Tag: news

It has been over six months since the Chinese housing bubble has popped. What’s worse, as overnight housing numbers out of China confirmed, the government has so far failed to contain the fallout, and according to the National Bureau of Statistics, which is anything but, after a fifth straight monthly decline, Chinese home prices have now wiped out all price gains in the past year. This was immediately spun as bullish by media outlets and sellside experts as “raising expectations the government will have to implement more economic support measures to cushion the blow.” I.e., buy stocks because central banks will push risk prices artificially higher yet again. In other words, bad is still good and failure continues to be success.

According to the NBS, average home prices in 70 major Chinese cities were down 1.3% in September from a year earlier, the first such drop since November 2012.

As compiled by Reuters, new home prices fell month-on-month in a record 69 of the 70 major cities, up from 68 in August. Only the southern city of Xiamen saw stable prices last month, National Bureau of Statistics (NBS) data showed.

The worst performance was in the eastern city of Hangzhou, where prices sagged 7.6 percent in September from a year before.

The decelerating property market, which accounts for about 15 percent of China’s economy, has crimped demand in 40 sectors ranging from steel to cement and furniture.

Actually, no. According to SocGen, “the aggregate exposure of China’s financial system to the property market is likely to be as much as 80% of GDP.” Which is why as we said in May, “this is not a sector that can go terribly wrong if China wants to avoid a hard landing.”

But much more importantly, when it comes to net worth, what the stock market is to the US, housing is to China, as we have also shown previously.

 

It is in this context that one can’t help but laugh at the following consensus forecast that has just China and the US as accountable for virtually all the growth in 2015:

Because until and unless China manages to arrest its tumbling housing market, which now is a net drag on net worth over the past year, one can kiss about $1 trillion in “GDP growth” in 2015 goodbye.

Some other observations on the Chinese housing market. From Reuters:

“The property downturn is still the main drag on the economy,” Wang Tao, an economist at UBS in Hong Kong, said in a note.

 

“The negative impact of the ongoing property downturn is being felt not only in heavy industry, but also in manufacturing investment.”

 

The slowdown in the housing market followed GDP data showing the economy grew at its slowest rate since the 2008/2009 global financial crisis in the September quarter, adding to worries that it will drag on global growth.

 

Yu Bin, a senior economist at the Development Research Centre (DRC), the cabinet’s think tank, said on Friday it expected China’s economy would grow by 7.4 percent this year, slightly below the government’s target of 7.5 percent. That would be the slowest pace in 24 years.

And some more from Bank of America:

Prices of new commodity residential properties for 70 medium-to-large-sized cities surveyed by the National Bureau of Statistics (NBS) declined by 1.2% yoy in September compared with 0.5% growth in August. The number of cities with higher home prices mom was 0 in September, down one from 1 in August, while the  number of cities with lower home prices mom was 69 in September, up one from 68 in August. Moreover, the number of cities with lower home prices yoy jumped to 58 in September from 19 in August.

 

In September, Soufun’s 100-city average new home price index rose by 1.1% yoy compared to 3.2% in August. Divergence in home price growth narrowed slightly among the different tiers of cities. September new home price growth was 5.4%, – 0.4% and -2.8% yoy, respectively for Tier-1, Tier-2 and Tier-3 cities, down from 8.0%, 1.1% and -1.3% yoy in August.

 

National average sale prices (ASP) of new homes was RMB5,987/sqm in September, down by 0.6% yoy compared to 1.1% decline recorded for August

 

 

Vacant residential GFA waiting for sale increased by 6.3 mn sqm in September, up from 5.9 mn sqm in August. According to the NBS data, completed unsold residential inventory stood at 376mn sqm, which is equivalent to 4.0 months of inventory, based on the average monthly sales volume in the past 12 months.

 

Perhaps it is time for China to take a page out of Europe’s playbook and to add the price of hookers and cocaine when calculating the blended average price of an apartment…

via Zero Hedge http://ift.tt/1DHP64O Tyler Durden

• Doctor with Ebola in New York hospital after return from Guinea (Reuters)
• Ebola Puts Spotlight on Bellevue, Key NYC Trauma Center (WSJ)
• Uber Driver Transported Ebola-Positive Doctor in New York (BBG)
• GOP Gains in Key Senate Races as Gender Gap Narrows (WSJ)
• ECB Tries for Third Time Lucky in European Stress Tests (BBG)
• Security tight in Canada as police probe Parliament gunman’s ties (Reuters)
• Why Madrid’s poor fear Goldman Sachs and Blackstone (Reuters)
• Fed’s $4 Trillion Holdings Keep Boosting Growth Beyond End of QE (BBG)
• Cold War Banker to Putin Billionaires Walks Sanction Wire (BBG)
• Ground offensive against Islamic State months away in Iraq (Reuters)
• Bank Breakup Plan Hits More EU Hurdles as Danes Reject Idea (BBG)
• Servicing JFK Airliners for Decades, Now There’s Ebola (BBG)
• New York police officer critically wounded in hatchet attack (Reuters)
• China Scores Cheap Oil 14,000 Miles Away as Glut Deepens (BBG)

 

 

Overnight Media Digest

WSJ

* A doctor who had returned to New York City recently after treating Ebola patients in West Africa tested positive for the virus on Thursday, officials said, setting up a new test for the nation’s ability to control the spread of the deadly disease. (http://on.wsj.com/1wvvsql)

* A number of details about Michael Zehaf-Bibeau, who killed a Canadian soldier and thrust the government into a terrified lockdown on Wednesday, emerged that began to fill in a picture of a middle-class suburban youth who grew estranged from his family and descended into a string of petty crimes. (http://on.wsj.com/1z2Sebz)

