Tuesday, March 08, 2016

Today's Headlines

Posted by Gary .....at 3:05 PM
Bloomberg:
  • China Stock Slump Set to Drag on Growth. China’s tumbling stock market is set to join a trade slump and sluggish factory conditions as a brake on economic growth this quarter. A plunge that has seen the Shanghai Composite Index fall 18 percent this year will reduce first-quarter gross domestic product growth by 0.1 percentage point to 0.3 percentage point, according to the majority of economists surveyed by Bloomberg News this month. "A minor drag from the stock market rout on GDP growth has to be expected," said Frederik Kunze, a Hanover, Germany-based economist at Norddeutsche Landesbank. "We will also see adjustments in the more and more important service sector." That’s because lower trading volumes dent revenue for the nation’s finance sector, which emerged as a key growth driver last year. As that adrenaline shot fades, the economy will be more reliant on the boost offered by increased fiscal support and monetary easing, the latest of which came last week when the central bank lowered the reserve requirement ratio for major banks.
  • Breaking Down China's Trade Data. (video)
  • China's Drug-Price Cuts Are Hitting Big Pharma Where It Hurts. The world’s largest pharmaceutical companies are facing a roadblock in China as a state-led campaign to slash drug prices has triggered a slowdown in sales growth. One of the biggest problems: China’s government-run health insurance funds, which are struggling to keep up with an ageing population and surging incidence of diseases like cancer or diabetes. As they grapple with tighter budgets and a slowing economy, many of these funds are capping reimbursements to patients and pushing local authorities to negotiate with companies to lower drug prices. More than $115 billion of drugs were sold in China last year, according to researcher IMS Institute for Healthcare Informatics, making it the world’s second largest market after the U.S. China’s pharmaceutical market shrank by 1 percent in dollar terms from October to November, according to Barclays Plc, a sharp contrast with the 17 percent expansion in the second half of 2013. As a result, companies from the U.K.’s GlaxoSmithKline Plc to AstraZeneca Plc and New York’s Pfizer Inc. saw China sales growth weaken last year. In the latest sign of price pressures for the industry, Li Bin, director of the National Health and Family Planning Commission said at a press conference at the National People’s Congress on Tuesday that China has won price cuts of more than 50 percent in national-level bargaining with drug companies on about five kinds of costly imported drugs for illnesses including cancer. The official didn’t specify the names of the drugs or the manufacturers.
  • Brazil Stocks Decline as China Trade Report Sends Vale Tumbling. The Ibovespa fell for the first time in seven days as a disappointing trade report out of China, Brazil’s top trading partner, sent Vale SA’s shares tumbling. Vale, a miner of iron ore, contributed the most to the index’s drop after a report showed that China’s imports declined for the 16th straight month and exports slumped by the most in almost six years. Commodities account for about a fifth of the Ibovespa index’s weighting. Tuesday’s slide puts an end to a rally that had sent the Ibovespa to its highest in five months. Before today, Brazilian stocks had surged 18 percent in a little more than a week as traders bet that President Dilma Rousseff was getting closer to being impeached, which could usher in a change in government that many investors say is the only way to shift attention from a sweeping corruption scandal back to the economy and a budget deficit. "China continues to be a source of concern for Brazil,” Ignacio Crespo Rey, an economist at brokerage Guide Investimentos, said from Sao Paulo. “Investors are more cautious and paying a lot of attention to the political scenario.” The Ibovespa fell 0.7 percent to 48,924.73 at 1:35 p.m. in Sao Paulo after earlier swinging between gains and losses. About half of the gauge’s 61 stocks dropped. Vale plunged 11 percent, it’s biggest tumble on a closing basis since October 2008. 
  • Banks Face Billions in Collateral Needs Under EU Swap Rules. Europe’s biggest banks will need billions of dollars to meet collateral requirements for derivatives starting this year under the latest version of a key rule that seeks to reduce risk. The standards, which will be phased in from September this year, may require EU buyers and sellers of swaps to set aside between 200 billion euros ($220.5 billion) and 420 billion euros in total once they are fully effective in 2020, three European regulators said on Tuesday in final draft standards. The requirement aims to stiffen standards for swaps contracted directly between traders rather than being settled at clearinghouses. “The overall reduction of systemic risk and the promotion of central clearing are identified as the main benefits of this framework,” the European Banking Authority, European Securities and Markets Authority and European Insurance and Occupational Pensions Authority said in the document.
  • Europe's Negative Yields Seep Into Non-Government Bond Sales. The first non-government issuer just got paid to borrow in euros. Berlin Hyp AG sold 500 million euros ($550 million) of three-year covered bonds priced to yield minus 0.162 percent on Tuesday, according to data compiled by Bloomberg. The sale followed the euro area’s first zero-coupon covered bond, sold last month by another German issuer, Landesbank Hessen-Thueringen Girozentrale. 
  • Emerging Markets Halt Gain as China Exports Damp Growth Optimism. Emerging-market stocks halted a seven-day advance as the biggest drop since 2009 in Chinese exports underscored shrinking global demand. The MSCI Emerging Markets Index ended its longest streak of gains in 11 months and a gauge of 20 developing-nation currencies retreated from the strongest level this year. Polish stocks fell from a three-month high as investors awaited the European Central Bank’s policy decisions on Thursday. Iron-ore producer Vale SA led Brazilian stocks lower. South Africa’s rand slumped as commodity prices dropped and the country’s current-account deficit widened more than economists forecast. An index of emerging-market bonds fell from the highest level in almost 11 months. The MSCI developing-nation stock gauge fell 0.9 percent to 788.23 at 11:51 a.m. in New York.
