor (Reuters)
• Venezuela Goes From Bad to Worse as Oil Prices Plummets (BBG)
• Luxury Shoemaker Jimmy Choo Rises on London Trading Debut (BBG)

 

Overnight Media Digest

WSJ

* President Barack Obama, after a day of withering criticism over the government’s handling of the Ebola virus, said Thursday he may name a point person to oversee the administration’s response and is open to a travel ban but isn’t planning one. (http://on.wsj.com/11xafkr)

* Chiquita Brands International Inc said its board rejected a sweetened takeover offer from Cutrale-Safra, saying the new bid isn’t adequate and isn’t in the best interest of shareholders. (http://on.wsj.com/1vCEt20)

* Sam Nunn, one of the last Georgia Democrats to serve a full term in the Senate, had just finished watching his granddaughter win a soccer game when he turned his attention to a more pressing family contest: his daughter Michelle’s run for U.S. senator. (http://on.wsj.com/1CtIVPv)

* Vice President Joe Biden’s son Hunter was discharged from the Navy Reserve this year after testing positive for cocaine, according to people familiar with the matter. (http://on.wsj.com/ZH89x5)

* The likely collapse of AbbVie Inc’s $54 billion agreement to buy Shire PLC leaves two global drug companies in need of new, independent courses and investors and Wall Street bankers smarting from losses and fees they won’t collect. (http://on.wsj.com/1vkY6dw)

 

FT

State-owned Russian oil company NK Rosneft OAO and Arkady Rotenberg, judo partner of Russian President Vladimir Putin, have launched legal challenges against sanctions imposed by the European Union’s European Council over Russia’s actions in Ukraine.

Advertising group WPP PLC’s unit has taken legal actions against the UK government to stop it from passing a four-year advertising contract worth 400 million stg to WPP’s rival Carat, an agency owned by rival Dentsu Aegis.

Royal Bank of Scotland said it will talk to its customers about the higher interest rates, making the process transparent, after it was fined for mis-selling home loans.

Britain’s bankers have been warned by officials from the International Monetary Fund on Thursday that a battle between national and regional regulators will increase costs for banks and stop capital flowing between subsidiaries in different countries.

Bank of England countered the EU cap on banker bonuses saying the debate over bonuses was “misguided” and that variable pay should play a significant role in banker remuneration.

NYT

* BHP Billiton Plc said on Thursday it would proceed with a new listing in London for its planned spinoff of several assets into a new global metals and mining company. (http://nyti.ms/1xXl1uV)

* MMX Mineracao & Metalicos SA, a mining company owned by the troubled Brazilian businessman Eike Batista, filed for bankruptcy protection on Thursday, the third of his companies to do so. (http://nyti.ms/1wa3Upx)

* The ambitions of the Russian tycoon Mikhail Fridman to build a new oil and natural gas company are being frustrated by the British government, which is declining to bless his purchase of a large gas field in the North Sea and other assets in British waters. (http://nyti.ms/1xXlHjR)

* Financial experts warn that a small group of giant asset managers that have amassed high-risk, high-yield bonds could find themselves unable to raise enough cash during a sell-off. (http://nyti.ms/1vkRsnN)

* Just one day after HBO said it would start an Internet-only offering, CBS Corp announced on Thursday its own subscription streaming service that lets people watch its live programming and thousands of current and past shows on demand. The moves signal a watershed moment for web-delivered television, where viewers have more options to pay only for the networks or programs they want to watch – and to decide how, when and where to watch them. (http://nyti.ms/1stYpjO)

 

Canada

THE GLOBE AND MAIL

** Former Canadian Prime Minister Jean Chretien is defending Liberal Leader Justin Trudeau’s controversial decision to oppose Canada’s air combat mission in Iraq, saying the fighter planes the Harper government is deploying are a “very marginal” response to the crisis caused by Islamic State militants. (http://bit.ly/1yJhfbD)

** Two employees at the Toronto hospital where Rob Ford is undergoing cancer treatment inappropriately accessed the mayor’s confidential medical records, a breach that led the hospital to mete out unspecified “action” against the staff members. (http://bit.ly/1sYX4V1)

** Thirty minutes into the 45th debate of Toronto’s race for mayor, front-runner John Tory squared off against rival Doug Ford, who until the most recent opinion poll had been nipping at his heels since he stepped into the race as a last-minute substitute for his brother Rob Ford. (http://bit.ly/Zxbwqc)

NATIONAL POST

** A new report by HSBC Global Research argues Canada’s oil and gas boom remains on course. The 20-page report, authored by HSBC Bank Canada chief economist David Watt, says the unprecedented boom in capital spending in Canada’s natural resources sector is here to stay, with major projects currently under way or planned in the next decade worth C$675-billion ($600.11 billion). (http://bit.ly/1qGZIJi)

** One year out from a scheduled October 2015 federal elections in Canada, none of the main federal parties has nominated even half of its candidates, although the opposition says it is preparing for the possibility of a snap spring campaign. (http://bit.ly/1waniCB)

** A Canadian survivor of the Nepal avalanche that killed at least 27 people has described a harrowing tale of being buried waist-high in thick, heavy snow on a “nightmare” of a day. Quebecer Sonia Leveque said she thought she was going to die and that she and her fellow trekkers are fortunate to be alive. (http://bit.ly/1sPkV8n)

 

China

CHINA SECURITIES JOURNAL

– China’s related government departments are studying several policies to support the logistics industry, including the reduction of administrative fees and halving land taxes for building warehousing facilities.

– The National Development and Reform Commission (NDRC) has approved three railway construction and expansion projects with an investment value of 95.9 billion yuan ($15.66 billion).

SHANGHAI SECURITIES NEWS

– The China Insurance Regulatory Commission is looking to introduce a rating system to improve corporate governance of the country’s insurance firms, the newspaper said citing sources.

CHINA DAILY

– Apple Inc on Thursday appealed a Beijing court ruling, which said the country’s intellectual property authority’s grant of a patent for an intelligent robot to a Shanghai technology firm was valid.

– Prices of smuggled iPhone 6 and iPhone 6 Plus units have almost halved in Beijing as Apple prepares to deliver authorised handsets on Friday.