* In a warning flag for Democrats, recent polls suggest the party is failing to draw enough support from women in three key Senate races – in Iowa, Arkansas and Colorado – to offset the strong backing that men are giving to Republicans. (http://on.wsj.com/1nBCDf0)

* The travails at Gucci are emblematic of the problems afflicting fashion’s big power houses. (http://on.wsj.com/1uNAjyR)

* Amazon.com Inc’s soaring ambitions are coming at a steep cost, dragging the e-commerce giant to its largest quarterly loss in 14 years. (http://on.wsj.com/1wnXRxD)

* Canada’s chief energy regulator said Thursday a municipality along the route of a crude-oil pipeline cannot stop an affiliate of Kinder Morgan Energy Partners from accessing areas for a proposed expansion. (http://on.wsj.com/10r3YGO)

* Primark, the U.K. fast-fashion chain that sells T-shirts for a couple of pounds and doesn’t believe in online retailing, wants to make it big in the U.S. Its big selling point to America will be price. (http://on.wsj.com/1znoNSF)

* Famed billionaire Warren Buffett has doubled down on renewables – and wind power in particular – in his energy strategy. Through a majority-owned subsidiary, Berkshire Hathaway Energy, Buffett plans to double the $15 billion already committed to renewable-energy projects through early this year, and he is on the hunt for more utility acquisitions. (http://on.wsj.com/1wsZY2d)

* KKR & Co LP signaled buying opportunities ahead, as choppy markets create conditions that can scare off other investors. Echoing sentiment from other private-equity executives, one of the top lieutenants to KKR co-founders Henry Kravis and George Roberts on Thursday said recent whipsawing markets could work to the firm’s advantage. (http://on.wsj.com/1nBF6WP)

 

FT

Overview Bank of England would fire a lender’s management over a weekend, impose losses on investors and halt bond trading in a move aimed at preventing taxpayers bailing out banks and to provide more clarity to investors and bank chiefs. EU has told Britain to pay an extra 2.1 billion euros ($2.66 billion) to the EU budget within weeks due to its relative prosperity, a subcharge that will add to Prime Minister David Cameron’s domestic worries over Europe. BP Plc and Chevron Corp have disclosed an oil find in the U.S. Gulf of Mexico. The companies said the oil well drilled by Chevron in the Guadalupe prospect in 1,200 metres of water needed more tests to establish its size but had found “significant oil pay.”

Uber’s head start in Britain has shadowed over the planned Addison Lee’s sale after potential bidders raised questions over the impact it could have on Addison Lee’s long-term prospects.

 

NYT

* Bankers are jockeying for the next sovereign debt deal in Africa, a continent that foreign investors have long been wary of for its economic woes, rampant poverty and political instability. Sub-Saharan countries have raised nearly $7 billion this year, more than in all of 2013, and yields on many bonds have fallen, even with the Ebola outbreak. (http://nyti.ms/1z2NUJx)

* Comcast Corp, the country’s largest cable operator, predicts that television groups like HBO and CBS will face steep challenges introducing streaming services that do not require cable subscriptions and that people will continue to pay for a bundle of television and Internet services in the years to come. (http://nyti.ms/1wsUbJW)

* Amazon Inc on Thursday reported disappointing third-quarter results. The company saw a wider net loss of 95 cents a share and revenue came in $260 million less than analysts’ projections. Amazon said it might lose money again in the fourth quarter, which in the old days was when retailers made all their profit for the year. (http://nyti.ms/12mXitV)

* Microsoft Corp on Thursday offered tantalizing signs of progress in the transformation of its business. In the last quarter, the company had a 25 percent increase in sales, largely because of its acquisition of Nokia Oyj’s mobile phone business. The results impressed investors, especially when compared with weak results from other technology bellwethers like IBM Corp. (http://nyti.ms/1znnlQu)

* General Motors’ quarterly earnings report on Thursday was noteworthy mostly for what it lacked: another big financial charge for safety recalls. After running up special charges of nearly $3 billion in the first half of the year for safety problems, the nation’s biggest automaker avoided additional charges for recalls in the third quarter. (http://nyti.ms/1thOnFw)

 

Canada

THE GLOBE AND MAIL

** Chinese authorities have subjected two detained Canadians, Kevin and Julia Garratt, who have now been held by China’s State Security Bureau for 81 days, to intensive questioning while refusing their access to legal counsel, raising fears about what the couple might be pressured into admitting. (http://bit.ly/1nBUeU3)

** Royal Canadian Mounted Police Commissioner Bob Paulson, the nation’s top police officer, says the job of keeping tabs on Canadian extremists was draining police budgets, violence had become almost impossible to foresee and police needed tools to react “decisively, quickly, preventatively.” (http://bit.ly/ZPGVV2)

** Rogers Communications Inc Chief Executive Guy Laurence is striking a new aggressive tone, directly calling out his competitors as he strives to convince investors his strategy to turn around the fortunes of the wireless, cable and media company is on the right track. (http://bit.ly/1wvKuMU)

NATIONAL POST

** The Conservatives are understood to be considering new legislation that would make it an offence to condone terrorist acts online. Sources suggest the government is likely to bring in new hate speech legislation that would make it illegal to claim terrorist acts are justified online. (http://bit.ly/1rr8NWS)

** Conservative members of Parliament inside their caucus room were determined to go out fighting, if worst came to worst. As they heard the cannonade of shots outside the historic Reading Room, in Parliament’s Hall of Honour, they barricaded the doors and armed themselves. The only weapons at hand were a rolled up Maple Leaf flag, replete with sharp points. (http://bit.ly/1rpKrNg)

** Despite a bear market for oil, two of Canada’s largest producers, Husky Energy Inc and its oil sands peer Cenovus Energy Inc, said on Tuesday that their growth plans had not yet been derailed. (http://bit.ly/1znUVFQ)

 

China

SHANGHAI SECURITIES NEWS

– The Shenzhen Stock Exchange is accelerating its launch of options, with the second testing phase set to take place as early as next week, the newspaper said, citing sources.

