Thursday, October 22, 2015

Today's Headlines

  • Draghi Signals ECB May Add Stimulus This Year on Weak Growth. (video) Mario Draghi said the European Central Bank will investigate fresh stimulus measures to boost the economy and that options include a further reduction in the deposit rate. The euro slid as the ECB president said the Governing Council has tasked the central bank’s committees with examining the pros and cons of different monetary-policy action. He told reporters at a press conference after the meeting in Malta on Thursday that there was a “rich discussion” about the instruments that might be used, while hinting fresh stimulus may be added before the end of the year.
  • What Draghi said on QE, Policy Outlook, Global Risks and Inflation.
  • The Strong U.S. Dollar Challenge for Emerging Markets. (video)
  • China's Record Capital Outflows Put Tobin Tax Back on the Agenda. China has for the second time this month raised the possibility of taxing foreign-exchange transactions as record capital outflows from the world’s second-largest economy put pressure on the yuan. "We are currently studying measures including Tobin Tax, unremunerated reserve requirement and handling fees for foreign-exchange trading to suppress any abnormal and significant flows of short-term funds that seek arbitrage," Wang Xiaoyi, deputy administrator of the State Administration of Foreign Exchange, said Thursday at a press conference in Beijing. Central bank Deputy Governor Yi Gang called for such punitive measures to be introduced to deter currency speculators in China Finance magazine, a People’s Bank of China publication.
  • Hyundai Profit Falls More Than Estimated on China Slowdown. Hyundai Motor Co. reported quarterly profit fell more than analysts’ estimates, after a slump in China deliveries overshadowed gains in SUV sales in the U.S., Europe and South Korea. Net income dropped 23 percent from a year earlier to 1.17 trillion won ($1 billion) in the three months through September, the seventh consecutive year-on-year quarterly decline, the Seoul-based company said Thursday. That compares with the 1.48 trillion won average of 21 analysts’ estimates compiled by Bloomberg. Sales rose to 23.4 trillion won from 21.28 trillion won a year earlier. Hyundai’s worldwide deliveries slipped for a third straight quarter, dragged down by weak demand in China, Russia and Brazil.  
  • Man Charged With Salvaging Korean Shippers Sees Gloomy Prospects. Alfred Kim, the man in charge of helping salvage South Korea’s shipping industry at the state-funded bad loan company, doesn’t sound too optimistic. “Nobody knows what the future is like as the shipping industry is still facing a tough time now,” said Alfred Kim, the fund’s project manager at Korea Asset Management Corp., based in Busan. “There’s large supply of ships, the Chinese economy isn’t doing very good. Right now, it’s very difficult to secure loans from the credit market and banks don’t want to invest more of their money on the shipping side.” 
  • Draghi's Policy Update Sends European Stocks to Two-Month High. Mario Draghi gave stock investors what they wanted. European shares spiked after the European Central Bank president said the ECB will re-examine the degree of stimulus in December, adding that the quantitative-easing program will continue until beyond September 2016 if needed. The central bank also discussed lowering deposit rates, Draghi said. The Stoxx Europe 600 Index climbed 2 percent, the most since Oct. 5, to 369.99 at the close of trading in London.
  • Vale(VALE) Earnings Slide as Metal Meltdown Blunts Cost Cutting. Vale SA, the world’s biggest iron-ore and nickel miner, reported a decline in quarterly earnings as slumping prices overshadowed efforts to focus on higher quality deposits and cut costs. Third-quarter adjusted earnings before interest, taxes, depreciation and amortization fell 15 percent from a year ago $1.88 billion, the Rio de Janeiro-based company said Thursday in a statement. That compared with the $1.86 billion average of 11 dollar-based estimates compiled by Bloomberg. On a net basis, Vale had a loss of $2.12 billion on currency and derivative losses.
  • Gold, Silver Shine Again as Investors Add $393 Million to ETFs. Precious metals are once again enticing investors. After ignoring the assets for most of the year, investors added $393 million to U.S. exchange-traded funds backed by precious metals this month through Oct. 20, on course for the biggest monthly inflow since February. Gold and silver are gaining favor amid increasing expectations that the Federal Reserve could wait until next year to raise interest rates. Higher rates curb the appeal of precious metals because they don’t offer interest or yields. 
  • Junk-Bond Default Rate May Nearly Double in a Year, UBS Says. U.S. junk-bond defaults could nearly double by the third quarter of next year, led by energy, metal and mining companies under pressure from depressed commodities prices, according to UBS Group AG. The high-yield default rate may climb as high as 4.8 percent, UBS analysts wrote in a note to clients Thursday. The default rate for speculative-grade debt in the U.S. was at 2.5 percent at the end of September, according to Moody’s Investors Service, up from 2.1 percent in the second quarter and 1.6 percent a year earlier.
  • Quebec Regulator Is Watching Valeant(VRX) Situation Closely. Quebec's AMF securities regulator says allegations about Valeant are "worrisome", is watching the situation "very seriously".
  • What Valeant's(VRX) Doing 'Appears to Be Illegal': Left. (video)
  • Hamptons Mansions Pile Up on Market as Luxury-Home Sales Decline. New Yorkers who want to buy a high-end retreat in the Hamptons have plenty of options to choose from. Sales of luxury homes in the area, known for its beachside mansions attracting financiers and celebrities, tumbled 16 percent in the third quarter from a year earlier to 52 transactions, according to a report Thursday from appraiser Miller Samuel Inc. and brokerage Douglas Elliman. The inventory of such properties -- defined as the top 10 percent of the market by price -- climbed 34 percent to 292. Wealthy buyers on Long Island’s East End are taking a pause after several years of heated sales, leading prices to fall as more houses come to the market. The median price of Hamptons deals completed at the luxury level dropped 18 percent from a year earlier to $5.3 million, in contrast to an increase for lower-cost homes.
  • McDonald’s(MCD) Shares Soar as Easterbrook Turnaround Takes Hold. (video) McDonald’s Corp. shares soared the most in almost seven years after third-quarter profit topped analysts’ estimates, showing Chief Executive Officer Steve Easterbrook’s plan to turn around the world’s largest restaurant chain is gaining traction. Profit in the quarter was $1.40 a share, the Oak Brook, Illinois-based company said in a statement Thursday. Analysts estimated $1.27, on average. And while revenue fell 5.3 percent to $6.62 billion, that beat analysts’ $6.41 billion average projection.
Fox News: 
  • Clinton grilled over close contact with Blumenthal, but not Stevens, on Benghazi. Former Secretary of State Hillary Clinton attempted to walk a swinging tightrope Thursday as Republicans on the House committee probing the Benghazi attacks hammered away at her communications with close friend Sidney Blumenthal -- suggesting she paid more attention to his emails than a barrage of unanswered pleas from murdered envoy Chris Stevens to increase security in the face of growing terrorist threats. At the Capitol Hill hearing, Clinton insisted Blumenthal, whose frequent messages to her turned up in recently released emails, was not a primary source of information or even technically "advising" her. But when she questioned what the emails have to do with the tragedy, committee Chairman Trey Gowdy, R-S.C., contrasted the frequent and direct communication with Blumenthal against Stevens' struggle to get more security. "I think it is eminently fair to ask why Sidney Blumethal had unfettered access to you, Madam Secretary ... and there's not a single solitary email to or from you, to or from Ambassador Stevens," he said.
Zero Hedge:

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