finance – Page 18344

Guest Post: The Gathering Storm

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Doing more of what failed spectacularly will not save the day a second time, as the scale required to create yet more phantom collateral and more asset bubbles will collapse the system.

The financial storm clouds are gathering, ominously darkening the horizon. Though the financial media and the organs of state propaganda continue forecasting blue skies of recovery and rising corporate profits, the factual evidence belies this rosy forecast: internal measures of financial and economic activity are weakening across the globe as the state-central bank solutions to all ills–massive increases in credit creation, leverage and deficit spending–have failed to address any of the structural causes of the 2008 Global Financial Meltdown.

This failure to address the causes of 2008 Global Financial Meltdown is disastrous in and of itself–but the status quo has magnified the coming disaster by scaling up the very causes of the 2008 Global Financial Meltdown: excessive credit expansion, misallocation of capital on a grand scale, an opaque shadow banking system constructed of excessive leverage and a dependence on phantom collateral, i.e. risks and assets that are systemically mispriced to skim stupendous profits for financiers, bankers and their political enablers.

This is what I have called doing more of what has failed spectacularly.

Extremes inevitably lead to collapse, but even the most distorted system has some feedback mechanisms that attempt to counter the momentum toward disaster. Just as the body will try to mitigate the negative consequences of a diet of greasy fast food, our grossly distorted financial and political systems still retain some modest feedback loops that attempt to mitigate rising risks.

These interactive forces make it impossible to predict the moment of collapse, even as systemic failure remains inevitable. Precisely when the heart of an obese, unfit person who eats nothing but fast food will give out cannot be predicted, but what can be predicted is the odds of systemic failure rise with every passing day.

Doing more of what has failed spectacularly–inflating new asset bubbles in housing, stocks and bonds via quantitative easing, obfuscating financial skimming operations with thousands of pages of new regulations, and so on–is the equivalent of pushing an obese, unfit person to run uphill. Rather than repair the system, doing more of what has failed further stresses the system.

But even if the financial system were cleansed of bad debt and phantom collateral, the status quo would remain only partially repaired. For it's not just the financial system that has reached the point of negative return: the entire economic foundation of the developed world–credit-dependent consumerism–is as bankrupt and broken as the financial system that fuels it.

The state's response to this economic endgame is depersonalized welfare, both corporate and individual. When favored sectors can't succeed in the open market, the state enforces cartel-capitalism that enriches the corporations at the expense of the citizenry. When the cartel-state economy no longer creates paying work for the citizenry, the state issues social welfare benefits, in effect paying people to stay home and amuse themselves.

This destroys both free enterprise on the corporate level and the source of individual and social meaning, i.e. the opportunity to contribute in a meaningful way to one's community, family and trade/skill.

The status quo is thus not just financially bankrupt–it is morally bankrupt as well.

The status quo is as intellectually bankrupt as it is financially bankrupt. Our leadership cannot conceive of any course of action other than central bank credit creation and expanding state control of the economy and social benefits, paid for with money borrowed from future generations.

Let's take a wild guess that the obese, unfit person won't make it up the second hill, never mind the third or fourth one. The status quo responded to the financial heart attack of 2008 by doing more of what had failed spectacularly. That injection of trillions of dollars, euros, yen, renminbi, quatloos, etc. revived the global financial system in the same way a shot of nitroglycerin resolves a life-threatening crisis: it doesn't fix the causes of the crisis, it simply gives the system some additional time.

The next global financial storm is already gathering on the horizon. Doing more of what failed spectacularly will not save the day a second time, as the scale required to create yet more phantom collateral and more asset bubbles will collapse the system.

Intellectual, moral and financial bankruptcy all go hand in hand. There isn't just one storm gathering on the horizon–there are three, each adding force and fury to the other two.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/8MYohdIwrGY/story01.htm Tyler Durden

Manufacturing Production Disappoints As Utilization Rises To 5-Year High

Industrial Production data for September rose by 0.6%, beating expectations by the most in 11 months as pre-government shutdown data was ‘helped’ by a revision lower in August (from 0.4% to 0.2% growth). Manufacturing production rose only 0.1% (missing expectations of +0.3%) as gains in car makers’ output was offset by declines in comptures, furniture, and applicances. Capacity Utilization surged to 5 year highs with its biggest beat of expectations since Dec 2010. All-in-all, a strangely mixzed bag of great and dismal data once again… Good enough ‘trend’ to warrant ‘taper’? who knows… but we posit the cyclical trend remains and the government shutdown likely renegs some of this better-than-expected data when we see it.