Britain

The Times

MARKET TURMOIL PUTS EUROPE IN SPOTLIGHT

The threat of stagnation in Europe, a potential new eurozone crisis and weaker growth in the United States rattled markets for a second day, sending prices for everything from government debt to equities into convulsions worldwide. (http://thetim.es/ZwGPkN)

BUFFETT SELLS DOWN ‘HUGE MISTAKE’ TESCO HOLDING

Warren Buffett’s Berkshire Hathaway has revealed that it sold shares in supermarket chain Tesco Corp on Monday, reducing its stake from 3.6 percent to below the 3 percent threshold at which investors are obliged to declare their ownership. (http://thetim.es/1ucRFF6)

The Guardian

ABBVIE WITHDRAWS BID FOR SHIRE AFTER U.S. GETS TOUGH ON TAX

U.S. drugs group AbbVie Inc has pulled out of its proposed $54 billion (42.14 billion euro) takeover of Britain’s Shire Plc after the Obama administration introduced rules to clamp down on overseas acquisitions driven by tax avoidance. (http://bit.ly/1CsDsbC)

U.S. FACTORY FIGURES HELP BRING CALM TO MARKETS AFTER DAYS OF TURMOIL

Strong U.S. factory output growth and the intervention by James Bullard, the hawkish president of the St. Louis Federal Reserve, brought some relief to markets following three days of turmoil that have knocked billions of pounds off the value of the FTSE 100. (http://bit.ly/1sWhM6V)

The Telegraph

WORLD BRACES AS DEFLATION TREMORS HIT EUROZONE BOND MARKETS

Eurozone fears have returned with a vengeance as deepening deflation across southern Europe and fresh turmoil in Greece set off wild moves on the European bond markets. Yields on 10-year German Bund plummeted to an all-time low on 0.72 percent on flight to safety, touching levels never seen before in any major European country in recorded history. (http://bit.ly/1DgybWI)

ANDREW BAILEY THROWS WEIGHT BEHIND GEORGE OSBORNE OVER BONUS CAP

Andrew Bailey, chief executive of the Prudential Regulation Authority, told senior bankers that the bonus cap is “the wrong policy” which would lead to unintended consequences. His comments come just a day after the European Banking Authority launched a clampdown on banks using “role-based allowances” to get around the cap. (http://bit.ly/1F79vSz)

Sky News

BANK RAISES FIXED PAY AS CRACKDOWN LOOMS

Sky News has learnt that Nomura Holdings Inc, the Japanese bank which acquired the European operations of Lehman Brothers after its collapse in 2008, is poised to award backdated fixed salary increases to a handful of its most senior City-based employees. (http://bit.ly/1F31pdw)

PM APPEALS FOR ‘ONE LAST GO’ ON EU IMMIGRATION

British Prime Minister David Cameron has said the immigration system is not working and he wants “one more go” at negotiating a better deal with the EU to limit the number of incomers. (http://bit.ly/ZwInva)

The Independent

BP LOSES COURT BATTLE OVER MEXICO GULF OIL SPILL CLAIMS

BP Plc is facing a flood of legal claims from big British investors over the Gulf of Mexico spill after it lost a crucial courtroom battle in Texas to get their cases thrown out. The investors, which include pension funds for several London boroughs and BP’s arch rival, Shell, are suing in the United States, where they are likely to win far-bigger payouts than they could in Britain. (http://ind.pn/1sXX8V7)

BSKYB’S GERMAN STAKE COULD GET BIGGER ON EURO ZONE JITTERS

BSkyB Chief Executive Jeremy Darroch has signalled the British pay-TV firm could end up with a larger-than-expected stake in Sky Deutschland as concerns about the German economy may encourage shareholders to sell. (http://ind.pn/ZGPx0g)

 

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Housing starts for September at 8:30–consensus up 5.4% to 1.01M rate
Housing permits for September at 8:30–consensus up 2.7% to 1.03M rate
University of Michigan consumer sentiment index for October at 9:55–consensus 84.0

ANALYST RESEARCH

Upgrades

AK Steel (AKS) upgraded to Buy from Neutral at Nomura
AMD (AMD) upgraded to Sector Perform from Underperform at Pacific Crest
Atmos Energy (ATO) upgraded to Overweight from Neutral at JPMorgan
BorgWarner (BWA) upgraded to Buy from Hold at Deutsche Bank
CA Technologies (CA) upgraded to Overweight from Equal Weight at Barclays
Calumet Specialty Products (CLMT) upgraded to Outperform at Wells Fargo
DHT Holdings (DHT) upgraded to Buy from Hold at Evercore
E-House (EJ) upgraded to Buy from Neutral at Goldman
Exelon (EXC) upgraded to Neutral from Sell at Citigroup
Fabrinet (FN) upgraded to Buy from Neutral at B. Riley
Fifth Third Bancorp (FITB) upgraded to Buy from Neutral at Citigroup
Foundation Medicine (FMI) upgraded to Outperform from Market Perform at William Blair
Goldman Sachs (GS) upgraded to Outperform from Market Perform at Keefe Bruyette
Helmerich & Payne (HP) upgraded to Buy from Neutral at UBS
Hilton (HLT) upgraded to Buy from Neutral at SunTrust
Hyatt Hotels (H) upgraded to Outperform from Neutral at Macquarie
IPG Photonics (IPGP) upgraded to Buy from Hold at Stifel
ITC Holdings (ITC) upgraded to Neutral from Underperform at Credit Suisse
Intuitive Surgical (ISRG) upgraded to Outperform from Market Perform at Leerink
Leju (LEJU) upgraded to Buy from Neutral at Goldman
Mattress Firm (MFRM) upgraded to Buy from Hold at KeyBanc
Nabors Industries (NBR) upgraded to Buy from Neutral at UBS
Old Dominion (ODFL) upgraded to Buy from Neutral at Longbow
PDC Energy (PDCE) upgraded to Buy from Neutral at SunTrust
Patterson-UTI (PTEN) upgraded to Buy from Neutral at UBS
PrivateBancorp (PVTB) upgraded to Outperform from Neutral at Macquarie
QLogic (QLGC) upgraded to Buy from Hold at Summit Research
Reliance Steel (RS) upgraded to Buy from Hold at Topeka
Southwestern Energy (SWN) upgraded to Outperform from Market Perform at Raymond James
SunEdison (SUNE) upgraded to Outperform from Market Perform at Cowen
Toronto-Dominion (TD) upgraded to Outperform from Neutral at Credit Suisse
Triangle Capital (TCAP) upgraded to Outperform from Market Perform at JMP Securities
UnitedHealth (UNH) upgraded to Outperform from Market Perform at Leerink
Viper Energy (VNOM) upgraded to Outperform from Market Perform at Northland
Xilinx (XLNX) upgraded to Outperform from Market Perform at Wells Fargo

Downgrades

AMD (AMD) downgraded downgraded to Hold from Buy at Canaccord
Urban Outfitters (URBN) downgraded to Equal Weight from Overweight at Morgan Stanley
Urban Outfitters (URBN) downgraded to Neutral from Buy at Goldman
Yara (YARIY) downgraded to Sell from Neutral at UBS

