China's GDP growth accelerates to 7.8% but imbalances large. China's economy expanded at its fastest rate this year in Q3, rising 7.8% vs 7.5% in Q2. The growth reflected a "mini fiscal stimulus" that included railway spending and tax cuts, said Bank of America, although one of its economists, Ting Lus, believes that the "growth peak" is "now behind us." The contribution of investment to GDP significantly outweighed that of consumption in the nine-month period, indicating the size of the job the government has to do to re-balance the economy.
Google shares fly following better-than-expected Q3. Google's (NASDAQ:GOOG) shares jumped 8.35% premarket after the search giant's Q3 earnings topped consensus and strong paid-click growth offset ad-price weakness. The company enjoyed a notable increase in mobile, and although the trend continues to pressure ad prices, it's also giving a lift to search volumes. Net profit rose 36% to $2.97B, adjusted EPS was $2.18B and revenue climbed 12% to $14.89B.
Lenovo probably only wants parts of BlackBerry. Lenovo (OTCPK:LNVGF) is likely to try to just acquire parts of BlackBerry (NASDAQ:BBRY) rather than the whole company, Reuters reports, due to regulatory concerns. The speculation is in contrast to a WSJ article that said that the Chinese computer maker is considering a bid for all of BlackBerry. Reuters cited experts who believe that BlackBerry's secure network would probably be sold to a North American buyer because of security issues, especially as the China-averse U.S. government is a major customer.
Top Stock News
Global shares up on China GDP, delayed Fed taper. China's GDP data has helped boost world stocks, as has an increasing belief that the Fed will hold off on tapering its QE program to offset any damage from the U.S. government shutdown. However, Japanese stocks fell 0.2% after the yen strengthened against the dollar because of the prospects of a delayed Fed taper. With U.S. futures higher, the S&P could add to its record close yesterday.
SAC, government close to settlement of over $1B. SAC Capital is reportedly nearing a deal with U.S. prosecutors to settle charges of insider trading whereby the hedge fund could pay $1.2-1.4B in penalties and the forfeiture of profits, and plead guilty to criminal misconduct. SAC could also be banned from managing money for outside investors for a period of time. The amount involved would be the biggest monetary penalty ever for insider trading.
HSBC to appeal $2.5B ruling vs Household. HSBC (HBC) plans to appeal a U.S. court ruling that it pay $2.46B from a case involving Household International, the credit card and mortgage lender that the British bank bought in 2002 for $14B. Household lost a class-action lawsuit charging that it misled investors about the quality of its loans in 2001-02. The firm was also accused of predatory lending and hiding the low quality of its loan portfolio.
Textron interested in $1.5B Beechcraft. Textron (NYSE:TXT) is reportedly among the companies exploring a bid for planemaker Beechcraft, which is up for sale again and could attract about $1.5B. The firm filed for bankruptcy in May 2012, after which a potential sale to a Chinese buyer collapsed. Textron CEO Scott Donnelly has said in the past that Beechcraft could be a good fit for his company, whose businesses include Cessna Aircraft and Bell Helicopters.
Vornado again eyes Toys "R" Us exit. Vornado (NYSE:VNO) reportedly wants to exit Toys "R" Us, which it bought along with KKR (NYSE:KKR) and Bain Capital in 2005 for $6.6B in a leveraged buyout. Vornado's stake is worth $418M, about what the firm paid for the holding. Toys "R" Us, which has just appointed a new CEO, has long been hampered by the massive debt it took on at the time of the LBO, while sales have flattened out. The company did file for an IPO in 2010 but didn't go through with it.
GM's nine-month sales rise 4.6%. General Motors' (NYSE:GM) nine-month global sales grew 4.6% to 7.25M vehicles, with volumes in China climbing 11% to 2.31M when including those with the company's partners. Globally, GM remains ahead of Volkswagen, whose nine-month sales rose 4.8% to 7.03M, although the German car giant has overtaken its U.S. rival in China with shipments of 2.35M.
Obamacare exchanges providing insurers with wrong data. The technology problems afflicting the roll-out of health-insurance exchanges seem to be even worse than thought, with insurers saying that the marketplaces are generating incorrect information. "Errors include duplicate enrollments, spouses reported as children, missing data fields and suspect eligibility determinations," the WSJ writes. The problems are damaging the ability of insurers to process even the small numbers of people who have signed up.
Top Economic & Other News
Traders befuddled by short, sharp movements in gold prices. Gold traders have been puzzling over a series of massive transactions over the past three weeks that have caused prices to move sharply within minutes. The latest incident came yesterday, when a rush of orders to purchase $2.3B worth of gold caused the metal to spike 3% in just 10 minutes. Theories about the factors involved include the effects of 24-hour electronic trading, short covering, selling by a distressed fund and market manipulation.
Jobs report coming on Tuesday. The September nonfarm payroll report is set to be released on Tuesday 22 October, while the October data will be published on November 8, as planned. The September PPI report is set for October 29 and the CPI reading a day later.
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In Asia, Japan -0.2% to 14562. Hong Kong +1.1% to 23340. China +0.2% to 2194. India +2.3% to 20883.
In Europe, at midday, London +0.3%. Paris +0.4%. Frankfurt +0.1%.
Futures at 6:20: Dow +0.1%. S&P +0.1%. Nasdaq +0.4%. Crude +0.2% to $100.88. Gold -0.4% to $1318.10.
Ten-year Treasury Yield -5 bps to 2.55%
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