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McDonalds Drops Heinz Ketchup Due To Executive Rivalry

It was as if a million Warren Buffetts cried out in terror and were suddenly silenced. That is an artist’s impression of what happened overnight following news that McDonalds would, after 40 years of serving the red tomato paste in its global restaurants, drop the use of Heinz ketchup from its stores. The reason: executive bad blood due to the appointment of Bernardo Hees, the former CEO of biggest rival Burger King, as the current head of Heinz following the Berkshire purchase of the company in February, in the process making the John Kerry estate even richer. “As a result of recent management changes at Heinz, we have decided to transition our business to other suppliers over time,” McDonald’s said in a statement. The Oak Brook, Illinois-based restaurant chain did not disclose the value of their business relationship.

From BBC News:

The world’s biggest fast-food chain said it would drop the ketchup after Bernardo Hees, the former head of rival Burger King, took over as Heinz’s chief executive. “We have decided to transition our business to other suppliers over time,” McDonald’s said.

In February, Heinz was purchased in a $28bn (£17.3bn) takeover.

McDonald’s said that it would work with Heinz “to ensure a smooth and orderly transition of the McDonald’s restaurant business”, which has 34,000 restaurants around the world.

Mr Hees took over after Heinz was bought by Warren Buffett’s Berkshire Hathaway and Brazilian investment fund 3G Capital. Burger King is controlled by 3G Capital.

McDonald’s uses the ketchup at many stores around the world, though only in Pittsburgh and Minneapolis inside the US.

“As a matter of policy, Heinz does not comment on relationships with customers,” the ketchup-maker said.

“As a result of recent management changes at Heinz, we have decided to transition our business to other suppliers over time,” McDonald’s said in a statement. The Oak Brook, Illinois-based restaurant chain did not disclose the value of their business relationship.

The Pittsburgh company, which also makes baked beans, vinegar and other foods, is now led by Bernardo Hees. He still serves as vice chairman of Burger King’s board and is also a partner at 3G Capital.

The 43-year-old Brazilian had become CEO of Burger King after 3G bought the struggling hamburger chain in 2010. He subsequently slashed costs, revamped the chain’s menu and launched a major marketing campaign to help make it a more formidable threat to long-time rival McDonald’s.

Coincidentally, it is all those international McDonalds restaurants which have the unpleasant habit of charging extra for ketchup portions. It remains to be seen just what the cash flow impact to Heinz (and benefit to alternatives) will be as a result.

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Superstorm Pounds UK: Leads To Deaths, Black Outs, Traffic Suspensions And Flight Cancelations

Almost exactly one year after Superstorm Sandy crushed the eastern seaboard of the USA, and 26 years after the last devastating storm to hit the south of England, the so-called St.Jude's Day storm – among the worst in recent memory – is battering the UK (and some of Europe) with winds up to 99 mph. So far there are 2 reported deaths, 220,000 homes without power, all SouthWest trains halted, and over 130 flights cancelled at Heathrow airport. Two nuclear plants have been shutdown and hundreds of trees have fallen blocking roads and rail links across as the storm begins to shift into mainland Europe…

Satellite image of the storm…

Via Reuters,

A teenage girl was killed when a tree fell onto her home while she slept during a fierce storm that battered southern Britain, police said on Monday.Police said they were called to the scene at 0718 GMT in Hever in Kent following a report the 17-year old was severely injured."Sadly the 17-year old died," police said in a statement. "The incident is not being treated as suspicious."Britain's strongest storm in a decade battered southern regions on Monday, forcing hundreds of flight cancellations, cutting power lines and disrupting the travel plans of millions of commuters.

Via ANP,

Amsterdam Fire Brigade Says Stay Inside as Storm Kills 2

BBC News reports a double-decker bus blown over…

Hundreds of trees have fallen…

A large crane fell on the Prime Minister's home at 10 Downing Street…

Power firm EDF say that have partially shut down two nuclear reactors in Kent due to the storm. We are trying to get more information on this.

"The shutdown was weather-related. The plant reacted as it should and shut down safely," an EDF Energy spokeswoman said.

and destruction is rife…

But there remains hope for recovery…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/9zAI43rjKek/story01.htm Tyler Durden

USD Strength Stuns US Stocks Into Morning Nosedive

Across the board the USD is rallying against the majors (having once again tested 17 month low resistance in the USD index). Much of the strength is coming from EUR weakness as excess liquidity in the eurozone drops to a fresh two-year low (prompting talk of renewed liquidity injections or LTROs). This has knocked US and European stocks notably lower from overnight highs leaving S&P futures an odd shade of red in the pre-open. Treasury yields are also pressing higher in the last few hours along with Commodities.

