Tag: finance

Mere days after the euphoria of Twitter’s IPO proclaimed by any and all as a great success, the bellwhether for all things Dot-Com-Bubble 2.0 has just entered its first bear market. Now down 20% from its $50.08 highs last week, Twitter now has a 3 handle ($39.99) as it seems the world wakes up to “unbelievable growth” that is ‘priced in’… Of course, with rumors that TWTR options trading starts later this week, it’s anyone’s guess where the machines take it next…

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/CZfHi9TxTpE/story01.htm Tyler Durden

“We’re seeing a new era of currency wars,” Neil Mellor, a foreign-exchange strategist at Bank of New York Mellon in London. This is what Bloomberg reported today in a piece titled “Race to Bottom Resumes as Central Bankers Ease Anew.” It adds: “The global currency wars are heating up again as central banks embark on a new round of easing to combat a slowdown in growth.  The European Central Bank cut its key rate last week in a decision some investors say was intended in part to curb the euro after it soared to the strongest since 2011. The same day, Czech policy makers said they were intervening in the currency market for the first time in 11 years to weaken the koruna. New Zealand said it may delay rate increases to temper its dollar, and Australia warned the Aussie is “uncomfortably high.”

For the most part Bloomberg account is accurate, it has one fundamental flaw: currency wars never left, but were merely put on hiatus as the liquidity tsunami resulting from the BOJ’s mega easing lifted all boats for a few months. And now that the world has habituated to nearly $200 billion in new flow every month (and much more when adding China’s monthly new loan creation), the time to extract marginal gains from a world in which global trade continues to contract despite the ongoing surge in global liquidity, central banks are back to doing the one thing they can – printing more.

The moves threaten to spark a new round in what Brazil Finance Minister Guido Mantega in 2010 called a “currency war,” barely two months after the Group of 20 nations pledged to “refrain from competitive devaluation.”

 

“There are places in the world where economies are generally quite weak, where inflation is already low,” Alan Ruskin, global head of Group-of-10 foreign exchange in New York at Deutsche Bank AG, the world’s largest currency trader, said in a Nov. 8 phone interview. “Japan was in that mix for 20-odd years. Nobody wants to go there” and “the talk from Draghi shows they’re taking the disinflation story very seriously. The Czech Republic is the same story.”

 

Growth in global trade may slow to 2.5 percent in 2013, the new head of the World Trade Organization said after a Sept. 5-6 summit of G-20 nations in St. Petersburg, Russia, down from the organization’s previous estimate in April of 3.3 percent. Even so, the G-20 participants agreed to “refrain from competitive devaluation” and not “target our exchange rates for competitive purposes.”

It is indeed the bolded part that is the most disturbing one, and is why the most important revision in the IMF’s quarterly update of its flawed forecasts, is always the chart showing the collapse in real global trade, which in 2013 is now forecast to be 50% lower than preliminary estimates.

So what should one watch for now that even the MSM admits the currency wars are “back”? Goldman lists the 5 key areas to watch as central banks resume beggar thy neighbor policies with never before seen vigor.

