China is due to report Q3 GDP tomorrow, in what could turn into fresh panic over the state of the global economy.
The economy is forecast to have grown 7.2% in the July-September period, the slowest pace since the first quarter of 2009 and down from 7.5% in the previous three months.
Over the weekend, media outlets reported that the People's Bank of China is planning an injection of about 200B yuan ($32.7B) into some national and regional lenders to keep liquidity ample and bolster growth.
French Finance Minister Michel Sapin reaffirmed that France would pursue a slow deficit reduction due to its need to maintain its fragile recovery, ahead of a meeting in Berlin with German counterpart Wolfgang Schaeuble.
Sapin also reiterated that Germany should lead an effort to boost investment in the euro zone, promising that France would continue to pursue structural reforms.
Regarding the country's budget, French Economy Minister Emmanuel Macron announced Sunday that he was sure the European Commission would not reject Paris' 2015 plan although it breaks EU deficit limits.
Remember last summer's private-equity legal settlements which ensnared sector names like Carlyle Group (NASDAQ:CG), Blackstone (NYSE:BX), KKR, and the P-E arm of Goldman Sachs (NYSE:GS) for colluding to keep a lid on the prices of buyout targets? Needless to say, management didn't bear the burden of the settlement penalties, but neither did the shareholders. In the case of Carlyle at least, the $115M fine was shouldered by the investors in one of its buyout funds.
Those investors include state and city workers and retirees from across the country, and chances are they were unaware they were responsible for these costs due to the highly secretive nature of the agreements made between P-E and the pension funds which invest in them.
Disclosure "would cause substantial competitive harm," says a Carlyle spokesman. “This is an overreach on Carlyle’s part, and frankly it violates the spirit of the indemnification clause of our contract,” says NYC Comptroller Scott Stringer, who oversees three city pension funds invested in that particular Carlyle vehicle.
Private-equity firms now manage $3.5T in assets, and pension funds have been among the more willing investors, with 10% of their assets - or $260B - in P-E. Yet the terms of their deals - including what they're paying to take part - are hidden from view despite open-records laws demanding just the opposite.
“Hundreds of billions of public pension dollars have essentially been moved into secrecy accounts,” says former SEC lawyer Edward Siedle. "It’s very damning legal boilerplate that sums up the fact that they are the highest-risk, highest-fee products ever devised by Wall Street.”
Moody's downgrades government of Russia's debt rating by one notch to Baa2 from Baa1 and maintains Negative outlook.
Key drivers for the downgrade: "i) Russia's increasingly subdued medium-term growth prospects, exacerbated by the prolongation of the Ukraine crisis, including through the impact of expanded international sanctions. ii) The gradual, but ongoing erosion of the country's foreign-exchange buffers due to capital flight, Russian borrowers' restricted international market access and low oil prices."
"Given the negative outlook on the rating, Moody's sees limited upward pressure in the next 12-18 months. A stabilization of the rating outlook could be triggered by a resolution of the crisis in Ukraine."
A little discussed reason the stock market may have hit bottom and started to recover: The realization that the lowest oil prices in four years will provide a stimulus of more than $1T to global economies, according to Citigroup.
“A reduction in oil prices also results in a reduction in prices across commodities, starting with natural gas, but also including copper, steel and agriculture,” says Ed Morse, the bank's head of global commodities research.
Alas, some big banks say the collapse in oil is nearly over, but much will depend on whether OPEC supports the price by cutting production, as is the norm, or protects its market share by keeping production steady.
Money continues to exit emerging market funds, $2.39B last week vs. $3.5B in October's first week. It's the fourth week of outflows in the last five, with ETFs accounting for $1.86B of the total vs. $2B the prior week.
The UBS team of Howard Park and Geoff Dennis: "The level of emerging market fund flows continues to hold up well given the correction in MSCI GEMs since 9/3 has now reached 11.8%. However, outflow momentum seems now to be building and we suspect there may be more outflows to come until markets stabilize."
Up 1% today, EEM is down 7% in a month and low lower for 2014.
In a purely political move, President Obama appoints former VP Joe Biden Chief of Staff Ron Klain to the post of Ebola "czar." No one knows for sure what the lawyer will do in the post since he knows next to nothing about Ebola, the scientific basis for the spread of highly contagious diseases and infection control protocols and procedures. He probably looks good on television, though.
The clinical-stage biopharmaceutical firm focuses on the needs of patients with renal and vascular disease. Its lead product is PRT-201, a recombinant elastase, for the prevention of vascular access failure in patients undergoing hemodialysis. The Fast Track and Orphan Drug-designated product candidate may inhibit neointimal hyperplasia, the growth of tissue inside blood vessels that can result in vessel narrowing and reduced blood flow. The company is positioning PRT-201 as a one-time application when a surgeon creates an arteriovenous fistula (AVF) for a dialysis patient, which has a failure rate as high as 70%.
