Friday, December 6, 2013
6:42 PMCorn traders worry as China rejects shipments said to contain GMO strain
- Corn futures (CORN) fell amid mounting concerns that export demand will suffer because China has been rejecting U.S. grain containing an unapproved genetically modified strain.
- This week, China rejected more than 120K metric tons in five separate shipments of U.S. corn after inspectors found the genetically engineered insect-resistant MIR 162 strain; regulators had rejected U.S. grain for the same reason last month.
- Traders worry the actions could herald a period of reduced shipments to China from the U.S., the world's biggest corn producer and exporter.
- Biotech company Syngenta (SYT) has resubmitted an application for the GMO strain to be allowed in China.
1:56 PMHeineken and Anheuser-Busch InBev go toe-to-toe in Mexico
- Heineken (HINKY) expects to see solid growth in Mexico next year as the economic situation in the nation improves.
- The Dutch brewer and Anheuser-Busch InBev (BUD +1.9%) control 99% of the beer market in Mexico, a level of domination which has kept Mexican regulators busy.
- Despite the extra attention from antitrust officials, Heineken expects to grow its market share even higher next year at A-B's expense - led by its Mexican brands such as Tecate, Dos Equis, Indio, and Sol.
1:13 PMLast bear standing no more. Hendry explains.
- "The great peril is not that the Fed finally tightens monetary policy and US stock prices suddenly tumble from what are very obviously overpriced levels," writes Hugh Hendry in his December letter, explaining his new-found bullishness. "The greater peril is that the current backdrop will turn out to mark a rapid acceleration in the ongoing move to the upside."
- In a highly entertaining essay drawing inspiration from the classic Bob Ryan character who popped up on HBO's Entourage for a couple of episodes, Hendry notes the eerie comparison to the markets of 1928, 1982, and 1998 - all ended badly, yes, but participants made plenty of money during the boom phase.
- "Just be long. Pretty much anything."
- Broad large-cap ETFs: PRF, PKW, VUG, VTV, SDOG, VV, SCHX, MGK, DEF, SCHG, SCHV, PWV, FLAG, MGV, DOD, JKD, FEX, EQL, IWY, EZY, JKE, PWB, IWX, FTC, JKF, EEH, SPXH, TRSK, SFK, PXLC, FWDD, PXLV, ALTL, GVT, RWG, FNDX, PXLG, IELG
9:35 AMCanada's 21.6K Nov. jobs beats estimates
- Canada added 21.6K jobs in November, well ahead of expectations for 12K and against a 13.2K gain in October. The unemployment rate held steady at 6.9%. The average monthly job growth over the last six months is11K vs. 23.3K seen in the previous six-month window (May's 95K gain fell off the measure).
- The loonie - which dropped sharply after the big U.S. jobs number - has returned to where it was prior to 8:30 ET, flat on the session around a multi-year low of $0.9390.
- Canada ETFs: EWC, FXC, CAD, CNDA, FCAN, EWCS
9:18 AMThailand calm after king's birthday, but shares weak
- Thai stocks (THD, TTF, TF) fall 1.1% in Bangkok after a seventh consecutive session of net foreign outflows ($115M according to Reuters).
- Politically the country enjoyed a relatively calm day as protesters and administration supporters pause in observance of the king's birthday.
- In other regional action, Indonesian shares (IDX, IDXJ, EIDO) slide 0.9% in Jakarta to a three-month low.
8:55 AMNorway readies asset sales, Statoil ownership under review
- Norway is readying a proposal targeting asset sales that the government has signaled will include Statoil (STO), as the state loosens its grip on private enterprise.
- The government next fall will submit a report outlining which companies it will reduce its stakes in and how it will conduct the sales, Norway's industry ministry says.
- Prime Minister Erna Solberg has said the government would seek to cut its STO stake to 51% from 67%.
8:40 AMTreasurys slide, but equities cruise right through big jobs number
- The 10-year Treasury yield jumps to 2.92% following the jobs numbers beat and the far bigger-than-expected dip in the unemployment rate to just 7%. The government shutdown apparently affected this month's speed of decline in the UE rate, but not the level - i.e., it would be at 7% no matter the shutdown, but the furlough and then return of workers caused all of the decline to occur in the November report.
