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  • Today - Wednesday, October 22, 2014

  • 3:57 AM
    • Following the submission of euro zone countries' budgets to Brussels for review last week, France and Italy will likely hear back today that their budget plans risk breaching EU rules, FT reports.
    • France is required to get its deficit back under the EU ceiling of 3% of economic output by next year but its plan ignored that commitment.
    • Italy must modify its structural budget into balance by 2015, as its public debt currently sits at 135% of GDP, far above the EU ceiling of 60%.
    • ETFs: EWI, EWQ
    | Comment!
  • Tuesday, October 21, 2014

  • 3:54 PM
    • Speaking at the Robin Hood Investors Conference, David Tepper says he's short the euro (FXE -0.6%).
    • The hedge funder has been expecting the ECB to go full QE at some point, and is no doubt pleased at this morning's floating of the idea of the central bank adding secondary market purchases of corporate bonds to its just-in-place program of buying ABS.
    • ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR
    | 2 Comments
  • 12:36 PM
    | 1 Comment
  • 8:01 AM
    • Pushing Europe to a sizable rally and sending the euro lower, Reuters says the ECB could decide as soon as this year to begin buying corporate bonds on the secondary market. The move would be an expansion of the ABS buying program launched this week.
    • "The pressure in this direction is high," says Reuters' source.
    • The Stoxx 50 (NYSEARCA:FEZ) is up 1.1% and the euro (NYSEARCA:FXE) lower by about 100 pips since the news, now down 0.3% at $1.2765.
    • Board Europe equity ETFs: VGK, FEZ, IEV, HEDJ, EPV, EZU, FEU, FEP, UPV, ADRU, FEEU, EURL, DBEU, EURZ, IEUR, FIEU, HEZU, ESTX
    • Euro ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR
    | 11 Comments
  • 6:21 AM
    • The panel chosen to pick candidates for Hong Kong's 2017 election could be made "more democratic", says the territory's leader Leung Chun-ying, just hours before the start of the first public talks between pro-democracy student leaders and government officials.
    • Expectations are low for a major breakthrough in today's talks, although the statement was the first indication of a possible concession to pro-democracy protesters who have blocked city streets for weeks.
    • ETFs: EWH, EWHS, FCHI, FHK
    | Comment!
  • 6:08 AM
    • Key quotes from CAO report:
    • "Industrial production is decreasing recently."
    • "Private consumption appears to be pausing recently."
    • "Business investment shows some weak movements recently, while it is on the increase."
    • "Although weakness remains for the time being, the economy is expected to recover, supported by the effects of the policies, while employment and income situation improve. However, attention should be given to the downside risks of the Japanese economy such as lengthening of the reaction after a last-minute rise in demand and slowing down of overseas economies."
    • ETFs: DXJ, EWJ, FXY, YCS, JGBS, DFJ, JGBD, JYN, NKY, DBJP, EZJ, EWV, YCL, DXJS, SCJ, JPNL, JSC, ITF, JGBL, JPP, JGBT, JPNS, HEWJ, JGBB, FJP, QJPN, JPMV, DXJT, DXJR, DXJH, DXJF, DXJC
    | 1 Comment
  • 4:02 AM
    • Jaguar Land Rover (NYSE:TTM) has opened its first plant in China as part of a manufacturing push aimed at more than doubling global sales by the end of the decade.
    • Last year, the company sold 425K vehicles worldwide, with more than 100K vehicles sold in China, making it Jaguar Land Rover’s single largest market.
    • The plant is part of a 10.9B yuan ($1.8B) investment, and will have a capacity of 130K cars.
    | Comment!
  • 2:40 AM
    • China's economic growth slowed in the third quarter to its weakest in more than five years as it battled a slumping real-estate market and weak domestic demand and industrial production.
    • The world's second-largest economy grew 7.3% between July and September from a year earlier, slightly above the 7.2% forecast by analysts but slowing from 7.5% in Q2.
    • The GDP data reinforces expectations that Beijing will need to unleash further stimulus to avert a sharper slowdown.
    • Shanghai is down 0.7%; Hang Seng is down 0.1%.
    • ETFs: FXI, EWH, KWEB, PGJ, GXC, YINN, FXP, HAO, ASHR, TAO, CHIQ, YANG, CQQQ, CHIX, MCHI, QQQC, PEK, XPP, YAO, YXI, CHXF, ECNS, CHII, FCA, CHIE, CN, CHIM, EWHS, FCHI, KFYP, ASHS, CNXT, CHNA, KBA, FHK
    | 10 Comments
  • Monday, October 20, 2014

