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China is not collapsing
Capital Markets
<p>LONDON – One question has dominated the International Monetary Fund’s annual meeting this year in Peru: Will China’s economic downturn trigger a new financial crisis just as the world is putting the last one to bed? But the assumption underlying that question – that China is now the global economy’s weakest link – is highly suspect.</p> <p>China certainly experienced a turbulent summer, owing to three factors: economic weakness, financial panic, and the policy response to these problems. While none on its own would have threatened the world economy, the danger stemmed from a self-reinforcing interaction among them: weak economic data leads to financial turmoil, which induces policy blunders that in turn fuel more financial panic, economic weakness, and policy mistakes.</p> <p>Such self-reinforcing financial feedback is much more powerful in transmitting global economic contagion than ordinary commercial or trade exposures, as the world learned in 2008-2009. The question now is whether the vicious circle that began in China over the summer will continue.</p> <p>Click here to read more</p> <p>© Project Syndicate<br /> Photo: Danijel James</p>
Daily Scan: Weak China trade data hit global markets
Capital Markets
<p>Updated throughout the day</p> <p>October 13</p> <p>Good evening everyone. Weak trade data from China have hit global markets, putting a full stop to the rallies that had lifted bourses for more than a week. In Asia, the Nikkei fell 1.11%; the Hang Seng slipped 0.57%. In Europe, most exchanges were racking up losses in excess of 1% as investors feared the cold China has caught would give everyone else the flu. Commodity and luxury good companies got hit the hardest. The mainland China indexes managed to close higher after spending most of the day in the basement, thanks to the invisible hand of Sino-capitalism.</p> <p>Here’s what else you need to know:</p> <p>Exports fall 3.7% and imports collapse in China trade data. China’s trade surplus widened to $60.34 billion in September from $60.24 billion in August, a massive jump from the $46.79 billion narrowing expected by analysts. The surplus was largely fueled by a 17.7% dive in imports, indicating that China’s shift to a consumer economy isn’t going as planned. And exports slowed Business Insider</p> <p>EM currencies slammed. The post China import bloodbath seemed claimed the Malaysian ringgit and the Indonesian rupiah; both tanked at least 1% against the dollar, while the Philippine peso and the Indian rupee lost at least 0.5%. The aussie meanwhile, right after clocking in a 9-day recovery, plunged nearly 0.9% to AU$0.7296 versus the greenback.</p> <p>Yuan punches in 8-day winning streak. The PBOC fixed the yuan 0.28% higher today, helping the currency snap up another day in the verde (or red, depending where you are). Interestingly, this seems at odds with their recent “quantitative easing” measures, which should’ve sent the renminbi down, down, down. Semantics, I guess, since it was Chinese media who kept calling it that. Financial Times (paywall)</p> <p>Chinese asset manager stabbed by investor. Global Wealth Investment CEO Wang Jie was rushed to a hospital Sunday after a disgruntled investor stabbed him in the shoulder during a meeting. The incident was apparently connected to the collapse of one of China’s largest state-backed guarantors, the Hebei Financing Investment Guarantee Group. Financial Times (paywall)</p> <p>U.K. falls into deflation. While core inflation remained unchanged, headline inflation in the United Kingdom fell to a 55-year low of -0.1% in September, worse than analyst estimates of an unchanged reading. “A smaller than usual rise in clothing prices and falling motor fuel prices” were to blame. Office of National Statistics</p> <p>Apple blocking news app in mainland China. Even users who bought their iPhones in the U.S. can’t access Apple News. Quartz</p> <p>Ford to invest $1.8 billion in China R&amp;D. Despite a slump in car sales in the region, U.S. carmaker Ford plans to invest $1.8 billion to build up its research and development capabilities in China to better tailor its offerings to its customers, as its president, Mark Fields said in a statement: “With this investment in research and development, the next generation of Ford vehicles will be completely designed around our customers.” </p>
Daily Scan: Oil slumps more than 4%; earnings take center stage as stocks rally 7th session
Capital Markets