21ST CENTURY HERALD

– China Telecom and China Unicom have been in talks for the past six months to jointly establish a content delivery network firm, the newspaper reported, citing a source in China Telecom.

 
SHANGHAI DAILY

– Recent fibre content and labelling tests by Shanghai’s quality watchdog have failed batches of clothing from brands such as Armani, Ralph Lauren and Fendi. Retailers were told to remove the items from their shelves immediately.

– More than 20 tonnes of industrial salt is believed to be on the market as normal edible salt in central China’s Henan province, officials said after raiding an underground workshop in the provincial capital of Zhengzhou.

CHINA DAILY

– Facebook founder Mark Zuckerberg conducted a half-hour public dialogue in the Chinese language at Tsinghua University, receiving cheers and applause from the audience.

– China plans to cooperate with several countries, including Mexico, Israel and Sweden, to expand the reach of its Beidou navigation satellite system.

Britain

Reuters has not verified these stories and does not vouch for their accuracy.

The Times TESCO CHAIRMAN QUITS AS PROFITS CRUMBLE BY 92 PCT Richard Broadbent, chairman of Tesco Plc is to stand down after a collapse in the supermarket chain’s half-year profit and an increase in the bill for a bookkeeping scandal from 250 million pounds to 263 million pounds ($400.80 million to $421.64 million).

(thetim.es/1wm4W1G)

The Guardian

SPIRIT PUB BARS MAGNERS OWNER’S MOVE TO GATECRASH TAKEOVER Spirit Pub Co Plc has rejected an attempt by the company behind Magners cider to gatecrash its 750 million pound takeover by brewer Greene King Plc. Irish cider company C&C Group Plc is understood to have made a new 760 million pound approach for the chain of 1,200 pubs in an effort to trump Greene King’s offer – which the Spirit board has indicated it is willing to recommend to shareholders.

(bit.ly/1ws4Dlb)

CENTRICA BOSS ATTACKS ‘CONTRADICTORY’ UK POWER POLICY Sam Laidlaw, chief executive of Centrica Plc, has urged the government to reconsider its support for offshore wind and other costly low-carbon technologies because it will raise the cost for energy consumers at a time of lower wholesale power prices. The energy boss and former government adviser also attacked ministers for allowing energy companies to propose coal-fired power stations for a new subsidy scheme when Britain was trying to cut carbon emissions.

(bit.ly/1vUO17y) BP’S NORTH SEA OIL FIND COULD YIELD 50 MLN BARRELS

BP Plc has reawakened hopes for the continuing potential of the North Sea by making a significant oil strike that industry experts believe could yield about 50 million barrels. The find was made in partnership with GDF Suez of France, and the British government said the successful well underlined the benefits that could be achieved if companies worked more closely together.

(bit.ly/1zmzSmY)

The Telegraph

BANK OF ENGLAND TARGETS END OF BANK BAILOUT ERA Bank of England could fire bank bosses on the spot and replace them with outside executives should the bank collapse under new rules designed to prevent taxpayers bailing out banks.

(bit.ly/ZOFg2e)

CUADRILLA FRACKING PLANS SUFFER FURTHER DELAY Cuadrilla’s plans to frack for shale gas in Lancashire have suffered further delay after council planners requested an extra two months to consider its proposals. The energy company submitted a planning application to Lancashire County Council in late May to frack at a site at Preston New Road, near Little Plumpton, followed in mid-June with plans for a second site at Roseacre Wood.

(bit.ly/1uM1Nox) Sky News

JOHNSON QUITS METRO BANK OVER TIME DEMANDS Luke Johnson, one of the Britain’s most successful entrepreneurs has resigned from the board of Metro Bank as growing regulatory scrutiny increases the time commitment required from bank directors.

(bit.ly/1owSI6w)

 

 

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
New home sales for September at 10:00–consensus down 6.9% to 469K rate

ANALYST RESEARCH

Upgrades

Brandywine Realty (BDN) upgraded to Buy from Hold at Stifel
Check Point (CHKP) upgraded to Buy from Hold at Needham
EQT Corporation (EQT) upgraded to Buy from Neutral at SunTrust
Halliburton (HAL) upgraded to Buy from Neutral at Citigroup
Invacare (IVC) upgraded to Buy from Hold at KeyBanc
Lorillard (LO) upgraded to Market Perform from Underperform at Cowen
Maxim Integrated (MXIM) upgraded to Buy from Hold at Deutsche Bank
NCR Corp. (NCR) upgraded to Neutral from Sell at Goldman
Plexus (PLXS) upgraded to Outperform from Market Perform at Raymond James
Reliance Steel (RS) upgraded to Buy from Hold at Jefferies
ResMed (RMD) upgraded to Outperform from Market Perform at William Blair
Royal Dutch Shell (RDS.A) upgraded to Buy from Neutral at UBS
Vulcan Materials (VMC) upgraded to Overweight from Equal Weight at Stephens
Weatherford (WFT) upgraded to Buy from Neutral at Citigroup