USD Index bounces off 17 month lows as EUR weakness dominates…

and US equity ftures have dropped over 10 points from overnight highs…

Charts: Bloomberg

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The Humiliation Is Complete: China Complains NSA Phone Taps "Violate Leaders' Privacy"

Following the latest Snowden revelations this time exposing the NSA’s spying practices in Spain, which apparently included spending billions in taxpayer funds to spy on 60 million Spanish phone calls, it was only a matter of time before Spain had an official response. Sure enough it came moments ago:

Spain Asks U.S. to Disclose All Information on Phone Taps

Good luck with that. However, the US response was quick:

U.S. Ambassador to Spain Says NSA Programs Protected U.S. Allies.

In other words, it was all for the greater good. Oddly enough, Rajoy has not yet summoned the US ambassador: one would think he would at least ask for all the NSA intercepted text message to Barcenas…

However, while the “indignation” by America’s allies will come and go, the punchline in the overnight response to NSA’s ongoing reputational hammering came not from Europe, but from China.

CHINA FOREIGN MINISTRY SPOKESWOMAN HUA CHUNYING COMMENTS ON NSA
CHINA SAYS NSA PHONE TAPS VIOLATE LEADERS’ PRIVACY

Because when even China makes fun of your spying practices, it’s probably time to call it a ballgame.

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

The Humiliation Is Complete: China Complains NSA Phone Taps “Violate Leaders’ Privacy”

Spain Asks U.S. to Disclose All Information on Phone Taps

Good luck with that. However, the US response was quick:

U.S. Ambassador to Spain Says NSA Programs Protected U.S. Allies.

However, while the “indignation” by America’s allies will come and go, the punchline in the overnight response to NSA’s ongoing reputational hammering came not from Europe, but from China.

CHINA FOREIGN MINISTRY SPOKESWOMAN HUA CHUNYING COMMENTS ON NSA
CHINA SAYS NSA PHONE TAPS VIOLATE LEADERS’ PRIVACY

Because when even China makes fun of your spying practices, it’s probably time to call it a ballgame.

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

Critical Obamacare Data Center Crashes On Sunday

If Churchill were alive today, he would probably characterize the rollout of Obamacare as a humiliation, wrapped in an embarrassment, inside a mockery-punching bag injury. And overnight, in addition to all the other well-known gremlins that have plagued America’s socialized healthcare from Day 1, insult was added injury, following a Reuters report that a “data center critical for allowing uninsured Americans to buy health coverage under President Barack Obama’s healthcare law went down on Sunday, halting online enrollment for all 50 states.” In other words, on top of and in addition to all the other bad coding and website processing issues that have been exposed and promptly scapegoated on other (you see Obama knew all about the successes, but nothing about the failures of Obamacare), now the internet itself is starting to glitch up. Which is hardly surprising considering Al Gore’s involvement in the latter.

Frontrunning: October 28

Budget deficit priorities people: U.S. NSA spied on 60 million Spanish phone calls in a month (Reuters)
Stuck in countless scandals, Obama does what he does best: speak. Obama To Speak At Installation Of FBI Director James Comey (TPM)
Five killed as car ploughs into crowd in Beijing’s Tiananmen Square (Reuters)
U.K. Storm Brings Power Cuts, Snarls Transport in South (BBG)
China Signals ‘Unprecedented’ Policy Changes on Agenda at Plenum (BBG)
Sandy’s Legacy: Higher Home Prices (WSJ)
Merkel Enters Concrete SPD Talks as Finance Post Looms (BBG)
Keep arming those Syrian al-qaeda rebels: Car bombs kill scores in Baghdad, in sign of crisis in Iraq (WaPo)
J.P. Morgan’s Mortgage Troubles Ran Deep (WSJ)
Detroit’s public library contains story of city’s decline (FT)
France central bank chief says Robin Hood tax is ‘enormous risk’ (FT)
Argentina elections: President loses in Buenos Aires province (BBC)
Phone-hacking: trial of Andy Coulson and Rebekah Brooks to begin (Guardian)
Euro Jobless Fault Line Festers as Italy Scars Recovery (BBG)
Hong Kong Home Prices to Drop as Barclays Joins UBS, Merrill (BBG)
JPMorgan Probe Prosecutor Put Away Tomato Racketeer (BBG)

Overnight Media Digest

WSJ

* The National Security Agency ended a program used to spy on German Chancellor Angela Merkel and a number of other world leaders after an internal Obama administration review started this summer revealed to the White House the existence of the operation, U.S. officials said.