<p>Updated throughout the day</p> <p>October 12</p> <p>Enough already about this Federal Reserve dithering. Time to worry about earnings. Last week, Alcoa launched the earnings reporting season with dismal news. Expectations are low for the season -- which could prove positive for stocks. Tighten your seatbelt Tuesday for some biggies: Intel, JPMorgan, Johnson &amp; Johnson, and CSX Corp. Later in the week we will get more heavyweights, including Goldman Sachs, Netflix, Bank of America, Wells Fargo, and Delta Air. Did we mention BlackRock, Schwab, or Citigroup? Busy, busy, busy. U.S. stocks closed higher in dull action but still notched a seventh consecutive day of gains. Banks and bond trading were closed for Columbus Day.</p> <p>Here’s what else you need to know:</p> <p>Fortress Investments to shutter lead fund after major losses. Head trader Michael Novogratz is reportedly on his way out. The fund has posted losses of 17.5% through September. The fund now has $1.6 billion in assets, down from $8 billion in 2007. Wall Street Journal (paywall)</p> <p>Oil hit by OPEC production. Sweet crude futures for November fell 4.41% while Brent tumbled nearly 4.5%. It was the biggest one-day drop since Sep 1. OPEC output rose 109,000 barrels/day in September to 31.57 million. That news overshadowed an earlier forecast that U.S. production would drop in 2016. MarketWatch</p> <p>AB Inbev hikes bid for SABMiller to $103 billion. They say the fourth time is the charm. AB Inbev has been wooing the No. 2 brewer for weeks. Apparently, when it announced its bid last week of  $99.2 billion, the jilted suitor thought board members representing SABMiller family stakeholders were in favor of the deal. Wrong! Wall Street Journal (paywall)</p> <p>Dennis Lockhart whistling the same tune. The Atlanta Fed president continues to say that the U.S. is ready for an interest rate hike this year. Lockhart is considered a good gauge on central bank thinking. WBP Online</p> <p>European stocks lower, breaking winning streak. The Stoxx Europe 600 was marginally lower. The FTSE was off 0.77%, breaking a nine-session series of up sessions. Rolls Royce Holdings fell more than 4% after the Financial Times reported that regulators were investigating some of its contracts. MarketWatch</p> <p>Dell to buy EMC in $67 billion deal, a tech record. The PC maker has gone through a total makeover, going private two years ago and now taking on a mountain of debt to acquire the storage giant. An announcement is expected Monday. New York Times (paywall)</p> <p>GE said to be in talks with Wells Fargo to sell $30 billion loan portfolio. GE has been on a tear to return to its industrial roots. Reuters</p> <p>Enough already, move! Central bankers at the annual meeting of the International Monetary Fund in Lima, Peru, told the Federal Reserve to raise rates, already. “'Delaying the increase would not solve the situation,' said Sukhdave Sin</p>
Billionaire Brooklyn Nets owner Mikhail Prokhorov visits team at training, teaches new tricks
Lifestyle, 4:01
<p>&nbsp;</p> <p>The Russian businessman and owner of the Brooklyn Nets led a team training camp and gave the basketball players some tips on dexterity and coordination. Not all the players were able to keep up with the 50-year old billionaire’s moves, Finbuzz reports.</p> <p>He travelled to Duke to give the team a lesson in Tescao, a Tibetan martial arts.</p> <p>“I think my preference was to come personally and to say hello to the players and to the coaches. I think it’s very important for the new team to have a special team building, and, of course, the commitment of ownership as part of the team,” he said.</p> <p>The NBA team posted a video of the tall and lean Prokhorov simultaneously drilling and bouncing balls of different size and shape, and the professionals can barely keep up. The Brooklyn Nets owner has been practicing Tescao for the last five and a half years.</p> <p>His visit reassured both investors and players that he’ll be around for at least another season.</p> <p>Prokhorov, who owns 80 percent of the Brooklyn Nets and 45 percent of the Barclays arena in Brooklyn, has an estimated net worth of $10.8 billion, according to Bloomberg’s billionaire index. It is his sixth consecutive season as the owner of the Nets. He bought the team in 2010 along with Jay-Z, who has since sold a majority of his stakes. As of this fall, he holds a one-fifteenth of a one percent of the Nets, and one-fifth of one percent of the $1 billion Barclays Center.</p> <p>Though it was reported in January of 2015 that Prokhorov was planning on selling the team and the arena, the deal never went through, and now his next move may be buying up the pieces of the team and arena he doesn’t already own.</p> <p>“I’m not planning to sell the Brooklyn Nets. The situation is that we’re in discussion with our partners at Forest City, who own 20% of the club and 55% of the arena, to buy them out,” he told TASS.</p> <p>This story originally appeared in Finbuzz.</p>
'Smart Contracts' conference unravels the many uses of blockchain
