Thursday, September 03, 2015

Today's Headlines

Posted by Gary .....at 2:17 PM
Bloomberg: 
  • Draghi Unveils Revamped QE Program as ECB Downgrades Outlook. (video) Mario Draghi unveiled a revamp of quantitative easing and signaled officials might expand stimulus if the rout in financial markets continues to weigh on growth and inflation. The European Central Bank president said in Frankfurt on Thursday that the Governing Council raised the share of bonds the ECB can buy to 33 percent of each issue from 25 percent, and that policy makers are ready to make more adjustments to ensure the full implementation of the 1.1 trillion-euro ($1.2 trillion) program. A weaker global outlook prompted an across-the-board reduction of the institution’s growth and consumer-price forecasts through 2017. The euro slid to a two-week low.
  • ECB Bond-Buying Tweak Is Less Than Meets the Eye, ABN Amro Says. European Central Bank President Mario Draghi sparked a rally in euro-area government bonds Thursday when the ECB increased a cap on the amount of securities it’s able to buy under its stimulus program to 33 percent from 25 percent. To ABN Amro Bank NV, this is no game changer. That’s because the increase is only likely to be applied to bonds that were issued before 2013 as they had no collective action clauses, according to Kim Liu, a fixed-income strategist at ABN Amro in Amsterdam. 
  • Foreigners Flee Japan Stocks at Fastest Pace Since at Least 2004. Global investors are pulling money out of Japan’s equity market at the fastest pace since at least 2004, according to Mizuho Securities Co. Foreigners last week sold a net 1.85 trillion yen ($15.4 billion) of Japanese stocks and equity index futures, the biggest combined outflow since Mizuho began tracking the data more than a decade ago, said Yutaka Miura, a Tokyo-based senior technical analyst at the brokerage. Investors are fleeing amid concern about China’s economic outlook and the prospect of higher interest rates in the U.S., he said.
  • Falling Currencies Raise Debt-Service Fears Across Africa. In the past decade, countries across Africa, encouraged by surging commodity prices and a global appetite for high-risk debt, sold dollar bonds to finance everything from roads to railways to tuna-fishing fleets. Now commodity prices have halved and African currencies are tanking, making the bond payments tougher and raising the possibility of a debt crisis on the world’s poorest continent. The risk of such an outcome is denting the outlook for countries from Ghana to Mozambique. Africa in recent years boasted most of the world’s fastest-growing economies and lured investors hungry for assets yielding more than those in the rich world.
  • Global Investment Banks May See Revenue Drop, JPMorgan Says. Global investment banks may see revenue drop 19 percent in the third quarter, lowering earnings per shares across the industry, as a surge in volatility caused by turmoil in China recedes, according to analysts at JPMorgan Chase & Co. “Recent strong turnover, especially in equities, could decline materially once markets settle -- not just in Asia but globally,” analysts led by Kian Abouhossein wrote in a report on Thursday. “Although volatility is good for investment banks,” it “could impact deal completion in the third quarter and potentially the fourth quarter,” they wrote, when cutting their estimates for earnings-per-share by an average of 2 percent to 3 percent through 2017. 
  • European Stocks Accelerate Gains as Draghi Rides to the Rescue. The Stoxx Europe 600 Index climbed as much as 2.9 percent, before closing 2.4 percent higher. The gauge halted a rout yesterday, after posting the worst monthly performance in four years and tumbling further earlier this week amid concern over a slowdown in China.
  • Aramco Cuts October Crudes to U.S. as Refinery Demand Falls. Saudi Arabia, the world’s largest crude exporter, cut pricing for all October oil sales to the U.S., widening the discount on its Medium grade for the first time in eight months, with refining demand plunging after the end of the summer driving season. State-owned Saudi Arabian Oil Co. cut its official selling price for October. Arab Medium sales to U.S. buyers by 50 cents a barrel, to 55 cents less than the regional benchmark, the company said in an e-mailed statement Thursday. Light crude will sell at a premium of 95 cents a barrel to the regional benchmark, 60 cents below the differential in September. Crude demand at U.S. plants fell below 2014 levels last week for the first time since March. Oil inventories rose by the most in four months as wells are still producing near the highest level in 40 years. The profit margin for making gasoline and diesel along the Gulf Coast, home to more than half of U.S. refining capacity, slid below $10 a barrel for the first time since April as fuel demand wanes. “Refining margins are coming down,” Olivier Jakob, managing director at consultants Petromatrix GmbH in Zug, Switzerland, said by telephone. “They’ve gone from very strong to just strong.” 
  • Crash Could Cost U.S.-Canadian Cities $170 Billion, Lloyd’s Says. A stock-market crash could erase as much as $170.3 billion from major cities’ gross domestic product in the U.S. and Canada and is the biggest threat to their economies, Lloyd’s of London said. The losses, which represent about 2 percent of combined GDP for the 35 cities studied, surpassed estimates for the impact of natural disasters such as floods and earthquakes as well as terrorist attacks, the London-based insurance market said Thursday in a report.
  • Consumer Comfort in U.S. Eases as Attitudes on Economy Falter. Consumer confidence in the U.S. eased last week, with Americans becoming more pessimistic about the state of the economy as global financial markets turned south. The Bloomberg Consumer Comfort index fell to 41.4 in the week ended Aug. 30 from 42 the previous period. About half of the survey interviews were collected during the recent stock-market sell-off, said Gary Langer, president of Langer Research Associates, which compiles the data for Bloomberg. The measure of Americans’ views of the economy fell to 32.7 from 34.6, the biggest drop since late February. The index tracking the buying climate, which indicates whether consumers think now is a good time to purchase goods and services, declined to 36.9 from 37.2. The personal finances gauge was little changed at 54.6 from 54.3.
  • Almost Half of Homes in New York and D.C. Are Now Losing Value. A new home-price index is a warning sign for some property markets. Almost half of single-family houses in the New York and Washington metropolitan areas are losing value, a sign that buyers' tolerance for high prices in many large U.S. cities may be reaching a limit.The values of 45 percent of houses in both the Washington and New York areas slumped by at least 2 percent in June from a year earlier, according to a new index created by Allan Weiss, co-founder of the Case-Shiller home price indexes. 
  • Joy Global(JOY) Plummets After Cutting 2015 Forecasts on Miner Demand.
    Joy Global Inc., the world’s biggest manufacturer of underground mining equipment, fell the most in six years after cutting its forecast for 2015 earnings and revenue amid a global commodity downturn. Joy tumbled 16 percent to $18.64 at 10:23 a.m., after earlier dropping as much as 20 percent, the most intraday since November 2008. It was the biggest decline today in the Standard & Poor’s 500 Index. Joy’s shares have plunged 60 percent this year as struggling miners buy less machinery.

Wall Street Journal: 
CNBC: 
  • Stop blaming China—the problem is bigger than that. Everyone is blaming China for the recent stock-market rout, but this blame is misguided. China was the beneficiary of global expansion of money supply at the hands of activist central banks. In fact, my view is that Chinese leadership had little to do with the growth "miracle" it experienced over the last decade.
Zero Hedge:
Financial Times: 
  • US trade contraction adds to global fears. The US economy’s trade with the rest of the world contracted in the first seven months of this year, according to figures that will add to concerns over a slowdown in global trade. The numbers released on Thursday also show how trade between some of the world’s biggest trading blocs — the US, EU and China — have been affected by the slowdown. They also illustrate how even the relatively robust growth in the US has its limitations as an engine of global growth.

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