  • Miners Lead 2nd Day of Europe Stock Slide on Global-Growth Worry. European stocks fell further from a five-week high, dragged down by equities that led the recent rebound, amid renewed worries about the outlook for global growth.Commodity producers slid the most, snapping a seven-day winning streak, followed by carmakers. Gains in those industries have pushed up the Stoxx Europe 600 Index as much as 13 percent since a Feb. 11 low. The benchmark lost 1 percent at the close, after data that showed Chinese exports and Japan’s economy shrank.
  • Goldman(GS) Says Commodity Rally a False Start That's Set to Fizzle. Goldman Sachs Group Inc. predicted a rally in commodities from iron ore to gold will falter and forecast copper and aluminum prices will slide as much as 20 percent over the next year. Any increase in raw material prices will prompt more supplies to enter the market, making it difficult for any advance to be sustained, analysts including Jeffrey Currie wrote in a report dated March 7. The bank maintained its bearish outlook for gold, said iron ore’s surge would prove temporary and reiterated that oil will fluctuate between $20 and $40 a barrel. Goldman also said it was a good time to make bets that copper and aluminum would decline. 
  • Iron Ore's Rally Stalls as Goldman to Citigroup Forecast Retreat. Iron ore’s rally stalled on Tuesday after a record 19 percent advance a day earlier as banks from Goldman Sachs Group Inc. to Citigroup Inc. together with some of the largest miners said that the surge wasn’t likely to endure. Ore with 62 percent content delivered to Qingdao dropped 0.2 percent to $63.63 a dry metric ton, Metal Bulletin Ltd. data showed. The decline was preceded in Asia by a fall in bellwether futures in Singapore, which lost as much as 12 percent. “There’s clearly what you would describe as an extreme short-covering event going on,” said Wayne Gordon, executive director for commodities and forex at UBS Wealth Management. “The rally is there to be sold because the fundamentals of the market, being supply and demand, do not stack up.”
  • U.S. Monetary Policy Increasingly Made in China. No central bank – even the world’s most powerful – is an island. With increasingly interconnected global financial markets, what happens overseas often quickly redounds on the U.S., and vice versa. Here’s the reasoning behind the “Made in China” observation, as laid out by Joachim Fels, global economic adviser for Pacific Investment Management Co. , which oversees $1.43 trillion in assets.
  • Republican Race Narrows As Trump’s Rivals Gain: ABC/Post Poll. Trump Has 34% to 25% for Cruz, 18% for Rubio, ABC/Washington Post national poll shows. Each of Trump’s rivals has gained since previous poll. Hillary Clinton beats Bernie Sanders 49% to 42%, the closest it’s been in this survey, according to March 3-6 poll.
  • States Starting to Feel Pinch as Revenue Forecasts Weaken: Chart. 
  • VIX Faces Challenge From Trading Robots Unleashed by Bats. The dominant gauge of investor fear -- the VIX -- is about to face new competition. Bats Global Markets Inc. is introducing its own volatility benchmark for U.S. stocks called the Bats-T3 SPY Volatility Index, an attempt to muscle in on CBOE Holdings Inc.’s VIX territory. Dubbed SPYIX (pronounced "Spikes") by its creators, the index tracks the price of options linked to the world’s biggest exchange-traded fund, the SPDR S&P 500 ETF Trust. Though they’re calculated in different ways, the indexes are similar enough that the price of the SPYIX should closely resemble the VIX, one of the most closely watched benchmarks in finance.
  • Fed Governor Donates to Clinton Even as Bank Guards Independence. At a time when Federal Reserve officials are making the case that monetary policy needs to be non-partisan and independent, a sitting governor has given money to Hillary Clinton. Fed Governor Lael Brainard gave $750 in three contributions to Clinton’s campaign between November and January, according to Federal Election Commission records.
  • Dick's Sporting Goods(DKS) Profit Misses Estimates.
Fox News: 
  • American tourist reportedly killed in 1 of 3 terror attacks in Israel during Biden visit. (video) An American tourist was stabbed to death in one of three bloody terror attacks that  rocked Israel Tuesday, just as Vice President Biden arrived in Tel Aviv to meet with leaders in an effort to stem Palestinian violence and mend frayed relations with the Jewish state. Palestinian attackers shot and stabbed a dozen policemen and civilians in separate assaults around Israel, continuing near-daily incidents that began in October and have left more than 200 Israelis and Palestinians dead. Two Israeli police officers and 10 civilians were wounded in the attacks and three Palestinian attackers were shot and killed.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
  • U.S. may raise Iran missile tests at Security Council -official. The United States is closely following reports that Iran has conducted ballistic missile tests and if they are confirmed will seek an "appropriate response" at the U.N. Security Council, a U.S. official said on Tuesday. The official, speaking on condition of anonymity, said the reported ballistic missile tests would not be considered a violation of the international nuclear deal with Iran but there were "strong indications" the test would be inconsistent with a U.N. Security Council resolution.
La Vanguradia:
  • Negative Rates Can Hit Stability, BIS's Caruana Says. Keeping interest rates very low or negative for a long period can negatively affect financial stability, Bank of International Settlements General Manager Jaime Caruana said in an interview. Markets are excessively dependent on central bank actions, he said. At some point, monetary policy will have to normalize and markets overcome resulting volatility, Caruana said.
Economista:
  • Volkswagen to Cut Mexico Production by 40%.
Shana:
  • Iran's 2017-18 Budget Based on $35-$40 Per Bbl Oil. Forecast for year March 21, 2017 to March 20,2018, Iran's Oil Ministry news service reports, citing Adel Azar, head of Iran's statistical center. 

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