Today - Friday, March 27, 2015
- Mercedes-Benz (OTCPK:DDAIF) plans to introduce its first pickup model by 2020.
- The automaker will target Europe, South Africa, and Latin America before deciding if it will roll out the Mercedes pickup in the U.S. where the F-150, Silverado, and Ram models are firmly entrenched.
- YTD Mercedes-Benz sales in the U.S. are +6.0% through the end of February.
- Lower oil prices and subdued consumer demand have again pushed Japan to the brink of deflation, underscoring the difficulties faced by policy makers to revive the world’s third-largest economy through its ¥80T a year stimulus program.
- Japanese core consumer price inflation, which includes energy prices but excludes food, fell to zero Y/Y in February, far below the 2% target the central bank had aimed to achieve by this spring.
- The Nikkei Composite Index dropped 1% on the news, falling to 19,286.
- ETFs: DXJ, EWJ, DFJ, NKY, DBJP, EZJ, EWV, JPNL, DXJS, SCJ, JSC, ITF, JPP, HEWJ, FJP, QJPN, JPMV, DXJT, DXJR, DXJH, DXJC, DXJF
- South Korea hopes its infrastructure companies will benefit from the country joining the China-backed Asian Infrastructure Investment Bank, its finance ministry said on Friday.
- The countries share close trading ties: China is South Korea's biggest trading partner and the two nations are set to sign a free trade agreement in the first half of this year.
- Seoul announced yesterday it would join the AIIB as a founding member, the latest U.S. ally to do so despite Washington's warnings.
Thursday, March 26, 2015
4:07 PM| Comment!
- The fallout in the energy sector thanks to oil's steep decline is no secret, but beyond reduced headcounts and spending in the oil patch, says Nomura, are hits to related industries like construction and engineering.
- While banks have low direct exposure to the oil sector, there's indirect exposure through things like mortgage-lending in Alberta.
- Then there's the impact of the oil shock on the investment portfolios of Canadian households, says Nomura, estimating 25% of household wealth is linked to domestic stocks, and 25% of that is energy-related. Canada's stocks have already been underperformers this year and should things worsen further, it could squeeze consumer spending.
- ETFs: EWC, FXC, CNDA, EWCS, FCAN, QCAN
- The unemployment rate rose to 5.9% in February vs. the 5.7% expected by economists. This as the central bank upped its inflation forecast for 2015 to 7.9% from 6.1% previously. The bank sees inflation falling to 4.9% in 2016 and 4.7% in 2017, but both are still above the 4.5% target.
- The Bovespa is lower by 2.4%.
- EWZ -1.9%
- ETFs: EWZ, BRF, BRXX, EWZS, BRZU, BRAQ, BZQ, BRAZ, BRAF, UBR, DBBR, FBZ
- Roughly €8B exited the banking system in February, bringing total deposits to €152.4B, the lowest level since June 2005. Over the last three month period, about €25B in deposits has been pulled out amid fears of capital controls or an exit from EMU.
- In the meantime, the government is rushing to put together a list of promised reforms necessary to secure more creditor cash to keep paying bills, and the ECB yesterday boosted the amount of money Greek banks can borrow under the ELA to €71.1B from €69.8B.
- Source: WSJ
- GREK -1.4%, NBG -3.7%
- "The underlying factors driving this trend [lower] are still there," says Marvin Barth, European head of FX strategy at the bank, noting the EU's large output gap has gone nowhere, thus depressing return on capital, especially when compared to the U.S.
- He also takes note of the ECB's commitment to hold rates near zero as facilitating the euro's (NYSEARCA:FXE) use as a funding currency, though the borrowing is not being used to invest in the European economy.
- Barclays moves up its forecast for euro/dollar parity by three months to Q3 of this year.
- The euro's lower by 0.4% today to $1.0920.
- ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR
9:40 AM| Comment!
- Toyota (NYSE:TM) says it will unveil the new RAV4 hybrid on April 2 at the New York International Auto Show.
- The model is expected to have a unique design new to the RAV family.
