Evening Headlines
Bloomberg:
Bloomberg:
- John Kerry Draws Fire for Saying Charlie Hebdo Attack Had `Rationale'. U.S. Secretary of State John Kerry said last week’s terror attacks in Paris lacked the "rationale" of the assault earlier this year on the staff of the satirical French newspaper Charlie Hebdo, comments that drew immediate criticism from conservatives. “There’s something different about what happened from Charlie Hebdo, and I think everybody would feel that," Kerry told embassy staff and their families Tuesday in Paris, according to a transcript posted by the State Department. "There was a sort of particularized focus and perhaps even a legitimacy in terms of — not a legitimacy, but a rationale that you could attach yourself to somehow and say, OK, they’re really angry because of this and that.” Al-Qaeda’s affiliate in Yemen claimed credit for the January attack on Charlie Hebdo, which left 12 staff members dead. The terror group said it was in retaliation for the magazine’s decision to publish cartoons of the Prophet Muhammad, among other justifications. Visual depictions of Muhammad are seen as by many Muslims as sacrilegious.
- Schumer Joins Republicans Questioning Obama's Refugee Plan. The Obama administration stepped up its assurances that it can keep terrorists from mixing with incoming Syrian refugees as a top Senate Democrat voiced reservations about a resettlement program already under fire from Republicans. New York Senator Chuck Schumer, who will take over as the Democratic leader in the chamber in 2017, said “a pause may be necessary” on the entry of Syrians fleeing civil war. House Speaker Paul Ryan of Wisconsin and Senate Majority Leader Mitch McConnell of Kentucky, both Republicans, earlier called on the administration to put those plans on hold.
- Fear Spreads as China's Finance Firms Face Arrests. The high-drama highway arrest of a prominent hedge fund manager. Seizures of computers and phones at Chinese mutual funds. The investigations of the president of Citic Securities Co. and at least six other employees. Now, add the probe of China’s former gatekeeper of the IPO process himself. The arrests or investigations targeting the finance industry in the aftermath of China’s summer market crash have intensified in recent weeks, creating a climate of fear among China’s finance firms and chilling their investment strategies. At least 16 people have been arrested, are being investigated or have been taken away from their job duties to assist authorities, according to statements and announcements compiled by Bloomberg News.
- China Home-Price Recovery Slows in October Amid Supply Glut. China’s home-price recovery slowed in October, as a supply glut in less prosperous cities challenges the authorities’ efforts to revive the residential market with interest-rate cuts and easing of mortgage restrictions. New-home prices increased in 27 cities, compared with 39 in September, the National Bureau of Statistics said Wednesday. Prices dropped in 33 cities, compared with 21 in September and were unchanged in 10.The number of unsold new homes nationwide increased 14 percent to 437 million square meters (4.7 billion square feet) as of Oct. 31 as the pace of home sales slowed, the statistics bureau said earlier this month.
- Hedge Fund Gaining 138% Says China Short Targets Easier to Spot. Hao Capital Management, whose Greater China-focused hedge fund returned 138 percent this year, said it is easier to identify targets to wager against among yuan-denominated China stocks than to spot those with the potential to rise. Many of the nation’s industries are plagued by overcapacity, which will lead to slower cash flow growth for companies with A shares listed in China, the manager of the $268 million hedge fund wrote in its October newsletter to investors. The hedge fund, which bets on rising and falling stocks and didn’t mention any specific industries or shares, wrote that companies with strong cash flows are unlikely to see valuations drop to lows seen in previous years.
- China IMF Victory to Sap Central Bank Appetite for Aussie Debt. China is about to deal another blow to Australian bonds as the yuan’s ascent into the International Monetary Fund’s reserves diverts investments from Aussie-dollar assets. The IMF signaled it will include the yuan as the fifth currency in its Special Drawing Rights basket this month, a stamp of approval for China’s progress in internationalizing the currency. Standard Chartered Plc estimates up to $1.1 trillion will enter the nation in the next five years due to the endorsement. One casualty of such diversification will be the Australian dollar, according to Credit Suisse Group AG, BNP Paribas SA and Mizuho Bank Ltd.
- Macau Chief Sees Casino Revenue Slumping More Next Year. Macau’s chief executive forecasts casino revenue to come in at 200 billion patacas ($25 billion) next year, the lowest since 2010 and a further decline from what analysts estimate for the whole of 2015. Casino shares fell.
- What Are 2016’s Downside Risks to EM Growth? (video)
- Are Investors Losing Faith in Policymakers? (video)
- Asian Stocks Rise on Japan as Investors Await Fed Minutes, BOJ. Asian stocks rose, boosted by gains in Japanese shares as the yen held losses before a Bank of Japan policy meeting. Investors awaited minutes from the Federal Reserve after U.S. inflation data bolstered the case for higher interest rates. The MSCI Asia Pacific Index gained 0.3 percent to 132.26 as of 9:04 a.m. in Tokyo.
