Tag: finance

The last week has seen retailers begin to push “the promotional panic button” as holiday sales are expected to collapse to the weakest since 2009 (as we discussed here, here, and here). As Bloomberg reports, faced with wary shoppers and a shorter holiday season, retailers are piling on deals as they jockey for market share and are faced with “too much inventory, which doesn’t bode well for 2014.” U.S. retail sales excluding autos and gasoline grew 0.2% in October, half the month-earlier gain leaving this year likely to be the worst and most promotional shopping season since 2008 and perhaps Wal-Mart’s $98 32-inch flat-screen TV is just the start of the deflationary spiral that benefits the stagnant incomes of the middle-class.

 

Via Bloomberg,

U.S. retailers are discounting earlier than ever as they brace for the weakest holiday shopping season since 2009.

 

Wal-Mart Stores Inc. (WMT) is dangling a 32-inch flat-screen TV for $98, down from $148 last year. Sears Holdings Corp. has waived layaway fees and its Kmart chain is introducing a rent-to-own program. More than a dozen retailers are opening earlier, or for the first time, on Thanksgiving Day. Among the attention-grabbing stunts: a $1 million jackpot for one of the first shoppers to visit Gap Inc. (GPS)’s Old Navy chain on Black Friday.

 

…

 

For the fourth year in a row, disposable incomes in 2013 have only inched up.

 

…

 

“The consumer is more deal-driven than ever,” Ken Perkins, president of researcher Retail Metrics LLC, wrote in a Nov. 14 note. “Discretionary dollars for holiday spending are limited for the large pool of lower- and moderate-income consumers due to lack of wage gains this year coupled with the increased payroll tax.”

 

…

 

“We will be seeing promotions significantly above the current 30 percent off, which are the opening table stakes,” said Craig Johnson, president of Customer Growth Partners, a New Canaan, Connecticut-based consulting firm. Stores have too much inventory, which “doesn’t bode well for 2014.”

 

…

 

The earlier openings are no panacea because they’ll simply pull purchases forward, rather than driving incremental sales, said Pam Goodfellow, a director at Prosper Insights & Analytics, a Worthington, Ohio-based research firm.

 

“Once they have spent their money, it is hard to coax them back out into the stores,” she said.

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

Over three years after current Warburg Pincus Managing Director and former US Treasury Secretary Tim Geithner welcomed everyone to the recovery, here is where we stand: “According to Markit, optimism is improving among developed economies while emerging markets still show low levels of confidence. Subdued expectations about future activity have led to restrained hiring plans. On net, only 14% of companies worldwide expect to add employees.” And just in the U.S. this number is 19%. Per the WSJ: “Companies continue to fret about further disruptions from unresolved fiscal issues, and are still particularly cautious about committing to hiring in this uncertain environment,” says Chris Williamson, Markit’s chief economist. That is all.

What was left unsaid is how many of the 14% of companies planning on growing are in the Bernanke bubble benefiting FIRE industry. We’ll go with a bold guess here and say, all of them.

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

With Richmond, CA’s plans to use eminent domain to “help” underwater homeowners still ongoing (as suits from mortgage-backed securities owners such as PIMCO, Blackrock, and DoubleLine having been initially dismissed), it appears the “wealth transfer” scheme is gaining traction around the nation. As we warned it would, the appeal of this “bailout” – with no thought to the unintended consequence of crushing an entire investing class out of the market (and its implicit rate-increasing result) – is just too strong for local government and sure nough New Jersey town Irvington is moving in that direction. As AP reports, Irvington’s plan would focus on using eminent domain to purchase so-called “private label” security mortgages, or ones that are not backed by the U.S. government.

 

 

Via AP,

Irvington, N.J., is moving forward with plans to become the second municipality in the nation to use eminent domain to buy mortgages that are in foreclosure.

 

…

 

“When you hear those words, it usually has a negative connotation,” Smith said. But, when used to take control of underwater mortgages the city will “recast it so people can stay in their homes.”

 

…

 

Richmond, Calif., announced plans to use eminent domain to help underwater homeowners earlier this year and a lawsuit challenging the practice was dismissed by a California district court judge in September. Richmond has not yet used eminent domain.

 

Smith said Irvington’s plan would focus on so-called “private label” security mortgages, or ones that are not backed by the U.S. government.

 

…

 

Smith said the city needs a third party to come in and actually buy the mortgages.

 

According to Cornell University law professor Robert C. Hockett, eminent domain is one of the few tools available to take over and write down an underwater mortgage because it gives municipalities the power to circumvent mortgage contracts, acquire loans from bondholders, write them down and give them back to the bondholders.

 

“Some government instrumentality is going to have to do this,” said Hockett, who helped create the approach. “No private actor can get around the contracts, but a public actor can.”

Worryingly, the idea is now gaining traction across the nation with Newark, NJ and North Las Vegas also floating the idea… Of course, with the Fed buying everything in sight, who cares? Oh wait, doesn’t the government want to encourage a private mortgage market? Oh well…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/52bFfmT4SDU/story01.htm Tyler Durden

With Richmond, CA’s plans to use eminent domain to “help” underwater homeowners still ongoing (as suits from mortgage-backed securities owners such as PIMCO, Blackrock, and DoubleLine having been initially dismissed), it appears the “wealth transfer” scheme is gaining traction around the nation. As we warned it would, the appeal of this “bailout” – with no thought to the unintended consequence of crushing an entire investing class out of the market (and its implicit rate-increasing result) – is just too strong for local government and sure nough New Jersey town Irvington is moving in that direction. As AP reports, Irvington’s plan would focus on using eminent domain to purchase so-called “private label” security mortgages, or ones that are not backed by the U.S. government.

 

 

Via AP,

Irvington, N.J., is moving forward with plans to become the second municipality in the nation to use eminent domain to buy mortgages that are in foreclosure.

 

…

 

“When you hear those words, it usually has a negative connotation,” Smith said. But, when used to take control of underwater mortgages the city will “recast it so people can stay in their homes.”

 

…

 

Richmond, Calif., announced plans to use eminent domain to help underwater homeowners earlier this year and a lawsuit challenging the practice was dismissed by a California district court judge in September. Richmond has not yet used eminent domain.