* As it becomes clear that no single leader oversaw the U.S. health law’s online exchange, the accounts of more than a dozen current and former officials show how a disjointed bureaucracy led to the site’s disastrous Oct. 1 launch.

* JPMorgan sidestepped many of the subprime-mortgage problems that bedeviled rivals during the financial crisis. But now its own behavior during the housing boom is coming under close examination.

* Three bond-fund managers won big from making the same bet: buying Greek government bonds at the height of the euro zone debt crisis and holding on. Investors’ perception of Greece has turned around sharply in recent months. Some Greek government-bond prices have more than quadrupled from their nadir in June 2012, as fears of a Greek exit from the euro zone receded.

* During the financial downturn in 2008-2009 Citibank India, like many other banks in the country, struggled with high bad debt on credit cards and personal loans issued in the go-go years. The bank has since sought to be more cautious about whom it lends to. Now, the bank, a unit of Citigroup Inc, is bracing for another set of challenges: new rules from the Indian central bank will require foreign banks to lend a greater portion of their money to agriculture-related activities and small businesses, which can be costly and unprofitable.

* The Federal Reserve has struggled to communicate clearly about its plans for winding down its $85 billion-a-month bond-buying program. Some Fed officials think they’d have an easier time if they established a rule to determine when and how to trim the purchases.

* A growing number of Western brands in China are creating online stores to reach more consumers, adopting a formula that Chinese e-commerce company Alibaba Group Holding Ltd has exploited with much success.

* When Chrysler reports third-quarter results, investors will be looking for fresh data to feed calculations of what the company could be worth if it goes ahead with an initial public offering.

The New York Fed is examining banks’ exposure to a type of mortgage investment vehicle that is vulnerable to a sharp rise in interest rates, underscoring regulators’ growing concerns about the rapid expansion of mortgage real estate investment trusts.

The Bank of England is planning to launch an internal probe into what led mutually-owned Co-operative Group to the 1.5 billion pound ($2.42 billion) capital shortfall that tipped it into the hands of a group of bondholders, including U.S. hedge funds Aurelius Capital and Silver Point Capital.

After China’s largest e-commerce company Alibaba abandoned plans for a more than $60 billion float in Hong Kong, the city’s financial secretary has backed calls for the need to change local listing rules.

U.S. tyre company Titan International is hoping to almost double the size of its European business in a bet on the continent’s rebounding economy.

British carmaker Jaguar Land Rover is set to build its largest and most expensive Range Rover, hoping to continue strong sales growth in emerging markets.

NYT

* U.S. Food and Drug Administration’s move to tighten restrictions for prescribing painkillers is a rare victory by lawmakers from states hard hit by prescription drug abuse over well-financed lobbyists for business and patient groups.

* Cruise ships keep growing bigger, and more popular. But the expansion in ship size is worrying safety experts, lawmakers and regulators, who are pushing for more accountability, saying the supersize craze is fraught with potential peril for passengers and crew. After a string of disasters at sea, lawmakers and regulators push for more accountability and question the size of the newest ships.

* The Obama administration has seemed uncertain how to handle reports that the National Security Agency spied on the German chancellor, Angela Merkel, for several years.

* Economists and policy wonks behind the Affordable Care Act worry that the technical problems bedeviling the federal portal could become much more than an inconvenience. If young and healthy applicants decide to put off or give up on buying coverage, rising prices and even a destabilized insurance market could result.

* Social media giant Twitter is entering one of the strongest markets for
initial public offerings in three years, especially in the United States. Investors have shown a growing appetite for initial offerings, eager to take risks in hopes of big rewards when newly public companies’ stocks rise. Retail investors, in particular the very wealthy, are also seeking exposure to soaring stock of new companies.

* Via its Goldman Sachs Foundation, led by Dina Powell, Goldman Sachs Group Inc, which many associate with Wall Street greed and excess, has staked out a position as one of United States’ leading corporate philanthropists.