Initiations

Alibaba (BABA) initiated with a Buy at Brean Capital
AmerisourceBergen (ABC) initiated with an Outperform at RBC Capital
Arctic Cat (ACAT) initiated with a Hold at Wunderlich
Brean starts Alibaba (BABA) at Buy, calls core China Internet holding
Cardinal Health (CAH) initiated with an Outperform at RBC Capital
Clean Energy (CLNE) initiated with a Hold at MLV & Co.
Dot Hill Systems (HILL) initiated with an Overweight at Piper Jaffray
McKesson (MCK) initiated with an Outperform at RBC Capital
Nautilus (NLS) initiated with a Buy at Wunderlich
Polypore (PPO) initiated with a Buy at MLV & Co.
Quantum (QTWW) initiated with a Buy at MLV & Co.
Radiant Logistics (RLGT) initiated with a Buy at Sterne Agee
Signet Jewelers (SIG) initiated with an Overweight at Barclays
Smith & Wesson (SWHC) initiated with a Buy at Wunderlich
Tesla (TSLA) initiated with a Buy at MLV & Co.
Thor Industries (THO) initiated with a Buy at Wunderlich
Tiffany (TIF) initiated with an Equal Weight at Barclays

COMPANY NEWS

Yara (YARIY) announced termination of merger discussions with CF Industries (CF)
AMD (AMD) announced global headcount reduction of 7%
General Electric (GE) said on track to meet goal or $1B in structural cost-out for year, said on track to close sale of GE Money Bank in Q4
Sarepta Therapeutics (SRPT) announced the publication of results from two single ascending-dose studies that demonstrated no clinical or toxicologic safety concerns with the company’s drug candidates for the treatment of Ebola and Marburg virus, respectively
Ampio (AMPE) announced results of open label portion of multiple injections study
Airbus (EADSY) cut production rate of A330 aircrafts to 9 from 10 per month
Cliffs Natural (CLF) said expects to record non-cash impairment of about $6B in Q3

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
General Electric (GE), BNY Mellon (BK), Heritage-Crystal Clean (HCCI), Fidelity Southern (LION), Crown Holdings (CCK), Western Alliance (WAL), BancFirst (BANF), Xilinx (XLNX), QLogic (QLGC), WD-40 (WDFC), Associated Banc-Corp (ASBC), First Financial (FFIN), Cytec Industries (CYT), Schlumberger (SLB), SanDisk (SNDK), Independent Bank (INDB), Wintrust Financial (WTFC), Bridge Capital Holdings (BBNK), Stryker (SYK)

Companies that missed consensus earnings expectations include:
Google (GOOG), AMD (AMD), Fabrinet (FN), Capital One (COF)

Companies that matched consensus earnings expectations include:
People’s United (PBCT)

Textron (TXT) raises FY14 EPS cont ops to $2.05-$2.15 from $1.92-$2.12
Rolls-Royce (RYCEY) sees FY14 revenue 3.5%-4% lower vs. last year
AMD (AMD) sees Q4 revenue down 13%, plus or minus 3%, consensus $1.48B
SanDisk (SNDK) sees Q4 revenue $1.8B-$1.85B, consensus $1.88B

NEWSPAPERS/WEBSITES

Clinton group urges Atlantic Power (AT) to restart sale process, Reuters reports
LVMH (LVMUY) could pair with a tech company to launch smartwatch, WSJ reports
Wells Fargo (WFC) to shut ‘dark pool’ as demand drops, Reuters reports
HP (HPQ) dismisses concerns about drop in global notebook market share, DigiTimes reports
NPD: Sony PlayStation4 (SNE) outsells XBox One (MSFT) in September, GameSpot reports
Goldman Sachs (GS) looks like a buy, Barron’s says

SYNDICATE

Tetraphase (TTPH) 3.95M share Secondary priced at $19.00
Zayo Group (ZAYO) 21.052M share IPO priced at $19.00

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

Yesterday it was the Fed’s latest intervention in capital markets, when shortly after yet another ghastly open, the Fed’s Bullard added some PPTness to stock when he first said that the Fed “should delay in ending QE”, only to backtrack several hours later he was nervous about “staying at zero” and that the Fed is “not too far from its employment goals.” Of course, the only thing the algos heard was a delay in QE and following on John Williams’ comment earlier in the week, have now reverted to the old central-planning regime where the Fed (and other central banks) will step in the second there is even the smallest market correction, because in the New Normal price discovery is illegal and punishable by breaking markets, such as yesterday’s DirectEdge failure at just the right time.

And yet, if the last three days all started with a rout in futures before the US market open only to ramp higher all day, today it may well be the opposite, when shortly after Europe opened it was the ECB’s turn to talk stocks higher, when literally within minutes of the European market’s open, ECB’s Coeure said that:

• COEURE SAYS ECB WILL START WITHIN DAYS TO BUY ASSETS

Which was today’s code word for all is clear, and within minutes US futures, which until that moment had languished unchanged, soared by 25 points. So will today be more of the same and whatever early action was directed by the central bankers will be faded into a weekend in which only more bad news can come out of Ebola-land?

Then again, luckily algos have zero sarcasm tolerance because if they were delighted to respond to ECB’s “good cop” Coeure, then they would have puked moments after yet another ECB member, Constancio, rejected everything Coeure said:

• CONSTANCIO: CEN BANKS SHOULDN’T BE MARKET MAKERS OF LAST RESORT

One can only smile with a market in which the only thing missing is the central banks’ advance report of the EOD closing print. Because fair and efficient went out of the window years ago: case in point yesterday’s DirectEdge breaking just as the selling intensified, just to prevent retail from piling into the fray and making the PPT’s momentum ignition inflection point impossible. The regulatory approach to “risk” was made even clearer when today Italian authorities took action to stem the downside and prohibit short-selling in Banca
Monte dei Paschi whose shares had been suspended after they struck record lows
yesterday.

But at least thanks to central planner regaining the upper hand in determining the “fair value” of assets, Greece is once again fixed when its 10 Year bond has soared from over 9% yesterday to just barely above 8% today… on absolutely no volume. Clearly, this is nothing but price discovery in its most purest.

In bond land, core Eurozone bond yields have risen alongside equities, with
Germany’s 10yr yield rising back toward 0.85% as the IT/GE and SP/GE
yield spread tightens. The German curve trades steeper, with the 2s/30s
wider by over 4bps as the market continues to unwind their heavy
flattening bias observed since the beginning of the week.

In Europe, equities have recovered a small part of the week’s losses early doors, with the modest bounce led by peripheral equities driven by the abovementioned halt in Monte Paschi shorting. The energy sector leads the gainers, with the stabilisation of crude prices above USD 82/bbl the primary catalyst, but also hopes of a resolution to the gas row between Russia, the EU and Ukraine – with talks due to be held later today. The FTSE-100’s recovery has been stalled by Rolls-Royce Holdings, whose shares fell 8% at the open after cutting their forecast for revenue growth due to deteriorating economic conditions (primarily Russian sanctions). Later today, further US earnings take focus, with General Electric and Morgan Stanley due.