 

Smith said Irvington’s plan would focus on so-called “private label” security mortgages, or ones that are not backed by the U.S. government.

 

…

 

Smith said the city needs a third party to come in and actually buy the mortgages.

 

According to Cornell University law professor Robert C. Hockett, eminent domain is one of the few tools available to take over and write down an underwater mortgage because it gives municipalities the power to circumvent mortgage contracts, acquire loans from bondholders, write them down and give them back to the bondholders.

 

“Some government instrumentality is going to have to do this,” said Hockett, who helped create the approach. “No private actor can get around the contracts, but a public actor can.”

Worryingly, the idea is now gaining traction across the nation with Newark, NJ and North Las Vegas also floating the idea… Of course, with the Fed buying everything in sight, who cares? Oh wait, doesn’t the government want to encourage a private mortgage market? Oh well…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/52bFfmT4SDU/story01.htm Tyler Durden

Today’s AM fix was USD 1,272.25, EUR 942.13 and GBP 790.12 per ounce.
Yesterday’s AM fix was USD 1,283.50, EUR 950.04 and GBP 797.01 per ounce.

Gold fell $14.10 or 1.09% yesterday, closing at $1,273.70/oz. Silver slid $0.34 or 1.64% closing at $20.41/oz. Platinum dropped $30.50 or 2.1% to $1,406.99/oz, while palladium fell $15.47 or 2.1% to $714.83/oz.

Gold remains under pressure after the losses incurred yesterday. Gold has failed to rally despite Janet Yellen, the Federal Reserve’s chief in waiting, indicating she would continue the U.S. central bank’s ultra-easy monetary policy.

Gold in USD, 1 Year – (Bloomberg)

Gold prices look vulnerable to further price falls. Support is at the recent low of $1,261.42, followed by the $1,251.84 low from October 15th. A close below that mid October low could see gold fall to test the June lows of $1,180/oz.
   
Investor sentiment remains extremely bearish amid surging stock markets and a complete lack of awareness of real and growing risks – sovereign, monetary and systemic.

Speculators on the COMEX got less bullish on gold last week as hedge funds and banks doubled their short holdings. The net long position on the COMEX plunged 37% to 55,456 futures and options in the week ended November 12, U.S. Commodity Futures Trading Commission (CFTC) data show, the biggest drop since February. Short bets climbed to 54,143, the highest since mid August, from 26,490 a week earlier.

The world’s largest gold exchange-traded fund, SPDR Gold Trust, said its holdings fell 1.2 tonnes to 864.51 tonnes on Monday – the fund’s lowest since February 2009.

Physical demand, which usually tends to provide a floor for prices at lower levels, remained anaemic even after Monday’s price drop. Demand has lately failed to pick up even below the $1,300  level as many bullion buyers had bought a lot of bullion when prices fell earlier in the year.

The Fed’s $85 billion in monthly bond purchases are inflationary and remain very gold bullish but gold remains very weak despite this ongoing currency debasement.

This money printing and currency debasement and still elevated systemic risk has led to bitcoin surging to new record highs overnight as buyers take shelter in the new virtual currency. Yet, at the same time gold prices remain weak. This is giving further credence to allegations of price suppression.

The virtual currency rose to a high of $900.98 on the Mt. Gox exchange Monday afternoon. It surged 42% from Sunday’s close and is up 107% from a week earlier.

Cross Currency Table – (Bloomberg)

Bitcoin was developed in 2009 and is a decentralized digital currency that enables low cost payments without the need for central authorities and issuers. Bitcoin is a peer-to-peer (P2P) currency system created in open source C++ programming code. Bitcoins can be accessed from anywhere in the world with an internet connection. Once a user has Bitcoins, they are stored in a digital wallet. Bitcoins can then be sent to anyone else who has a Bitcoin address.

U.S. law enforcement and regulatory agents expressed optimism and acknowledged risks for digital currencies. U.S. officials outlined the potential benefits and liabilities of bitcoin.

Federal Reserve Chairman Ben Bernanke said in a letter in absentia to the Senate panel that virtual currencies “may hold long-term promise, particularly if the innovations promote a faster, more secure, and more efficient payment system.”

Bitcoin’s latest gains came despite the potential for regulation of the digital currency. The U.S. Senate Committee on Homeland Security and Governmental Affairs (HSGAC) began a hearing yesterday. The event brought representatives from different federal agencies and representatives from the bitcoin community to discuss virtual currencies.

Gold Prices/Fixes/Rates/Volumes – (Bloomberg)

Bitcoin has increased more than tenfold since the beginning of 2013. One of the reasons for the incredible surge is that bitcoin is a freely traded market and not subject to rigging or price manipulation by banks or government. Total market capitalization of bitcoins is in excess of $8 billion based on recent prices, according to Bitcoincharts.com.

The bitcoin frenzy today will be mirrored by a gold buying frenzy which will again see gold prices surge in value in the coming months. This will only happen when prices are again dictated by physical supply and demand.

Bitcoin is an interesting speculative punt and may merit a small allocation in a portfolio however its virtual and digital nature create advantages and also risks.

Physical gold, either in your possession or in allocated accounts, remains a far safer alternative both to bitcoin, to digital gold platforms and to paper and electronic currencies in what is still a vulnerable banking system.

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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4x5rMj_lIwA/story01.htm GoldCore

Tonight at 7 pm Ben Bernanke will be speaking at the National Economists Club Annual Members Dinner. As Credit Suisse’s Carl Lantz notes, nobody knows the topic or the title of the speech: we can only assume it is some variation of the now trite and generic “BTFATH” coming from the Fed endlessly for the past 5 years. However, we do know one thing: the menu of the dinner that will accompany Bernanke’s remarks. We are certain that in a world in which a tweet by a 70 year old billionaire moves markets as much as a statement by a current or future uber CTRL-Peers, it is the details of what the glorious chairman eats that is the most marking-moving event du jour, and as such the menu will be today’s most important “fundamental” news. Jon Hilsenrath will follow up with his detailed analysis shortly.

