‘Fragile Five’ Struggle to Take Advantage of Fed Taper Reprieve

November 13, 2013, 3:49 AM

‘Fragile Five’ Struggle to Take Advantage of Fed Taper Reprieve

NATASHA BRERETON-FUKUI

The Federal Reserve’s decision in September to maintain for now its extraordinary support for the American economy has given emerging markets extra time to prepare for the U.S. central bank’s eventual policy tightening. The verdict is mixed on whether the “Fragile Five” — as Morgan Stanley dubbed India, Indonesia, Turkey, Brazil and South Africa – have done enough to prepare for the Fed’s eventual tapering, which some analysts now believe could come  as early as December. Read more of this post

As assets surge, bond investors worry over liquidity traps

As assets surge, bond investors worry over liquidity traps

10:30am EST

By Karen Brettell

NEW YORK (Reuters) – Asset managers’ bond holdings are surging as banks that traditionally facilitated trades in debt markets scale back, raising fears that increasingly one-sided markets are at a greater risk of frantic selloffs. Big U.S. companies, including Verizon (VZ.N: Quote,Profile, Research, Stock Buzz) and Apple (AAPL.O: Quote,Profile, Research, Stock Buzz), have been selling record numbers of bonds to seemingly insatiable demand, as unprecedented stimulus from central bank bond purchases makes borrowing favorable for big corporations and as investors stretch for higher returns. Read more of this post

Advisers Wary of New Crop of China ETFs; Advisers find reasons to be on guard about A shares

Advisers Wary of New Crop of China ETFs

Advisers find reasons to be on guard about A shares

MURRAY COLEMAN

Nov. 13, 2013 9:11 a.m. ET

The trickle of funds investing in China’s $1.2 trillion mainland stock market is starting to arrive, promising to redraw maps across emerging markets for foreign investors. Last week saw the debut of the first U.S.-listed exchange-traded fund to invest in so-called “A” shares from the world’s second-biggest economy. The launch of DeutscheDBK.XE -0.90% Asset & Wealth Management’s db X-trackers Harvest CSI 300 Index ETFASHR -1.51% (ASHR), with $108 million in seed money, marked the biggest initial capital investment for an equity ETF since 2007. Read more of this post

Korea to Lift Five-Year Ban on Short Selling Finance Stocks

Korea to Lift Five-Year Ban on Short Selling Finance Stocks

South Korea will allow investors to short sell financial stocks from tomorrow, signaling that regulators believe banks and insurers are strong enough to withstand the lifting of a ban imposed during the 2008 crisis. The restriction is being removed because equities have stabilized since July and the government wants to bolster capital markets, the Financial Services Commission said today in an e-mailed statement. Short sales occur when an investor sells borrowed securities in anticipation of a price decline. Read more of this post

Emerging Currencies Are Pressured Anew; Looming Fed Pullback Sparks Selloff

Emerging Currencies Are Pressured Anew

Looming Fed Pullback Sparks Selloff

ANJANI TRIVEDI

Updated Nov. 12, 2013 6:56 p.m. ET

Investors worried about a cutback to the Federal Reserve’s easy-money policies are withdrawing from some emerging markets, sparking a currency selloff that echoes last summer’s rout. The stronger-than-expected October U.S. jobs report, released on Friday, heightened expectations that the Fed could be just months away from scaling back, or tapering, its $85 billion a month of bond purchases. Taken together with other positive indicators about the U.S. economy, the jobs report spurred a rise in U.S. bond yields, which many money managers said lessens the allure of emerging markets. Read more of this post

State Companies Emerge as Winners Following Top China Meeting; Enterprises Fended Off Calls to Curb Their Influence

State Companies Emerge as Winners Following Top China Meeting

Enterprises Fended Off Calls to Curb Their Influence

BOB DAVIS And BRIAN SPEGELE

Nov. 13, 2013 9:25 a.m. ET

BEIJING—China’s biggest state-owned companies emerged as major winners following a meeting this week of top Communist Party leaders, who reaffirmed their “dominant role” in the economy in comments that suggested they have been able to fend off repeated calls to curb their enormous influence. Read more of this post

Thailand Spurns IMF’s Call to Rethink Rice-Purchase Program

Thailand Spurns IMF’s Call to Rethink Rice-Purchase Program

Thailand said that it will press on with a $21 billion rice-purchase program, spurning a call from the International Monetary Fund to end the loss-making intervention and telling the lender its approach is better. “The government has our ways to help farmers,” Finance Minister Kittiratt Na-Ranong told reporters in Bangkok today after the IMF released a macro-economic assessment of the country, known as an Article IV consultation. “We listened to different points of view but the IMF needs to profoundly understand the situation before giving theoretical comments,” he said, adding that he hadn’t yet read the report. Read more of this post

Great Rotation Seen Muted by Pension-Fund Demand: Credit Markets

Great Rotation Seen Muted by Pension-Fund Demand: Credit Markets

A shift by household investors from bonds into equities that Bank of America Corp. dubbed the great rotation is being muted as pension funds and insurers boost fixed-income assets to match future obligations. U.S. companies with the largest defined-benefit pensions increased allocations into fixed-income to 41.3 percent from 36 percent since 2010, putting a greater share into the market than into equities, according to JPMorgan Chase & Co. (JPM) analysts and data from actuarial and consulting firm Milliman. Life insurers are replacing maturing structured securities with corporate bonds, and sovereign-wealth funds with $4.3 trillion of assets are investing 90 percent of it into debt, the analysts said. Read more of this post

