Friday, November 28, 2014

Friday Watch

Evening Headlines 
  • Russian Recession Risk Seen at Record as Oil Saps Economy. Russia will sink into recession at a Urals price of $80 a barrel, seven years after its economy grew 8.5 percent when its chief export oil blend averaged near $70, according to a Bloomberg survey of analysts. Urals at $80, or about $3 cheaper than its average in the month through November 15, will tip Russia into a contraction, according to the median estimate of 32 economists. The probability of a recession in the next 12 months rose to 75 percent, the highest since the first such survey more than two years ago, according to another poll.
  • Abe Tested by Weak Retail Sales as Japan Election Looms: Economy. Japan’s inflation slowed for a third month and retail sales fell more than forecast, showing the economy continues to struggle from a sales-tax increase as Prime Minister Shinzo Abe heads into an election next month. The Bank of Japan’s key price gauge increased 2.9 percent in October from a year earlier, equivalent to a 0.9 percent gain when the effects of April’s tax bump are excluded. Retail sales dropped 1.4 percent from September, more than a 0.5 percent decline forecast in a Bloomberg News survey.
  • Kuroda’s Easing ‘Incomprehensible’ to Ex-BOJ Chief Economist. Prime Minister Shinzo Abe has tied the Bank of Japan’s hands with a delay in a sales-tax increase that’s hurt confidence in the nation’s finances, a former chief economist at the central bank said. Damaged trust in Abe’s pledge to cut the deficit will make it “extremely difficult” for the BOJ to exit record stimulus without risking a bond yield surge, Hideo Hayakawa said in an interview yesterday. More easing would also be tough because Governor Haruhiko Kuroda effectively has made fiscal improvement a premise for further monetary stimulus, he said
  • Record China Downgrades Test PBOC as More Defaults Seen. Rating companies say defaults in China will spread as the central bank’s interest rate cut will do little to stop a wave of maturities from worsening record debt downgrades. Chinese credit assessors slashed grades on 83 firms this year, already matching the record number in all of 2013, according to data compiled by Shenzhen-based China Investment Securities Co. Companies must repay 2.1 trillion yuan ($342 billion) in the first six months of 2015, the most for any half, data compiled by Bloomberg show.
  • Cameron to Set Out Plan to Cut Migration, Raising EU Exit Threat. David Cameron will raise the prospect of Britain leaving the European Union if fellow leaders don’t agree to let him restrict access to welfare payments for migrants. In a speech in central England today, the prime minister will demand that Europeans arriving in the U.K. receive no welfare payments or state housing until they’ve been resident for four years. He’ll say they shouldn’t receive unemployment benefits and should be removed from the country if they don’t find work within six months.
  • Commodities Slump to Five-Year Low as Crude Oil Drops on OPEC. Commodities retreated to a five-year low as crude oil tumbled after OPEC refrained from cutting output to ease a global glut. Gold and copper also declined. The Bloomberg Commodity Index (BCOM) of 22 raw materials dropped as much as 1.9 percent to 115.2838, the lowest since July 2009, before trading at 115.29 by 1:26 p.m in Singapore. The index resumed trading today after the U.S. Thanksgiving holiday yesterday when Brent crude dropped 6.7 percent after a meeting of the Organization of Petroleum Exporting Countries in Vienna took no action to relieve the supply glut.
Zero Hedge:
Business Insider:
Evening Recommendations
  • None of note
Night Trading
  • Asian equity indices are -.50% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 101.0 -1.5 basis points.
  • Asia Pacific Sovereign CDS Index 62.50 unch.
  • FTSE-100 futures -.27%.
  • S&P 500 futures +.01%.
  • NASDAQ 100 futures  +.28%.
Morning Preview Links

Earnings of Note

  • None of note
Economic Releases
  • None of note.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Eurozone CPI report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by consumer and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the early close, finishing mixed. The Portfolio is 50% net long heading into the day.

No comments: