Monday, September 22, 2014

Today's Headlines

Bloomberg:
  • Obama’s Words on Islamic Militants Come Back to Haunt Him. For criticism of President Barack Obama’s offensive against Islamic State, look no farther than the president’s own words. In January, he dismissed the Islamic militants as “a jayvee team,” amateurs who posed little threat. In August, he derided the Syrian rebels who now will be key allies as “former doctors, farmers, pharmacists” with less capacity to fight than needed.
  • World Bank Says Ebola’s Spread May Have Catastrophic Cost. The World Bank warned that the economic costs of the Ebola outbreak in West Africa will escalate to “catastrophic” proportions if the virus spreads, while Ghanaian President John Dramani Mahama criticized the international response to the disease.
  • Weak Yen Puts Japan at Risk, Says Ex-BOJ Deputy Iwata. Japan is in danger of falling into a recession as the yen’s decline reduces the purchasing power of households and squeezes corporate profits, said a former deputy governor of the Bank of Japan. “The current yen weakness is slightly excessive,” Kazumasa Iwata, the deputy from 2003-2008, said in an interview on Sept. 19 in Tokyo. “Abenomics entails the risk of ‘beggar thyself’ consequences and signs are already emerging.” 
  • Most Influential 50 Are the Bankers, Investors Who Move Markets.
  • Tesco Starts Accounting Probe of Inflated Profit Forecast. (video) Tesco Plc started a probe of accounting practices and suspended four executives, including its U.K. chief, after overstating its first-half profit estimate. The shares plunged as much as 12 percent to their lowest in more than a decade after the biggest British supermarket chain said that some income was booked before being earned and costs were recognized later than incurred.
  • Brazil Growth Slowing as Lula China Policy Sows Doubts. In 2004, Brazil’s then-President Luiz Inacio Lula da Silva and 400 executives went on a six-day trip to China. The mission was simple: Encourage companies to strengthen ties with the Asian nation to bolster growth at home. A decade later, ties between Brazil and China have never been stronger. Growth at home is stagnant
  • Emerging Stocks Fall to 15-Week Low on China as Ibovespa Drops. Emerging-market stocks fell to the lowest in 15 weeks after China’s finance minister damped speculation that the government will boost stimulus in the world’s second-largest economy. The MSCI Emerging Markets Index dropped 1.3 percent to 1,040.01 at 11:04 a.m. in New York. PetroChina Co. (857) led a gauge of Hong Kong-traded Chinese shares to a two-month low. OAO Alrosa, Russia’s largest diamond producer, decreased 3 percent after its chief executive officer stepped down. Iron-ore producer Vale SA, whose top export market is China, fell to the lowest since December 2008 as Brazil’s Ibovespa declined the most among the world’s equity benchmarks.
  • European Stocks Fall Amid China Concern as Tesco Slides. European stocks fell the most in more than three weeks as China’s finance minister damped speculation his government will boost economic stimulus. Commodities producers dropped the most among 19 industry groups. Tesco Plc slumped to its lowest price since 2003 as it started an investigation into its accounting practices after overstating its guidance for first-half earnings by about 250 million pounds ($408 million). Cermaq ASA jumped the most since May 2013 after Mitsubishi Corp. offered to buy it. Merck KGaA rose 4.4 percent after agreeing to purchase Sigma-Aldrich Corp. The Stoxx Europe 600 Index declined 0.5 percent to 346.69 at the close of trading in London after earlier paring losses to 0.2 percent.
  • Brent Declines on Concern China Growth Slowing; WTI Drops. Brent for November settlement slipped $1.83, or 1.9 percent, to $96.56 a barrel on the London-based ICE Futures Europe exchange at 12:02 p.m. New York time. The volume of all futures traded was about 26 percent below the 100-day average for the time of day.
  • Subprime Lending. Not that many years ago, subprime loans almost brought down the global economy. The financial world collectively vowed to never again go overboard advancing money to people considered unlikely to pay it back. But in the U.S., some forms of subprime are on the rise again, primarily in auto loans and also in small-business lending.
  • Dudley Says Financial Stability Definitely on Fed’s Radar. The Federal Reserve is on the lookout for signs of asset-price bubbles, and financial stability is a necessary condition for effective monetary policy, said William C. Dudley, president of the Federal Reserve Bank of New York. “I think we do need to try to identify asset bubbles in real time,” Dudley said today at the Bloomberg Markets Most Influential Summit in New York. “You can’t have an effective monetary policy if you have financial instability.”
  • Tiger’s Robertson Says Bond Bubble to End in ’Very Bad Way’. Julian Robertson, the billionaire founder of Tiger Management LLC, said there’s a bubble in bonds that will end “in a very bad way.” “Bonds are at ridiculous levels,” Robertson said today at the Bloomberg Markets Most Influential Summit in New York. “It’s a worldwide phenomenon that governments are buying bonds to keep their countries moving along economically.”
  • Insider Buying Dries Up Defying $275 Billion of Buybacks. American companies have seldom spent more money than they are now buying back shares. The same can’t be said for their executives. A total of 7,181 insiders bought their own stock this year through Sept. 12 and 23,323 sold shares, according to data compiled by Bloomberg and Washington Service. The ratio of buys to sells is near the lowest since 2000. At the same time, corporate repurchases reached $275 billion in the first half of the year, the second busiest since S&P Dow Jones Indices began tracking the data in 1998
  • Small-Cap Selloff Leaves Fewer Stocks Shouldering Rally. The biggest tumble for smaller companies in seven weeks underscored weakening breadth in the American bull market two weeks after its 5 1/2-year birthday. Shares tracked by the Russell 2000 Index (RTY) slid 1.5 percent, bringing the decline since Sept. 18 to 2.6 percent, the largest retreat since Aug. 1. While the Russell 3000 Index touched an intraday record at the end of last week, fewer than 55 percent of its components traded above their 200-day moving average, a combination that hasn’t happened since the peak of the dot-com bubble, according to MKM Partners LLC.
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