Central Banks Risk Asset Bubbles in Battle With Deflation Danger

Central Banks Risk Asset Bubbles in Battle With Deflation Danger

Central banks are finding it’s easier to push up stock and home prices than it is to prevent inflation from falling short of their targets. While declining costs for everything from gasoline to coffee can be good news for consumers, disinflation makes it harder for borrowers to pay off debts and businesses to boost profits. The greater danger comes when disinflation turns into deflation, which leads households to delay purchases in anticipation of even lower prices and companies to postpone investment and hiring as demand for their products dries up. Read more of this post

Philippines Paradise Demolished Drains Vital Tourist Dollars: Southeast Asia

Paradise Demolished Drains Vital Tourist Dollars: Southeast Asia

The Philippines, ravaged by the deadly Super Typhoon Haiyan and a 7.2-magnitude earthquake in the past month, needs to race to rebuild beach resorts and infrastructure to bring back much-needed tourism spending. At least 2,275 people were killed and hundreds of thousands displaced after the Southeast Asian nation was hit by one of the most powerful storms on record Nov. 8. An earthquake on Oct. 15 killed at least 222 in Bohol and Cebu. Both hit in an area dotted with resorts that depends on revenue from divers and beachgoers. Read more of this post

Understanding Japan’s GDP: A Guide for the Perplexed

November 13, 2013, 4:16 AM

Understanding Japan’s GDP: A Guide for the Perplexed

MITSURU OBE

Japan on Thursday will release preliminary data for the third quarter’s gross domestic product. Economists expect the growth rate to have slowed to 1.7% on-quarter in annualized terms in the July-September period, from 3.8% in April-June. The data will serve as a progress report on Prime Minister Shinzo Abe’s economic policies, and provide a key input into discussions of next year’s budget. Strong numbers would mean the economic recovery remains on track, allowing the government to slowly shift its focus from short-term economic stimulus to medium-term fiscal consolidation. A medium-term fiscal reform target and a sales tax hike to 10%, both in 2015, already loom large in policymakers’ minds. Read more of this post

Throwing-Grandma-Off-Cliff Ads Dim Odds of Medicare Cuts; “Is America Beautiful without Medicare?”

Throwing-Grandma-Off-Cliff Ads Dim Odds of Medicare Cuts

A television ad that aired briefly in August 2012 stands as a warning today for lawmakers who want to cut Social Security and Medicare. A man in a dark suit acting as Wisconsin Representative Paul Ryan, then the Republican Party’s vice presidential candidate, pushes a wheelchair carrying a panicked-looking grandmother to the edge of a cliff. He dumps her over the rocky ledge. “Is America Beautiful without Medicare? Ask Paul Ryan and his friends in Congress,” the ad says. Read more of this post

Contractors squeezed as oil budgets tighten; The Thomson Reuters index of 164 global oil services companies is up some 70 percent since 2010

Contractors squeezed as oil budgets tighten

6:31am EST

By Stephen Eisenhammer

LONDON (Reuters) – Under pressure from their shareholders to spend less, international oil companies are demanding cheaper and simpler services, equipment and engineering, a red flag for contract firms which rely heavily on their needs. Contractors have cashed in on the oil boom of the last few years. The Thomson Reuters index of 164 global oil services companies is up some 70 percent since 2010. Read more of this post

Secret Israel Housing Boom Defies Settlement Discord: Mortgages

Secret Israel Housing Boom Defies Settlement Discord: Mortgages

When David and Rivka Wietchner bought a home in the West Bank Jewish settlement of Har Bracha, they swooned over the mountain view, the embracing community and the 375,000-shekel ($106,000) price of a six-room apartment. Two years later, the Israeli parents of three were even more delighted to discover their home would now sell for about 500,000 shekels, or 33 percent more. Boosted by rising demand, home prices are surging in Har Bracha, Hebrew for the Mountain of Blessing, and other remote settlements in the northern West Bank, even though they’re the most likely to be torn down in any peace deal with the Palestinians. Read more of this post

McDonald’s Coffee Is Driving Away Customers

McDonald’s Coffee Is Driving Away Customers

ASHLEY LUTZ NOV. 12, 2013, 12:35 PM 6,384 12

McDonald’s has spent years offering new coffee products to compete with Dunkin’ Donuts and Starbucks. But the McCafe is starting to hurt business at McDonald’s, Howard Penney, managing director at Hedgeye Risk Management, tells Yahoo! Finance. “They went too far on the beverage initiative beginning in 2009 and really hurt the core business,” Penney tells Yahoo!. “They’re really losing customers at lunch and the stores are a little too inefficient because of the distractions they’ve put into the stores.” Read more of this post

Asia stock exchanges and watchdogs grapple with HFT dilemma

November 12, 2013 12:31 pm

Asia stock exchanges and watchdogs grapple with HFT dilemma

By Jeremy Grant

A curious thing happened recently on SGX, the Singapore exchange. In a matter of hours, about S$8bn (US$6.4bn) was wiped off the combined market value of three little-known stocks. Shares in Blumont Group, Asiasons Capital and LionGold Corp slumped after mysterious trading activity that has been blamed on everything from aggressive short selling to outright market manipulation or insider trading. Read more of this post