* Financially struggling media companies are racing to add conferences, festivals and other live events to their business strategy, convinced they can provide a reliable revenue stream and expand the reach of their brands. The number of organizations staging live events has surged in recent years, say publishers and their business partners, and concerns over conflict of interest, though still a delicate issue at some media companies, are largely bygone relics at others.

* As adults turn to mobile devices like tablets, Kindles, and iPhones, their children – even the smallest ones – are doing so as well, according to a new study by Common Sense Media, a San Francisco-based nonprofit organization that examines children’s use of technology, and rates children’s apps, games and websites. Over the last two years, the shift has been drastic. Among children under 2, the survey found, 38 percent had used mobile devices like iPhones, tablets, or Kindles – the same share as children 8 and under who had used such technology in a similar survey two years ago.

* National Oceanic and Atmospheric Administration’s Office of Ocean Exploration and Research and the “Octonauts” producer, Silvergate Media, have signed a letter of intent to develop a formal partnership to raise awareness of ocean exploration and science and advance NOAA’s mission.

Canada

THE GLOBE AND MAIL

* Canada’s surprisingly strong real estate market is leading to heightened scrutiny of the data used to assess sales. The numbers are getting more attention amid debate about just how inflated the market may be.

* Ontario Progressive Conservative Leader Tim Hudak is pledging to cut back the province’s transit-building plans, and would cancel a raft of suburban light rail transits in favor of extending Toronto’s subway system.

Reports in the business section:

* China’s state-owned companies are still keen to invest in Canada’s energy sector, but worry about the slow pace of infrastructure development to connect Western oil and gas producers with Asian markets, Canadian Natural Resources Minister Joe Oliver said.

* Enbridge Inc has given closing arguments in support of the reversal project for its Line 9 oil pipeline between Ontario and Quebec, and in a show of how rancorous the regulatory proceedings became, it was forced to do so in writing.

NATIONAL POST

* The Senate expenses scandal took another turn on Sunday when top Conservatives in the upper chamber said they would consider backing away from a motion to suspend three controversial senators, a move that prompted the Prime Minister’s Office to reaffirm its support for the proposed sanctions.

* The surprising revelation last week that Ottawa is almost $7 billion ahead of schedule for eliminating the deficit is attracting the scrutiny of the budget watchdog. The No. 2 man in the Parliamentary Budget Office says officials have asked the finance department for clarification.

China

CHINA BUSINESS NEWS

– The Development Research Centre of the State Council, a top think-tank under China’s cabinet, published a so-called “383 report” in which it made proposals for reforms for the coming plenary meeting of the Communist Party of China in November, attracting widespread attention.

CHINA SECURITIES JOURNAL

– Nearly 1,600 of China’s more than 2,000 listed companies have published their third-quarter earnings results so far, with their combined net profits growing a better-than-expected 12.33 percent due to increased sales, rising profit margins and lower costs.

SHANGHAI SECURITIES NEWS

– Last week’s launch of “loan prime rate”, China’s first benchmark lending rate based on the interest that banks lend to their best clients, has laid a cornerstone for China to build a market-oriented interest rate regime, economists said.

SECURITIES TIMES

– The suspension of stock initial public offerings (IPOs) for the past year has deprived Chinese brokerages a key source of revenue, greatly hitting their income. Regulators quietly suspended IPOs last November to support the sagging domestic stock market.

CHINA DAILY

– China’s largest private steel company, Shagang Group, plans to move away from steel as its primary business in less than three years amid a government campaign to cut huge steel glut in the country.

PEOPLE’S DAILY

– The government’s decision to eliminate some registered capital requirements for establishing new companies reflects a trend to offer Chinese citizens more opportunities to launch their own businesses while tightening supervision of existing firms, a commentary by this mouthpiece of the ruling Communist Party of China said.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Bank of Nova Scotia (BNS) upgraded to Outperform from Neutral at Credit Suisse
Bristol-Myers (BMY) upgraded to Overweight from Equal Weight at Morgan Stanley
Choice Hotels (CHH) upgraded to Neutral from Underperform at Credit Suisse
Generac (GNRC) upgraded to Neutral from Sell at Goldman
Patterson-UTI Energy (PTEN) upgraded to Neutral from Sell at Goldman