11/19: NEC Annual Members Dinner: Ben S. Bernanke, Fed Chairman

Featured Speaker
Ben S. Bernanke
Chairman, Federal Reserve

Cocktail Reception 6 pm-7 pm
Speaker Address/Remarks  7 pm-8 pm
Dinner 8 pm-9 pm

Menu

Blackened Chicken on a Wavy Cracker

Cocoa Ancho Blackened Chicken on Bleu Cheese Mousse nestled in a wavy cracker.  Topped with molasses spiced toasted pepita and fresh chive.

Coconut Shrimp Lollipops

Coconut Shrimp served on a skewer with apricot ginger sauce.

Fruit and Cheese Display

Fresh fruit with grape clusters, fresh berries, imported and domestic cheses, accompanied by french bread and crackers.

Red and White Wine Service with Dinner

Riesling Poached Pear Salad

Frisse and arugula salad with riesling poached pears, chevre medallion and spiced walnuts.  Drizzled with pomegranate vinaigrette.

Portobello Ravioli (Vegetarian Offering)

Portobello mushroom ravioli, carmelized cipolini onions, julienne sundried tomatoes, sauteed field mushrooms and haricot vert beans with a beurre noisette sauce crowned with shaved parmesan cheese and fresh parsley.

OR

Bistro Filet and Grilled Salmon Duo (plated together)

Grilled bistro filet of beef and grilled Atlantic Salmon on a bed of spinach, topped with a Zinfandel demi sauce and accompanied by asparagus, tri color carrots and a celeriac puree.

Breads and Rolls

An assortment of miniature rolls with sweet butter.

Brownie Cheesecake Napoleon

Fudge Brownie, cheesecake and chocolate mousse covered in a rich chocolate ganache, decorated with duo cigarette, raspberry coulis and whipped cream.

(Regular and Decaffeinated Coffee, Iced Tea, Water)

**Credit Card payment is Non Refundable**

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5UM00E2aZOM/story01.htm Tyler Durden

Tonight at 7 pm Ben Bernanke will be speaking at the National Economists Club Annual Members Dinner. As Credit Suisse’s Carl Lantz notes, nobody knows the topic or the title of the speech: we can only assume it is some variation of the now trite and generic “BTFATH” coming from the Fed endlessly for the past 5 years. However, we do know one thing: the menu of the dinner that will accompany Bernanke’s remarks. We are certain that in a world in which a tweet by a 70 year old billionaire moves markets as much as a statement by a current or future uber CTRL-Peers, it is the details of what the glorious chairman eats that is the most marking-moving event du jour, and as such the menu will be today’s most important “fundamental” news. Jon Hilsenrath will follow up with his detailed analysis shortly.

11/19: NEC Annual Members Dinner: Ben S. Bernanke, Fed Chairman

Featured Speaker
Ben S. Bernanke
Chairman, Federal Reserve

Cocktail Reception 6 pm-7 pm
Speaker Address/Remarks  7 pm-8 pm
Dinner 8 pm-9 pm

Menu

Blackened Chicken on a Wavy Cracker

Cocoa Ancho Blackened Chicken on Bleu Cheese Mousse nestled in a wavy cracker.  Topped with molasses spiced toasted pepita and fresh chive.

Coconut Shrimp Lollipops

Coconut Shrimp served on a skewer with apricot ginger sauce.

Fruit and Cheese Display

Fresh fruit with grape clusters, fresh berries, imported and domestic cheses, accompanied by french bread and crackers.

Red and White Wine Service with Dinner

Riesling Poached Pear Salad

Frisse and arugula salad with riesling poached pears, chevre medallion and spiced walnuts.  Drizzled with pomegranate vinaigrette.

Portobello Ravioli (Vegetarian Offering)

Portobello mushroom ravioli, carmelized cipolini onions, julienne sundried tomatoes, sauteed field mushrooms and haricot vert beans with a beurre noisette sauce crowned with shaved parmesan cheese and fresh parsley.

OR

Bistro Filet and Grilled Salmon Duo (plated together)

Grilled bistro filet of beef and grilled Atlantic Salmon on a bed of spinach, topped with a Zinfandel demi sauce and accompanied by asparagus, tri color carrots and a celeriac puree.

Breads and Rolls

An assortment of miniature rolls with sweet butter.

Brownie Cheesecake Napoleon

Fudge Brownie, cheesecake and chocolate mousse covered in a rich chocolate ganache, decorated with duo cigarette, raspberry coulis and whipped cream.

(Regular and Decaffeinated Coffee, Iced Tea, Water)

**Credit Card payment is Non Refundable**

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5UM00E2aZOM/story01.htm Tyler Durden

• J.P. Morgan, U.S. Reach Historic Settlement (WSJ)
• OECD cuts global growth forecast (AP)
• Guess the profit margin: Wal-Mart Touts $98 TV as Holiday Seen Weakest Since 2009 (BBG)
• Republicans defy threat, block another Obama judicial pick (Reuters)
• Fed Ponders How to Temper Tapering Without Rate Increase (BBG)
• Wall Street uses ‘merchant’ workaround to cling to commodity assets (Reuters)
• PBOC to ‘Basically’ End Normal Yuan Intervention, Zhou Says (BBG)
• Italy’s leader warns Germany of rise of anti-European sentiment (FT)
• Yellen Nomination for Fed Chairman to Get Vote This Week (BBG)
• As U.S. default threatened, banks took extraordinary steps (Reuters)
• NSA vowed repeatedly to fix its collection errors (AP)
• White House and insurers work to bypass troubled health website (FT)
• Mersch Expects ECB Stress Tests to Have 3-Year Horizon (BBG)

 

Overnight Media Digest

WSJ

* JPMorgan and the Justice Department reached a $13 billion settlement after agreeing to $4 billion in aid to distressed homeowners.

* Iran’s national gas company said it is facing collapse, the latest sign of deepening economic distress from international sanctions as Tehran seeks urgent relief in talks with world powers.

* Big U.S. meatpackers are appealing to Congress in a last-ditch effort to stave off new federal labeling rules that require more information about the origins of beef, pork and other meats.

* Three exchange companies are in the early stages of considering individual bids for Euronext, the European exchange group set to be spun off after being acquired last week by IntercontinentalExchange, according to people familiar with the discussions.

* Online-storage service Dropbox is raising a funding round that could value it at more than $8 billion, though new figures reveal its revenue growth is decelerating.