- Stock index futures remain about where they were, the S&P 500 (SPY) +0.5%.
- Gold (GLD) is off 1.25% to $1,216 per ounce and the dollar jumps, with UUP +0.5% premarket.
- Treasury ETFs: TBT, TLT, TMV, IEF, TBF, PST, EDV, TTT, TMF, TLH, ZROZ, SBND, IEI, DLBS, TYO, DTYS, VGLT, UST, UBT, TLO, TBX, VGIT, GSY, LBND, DTYL, SCHR, TYD, ITE, TYBS, TENZ, FIVZ, TBZ, DFVL, DLBL, DFVS, TYNS
- PM ETFs: GLD, SLV, IAU, AGQ, PHYS, SIVR, PPLT, PALL, USLV, ZSL, SGOL, UGL, DGP, GLL, DZZ, UGLD, DBS, DGL, DSLV, GLTR, DGZ, PTM, AGOL, DBP, GLDI, DGLD, WITE, SLVO, PGM, TBAR, USV, JJP, UBG, RGRP, LPLT, BLNG, IPLT
- Dollar: UDN, UUPT, UDNT
8:39 AMLukoil said to be in talks with oil majors to sell Venezuela stake
- Russian oil producer Lukoil (LUKOY, LUKOF) reportedly has been in talks with international majors about selling its stake in a consortium developing a large oil project in Venezuela.
- Lukoil has said it wanted to sell its 20% stake in the Russian Junin-6 consortium developing heavy oil in the Orinoco basin to focus on other projects; consortium leader Rosneft apparently made a low-ball offer, and Lukoil has since held talks with Cnooc (CEO), Sinopec (SNP), Statoil (STO), Chevron (CVX), Total (TOT) and various state-run firms.
- The Russian consortium owns a 40% stake in the project; Lukoil's stake in the consortium is said to be worth ~$200M.
6:58 AMUnemployment seen edging lower
- U.S. jobs data for November is due out this morning, with economists estimating that the number of nonfarm payrolls increased by 180,000 vs 204,000 in October, and that the unemployment rate edged down to 7.2% from 7.3%.
- Markets would view anything above 200,000 as increasing the chances that the Fed will start tapering this month, while a number below 150,000 would cut those chances.
- A strong payroll number would "increase speculation that tapering could still be on the cards for December," says investment analyst Luke Bartholomew. "So, perversely, a strong number could be damaging for stocks and other risk assets."
5:25 AMGlobal equities mostly higher ahead of U.S. jobs report
- Financial markets are in what Reuters calls "a state of suspended animation" ahead of the U.S. employment figures, which are due out this morning.
- Whatever the numbers, the data will provide further fuel for the frenzy of speculation about when the Fed will start to taper.
- The Nikkei closes +0.8% and stabilizes after a couple of days of sharp losses. Elsewhere in Asia, Hong Kong +0.1%, China -0.4% and India +0.15%.
- Europe is mostly higher and recovering a bit of ground after five days of losses. EU Stoxx 50 +0.2%, London +0.5%, Paris +0.3%, Frankfurt +0.7%, Milan -0.2%, Madrid -0.4%.
- U.S. stock futures: Dow +0.35%. S&P +0.4%. Nasdaq +0.4%
3:51 AMBundesbank ups growth forecasts
- Germany's Bundesbank has increased its growth outlook and now expects the country's economy to expand 0.5% this year and 1.7% in 2014.
- Previously, the central bank had projected growth of 0.3% and 1.5% respectively.
- The Bundesbank also forecast that GDP will increase 2% in 2015.
- The bank said growth is being mainly driven by domestic demand, helped by low interest rates and growing incomes.
- "The German economy is in good shape: the unemployment rate is low, employment is rising, and wage growth is returning to normal," Bundesbank President Jens Weidmann said. (PR)
- The DAX is +0.4% and the euro is -0.1% to $1.3657.
- ETFs: EWG, BUND, EWGS, GERJ, BUNL, FGM, BUNT, DBGR, GGOV, DXGE
3:30 AMNelson Mandela passes away
- South African markets are calm following the passing of Nelson Mandela, who was instrumental in the country's peaceful transition away from apartheid.