In FX, BoE’s Haldane knocked GBP lower halfway through the morning by stating that recent economic data favours a later BoE rate hike, however Haldane also stated that “mid-2015 not a bad bet by the markets”, prompting Sep’15, Dec’15 Short-Sterling contracts to fall sharply. In other words, yet another central bank whose only data-dependency is based on the data from the FTSE. On a similar topic, Bank of America have added their name to the slew of firms pushing back their BoE rate rise forecast to Aug 2015 vs. Feb 2015. ECB speakers have hit the wires thick and fast this morning, continuing to highlight the policy tools from the ECB that are yet to come into action (2nd TLTRO tranche, ABS/CB purchases), with little market effect. Overnight, China’s 1y/1y swap rate hit a low of 3.04%, near the PBoC’s deposit rate mark of 3%. As a guide, the last time the rate traded below 3.0% was in 2012, which was also when the PBoC last cut rates (July 12th), the pricing in of Chinese easing helped lift AUD for much of the overnight session.

But the biggest action may be in commodities, where the record oversold WTI and Brent crude futures trade over USD 3/bbl above the week’s lows, with the market taking the opportunity to book profits after the bear-market saw its YTD bottom on Thursday. Spot palladium continues to pare yesterday’s losses as the Kremlin state that talks with the EU and Ukraine are difficult, with a large number of misunderstandings and disagreements between all parties. Yesterday, spot palladium fell over USD 27/oz amid USD strength and easing of Russia/Ukraine tensions. Palladium still has another USD 10/oz to gain before erasing yesterday’s losses.

On today’s docket we have Building Permits and Housing Starts in the US with the first UoM Consumer Confidence print for October will probably the most interesting report on what should be a fairly quiet day for data watchers. And completeing it all will be Janet Yellen who in two hours will speak about… Inequality of Economic Opportunity

Bulletin Headline Summary from Bloomberg and RanSquawk

• European equities and German bond yields rise, but remain on track for a weekly loss as sentiment remains fragile – Italian bank shares gain sharply as short-selling bans are put in place to stem the rout
• Energy names lead the gains in Europe as WTI and Brent crude futures trade over USD 3/bbl above the weekly lows on profit-taking and short-covering
• Looking ahead, attention shifts to Fed’s Yellen speaking on inequality at 1330BST/0730CDT, with General Electric and Morgan Stanley also due pre-marke
• Long Treasuries gain for a fifth consecutive week, with 10Y touching lowest since May 2013, 30Y breaking below 3% amid weaker-than-forecast U.S. eco data, concerns over global growth, particularly in euro zone.
• Some schools in Ohio and Texas were closed today after students’ potential exposure to a nurse with Ebola furthered fears of the disease spreading
• The Obama administration sought to deliver a message of reassurance on Ebola while acknowledging lapses in the government’s handling of the first U.S. cases; Obama said he is open to Ebola czar, still opposes travel ban
• Russia’s Putin wants to prevent the Ukrainian war from leading to the frozen conflict he’s maintaining in some former Soviet states, U.K. Prime Minister David Cameron said after a meeting in Milan
• The cost of locking in Chinese borrowing costs is poised to drop below the central bank’s savings benchmark for the first time since 2012 as speculation mounts that interest rates will be cut
• The Bank of Japan’s operation to buy treasury bills from the market fell short of its target for the first time since at least April 2013
• Companies like Apple Inc. and Google Inc. should be required to build surveillance capabilities into their products to help law enforcement with their probes,  according to the Federal Bureau of Investigation
• EU peripheral yields mostly higher. Asian stocks mixed, Nikkei -1.4%, Shanghai -0.7%. European stocks, U.S. equity- index futures gain. Brent crude higher, gold and copper fall

US Data Calendar

• 8:30am: Housing Starts, Sept., est. 1.008m (prior 956k)
  • Housing Starts, m/m, est. 5.4% (prior -14.4%)
  • Building Permits, Sept., est. 1.030m (prior 998K, revised 1.003m)
  • Building Permits, m/m, est. 2.7% (prior -5.6%, revised -5.1%)
• 9:55am: UofMich Confidence, Oct. prelim, est. 84 (prior 84.6)
• 8:30am: Fed’s Yellen speaks in Boston
• No POMO

* * *

DB’s Jim Reid concludes the overnight summary:

Non-voting Fed hawk Bullard’s comments yesterday versus a week before show how quickly things have changed. On October 9th he said “I think there’s a risk” in holding off on rate hikes until the middle of the year. “We should act on good news. We’ve got a pretty good performing economy. We should be willing to remove some accommodation,” and it would be better to get this process started and not wait too long”. However yesterday he said that “Inflation expectations are declining in the U.S.,” he said. “That’s an important consideration for a central bank. And for that reason I think that a logical policy response at this juncture may be to delay the end of the QE.” So he has shifted in a very short space of time from being a Q1 rate hike proponent to one who might want to keep QE alive.

His comments helped turn a market heading towards another mini-meltdown but the intraday volatility was still remarkable. In Europe whilst the Stoxx600, DAX, CAC, IBEX and FTSEMIB closed -0.4%, +0.1%, -0.5%, -1.7% and -1.2% on the day the intraday high-to-low range was much wider at 3.8%, 3.6%, 5.0%, 5.7% and 5.5%, respectively. In the US, the S&P 500 was largely unchanged on the day masking the 2.1% range that we saw throughout the trading session yesterday. With all that volatility came another leg up for VSTOXX and VIX as both closed at their highest since June 2012

Away from equities, higher volatility was also a notable theme in Fixed income markets. The 10yr Treasury yield started the US session at around 2.14%, dipped to a low of 1.976% before climbing back up to a close largely unchanged at around 2.16%. The 10yr German Bund yield dipped to as low as 0.72% before closing back up around the highs of the day of 0.82%. In credit the end of day changes for Xover was also somewhat misleading as index was offered as wide as 424bp before closing 2bp wider on the day at around 404bp.

With eyes on cross asset volatility the trading day yesterday was also supported by some dovish notes from Fed’s Kocherlakota and some better data flow out of the US. Kocherlakota maintained his view that rate hikes any time in 2015 would be inappropriate and was of the view that the Fed can still do more given both employment and inflation are still low. Market seems to agree with that with the Fed Funds contract not pricing in a full rate hike until the first few months of 2016. Data wise we saw better than expected initial jobless claims (264k v 290k), industrial production (+1.0% v +0.4%) and the Philly Fed survey (20.7 v 19.8) although the NAHB Housing market index fell short of consensus (54 v 59).