- China Steel Output to Plunge 23 Million Tons in 2016, CISA Says. Crude steel production in China will shrink by an estimated 23 million metric tons next year as a downturn in local demand deepens and mills encounter increasing opposition to exports, according to the China Iron & Steel Association. Output in the world’s largest producer may drop to about 783 million tons from 806 million tons in 2015, a decline of 2.9 percent, according to Deputy Secretary General Li Xinchuang. Local demand would slump to about 654 million tons in 2016 from 668 million tons this year, Li said in an interview in Shanghai on Wednesday.
- Zinc Slumps to Six-Year Low as Metals Tumble on China, Dollar. Zinc dropped to the lowest since July 2009 as industrial metals retreated on concerns over faltering Chinese demand and the dollar traded near its strongest in more than a decade. Lead fell to the lowest since 2010. Zinc used to galvanize steel lost as much as 1.5 percent to $1,525 a metric ton on the London Metal Exchange and traded at $1,526.50 by 9:37 a.m in Hong Kong. Lead sank as much as 1.4 percent to $1,572 a ton. Copper and aluminum declined, while nickel rose.
- Paris Attacks: Latest Updates.
- Paris Attacks Fuel Debate Over Spying. Growing belief that
terrorists behind assaults used encrypted communications prompts
re-examination of U.S. policy on surveillance.
- Hillary Clinton Faces Foreign-Policy Challenges. Former secretary of state uniquely tethered to President Obama’s record in the Middle East. When Hillary Clinton jumped in the 2016 presidential race, her advisers believed she had at least one clear advantage over her rivals: The foreign-policy credentials that burnished her campaign to become commander in chief.
- House Speaker Ryan Warns of Budget, Guantanamo Bay Confrontations With White House. New leader doesn’t rule out government shutdown when funding expires Dec. 11. Spending legislation needed to avoid a government shutdown in December must include Republican policy measures in order to pass Congress, House Speaker Paul Ryan (R., Wis.) said Tuesday.
- Regulators Look Into Mutual Funds’ Procedures for Valuing Startups. SEC increases focus on private-company valuations as part of regular fund-firm reviews. Federal securities regulators are looking more closely at whether U.S. mutual funds have proper procedures in place to accurately price shares of private technology companies amid signs the tech boom is wavering, according to people familiar with the matter.
- Dollar’s Revival Poses New Threat to Commodities. Expectations of Fed rate increase have sparked a revival in dollar.
- Louisiana Gov. Bobby Jindal Suspends GOP Presidential Campaign.
- President Guantanamo. Obama may move to shut the prison down in violation of the law. President Obama rode into the White House vilifying George W. Bush’s “unchecked presidential power” and “ignoring the law when it is inconvenient,” as he put it in 2007. Yet now Mr. Obama is poised to exceed any executive action his predecessor so much as contemplated as he may shut down Guantanamo Bay in defiance of inconvenient laws he signed.
Fox News:
- France, Russia pummel ISIS stronghold as critics blast US rules of engagement. (video) In the wake of Friday's deadly terror attack in Paris and the confirmed bombing of a Russian airliner, Russia and France are pounding the Islamic State's Syrian stronghold of Raqqa as, while the number of U.S. airstrikes against ISIS still dwarves all others combined, America appears to be in a slap fight while others are punching hard, say military experts.
MarketWatch.com:
CNBC:
Zero Hedge:- Fed may send a big message to markets. Minutes from the Fed's last meeting could be a big deal for markets Wednesday, showing the central bank is finally ready to raise rates next month — barring any negative surprises in the economy. "Hopefully, they'll make their intentions to raise rates a lot clearer in the new set of minutes," said Jack Ablin, CIO of BMO Private Bank.
- Hannover Police Warn "Find Safety, Don't Stay In Groups" After Explosives Allegedly Discovered, Football Game Evacuated.
- The Fed's Failed Communication Strategy - More Than Half Of FedSpeak Is "Not Useful". (graph)
- Baltic Dry Index Crashes Near Record Low. (graph)
- Crude Jumps After API Reports Modest Inventory Draw (First In 8 Weeks) Despite Another Big Build At Cushing. (graph)
- Ted Cruz Prepares Refugee-Rejection Bill, Slams Obama's Plan As "Nothing Short Of Lunacy".
- China Has "Right" To "Seize" Neighboring Islands, Official Says.
