Tuesday, March 29, 2016

Today's Headlines

Posted by Gary .....at 2:31 PM
Bloomberg: 
  • World's Best Economy Betraying Investors as India Earnings Decay. Talk to a skeptic about this month’s global stock rebound and the first thing he mentions is likely to be earnings, or the lack thereof. Why should the nation with the brightest economic outlook be any different? India’s S&P BSE Sensex is up 9 percent from its February low and set for its best month in more than two years. Company profits are on the opposite trajectory, falling in four of the last five quarters in the worst run since the financial crisis. That’s despite the government forecasting the country to expand faster than any other major economy in the fiscal year through March. While profits are falling worldwide, nowhere is the divergence of earnings and the economy more pronounced than in India, where bad debts at banks, the commodities slump and uncooperative weather are squeezing companies. Stagnating income is widening stock valuations and inciting bearishness among the country’s equity strategists, who have left targets mostly unchanged amid the rally.
  • China Stocks Drop for Second Day as Curbs Hurt Property Shares. (video) China’s stocks fell for a second day, paring this month’s advance, as a gauge of small companies slumped and property developers extended losses amid concern new price-cooling measures will hit sales. The Shanghai Composite Index slid 1.3 percent. Poly Real Estate Group. dropped to the lowest level in a month, dragging down a gauge of developers. The small-cap ChiNext index plunged the most in three weeks. The Shanghai index closed below the key 3,000 level for a fourth straight day at 2,919.83, the lowest level in more than a week. Trading volumes were 17 percent below the 30-day average. The ChiNext slid 2.1 percent, paring a rally since last month’s low to 17 percent through Monday. The ChiNext trades at 60 times reported earnings, four times more expensive than the Shanghai index, according to data compiled by Bloomberg.
  • BOE Ready to Support Financial Stability on `Brexit' Risks. (video) Bank of England officials said they’re ready to support financial stability as they warned of the threats stemming from the U.K.’s referendum on its membership in the European Union. “Heightened and prolonged uncertainty has the potential to increase the risk premia investors require on a wider range of U.K. assets,” the BOE’s Financial Policy Committee said in a statement of its March 23 meeting released on Tuesday. “These pressures have the potential to reinforce existing vulnerabilities for financial stability.”
  • Emerging-Markets 2015 Debt Trading Lowest Since 2009, EMTA Says. Emerging-markets debt trading in 2015 fell to the lowest in six years as investors allocated less to the asset class due to rising volatility and a weak growth outlook, EMTA said. Annual trading volume fell 20 percent to $4.73 trillion from $5.92 trillion in 2014, the lowest reported volume since 2009, according to a survey of 49 leading banks, asset management firms and hedge funds, conducted by the New York-based association for emerging-market debt trading and investment.
  • European Stocks Halt Four-Day Declining Streak as Markets Reopen. (video) European stocks rose, snapping their longest losing streak in more than a month, as markets reopened after the Easter holiday. The Stoxx Europe 600 Index added 0.5 percent at the close of trading. It earlier erased an increase of as much as 1 percent as miners reversed gains. Real-estate shares posted the biggest gains on the gauge, with LEG Immobilien AG and Immofinanz AG up 2.5 percent or more.
  • Iran Said to Attend Doha Talks Without Joining Oil Freeze. Iran will attend talks with fellow OPEC members and Russia in Qatar next month without joining their proposal to freeze crude oil production, according to a person familiar with the nation’s policy. Oil Minister Bijan Namdar Zanganeh will attend the discussions in Doha on April 17, said the person, who asked not to be identified as the talks are private. Iran will maintain its policy of regaining market share lost during years of sanctions so won’t accept limits on its output, the person said. Most OPEC members, including Saudi Arabia, have said they will go to the meeting. “By attending the freeze meeting, and yet still being able to say they managed to escape the freeze, Iran earns some brownie points with its domestic audience,” said Olivier Jakob, managing director at consultant Petromatrix GmbH in Zug, Switzerland.
  • Shorts Crowding Into Texas Banks Bet Energy Pain Isn't Over. With energy stocks enjoying the biggest rebound since the beginning of the oil rout, short sellers have shifted their sights to regional banks that do business with the industry. Bearish bets have shot up 35 percent on average this year among the 10 most-shorted stocks in the KBW Regional Banking Index, data compiled by Bloomberg and Markit show. Cullen/Frost Bankers Inc. and Prosperity Bancshares Inc. in Texas have seen short interest surge about 60 percent. The banking gauge fell 0.8 percent at 9:30 a.m. New York time.
  • China's True Demand For Copper Is Only Half as Much as You Think. A 7 million metric tonne stockpile. Virtually every aspect of the commodities bust has a China angle. Forecasts for China's consumption of raw materials have proved wildly optimistic, while domestic production of certain resources have resulted in particularly severe gluts in commodities such as steel and coal. But in one respect, China has been putting an artificial degree of upward pressure on a select resource—copper—sparing it from the worst of the rout in commodities.