* The U.S. government is being forced to support sugar companies even though taxpayers are already footing a $280 million bill stemming from loans the companies can’t repay.

* New York lawyer Steven Donziger was the mastermind behind a litigation team that spent more than $21.4 million to allegedly extort billions from Chevron Corp over environmental damage claims in Ecuador’s Amazon Basin, a lawyer for the oil giant said Monday.

* Time Warner Cable Inc subscribers will soon be able to watch shows from the Discovery Channel or Animal Planet online, including on tablets or smartphones, thanks to a deal unveiled on Monday.

 

FT

The NSA spying scandal has put pressure on talks to forge an EU-U.S. trade pact, German chancellor Angela Merkel warned in her toughest response on the scandal so far and its impact on economic ties.

The United States Department of Justice is set to announce the biggest ever settlement with a single company as JPMorgan Chase agrees to shoulder the responsibility for the past misdeeds of Washington Mutual.

The UK’s Financial Conduct Authority (FCA) is probing the use of personal accounts by foreign exchange traders amid allegations that traders used these accounts to trade their own money ahead of clients’ orders.

Royal Bank of Scotland is in exclusive talks with French lender BNP Paribas to sell its structured retail investor products and equity derivatives business, as it slims down its investment bank.

Boeing and Airbus insisted on Monday they were not overly reliant on orders from Gulf airlines for their long-range passenger jets.

Russian oligarch Suleiman Kerimov has agreed to sell his 21.75 percent stake in potash miner Uralkali, to billionaire Mikhail Prokhorov, a longtime business ally.

 

NYT

* Federal officials told a Senate hearing that virtual currencies like bitcoin offered real benefits for the financial system.

* Wal-Mart illegally disciplined and fired employees over strikes and protests, the National Labor Relations Board said on Monday.

* Maria Bartiromo, one of the first women to become a star on television by reporting on business news, is leaving her longtime home at CNBC for its rival, the Fox Business Network.

* The largest category of victims in the vast Ponzi scheme run by Bernard Madoff – those who lost cash through accounts with various middleman funds – will be first in line for compensation from a $2.35 billion fund collected by the Justice Department.

* Dropbox, a five-year-old San Francisco start-up that allows users to access stored documents via the web, is seeking funding that would value it at more than $8 billion.

* The Justice Department is set to announce a $13 billion settlement with JPMorgan Chase over the bank’s questionable mortgage practices in the run-up to the financial crisis, people briefed on the deal said on Monday, as prosecutors and the bank hashed out the final details of the deal.

* The Opel unit of General Motors said on Monday that it reached a preliminary agreement with workers to close a factory in Bochum, Germany, at the end of next year, another example of the effort by hard-pressed European automakers to slowly close superfluous manufacturing plants.

* Google agreed on Monday to pay $17 million to 37 states and the District of Columbia in a wide-reaching settlement over tracking consumers online without their knowledge.

* Governor John Hickenlooper of Colorado proposed on Monday tough new limits on leaks of methane and other gases from well sites and storage tanks. Supporters called the limits, which would exceed existing federal rules, the most sweeping in the nation.

 

Canada

THE GLOBE AND MAIL

* Canadian Prime Minister Stephen Harper’s office is wading into the Rob Ford saga, avoiding specifics but calling the recent “allegations” against the Toronto mayor “troubling.”

* Calgary Mayor Naheed Nenshi will not back down in the face of a $6 million defamation suit. On Monday, Nenshi responded to a suit filed by developer Cal Wenzel who was secretly recorded last year discussing a plan to defeat members of city council in the recent October election.

Reports in the business section:

* Kevin Crull, president of Bell Media, acknowledged that big TV bundles have become a “hot-button issue”
for consumers, but warns there could be “unintended consequences” if Ottawa forces TV distributors to make dramatic changes to their business models.

* The consortium of multinationals that controls Ontario’s beer retailing has published a study that suggests they are not making windfall profits because of prices that are sharply higher than in Quebec.

NATIONAL POST

* Toronto council took unprecedented steps to neuter Rob Ford’s mayoralty during another astonishing meeting that saw him get into a screaming match with residents.

* Canada’s budget watchdog is asking MPs to get to the bottom of why the Harper government is spending billions less than it budgets for, or Parliament authorizes.

FINANCIAL POST

* With just a few moves, Fairfax Financial Holdings Ltd has turned up the fire under Canada’s tepid casual dining market. Fairfax’s purchase of a 51 percent stake in Keg Restaurants Ltd on Monday comes just weeks after the Toronto investment firm bought a minority interest in Swiss Chalet owner Cara to spur a merger with its own Prime Restaurants.

* The Ontario Teachers’ Pension Plan took a big bite of one of the United Kingdom’s major biscuit makers on Monday, buying the iconic Burton’s Biscuit Company which produces the brands Wagon Wheels, Jammie Dodgers, and Cadbury Fingers under licence.

 

China

CHINA SECURITIES JOURNAL

– Provincial authorities in Beijing, Shanghai, Guangzhou and Shenzhen have adopted measures to control real estate prices and encourage low-cost housing. In Guangzhou, the deposit required on the purchase of a second property has been increased by 30 percent.

SHANGHAI DAILY

– Shanghai does not need extra maternity wards to cope with the recent government change to the one-child policy, city health authorities said on Monday. Under the new rules around 400,000 couples in Shanghai will become eligible to have two children rather than just one.

– Ten people received jail terms ranging from three to 13 years in food safety cases in Shanghai on Monday. Offences included using expired ingredients in moon cakes, adding addictive poppy seed shells to dishes and running an illegal abattoir. Authorities have taken a tougher line against food safety cases since new directives in May.

CHINA DAILY

– Enterprises around Beijing are illegally discharging airborne pollutants on a large scale, according to an inspection by the Ministry of Environment Protection. Twenty-one of 65 companies and factories checked were found to be carrying out such illegal activities.

– Li Keqiang, China’s premier, will visit Romania and Uzbekistan from Nov. 25 to 29 to attend a meeting of leaders from Central and Eastern Europe, a spokesperson said on Monday.