The recovery from the lows after Bullard spoke yesterday is another reminder how addicted markets still are to liquidity. Indeed in today’s pdf we reprint and update a table from our 2014 Outlook showing the various phases of the Fed’s balance sheet expansion and pausing over the last 5-6 years and its impact on equities and credit. We have found that the relationship broadly works best with markets pricing in the Fed balance sheet move just under 3 months in advance. We’ve also included our oft-used chart of the Fed balance sheet vs the S&P 500 to help demonstrate this. So end July / early August 2014 was always the time that this relationship suggested markets should enter a new more difficult phase.

The Fed can certainly help markets but perhaps we really need the ECB to step up a gear for a true recovery. Confirming an earlier media report the ECB yesterday announced that it will reduce the haircuts on Greek collateral submitted by banks in response to recent market weakness. The EC’s Katainen yesterday said that there should be “no doubt that Europe will continue to assist Greece in whatever way is necessary” so the government can keep financing itself. ECB’s Nowotny comments yesterday weren’t as dovish as perhaps the markets were hoping for when he said that he doesn’t think the central bank should pre-commit the amount of ABS it will buy and said market expectations re the volumes were overdone. There is still concern that things have to get worse in Europe before action and on that the periphery was certainly creaking yesterday. Ten year Spanish and Italian Bond yields widened as much as 30bp and 32bps on the day before paring losses to close the day 10bp and 16bp higher, respectively. Greek bonds failed to recover its intraday weakness though with the 10yr bond yield closing 111bp higher near the day’s high of 8.96%.

The Shanghai Composite, Nikkei and the KOSPI are down -1.0%, -0.6% and -1.0%, respectively. Chinese equities were in the green earlier but gave away all of that on concerns that the SH-HK Connect will be delayed. HK officials overnight said that there isn’t a timetable for the program. The S&P 500 Futures (+0.2%) are following the positive lead from the US session yesterday though. Asian credit spreads snapped back after yesterday’s sell-off although sovereign CDS contracts are off the opening tights as we head to print.

In terms of today, Yellen’s scheduled speech aside we have Building Permits and Housing Starts in the US. The first UoM Consumer Confidence print for October will probably the most interesting report on what should be a fairly quiet day for data watchers. US earnings will also continue to feed throughout the day with the Morgan Stanley and General Electric perhaps the two big names to watch.

via Zero Hedge http://ift.tt/11BKNKB Tyler Durden

Having rotated their attention to the T-bill market in Japan (after demand for the Bank of Japan’s cheap loans disappointed policymakers) in an effort to ensure enough freshly printed money was flushed into Japanese markets, the BoJ now has a major problem. For the first time since QQE began, Bloomberg reports the BoJ failed to buy all the bonds they desired. Whether this is investors unwilling to sell (preferring the safe haven than stocks or eu bonds) or that BoJ has soaked up too much of the market (that dealers now call “dead”) is unclear. Japanese stocks – led by banks – are sliding as bond-demand sends 5Y yields (13bps) to 18-month lows.

 

Umm, Tokyo, we have a problem…

Bank of Japan bought 2.62t yen ($25b) of Japan’s treasury-discount bills from financial companies today, compared with the 3t yen that the BOJ offered to acquire.

 

This is the first time the central bank failed to meet its purchase target for t-bills since at least April 2013, when Governor Kuroda stepped up quantitative easing

*  *  *

Markets are not happy – Nikkei is 300 points off today’s highs…

 

led by banks collapsing to 18-month lows

 

and bond yields are sliding

 

and the yield curve flattens

 

*  *  *

And remember, the Japanese bond market (the largest in the world) is now “dead” according to dealers:

The Bank of Japan’s unprecedented asset purchase program has released a creeping paralysis
that is freezing government bond trading, constricting the yen to the
tightest range on record and braking stock-market activity.

 

…

 

“All the markets have been quiet,” said Daisuke Uno, the Tokyo-based chief strategist at Sumitomo Mitsui Banking Corp. “We’ve
already seen the BOJ dominance of JGBs since last year, but recently
participants in currency and stock markets are also decreasing as those
assets have traded in narrow ranges.”

 

…

 

“The flows on both the buying side and selling side continue to fall,”
said Takehito Yoshino, the chief fund manager at Mizuho Trust &
Banking Co., a unit of Japan’s third-biggest financial group by market
value. “Falling volatility is a very serious problem for traders and
dealers who are unable to get capital gains.”

*  *  *

Just a good job Kuroda is so confident on hyperinflation…

And for those hoping for moar QQE – how exactly will they achieve this when they can’t get a T-bill “BOJOMO” off at current levels!

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

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

In July, I published a post titled, Introducing Ghost Skyscrapers – NYC Real Estate Goes Full Retard, in which I highlighted many of the current absurdities characteristic of Manhattan real estate. Of all the points made, the most striking statistic from the piece is the fact that:

“The Census Bureau estimates that 30 percent of all apartments in the quadrant from 49th to 70th Streets between Fifth and Park are vacant at least ten months a year.”

There is absolutely nothing healthy about this reality. As someone who grew up less than a mile from that quadrant, I can tell you this is very negative for NYC’s long-term vibrancy. Sure, while the boom is happening and global oligarchs are parking some of their savings in newly built glass towers, you’ll get jobs, construction and sales; but when the boom stops, and it always does, all you’ll be left will are empty multi-million dollar boxes that no one can afford. When such a high percentage of properties are built solely to serve as bank accounts, and not a space to live in, you’ve got a severe case of malinvestment on your hands.

For quite some time, I have pointed out that many of these oligarchs will ultimately rue the day they made these investments. It always seemed obvious to me that once the billionaires had their fill they would become a captive milk cow for local governments. When you buy a $20 million dollar home in NYC, and the market starts to cool even a little, there is no getting out. You are completely stuck and then it will be time to come collect. No one will feel sorry for you. No one will care. If you are an oligarch and you didn’t see this coming, I don’t know what to tell you. The pied-à-terre tax is now on the agenda in New York City.

From Bloomberg:

New York’s real-estate industry accounted for $15.4 billion of the city’s $41 billion in 2012 local revenue, more than enough to pay for its 70,000 teachers, 35,000 police officers, firefighters, sanitation workers, parks and libraries, according to a real estate board report.

 

The industry’s reaction may be disproportionate to the tax’s chance of passage. For the idea to become city law, a lot of improbable political events would have to happen. The measure would require approval of the state legislature, whose composition will be determined in a Nov. 4 election and where the Senate, now run by a coalition of Republicans and Democrats, has been hostile to new taxes.

 

It also would need the signature of Governor Andrew Cuomo, a Democrat who built a campaign treasury of more than $30 million by accepting donations from corporate executives and real-estate developers. On his campaign website, he vows to “reverse the mentality of New York as the tax capital of the nation.”

 

More than 80 percent of the $665 million generated would come from 445 units valued at more than $25 million, whose owners would pay an average $1.2 million a year in taxes, said James Parrott, policy institute’s chief economist.