Downgrades

ARM Holdings (ARMH) downgraded to Hold from Buy at Benchmark Co.
Audience (ADNC) downgraded to Hold from Buy at Benchmark Co.
Basic Energy (BAS) downgraded to Sell from Hold at Wunderlich
Choice Hotels (CHH) downgraded to Underperform from Neutral at RW Baird
Crocs (CROX) downgraded to Neutral from Overweight at Piper Jaffray
DuPont Fabros (DFT) downgraded to Neutral from Outperform at RW Baird
Exelon (EXC) downgraded to Sell from Neutral at Goldman
Glacier Bancorp (GBCI) downgraded to Sector Perform from Outperform at RBC Capital
Graco (GGG) downgraded to Perform from Outperform at Oppenheimer
Host Hotels (HST) downgraded to Market Perform from Outperform at Wells Fargo
Lear (LEA) downgraded to Hold from Buy at Deutsche Bank
Owens Corning (OC) downgraded to Hold from Buy at KeyBanc
Owens Corning (OC) downgraded to Neutral from Buy at BofA/Merrill
PSEG (PEG) downgraded to Sell from Neutral at Goldman
SandRidge Mississippian Trust II (SDR) downgraded to Underperform at RBC Capital
SandRidge Permian Trust (PER) downgraded to Underperform at RBC Capital
Shoe Carnival (SCVL) downgraded to Neutral from Buy at Sterne Agee
Teck Resources (TCK) downgraded to Neutral from Buy at BofA/Merrill
Transocean (RIG) downgraded to Sell from Neutral at Goldman
Trimble Navigation (TRMB) downgraded to Hold from Buy at Needham

Initiations

Bally Technologies (BYI) initiated with a Neutral at Citigroup
Independence Realty Trust (IRT) initiated with an Outperform at JMP Securities
International Game (IGT) initiated with a Buy at Citigroup
RE/MAX Holdings (RMAX) initiated with a Buy at BofA/Merrill
RE/MAX Holdings (RMAX) initiated with a Neutral at JPMorgan
SolarCity (SCTY) reinstated with an Outperform at Credit Suisse

HOT STOCKS

JPMorgan (JPM) announced $5.1B in settlements with FHFA (FMCC, FNMA)
Liberty Global (LBTYA) to sell Chellomedia to AMC Networks (AMCX) for $1.0B
Rio Tinto (RIO) sold 50.1% interest in Clermont Joint Venture for $1.01
5B (GLNCY)
NTT Communications (NTT) to acquire 80% stake in RagingWire Data Centers for $350M
Carlos Slim’s Inmobiliaria Carso disclosed $248M purchase of America Movil (AMX) stock

EARNINGS

Companies that beat consensus earnings expectations last night and today include:

CNA Financial (CNA), Haemonetics (HAE), Sohu.com (SOHU), Changyou.com (CYOU), WABCO (WBC), Weyerhaeuser (WY), Seacor Holdings (CKH)

Companies that missed consensus earnings expectations include:

TGC Industries (TGE), Loews (L), Boardwalk Pipeline (BWP), Gulf Island Fabrication (GIFI)

Companies that matched consensus earnings expectations include:

Bridge Bancorp (BDGE)

NEWSPAPERS/WEBSITES

The Fed has struggled to communicate clearly about its plans for winding down its $85B-a-month bond-buying program. Some Fed officials think they’d have an easier time if they established a rule to determine when and how to trim the purchases, the Wall Street Journal reports
When Chrysler Group LLC (FIATY) reports Q3 results Wednesday, investors will be looking for new data to feed calculations of what the auto maker could be worth if it goes ahead with an IPO, the Wall Street Journal reports
Toyota Motor (TM) retained its lead over GM (GM) and Volkswagen (VLKAY) this year, January-September global sales figures showed, as the Japanese car maker closes in on a record annual profit, Reuters reports
Apple’s (AAPL) iPhone sales and revenue forecasts, due to be released today, may offer clues as to whether its low-cost 5C model missed the mark or whether the company can continue its run of smash-hit gadgets, Reuters reports
Blackstone Group (BX) President Tony James is reducing his stake in the private-equity firm he helped build. He has sold at least 8.25M shares this year in three transactions, about 20% of the equity he held in Blackstone at the beginning of the year, according to regulatory filings, Bloomberg reports
Vivendi (VIVHY), selling assets to refocus on media businesses, is in talks with Lagardere to find an agreement for the ownership structure of their jointly owned TV unit Canal Plus, Bloomberg reports

BARRON’S

Icahn’s proposal to Apple (AAPL) should not be indulged
Kohl’s (KSS) could rise 20%
Furmanite (FRM) an attractive investment
Walgreens (WAG) could reach $70 or $80 in the next few years
McDonald’s (MCD) falling forward P/E ratio could continue to drop
Melco Crown (MPEL), MGM China (MCHVF) are ways to play growth in Macau

