Monday, November 09, 2015

Today's Headlines

Posted by Gary .....at 2:48 PM
Bloomberg:  
  • OECD Trims Global Growth Forecast on Emerging-Market Slowdown. (video) The OECD trimmed its global economic forecasts for the second time in three months as slower growth in emerging markets spilled over into countries such as Germany and Japan. World output will expand 2.9 percent in 2015 and 3.3 percent in 2016, down from the 3 percent and 3.6 percent predicted in September, the Organization for Economic Cooperation and Development said in a semi-annual report published Monday. “Global growth prospects have clouded this year,” the Paris-based organization said. “The outlook for emerging-market economies is a key source of global uncertainty at present.” The OECD barely changed its forecasts for Chinese output, pegging growth at 6.8 percent this year and 6.5 percent in 2016. Yet Brazil’s economy is now seen shrinking 3.1 percent this year and 1.2 percent next, compared with contractions of 2.8 percent and 0.7 percent predicted in September. Russian gross domestic product is on track to drop 4 percent in 2015 and 0.4 percent next year, according to the report. Since the OECD didn’t give an estimate for Russia in September, that compares with a June prediction for a contraction of 3.1 percent in 2015 and expansion of 0.8 percent in 2016. For emerging markets, “challenges have increased,” the OECD said. Should their situation deteriorate, “growth would also be hit in the euro area, as well as Japan.”
  • China’s Growth Challenge: Imports/Exports Plunge. (video)
  • Swedes on a Debt Binge Now Face Test of Rising Mortgage Rates. Sweden’s housing market is decoupling from monetary policy as mortgage rates are starting to rise after a four-year swoon. While the central bank last month pledged to keep its benchmark rate unchanged until early 2017 at a record low of minus 0.35 percent, some banks are increasing loan rates to cover rising funding costs amid concern over the red-hot housing market. That could put the pinch on the Swedish consumer. “To have interest rates this low isn’t sustainable,” Hans Lindblad, director-general of the National Debt Office, said in a Nov. 4 interview. “Above all, young households don’t realize that in normal times interest rates may be 4-6 percent, not 2 percent, and that’s something that households need to be able to handle.” Warnings of the risks building in Sweden are growing more frequent, with a number of bank executives and regulators sounding the alarm and the central bank revealing plans to cut its exposure to mortgage debt. Borrowing in Sweden has risen at twice the rate of economic growth since 2009, driving housing prices up almost 50 percent.
  • Political Risks Re-Emerging in Europe Punish Portuguese Bonds. The re-emergence of political risks in the euro area played havoc with the region’s higher-yielding government bonds, blunting the impact of the European Central Bank’s asset-purchase program. Declines by Portugal’s sovereign bonds Monday pushed the 10-year yield to the highest level since July as a loose alliance of opposition parties was poised to topple Prime Minister Pedro Passos Coelho’s new government, boosting investors’ concern about political instability and plans to roll back spending cuts tied to the country’s previous international bailout.
  • Brazil's Real Drops on Economic Woes as China Trade Disappoints. The Brazilian real slumped as economists in a central bank survey said the recession is worsening, while a disappointing trade report out of China shows it’s unlikely the Asian nation can help fuel a rebound anytime soon. The real dropped 0.9 percent to 3.8012 per dollar as of 4:23 p.m. in Sao Paulo. The currency is down 30 percent this year, making it the worst performer among 31 major counterparts to the dollar tracked by Bloomberg.
  • European Stock Rally Runs Out of Steam Amid China Growth Concern. European stocks fell, after rising four times in the past five days, as investors weighed the outlook for global economic growth and stimulus. Shares of exporters fell after worse-than-forecast Chinese trade data. Continental AG led a drop in carmakers, losing 5.3 percent, after its sales missed analysts’ projections. Renault SA slid 3.5 percent after France, the company’s biggest shareholder, said it would oppose a merger with Japanese partner Nissan Motor Co. Personal and household-goods shares slid, with Hermes International SCA and Christian Dior SE down at least 2.1 percent. "There is some caution on the consumer side and export-led sectors that comes from questions about the Chinese economy and emerging markets as a whole,” said Pierre Mouton, a fund manager at Notz, Stucki & Cie. in Geneva. “The economic numbers from China are not very good for the time being.” The Stoxx Europe 600 Index lost 1.1 percent at the close of trading. Portugal’s PSI 20 Index slid 4.1 percent, the most among western-European markets.
  • Dollar Surge Raises Red Flags. (video)
  • Has the Market Had Enough of Share Buybacks? (video)
  • Fed's Rosengren Signals Readiness to Lift Rates Amid Strong Data. (video) Federal Reserve Bank of Boston President Eric Rosengren said encouraging U.S. economic data coupled with emerging signs of risk taking by some investors make it appropriate for the central bank to consider raising interest rates as soon as next month, while moving gradually thereafter. “All future committee meetings -- including December’s -- could be an appropriate time for raising rates, as long as the economy continues to improve as expected,” Rosengren said, according to remarks prepared for delivery Monday in Portsmouth, Rhode Island.
  • Banks Rewrite Contracts Worth Trillions to Shed Too-Big-to-Fail. (video) Wall Street is poised to expand a rewrite of financial contracts worth trillions of dollars in an effort to persuade regulators that giant banks can be wound down without hurting the broader economy. The trading and lending agreements being reworked are part of the grease that makes the global financial system function. The changes are expected to allow certain securities and funding contracts to remain intact for as long as 48 hours after a bank fails, said three people with knowledge of the matter. The extra time is intended to give a faltering bank’s home government time to jump in and set up a healthy version of the doomed institution, something that’s difficult to do when counterparties have terminated contracts and fled.
  • For U.S. Stocks, Warnings Found in Investment-Grade Credits. U.S. stocks are up for the year, a 10 percent correction has been reversed, and valuations are back where they were in July. Back to normal, right? Wrong. Across the Standard & Poor’s 500 Index, evidence has surfaced that the stresses that blew into credit markets this summer have changed the way Americans view stocks. Case in point: for one of the few times since 1996, companies whose bonds are rated investment grade are trading with higher price-earnings ratios than those rated junk. Concern about credit quality provided the prologue to the stock market’s 11 percent decline in August and, unlike the swoon itself, it hasn’t gone away. The flip-flop in valuations highlights newfound caution among investors who for most of the past two decades paid more for junk-rated companies, convinced they’d grow faster while falling rates kept solvency concerns at bay. “As the recovery starts to show age, the risk of recession starts to rise, and the last thing you want to be in as you head into a recession is low-quality rated companies,” said Jim Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management Inc.  
  • Macy's(M), Kohl's(KSS) Tumble After Citigroup Warns of `Tough Quarter'. Shares of Macy’s Inc. and Kohl’s Corp. declined after Citigroup Inc. cut its earnings estimates for the companies, saying the industry is suffering from a sales slowdown and inventory glut. 
  • Mallinckrodt(MNK) Drops on Mention by Valeant Foe Citron Research. Mallinckrodt Plc shares plummeted after the drugmaker was mentioned on Twitter by Citron Research, the stock-commentary site whose scrutiny helped lead to a rout of Valeant Pharmaceuticals International Inc.’s stock.
  • Canadian Pacific(CP) Said to Explore Norfolk Southern(NSC) Takeover.
MarketWatch.com:
Fox News:
  • University of Missouri president resigns amid race backlash. (video) The president of the University of Missouri system resigned Monday morning in the face of growing protests -- including the threat of a faculty and student walkout  -- over his handling of a spate of racially charged incidents.
Zero Hedge:

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)