Monday, December 12, 2016

Today's Headlines

  • China Warns Trump Against Using Taiwan for Leverage on Trade. (video) China warned Donald Trump against using the One-China policy regarding Taiwan as a bargaining chip in trade talks, a swift response that indicates Beijing is losing patience with the U.S. president-elect as he breaks with decades of diplomatic protocol. “Adherence to the One-China policy is the political bedrock for the development of the China-U.S. relationship,” Foreign Ministry spokesman Geng Shuang told reporters in Beijing at a regular briefing on Monday. “If it is compromised or disrupted, the sound and steady growth of the China-U.S. relationship as well as bilateral cooperation in major fields would be out of the question.”
  • China’s Red Line Has Asia Braced for Lose-Lose Battle With Trump. (video) U.S. President-elect Donald Trump’s willingness to test China’s red line on Taiwan has the region braced for a lose-lose scenario where the world’s two economic superpowers take tit-for-tat swipes at each other. Initial hopes in Beijing that China would strike a grand bargain with the businessman-turned-politician are fading fast. His weekend remarks that the decades-old One-China policy could hinge on trade negotiations touches one of Beijing’s rawest nerves and threatens a “core interest” that China has long said it’ll defend at any cost.
  • EU Calls for Brexit Talks ‘Swiftly’ After Article 50, Draft Says. The European Union will set out for the first time on Dec. 15 how it will conduct its Brexit negotiations with the U.K. as preparations intensify before Prime Minister Theresa May officially fires the starting gun. EU governments will be asked to “proceed swiftly” in authorizing the opening of the negotiations once May triggers Article 50 of the Lisbon Treaty to formally start the withdrawal, according to a draft of the EU statement read out to Bloomberg.
  • China Stocks Sink Most in Six Months as Property Concerns Build. (video) Chinese stocks slumped the most in six months on worsening concern about the outlook for the property market and as curbs on insurers’ equity investments spurred selling. The Shanghai Composite Index fell 2.5 percent to 3,152.97 at the close, its biggest loss since June 13. A measure of property companies tumbled 3.5 percent after China Vanke Co.’s president predicted home sales will drop “significantly” in the coming year. Gree Electric Appliances Inc. sank 6.1 percent. Foresea Life Insurance Co. said it won’t increase its holdings in Gree and will gradually sell the shares, while the insurance regulator suspended Evergrande Life’s entrusted stock investment. The nation’s top securities official has slammed leveraged stock buyers as “robbers” as officials move to rein in financial risks associated with a surge in dealmaking. Since 2014, Chinese insurers have stepped up acquisitions as their premium income has expanded. The opening up of Shenzhen’s stock market has failed to stimulate much demand from foreign investors, with a daily quota yet to be filled and the city’s key measure tumbling. The Shenzhen Composite Index dropped 4.9 percent, while the ChiNext gauge of small-cap shares in the city sank 5.5 percent.
  • Real Estate Firms Drag Europe Stocks Down While Oil Shares Rise. (video) The Stoxx Europe 600 Index fell 0.5 percent, following the biggest weekly rally in almost two years. Oil and gas companies surged to their highest prices since July 2015 after Saudi Arabia signaled it’s ready to cut production more than earlier agreed, sending crude prices soaring. Last week’s jump in equities helped push more prices into a technical level that analysts consider overbought, a pullback from which could trigger declines.
  • Goldman Says Saudis Wrong to Rule Out U.S. Shale Oil Rebound. (video) Saudi Arabia is wrong to think that U.S. shale production won’t respond to higher oil prices in 2017, according to Goldman Sachs Group Inc. While crude may rise to over $60 a barrel if OPEC members and other nations cut production as promised, a rebound in U.S. shale output would bring prices back to $55, the bank’s forecast for the first half of next year, it said in a report. Saudi Energy Minister Khalid al-Falih said on Saturday he didn’t expect a big supply response from American shale producers in 2017. 
  • Watch Out OPEC, the Americans Are Coming. U.S. production will limit how far oil prices can climb.
  • Morgan Stanley Has Four Reasons Why It's Different This Time for the U.S. Dollar. Wall Street's betting on dollar strength - again. (video)
  • Hedging Is an Afterthought for Traders With S&P 500 Near Record. Fresh off three straight record closes and with call volume at all-time highs, options traders are adding to bullish bets on the S&P 500 Index. They’re paying the least since July 2014 to protect against a decline in the SPDR S&P 500 ETF Trust before Wednesday’s Federal Reserve rate decision.
  • For Stocks, Hard Part of This Tightening Cycle Comes Next Year. (video)
  • Yellen Outlook Blurred by Trump Fiscal Plans: Decision-Day Guide. (video)
  • McConnell, Ryan Back CIA After Trump’s Attacks on Hacking Probe. (video) The two top Republicans in Congress offered strong support for the intelligence community Monday, in sharp contrast to President-elect Donald Trump’s attack on the CIA after reports the agency found that the Russian government tried to help him win the presidency.
  • JPMorgan(JPM) Traders Back Risky Property Deals as Bank Shows Caution. Real estate developers who can’t get funding from JPMorgan Chase & Co.’s commercial bank may have another option: a JPMorgan trading desk. A group of traders in JPMorgan’s investment bank has expanded from selling commercial mortgage-backed securities to underwriting loans that are unsuitable for bonds, such as those for big construction projects, according to people with knowledge of the matter. In recent months, the desk has helped fund developments including Manhattan condominiums, a Times Square hotel and New Jersey’s troubled American Dream mega-mall. The biggest U.S. bank by assets is making the deals as traditional lenders pull back from construction loans, which carry bigger risks and juicier yields than mortgages for occupied buildings. Traders in JPMorgan’s investment bank are harnessing demand from investors and developers to take part in potentially lucrative projects, even as the company’s commercial bank -- which holds most of its real estate debt -- signals caution about riskier property financing after a six-year surge in prices.
Wall Street Journal:
Zero Hedge:
  • Micron's(MU) Durcan Warns China Could Cause Memory Chip Glut. Micron CEO Mark Durcan says China's plan to develop its own semiconductor industry could create oversupply in memory chips, citing his comments to reporters in Taipei.

No comments: