Monday, February 01, 2016

Today's Headlines

  • China's Stocks Extend Worst Rout Since 2008 on Growth Concerns. (video) Chinese stocks extended the steepest monthly selloff since the global financial crisis after an official factory gauge slumped to a three-year low, some of the nation’s largest companies warned of disappointing earnings and traders unwound margin debt. The Shanghai Composite Index slid 1.8 percent to 2,688.85 at the close, extending its loss this year to 24 percent. PetroChina Co., which has the biggest weighting on the benchmark gauge, dropped after saying annual net income probably fell as much as 70 percent. China Life Insurance Co. declined to a 14-month low after reporting earnings for last year that trailed forecasts. Leveraged bets on Chinese stock exchanges fell for a record 21st day on Friday to the lowest level since the depths of the last year’s rout.
  • OECD's Gurria: China's Economy to Be Turbulent for Years. (video)
  • Emerging Market ETF Losses Top $4B in January, Most in 5 Months. Investors withdrew $272 million from U.S. exchange traded funds that buy emerging markets stocks and bonds last week, bringing January’s losses to more than $4 billion, the most since August. Redemptions from emerging-market ETFs that invest across developing nations as well as those that target specific countries totaled $4.13 billion, compared with inflows of $1.36 billion in December, according to data compiled by Bloomberg. Last month’s declines were the worst since August, when they reached $6.13 billion.
  • China Construction Bank Fund Price Falls After `Massive' Outflow. The price of a mutual fund managed by a unit of China Construction Bank Corp. fell by more than two-thirds in one day as investors rushed for the exit. The unit price of the Jianxin Xinfeng C fund fell to 0.337 yuan Friday from 1.039 yuan on Thursday because of a "massive redemption," its manager, CCB Principal Asset Management, said in a statement Monday. Those who redeemed were paid a per-unit rate rounded to the third digit after the decimal point and above fair value, leaving the remaining investors with a loss, CCB Principal said in the filing to, the website designated for disclosures by the China Securities Regulatory Commission.
  • Canadian Bonds Lurch to Worst January Since 2009 in Energy Rout. A global financial rout that wiped US$7 trillion from equities markets worldwide and sent oil plunging to a 12-year low in January didn’t spare Canada’s bond market. An index of Canadian investment grade, high-yield and government debt issued in U.S. dollars is on track for its worst performance in the first month of the year since 2009, according to Bank of America Merrill Lynch indexes.
  • World's Worst Currency Sparking Outflows From Mexico's Stock ETF. Traders are pulling money from Mexico’s biggest exchange-traded stock fund at the fastest pace in seven months, tracking the tumble in the nation’s currency. The iShares MSCI Mexico Capped ETF has posted $118.9 million in outflows so far in 2016, the most among similar funds from major emerging markets after Taiwan, according to data compiled by Bloomberg. While the Latin American nation’s benchmark IPC equity gauge has climbed 1.5 percent in the span, it’s slumped 4.8 percent when measured in dollars. The peso has slid 6.3 percent this year, the most among major currencies.
  • Emerging-Asset Rally Ends as China Growth Concern Resurfaces. The MSCI Emerging Markets Index declined 0.1 percent to 741.63 at 11:42 a.m. in New York. While the gauge jumped last week, it retreated 6.5 percent in January. A measure tracking 20 developing-nation currencies depreciated 0.1 percent on Monday after falling 1.5 percent last month.
  • Europe Shares Drop as Disappointing China, U.S. Data Damp Mood. (video) European stocks retreated as deteriorating Chinese and U.S. data dented the investor optimism that helped trim January losses last week. The Stoxx Europe 600 Index slid 0.2 percent to 341.61 at the close, paring earlier declines of as much as 1.2 percent in late trading.
  • S&P Lowers Shell's Rating, Puts Other Oil Majors on Watch. Standard & Poor’s lowered its rating on Royal Dutch Shell Plc and sees a significant likelihood of downgrades for several Europe-based integrated oil and gas majors in the next weeks. "We lowered our ratings on Royal Dutch Shell Plc to ’A+/A-1’ from ’AA-/A-1+’ and placed the long-term rating on CreditWatch with negative implications," S&P said in an e-mailed statement. "We also placed on CreditWatch negative our ratings on BP Plc, Eni SpA, Repsol S.A., Statoil ASA, Statoil Forsikring AS, Statoil US Holdings Inc., and Total S.A."
