Evening Headlines
Bloomberg:
- Putin's Syria Gamble Stokes Fears His Real Goal Is Aiding Assad. (video) Russia President Vladimir Putin’s sudden escalation of airstrikes
inside Syria is forcing the world to confront his latest military
adventure, against a backdrop of deep distrust over whether defeating
the Islamic State is his only goal. While the U.S. and its allies
want to see the extremists crushed, Putin’s actions -- the U.S. said he
bombed an area where the terror group doesn’t operate -- fueled fears
that he really just wants to prop up ally President Bashar al-Assad, who
Western leaders say should step aside. It also raises the odds of
high-stakes accidents as Russian and U.S. jets share the same air space
but potentially different missions.
- ETF Investors Exit Emerging-Market Stock Bets as China Falters. Traders dumped exchange-traded funds tracking emerging-market stocks
at the fastest pace in over a year last quarter amid concerns over the
slowdown in China, a selloff in commodities and the prospect of higher
interest rates in the U.S. Investors pulled $6.1 billion from
U.S.-traded ETFs that offer exposure to a basket of developing-nation
equities in the three months through September, the most since the first
quarter of 2014, according to data compiled by Bloomberg.
Exchange-traded funds that invest in both emerging-market stocks and
debt as well as individual countries saw outflows in 12 out of 13 weeks
ending Sept. 25, with losses totaling $12 billion, the data show.
- Japan Inc.'s Confidence Is Waning as Headwinds Hit Abenomics. Weakness in the Japanese economy and the slowdown in Asia are
chipping away at the nation’s business confidence, with the latest
survey from the central bank showing sentiment among large manufacturers
worsening. The Tankan index for large manufacturers fell to 12
in September from 15 in June, the Bank of Japan said Thursday, lower
than the median estimate of 13 in a Bloomberg survey of economists. The
index is forecast to drop to 10 in December. There’s growing
concern that Japan’s economy may have contracted in the quarter that’s
just ended, which would tip the nation into its second recession since
Japanese Prime Minister Shinzo Abe took office in 2012. Large companies
that have benefited from the weak yen and rising profits under Abe have
yet to make a significant commitment to expanding domestic investment.
- Strategist Known as Mad Dog Says Yen Can Climb to 100 per Dollar. The
yen has already hit bottom and could strengthen to 100 per dollar
next year as Bank of Japan Governor Haruhiko Kuroda’s unprecedented
monetary easing is proving ineffective for the economy, said Eishi
Wakabayashi, a former currency trader who twice forecast the yen’s surge
to record highs. “The dollar is destined to decline against the yen because it’s been supported forcibly,” meaning that the yen’s 2015
low of 125.86 per dollar was an excessive depreciation, New York-based
Wakabayashi said in a Sept. 25 interview in Tokyo. “The quantitative
easing worked only psychologically on asset prices, weakening the yen
and lifting stocks while failing to boost inflation. That’s become clear
and we will see the repercussion from these shock therapies.”
- Singapore's Home Prices Match Longest Losing Streak in 2002. Singapore home prices dropped for an eighth quarter, matching the
longest losing streak in 13 years, as tighter mortgage curbs cooled
demand in Asia’s second-most expensive housing market. An index
tracking private residential prices fell 1.3 percent in the three months
ended Sept. 30 from the previous quarter, according to preliminary data
from the Urban Redevelopment Authority on Thursday. The slump was the
most since June 2009, in the aftermath of the global financial crisis.
- America's Oil Output Refuses to Collapse. Here's One Reason Why. Somewhere amid the maze of wells that Murphy Oil Corp. has scattered
across Texas’s sprawling Eagle Ford shale formation, Brett Pennington is
carrying out a little experiment. What will happen, the
exploration chief wants to know, when he jams huge quantities of sand
down the narrow mouth of one of these wells. Will more crude seep out?
Or, rather, will he smother the opening and choke off the flow?
- Vale(VALE) Gain Is Iron Market Pain as Giant Project Ahead of Schedule. The
world’s top iron-ore producer has some bad news for the oversupplied
market: its biggest project is running ahead of schedule. S11D, part
of the Carajas mining complex in northern Brazil, is on track to beat a
targeted December 2016 start date, Vale SA Chief Financial Officer
Luciano Siani said in an interview Wednesday. The
project -- the industry’s largest and, according to Vale, the most
profitable -- will add 90 million metric tons of annual capacity to
global supply, although Vale intends to control the speed at which it
hits the market, Siani, 45, said in Toronto, where he is holding
meetings with investors and analysts. “We will manage the ramp up in
order to preserve the premium for this high grade ore,” he said.
- Wal-Mart(WMT) Said to Plan Hundreds of Job Cuts at Headquarters. Wal-Mart Stores Inc. is planning job cuts at its headquarters that
could involve hundreds of workers, including senior managers, according
to people familiar with the situation. The cuts are expected to
begin in the next week, said the people, who asked not to be identified
because the deliberations are private.
Wall Street Journal:
- Hillary Clinton Emails Had a Two-Month Gap. Archive of messages turned over to officials begins weeks into the start of her tenure. About two months of emails from the start of Hillary Clinton’s tenure as
secretary of state are missing, and federal officials haven’t been able
to recover them.