Downgrades

AG Mortgage (MITT) downgraded to Market Perform from Outperform at JMP Securities
Abercrombie & Fitch (ANF) downgraded to Market Perform from Outperform at BMO Capital
Abercrombie & Fitch (ANF) downgraded to Sell from Neutral at Goldman
Amazon.com (AMZN) downgraded to Market Perform from Outperform at Cowen
American Eagle (AEO) downgraded to Neutral from Buy at Goldman
Colfax (CFX) downgraded to Neutral from Buy at Goldman
Equinix (EQIX) downgraded to Market Perform from Outperform at Cowen
Gartner (IT) downgraded to Hold from Buy at Stifel
Hub Group (HUBG) downgraded to Neutral from Buy at Longbow
JAKKS Pacific (JAKK) downgraded to Neutral from Buy at B. Riley
KLA-Tencor (KLAC) downgraded to Neutral from Buy at B. Riley
KLA-Tencor (KLAC) downgraded to Neutral from Outperform at Credit Suisse
NIC Inc. (EGOV) downgraded to Market Perform from Strong Buy at Raymond James
Pacific Continental (PCBK) downgraded to Market Perform at Keefe Bruyette
Premiere Global (PGI) downgraded to Market Perform from Outperform at Raymond James
QIWI (QIWI) downgraded to Sell from Buy at Goldman
Safe Bulkers (SB) downgraded to Hold from Buy at Evercore

Initiations

Alibaba (BABA) initiated with an Outperform at BMO Capital
GoPro (GPRO) initiated with an Underperform at Oppenheimer
Jones Energy (JONE) initiated with an In-Line at Imperial Capital
Marathon Oil (MRO) initiated with a Buy at Mizuho
Mattress Firm (MFRM) initiated with an Overweight at Barclays
Medley Management (MDLY) initiated with a Buy at MLV & Co.
Physicians Realty Trust (DOC) initiated with an Outperform at Raymond James
Rosetta Genomics (ROSG) initiated with a Hold at Cantor
Surgical Care Affiliates (SCAI) initiated with a Hold at Jefferies
Tempur Sealy (TPX) initiated with an Equal Weight at Barclays

COMPANY NEWS

Pfizer (PFE) announced a new $11B share repurchase program
Amazon (AMZN) said it recorded charges of $170M for unsold Fire Phones, other costs
Juniper Networks (JNPR) announced a $1.1B increase to its share repurchase authorization
Digital River (DRIV) agreed to be acquired by investor group led by Siris Capital Group for $26 per share, or $840M
NPS Pharmaceuticals’ (NPSP) PDUFA date for Natpara extended three months to January 24, 2015
Wyndham (WYN) approved $1B increase to share repurchase authorization
Vitae Pharmaceuticals (VTAE) reported positive top-line results from two Phase 1 clinical trials of BI1181181/VTP-37948
AMC Networks (AMCX), BBC Worldwide entered long-term partnership, under which AMC will invest $200M to acquire a 49.9% equity stake in BBC America

EARNINGS

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

Microsoft (MSFT), Barnes Group (B), Wyndham (WYN), LyondellBasell (LYB), Forum Energy (FET), Gulf Island Fabrication (GIFI),  OceanFirst Financial (OCFC), Minerals Technologies (MTX), Strattec Security (STRT), Hancock Holding (HBHC), First Internet Bancorp (INBK), Universal Truckload (UACL), Southern National Bancorp (SONA), Sensient (SXT), Rubicon Project (RUBI), Dime Community (DCOM), Callaway Golf (ELY), Premiere Global (PGI), Compuware (CPWR), LogMeln (LOGM), Clean Energy (CLNE), ShoreTel (SHOR), 1st Source (SRCE), PolyOne (POL), Altera (ALTR), IGI Laboratories (IG), SPS Commerce (SPSC), City National (CYN), Gigamon (GIMO), Mattson (MTSN), NetSuite (N), Federated Investors (FII), KLA-Tencor (KLAC), Maxwell (MXWL), Dolby (DLB), PC Connection (PCCC), Constant Contact (CTCT), Informatica (INFA), Qlik Technologies (QLIK), Freescale (FSL), BJ’s Restaurants (BJRI), Greenhill & Co. (GHL), Chubb (CB), Edwards Lifesciences (EW), Deckers Outdoor (DECK), Stericycle (SRCL), BioMarin (BMRN), Uroplasty (UPI), Juniper (JNPR), Maxim Integrated (MXIM), FCB Financial (FCB), Principal Financial (PFG), Spectranetics (SPNC), PDF Solutions (PDFS), Calamos (CLMS), Netgear (NTGR), Chicago Bridge & Iron (CBI), CONMED (CNMD), VeriSign (VRSN), Merit Medical (MMSI), MainSource Financial (MSFG), Swift Transport (SWFT), W. R. Berkley (WRB), Pacific Biosciences (PACB), Pandora (P), VCA Inc. (WOOF), Echo Global (ECHO), Lattice Semiconductor (LSCC), Lattice Semiconductor (LSCC)

Companies that missed consensus earnings expectations include:

Amazon.com (AMZN), ImmunoGen (IMGN), New Oriental Education (EDU), Heritage Financial (hfwa), Basic Energy (BAS), Olin Corp. (OLN), Southwestern Energy (SWN), Simpson Manufacturing (SSD), Builders FirstSource (BLDR), Cape Bancorp (CBNJ), National Bank (NBHC), Bryn Mawr Bank (BMTC), TESSCO (TESS), OFG Bancorp  (OFG), SVB Financial (SIVB), Synaptics (SYNA), Shore Bancshares (SHBI), Flowserve (FLS), Forward Air (fwrd), Hub Group (HUBG), NCR Corp. (NCR), Covisint (COVS), Micrel (MCRL)

Companies that matched consensus earnings expectations include:

First Niagara (FNFG), Heritage Commerce (HTBK), Glacier Bancorp (GBCI), Macatawa Bank (MCBC), NewBridge Bancorp (NBBC), ResMed (RMD), Proofpoint (PFPT), Riverbed (RVBD), Cerner (CERN), Ingram Micro (IM), Healthways (HWAY)

