Today - Friday, March 14, 2014
- Liberty Global LBTYA announces it acquired the remaining 20% of VTR GlobalCom and VTR Wireless shares in a deal which sees it swap 10.1M shares of Liberty Global Class C shares in exchange.
- VTR is the largest cable operator in Chile.
- "This is a case that can’t be considered in isolation from history," says Russian Foreign Minister Lavrov after wrapping up a long meeting with Sec. of State John Kerry. "Everybody knows what Crimea means for Russia, and it is more than what the Comoros means for France, or the Falklands for Great Britain."
- Russian has a legal right to annex Crimea, he says, but has no plans to send forces into Eastern Ukraine. His country, he says, will respect the results of Sunday's Crimean referendum on whether to join Russia.
- Stocks are taking the news in stride, the S&P 500 (SPY) about flat on the session.
- ETFs: SPY, SH, SSO, SDS, IVV, VOO, SPXU, UPRO, RSP, RWL, EPS, BXUB, TRND, SFLA, BXUC, BXDB
- Volkswagen's (VLKAY) goal to improve market share in the U.S. is facing a tougher road due to a battle with the UAW over unionizing employees, reports the Wall Street Journal.
- The automaker's decision on where to build a new SUV vehicle is complicated by the issue.
- Volkswagen sales are down 16% Y/Y for the first two months of the year.
- European equities follow Asian shares lower as the tension over the Ukraine crisis increases and amid rising concerns about China's economy following weak data this week.
- "Traders would be foolish to make the mistake they made two weeks ago and go home long into the weekend, particularly with the situation on the ground in Ukraine so potentially fluid, and the Crimea referendum vote due on Sunday," says market analyst Michael Hewson.
- However, U.S. stock futures are higher following sharp losses on Wall Street yesterday.
- Euro Stoxx 50 -0.6%, London -0.4%, Paris -0.6%, Frankfurt -0.7%, Milan -0.5%, Madrid -0.7%.
- U.S. stock futures: Dow +0.1%. S&P +0.2%. Nasdaq +0.2%
- ETFs: VGK, FEZ, IEV, EPV, EZU, HEDJ, FEU, FEP, UPV, ADRU, FEEU, EURL, EURZ, DBEU, FIEU
- John Kerry has arrived in London to meet with Russian Foreign Minister Sergey Lavrov in another effort to try to resolve the crisis over Ukraine.
- However, Western officials believe there is little chance of heading off a referendum in Crimea on Sunday over a proposal for the province to leave Ukraine and join Russia. Still, the West will try to persuade the latter country not to annex Crimea if the region's voters approve the proposal. Ukrainian interim Prime Minister Arseniy Yatsenyuk believes it's a foregone conclusion that they will.
- Yesterday, Russia began new military exercises near the Ukrainian border.
- Meanwhile, hackers have brought down the Web sites of the Kremlin and Russia's central bank ahead of an interest-rate decision.
- Russia's Micex stock index is -2.6% at 1216, but that's up from a 4 1/2 year low of 1184 earlier. The USD-RUB is +0.2% at 36.652 rubles.
- Russian and Eastern European ETFs: RSX, RUSL, ERUS, RUSS, RSXJ, RBL, RUDR, GUR, ESR
- India's wholesale-price index weakened to a nine-month low of +4.68% on year in February from +5.05% in January and came in below consensus of +4.9%.
- The falling WPI adds to declining CPI as the the Reserve Bank of India focuses on reducing inflation, with the RBI hiking interest rates three times since September.
- “We need to see a sustained drop in inflation for the central bank to start cutting rates," strategist Tirthankar Patnaik said before the WPI report. "We don't expect the RBI to change its stance in a hurry as price pressures remain in the economy."
- The Sensex is -0.8% and the USD-INR is -0.2% 61.371 rupees.
- ETFs: EPI, INDY, SCIF, PIN, INP, INDL, ICN, INR, INDA, SCIN, INXX, INCO, SMIN
- As expected, German CPI rose 0.5% on month in February after dropping 0.6% in January.
- On year, inflation slipped to 1.2% from 1.3%.
- HICP +0.5% on month vs -0.7% previously. On year, HICP +1% vs +1.2%.
- All the figures were in line with consensus.
- The comparably low inflation rate was again mainly due to a fall in prices for mineral oil products. Excluding those prices, inflation was +1.7%. (PR)
- DAX futures are -0.2%, while the euro is -0.1% at $1.3858.
- ETFs: EWG, BUND, EWGS, GERJ, DBGR, DXGE, BUNL, FGM, GGOV, BUNT, HEWG
- The Nikkei leads Asian stocks lower following more weak Chinese economic data yesterday and amid increased tension in Ukraine, with the Japanese index slumping 3.3%. A sharp rise in the yen overnight didn't help matters.
