Monday, March 24, 2014

Today's Headlines

  • World Leaders Discuss Ukraine as Worry Grows Over Russia. World leaders pledged further measures against Russia amid growing concern that it’s building up its forces on the border with Ukraine after annexing the Crimean peninsula. President Barack Obama and the other Group of Seven heads of government hold a meeting in The Hague tonight to decide what steps to take next in the crisis, including suspending Russia from the larger G-8 grouping in the worst standoff between the former Cold War enemies since the Soviet Union collapsed. Ukraine said today it deployed more troops to the frontier. 
  • Russia Facing Recession as Sanctions Likely to Intensify. Sanctions imposed by the U.S. and the European Union are pushing Russia toward a recession as the intensity of their economic penalties increases after the annexation of Crimea earlier this month. Banks including state-run VTB Capital say the world’s ninth-biggest economy will shrink for at least two quarters as penalties for annexing Crimea rattle markets, curb investment and raise the cost of borrowing. Sanctions that have so far focused on individuals via visa bans and asset freezes may be expanded to target specific areas of the economy.
  • China’s Urbanization Loses Momentum as Growth Slows. The pace of migration of rural Chinese to cities, a dynamic hailed by Premier Li Keqiang as key to the nation’s development, is set to slow by a third in coming years, deepening economic-growth concerns. A government report released this month projected a 6.3 percentage-point rise in the share of people living in cities from 2013 to 2020 -- down from a 9.4-point gain the previous seven years. Nomura Holdings Inc. estimates that slower urbanization will slice as much as half a percentage point from annual gross domestic product growth over the next half decade.
  • China Money Rate Completes Longest Rising Streak in Eight Months. China’s benchmark money-market rate rose for an eighth day, the longest stretch since July, after a central bank official said the nation will make “substantial progress” in freeing up interest rates. “While much needed, the deposit-rate reform is likely to raise costs throughout the economy and will be a drag on growth,” said Dariusz Kowalczyk, a Credit Agricole CIB strategist in Hong Kong. Lou’s comments are positive for the long-term potential, but may temper market hopes for policy stimulus, he said.
  • Turkey Threatens Syria With Further Action After Warplane Downed. Turkey told Syria that it was ready to act again in defense of its borders after the shooting down of a warplane said to have flown into its territory. Foreign Minister Ahmet Davutoglu said today that the incursion should not be repeated, as the military justified yesterday’s action by Turkish combat aircraft against a Syrian MiG-23 that had ignored four warnings and briefly penetrated 1 kilometer (0.6 mile) into Turkish airspace, according to a statement. A Syrian SA-5 surface-to-air missile system locked on a Turkish F-16 for more than four minutes during a border patrol yesterday, the military said, without elaborating. 
  • European Stocks Decline Most in Two Weeks; KPN Retreats. European stocks fell, after posting their biggest weekly advance in more than a month, as world leaders pledged further measures against Russia, and manufacturing gauges slipped in China, Germany and the U.S. Royal KPN NV lost 4.2 percent after Citigroup Inc. downgraded the stock. Stada Arzneimittel AG slumped 15 percent after cutting its 2014 forecast. CEZ AS, the largest Czech utility, climbed 5.1 percent after the nation’s finance minister said the government is seeking a 100 percent dividend payout. The Stoxx Europe 600 Index fell 1.1 percent to 324.39 at the close of trading in London.
  • Gold Drops Most in 13 Weeks; Palladium Extends Rally. Gold futures for June delivery fell 1.9 percent to settle at $1,311.10 an ounce at 1:45 p.m. on the Comex in New York, the biggest drop since Dec. 19. Earlier, the price touched $1,308.40, the lowest for a most-active contract since Feb. 20. Trading was 54 percent above the average for the past 100 days for this time, data compiled by Bloomberg showed.
  • Record U.S. Small-Caps Rally Sends Valuation 26% Above 1990s. In one corner of the U.S. equity market, investor enthusiasm is exceeding the frenzy of the Internet bubble. Small-cap shares tracked by the Russell 2000 Index have rallied for seven straight quarters, the longest stretch ever, sending valuations 26 percent above levels at the height of the 1990s rally. Gains in stocks from LogMeIn (LOGM:US) Inc. to Athenahealth Inc. have pushed the gauge up 248 percent since the bull market began five years ago, leaving price-earnings ratios about three times as high as for shares in the Standard & Poor’s 500 Index.
Wall Street Journal:
Fox News:
  • El-Erian: Markets should be worrying about Ukraine. Markets have been lulled to complacency by geopolitical tensions in recent years, says to Mohamed El-Erian, who’s still typing up a storm after his departure from Pimco. But, he says, beware of Ukraine.
Business Insider:
Washington Post:
Financial Times:
  • Fed’s growing repo role risks backfiring. Don’t fight the Fed is an oft-quoted adage among investors. Now the dictum may extend to the “shadow banking” world as the US central bank muscles into the murky realm of funding and leveraging between established banks and other financial players.

1 comment:

theyenguy said...

The Great Bear Market of 2014 picked up steam today.

Sectors trading lower included Social Media, SOCL 2.9%, Biotechnology, IBB 2.8, Internet Retail, FDN 2.7, Nasdaq Internet, PNQI 2.6, Pharmaceuticals, PJP 2.5, Spin Offs, CSD 1.9, Media, PBS 1.8, Solar Energy, TAN 1.7

Nations trading lower included GERJ 2.4%, China Technology, CQQQ, 2.2%.

Disinvestment out of risk based stocks has introduced Kondratieff Winter.