Tuesday, November 04, 2014

Today's Headlines

  • Merkel Says Ukraine Rebel Votes Illegal as Tensions Mount. German Chancellor Angela Merkel condemned what she called “illegal” elections in Ukraine’s separatist regions as President Petro Poroshenko threatened to scrap a law on greater autonomy underpinning an increasingly fragile cease-fire. Amid warnings that Russia is amassing military vehicles in rebel-held areas, Poroshenko convenes a meeting of Ukraine’s National Security and Defense Council at 5 p.m. today to consider revoking the “special status” law that was part of the truce accord struck Sept. 5 in the Belarusian capital, Minsk. Merkel said she sees “no reason right now” to lift economic sanctions imposed on Russia, which “isn’t contributing yet as much as we would like” to resolve the crisis.
  • Poroshenko Asks to End East Ukraine’s Autonomy After Vote. Ukrainian President Petro Poroshenko will ask parliament to revoke a law giving more autonomy to regions occupied by pro-Russian separatists after the rebels held elections condemned by the U.S. and the European Union. Ukraine is sticking to a Sept. 5 cease-fire, Poroshenko said, even as the government in Kiev accused insurgents of continuing to shell government forces and Russia of massing troops and military vehicles in rebel-occupied Luhansk and Donetsk. The results of Nov. 2 ballots in the two regions will be annulled and the votes redone in government-condoned votes slated for Dec. 7, Poroshenko said.
  • EU Cuts Growth Outlook as Inflation Seen Below ECB Forecast. The European Commission cut its growth forecasts for the euro area as the bloc’s largest economies struggle to put the ravages of the debt crisis behind them after two recessions in six years. Gross domestic product in the 18-nation region will rise by 0.8 percent this year and 1.1 percent in 2015, down from projections for 1.2 and 1.7 percent in May, the Brussels-based commission said today. It lowered its projections for Germany, Europe’s largest economy, and said inflation in the euro area will be even weaker than the European Central Bank predicts
  • EU Cuts Italy GDP Forecasts, Says Exports Needed. The European Commission cut Italy’s economic forecasts for this year and next, saying the country will need to rely on an increase in exports to return to growth in 2015. The country’s economy will contract 0.4 percent in 2014 and expand 0.6 percent next year, the Brussels-based executive arm of the European Union said today in its autumn economic forecasts. That compares with a May forecast predicting a 0.6 percent expansion this year and a 1.2 percent increase next year.
  • European Stocks Decline as EU Cuts Forecasts, Oil Tumbles. (video) European stocks declined for a second day, as officials cut growth forecasts for the euro region, and oil companies plunged on tumbling prices for the commodity. Hunting Plc and Seadrill Ltd. retreated more than 5 percent as a gauge of oil-related companies fell the most on the Stoxx Europe 600 Index. Hugo Boss AG slid 5 percent after lowering its 2014 sales outlook. Securitas AB (SECUB) jumped to the highest level in more than seven years after reporting third-quarter net income that beat estimates. Royal DSM (DSM) NV advanced 1.6 percent after posting quarterly results that beat projections. The Stoxx 600 slipped 1 percent to 330.88 at the close of trading, extending losses in late afternoon trading.
  • U.S. Crude Futures Fall to 3-Year Low on Saudi Price Cut. WTI for December delivery fell $1.97, or 2.5 percent, to $76.81 a barrel at 1:37 p.m. on the New York Mercantile Exchange after touching $75.84, the lowest intraday price since Oct. 4, 2011. The volume of all futures traded was 54 percent above the 100-day average for the time of day. Front-month WTI swung to a discount, or contango, yesterday versus the second month for the first time since April. 
  • Copper Falls Most in Three Weeks on EU Economic Outlook. Copper futures for December delivery fell 1.5 percent to settle at $3.0185 a pound at 1:13 p.m. on the Comex in New York, the biggest drop for a most-active contract since Oct. 15. Earlier, the metal touched $3.003, the lowest since Oct. 21. 
  • EU Next-Year Coal Falls to Record Low Close as Glut Grows. European thermal coal for delivery next year fell to its lowest-ever close as Glencore Plc said it boosted third-quarter production amid a glut of supply in the seaborne market. Next-year coal for delivery to northwest Europe lost 1.1 percent to $70.35 a metric ton at 5:19 p.m. in London, according to broker data on Bloomberg. That’s the lowest close since at least September 2007, when Bloomberg began compiling data for the contract. Prices slid as low as $70.20 during the session.
Business Insider:
NY Post:
  • Hedgies Are Drying Up Like Fall Leaves. While the broader markets came back last week to post a positive October and are up nearly 7 percent this year, many hedgies are still falling behind.
  • Exclusive: Central Bankers to Challenge Draghi on ECB Leadership Style. National central bankers in the euro area plan to challenge European Central Bank chief Mario Draghi on Wednesday over what they see as his secretive management style and erratic communication and will urge him to act more collegially, ECB sources said. The bankers are particularly angered that Draghi effectively set a target for increasing the ECB's balance sheet immediately after the policy-making governing council explicitly agreed not to make any figure public, the sources said. "This created exactly the expectations we wanted to avoid," an ECB insider said. "Now everything we do is measured against the aim of increasing the balance sheet by a trillion (euros)... He created a rod for our own backs."
International Business Times:
  • Ukraine Crisis: President Poroshenko Orders Troops to Key Cities to Prevent Possible Rebel Offensive. Ukrainian President Petro Poroshenko has revealed that he has ordered his military leaders to deploy further army units to prevent a potential offensive by Russian-supported separatists in eastern and southern cities, according to Interfax news agency. In a statement after a meeting with security chiefs, Poroshenko confirmed that the units were to be deployed to protect Mariupol, Berdyansk, Kharkiv, and northern Luhansk. "Several new [military] units and groups have been formed which will allow immediately for a possible offensive on Mariupol, Berdyansk, Kharkiv and northern Luhansk," Poroshenko said at a meeting of the Ukrainian national security and defence council.

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