• Watch for Sudden Policy Shifts – In a regime where stability is achieved via offsetting forces, a sudden change in one of these forces will lead to potentially rapid moves. Changes often result from a major policy shift, as for example seen in Japan about a year ago. The period of Sterling weakness early in the year was another example, where a central bank suddenly increased the focus on the exchange rate. A policy shift that hurt EM deficit currencies this year, in particular, was the move towards Tapering by the Fed. Changes to one of the normally offsetting forces are quite similar to revaluation or devaluations in traditional exchange rate regimes.
• Watch Genuine Appreciation Trends – In a world where every country wants to prevent its currency from strengthening, those who actually favour a stronger currency will not face many offsetting pressures. Obviously this is conditional on stronger underlying fundamentals. In order to control the speed of appreciation, frequent smoothing operations can be necessary. This may create a scenario of relatively slow appreciation, combined with very low volatility, which in turn would imply a high Sharpe Ratio. China’s steady Renminbi appreciation remains a case in point. And in recent times the Korean Won as well.
• Watch Policy Constraints – There may also be countries that face continued appreciation pressures but operate under policy constraints that do not allow them to respond fully. In these situations policymakers may not be able to fully prevent appreciation. The constraints could appear in various forms. Would the ECB have been able to cut rates with higher inflation rates? A strict inflation mandate reduces the flexibility for policy makers to respond to currency movements, in particular when they reflect positive growth shocks. External policy pressures could be a constraint. The discussions at the G7 may have been a factor that limited Japan’s ability to weaken the JPY further and could become a constraint in case the JPY starts to strengthen again. The US Treasury report on currencies certainly hints in that direction.
• Watch Carry – If policymakers aim at anchoring the exchange rate in nominal terms and succeed, this does not automatically imply that there are no return opportunities. As long as interest rates differentials persist there will be carry opportunities. And again relatively low volatility may be a welcome feature which raises Sharpe ratios. How long will the RBA be able to sustain an interest rate differential of more than 2% to most other developed economies in such a scenario?
• Watch Quasi Currencies – Finally there is even an argument that competitive devaluations could boost precious metals. That view is based on the simplification that gold, for example, is a “homeless” currency without a central bank that tries to block its appreciation. Another way of saying the same is that many asset prices may rise in response to continued and competitive monetary easing, which is a key feature of such a non-collaborative exchange rate mechanism.

But most importantly, watch Yellen and the inflection point where the consensus that tapering may/will/should be just around the corner, makes way for the anathema, namely that $85 billion per month is nowhere near enough as the Fed doubles down on its own core prerogative for 2014: ramping inflation at all costs… even if it means a return to Yellen’s favorite topic: outright monetary finance.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/7HHq4eDBPUY/story01.htm Tyler Durden

“We’re seeing a new era of currency wars,” Neil Mellor, a foreign-exchange strategist at Bank of New York Mellon in London. This is what Bloomberg reported today in a piece titled “Race to Bottom Resumes as Central Bankers Ease Anew.” It adds: “The global currency wars are heating up again as central banks embark on a new round of easing to combat a slowdown in growth.  The European Central Bank cut its key rate last week in a decision some investors say was intended in part to curb the euro after it soared to the strongest since 2011. The same day, Czech policy makers said they were intervening in the currency market for the first time in 11 years to weaken the koruna. New Zealand said it may delay rate increases to temper its dollar, and Australia warned the Aussie is “uncomfortably high.”

For the most part Bloomberg account is accurate, it has one fundamental flaw: currency wars never left, but were merely put on hiatus as the liquidity tsunami resulting from the BOJ’s mega easing lifted all boats for a few months. And now that the world has habituated to nearly $200 billion in new flow every month (and much more when adding China’s monthly new loan creation), the time to extract marginal gains from a world in which global trade continues to contract despite the ongoing surge in global liquidity, central banks are back to doing the one thing they can – printing more.

The moves threaten to spark a new round in what Brazil Finance Minister Guido Mantega in 2010 called a “currency war,” barely two months after the Group of 20 nations pledged to “refrain from competitive devaluation.”

 

“There are places in the world where economies are generally quite weak, where inflation is already low,” Alan Ruskin, global head of Group-of-10 foreign exchange in New York at Deutsche Bank AG, the world’s largest currency trader, said in a Nov. 8 phone interview. “Japan was in that mix for 20-odd years. Nobody wants to go there” and “the talk from Draghi shows they’re taking the disinflation story very seriously. The Czech Republic is the same story.”

 

Growth in global trade may slow to 2.5 percent in 2013, the new head of the World Trade Organization said after a Sept. 5-6 summit of G-20 nations in St. Petersburg, Russia, down from the organization’s previous estimate in April of 3.3 percent. Even so, the G-20 participants agreed to “refrain from competitive devaluation” and not “target our exchange rates for competitive purposes.”

It is indeed the bolded part that is the most disturbing one, and is why the most important revision in the IMF’s quarterly update of its flawed forecasts, is always the chart showing the collapse in real global trade, which in 2013 is now forecast to be 50% lower than preliminary estimates.

So what should one watch for now that even the MSM admits the currency wars are “back”? Goldman lists the 5 key areas to watch as central banks resume beggar thy neighbor policies with never before seen vigor.