PEOPLE’S DAILY

– Reform in China is a complicated task that requires research in various fields and co-operation across different associations, said a commentary in the paper that acts as the party’s mouthpiece. The reforms that have emerged from the Third Plenary Session have opened the door for deeper reform, said the paper

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Great Plains Energy (GXP) upgraded to Buy from Underperform at BofA/Merrill
Hallador Energy (HNRG) upgraded to Outperform from Market Perform at Cowen
Mead Johnson (MJN) upgraded to Outperform from Perform at Oppenheimer
Midway Gold (MDW) upgraded to Speculative Buy from Hold at Canaccord
QIAGEN (QGEN) upgraded to Neutral from Sell at Citigroup
Rockville Financial (RCKB) upgraded to Outperform from Market Perform at Keefe Bruyette
United Financial (UBNK) upgraded to Outperform from Market Perform at Keefe Bruyette
Vail Resorts (MTN) upgraded to Outperform from Neutral at Credit Suisse

Downgrades

Altera (ALTR) downgraded to Buy from Conviction Buy at Goldman
TCP Capital (TCPC) downgraded to Hold from Buy at Wunderlich
Walgreens (WAG) downgraded to Market Perform from Outperform at Raymond James
Zions Bancorp (ZION) downgraded to Outperform from Strong Buy at Raymond James

Initiations

ABM Industries (ABM) initiated with a Neutral at Piper Jaffray
Aerie Pharmaceuticals (AERI) initiated with a Buy at Canaccord
Aerie Pharmaceuticals (AERI) initiated with an Outperform at RBC Capital
Avon Products (AVP) initiated with a Neutral at Credit Suisse
CST Brands (CST) reinstated with an Underperform at Credit Suisse
Centene (CNC) initiated with an Outperform at Leerink
CigCintas (CTAS) initiated with a Neutral at Piper Jaffray
Coty (COTY) initiated with a Neutral at Credit Suisse
DDR Corp. (DDR) initiated with a Buy at MLV & Co.
Endurance (EIGI) initiated with a Buy at Goldman
Endurance (EIGI) initiated with a Buy at Jefferies
Endurance (EIGI) initiated with an Outperform at Credit Suisse
Endurance (EIGI) initiated with an Outperform at Wells Fargo
Estee Lauder (EL) initiated with an Outperform at Credit Suisse
Gastar Exploration (GST) initiated with a Buy at Canaccord
HCI Group (HCI) initiated with a Market Perform at JMP Securities
Health Net (HNT) initiated with a Market Perform at Leerink
HumIntel (INTC) initiated with a Buy at Mizuho
KiLabCorp (LH) initiated with a Neutral at ISI Group
Molina Healthcare (MOH) initiated with a Market Perform at Leerink
Qualcomm (QCOM) initiated with a Buy at Mizuho
Quest Diagnostics (DGX) initiated with a Neutral at ISI Group
S&W Seed (SANW) initiated with a Buy at Roth Capital
Uni-Pixel (UNXL) initiated with a Perform at Oppenheimer
WellCare (WCG) initiated with a Market Perform at Leerink

HOT STOCKS

IntercontinentalExchange (ICE) to acquire Singapore Mercantile Exchange
Wal-Mart (WMT) to match competitors’ (TGT, BBY) Black Friday deals one week early
Newcastle Investment (NCT) to acquire $1.01B worth of senior housing assets
NHTSA opened preliminary evaluation into Tesla (TSLA) fires
Salesforce.com (CRM), Hewlett-Packard (HPQ) announced strategic cloud partnership
Tesoro Logistics (TLLP) acquired assets from Tesoro (TSO) for $650M
ING Group (ING) to sell 11.3% direct stake in SulAmerica to Swiss Re
Schweitzer-Mauduit (SWM) to acquire DelStar (ACAS) for $231.5M in cash
Urban Outfitters (URBN) CEO “cautious” on Q4
Medifast (MED) to add 37 Weight Control Centers in six states over the next three years

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Home Depot (HD), Trina Solar (TSL), Brocade (BRCD), Urban Outfitters (URBN)

Companies that missed consensus earnings expectations include:
Campbell Soup (CPB), AutoNavi (AMAP), Jacobs Engineering (JEC), Standard Parking (STAN), UGI Corporation (UGI), AmeriGas (APU), Active Power (ACPW)

Companies that matched consensus earnings expectations include:
Salesforce.com (CRM)

NEWSPAPERS/WEBSITES

• There’s a shift among investors and Wall Street analysts willing to back energy companies that promised rapid growth and planned to assemble oil and gas fields to sell, at a premium, to larger companies (BHP, RDS.A, XOM, COG, EOG, CHK). Now, big companies’ appetite for these deals has dwindled, the Wall Street Journal reports  
• Lately, Best Buy Co. (BBY) has been a lot of analysts’ best friend. Last November, after it reported fiscal Q3 results, the stock fell 13%. Since then the share price has risen 264%, leading Wall Street to change its tune: 58% of analysts following the company now rate its stock as a “buy” or “outperform,” according to FactSet, the Wall Street Journal reports
• JPMorgan Chase (JPM) has withdrawn from a syndicate of banks working on a $2B Hong Kong listing by China Everbright Bank Co., sources say, Reuters reports.

< li>Apollo Global Management (APO) is selling CKE, Inc. after postponing plans for an IPO last year. TriArtisan Capital Partners is in the lead to acquire the restaurant group that owns the Carl’s Jr. and Hardees fast food chains, in a deal approaching $2B, sources say, Reuters reports

• Janet Yellen’s nomination to be chairman of the Federal Reserve is scheduled for a Senate Banking Committee vote on Thursday, advancing her confirmation, and  setting the stage for a full Senate confirmation vote later this year, Bloomberg reports
• Banks that best adapt to “relentless waves” of new rules from global regulators have the greatest chance of remaining competitive, according to Boston Consulting Group, Bloomberg reports