NEWSPAPERS/WEBSITES

Johnson & Johnson (JNJ) found ‘not liable’ in all-metal hip implant suit, WSJ reports
Apple (AAPL) responds to GT Advanced’s (GTAT) sapphire business exit, said will continue evaluating GTAT’s progress on larger sapphire boule development, Re/code reports
RealPage (RP) draws interest from prospective buyers, FT reports
Glenview Capital acquires stake in Actavis (ACT), Bloomberg reports (AGN, SLXP, PFE)
Lockheed (LMT) comes to $4B agreement with Pentagon for more F-35s, Reuters says
Google (GOOG) won’t make additional investments in Himax Display (HIMX), DigiTimes reports

SYNDICATE
DryShips (DRYS) files automatic common stock shelf

via Zero Hedge http://ift.tt/1DHP2Sz Tyler Durden

And just like that, the Ebola panic is back front and center, because after one week of the west African pandemic gradually disappearing from front page coverage and dropping out of sight and out of mind, suddenly Ebola has struck at global ground zero. While the consequences are unpredictable at this point, and a “follow through” infection will only set the fear level back to orange, we applaud whichever central bank has been buying futures (and the USDJPY) because they clearly are betting that despite the first ever case of Ebola in New York, that this will not result in a surge in Ebola scare stories, which as we showed a few days ago, may well have been the primary catalyst for the market freakout in the past month.

For those who missed events last night, a doctor in New York City who recently returned from treating Ebola patients in Guinea has become the first person in New York City to test positive for the virus. Officials told a press conference at Bellevue hospital that they were monitoring 4 people with whom Spencer had contact. His fiancée and two friends had been quarantined, while the fourth person, a taxi driver, was not considered to be at risk

So with Ebola roaring back, many are wondering if the same fears that sent the market turmoiling in late September and early October will also return, most prominently global commodity deflation, slamming the EMs.  In this regard, commodity markets remain relatively tentative nonetheless, WTI crude futures trade in the red in a continuation of recent losses, with BofA seeing downside risks to WTI oil prices over the next three months. In terms of metal specific news, China’s copper production rose to a record high in September of 715,000 tonnes, an increase of 5% M/M and analysts at Goldman Sachs say that iron ore prices should remain supported in the short term, adding there is no obvious catalyst that would drive prices outside the recent range.

In other market news, Asian equities traded mostly higher, albeit off their best levels following notable weakness observed across US equity futures after confirmation that a patient who was being tested for Ebola in NYC tested positive for the disease. Nikkei 225 (+1%) shrugged off the negative sentiment seen across US futures with the index supported by yesterday’s movements in USD/JPY, positive Wall Street close and the WSJ report of potential further BoJ easing.

European equities opened in a sea of red as participants remained cautious regarding the overnight confirmation of the first Ebola case in NY which subsequently weighed on US equity futures. This sentiment proceeded to weigh on travel and leisure related names with consumer staples the underperforming sector in Europe, while a negative pre-market report for BASF (after they cut their 2015 EBITDA forecast) has also weighed on chemical names. The now traditional surge in the USDJPY at Europe open, as a result of central bank stabilization, managed to push US equity futures somewhat higher and well off their overnight lows.

The only thing on the US docket today is New Home Sales at 10:00 am.

Bulletin Headline Summary from Bloomberg and RanSquawk

• European equities trade in the red amid renewed concerns over Ebola after the first case in NY was confirmed overnight.
• GBP outperformed FX markets in European trade following the UK GDP release confirming the longest uninterrupted run of growth in three years, although GBP/USD has since pared these gains heading into the NA open.
• Looking ahead, today sees the release of US new home sales as well as a host of sovereign debt ratings including Germany, Italy, Spain, Russia and Austria all due for release.
• Treasuries gain, paring week’s decline, as equity-index futures fall after New York City doctor tests positive for Ebola, first case in most populous U.S. city.
• The doctor is being treated in an isolation unit at Bellevue Hospital Center in Manhattan; officials are monitoring those who were with him as he traveled on the subway, went bowling and had close contact with several people
• U.K. GDP rose 0.7% in 3Q vs 0.9% in 2Q, matching median estimate in Bloomberg survey; slowdown comes as BoE policy makers become more concerned about threats from the weakness in the euro area, Britain’s biggest trading partner
• Britain’s decades-long battle over the EU budget flared up again with Prime Minister Cameron resisting a call for the U.K. to pay more to finance the EU’s institutions in Brussels
• The U.K. Independence Party will test its ability to win over voters from across the political spectrum next week when it seeks to seize control of a police authority in the opposition Labour Party’s political heartland
• At noon in Frankfurt on Sunday, ECB plans to release results of its stress tests of currency bloc’s 130 biggest banks
• After two previous tests run by European Banking Authority didn’t reveal problems at lenders that later failed, the ECB has staked its reputation on getting the exercise right
• Denmark won’t back a proposal to split Europe’s biggest banks as the region’s first country to enforce bail-in rules questions the value of more regulation
• China’s new-home prices fell in all but one city monitored by the government last month as the easing of property curbs failed to stem a market downturn amid tight credit.
• Sovereign yields mostly lower. Asian stocks mixed, with Nikkei higher, Shanghai lower; European stock, U.S. equity- index futures fall. Brent crude falls 1.1%;  copper gains, gold little changed

US Event Calendar

• 10:00am: New Home Sales, Sept., est. 470k (prior 504k)
• New Home Sales m/m, Sept., est. -6.8% (prior 18%

ASIA

JGBs traded up 12 ticks at 146.47 underpinned by spill-over buying in USTs on the US Ebola reports. Prices were further supported by the BoJ offering to buy JPY 1.05trl of government debt incl. JPY 400bln in 5-10yr maturities. Asian equities traded mostly higher, albeit off their best levels following notable weakness observed across US equity futures after confirmation that a patient who was being tested for Ebola in NYC tested positive for the disease. Nikkei 225 (+1%) shrugged off the negative sentiment seen across US futures with the index supported by yesterday’s movements in USD/JPY, positive Wall Street close and the WSJ report of potential further BoJ easing.

