Monday, November 21, 2016

Today's Headlines

  • Day of Reckoning Strikes Europe’s Balance-Sheet Basket Cases. (video) It’s a new era for Europeans who for eight years got accustomed to watching companies with the worst balance sheets do nothing but rally. Now those stocks are getting crushed by rising bond yields, a trend strategists see continuing. Companies with the highest debt ratios have tanked 5.5 percent this month, the worst showing versus the Stoxx Europe 600 Index since 2008, data compiled by Goldman Sachs Group Inc. and Bloomberg show. Get used to it, says Morgan Stanley’s Graham Secker.
  • Three Charts Signal Dark December for Slumping China Bond Market. Accelerating inflation, a weakening yuan and a cash crunch look set to deliver a triple blow to China’s bond market. Haitong Securities Co., ranked the best fixed-income forecaster by financial magazine New Fortune, revised up its 10-year sovereign yield estimate twice in less than three weeks to as much as 3 percent. Ten of 19 banks and brokerages say the yield could touch that level by year-end with the median forecast for a climb to 2.93 percent, from 2.885 percent on Monday, a survey by Bloomberg shows. “All the factors we see are negative,” said Deng Haiqing, chief economist at JZ Securities Co. in Beijing. “The market is entering the darkest period since 2013’s cash crunch.”
  • Citigroup Leads U.S. Banks Higher in Global System Risk List. Global banking regulators said some U.S. lenders present a bigger risk to the financial system than last year and should face stiffer capital requirements to ward off threats. Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. all face higher capital surcharges after they rose in the Financial Stability Board’s latest ranking of the most systemically important banks in the world. Meanwhile, New York-based Morgan Stanley and London-based lenders HSBC Holdings Plc and Barclays Plc saw their buffer levels fall, the FSB said in a statement on Monday. HSBC’s capital surcharge falls to 2 percent of risk-weighted assets from 2.5 percent, while Citigroup’s buffer rises to 2.5 percent from 2 percent, the FSB said. Barclays surcharge falls to 1.5 percent from 2 percent; Wells Fargo rises to 1.5 percent from 1 percent; and the Industrial and Commercial Bank of China surcharge rises to 1.5 percent from 1 percent.
  • Europe Stocks Rise After Longest Run of Daily Swings Since 2013. (video) A rally in commodity producers helped European equities erase declines, sending the shares for their longest streak of intraday fluctuations in more than three years. The Stoxx Europe 600 Index climbed 0.3 percent, reversing a slide of as much as 0.8 percent. Royal Dutch Shell Plc and Glencore Plc climbed more than 2 percent as commodities advanced. That marks a 10th day of the gauge alternating between intraday advances and losses, its longest streak since May 2013.
  • OPEC Quota Talks End First Day as Optimism on Output Deal Grows. (video) Oil traders and analysts grew more confident that OPEC will reach a deal to curb global oversupply next week as delegates said talks on assigning quotas to individual countries made good progress. Today’s discussions went well, Libyan OPEC Governor Mohamed Oun said as he left the group’s headquarters in Vienna on Monday evening. The two-day meeting, a warm-up for a full OPEC meeting next week, will continue tomorrow.
  • Iron Ore Awakens to Hangover as Stockpiles Surge, Rio Cuts Jobs. (video) Benchmark spot with 62 percent content at Qingdao fell 8.8 percent last week, capping the first weekly drop in almost two months, according to Metal Bulletin Ltd. Prices, which fell 3.4 percent to $70.34 a dry ton on Monday, may average $58 this quarter and $50 next year, according to Barclays. Earlier in Asia, the SGX AsiaClear contract fell as much as 2.3 percent to $65.30 a ton. That follows a 15 percent drop last week, and puts prices a little above the $64.78 close on Nov. 8, the last day of trade of before Trump’s win. On the Dalian Commodity Exchange, futures were at 552.5 yuan ($80) a ton, compared with the 519 yuan close on Nov. 8, and the Nov. 14 high of 627 yuan.
  • Goldman(GS) Overweights Commodities for First Time in Four Years.
Wall Street Journal:
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