This tax may not pass this time around, but mark my words, it will pass eventually. When 80% of the tax can be collected from 445 foreign owned, vacant units, these oligarchs ultimately will be milked when the NYC economy turns south again. Whether you agree with it or not is beside the point. These taxes are coming and this is just the start.

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

Apparently under pressure from some members of Japan’s parliament (who are likely being screamed at by the firms and people that bought and voted for them) as they question the possibility of JPY dropping to 170 per USD, BoJ Chief Haruhiko Kuroda proclaimed yesterday that “monetary policy can prevent hyperinflation,” but don’t worry because he “doesn’t think Japan will experience hyperinflation.” Well that’s a relief because all his other predictions about how well Abenomics would work have been utter failures. Perhaps Kuroda should listen to ex-BoJ chief economist Hideo Hakayawa who stunningly suggested, The BOJ should start paring its unprecedented easing soon or risk hurting people, “it’s important to quit while you’re ahead.”

Bank of Japan Governor Haruhiko Kuroda says doesn’t expect yen weakness to go that far when asked in parliament today about possibility of currency dropping to 170 per dollar…

• *KURODA: WEAK YEN IN LINE WITH FUNDAMENTALS IS POSITIVE OVERALL
• *KURODA: WEAK YEN CAN DEPRESS NONMANUFACTURING, REAL INCOMES
• *KURODA: FX HAS EFFECT ON COMPANIES’ OVERSEAS BUSINESS
• *KURODA: CAN’T NECESSARILY SAY YEN DECLINE WILL GO THAT FAR
• *KURODA: HAVEN’T SET ANY DEADLINE FOR BOJ’S EASING
• *KURODA: WON’T LET PRICES CONTINUE TO RISE AFTER REACHING 2%
• *KURODA: TOO EARLY TO DISCUSS CONCRETE STEPS ON EXIT POLICY

And

• *KURODA: DON’T THINK JAPAN WILL EXPERIENCE HYPER INFLATION
• *KURODA: CAN PREVENT HYPER INFLATION WITH MONETARY POLICY

So – all good then?

Well no – as the Japanese central bank’s former chief economist, Hideo Hayakawa, suggests…

The BOJ should start paring its unprecedented easing soon or risk hurting people, Hayakawa said in an interview. Pushing inflation to a 2 percent target in a short period will raise living costs without boosting employment or growth, he said.

 

“It’s important to quit while you’re ahead,” said Hayakawa, who was an executive director at the BOJ until March 2013. “Basically, drop the two-year reference, keep the 2 percent target and taper slowly.”

 

The remarks underscore the risks Governor Haruhiko Kuroda is taking to reflate the world’s third-biggest economy with a stimulus program he began in April last year. While the BOJ is still winning its “gamble” with its stimulus, it shouldn’t push its luck, Hayakawa said.

 

“The secret to success is declare victory while you’re winning,” he said.

 

…

 

Growing public criticism of the yen’s recent weakness means the BOJ can’t stick to its current plan to reach 2 percent inflation, he said.

 

“The short cut to achieving the 2 percent target is through a weak yen but that goes against public sentiment,” Hayakawa said. “It’s not good to go too far and get wounded later.”

*  *  *

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Submitted by Lance Roberts of STA Wealth Management,

Deflation

The recent market contraction should not be as much of a surprise as it has been.  First, the markets were long overdue for a correction after an extremely long and unbroken run. Secondly, as I have addressed several times previously, the collapse in global inflationary pressures, along with economic growth, was an issue that would rapidly “wash up” on domestic shores.  To wit:

“I would most likely bet on the latter as the deflationary pressures that are rising in Japan and the Eurozone flow back into the domestic economy over the next couple of quarters.”

The chart below, which shows oil prices, interest rates and the 10-year breakeven inflation rate, are all stating that those deflationary pressures have come home to roost.

The collapse in oil prices is the effect of the drag in global demand combined with the recent surge in the U.S dollar.

Here is the “GOOD NEWS.” 

The collapse in oil prices, combined with a strong dollar, will provide consumers with roughly a $40 billion tax credit going into the winter. This should help provide some support to the domestic economy in the short-term provided there are no other offsetting factors such as a resurgence of the “polar vortex’s” that sapped economic growth last year. 

Retail sales makeup about 40% of the personal consumption expenditures which comprises almost 70% of the quarterly GDP calculation.  Retail sales have slowed recently as the bulk of American’s is living paycheck-to-paycheck.  This is shown in the chart below of “control purchases” that reflects what households are buying.  (Note: Historically, control purchases below 4% annualized have been associated with very weak economic growth.)

Therefore, there may be some pickup in retail sales in the months ahead which may provide a temporary buoy during the global economic storm.

 

Houston, We Have A Problem

I live in Houston, which as many already know, has enjoyed on of the biggest economic “booms” in history as oil production has had a major impact on the wealth and prosperity of the city. 

However, as I have warned in the past, it is important to remember that all things are going in cycles and that the current expansion was unlikely to last forever.  The reason, I said this then, and still believe it now, is two-fold.

First, the development of the “shale oil” production over the last five years has caused oil inventories to surge at a time when demand for petroleum products in on the decline as shown below.

The obvious ramification of this is a “supply glut” which leads to a collapse in oil prices.  The collapse in prices leads to production “shut ins,” loss of revenue, employee reductions, and many other negative economic consequences for a city dependent on the production of oil.

Secondly, I have also discussed that the “fracking miracle” may not be all that it is believed to be due to fast production decline rates and massive amounts of leverage. Just recently Yves Smith posted an article discussing this very issue stating:

“The oil and gas sector is capital intensive. Drillers have borrowed phenomenal amounts of money, which was nearly free and grew on trees, to acquire leases and drill wells and install processing equipment and infrastructure. Even as debt was piling up, the terrific decline rates of fracked wells forced drillers to drill new wells just keep up with dropping production from old wells, and drill even more wells to show some kind of growth. One heck of a treadmill. Funded in part by junk debt.

 

Junk bond issuance has been soaring as the Fed repressed interest rates and caused yield-hungry investors to close their eyes and take on risks, any risks, just to get a teeny-weeny bit of extra yield. Demand for junk debt soared and pushed down yields further. And even within this rip-roaring market for junk bonds, according to Bloomberg, the proportion issued by oil and gas companies jumped from 9.7% at the end of 2007 to 15% now, an all-time record.”

While I am not suggesting that the Houston economy is set to collapse, I know many individuals that are heavily leveraged into the “energy” sector believing that things will “only continue to go up.” This is tremendously risky and anyone who lived in Houston during the 80’s will assure you they don’t.

 

Freaking Out

The long awaited correction has finally begun.  It should come as no surprise considering the markets have been in the longest near vertical run in the history of the market.  However, the question for investors is “what do I do now?”