  • 3:19 PM
    • Things are volatile out there. Just seven weeks after recommending investors unload Russian stocks, Morgan Stanley does a 180, calling the country a "tactical" buy, i.e. don't buy and sock away in a drawer.
    • “We do not have cause to believe the [Ukraine] situation is deteriorating, and worst case outcomes (such as additional sanctions) now appear a less likely scenario," says Morgan equity strategist Ronan Carr. The Market Vectors Russia ETF (RSX -1%) is lower by 12.2% since Morgan's August 29 sell recommendation.
    • The team at JPMorgan, on the other hand, which has advised selling Russia since July, continues to hold that opinion, noting de-escalation in Ukraine could be six  months to a year out, and sanctions won't be lifted until after that.
    • ETFs: RSX, RUSL, RUSS, RSXJ, ERUS, RBL, RUDR
    | 4 Comments
  • 2:44 PM
    | Comment!
  • 11:41 AM
    • In more bad news for an already-weak global economic recovery, China's GDP growth will slow to 3.9% over the coming decade as productivity gains evaporate and Beijing fails to push through necessary reforms, says the Conference Board.
    • Foreign companies, says the report, should realize China is in "a long slow fall in economic growth ... The competitive game has changed from one of investment-driven expansion to one of fighting for market share.”
    • Putting finer numbers on the forecast, the Conference Board sees economic growth averaging 5.5% from 2015-2019 (vs. last year's 7.7%), and slowing further to 3.9% between 2020-2025.
    • China could reverse the slowdown with market-related reforms, says the CB, but the group is skeptical such changes - sure to cause short-term growth and political pains - will be made.
    • ETFs: FXI, PGJ, GXC, YINN, FXP, YANG, MCHI, XPP, YAO, YXI, CHXF, FCA, CN
    | 2 Comments
  • 8:20 AM
    • The Nikkei has slumped alongside Western markets over the past few weeks - down more than 10% - but gained 4% overnight following Friday's big rally in the States.
    • Also at work is a published report saying Japan's $1.2T Government Pension Investment Fund (GPIF) will boost its allocation target for domestic shares to about 25% from 12%. Foreign holdings of stocks and bonds will be lifted to a combined 30% from 23%, while holdings in JGBs will be cut to 40% from 60%.
    • The GPIF has been expected to announce a higher domestic stock target, but the 25% figure is likely toward the top end - if not exceeding - of market expectations.
    • EWJ +2% premarket
    • ETFs: DXJ, EWJ, DFJ, NKY, DBJP, EZJ, EWV, DXJS, SCJ, JPNL, JSC, ITF, JPP, JPNS, HEWJ, FJP, QJPN, JPMV, DXJT, DXJH, DXJR, DXJF, DXJC
    | Comment!
  • 6:19 AM
    • 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.
    • ETFs: FXI, EWH, KWEB, PGJ, GXC, YINN, FXP, HAO, ASHR, TAO, CHIQ, YANG, CQQQ, CHIX, MCHI, QQQC, PEK, XPP, YAO, YXI, CHXF, ECNS, CHII, FCA, CHIE, CN, CHIM, EWHS, FCHI, KFYP, ASHS, CNXT, CHNA, KBA, FHK
    | Comment!
  • 3:56 AM
    • Russia and Ukraine have reached a preliminary agreement on a price for winter gas supplies, easing some concerns that the countries’ dispute could disrupt supplies to Europe via Ukraine.
    • Russia cut off supplies in June, demanding Ukraine pay a debt of some $5B. Lacking the funds to purchase the gas due to its recession, Ukraine has appealed to the IMF for help.
    • Ukrainian President Petro Poroshenko announced that Ukraine had agreed on a price of $385 per 1,000 cubic meters of gas until the end of March.
    | 5 Comments
  • 3:38 AM
    • 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.
    • ETFs: EWQ
    | 2 Comments
  • Saturday, October 18, 2014

  • 3:23 PM
    • 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."
    • ETFs: RSX, RUSL, RUSS, RSXJ, ERUS, RBL, RUDR
    | 22 Comments
  • 12:23 PM
    • Wal-Mart de Mexico will search for a new CEO to replace the retiring Scott Runkin.
    • The exec plans to step down in 2015.
    • Wal-Mart (NYSE:WMT) said earlier in the week it was looking to "rejuvenate" its business in Mexico.
    • Total revenue rose 4.3% in Q3 to 105.6B pesos, while EBITDA fell 4.2% to 9.2B pesos.
    • Wal-Mart de Mexico Q3 results (.pdf)
    | 1 Comment
  • Friday, October 17, 2014

  • 4:40 PM
    • Russian Pres. Putin says Europe should help Ukraine pay upfront for natural gas to guarantee steady winter supply; Ukraine won’t get Russian gas unless it prepays, and Europe should extend loans or aid to help it do so.
    • European aid could be discussed at talks planned for next week; Ukraine has agreed to pay $3.1B of debt for past supplies by year end, which was another condition for the resumption of deliveries, Gazprom (OTCPK:OGZPY) CEO Alexei Miller said today.
    • After talks today with Putin, Germany's Merkel and France's Hollande, Ukraine Pres. Poroshenko said they didn’t deliver “any practical result."
    | 3 Comments
  • 3:16 PM
    • 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.
    • ETFs: EEM, VWO, EDC, EDZ, SCHE, IEMG, EEV, ADRE, EUM, EET, GMM, EEME, DBEM, FEM, EMCR, EWEM, HEEM, EMLB, EMSA, EMFT, EMDR, EMHZ
    | Comment!
  • 11:00 AM
    • 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.
    • The China Financials ETF (CHIX -0.9%)
    • Broad China ETFs: FXI, PGJ, GXC, YINN, FXP, YANG, MCHI, XPP, YAO, YXI, CHXF, FCA, CN
    | 1 Comment
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