- One of Mandela's biggest achievements was enacting policies that paved the way for GDP to grow for 15 years, the longest period of expansion in South Africa's history. These policies included embracing the free market, cutting costs and attracting foreign investment.
- The question is now that Mandela has passed on, whether South Africa will feel more free to abandon the policies and conciliation that he espoused. For example, the ANC's youth wing wants to nationalize banks and mines, policies that Mandela ditched in 1994.
- There are also fears that Mandela's death could leave South Africa open to renewed racial and social tensions, such as those seen in the mine strikes over the past year or so.
- The economy is already not in a good way: unemployment is 24.7% and there is a large inequality in earnings between blacks and whites.
- The FTSE/JSE Top 40 is +0.3%, the South African 10-year bond yield is -2.5 bps at 8.16%, and the USD-ZAR is +0.2% at 10.4732 rand.
- Tickers: HMY, AGPPY, AGPPF, AAUKY, AAUKF, SSL, GFI, ABX, AU, SBGGF.
- ETF: EZA
2:55 AMFrench trading activity slips
- France's trade deficit narrowed to €4.7B in October from €5.6B in September and came in below consensus of €5B.
- Exports slipped to €36.5B from €36.7B.
- Imports declined to €41.2B from €42.5B.
- The budget deficit widened to €86.05B from €80.80B.
- CAC 40 futures (EWP) +0.5%.
Thursday, December 5, 2013
5:56 PMUkraine, under Russian pressure, is no-show to sign gas import deal
- Ukrainian officials failed to show to sign a deal that could open up a natural gas supply route via Slovakia, WSJ reports, raising concerns that Ukraine was walking away from an agreement the European Union spent months brokering.
- The deal would have opened up a major gas supply route to Ukraine that could have greatly reduced the country's dependence on Russian supplies, but Pres. Yanukovych's government had warned it may put the deal on hold, citing trade pressure from Russia.
- Russia's Gazprom (OGZPY) meets a quarter of the EU's gas needs, the bulk of which flows via Ukraine, and supplies the vast majority of Ukraine's energy needs.
3:49 PMBass: Real move in yen hasn't even begun
- "This is just the beginning. It's not the real move," says Kyle Bass (speaking to Steven Drobny) of the move down in the yen (FXY +0.6%) this year. "The real move happens when it runs away from the authorities and they lose control." On the record as saying dollar/yen goes to ¥200, Bass says if he's right about Japan, it will go much further than that. ¥500? No, but once currencies get moving in a certain direction, they often swing way too far.
- Wake me when dollar/yen goes to ¥350, says Bass when asked at what point he becomes a buyer in Japan.
- Japan ETFs: DXJ, EWJ, FXY, YCS, JGBS, JGBD, DFJ, JYN, NKY, DBJP, EZJ, EWV, SCJ, YCL, JSC, JPP, JGBL, ITF, DXJS, JGBT, JPNL, JPNS, FJP
12:34 PMAnheuser-Busch InBev to expand packaging innovation
- Anheuser-Busch InBev (BUD -0.7%) plans to spend $10M to upgrade its brewery in Williamsburg, Virginia.
- The intriguing part of the company's announcement is that the investment will go in part to improve "innovative" packaging capabilities.
- The beer industry which has been nearly tapped out on innovation has turned to can and bottle variety for marketing spins.
11:34 AMState Street Launches Beyond BRIC ETF
- State Street's (STT) Global Advisors unit launched the SPDR MSCI EM Beyond BRIC ETF (EMBB) this morning to meet the ever growing investor interest in underplayed emerging markets.
- With an expense ratio of 0.55%, this new ETF will bypass the now crowded BRIC countries (Brazil, Russia, India and China), instead investing in developing market stocks with less outside exposure; Chile, the Czech Republic and Indonesia to name a few.
- Another Beyond BRIC ETF (BBRC) was launched just over a year ago with a net expense ratio of 0.58%.
- Emerging Market ETFs: EEM, VWO, EDC, EDZ, SCHE, IEMG, EEV, PIE, ADRE, EUM, EET, GMM, EEME, EMCR, DBEM, EWEM, FEM, EMLB, EMSA, EMFT, EMDR