St. Louis, MO-based Endostim (Pending:STIM) is set for its IPO of 3.2M shares of common stock at $10 - 12.
The company develops and commercializes a neurostimulation system for the treatment of severe gastroesophageal reflux disease (GERD). Its device targets the main cause of GERD, the dysfunction of a muscle at the junction of the esophagus and stomach called the lower esophageal sphincter (LES). The EndoStim system performs like a pacemaker, delivering low energy electrical stimulation to the LES. It is implanted via laparoscopy, is reversible and preserves the anatomy of the esophagus and stomach.
The device was commercially launched in Europe in 2013 after receiving CE Mark clearance the year before. It is not yet approved in the U.S.
One of the key issues serving as a road block to mortgage lending is banker fear over having any loans put back to them by the GSEs at any time - even years down the road - for any number of reasons.
This concern was voiced most pointedly in the late summer by Wells Fargo (WFC +1.2%) CEO John Stumpf in the kind of call-out of regulators you don't often hear from corporate leaders.
The WSJ is now reporting that Fannie (OTCQB:FNMA +5.9%), Freddie (OTCQB:FMCC +7.3%), their regulators, and banks are near a deal in which the lenders could feel protected enough to begin granting mortgages to those without perfect credit and employment histories.
Kotok's Cumberland Advisors was in there buying on Wednesday with the Dow down 400 points, as the underlying components of tracked ETFs reaching extremes - nearly every stock was "oversold by enough standard deviations as to call for action."
"We are moving from worrisome cash reserve maintenance with anticipation of high volatility to a new place that will lead us into a new leg of a bull market. The time to rebalance and position is when doing so requires courage and when things look ugly."
According to banking executives in the know, the PBOC is set to inject up to ¥200B ($32.8B) into roughly 20 large national and regional Chinese banks amid worry the country will miss its GDP growth target of 7.5% this year.
This would follow last month's move which pumped ¥500B into the five major state-owned banks. The funds, naturally, are expected to be lent out to those sectors deemed important by Beijing.
Big Mama's (as the central bank is known locally) stimulus measures thus far don't seem to have done a lot, and word is it's lack of demand rather than a shortage of credit which is holding lending and the economy back. Economists say these liquidity injections are less than meets the eye, and what's really needed to boost the economy are rate cuts.
Tumbling crude prices haven’t shaken the faith of at least two of the top providers of drilling and production services: SLB CEO Paal Kibsgaard describes the drop as “fear of short-term oversupply” and says the company is not changing a long-term view that its earnings will almost double from last year’s level by 2017, while Baker Hughes (BHI +4.7%) CEO Martin Craighead says his company's customers don't believe crude prices will stay low.
September housing starts at a seasonally-adjusted rate of 1.017M were 6.3% higher than August and 17.8% higher than a year ago, with single-family starts up just 1.1% from August and volatile multi-family starts up a big 18.5%.
Building permits rose 1.5%, with single-family permits down 0.5% and multi-family up 7%.
WTI crude oil futures rise more than $1 to above $84/bbl, and Brent crude also is up sharply, rising more than $1 to above $87, as Goldman Sachs says the market is not oversupplied.
"Prices have likely overshot to the downside,” says Jeff Currie, Goldman’s head of commodities research, which leaves his team "near-term constructive, despite being long-term bearish.”
“The ‘supply glut’ is not yet here today, it exists in expectations,” Goldman says, adding that the recent selloff in oil has been mostly driven by positioning based upon expected fundamental shifts, not actual observable shifts.
Investors yanked $5.7B from European equity funds last week, says BAML, the largest amount on record. The move naturally came as markets headed south alongside investor concerns the ECB won't fire the QE bullet.
In response to a few down days in the market, the Fed this week has trotted out two of its members to suggest continued or even expanded QE, and the ECB let float its intention to provide necessary support to Greek banks. Now the Bank of England has walked back some its hawkishness, with chief economist Andrew Haldane saying he's "gloomier" about the outlook for the U.K. economy than he was a few weeks back, and that rates can likely stay lower for longer.
S&P 500 (NYSEARCA:SPY) futures are ahead 1.3%, Nasdaq 100 (NASDAQ:QQQ) 1.4%, and DJIA (NYSEARCA:DIA) 1%, with earnings from GE, and MS, among others, on tap for before the bell.
Europe's Stoxx 50 (NYSEARCA:FEZ) is up 1.2%, led by Spain.s 1.75% gain.
The 10-year Treasury yield is higher by four basis points to 2.2%, and gold is down $3 per ounce to $1,237.50.