- "Japan stocks often take the first hit on bad Asian news, then when the U.S. markets fall later, they react to that as well, resulting in a 'double whammy' effect," says hedge-fund manager Ed Rogers.
- Hong Kong shares are also suffering as the Hang Seng drops 0.9% and heads for its worst week since May 2012.
- Elsewhere in Asia, China -0.8% and Indian -0.9%.
- Meanwhile, Japanese industrial production rose 3.8% on month vs a prior estimate of +4%.
- On year, output +10.3% vs +10.6%.
- Capacity utilization +5.9% vs +2.2%.
- ETFs: DXJ, EWJ, FXY, YCS, JGBS, JGBD, JYN, NKY, DBJP, EZJ, EWV, YCL, JPNL, ITF, JGBL, JPP, JGBT, JPNS, JGBB, HEWJ, FJP, EWH, EWHS, FCHI, FHK
Thursday, March 13, 2014
- Tech stocks with strong Russian and/or Ukranian exposure fell sharply amid a broader equity selloff after Russia began new military exercises near the Ukranian border ahead of a March 16 Crimean referendum.
- Notable decliners: YNDX -8.4%. QIWI -8.3%. EPAM -6.3%. LXFT -3.8%. VIP -2.8%.
- Qiwi sold off yesterday in spite of posting a Q4 beat and strong 2014 guidance (20%-22% revenue growth vs. a 13.8% consensus). VimpelCom slipped after disclosing investigations by the SEC and Dutch authorities.
- Worries about the health of industries with massive overcapacity have many banks cutting lending to certain sectors by up to 20%, reports Reuters. At the same time, Beijing has asked banks to include loans linked to derivative products and debt financing along with regular reports of outstanding loans by sector.
- The specific sectors facing audi are steel, cement, aluminum, smelting, flat-glass, and shipbuilding, says a bank source, and one area of particular concern is the common practice of bank loans backed by commodities like steel and copper.
- The moves come in the wake of last week's landmark bond default by Chaori Solar as well as the default of a coal-related high-yield trust product, but is it the real deal? Stories of Beijing cracking down on industrial sectors with excess capacity have been floating around for a decade, but the train has kept on rolling (or bubble inflating, depending on your point of view). FXI -2.2%
- China ETFs: FXI, PGJ, GXC, FXP, YINN, KWEB, HAO, ASHR, CHIQ, TAO, CHIX, YANG, CQQQ, MCHI, PEK, QQQC, XPP, YAO, CHXX, CHII, YXI, CHXF, ECNS, CHIM, CHIE, KFYP, FCA, TCHI, CHNA, KBA
- After hitting a 2-1/2 year high in morning action, the euro (FXE -0.3%) does an about face as Mario Draghi tries to hold back the waves, calling the euro "increasingly relevant in our assessment of price stability."
- "Any material risk of inflation expectations becoming unanchored will be countered with additional monetary policy measures."
- ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR
- It's first bond auction since September 2010, Ireland sold 10-year notes priced to yield 2.967%, the lowest on record for 10-year paper. Ten-year U.S. Treasury notes at 2.66% yield only 30 basis points less!
- The country's National Treasury Management Agency did raise 10-year money in January, but that was through banks, rather than an auction.
- ETFs: EIRL
- "We can't tell them something we don't know ourselves," Bank of England Governor Mark Carney recently told the WSJ when asked about the timing of rate hikes. "We're not going to raise interest rates until the economy can really sustain it."
- Short Sterling futures have priced in the first nudge higher in rates in spring 2015, just ahead of a U.K. election, and the BOE has done little to dissuade that notion. The U.K. economy has performed much better than Carney expected, the unemployment rate falling to 7.2% by 2013's end, within 20 basis points of where Carney and team didn't expect it to fall to until 2016. "We are now in Monty Python Territory," said one parliament member recently to Carney as the central bank chief tried to explain the BOE's forward guidance and market reaction to it.
- U.K. ETFs: EWU, EWUS, FKU, DXPS, DBUK
- ECB members keep trying to talk down the currency, but the euro keeps moving ahead, up 0.4% this morning and buying $1.3956 - the most since October 2011.
- Yesterday, George Soros - launching his new book "The Tragedy of the European Union" - compared the stagnation in the EU to that of Japan. He no doubt sees the strength of the euro in the face of economic weakness as similar to that of the yen during Japan's malaise - a failure of policymakers to come to grips and deal with what confronts them.
- Euro ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR
- Asian shares mostly fall following more evidence that China's economy is slowing - although not in Shanghai - while European equities and U.S. stock futures are mainly higher.
- Japan -0.1%, Hong Kong -0.7% , China +1.1%, India -0.3%.
- Euro Stoxx 50 +0.1%, London -0.1%, Paris +0.2%, Frankfurt +0.2%, Milan +0.7%, Madrid +0.2%.
- U.S. stock futures: Dow +0.2%, S&P +0.3%, Nasdaq +0.3%