FIXED INCOME & EQUITIES

European equities opened in a sea of red as participants remained cautious regarding the overnight confirmation of the first Ebola case in NY which subsequently weighed on US equity futures. This sentiment proceeded to weigh on travel and leisure related names with consumer staples the underperforming sector in Europe, while a negative pre-market report for BASF (after they cut their 2015 EBITDA forecast) has also weighed on chemical names.

Nonetheless, the periphery has provided some light at the end of the tunnel for European stocks with the FTSE MIB the notable outperformer following Italian press reporting that Banca Monte dei Paschi would not sell stock to fill any potential capital shortfall. However, an Italian Banks Association Official said it will not be simple to interpret results of ECB stress tests and they could lead to market volatility. Elsewhere in Europe, equities still remain in the red, which has subsequently supported fixed income products, albeit amid particularly light volumes (173k in the Bund).

In terms of major US stocks news, focus will be on Microsoft and Amazon after their after-market updates, with Microsoft seen higher after-market and Amazon lower. Attention will also turn towards Pfizer after they authorized a new USD 11bln share buyback program.

FX

In FX markets, GBP/USD was the notable outperformer following the UK advanced Q3 GDP release, which came in-line with expectations (Q/Q 0.7% vs. Exp. 0.7%) but provided some relief to those who had been looking for a lower reading, in line with the recent slew of weak UK data. The ONS also said the release marked the longest uninterrupted run of growth in three years, which subsequently saw GBP/USD break above yesterday’s highs of 1.6060 after tripping stops, although has since pared some of these gains. The RUB has continued to weaken in European trade ahead of the S&P’s rating announcement for the country and following RBS’ forecast yesterday that the sovereign would be cut to junk.

COMMODITIES

Commodity markets remain relatively tentative with all attention now turning towards how the US will react to the confirmation of the overnight news of the first case of Ebola in New York. Nonetheless, WTI crude futures trade in the red in a continuation of recent losses, with BofA seeing downside risks to WTI oil prices over the next three months. In terms of metal specific news, China’s copper production rose to a record high in September of 715,000 tonnes, an increase of 5% M/M and analysts at Goldman Sachs say that iron ore prices should remain supported in the short term, adding there is no obvious catalyst that would drive prices outside the recent range.

* * *

DB’s Jim Reid concludes the overnight recap

The gyrations of markets are much easier to fathom these days and after a week of a spectacular recovery in risk we thought it would be interesting to start with the latest flow numbers in HY which came out overnight. Overall it seem HY fund flows at the moment are following the (expected) future growth as US funds saw inflows whilst Western European funds suffered another week of outflows. Per EPFR’s data, the US HY mutual funds saw their strongest week since mid-August with $2bn of inflows. This came after outflows last week of $863m. The picture in Western European funds was far less positive, as they experienced $432m of outflows, the 4th week of negative numbers in row. It will be interesting to see whether yesterday’s PMI’s have any impact on these patterns.

Indeed trading over the last 24 hours has been dominated by the flash PMIs. The day began with the Japanese and Chinese manufacturing PMI’s both coming in ahead of expectation at 52.8 and 50.4 respectively. The bigger market moving numbers though came from the European and US releases later in the day. Whilst the European numbers began disappointingly with a much weaker than expected 47.3 French manufacturing PMI, the stronger than expected 51.8 German manufacturing equivalent managed to turn sentiment around. This was followed by the Eurozone manufacturing PMI which also came in ahead of expectation at 50.7 (49.9 expected). Later in the day the weaker than expected US manufacturing PMI read of 56.2 (vs 57 expected) did not harm sentiment.

At the end of today’s PDF we include our PMI vs equity table again which we’ve now updated for the new European and Asian reads. As we discussed yesterday we generally view this analysis as a guide rather than anything more serious. The main developments given yesterday’s data and market moves are in the European market where Germany has gone from looking relatively ‚fair value? to now being roughly 8% ‚undervalued? thanks to yesterday’s stronger PMI. On the flip side, France has gone from being about 2% ‚undervalued? to now being around 4% overvalued.

Markets reacted very positively to these PMI developments. In Europe the Stoxx 600 rallied +0.7% whilst the Euro Stoxx was up 1.2%. The credit reaction was slightly more muted as iTraxx Main and Xover both tightened by -1bp. US markets were also strong with the S&P500 ending the day up +1.3% whilst in credit CDX IG and HY tightened by -2bps and -10bps respectively. Govvies struggled in the risk-on environment – the Germany and US 10Y rose +3bps and +6bps respectively.

Also helping markets yesterday were relatively upbeat results with Caterpillar a big focus. DB’s Alan Ruskin had an interesting comment yesterday on their Q3 results. He wrote how, “for those looking at Caterpillar’s Q3 results and drawing positive things about the global economy, the actual detail showed a world distinctly lacking in balance, with N.America doing all the ‘heavy lifting’ while China’s and Latam’s comparisons are notably weak.? He pointed out a number of comments in Caterpillar’s Q3 Earnings Release including their statement that they, “expect the Chinese construction machine industry to remain challenged in the near future,” on the one hand whilst on the other they noted how, “sales decreases in Asia/Pacific and Latin America were about offset by increases in North America.” These comments chime in well with the IMF’s last global economic forecasts, which also stressed the role of the US in lifting global growth rates going forward. No pressure then.

