Wednesday, November 05, 2014

Today's Headlines

  • Ukraine Truce Teeters as Merkel Warns on Russia Sanctions. Ukraine’s two-month-old truce was in peril amid new fighting as insurgents loyal to Russia raised doubts about a cease-fire and German Chancellor Angela Merkel urged the European Union to consider more sanctions. A move by Ukrainian President Petro Poroshenko to revoke the special status of the rebel-held areas will scuttle the Sept. 5 truce struck in Minsk, the breakaway regions said in a joint statement today. Speaking at a news conference in Berlin, Merkel said the EU should consider expanding the list of Russian-linked individuals under sanctions to punish those responsible for “illegitimate” elections in eastern Ukraine. 
  • Ruble Slumps to Record as Russia Moves Closer to Free Float. The ruble fell to a record as Russia moved a step closer to allowing it to trade freely, abandoning policies that fueled speculation on the currency’s decline. The ruble slid as much as 3.1 percent against the dollar before trading 2.6 percent lower at 44.7655 by 5:48 p.m. in Moscow. The exchange rate pared declines after the central bank’s First Deputy Governor Ksenia Yudaeva said further interest-rate increases have not been ruled out. Three-month implied volatility for the currency rose to a five-year high, while wagers for higher borrowing costs fell. 
  • Euro Area Limping Toward Deflation Fuels QE Calls as ECB Meets. The euro area is edging closer to the moment that deflation risks become reality. Companies cut selling prices by the most since 2010 as they attempted to boost sales in the face of a flagging economy and slowing new orders, Markit Economics said today. This in turn is squeezing profit margins and reducing resources for hiring and investing, damping chances of an economic rebound, the London-based company said.
  • GM China Sales Expand at Slowest Pace in 20 Months. General Motors Co. (GM), which counts China as its largest market, posted the slowest pace of sales growth in 20 months after deliveries of Wuling-brand vehicles declined. The carmaker’s sales in the world’s largest auto market in October rose 3.2 percent to 291,371 vehicles in China, according to a statement on the Detroit-based company’s website. Wuling vehicle sales, which makes up about half of GM’s total sales in China, fell 10 percent. That’s the biggest monthly decline for Wuling sales since January 2012.
  • European Stocks Rebound as Natixis, M&S Gain on Earnings. European stocks rose for the first time in three days as companies from Marks & Spencer Group Plc to Natixis (KN) SA posted better-than-estimated earnings. The Stoxx Europe 600 Index climbed 1.7 percent to 336.36 at the close of trading as all the industry groups on the gauge climbed. The measure had lost 1.8 percent in the past two days as some earnings missed projections and the European Commission cut growth forecasts for the region.
  • Iron Drops to Lowest Since 2009 as APEC Curbs Dent Demand. Iron ore declined to the lowest level in more than five years as China ordered some steel mills to reduce production, curbing demand in the world’s biggest user just as increased supplies exacerbate a global surplus. Ore with 62 percent content delivered to Qingdao fell 2 percent to $76.46 a dry metric ton today, the lowest price since September 2009, according to data from Metal Bulletin Ltd. The drop extends two weeks of losses at the end of October. 
  • Precious Metals Drop, With $1.5 Billion Wiped From Funds. Gold, silver and platinum tumbled as the dollar’s advance to a five-year high cut demand, wiping almost $1.7 billion from the value of precious metals-backed funds. Gold and silver slid to four-year lows as the Bloomberg Dollar Spot Index climbed after Republicans gained control of the Senate from the Democrats in U.S. midterm elections and Bank of Japan Governor Haruhiko Kuroda said he saw no limit to the steps the BOJ may take to defeat deflation. About $1.66 billion was erased from the value of precious metals exchange-traded product holdings today.
  • Saudi Flexing Met With Crickets by U.S. Shale Frackers. Saudi Arabia’s rivals in the shale fields from North Dakota to Texas aren’t flinching as the Persian Gulf kingdom wages a price war to reclaim market share and chill competition. The U.S. companies believe they have a lot more staying power than many of Saudi Arabia’s partners in the Organization of Petroleum Exporting Countries, or OPEC. Several producers plan on increasing production.
  • Einhorn Adds to Bearish Bets on Tech Stocks, Cites Amazon(AMZN). Greenlight Capital Inc., the $10 billion hedge-fund firm run by David Einhorn, told investors it’s increasing wagers against a group of technology stocks, in a letter that discussed the lack of profitability at online retailer Inc. (AMZN). “AMZN’s recent disappointment is notable in that for years, the story has been that AMZN isn’t profitable because it is growing so fast,” Greenlight said in a quarterly letter to clients today, referring to the stock ticker for “Now growth is slowing, but rather than unleashing higher profits, the slower growth is leading to even greater losses.”
Business Insider:
  • Shipping slump likely to persist for next 2 years- COSCO chairman. The global shipping market is unlikely to see a recovery during the next two years as it grapples with an oversupply of vessels, the chairman of China's largest shipping group said on Wednesday. The sector has been battling overcapacity since the 2008 financial crisis because new vessels ordered before the downturn have flooded the market, dragging down rates and hitting Chinese ship builders hard.
  • Ukraine Security Service Sees Russian Invasion Risk. Russian agents, instructors operating in rebel-held areas, Markiyan Lubkivsky, adviser to security service chief Valentyn Nalyvaychenko, said. The risk of invasion is especially high near Mariupol., he said.

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