The answer from the mainstream “bulls” is simply to do nothing.  After being caught heavily flatfooted with daily cheerleading of the markets, their only answer currently is to do nothing. After all “it’s not about timing the market but time ‘IN’ the market that matters.” Right?

Such a statement is a cop-out for the lack of an actual portfolio/risk management discipline of any sort.  However, as discussed earlier this week, the current correction was not only anticipated, but should also not be taken lightly.

A big concern at the moment is the conclusion of the Federal Reserve’s ongoing liquidity intervention program which has been the driver behind the markets unbridled advance since its inception in 2012.  The same thing occurred in 2011, which led to a topping process as QE2 was coming to an end. 

While no two periods are ever the same what is important is the current defense of 1850 level on the S&P 500 so far.  A rally from this level, which fails to attain a new high, suggests that the market will complete an important topping process in the months ahead.

The markets are currently on very important “sell signals,” but also “grossly oversold” on a short-term basis.  This setup suggests that investors should be patient and await a rally back to resistance to reduce equity risk in portfolios for the time being.

(Subscribe for free email delivery of this weekend’s newsletter for portfolio model adjustments and suggested allocations)

“The point is that there are many risks investors should not ignore. Making up losses is much harder than reinvesting stored capital once a clearer picture emerges. While the current belief that a correction of magnitude in the markets is "inconceivable," I am not sure that word means what they think it means.”

Caution is advised.

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

From Bitcoin to the Swiss gold referendum, and from Chinese trade and North Korean leadership, Jim Rogers covers a lot of ground in this excellent interview with Boom-Bust’s Erin Ade. Rogers reflects on the end of the US bull market. citing a number of factors from breadth to the end of QE, adding that he agrees with Albert Edwards’ perspective that now is the time to “sell everything and run for your lives,” as the “consequences of [The Fed] are now being felt.” Most notably though, Rogers believes the de-dollarization is here to stay as Western sanctions force many nations to find alternatives. Simply put, Rogers concludes, “we are all going to pay a terrible price for all this money-printing and debt.”

 

 

Excerpts:

On US stocks:

This is the end of the bull market. Stocks will fall 20%

 

Market breadth is waning as evidenced by the lower number of stocks hitting new highs and trading above their 200-day moving averages. Small cap stocks have already corrected over 10 percent and almost half of the Nasdaq is down 20 percent – a bear market already.

 

Where is this headed? Consolidation is the bare minimum. But, depending on the real economy, it could be worse.

 

“Any pension plans, endowments, etc., are suffering because they invest for the futures and are finding that their situation has gotten worse,” he says.

On The Fed:

“We are all going to pay a terrible price for all this money-printing…

 

They are doing this at the expense of people who save and invest.

 

They are doing it to bail out the people who borrowed huge amounts of money. The consequences are already being felt.”

On de-dollarization:

The move away from the U.S. dollar is yet another reaction to Western sanctions placed on Russia since it annexed Crimea from Ukraine in March.

 

Russia and Iran have agreed to use their own national currencies in bilateral trade transactions rather than the U.S. dollar.

 

An original agreement to trade in rials and rubles was made earlier this month in a meeting between Russian Energy Minister Alexander Novak and Iranian Oil Minister Bijan Namdar Zanganeh.

 

Similarly, Russia and China also agreed to trade with each other using the ruble and yuan in early September, following a Russian deal with North Korea in June to trade in rubles

via Zero Hedge http://ift.tt/11yvTVB Tyler Durden

With 80% of Americans concerned about Ebola, and Europe's most worrisome 'factor' is rising prices (yes, rising, despite central banks' deflation ogre fears), we thought it might be useful to remember just what other concerns the world has. From 'inequality' to 'religious hatred' and from 'nuclear weapons' to 'pollution', there is a lot of diverse fears around the world.

 

Americans are focused on Ebola (for now)

…nearly 80 percent were concerned about the Ebola outbreak, with 41 percent saying they were "very concerned" and 36 percent "somewhat concerned."

*  *  *

Europe's biggest fears – rising prices!

So, paradoxically to "fix" Europe, Mario Draghi is desperately trying to make Europe's biggest problem even worse.

 

*  *  *

Let's see what the rest of the world is worried about… (via The Washington Post)

As panic over the spread of Ebola persists, a new report from the Pew Global Attitudes Project offers a bit of perspective. It explores the larger threats people in different regions of the world fear. Unsurprisingly, concerns vary across continents.

 

Respondents to the poll were asked to cite what they believed was the top global threat out of five categories. The 48,643 respondents came from 44 countries.

 

 

Source: The Washington Post

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Authored by Jared Dillian,

Back in the summer of 2007, when I was working for Lehman Brothers, I had a vacation to the Bahamas planned. This was unusual for me. Up until that point, in six years of working for Lehman, I had taken about five vacation days—total. But my wife and I were going to a semi-primitive resort on Cat Island, the most desolate island in the Bahamas. Interesting place for a vacation. Suffice to say that it’s plenty hot in the Bahamas in August.

The market had been acting funny for a while, and I had a hunch that there was going to be trouble while I was gone, so I bought the 30 strike calls in the CBOE Market Volatility Index (VIX). I was betting that volatility was going to go up a lot in a short period of time. In fact, these options—which I spent a little over $100,000 on—would be worthless unless there was outright panic. I gave instructions to my colleagues to sell the call options if the VIX went over 35. (Note: my memory on the details of the trade, like the strike of the options and the level of the VIX, is a little hazy. The specifics might have been different, but you get the general idea.)

So there I was, sunning myself at this primitive resort on Cat Island and the world was melting down, and I was completely oblivious to what was going on back on Wall Street. Coincidentally, the local Bahamas newspaper had a picture of black swans on the cover one day. I staged a photo of me in a hammock reading the newspaper with the black swans on it. I still have that photo.

I got back to civilization and checked the markets. I saw the chart of the VIX. I could hardly contain myself. If my colleagues had executed the trades properly, I would have had a profit of over $800,000. But when I got back to work and opened my spreadsheet, I found that I’d made less than $100,000. What I had failed to consider was that if the world actually was blowing up, the guys would have been too busy to execute my trade.

So there is this whole idea of state dependence that we have to consider when we’re talking about the market. Like, you might have a plan to buy stocks when the index gets below a certain level, but when the market gets to that point, you:

a) may not have the capital; and

 

b) might be panicking into your shorts. It’s nice to have a plan, but, paraphrasing Mike Tyson, everyone has a plan until they get punched in the face.

I remember reading Russell Napier’s book about bear markets, called Anatomy of the Bear. It talked about all the big bear markets in the US, including the granddaddy of them all, the stock market crash of 1929 and the Great Depression. One of the things that I learned from this book was that if you can time the bottom exactly right, you can make a hell of a lot of money in very short order. For example, if you had bought the lows in 1932, you could have doubled your money in a matter of months.

