Friday, April 11, 2014

Today's Headlines

  • Ukraine Premier Bids to Calm East as Putin Presses Europe. Ukraine’s premier sought to ease tensions among Russian speakers in the east demanding greater autonomy as President Vladimir Putin appealed to Europe to provide aid to the cash-strapped nation to ensure gas supplies. Arseniy Yatsenyuk told reporters today in the city of Donetsk, where pro-Russian protesters have seized the local-government headquarters, that his administration in Kiev wants to give greater powers to the regions and to resolve the crisis that’s gripping the country as soon as possible. Having annexed Crimea and deployed thousands of troops along the border, Putin has been ratcheting up pressure on Ukraine, threatening yesterday to halt gas shipments. Ukraine is dominating discussions at the spring meetings of the International Monetary Fund and World Bank, which started today.
  • Toxic Debt Condemned in Crisis Heralded as Europe’s Savior. Asset-backed securities were denounced for causing the financial crisis. Now the debt is being seen as a savior for Europe’s economy. The European Central Bank signaled this week that plans to ward off deflation may center on asset-backed securities, while policy makers are promoting an expansion of the market. The efforts come as sales of the bonds fell to $102.5 billion in Europe last year from $449 billion in 2007 and less than the $174 billion of issuance in the U.S., according to JPMorgan Chase & Co. 
  • China Normal Growth Needs Only Minor Policy Changes: Zhou. China’s central bank chief said the nation needs only minor policy adjustments when growth is within a normal range, adding to signals that the government will avoid taking broader action to counter a slowdown. The State Council has a target for about 7.5 percent growth and has studied the range, and “we don’t have to roll out significant policies” when growth is in a normal range, People’s Bank of China Governor Zhou Xiaochuan said today in Boao, China.
  • China Bond Sale Fails First Time Since June on Rate Outlook. China’s Ministry of Finance failed to sell all of the bonds offered at an auction today for the first time in 10 months amid speculation short-term interest rates will climb as corporate tax payments tie up funds. The ministry sold 20.7 billion yuan ($3.3 billion) of one-year debt today, less than the planned issuance of 28 billion yuan, according to a statement on its website. The average yield of 3.63 percent compared with the median estimate of 3.4 percent in a Bloomberg News survey yesterday, when the yield on similar-maturity existing notes was 3.32 percent. 
  • China’s H Shares Decline Most in Two Months as Tencent Retreats. Chinese stocks dropped, sending mainland companies in Hong Kong to the biggest decline in two months, as falling producer prices signaled weakening economic growth and technology shares sank on valuation concerns. Anhui Conch Cement Co. (600585), China’s biggest cement maker, slid the most since 2011 in Hong Kong. The ChiNext index, which has a 32 percent weighting in smaller technology stocks, lost 1.3 percent after U.S. peers tumbled yesterday on concern valuations are too high. Tencent Holdings Ltd. (700), Asia’s biggest Internet company, dropped 6.8 percent. The Hang Seng China Enterprises Index (HSCEI) slid 1.9 percent to 10,228.42 at the close.
  • G-20 Deeply Disappointed U.S. Preventing IMF-Resources Boost. Global finance chiefs pressed the U.S. to allow an increase in the financial resources of the International Monetary Fund as they argued the Ukraine crisis underscores the lender’s importance. “We are deeply disappointed with the continued delay in progressing the IMF quota and governance reforms,” Group of 20 finance ministers and central bankers said in a statement released after talks in Washington today. “We urge the U.S. to ratify these reforms at the earliest opportunity.”
  • Ebola Outbreak Empties Hotels as West Africa Borders Closed. West Africa is fighting to contain the spread of the disease that has claimed the lives of 111 people in Guinea and Liberia, the worst outbreak in seven years, and kills as many as nine out of 10 people who contract it. There’s no cure or vaccine for the hemorrhagic fever that will probably continue to spread in the region for a few more months, according to the World Health Organization. 
  • European Stocks Drop as Stoxx 600 Posts Weekly Slide. European stocks fell for a second day, with the benchmark index posting its biggest weekly drop in almost a month, as investors speculated that equity gains have overshot the earnings outlook. ARM Holdings Plc lost 4.5 percent as information-technology shares caught up with a slump in their U.S. peers yesterday. Thales SA declined the most since July 2012 after JPMorgan Chase & Co. lowered its recommendation. Mediaset Espana Comunicacion SA tumbled to the lowest price since November after its second-biggest shareholder sold a part of its stake. Salzgitter AG rose 1.2 percent after Citigroup Inc. advised investors to buy the stock. The Stoxx Europe 600 Index fell 1.4 percent to 328.77 at the close London.