- EV sales are off to a sluggish start in the U.S. this year.
- Previously: Checking in on U.S. electric vehicle sales (Mar. 03 2015)
- "It's not the stronger dollar that irks the Fed," says Morgan Stanley. "It's the pace of appreciation." Since the middle of last year, the nominal trade-weighted exchange value of the greenback has appreciated nearly 22%, or an average of 2.3% per month, creating "substantially tighter financial conditions."
- Comparing this "dollar tantrum" to 2013's "taper tantrum" - in which the Fed didn't seem concerned with what markets were doing, until one day it did and then quickly cooled its hawkish talk - Morgan Stanley believes the central bank will raise rates later than expected.
- ETFs: SHY, BIL, VGSH, SHV, SCHO, DTUS, SST, DTUL, TUZ
- Anheuser-Busch InBev (NYSE:BUD) is days away from nominating JAB Holding CEO Olivier Goudet as its next chairman, sources tell Reuters.
- The move would keep A-B closely tied to JAB and 3G Capital with its four board members.
- JAB and 3G are two of the biggest players on the global consumer goods scene.
- Previously: Beer fallout from Kraft buyout (Mar. 25 2015)
- Greece is optimistic about reaching a deal on economic reforms with its European partners early next week, unblocking urgently needed funding, Economy Minister George Stathakis told Antenna TV.
- The country's eurozone creditors have hinged the next round of bailout funds on reforms that are to approved by the bloc's finance ministers.
- However, in another setback to Greece's government yesterday, the country failed to secure a quick cash payment after eurozone officials told Athens it was not entitled to €1.2B from the European Financial Stability Facility.
- ETFs: GREK
- Indonesia wants to have a major role in the new $50B Asian Infrastructure Investment Bank, with at least the vice-president's position reserved for the Southeast Asian country.
- "We are fighting to get a position in the AIIB ... because most likely we will be the biggest client," said Indonesian Finance Minister Bambang Brodjonegoro.
- At least 35 countries will join the AIIB by the March 31 deadline, the bank's interim chief, Jin Liqun, said on Sunday.
Wednesday, March 25, 2015
- The odds of 3G Capital Partners financially backing a takeover by Anheuser-Busch InBev (NYSE:BUD) of SABMiller (OTCPK:SBMRY) were taken down a notch by analysts after the merger between Heinz and Kraft Foods was announced.
- 3G is considered a likely source of financing for the +$100B A-B would need to put together an attractive offer for its beer rival, but will be a little lighter in the wallet after the Kraft buy.
- The analyst community has been sharply divided over the last year on if the beer mega-merger is actually in the works.
- "This demonstrates that these two markets are largely driven by different pools of investors who have sharply different preferences from time to time," writes BAML, commenting on the widening valuation gap between stocks in Shanghai and Hong Kong since the trading link between the two markets was created last November. The Hang Seng China AH Premium Index closed at 133.8 today vs. a previous all-time high of 141.4 in October 2011.
- The conventional wisdom said the gap was supposed to narrow.
- Shanghai is dominated by retail investors, with those accounts making up 70-80% of total AUM vs. 30-40% in Hong Kong. And retail investors are an enthusiastic lot at the moment, opening up a record 1.1M accounts last week.
- "Due to the lack of urge to arbitrage by these two pools of investors, we suspect that the current high premium itself will unlikely force a reversion to the mean. In another word. these two markets will probably continue to dance to different tunes for a while." says BAML.
- Since the start of 2014, the DB China A-Shares Fund (NYSEARCA:ASHR) is up 65.7% vs. the iShares China Large-Cap ETF (NYSEARCA:FXI) and the iShares MSCI China ETF (NYSEARCA:MCHI), up 14.8% and 11.7%, respectively.
- Source: Barron's
- ETFs: FXI, EWH, PGJ, YINN, GXC, FXP, ASHR, YANG, MCHI, PEK, XPP, YAO, YXI, CHXF, FCA, CN, EWHS, FCHI, ASHS, CNXT, CHNA, KBA, FHK, AFTY
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