Fox News:
- Russia-linked hackers tried to access Clinton's email server. (video) Hackers linked to Russia attempted at least five times to gain access
to Hillary Clinton’s private email account while she was secretary of
state, according to emails released Wednesday. Clinton originally received the infected emails, disguised as
speeding tickets, over four hours on the morning of Aug. 3, 2011. The
infected emails instructed recipients to print the attached tickets,
which would have allowed hackers to take control of their computers.
Business Insider:
- Chinese SMEs are struggling. (graph)
“A key factor weighing on the headline index was a sharper contraction
of manufacturing output in September,” said Markit. “According to
panelists, worsening business conditions and subdued
client demand had led firms to cut their production schedules. Weaker
customer demand was highlighted by a further fall in total new orders
placed at Chinese goods producers in September. “Furthermore, the rate of reduction was the steepest seen for just
over three years. Data suggested that the faster decline in total new
business partly stemmed from a sharper fall in new export work. The
latest survey showed new orders from abroad declined at the quickest
rate since March 2009." In what will no doubt raise questions over China’s economic transitions
from an industrial to services economy, there was also worrying news on
activity across the nation’s services sector. The separate Caixin services PMI gauge dipped to 50.5 in September from 51.5, falling to the lowest level in 14-months.
- Chinese firms are bearing up on the economy. Based on the latest quarterly survey of banks, companies and
households conducted by the People’s Bank of China – a report that
captures the views of 20,000 urban households, 5,000 businesses and
3,100 banks – sentiment towards the economy deteriorated sharply despite
relative stability in business profits, orders and labor market
conditions. “The business survey for Q3 makes for gloomy reading,” said Chang Liu
and Mark Williams, economists at Capital Economics in a research note
released overnight. “The headline index on firms’ confidence in the state of the economy
fell to its lowest since the trough in 2009. Firms’ sentiment about
their own circumstances deteriorated too, with this index falling below
50 for the first time since 1999″.
- The next shoe to drop. Here’s how the junk-bond debacle bleeds into stocks. Part of the fuel
that powered stocks to such vertiginous heights over the last few years
was the M&A boom. Companies bid for each other with huge premiums
over the already inflated stock prices. These deals were mostly funded
with shares, of which companies could print an unlimited amount, and
with debt, of which even over-indebted junk-rated companies could issue
nearly unlimited amounts, thanks to the Fed’s policies that drove yield
investors to near-insanity.
Reuters:
- Express Scripts(ESRX) says Praluent, Repatha will not be "budget busters". Express Scripts Holding Co said
on Wednesday two costly new potent cholesterol fighters will not
be "budget busters" for its clients and that most prescriptions
for the drugs have been rejected because patients did not meet
required medical criteria. "We're seeing a lot of patients who either don't qualify or
their physicians are not providing (needed) information," said
Everett Neville, a vice president of Express Scripts, whose
company is the largest pharmacy benefit manager in the United
States.
Financial Times:
- Brazil central bank vows to do what it takes to control inflation. Brazil’s
central bank is willing to do whatever is necessary to control
inflation while the country grapples with the thorny issue of how to
rebalance the nation’s public finances, a senior official has said. Tony Volpon (pictured), head of international affairs at the
central bank, said that while tax increases to balance the budget could
raise prices, monetary policy would be adapted to ensure that inflation
eventually converged to the official target of 4.5 per cent.
- ‘Fragile’ economy threatens oil oversupply rebalance, says energy expert. A
fragile global economy threatens the progress of rebalancing an
oversupplied oil market, says Gary Ross, executive chairman of Pira
Energy Group, the research company. Cuts in oil production were happening more slowly than expected after crude prices collapsed in the past year, said Mr Ross. Even with oil companies pulling the plug
on big projects and deploying fewer rigs to drill for oil, supply
remains robust.
Telegraph:
Evening Recommendations
Night Trading
- Asian equity indices are +.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 160.50 -4.5 basis points.
- Asia Pacific Sovereign CDS Index 92.5 -1.75 basis points.
- NASDAQ 100 futures +.73%.
Earnings of Note
Economic Releases
7:30 am EST
- Challenger Job Cuts for September.
8:30 am EST
- Initial Jobless Claims for last week are estimated to rise to 271K versus 267K the prior week.
- Continuing Claims are estimated to fall to 2230K versus 2242K prior.
9:45 am EST
- Final Markit US Manufacturing PMI for September is estimated at 53.0 versus 53.0 in August.
10:00 am EST
- Construction Spending for August is estimated to rise +.5% versus a +.7% increase in July.
- ISM Manufacturing for September is estimated to fall to 50.6 versus 51.1 in August.
- ISM Prices Paid for September is estimated to rise to 40.0 versus 39.0 in August.
Afternoon:
- Wards Total Vehicle Sales for September are estimated to fall to 17.6M versus 17.72M in August.
Upcoming Splits
Other Potential Market Movers
- The Fed's Williams speaking, ECB's Draghi speaking, Eurozone Manufacturing PMI, BoE Minutes, Australian Retail Sales report, Japan Unemployment report, Bloomberg weekly Consumer Comfort Index, weekly EIA natural gas inventory report, (F) September conference call and the (CLX) analyst day could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by technology
and commodity shares in the region. I expect US stocks to open
modestly higher and to maintain gains into the afternoon. The Portfolio
is 75% net long heading into the day.