  • Steel Rally Is Too Good to Be True. Is it time to call the bottom of the steel market? Lakshmi Mittal seems to think so. The billionaire CEO of ArcelorMittal, the world's largest steelmaker, told the Financial Times this month the trough had been reached and "things should continue to improve." Is he right?
  • Fed's Williams Sees Gradual Hikes as U.S. Economy on Track. (video) Federal Reserve Bank of San Francisco President John Williams said the U.S. economy appears to be weathering cooler global growth and he repeated that the central bank will raise interest rates at a gradual pace. “Despite recent financial market volatility, my overall outlook for both the U.S. and the global economy remains largely unchanged over the past few months,” Williams said Tuesday in a speech in Singapore. “We took the first small step with a modest rate hike in December, and the future pace will be, as we’ve said repeatedly, gradual and thoughtful.”
  • Yellen Says Caution in Raising Rates Is ‘Especially Warranted’. (video) Federal Reserve Chair Janet Yellen said it is appropriate for U.S. central bankers to “proceed cautiously” in raising interest rates because the global economy presents heightened risks. The speech to the Economic Club of New York made a strong case for running the economy hot to push away from the zero boundary for the Federal Open Market Committee’s target rate. “I consider it appropriate for the committee to proceed cautiously in adjusting policy,” Yellen said in the text of prepared remarks Tuesday. “This caution is especially warranted because, with the federal funds rate so low, the FOMC’s ability to use conventional monetary policy to respond to economic disturbances is asymmetric.”
  • Traders Prepare for Death of a Junk Rally. Many traders don't trust the rally in riskier debt right now, and some are plotting ways to bet against it. The credit cycle seems to be souring, with corporate earnings generally weakening, and central bankers are seemingly more desperate. Yet riskier corporate debt is surging again, especially U.S. junk debt tied to energy companies, which has experienced a record 16 percent rally so far in March. That's fueled a 4 percent gain in the broader high-yield market, the biggest monthly gain since 2011.
Wall Street Journal:
  • Pakistan Militant Group Jamaat-ul-Ahrar Threatens Fresh Wave of Violence. Extremists behind deadly Easter Sunday attacks make warning as government rounds up thousands in dragnet. The militant group behind the park massacre here this week on Tuesday threatened to unleash a wave of new attacks, as the government rounded up thousands of suspects. The Easter Sunday assault that killed 72 people was the latest in a series of bloody incursions by Jamaat-ul-Ahrar extremists over the past two years, which has established them as the most brutal and capable militant group in the country. ​The Pakistani Taliban affiliate’s network, officials say, reaches into the country’s heartland of... 
  • Slowing in China: Not Just Economy but Political Resolve. A brittle regime lacks the determination to make painful industrial changes. China’s economic collapse no longer seems imminent. The Wall Street hedge funds who bet against the Chinese currency have taken heavy losses and battered stock markets are stabilizing. In fact, collapse was never in the cards. Over the short term, as Beijing has demonstrated, it has enough financial firepower left to fight off threats...
  • Trump Is Obama Squared. Two epic narcissists who see themselves as singularly suited to redeem America.
MarketWatch.com: 
CNBC:
Zero Hedge:
Washington Times:
  • Ex-Trump strategist calls candidacy a ‘charade’ in scathing open letter. A former campaign strategist for Donald Trump penned a blistering column on Monday calling the GOP front-runner a “self-preservationist” who “would stab any one of his supporters in the back if it earned him a cent more in his pocket.” Stephanie Cegielski, a former communications director for Mr. Trump’s short-lived “Make America Great Again” super PAC, claimed in an open letter for XOJane that Mr. Trump aimed to position himself as a “protest” candidate and never expected to do so well in the Republican primary. “What was once Trump’s desire to rank second place to send a message to America and to increase his power as a businessman has nightmarishly morphed into a charade that is poised to do irreparable damage to this country if we do not stop this campaign in its tracks,” she wrote. “And I am now taking full responsibility for helping create this monster — and reaching out directly to those voters who, like me, wanted Trump to be the real deal,” Ms. Cegielski wrote. “I don’t think even Trump thought he would get this far. And I don’t even know that he wanted to, which is perhaps the scariest prospect of all. “He certainly was never prepared or equipped to go all the way to the White House, but his ego has now taken over the driver’s seat, and nothing else matters. The Donald does not fail. The Donald does not have any weakness. The Donald is his own biggest enemy.” “I’ll say it again: Trump never intended to be the candidate. But his pride is too out of control to stop him now,” she continued. “He doesn’t want the White House. He just wants to be able to say that he could have run the White House.

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