  • Nasdaq Swings Hit Highest Since 2011 as VIX Stays Calm. The selloff that is sending shares in the Nasdaq 100 Index to the wildest swings since Europe’s debt crisis is failing to stir equal panic in option prices. That bothers Bruce Bittles. “They’ll have to show a lot of pessimism before this decline is over,” said Bittles, chief investment strategist at Milwaukee-based RW Baird & Co., which oversees $110 billion. “It certainly looks like this correction could carry on.” Losses of 5 percent or more from Facebook Inc. to Tesla Motors Inc. and Netflix Inc. drove the Nasdaq 100 down 3.1 percent yesterday, the worst retreat in two years. During April, the gauge has moved 1.5 percent a day on average, the most since November 2011. At the same time, prices for options are below levels from February and October. Concern earnings growth is slowing, valuations are stretched and that speculators got too bullish has erased $700 billion from the value of American equities in the past week. Losses that began in shares with the biggest gains have spread to the broader market, where the Standard & Poor’s 500 Index (SPX) reached a record on April 2. 
  • Computer Strategies Often Rely on Unsound Math, Researchers Say. Investment strategies that use computer models to decide when to buy and sell securities based on historical market trends are usually unsupported scientifically because of back-testing flaws, according to the 126-year-old American Mathematical Society. “We are not implying that those technical analysts, quantitative researchers or fund managers are ‘snake oil salesmen,’” David H. Bailey, a research fellow at the University of California, Davis, and three co-authors said in a paper in the May issue of the society’s magazine Notices. “Hedge-fund managers are often unaware that most back-tests presented to them by researchers and analysts may be useless.”
Wall Street Journal: 
  • It's 'hostile' for businesses today: Langone. (video) Excessive regulation has created a "hostile" environment for business owners in the United States, curbing liquidity and putting a drag on the economy, billionaire investment banker and business magnate Ken Langone said Friday on CNBC. "We are in a period of intense and unreasonable regulation and we're seeing the fruits of that environment," said Langone, co-founder of Home Depot, on "Squawk on the Street." "We have to accept the fact that what's going on today doesn't come without cost and the cost is economic growth."
Business Insider:
Financial Times:
  • Tiger Cub funds hit in tech-led stock slide. Will hedge fund history repeat itself, or will it rhyme? In the late 1990s, as technology shares surged ever higher, one of the world’s most renowned hedge fund managers was distraught. Now, as many investors ponder whether markets are in the grip of a second technology bubble, the Cubs, it seems, are determined not to make the same mistake that led to their mentor’s demise. As investors debate whether markets are in the grip of a second technology bubble Tiger Cub hedge funds have piled in to loftily valued US technology shares such as Facebook, Amazon and Tesla Motors. And, last month, as many of these names that had performed so strongly over last year began to fall, these hedge funds suffered heavy losses.
Financial Express: 
  • Industrial production in India dips 1.9 pct in February, enters negative zone. After feeble signs of a recovery, industrial production once again slipped into negative territory and contracted 1.9 per cent in February due to poor performance in manufacturing, especially capital goods. Factory output as measured by the index of industrial production (IIP) showed a decline of 0.1 per cent during the 11-month period from April to February, compared with growth of 0.9 per cent in the corresponding period a year earlier. Manufacturing, which constitutes over 75 per cent of the index, declined 3.7 per cent in February as against growth of 2.1 per cent in the same month a year ago. Production of capital goods, a barometer of demand, shrank 17.4 per cent, in sharp contrast to an expansion of 9.1 per cent in the same month in 2012.
India's statistics office is likely to say in two weeks that growth this year will slump further to an 11-year low, undermining the government's optimism that it would at least be flat at 5% on the back of a recovery in the second half.

The advanced estimate for FY14 is set to come in below that level, said an official who didn't want to be named.

The economy expanded 4.6% in the first half and would need to rise 5.4% in the second for growth to come in at 5%, which doesn't lo ..

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