  • Traders Seeking High-Quality Stocks Is Bearish Market Signal. In the worst start for the U.S. stock market since 2009, investors have been aggressively loading up on shares of companies with the sturdiest earnings momentum. And that’s raising concerns. Animal spirits are out as qualities that define winning investments no longer include the high-risk, high-reward potential of shares backed by debt-laden balance sheets. History shows that such a shift has been a bearish signal for stocks in the past, often marking the end of bull markets.
  • Iowa Senator Ernst Questions Trump’s Conservative Credentials. “Judging from what he said just a few years ago, I would not have agreed that he was a conservative." The prospect of Trump winning has unnerved some Republican leaders. Ads opposing him on air in Iowa highlight the billionaire businessman’s previous statements on abortion and guns, in which he sounds more like a Democrat.
Wall Street Journal:
  • Gulf States Shy Away From OPEC Meeting to Cut Production. Delegates say they want to wait to see the effect of Iran’s return to market. Persian Gulf Arab oil producers don’t support holding an emergency meeting of the Organization of the Petroleum Exporting Countries, officials said, dampening expectations that the group will act to prop up sagging crude prices. Persian Gulf Arab OPEC delegates said they want to wait until the next scheduled OPEC meeting in June, when they will have a clearer picture of how new barrels of Iranian oil are affecting the market now that Western sanctions have ended. Iran has pledged to increase production by a million...
Fox News: 
  • Official: Withheld Clinton emails contain 'operational' intel, put lives at risk. (videoEXCLUSIVE: Highly classified Hillary Clinton emails that the intelligence community and State Department recently deemed too damaging to national security to release contain “operational intelligence” – and their presence on the unsecure, personal email system jeopardized “sources, methods and lives,” a U.S. government official who has reviewed the documents told Fox News.
Zero Hedge:
Business Insider:
  • Every Day Trump Brings me Closer to Casting a Vote for Hillary. Incidents like last night’s infantile howling over Ben Sasse’s criticism push me strongly towards not only not voting for Trump, but actually voting for his opposition, whoever it might be. Ben Sasse is without a doubt a good conservative. If Trump acts like a Republican front runner, and stays [at least allegedly] pro-life, and campaigns for other Republicans and just in general cleans up his act, I will vote for him. If he continues being a moronic oaf and/or backtracks on his promise that he’s pro-life, I’ll probably just stay home. If he keeps attacking and insulting other Republicans, I’ll vote Hillary and be glad about doing it. Of course, there’s a pretty good chance that’s the entire point of the Donald Trump 2016 campaign.
Washington Times: 
  • Obama misled Congress on debt limit: House report. Debt fight won’t lead to default, could embolden conservatives. The government could have continued to pay Social Security and other critical payments in the event it reached its debt limit, but the Obama administration intentionally misled Congress about that to force Republicans to hike the borrowing ceiling, a House panel said Monday, citing internal Treasury Department documents. The stunning revelation could fundamentally change the battleground between Capitol Hill and the White House heading into the next debt showdown early next year, because it means a president could no longer use the threat of a full government shutdown to win a debt hike.
  • Citigroup Economist Expects 2.5% Growth in China in 2016. Citigroup's Chief Economist Willem Buiter expects growth in China to slow more drastically than many think and will come close to a recession, citing interview. Though official data show China growth at 6.9% last year, Buiter says was closer to 4%. Further drop would result in rising unemployment, bankruptcies, and need by Chinese govt to bail out banks and borrowers. Slowdown will hit exporting nations Germany, South Korea and Japan.

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