- BofA Is A "Seller Of Risk" As Everyone Is Long The Dollar, US Stocks Never More Overvalued. (graph)
- One Terror Attack Too Many? Equity Exuberance Fizzles On Late German Bomb Scare. (graph)
Business Insider:
- Everyone on Wall Street is talking about this dark new China report. "Many analysts once forecast a soft landing for the economy after more than 35 years of breakneck growth, but that landing point is still not in sight," the report said. It continued: "While we believe the government will pull enough policy levers to prevent full-blown economic crisis, the danger remains that China is facing a protracted period of declining growth." The report predicts 4.5% gross domestic product growth on average between 2015 and 2020, and 3.6% on average from 2015 to 2020 if the government is able to stave off disaster through policy mechanisms. Here is the killer line: China's productivity crisis — the result of both institutional deficiencies and a maturing economy — remains unaddressed. For these reasons, we believe China is facing a protracted period of declining growth that will be much longer and deeper than analysts may have predicted.
- GUNDLACH: This could be 'the beginning of something big'. (graph)
- Famous Harvard professor rips into 'tyrannical' student protesters, saying they want 'superficial diversity'. High-profile incidents of racial discrimination at the University of Missouri have spurred students across the US to protest racism on their own campuses. And while many civil libertarians have lauded their actions, Alan Dershowitz, a prominent Harvard Law School professor, has ripped into these students for what he argues are hypocritical demands. "The last thing these students want is diversity," Dershowitz told Business Insider. "They may want superficial diversity, because for them diversity is a code word for 'more of us.' They don't want more conservatives, they don't want more white students, they don't want more heterosexuals."
- The STD epidemic in the US is getting worse.
- ISIS pulled off two of its most alarming attacks in the space of less than a month.
- Over 1,200 Europeans who joined Islamic extremists have returned to Europe.
- GUNDLACH: How can oil go higher with this fact in play? (graph)
- GOLDMAN SACHS(GS) CFO: None of us have 'really' been stress-tested.
- Paris Merely A ‘Test,’ Says US Counter-Terrorism Expert. A former FBI counter terrorism expert claims the bloody Nov. 13 Paris attack wasn’t a full-fledged assault, but a cold-blooded ISIS “test” to assess its ability to launch small, randomized attacks in a major Western city.
Reuters:
Evening Recommendations - Hedge fund Achievement Asset to shut down after energy losses. Hedge fund Achievement Asset Management is shutting its doors after suffering losses on energy market bets this year, becoming the latest investment firm to return capital to clients in a year many managers have struggled to make money. The Chicago-based firm, run by Joseph Scoby, plans to return $875 million to clients by the end of the year, according to published reports in Crain's Chicago Business and the Wall Street Journal. At its peak in 2014 the firm oversaw roughly $2 billion in assets but investors had been pulling money out as returns sagged. The fund lost roughly 7 percent this year as its bets on corporate bonds soured, Crain's reported.
- Fed's Tarullo says 'shadow' banks need activity-by-activity regulation. The United States is in a "grace period" of lowered financial risk but should address the potential for increased problems to develop in the financial system's non-bank sector, Federal Reserve Governor Daniel Tarullo said on Tuesday. Tarullo said the "shadow" banking sector is too diverse and in many cases helpful to put under the same sort of blanket regulations banks face on things like the capital and liquidity they are required to maintain.
- None of note
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 127.75 -1.75 basis points.
- Asia Pacific Sovereign CDS Index 70.0 -.5 basis point.
- Bloomberg Emerging Markets Currency Index 70.46 -.09%.
- S&P 500 futures +.05%.
- NASDAQ 100 futures +.07%.
Earnings of Note
Company/Estimate
- (LOW)/.79
- (SPLS)/.35
- (TGT)/.86
- (CTRP)/.25
- (HI)/.55
- (GMCR)/.71
- (LB)/.52
- (NTAP)/.56
- (CRM)/.19
- (SINA)/.21
- (WB)/.06
8:30 am EST
- Housing Starts for October are estimated to fall to 1160K versus 1206K in September.
- Building Permits for October are estimated to rise to 1147K versus 1103K in September.
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,268,180 barrels versus a +4,224,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -972,730 barrels versus a -2,102,000 barrel decline the prior week. Distillate
supplies are estimated to fall by -450,00 barrels versus a +352,000
barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.61% versus a +.8% gain prior.
- Release of US Fed Minutes from Oct. 27-28 FOMC Meeting.
- None of note
- The Feds Dudley speaking, Fed's Kaplan speaking, BofJ rate decision, weekly MBA mortgage applications report, Jefferies Healthcare Conference, Barclays Automotive Conference, (SGI) analyst day, (CA) analyst day, (LGND) analyst day, (OC) investor day, (QCOM) analyst meeting and the (VRX) investor conference could also impact trading today.
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