<p>Cryptocurrency experts from across the world gathered at Hong Kong's Cyberport today for the first day of Blockchain Workshops' two-day "Smart Contracts for Smart Cities" conference. </p> <p>The two-day event -- a draw for the sandal-wearing hacker as much as the smartly-dressed banker -- focuses on the seemingly limitless applications of blockchain (the decentralised technology that underpins cryptocurrencies like Bitcoin) across industries as varied as fintech, intellectual property, infrastructure, and internet-of-things (IoT).</p> <p>The opening speech was delivered by Hennin Diedrich, a senior programmer at IBM. Titled "Towards a Democracy of Devices," the talk examined the broader impact of blockchain technology. This was followed by an opening panel -- "Blockchain and Applications" -- where Diedrich, as moderator, quizzed a  team of technical experts about the hopes, fears and complexities of blockchain technology. </p> <p>Here is some of the social media commentary:</p> <p>Hennig Diedrich from IBM gives the keynote at #blockchain workshops #smartcontracts<br /> — NexChange (@NexChanger) October 12, 2015</p> <p>&nbsp;</p> <p>The opening panel at #smartcontracts for smart cities #blockchain<br /> — NexChange (@NexChanger) October 12, 2015</p> <p>&nbsp;<br /> Dom Williams, Difinity: "The reason the decentralised cloud will win is because it's an open transparent system" #smartcontracts — NexChange (@NexChanger) October 12, 2015<br /> Vlad Zamfir, Ethereum: "Bitcoin is a protocol that anyone can understand and provides a great gateway to blockchain" #smartcontracts — NexChange (@NexChanger) October 12, 2015</p> <p>Peter Todd, Bitcoin Dev: "It will take a long time for computer security to get to a point when more people are comfortable." #smartcontracts — NexChange (@NexChanger) October 12, 2015</p>
Asian family offices turn cautious
Asset Management
<p>Family offices in Asia Pacific are shifting towards a more conservative investment approach, according to a recent survey. Rather than pursuing growth as their main focus, they are getting cautious, moving towards balanced and preservation strategies.</p> <p>The recently released Global Family Office Report 2015 by UBS and Campden also found that the region’s family offices are an uncomplacent lot. </p> <p>Despite posting an average dollar return of 6.7% last year, the second best among their peers in Europe, North America, and emerging markets, they were less happy with their performance than the average in the study. </p> <p>The research questioned principals and executives in over 224 family offices across 37 countries. In Asia Pacific, 35 family offices participated with average assets under management of $431 million. </p> <p>A family office manages key areas of a rich family’s assets, including real estate holdings and direct or indirect investments, tax consolidation, and estate management as well as serving as the central hub for a family’s legacy, governance, and succession communication.</p> <p>It is becoming an attractive alternative to farming out cash and decision-making to private banks. But costs are also rising as offices compete for talent. </p> <p>Oh, the best regional performer last year? Europe, because of big bets on real estate and private equity.<br /> Photo: greg<br /> &nbsp;</p>
China tech titans reveal global ambitions with fintech partnerships
<p>Two of China's biggest internet companies - Alibaba and Baidu - both revealed their global fintech ambitions this past week with two significant partnerships.</p> <p>The first was Alibaba, the company behind payments platform Alipay, which announced at tie-up with Aussie fintech startup Get Capital. The company's blog reports that the collaboration will allow Australian importers and exporters to access finance on the Alibaba platform.</p> <p>Get Capital will offer a line of credit through's e-Credit line facility. The deal represents a significant expansion of Alibaba's finance ecosystem beyond its borders. </p> <p>Baidu, meanwhile, has just had its own big overseas play by launching a Hong Kong-based international fintech accelerator with Standard Chartered Bank and co-working space operator TusPark Global. The so-called SuperCharger fintech accelerator will give Baidu direct access to start-ups both from Greater China and overseas.</p> <p>This is a big development for Baidu which has been somewhat overshadowed by the likes of Alibaba and Tencent when it comes to fintech. But now its seems that all the BATs are developing global fintech ambitions.<br /> Photo: NASA Goddard Space Flight Center </p>
Japan government fintech drive threatens bureaucratic 'turf war'
<p>Japanese ministers are tripping over themselves to get behind fintech, so much so that government departments are now treading on each other's toes.</p> <p>This week the Japanese government  charged the  Ministry of Economy, Trade and Industry (METI) with setting up a panel focusing on ways to boost the country's fintech industry. The only problem is that Japan's Financial Services Agency (FSA) has already launched a similar initiative, reports the Asian Nikkei Review, leaving some industry professionals confused.</p> <p>The FSA has already had two meetings attended by e-commerce giant Rakuten and a slew of startups. The agency is said to be focusing on building a framework that makes it easier for financial institutions to acquire fintech startups.</p> <p>METI meanwhile is forming a panel of 13 Japan institutions and fintech startups including NEC, Credit Saison, Mizuho Financial Group, and the Bank of Japan. Similarly the panel wants to encourage collaboration between banks and start-up. </p> <p>With similar remits,  it is very likely that METI and the FSA will find themselves competing for the same budgets. It will be interesting to see how the two departments cooperate.<br /> Photo: Tanya Impeartrice</p> <p>&nbsp;</p>