SYNDICATE

Boise Cascade (BCC) files to sell 8M shares of common stock for holder

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Key Events And Issues In The Coming Week

In the upcoming week, the key event is the US FOMC, though we and the consensus do not expect any key decisions to be taken. Though a strengthening of forward guidance is still possible, virtually nobody expects anything of import to be announced until the Dec meeting. In the upcoming week we also have five more central bank meetings in addition to the FOMC: Japan, New Zealand, India, Hungary and Israel. In Hungary we, in line with consensus, expect a 20bps cut to 3.40% in the policy rate. In India consensus expects a 25bps hike in the repo rate to 7.75%.

On the data front, US IP, retail sales and pending home sales are worth a look, but the key release will be the ISM survey at the end of the week, together with manufacturing PMIs around the world. US consumer confidence is worth a look, given the potential impact from the recent fiscal tensions.

A few other selected data releases are worth some attention. For example the latest Turkish trade numbers are relevant in the context of large external deficits in that country. Japanese wage data are interesting given the BoJ attempt to change inflation expectations. Finally, the Korean trade data will be the first hard data released globally for the month of October.

Monday, Oct 28

Israel MPC: GS and consensus have policy rate unchanged. The housing boom continues to be a constraint on further monetary easing and a rate cut will arguable only have a limited impact on the exchange rate at this point.
Australia RBA Governor speaks
US IP (Sep): Consensus +0.4%, previous +0.4%
US Pending Home Sales (Sep): Consensus -0.2%, previous -1.6%
Japan Retail Sales (Sep): Cconsensus +1.8%yoy, previous +1.1%yoy
Japan Household Spending (Sep): Consensus +0.5%yoy, previous -1.6%yoy
Japan Unemployment Rate (Sep): Consensus 4.0%, previous 4.1%
South Korea CA Balance (Sep): previous $+6.8bn
Also interesting: Italy Business Confidence (Oct), Ukraine CA Balance (Q3)

Tuesday, Oct 29

India MPC: consensus expects a hike of 25bps in repo and reverse repo rates to 7.75% and 6.75% respectively and has cash reserve ratio unchanged at 4.00%.
Hungary MPC: Consensus expect a cut of 20bps to 3.40% in the policy rate
US Consumer Confidence (Oct): Consensus 75.0, previous 79.7
US PPI (Sep): Consensus +0.2%, previous +0.3%
US Retail Sales (Sep): Consensus +0.1%, previous +0.2%
US S&P Case Shiller Home Price Index (Aug): consensus +0.5%, previous +0.6%
Japan IP (Sep): Consensus +1.8%mom, previous -0.9%mom
Germany GFK Consumer Survey (Nov): previous +7.1
France Consumer Confidence (Oct): previous 85
South Korea IP (Sep): Previous +3.3%yoy
Also interesting: UK Consumer Credit (Sep) and Mortgage Approvals (Sep)

Wednesday, Oct 30

US FOMC: GS and consensus expect no change in monetary policy tools
New Zealand MPC: Consensus have policy rate unchanged at 2.50%.
US ADP Employment Change (Oct): consensus 160K, previous 166K
US CPI (Sep): Consensus +0.2%, previous +0.1%
Euro Area Consumer Confidence (Oct, final): consensus -14.5, previous -14.5 (flash)
Germany Harmonized CPI (Oct, flash): previous +1.6%yoy
Germany Unemployment Change (Oct): consensus flat, previous +25K
Brazil IGP-M Inflation (Oct): GS +5.40%yoy, consensus +5.32%yoy, previous +4.40%yoy
Also interesting: Ukraine GDP (Q3, prelim.), Spain GDP (Q3) and CPI (Oct, flash)