SYNDICATE

Blackstone Mortgage (BXMT) files to sell $150M in convertible senior notes due 2018
Carbonite (CARB) files $75M mixed securities shelf, 9.5M shares of common stock
Cardiovascular Systems (CSII) files to sell 2.1M shares of common stock
Cardtronics (CATM) reports private offering of $250M convertible senior notes due 2020
Demandware (DWRE) files to sell 3.3M shares of common stock
Memorial Production (MEMP) files to sell 7.06M shares of common stock
NMI Holdings (NMIH) files to sell 51.5M shares for selling stockholders
Newcastle Investment (NCT) files to sell 50M shares of common stock
NextEra Energy (NEE) files to sell 11.1M shares of common stock
Noodles & Company (NDLS) files to sell 5.175M shares for holders
Oiltanking Partners (OILT) fles to sell 2.6M common units
SPS Commerce (SPSC) files to sell 750,000 shares of common stock
Tesoro Logistics (TLLP) files to sell 6.3M shares of common stock
Uranium Energy (UEC) files to sell 3M shares for selling stockholders

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/gvrBLWFg5C4/story01.htm Tyler Durden

When all else fails, and/or when the president is caught in yet another major scandal, there is only one way out: war. As many expected, but as nobody knew what shape the latest provocation would take, overnight at least 23 were killed and dozens hurt after a twin bomb attack shook the Iranian embassy in Beirut. As NBC reports, a local al Qaeda affiliate, the Abdullah Azzam brigades, claimed responsibility for the explosions – the latest sign that Syria’s civil war is spilling over the border into Lebanon. Burning cars, bodies and pools of blood littered the front of the embassy building, in the Hezbollah-dominated south of the city. The Zahraa hospital nearby told AFP that it had received the bodies of five people and was treating at least 35 others for wounds. Lebanese media broadcast harrowing images from the scene of the blast, with charred bodies on a street lined by blazing cars and strewn with the rubble.

The horrifying scene looked something like out of Beirut in the 1980s:

Burning cars, bodies and pools of blood littered the front of the embassy building, in the Hezbollah-dominated south of the city.

 

Eyewitnesses described charred bodies and a large crater.

 

Security camera footage indicated the first blast was carried out by suicide bomber who rushed toward the walls of the embassy, while the second was caused by a nearby car bomb, officials told Lebanese media.

 

One explosion blew out the large black main gate of the Iranian mission, damaging the three-story facility, Reuters said.

 

Lebanon’s Health Minister Ali Hassan Khalil told Reuters that at least 23 people were killed and 146 wounded, but the toll was changing rapidly as emergency workers and bystanders picked through the wreckage of burning vehicles.

 

“At one entrance of the Iranian embassy I counted six bodies outside. I saw body parts around and thrown two streets away,” Reuters television cameraman Issam Abdullah said from the scene.

 

“There is huge damage, it looks like it is a car bomb. One car is twisted there. There were two Mercedes cars badly damaged,” he added.

 

Activist Ahmad Yassine posted pictures of the aftermath of the explosion to Twitter, showing burning vehicles and bystanders picking through the wreckage.

 

The area is home to a number of foreign embassies, including those of Egypt, Kuwait and China.

And while Al Qaeda was quick to take the blame, Iran had other thoughts, and its foreign ministry promptly accused Israel of carrying out the deadly attack.

In other words, the CIA-funded Al-Qaeda groups originally in Syria, are now operating in neighboring countries where they are blowing up Israel’s enemies at Netanyahu’s bidding, while taking responsibility and keeping the spotlight away from the Israeli state. What can possibly go wrong with such a strategy clearly designed to push the middle east back to the brink of war?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/vgZFSA6WnBk/story01.htm Tyler Durden

It is time for the centrally-planned markets to “try” for the round number trifecta of 16000, 1800 and 4000 again, although it may be a tad more difficult on a day in which there is no double POMO and just $2.75-$3.50 billion will be injected by the NY Fed into the S&P – perhaps it is Bitcoin that will hit the nice round number of $1000 first? Overnight, the Chinese Plenum news rerun finally was priced in and the SHComp closed red, as did the Nikkei 225 as the Asian euphoria based on communist promises about what may happen by 2020 fades.  What’s worse, the Chinese 7-day repo rate is up 140bp this morning to 6.63% amid talk of tightening domestic liquidity conditions, and back to levels seen during the June liquidity squeeze. All this is happening as China continues leaking more details and hope of what reform the mercantilist country can achieve, and how much internal consumption the export-driven country can attain: overnight there were also additional reports of interest rate liberalization and that the PBOC are to set up a floating CNY rate. Good luck with that.

Heading west to Europe, the German ZEW Surve printed at 54.6 up from 52.8 and above expectations of 54.0 – the highest since October 2009, however the current situation survey dropped from 29.7 to 28.7, well below the expected 31.0. According to the ZEW expectations increased slightly following the ECB rate cut. So Germany should not have a problem with greenlighting QE then – just think of how high the ZEW would surge. Also in Europem Italian Industrial Orders missed expectations of a 2.0% increase, and instead declined from 2.2% to 1.6% in September. In Spain, Confidencial reported that the ECB stress tests may penalize Spanish bank bond holdings, because only in Europe will the central bank which bailed out Spain’s bank penalized Spain’s banks.

In conclusion, and in the most bullish news of the day – for stocks of course – the OECD lowered 2014 world GDP forecast from 4.0% to 3.6%.  At the same time is urged the ECB to consider QE and scrap the debt ceiling. What can one say: the OECD – the best friend of the 0.1%.

There is nothing on the US docket today except the following two things:

• US: Employment cost index for Q3, cons 0.5% (8:30)
• US: Fed speaker Evans (14:15)

Overnight bulletin from Bloomberg and RanSquawk:

