Tuesday, September 08, 2015

Today's Headlines

Posted by Gary .....at 2:13 PM
Bloomberg:    
  • China Exports Slide as Tepid Demand Adds to Growth Challenge. China’s exports declined in August, signaling weak demand in regions such as Europe and adding to growth pressures facing the world’s second-largest economy. Overseas shipments fell 5.5 percent from a year earlier in dollar terms, the customs administration said. The reading was slightly above the median forecast of a 6.6 percent decline by economists surveyed by Bloomberg, and compared to an 8.3 percent drop in July. Imports fell 13.8 percent, widening from an 8.1 percent decrease and leaving a trade surplus of $60.2 billion.The data highlight tepid demand around the world and sliding prices for inputs to China’s factories and their shipments abroad. 
  • China Just Killed the World's Biggest Stock-Index Futures Market. Add the world’s biggest stock-index futures market to the list of casualties from China’s interventionist campaign to stop a $5 trillion equity rout. Volumes in the country’s CSI 300 Index and CSI 500 Index futures sank to record lows on Tuesday after falling 99 percent from their June highs. Ranked by the World Federation of Exchanges as the most active market for index futures as recently as July, liquidity in China has dried up as authorities raised margin requirements, tightened position limits and started a police probe into bearish wagers.While trading in Chinese equities has also slumped amid curbs on short sales and an investigation into computer-driven orders, the tumble in futures volumes may cause even greater damage because of their central role in the investment strategies of domestic hedge funds and other institutional money managers.
  • China's Stock-Rescue Tab Surges to $236 Billion, Goldman Says. (video) China’s government has spent 1.5 trillion yuan ($236 billion) trying to shore up its stock market since a rout began three months ago, according to Goldman Sachs Group Inc. The “national team" expended about 600 billion yuan in August alone, with the total now equivalent in value to 9.2 percent of China’s freely-traded shares, strategists including Kinger Lau wrote in a report dated Monday. 
  • China's Yuan Shock Threatens Triple Whammy for Asian Exporters. Even before Aug. 11, China was threatening to snatch market share from other Asian competitors in the key U.S. and European export markets. Then the outlook for China’s Asian competitors worsened as the shock yuan devaluation loosened a dollar link that had kept the unit strong even while the currencies of most Asian competitors had weakened. All of a sudden, prospects for easy competitive gains versus China from currency depreciation had ended.
  • Shrinking Iron Ore Imports Yet Another Sign of China Slowing. China’s iron ore imports contracted last month, adding to evidence that a deepening slowdown in the world’s second-biggest economy is hurting demand for raw materials. Inbound cargoes fell 14 percent to 74.12 million metric tons from 86.1 million tons in July, which was the highest level this year, according to customs data Tuesday. Imports for the first eight months declined 0.2 percent to 613 million tons. After decades of rapid growth and an unprecedented expansion in steel production, China is now grappling with excess capacity as a property-led slowdown crimps demand. Iron ore prices tumbled in July to their lowest in at least six years as surging low-cost output from Rio Tinto Group in Australia and Brazil’s Vale SA swamped the market. Deadly explosions at Tianjin port last month also disrupted shipments and may have reduced the import figure, according to Shenhua Futures Co.
  • The Contagion Threat From China’s Slowdown. (video)
  • Fitch Says Risk of Downgrades Spreading Among Developing Nations. Brazil and South Africa top a list of emerging-market borrowers whose credit ratings are threatened by slowing growth and ballooning budget deficits, according to Fitch Ratings. Credit grades across Latin America are also under pressure as the down cycle in commodity prices deepens and stagnation in Brazil’s economy pushes the entire region into contraction, Shelly Shetty, a senior director for sovereigns at Fitch, said in a conference in London Tuesday. In South Africa, the main threats are reduced long-term growth potential and fiscal slippage, said Carmen Altenkirch, a London-based director in Fitch’s sovereign group.
  • Japan Economy Flashes Warning as Inventory Gain Holds Up GDP. Japan’s economy contracted last quarter less than initially estimated, thanks to a buildup in inventories that risks damping a rebound. Gross domestic product shrank at an annualized 1.2 percent pace in the three months through June from the first quarter, less than the 1.6 percent drop reported last month, the Cabinet Office said on Tuesday in Tokyo. Economists had estimated a 1.8 percent contraction.
  • Europe Stocks Climb Second Day on China Support, Led by Autos. European shares posted a broad-based rally as China led gains in global equities amid speculation that state support will limit its market turmoil. All 19 industry groups on the Stoxx Europe 600 Index rose, with carmakers and miners leading the advance. Daimler AG, BMW AG and Volkswagen AG rose at least 2.5 percent. Commerzbank AG increased 6.8 percent after JPMorgan raised the German lender to overweight, similar to buy, from neutral, and added it to its list of top picks among European banks. Amlin Plc soared 33 percent after MS&AD Insurance Group Holdings Inc. agreed to buy the Lloyd’s of London insurer. Rio Tinto Group contributed the most to gains in a gauge of miners, rising 2.6 percent after giving a bullish assessment of China’s steel and copper demand. The Stoxx Europe 600 Index advanced 1.2 percent to 359 at the close of trading, after earlier rising as much as 2.3 percent.
  • Glencore Investors Force Glasenberg to Prepare for Doomsday. Glasenberg, Glencore’s second-largest shareholder, was uncharacteristically downbeat during a conference call with analysts. The new plan envisions cutting $10 billion of debt through the end of next year, shelving dividends and selling both new shares and assets. The fresh approach was triggered by the almost-universal bearishness on commodity prices that investors expressed in talks, surprising Glencore’s management, a person familiar with the matter said, asking not to be identified because the meetings were private.
  • Liar Loans Redux: They're Back and Sneaking Into AAA Rated Bonds. (video) The pitch arrived with an iconic image of the American Dream: a neat house with a white picket fence.
    But behind that picture of a $2.95 million home in Manhattan Beach, California, were hints of something darker: liar loans, those toxic mortgages of the subprime era. Years after the great American housing bust, mortgages akin to the so-called liar loans -- which were made without verifying people’s finances -- are creeping back into the market. And, like last time, they’re spreading risks far and wide via Wall Street. Today’s versions bear only passing resemblance to the ones that proliferated in the mid-2000s, and they’re by no means as widespread. Still, they reflect how the business is starting to join in the frenzy that’s been creating booms in everything from subprime car loans to junk-rated company bonds.
  • Biden Inches Ahead of Sanders in National Poll as Clinton Slips. Support for the vice president is building as speculation grows about his potential entry into the 2016 presidential race, with 22 percent saying they'd back him. That's ahead of Senator Bernie Sanders of Vermont, who was picked by 20 percent. The difference is within the poll's plus or minus 5.3 percentage point margin of error. Clinton, who continues to confront questions about her use of a private e-mail server while secretary of state in the Obama administration, has the support of 42 percent, down from 52 percent a month ago. Biden's number is 10 percentage points higher than a month ago, while Sanders has seen a 4-point increase during that time.
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