Thursday, Oct 31

Japan MPC: GS and consensus expects no change in monetary policy stance. We also expect a small upward revision to growth in the published bi-annual outlook report
Japan Total Cash Wages (Sep). GS -0.6%yoy, consensus -0.3%yoy, previous -0.9%yoy
US Initial Jobless Claims: consensus 340K, previous 350K
US Chicago PMI (Oct): GS 55.0, consensus 55.0, previous 55.7
Euro Area Harmonized CPI (Oct, flash): GS +1.1%yoy, consensus +1.1%yoy, previous +1.1%yoy
UK GFK Consumer Confidence (Oct): consensus -8, previous -10
South Africa Trade Balance (Sep): consensus ZAR-16.0bn, previous ZAR-19.1bn
Turkey Trade Balance (Sep): consensus $-7.30bn, previous $-7.02bn
Thailand CA Balance (Sep): previous $+1.3bn
Taiwan GDP Advance (Q3): consensus +2.5%yoy, previous +2.5%yoy
South Korea CPI (Oct): Consensus +1.0%yoy, previous +0.8%yoy
Also interesting: Australia Building Approvals (Sep) and Private Sector Credit (Sep), France Consumer Spending (Sep), Hungary Trade Balance (Aug, final), Switzerland FX Reserves (Q3)

Friday, Nov 1

US Fed Speakers: Bullard (FOMC voter), Kocherlakota (non-voter), Lacker
US ISM Survey (Oct): Consensus 55.0, previous 56.2
US Motor Vehicles Sales (Oct)
China PMI (Oct): Previous 51.5yoy
UK Manufacturing PMI (Oct): consensus 56.4, previous 56.7
Brazil Trade Balance (Oct): Consensus $+1.35bn mom, previous $+2.15bn mom
Sweden Manufacturing PMI (Oct): consensus 54.5, previous 56.0
Czech Republic Manufacturing PMI
Switzerland Manufacturing PMI (Oct)
Indonesia Trade Balance (Sep): consensus $-48mn yoy, previous $+132mn yoy
Thailand CPI (Oct): GS +1.4%yoy, consensus +1.5%yoy, previous +1.4%yoy
Also interesting: Mexico Workers Remittances (Sep), Peru CPI (Oct), South Korea Trade Balance (Oct), Russia Manufacturing PMI (Oct)

And from SocGen, a summary of the key investor issues:

NO FED TAPER … BUT BETTER DATA

We expect to see no change from the 28-29 October FOMC. Better data, however, will be a reminder to markets that Fed taper is delayed, not cancelled. We look for a 0.7% mom gain in September industrial production and while the headline retail sales number is likely to clock in at a fairly moderate 0.2% mom, ex-autos we look for 0.9%. We put the odds of a December tapering announcement at 5%, January at 30% and March at 60%.

BOJ HOPING FED WILL TAPER SOONER…

The BoJ presents new growth and inflation forecasts at this week’s meeting and our expectation is that there will be little change. Recent yen appreciation, however, presents a challenge to the BoJ. The BoJ is already purchasing around 70% of JGB issuance and the concern is that this is close to the limit of what is feasible. No doubt, the BoJ is hoping that the Fed will taper sooner rather than later, allowing the yen to resume a depreciation path. At that time, the BoJ could hope that even a small increase in its asset purchases (most likely to be ETFs) could have a greater impact. This week, however, we expect the BoJ to remain on hold and keep its powder dry.

…RBI THAT IT WON’T!

The delay of Fed tapering has allowed the INR to stage an appreciation of 10% against the US dollar from recent lows. This is helpful to the RBI, facing a near stagflation situation of runaway inflation and slowing growth. We expect the RBI to take this window of opportunity and hike rate 25bp on Tuesday (and perhaps even 50bp). Our expectation that the Fed will taper in Q1 means that any respite for the INR is likely to prove short-lived. Moreover, weak domestic data will mark an additional headwind. Ultimately, it is up to the government to implement desperately needed supply side reforms. The hope is that after the spring 2014 general election, the next government will indeed deliver.

CHINA POLICY TIGHTENING CREEPING BACK

< p>We expect the official manufacturing PMI to decline to 50.8 from 51.1 in September. Interestingly, policy appears to be shifting back to risk management; the PBoC has withdrawn liquidity for two weeks and big cities are tightening restrictions on the property market again.

ECB LENDING SURVEY TO SHOW SLOW REPAIR

The ECB’s quarterly bank lending survey (Wednesday) is set to confirm an only very gradual improvement of the financial fragmentation still plaguing the periphery. As we detailed last week in our new Focus Banking Union report, we see significant potential wins from banking union. Last week, the ECB presented the comprehensive assessment that will pave the way for the Single Supervisory Mechanism (SSM) to come into effect in November 2014. An effective European Banking Union requires that the Single Resolution Mechanism (SRM) also be in place. The hope is to have this in place before the current legislative period ends as the European Parliament heads to elections in May 2014

Source: Goldman, SocGen

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/YvEDhINA0Rs/story01.htm Tyler Durden