Headlines this morning are dominated by the news that overnight a doctor in New York has tested positive for Ebola, the first diagnosed case in the city. S&P futures are trading -0.5% lower as we go to print on the back of this and Asian markets are generally mixed with bourses in Hong Kong, China and Korea moving -0.3%, +0.2% and -0.5% respectively whilst the Nikkei (up +0.8%) is the standout performer on the back of a 0.7% weakening of USDJPY yesterday during European and US trading times . Sentiment hasn’t been helped as China reported disappointing house price data as average prices declined 1.0% relative to August marking a fifth consecutive monthly drop. Meanwhile in Korea, Q3 GDP came in line versus expectations at 0.9% QoQ.

Looking to the day ahead, in Europe we have the November GfK consumer confidence read (expected in at 8), UK advanced Q3 GDP (expected in at +0.7% QoQ) and Italian September wage growth data. Over in the US we have September new home sales (expected in at -6.8% MoM).

Importantly, banks will find out the results of the AQR tests today with the results made public at noon on Sunday. Earlier in the week we had reports from Spanish news source Efe that eleven banks across five nations had supposedly failed the tests including Erste Bank, Banco Popolare and Dexia. However this has been quickly downplayed with a Reuters article quoting an Erste Bank spokesman as saying “Out of the supervisory dialogue we have no indication we won’t pass”. The article also quotes positive comments from senior Cypriot and Spanish officials over confidence that their respective domestic banks should fare well through the tests whilst a further article mentions that the German Bank most at risk of failing, HSH Nordbank, is set to meet the requirements. This will dominate the headlines before Monday morning but don’t be surprised to see more leaks today ahead of this.

via Zero Hedge http://ift.tt/ZLotwz Tyler Durden

Submitted by Brandon Smith of Alt-Market.com,

One of the most dangerous philosophical contentions even amongst liberty movement activists is the conundrum of government force and prevention during times of imminent pandemic. All of us at one time or another have had this debate. If a legitimate viral threat existed and threatened to infect and kill millions of Americans, is it then acceptable for the government to step in, remove civil liberties, enforce quarantines, and stop people from spreading the disease? After all, during a viral event, the decisions of each individual can truly have a positive or negative effect on the rest of society, right? One out of control (or “lone wolf”) citizen/terrorist could reignite a biological firestorm, so, should we not turn to government and forgo certain freedoms in order to achieve the greater good for the greater number?

If the government in question was a proven and honorable institution, then I would say pro-Medical Martial Law arguments might have a leg to stand on. However, this is not the case. In my view, medical martial law is absolutely unacceptable under ANY circumstances, including Ebola, in light of the fact that our current government will be the predominant cause of viral outbreak. That is to say, you DO NOT turn to the government for help when the government is the cause of the problem.

The recent rise of global Ebola is slowly bringing the issue of medical martial law to the forefront of our culture. Charles Krauthammer at The Washington Post recently argued in favor of possible restrictions on individual and Constitutional liberties in the face of a viral pandemic threat.

The CDC now argues that in the case of people who may be potential carriers, or even in the case of people who refuse to undergo screenings, it has the legal authority to dissolve all constitutional protections and essentially imprison (quarantine) an American citizen for as long as they see fit to do so.

The Obama Administration is now using militant terminology in reference to Ebola response, including the formation of “Ebola SWAT Teams” for quick reaction to potential outbreak areas.

In typical socialist fashion, the nurses union 'National Nurses United' has called for Barack Obama to use “executive authority” to take control of all Ebola response protocols in hospitals across the country. Yet another perpetuation of the myth that more government power is the solution.

And finally, the Department of Defense has been tasked to create a military controlled “quick-strike team” to deal with Ebola within U.S. borders. This team will be under the command of none other than Northcom, apparently trampling the Posse Comitatus Act and setting the stage for the rationalized use of military personnel against U.S. citizens under the guise of pandemic prevention.

It should be clear to anyone with half a brain that medical martial law is being quietly prepared, and that the threat of such measures is not a paranoid conspiracy, but a very real possibility. It should also be noted that such provisions are not only the products of the Obama Administration. It was George W. Bush who first created laws intersecting with the World Health Organization's pandemic preparedness planning. These laws include the “overrule of existing legislation or (individual) human rights” in order to quell a viral outbreak, and were originally drafted around the potential of an influenza crisis.

It is this kind of executive overreach that has set precedence for states such as Connecticut to announce a tentative state of emergency with medical martial law restrictions.

I discussed in great detail why Ebola works in favor of establishment elites in my article 'An Ebola Outbreak Would Be Advantageous For Globalists'.

Understand that bureaucrats will come to you with promises of offering a helping hand, hoping that you are afraid enough to accept, but their intentions will not be compassionate. Rather, their intent will be to assert as much dominance over the public as possible during the chaos, and to erase any conception the people may have had in the past that they have inalienable rights.

But going beyond the hidden motives of tyrants, I think it is important to point out that the Center for Disease Control and the federal government in general has already lost all credibility in dealing with Ebola, and therefore, it has lost any authority it may have had in administrating a future response.

Ebola has been officially known to the CDC for over thirty years. Why has the CDC refused for three decades to produce proper care guidelines for hospitals? Medical staff in the U.S. didn't even receive guidelines when the outbreak in Western Africa was obviously progressing out of control.

Why did the CDC leave Thomas Duncan, the very first U.S. Ebola case, in the hands of the Texas Health Presbyterian Hospital, without proper procedures in place to prevent further infection, and without a CDC team present? The CDC has an annual budget of nearly $7 billion. Where is all of this money going if not to stamp out such threats as Ebola?

The argument presented by the White House, the CDC, and even the World Bank, has been that stopping direct or indirect travel from nations with an Ebola outbreak would be “impractical”, and that such travel bans would somehow “make matters worse”. They have yet to produce a logical explanation as to how this makes sense, but what if we did not need to institute a travel ban? The CDC, with it's massive budget, could easily establish quarantine measures in infected countries. Anyone wishing to travel outside of these nations would be welcome to do so, as long as they voluntarily participate in quarantine procedures for a set number of days. No quarantine, no plane ticket. Where has the CDC response been in Western Africa?

