BETWEEN THE HEDGES: Today's Headlines

Monday, November 10, 2014

Posted by Gary .....at 2:50 PM

Bloomberg:

Ukraine Rebel Meets Russia Senate as EU Warns on Conflict. A Ukrainian separatist leader met with senators in Moscow after holding elections condemned by the U.S. and the European Union, which warned it could increase sanctions on Russia if the conflict intensifies. Andrei Purgin, deputy premier of the self-proclaimed Donetsk People’s Republic, advocated the use of rubles in some transactions in eastern Ukraine as he visited the Federation Council in Russia’s upper house of parliament today. Ukraine accused Russia of stepping up efforts to reinforce rebels with arms and supplies, while EU foreign affairs chief Federica Mogherini told German lawmakers that Russia risks new sanctions if it escalates the military conflict.

Russia Says Sanctions Hurting as Bank Moves to Defend Ruble. Russia’s financial guardians made their broadest acknowledgment yet that sanctions are sinking the economy, as the central bank moved to protect the ruble after the currency’s worst week in more than a decade. The Bank of Russia said in Moscow today that gross domestic product will probably stagnate in 2015, highlighting the damage wrought by a slump in oil prices and international measures linked to the conflict in Ukraine. Governor Elvira Nabiullina said the ruble’s slide has gone too far and pledged to limit local-currency funding to ward off speculators.

European Stocks Climb Amid Earnings; Carlsberg Advances. European stocks advanced, after posting a weekly decline, as investors weighed corporate results from companies including Carlsberg (CARLB) A/S and Lonmin (LMI) Plc. Carlsberg added 3.1 percent after Russia’s biggest brewer said its markets share improved in the country as it reported better-than-expected third-quarter profit. Lonmin climbed to its highest price in seven weeks after saying it didn’t see the need to raise funds this financial year. Nutreco NV jumped 14 percent after a Dutch investment company raised its bid for the animal-feed maker by 11 percent, fending off a rival approach by Cargill Inc. The Stoxx Europe 600 Index rose 0.7 percent to 337.71 at the close, extending gains in the last 90 minutes of trading.

Crude Retreats on Concern OPEC in No Hurry to Cut Output. West Texas Intermediate crude and Brent slipped on speculation that the Organization of Petroleum Exporting Countries is in no hurry to cut output to reverse a slide in prices. Crude has slumped into a bear market this year amid a global glut. The largest OPEC producers have responded by cutting prices, resisting calls to reduce supply as they compete with the highest U.S. production in three decades. Kuwait’s oil minister said he doesn’t expect OPEC to trim output at the group’s next meeting in Vienna on Nov. 27.

Predictors of ’29 Crash See 65% Chance of 2015 Recession. In 1929, a businessman and economist by the name of Jerome Levy didn’t like what he saw in his analysis of corporate profits. He sold his stocks before the October crash. Almost eight decades later, the consultancy company that bears his name declared “the next recession will be caused by the deflating housing bubble.” By February 2007, it predicted problems in the subprime-mortgage market would spread “to virtually all financial markets.” In October 2007, it saw imminent recession -- the slump began two months later. The Jerome Levy Forecasting Center, based in Mount Kisco, New York, and run by Jerome’s grandson David, is again more worried than its peers. Its half-dozen analysts attach a 65 percent probability of a worldwide recession forcing a contraction in the U.S. by the end of next year. Why the gloom? Levy argues the U.S. and many advanced economies still have balance-sheet excesses exposing them to renewed financial crisis. There is limited room for policy makers to reverse any slump, and low inflation risks tipping into deflation in many parts of the world.

Iron Ore Seen Extending Slump by ANZ as Global Glut Doubles. Iron ore will extend declines next year as a global glut more than doubles, according to Australia & New Zealand Banking Group Ltd., which reduced its price forecasts through 2017. The raw material will average $78 a metric ton in 2015, from an earlier forecast of $101, Head of Commodity Research Mark Pervan wrote in a report dated today. The 2016 forecast was cut to $85 from $95 and the 2017 outlook was reduced to $89 from $94, Pervan wrote. While prices won’t drop below $70, they are unlikely to recover to more than $100 again, he said. Iron ore plunged 44 percent this year to a five-year low as rising supplies from BHP Billiton Ltd. (BHP) and Rio Tinto Group in Australia created a glut as China’s economy slowed. The increase in low-cost global production would trigger permanent mine closures in China, creating a lower industry floor price, according to Pervan, who said he’d just returned from a tour of mills and traders in the world’s largest steelmaker. “The party’s over for iron ore,” Pervan wrote in the report, which forecast a global surplus next year of 56 million tons, up from 20 million tons this year. “Demand conditions are more challenging than we thought.”

Wall Street Journal:

Some BOJ Board Members Question ‘Easy Money’ Stance. Skepticism Arises Over Kuroda’s Asserting That Printing Money Will Raise Inflation Expectations. The rare split vote that decided the Bank of Japan’s recent move to boost asset purchases shows that some policy board members are beginning to question Gov. Haruhiko Kuroda’s belief that printing money will raise inflation expectations.