• Watch for Sudden Policy Shifts – In a regime where stability is achieved via offsetting forces, a sudden change in one of these forces will lead to potentially rapid moves. Changes often result from a major policy shift, as for example seen in Japan about a year ago. The period of Sterling weakness early in the year was another example, where a central bank suddenly increased the focus on the exchange rate. A policy shift that hurt EM deficit currencies this year, in particular, was the move towards Tapering by the Fed. Changes to one of the normally offsetting forces are quite similar to revaluation or devaluations in traditional exchange rate regimes.
• Watch Genuine Appreciation Trends – In a world where every country wants to prevent its currency from strengthening, those who actually favour a stronger currency will not face many offsetting pressures. Obviously this is conditional on stronger underlying fundamentals. In order to control the speed of appreciation, frequent smoothing operations can be necessary. This may create a scenario of relatively slow appreciation, combined with very low volatility, which in turn would imply a high Sharpe Ratio. China’s steady Renminbi appreciation remains a case in point. And in recent times the Korean Won as well.
• Watch Policy Constraints – There may also be countries that face continued appreciation pressures but operate under policy constraints that do not allow them to respond fully. In these situations policymakers may not be able to fully prevent appreciation. The constraints could appear in various forms. Would the ECB have been able to cut rates with higher inflation rates? A strict inflation mandate reduces the flexibility for policy makers to respond to currency movements, in particular when they reflect positive growth shocks. External policy pressures could be a constraint. The discussions at the G7 may have been a factor that limited Japan’s ability to weaken the JPY further and could become a constraint in case the JPY starts to strengthen again. The US Treasury report on currencies certainly hints in that direction.
• Watch Carry – If policymakers aim at anchoring the exchange rate in nominal terms and succeed, this does not automatically imply that there are no return opportunities. As long as interest rates differentials persist there will be carry opportunities. And again relatively low volatility may be a welcome feature which raises Sharpe ratios. How long will the RBA be able to sustain an interest rate differential of more than 2% to most other developed economies in such a scenario?
• Watch Quasi Currencies – Finally there is even an argument that competitive devaluations could boost precious metals. That view is based on the simplification that gold, for example, is a “homeless” currency without a central bank that tries to block its appreciation. Another way of saying the same is that many asset prices may rise in response to continued and competitive monetary easing, which is a key feature of such a non-collaborative exchange rate mechanism.

But most importantly, watch Yellen and the inflection point where the consensus that tapering may/will/should be just around the corner, makes way for the anathema, namely that $85 billion per month is nowhere near enough as the Fed doubles down on its own core prerogative for 2014: ramping inflation at all costs… even if it means a return to Yellen’s favorite topic: outright monetary finance.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/7HHq4eDBPUY/story01.htm Tyler Durden

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

 

 

Chart: Bloomberg Briefs

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

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

 

 

Chart: Bloomberg Briefs

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

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

 

 

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

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

 

Chart: Bloomberg Briefs

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

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

 

 

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

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

 

Chart: Bloomberg Briefs

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

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

Bloomberg has more:

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

 

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

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

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

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

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

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

Monday, Nov 11

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

Tuesday, Nov 12

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

Wednesday, Nov 13

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

Thursday, Nov 14

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

Friday, Nov 15

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

 

In table format from SocGen:

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

EURO AREA RECOVERY SHORT-LIVED

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

JAPAN GDP TO RAISE DOUBTS ON ABENOMICS

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

CHINA CP PLENARY MEETING TO STRESS REFORM

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

Source: Goldman, Socgen

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

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

 

Overnight Media Digest

WSJ

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

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

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

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

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

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

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

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

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

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

 

FT

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

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

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

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

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

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

 

NYT

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

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

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

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

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

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

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

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

 

Canada

THE GLOBE AND MAIL

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

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

Reports in the business section:

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

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

NATIONAL POST

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

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

 

China

PEOPLE’S DAILY

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

CHINA DAILY

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

SHANGHAI SECURITIES NEWS

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

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

CHINA SECURITIES JOURNAL

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

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

SECURITIES TIMES

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

CHINA DAILY

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

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

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

Downgrades

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

Initiations

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

HOT STOCKS

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

EARNINGS

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

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

NEWSPAPERS/WEBSITES

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

BARRON’S

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

SYNDICATE

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

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