Earnings crunch begins: Big banks in the spotlight
Capital Markets
<p> The third-quarter earnings crunch begins this week.<br /> Many big banks are scheduled to report, but expectations are muted for them overall.<br /> Well Street expectations are low for others as well, including Dow components GE and Intel, as well as Netflix.</p> <p>The quarterly reporting crunch begins in earnest this week, and many of the big banks will be taking their turns in the earnings spotlight, including Bank of America Corp (NYSE:BAC), Citigroup Inc (NYSE: C), JPMorgan Chase &amp; Co. (NYSE: JPM) and Wells Fargo &amp; Co(NYSE: WFC).</p> <p>The consensus forecasts of Wall Street analysts for these are rather muted, with small declines in revenue anticipated from three of them, and modest earnings growth from two, relative to the year-ago period.</p> <p>Below is a quick look at what is expected from these and a few of the week's other most prominent reports.</p> <p>See also: JC Parets: Stay Away From Banking Stocks<br /> Bank of America<br /> This leading money center bank will post earnings of $0.37 per share for its third quarter, if Estimize's consensus forecast is accurate. That would compare to a net loss $0.04 per share in the same period of last year. Note that Estimize overestimated Bank of America earnings in ...</p> <p>Full story available on<br /> Photo: Wally Gobetz</p>
Weekend Scan: Goldman sees unemployment falling below 4.5% in 2018 even as growth slows
Capital Markets
<p>October 12</p> <p>Good evening everyone. Federal Reserve officials have been saying for some time that they believe the unemployment rate can fall more than they expected before inflation kicks in. Now Goldman Sachs has issued a report saying the jobless rate is likely to fall below 4.5% in the next couple of years, even without stellar growth. The Calculated Risk blog reports that the ageing population is behind the new normal for economic equilibrium. As baby boomers retire, the participation rate in the job force declines. Goldman expects the particpation rate to slip 0.25% annually to 61.8% by 2018 from the current 62.4%.</p> <p>Here’s what else you need to know:</p> <p>Enough already, move! Central bankers at the annual meeting of the International Monetary Fund in Lima, Peru, told the Federal Reserve to raise rates, already. “'Delaying the increase would not solve the situation,' said Sukhdave Singh, deputy governor of Bank Negara Malaysia." They probably didn't read that Goldman Sachs report.  Wall Street Journal (paywall)</p> <p>Deflation, the elephant in the room. Barron's contributing editor Jim McTague writes on his blog that deflation is the thing no one wants to talk about at the Fed: "Deflation is evident in many places in our  economy. The buyout of older, high-paid employees by companies is an effort to reduce payrolls so that they can compete with startups and foreign competitors enjoying  lower human capital outlays.  Home prices in may sections of the country have not recovered from the Great Recession, owing to slack demand caused by weaker incomes.  The National Federation of Retailers this week said that their members this holiday season will have to grapple with deflation.  They will have to offer prices in 2015 lower than in 2014 to loosen consumer dollars." LinkedIn</p> <p>Turkey blaming Islamic state for bomb that killed up to 128. A pair of suicide bombers disrupted a pro-Kurdish demonstration in Ankara. The Turkish government said the attack would not delay elections slated for November. Reuters</p> <p>Iran tests new long-range missle. The surface-to-surface weapon called Emad can reach Israel and has "precise control." The test could throw a wrench into the nuclear agreement recently reached with six nations. Iran's parliament approved the general structure of the deal on Sunday. Wall Street Journal (paywall)</p> <p>Hillary Clinton to claim center stage in first Democratic debate.  A total of five candidates will be squaring off. Can anyone out there name all five candidates? CNN</p> <p>Asia stock markets looking rosy. CSI 300 futures point to a 2.01% climb, Hang Seng Index contracts signal a 0.75% pop, while Straits Times Index futures hint at a 1.73% jump. Japan is close for Health and Sports day.</p> <p>China to release new yuan loans. Watch for the number at 10 a.m., local time.  Also on the docket: Malaysia’s industrial production figures at 1 p.m., and India’s industrial, manufacturing, and inflation numbers at 9 p.m.</p> <p>North Korea is “ready for war.” Celebrating the 70th anniversary of the ruling Workers' Pa</p>