Monday, January 09, 2017

Today's Headlines

  • China’s Biggest Money Fund Is Bracing for More Liquidity Shocks. China will face more frequent liquidity shocks this year, according to the manager of the nation’s biggest money-market fund, which plans to hold extra cash to protect against the risk of rising redemptions. The government’s efforts to curb risk in the financial system and support the sliding yuan are likely to “over-stretch a rope that’s already tight,” said Wang Dengfeng, who manages the 800 billion yuan ($115 billion) Yu’EBao fund at Tianhong Asset Management Co. “The biggest challenge for us this year is to appropriately manage our own liquidity risks - that we have ample cash to meet demand when large redemptions occur,” Wang said in an interview in Beijing last week. “We’ll set aside much more cash than needed, rather than allocating into high-yielding assets.”
  • Nielsen: China Growth Falls to 3% Within Five Years. (video)
  • Why the China Manipulator Label Looks Increasingly Appealing to Trump. (video) The name-and-shame maneuver may not be a long shot.
  • McDonald’s(MCD) Sells Control of China Business to Citic, Carlyle. McDonald’s Corp. agreed to sell a controlling stake in its China and Hong Kong operations to a group of investors for about $1.7 billion, a key component of the fast-food giant’s reorganization in a market where it’s striving to catch up with more nimble rivals. Chinese state-backed conglomerate Citic Ltd., Citic Capital Holdings and U.S. private-equity firm Carlyle Group LP will acquire an 80 percent holding in a deal valuing the business at as much as $2.08 billion, according to a statement Monday.
  • Italian Unemployment Rate Rises to Highest Since June 2015. Italy’s unemployment rate rose to the highest level since June 2015, as the country struggles to regain a solid economic footing. The jobless rate was 11.9 percent in November, up from a revised 11.8 percent the month before, statistics agency Istat said Monday in Rome. The median estimate in a Bloomberg survey of 13 analysts called for 11.6 percent. Youth unemployment rose to 39.4 percent, the highest since October 2015. The November unemployment rate for the 19-nation euro area was 9.8 percent, the European Union’s statistics office in Luxembourg said later Monday.
  • Deutsche Bank(DB) Says Oil, Bond and Yen Trades May Be Due Break. The new year has barely started and it’s time for a breather, according to Deutsche Bank AG. The lender says three popular “reflation trades” -- selling government bonds, buying oil and shorting the yen -- may have gone too far. While fundamentals suggest these trends may have further to go, Deutsche Bank strategists including New York-based Parag Thatte wrote in a recent note that the trio of consensus calls are now looking “stretched.
  • Iraq’s Southern Oil Exports Hit Record Before OPEC Cuts. Iraq’s oil exports from its southern ports in the Gulf reached a record high in December, just before the country was due to join other major producers in cutting output to help curb a global oversupply. Shipments from southern ports in Basra Province averaged 3.51 million barrels a day in December, Oil Minister Jabbar Al-Luaibi said in an e-mailed statement, up from 3.407 million in November. He didn’t disclose figures for exports through Iraq’s northern pipeline network, which typically average about 600,000 barrels a day. “Achieving this record average will not affect Iraq’s decision to cut output from the beginning of 2017,” Al-Luaibi said. “Iraq is committed to achieving producers’ joint goals to control the oil glut in world markets.”
  • The Options Market Isn't Too Worried About Retail Woes -- Maybe It Should Be. The ratio of puts to calls for the retail sector ETF has come in sharply, notes MKM Partners.
Wall Street Journal:

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