Tuesday, November 01, 2016

Today's Headlines

Bloomberg:
  • China Starts Credit-Default Swap Trading as Bond Failures Spread. Faced with mounting bond failures, China has started trading of credit-default swaps on the nation’s interbank market. Trading began Monday, according to a statement on the website of the National Association of Financial Market Institutional Investors, a unit under the nation’s central bank. Industrial Bank Co. and Bank of China Ltd. were among the institutions to conduct transactions, using China United Network Communications Ltd.’s bonds as underlying debt, said a person familiar with the matter, asking not to be identified because the authorities haven’t disclosed the information. The swaps, which provide insurance against nonpayment on bonds, can help investors hedge against credit risks after 21 securities defaulted this year, compared with only seven in 2015.
  • Better Earnings Season Marred as Shire Sends Europe Stocks Down. (video) European companies may be heading for their most encouraging earnings season in a year, but disappointing results from heavyweights including Shire Plc and Standard Chartered Plc are hogging the limelight. About half of the Stoxx Europe 600 Index’s members have released quarterly results, and of those, 62 percent have beaten profit estimates, according to strategists at JPMorgan Chase & Co., marking the best scorecard since the second quarter of 2015. But despite upbeat news from Royal Dutch Shell Plc and China on Tuesday, worse-than-estimated results at Shire and Standard Chartered dragged the equity gauge down 1.1 percent to its lowest level since July 11 at the close of trading. Since reaching a four-month high in September, stocks have struggled to break higher on concern over monetary-policy tightening, the efficacy of European Central Bank stimulus amid mixed economic data, and the U.S. elections. The Stoxx 600 fell 1.2 percent in October, posting its first back-to-back monthly declines since the start of the year, with a late slide in energy shares and earnings ambiguity exacerbating investor concerns.
  • Oil's Heading to $40 If OPEC Fails, Says Goldman. (video)
  • Buy Gold No Matter Who Wins the Election, HSBC Says. The precious metal could reach levels not seen since 2013. 
  • Equity Traders Are Preparing for a Tsunami Amid Tranquil Seas. Markets have been unusually calm in the run-up to the U.S. presidential election, with realized one-month volatility for the S&P 500 index tumbling throughout October. But traders are preparing for this to end very soon, as evidenced on Tuesday morning by the surge in the CBOE Volatility Index to above 18 — a level it hasn't breached since mid September. The index, also known as the VIX, is a measure of the S&P 500's implied volatility over the next month derived from options prices.
Wall Street Journal:
Zero Hedge:

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