Why not use minor and measured travel restriction in Africa today, instead of using unprecedented martial law in America tomorrow? It makes no sense, unless, of course, the plan is to allow Ebola to spread…

Why has the White House nominated Ron Klain, a man who knows absolutely NOTHING about Ebola or medical emergency strategies, as the new “Ebola Czar”?

Why has all discussion on Ebola prevention revolved around government measures rather than community measures?  Why has all talk centered on what the government will do AFTER an outbreak occurs, rather than on what can be done to prevent an outbreak in the first place?

The reality is that the federal government does not have any treatments for Ebola that are outside of the knowledge and capabilities of the average medically trained citizen. Meaning, the government and the CDC are NOT needed for a community to handle an Ebola outbreak, if that community is given proper guidelines and strategies in advance. Treatment for Ebola, at least in first world nations, consists primarily of regimented transfusions. These transfusions are a mixture of isotonic saline, electrolytes, and plasma, designed to keep the body supported until it's immune system can build up a proper defense to the virus. Natural and homeopathic methods can also boost immune system functions making the body resistant to the virus before it is ever contracted. The most effective of all treatments appears to be the transfusion of blood from a recovering patient with anti-bodies into a newly sick patient. This is likely the reason for the quick recovery of infected doctors like Kent Brantly.

The CDC would never be able to coherently organize a large scale program of transfusion initiatives, even if it wanted to. Most hospitals around the country have no isolation wards able to handle even a minor Ebola outbreak. The hospitals that do have facilities are limited to less than a dozen beds. According to the medical workers I have spoken with, most hospitals require a minimum of around 50 health professionals to deal with a single Ebola patient.  In the event of an outbreak larger than a few people per state, the CDC and local hospitals are simply not equipped to react to the problem.  Blood transfusions from recovering donors would be few and far between, unless organized by local citizens working under their own directives.

Ironically, it was the Bush Administration's own report in 2006 on the possibility of bird flu pandemic that admitted the government is completely unequipped to handle an outbreak of moderate size. The report stated that “all sources of external aid may be compromised during a pandemic,” and that "local communities will have to address the medical and non-medical effects of the pandemic with available resources." Little has changed in the federal government's pandemic preparations since the report was written.

This leaves individual communities to either prepare for the worst, or die off while waiting for the government to save them. Self isolation and self treatment are the only practical options.

The greatest danger to American citizens is, in fact, not the Ebola virus, but government reactions to the Ebola virus. Already, several medical outfits around the world are suddenly interested in producing an Ebola vaccination when no one seemed very interested before. This might sound like good news, until you learn the terrible history of modern vaccinations.

Pharmaceutical company Merck was caught red handed faking vaccine efficacy data. Merck's Gardisil was found to contain DNA fragments of human papillomavirus.

Glaxosmithkline, a major vaccine producer, has been caught repeatedly attempting to bribe doctors and health professionals into promoting their products or outright lying about their effectiveness. Glaxo was caught producing rotavirus vaccinations tainted with a swine virus in 2010. Glaxo has been caught producing vaccines tainted with bacteria and endotoxins.

It is important to point out that Glaxo is also spearheading an Ebola vaccine initiative.

U.S. company Baxter produced a flu vaccination in Austria tainted with both avian flu and swine flu. The mixture just happened to be randomly tested on a group of ferrets by a lab in the Czech Republic. The test animals died. The exposure of this “mix up” was quietly swept under the rug by Baxter and the mainstream media, but reports indicate that if the vaccine had been used on the general population, a terrible pandemic would have erupted.

Beyond the fact that vaccinations have a tendency to cripple our natural immune system and infect patients with the very disease they are meant to prevent, none of these existing companies can be trusted to produce a vaccine that is safe even by traditional pharmaceutical standards (which are very low). If the CDC and the federal government trigger a medical martial law scenario, they will most likely include forced vaccination of the population to maintain “herd immunity”. The bottom line? The use of such vaccines will be a death sentence for many, a death more certain than the contraction of Ebola. In my opinion, Ebola vaccination should be avoided at all costs by the American populace.

I can think of no rationale for government involvement in the treatment of an Ebola outbreak. If it is not pure incompetence on their part that has exacerbated the threat, then even worse, it is a deliberate program of genocide. In either case, no military or CDC “strike teams” should be allowed free reign in our neighborhoods, towns, counties, or states. DHS and FEMA Community Emergency Response Teams (CERT) are also a no go, given FEMA's track record of dismal disaster response. They CANNOT be allowed to take control of our communities.

The only way for Americans to survive such an event is to cut out government entirely and establish their own medical strategies, as organizations like the Oath Keepers Community Preparedness Teams (CPT) are doing.

If someone wants to voluntarily go to the CDC or FEMA for assistance, then they should be allowed to take that risk. However, medical martial law over all of us in the name of the “greater good” should not be tolerated. The government has proven beyond a doubt that it is not qualified to handle a viral crisis scenario, let alone determine what the “greater good” actually is. I can't speak for the whole of the Liberty Movement, but as for myself, if a group of hazmat suited thugs decides to chase me down with a syringe, I am relatively certain none of them will live through the encounter.

Will I be accused of aiding the spread of Ebola because of my non-compliance? Of course. Do I care? Not so much. Each individual American will have to make their own decision on this matter in due course. Is it better to conform and risk annihilation at the hands of an ignorant and/or corrupt government, or, to fight back and be labeled a bio-terrorist? With the clear lack of tangible government preventions for outbreak in the U.S., you'll probably get your chance to find out soon enough.

via Zero Hedge http://ift.tt/1wic3uF Tyler Durden