I wanted to do that. I prayed for a bear market, so I would get my chance.

Little did I know that I would get my chance just two years later—and blow it.

When the market is down 60%, it’s scary as hell to buy stocks. Hindsight being 20/20, you can say, “What, did you think it was going to zero?” Actually, yes—in March of 2009, people thought it was going to zero.

But for those people who:

a) had capital; and

 

b) weren’t terrified,

it was a once-in-a-lifetime opportunity.

A Thousand Days with No Correction

So let’s talk about a). Does everybody have capital?

Remember, the hard part of this is not picking bottoms. Many people can do this quite capably. Panic/liquidation is very easy to spot. But few people have the ability to take advantage of it, because they’re fully invested.

As for b), you tend not to be terrified if you have capital.

Everyone knows by now that the stock market is correcting. The price action is pretty terrible. Will it get worse? I think so. We’re seeing excesses (corporate credit, growth stocks, IPOs) that we haven’t seen in many, many years. It’s been over 1,000 days since we’ve had a correction of any magnitude. With the market down about 5%, nobody is particularly worried, because every other time the market was down 5%, it ended up going higher.

Back to state dependence.

What is it going to feel like if the market goes down further? How will people behave if the S&P 500 gets to, say, 1,700?

 

I can tell you what it will be like if the S&P gets to 1,700. It’s going to be like it was in August of 2007 when my coworkers forgot to sell my VIX calls because they were buried under an avalanche of panicked sell orders from institutional money managers. Pre-algorithmic trading, the trading floor used to get pretty noisy. I used to be able to tell you what the market was doing just from listening to the floor. At SPX 1,700, trading floors will be very noisy.

 

It’s been so long since we’ve had a correction, I’m guessing that most people have forgotten what a correction feels like. When you go that long in between corrections, people are sitting on a mountain of capital gains. And unless the capital gains really start to disappear, there is little pressure to sell. But if you’re the owner of, say, airline stocks, and you’ve watched them evaporate to the tune of 30%, that tends to focus the mind a little bit.

 

As with any steep correction, there will be fantastic opportunities, but they will only be available to those who have capital. Remember, bear markets don’t just destroy the bulls’ capital, they destroy the bears’ capital, too.

Bear markets destroy everyone’s capital.

via Zero Hedge http://ift.tt/102uu9b Tyler Durden

Since Russia first began rattling its retaliatory anti-Western-fast-food sabre at McDonalds in April, things have escalated. It started in Crimea, spread to Moscow, and now as Yopolis notes, has spread across much of Russia as more and more McDonalds stores are shuttered by Russia’s Food Safety Commission (Rospotrebnadzorom)…

 

The Map of Hostilities – all the closed McDonalds in Russia…

 

July 28th. There is information about the checks Rosselkhoznadzor. Experts interested in the quality of the cheese, which is still possible to deliver from the Czech Republic and France.

August 6th. Vladimir Putin signed a decree banning the import of products and raw materials from Europe, the United States and other countries that have imposed sanctions against Russia.

On 20 August. “McDonald’s” unexpectedly closes three Moscow restaurant – on Manezh Square, on Prospekt Mira and Malaya Bronnaya street. Company forced to suspend their activities because of the claims Rospotrebnadzora that found numerous violations in the work of institutions. A few days later a restaurant on Manezh Square will be closed for 90 days, the decision of the court of Tver.

Court suspends the very first McDonald’s in Russia – Pushkin Square.

On 27 August. 85 days closes McDonalds in Yekaterinburg. The next day, suspend work two places in Sochi and one – in Serpukhov.

On 29 August. banned 12 restaurants across Russia, among them – three in Moscow and two in the suburbs.

September 1st. “McDonald’s” makes a statement that eliminate irregularities in three popular restaurants in Moscow. Despite this, the court does not allow them to open ahead of schedule. Around the same time, it appears that the company has filed eight lawsuits in the Pension Fund. The fact that officials refuse to accept the quarterly reports of the “McDonald’s”, and because of this, the staff could not shape their future retirement.

It turns out that the CPS checks quarter of 440 restaurants, “McDonald’s” in Russia. According to the service, their actions are planned and not related to politics.

September 4th. Closes second restaurant network in Yekaterinburg.

September 9 receives information about the penalties for suburban McDonald’s – in total they have to pay 500 thousand rubles.

“McDonald’s” refuses to salads “Vegetable” and “Caesar” because of the ban on the importation of products from the EU. Company “Belaya Dacha”, collaborating with restaurants since 1994, promised to find new channels of supply of raw materials, but in Moscow, salads and have not appeared.

On the website of the Russian “McDonalds” appears statement “planned modernization” restaurants.

September 12th. McDonalds on “Tretyakov” cordoned off by police.

September 16th. CPS finds a breach in the restaurant Novosibirsk.

On 17 September. “McDonald’s” increasingly resists. She sued the Government of St. Petersburg with a request to annul the decision of the arbitral tribunal. However, according to local Rospotrebnadzora, the service has not conducted inspections in St. Petersburg.

On 29 September. Temporarily closes the only McDonald’s in the Komi Republic. Guide denies Rospotrebnadzora explains closing “technical Rearrangement.”

On 8 October. PROSECUTOR starts checking the charity fund “Ronald McDonald House”, which helps sick children. In all honesty, organizations questioned the deputy from the “Just Russia” Andrei cool.

October 10th. third McDonalds in Volgograd closed for two months. Total in the region, there are five restaurants of the chain. The first closed in September, the second stopped working after a month. The reason is the same: the violation of sanitary norms and E. coli. After complaining of the court permits the work to one of the restaurants, but without the right to sell food and drinks. Places fined 100 and 150 thousand rubles.

On the same day the company’s representatives say they won the case in Veliky Novgorod. The court did not prohibit the restaurant to sell their products, as requested in Roskomnadzor.

In one of the McDonald’s Voronezh find E. coli. Allowable rate of bacteria in cucumbers exceeded 1.6 times. Restaurant fined 50 thousand rubles. Another McDonald’s closes at center of Nizhny Novgorod.

October 13th. Court in Moscow satisfies the claim Rospotrebnadzora to “McDonald’s” in 100 thousand rubles. In the production and reverse actions are – the company wants to make a claim for it to be unfounded.

October 14th. One of the restaurants of the Krasnodar Territory is sentenced to a fine of 300 thousand rubles. “McDonald’s” again disagrees with the decision of the court and provides a counter-suit.

With each passing day the story gets more and more strange. On Monday, the Moscow Arbitration Court fined the restaurant at ENEA 100 thousand rubles for the illegal sale of toys in the “Happy Meal.”

Source: Yopolis

*  *  *

We are sure this is not helping MCD sales as they suffer the longest streak of losing quarters on record

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