• China’s Zhou says PBOC to remove itself from day-to-day interventions in the domestic FX market and establish a managed floating CNY FX rate, will cut the ratio of T-Bonds held to maturity. Governor Zhou Xiaochuan said, without giving a timeframe
• OECD lowers 2014 world GDP forecast to 3.6% from 4.0% in May outlook. Calls on ECB to consider quantitative easing and says that the U S should scrap the debt ceiling for a credible long-term budget plan.
• Combination of profit taking related flow, as well as initial reaction to comments by Fed’s Dudley and Plosser saw USTs edge lower overnight in Asia and in turn resulted in lower Europe open.
• Treasuries decline, 10Y yield holding near 50-DMA at 2.671%, 100-DMA at 2.665%; light eco calendar with Bernanke due to speak at National Economists Club in Washington at 7pm.
• JPMorgan has resolved the last obstacles to a record $13b settlement of civil state and U.S. probes over the sale of mortgage bonds, clearing the way for a deal today after months of negotiations, two people briefed on the matter said
• German investor confidence rose to 54.6 in November, highest level in more than four years, from 53.8 in prior month and median estimate of 54 in Bloomberg survey
• ECB’s Asmussen said policy makers haven’t exhausted their options to counter low inflation, must be very careful on negative deposit rate, according to an interview broadcast on Austria’s ORF radio
• Greek banks’ bad loan ratio at 32%, with rate of increase in non-performing loans slowing, Kathimerini reported
• OECD cut its forecast for global growth to 2.7% this year and 3.6% next year from the 3.1% and 4% predicted in May as emerging markets including India and Brazil cool
• Potential shortfalls in Obamacare enrollment would put a 30% dent in projections for U.S. prescription-drug sales in 2017, a report from IMS Health Inc. shows
• Obama’s job approval rating fell to 42% in a ABC News/Post poll, down 13 points this year and six in the past month to match the lowest of his presidency
• Sovereign yields mostly higher, EU peripheral spreads narrow. Asian, European stocks, U.S. equity-index futures lower. WTI crude, copper and gold lower

Market recap:

China will gradually expand the CNY trading band to help make the currency more flexible. A combination of profit taking related flow, as well as initial reaction to comments by Fed’s Dudley and Plosser saw USTs edge lower overnight in Asia and in turn translate into somewhat cautious equity cash open in Europe. Also,  reports that China will gradually expand the CNY trading band to help make the currency more flexible and market-driven resulted in broad-based, albeit short-lived USD weakness which pushed EUR/USD and GBP/USD to session highs. However the reaction was short-live and the initial bout of selling pressure quickly abated after it became apparent that these comments were part of the study guide released by a Communist Party after the third plenum and is part of long-term reforms as recently proposed by the Chinese government. Still, the fact that the head of the Bank also noted China will cut the ratio of T-Bonds held to maturity is USD negative in the near future. In other news, German ZEW survey expectations for the month of October came in at its highest since October 2009, while the OECD lowered 2014 world GDP forecast to 3.6% from 4.0% in May outlook. The OECD also called on the ECB to consider quantitative easing and stated that the US should scrap the debt ceiling for a credible long-term budget plan. Going forward, market participants will get to digest the release of the weekly API report and await comments from Fed’s Evans and Bernanke.

Asian Headlines

China’s Zhou says PBOC to remove itself from day-to-day interventions in the domestic FX market and establish a managed floating CNY FX rate. However, no timeline has yet been given.

The Chinese Ministry of Commerce says China exports continue to face difficulties and fast CNY rise is squeezing exporter profits.

Japanese Economy Minister Amari said expects stimulus to be about JPY 5trln with tax measures of about JPY 1-2trln pushing the total up to about JPY 6trl, aimed to counter impact of tax hike.

EU & UK Headlines

German ZEW Survey Expectations (Nov) M/M 54.6 vs Exp. 54.0 (Prev. 52.8) – Highest since October 2009
German ZEW Survey Current Situation (Nov) M/M 28.7 vs Exp. 31.0 (Prev. 29.7)

OECD lowers 2014 world GDP forecast to 3.6% from 4.0% in May outlook
Calls on ECB to consider quantitative easing.
US should scrap the debt ceiling for a credible long-term budget plan.

Eurozone banks are set to be allowed to avoid complex new definitions for bad loans in their first data submissions in next year’s ECB check, winning a temporary reprieve from their heavy data-gathering burden.

UK DMO sells GBP 3.75bln 2.25% 2023 Gilts, b/c 1.80 (Prev. 1.84) tail 0.2bps (Prev. tail 0.2bps)

US Headlines

The US Treasury has face a backlash from the likes of BlackRock, PIMCO and Fidelity after a report by the Office of Financial Research showed that asset managers could pose risks to the broader financial system.

Equities

Stocks traded lower in early European trade after coming off the highs seen yesterday, which resulted from the positive sentiment observed in the Asian session. Afren are leading the way this mornin
g following the Co.’s drilling results being ‘significantly’ above expectations. EasyJet are also trading in the green after the Co.’s proposed dividend pence per share increased 55.8% from GBP 0.215 to GBP 0.335. In terms of laggards Paddy Power are leading the way downwards after the Co. lowered operating profit growth in 2013 before FX to be about EUR 11mln lower than mid-point of previous guidance. From a sector specific perspective, Industrials are being lead lower following Intertek’s pre-market earnings.

Home Depot (HD) Q3 EPS USD 0.95 vs. Exp. USD 0.90, year forecast raised

FX

The FT writes that traders are betting China’s CNY is about to strengthen to its highest level against the US dollar since at least 1998. One month non-deliverable forwards, which are contracts betting on the renminbi-US dollar exchange rate in a month’s time, have jumped to 6.1265 per dollar, their strongest since December 1998. This saw a relatively short-lived market reaction by market participants as despite the news being released, markets were not presented with much in the way of a timeline for these events and therefore isn’t gaining the momentum that the headline could have brought.

Overnight, AUD/USD pared back all the initial losses seen in the wake of the RBA policy November meeting minutes, which

were somewhat surprisingly ‘upbeat’ showing that the RBA saw improvement in forward looking indicators in the last month and sees “mounting evidence” that past rate cuts supporting activity and asset values. This comes despite the RBA saying that they feel AUD is still uncomfortably high with a fall needed to rebalance the economy and not closing possibility of a rate cut to support growth.

Commodities

Heading into the North American open, WTI crude and brent futures trade in minor negative territory after retracing most of the losses seen overnight, with a weaker USD providing some upside for commodities. Brent did see some upside later in the session after an AFP tweet claimed that Iran had accused Israel of being behind the Beirut bombing earlier in the day.

Earlier today it was reported that two explosions were heard in South Beirut near Iranian Embassy, it was later revealed that an Iranian official was killed in the blast. Afterwards an AFP tweet: “Iran accuses Israel of being behind Beirut bombing”.

Iran are to pump their first oil at fields shared with Iraq by the end of the Iranian year according to Press TV.

Obama is to meet with the Senate today in an attempt to try to dissuade the House from imposing more Iran sanctions *Please see today’s ‘Energy Commentary’ report for more energy news.

 

SocGen’s macro event recap:

It could be costly to fail to provide accommodation [to the market],” Fed chair nominee Yellen told US Senators last Thursday. Maybe that, and a 12-month forward P/E of 15.5 vs a 10y average of 16.3, is why investors continue to articulate a bullish view for risk assets. And are lower yields a sign that markets are pricing in a fall in annual CPI to 1% this week and therefore UST 10y yields are dropping back below 2.70%? The reality is that because of falling US yields EUR/USD is trading back to where it was before the ECB cut rates two weeks ago (1.3532). Intra-day flows continue to support the EUR at these levels and shows that the ECB’s powers are limited as it battles disinflationary pressures. Data yesterday reported a widening in the eurozone trade surplus to EUR14.3bn in September, a 45% increase from a year ago despite an anaemic economic recovery. The current account surplus has been running in double digits every month since May 2012. With numbers like that, the pace of EU depreciation will be glacial until the surplus is whittled back or US rates push higher. Meanwhile, foreign investors chose to offload $26.2bn of US T-bills in September as the government went into shutdown. A budget deal is of the essence before January.

A speech by ECB chief economist Praet in Frankfurt will garner close attention one week after the interview in the WSJ where he put forward the idea of outright asset purchases as a policy solution to help arrest the disinflationary pressure from building. We look for a rise in the ZEW survey expectations in November to 56.1 vs 52.8 last and a rise in current conditions to 32.4 vs 29.7 last, the highest since June 2012.

DB’s Jim Reid concludes the overnight event summary:

The positive sentiment from Chinese reforms has abated somewhat today after a very strong day for Chinese H-shares yesterday. The closely watched Hang Seng China Enterprises index is still up 1.0% today (following a 5.7% gain yesterday) and it’s safe to say that there is still a reasonable bid from offshore for Chinese exposure. But as we noted yesterday, the bullish sentiment from reforms isn’t flowing through to all Chinese risk assets uniformly at the moment. Indeed, onshore equity indices are tracking slightly lower today (Shanghai Composite -0.1%) and, by sector, the softness in onshore equities is being driven by cyclicals including smelters and autos.  Copper futures are down another half a percentage point and mining stocks in Asia are trading with a mixed tone. The recently announced reforms place a heavy emphasis on curbing overbuilding, protection of the environment and achieving sustainable growth, so it’s not unexpected that cyclicals to be lagging to some extent.

There is also increasing focus on the onshore Chinese fixed income markets at the moment. One of the major goals of the reforms was to liberalise Chinese money rates – which includes the Chinese treasury yield curve. The 10yr government bond yield has been rising over the last few months and has increased by around 50bp in November alone. Some of this move can be put down to positioning ahead of the third plenum announcements but we’ve also seen yields add 15bp over the past two days alone (currently 4.657% from lows of 3.45% in May). Staying in the money markets, the 7day repo rate is up 140bp this morning to 6.63% amid talk of tightening domestic liquidity conditions. This move brings its back up to levels seen during the liquidity squeeze in June . The increase in rates is also having a negative impact on onshore corporate bond markets. Offshore though, US dollar Chinese corporate bonds remain fairly well bid and spreads have tightened by a several basis points over the past couple of days. Although we imagine that the onshore rate selloff is negative for bank investment portfolios in the short term, our Chinese banking analysts expect higher bond yields to eventually raise returns for bond investments and increase loan pricing for large corporates, which will help mitigate the impact from deposit rate regulation.

Again, our view on the reforms is that the range of announced measures is impressive and that they are step in the right direction, but the truth will be in the execution. There are conservative interest groups within the government and State-owned sector who would be resistant to reforms, but as DB’s James Malcolm argues the big question is whether China can implement these reforms quickly enough for impatient markets. An argument can also be made that if reforms are implemented too quickly the frictional costs for the economy could come to the fore. So it’s definitely a delicate balancing act for the government and one which will be crucial to markets over the weeks, months and even years to come.

Outside of China, US markets spent most of the day above 16000 and 1800 on the Dow and S&P 500 before slipping in the last hour of trading with the S&P 500 closing at 1792 – down 0.37% on the day. Explanations for the late selloff varied. Carl Icahn was quoted at a Reuters investment conference that he is “very cautious” on equities and that the equity market could easily have a “big drop”. Icahn also commented that earnings are a mirage and are being boosted by low interest rates.
His comments were published on newswires well after the downward slide had begun though. Others blamed hawkish comments from the Philly Fed’s Plosser earlier in the day who argued for a fixed cap on QE and that the labour market had sufficient momentum to justify a start to tapering. Plosser also argued that he wasn’t supportive of linking QE tapering with changes in the Fed’s unemployment threshold for rate hikes, describing the policy shifts as potentially a source of confusion which could undermine the effectiveness of forward guidance. Plosser is a FOMC voter next year and is a known hawk. Those comments were at odds with the NY Fed’s Dudley (a voter and a dove) who described current labour market momentum as insufficient. He also commented that there was enough slack in labour markets to continue with very accommodative monetary policy without having an inflation problem.

The late weakness in stocks helped US treasuries rally into the close (-4bp on the day) but the catalyst for the rally in rates started with a weaker than expected NAHB homebuilder sentiment report. The sentiment index came in at 54.0 for November, which was unchanged from October, but was weaker than the median estimate of 55.0. The index remains at a five month low but it’s still much higher than at any point in H1 of the year. The detail of the report showed some softening in the outlook and in buyer traffic, perhaps as the impact of higher mortgage rates starts to flow through. The US dollar was a touch weaker against major currencies– and the combination of firmer UST yields and weaker dollar spurred a strong day for EM. Indeed the MSCI EM index gained 2% for its best gain in a month while EM bond yields were firmer on the day.

Looking at the day ahead, Italian industrial orders and sales and the German ZEW survey are the main data highlights in Europe. In the US, the employment cost index will be released but there will be some focus on the Fed speak. Indeed, Bernanke will deliver the Herbert Stein Memorial Lecture at the National Economists Club in Washington DC, well after the US markets close. He’s not expected to discuss Fed policy but there may some interesting snippets from the Chairman.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ZezyE9UN7CM/story01.htm Tyler Durden