Market Snapshot
Asia:: Japan +1.9% to 18554. Hong Kong -0.4% to 22989. China -3.5% to 3321. India -0.1% to 27288.
Europe: London +0.6%. Paris +0.8%. Frankfurt +0.9%.
Futures: Dow +0.4%. S&P +0.5%. Nasdaq +0.5%. Crude -1.3% to $45.69. Gold -0.2% to $1174.80.
Ten-year Treasury Yield -2 bps to 2.04%
Economic News
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
Markets
Japan’s exports grew at the slowest pace in more than a year in September, raising fears that weak overseas demand may have pushed the economy into recession. The value of Japanese shipments rose just 0.6% Y/Y, missing forecasts for a 3.4% gain, and marking the third straight month of waning growth. The trade data is also one of the most crucial economic indicators before the BOJ meets on Oct. 30 to decide whether the nation will need more monetary stimulus. Nikkei +1.9% to 18,554.
Upsetting an otherwise tranquil October, China’s stock market erased morning gains and suddenly fell in late trading, bringing back recent memories of afternoon sell-offs in the broader market. The Shanghai Composite ended the session down 3.5%, its biggest fall since September 15. As of Tuesday, the index was up more than 12% this month and was trading at an eight-week high.
With a critical deadline just two weeks away, House Republican leaders are discussing options for raising the U.S. debt limit as party members remain locked over internal differences. Last week, Treasury Secretary Jacob Lew moved the cutoff for raising the debt limit to Nov. 3, earlier than the Nov. 5 date he had set earlier. After that point, Lew said, the Treasury would have less than $30B to fund the government, “far short” of expenses on certain days.
Syrian President Bashar al-Assad arrived in Moscow on an unannounced visit on Tuesday, in the leader’s first known trip outside his country since the start of the country’s civil war. During the meeting, Russia’s Vladimir Putin reiterated his commitment to support Assad through military and political channels, and said he would call on other world powers to look into a potential diplomatic solution to the conflict. Syria’s economic output has shrunk by as much as 60% since the war began in 2011.
Stocks
Credit Suisse is planning to raise 6.05B Swiss francs ($6.2B) in fresh capital through a rights offering and private placement, as newly appointed CEO Tidjane Thiam shakes up the institution. Credit Suisse (NYSE:CS) will also restructure through the creation of three regionally-focused divisions, the splitting of its securities business, and IPO of its Swiss banking unit by 2017. Q3 results: Net income fell 24% to 779M Swiss francs from 1.03B francs a year earlier.
Syngenta CEO Mike Mack has announced he will be leaving the pesticide and seed maker at the end of October, and will be replaced by CFO John Ramsay until the appointment of a new chief executive. The resignation comes only a few months after Syngenta (SYT) fought off a $45B takeover attempt by Monsanto (MON). “I believe that this is an appropriate time for the company to benefit from the perspectives of a new leader,” Mack said, calling current market conditions challenging. “I wish John every success in his new role.”
Credit Agricole has agreed to pay $787M to U.S. regulators and entered into a deferred prosecution agreement with the DOJ to settle allegations over the transfer of billions of dollars on behalf of Iran and other countries. Credit Agricole (CRARY) now joins 10 other global banks that have entered into similar agreements over the past six years, acknowledging conduct that violated U.S. sanctions.
According to firm Hedge Fund Research, hedge funds suffered their largest quarterly loss in assets since the financial crisis during the three months that ended in September. The third-quarter saw the average fund lose 3.9% driven by slowing growth in China, sliding commodities prices and a likely U.S. Fed rate hike that sent stocks tumbling. Notables: Bill Ackman’s Pershing Square (PSHZF) has now fallen 12.6% for the year, while David Einhorn’s Greenlight Capital (GLRE) is down 17% YTD.
Toyota is recalling about 6.5M vehicles worldwide to fix a defective power window switch in models including the Yaris/Vitz subcompact, Corolla, Camry and others. Debris caused by wear from the electrical contact points can accumulate and cause a short circuit, Toyota (TM) said in a statement. That in turn could make the switch assembly overheat, potentially leading to a fire.
Tesla shares fell 6% yesterday after Consumer Reports pulled its recommendation on the Model S due to reliability issues. “As the older vehicles are getting up on miles, we are seeing some where the electric motor needs to be replaced and the onboard charging system won’t charge the battery,” the publication said. “On the newer Tesla (TSLA) vehicles, we are seeing problems such as the sunroof not operating properly. Door handles continue to be an issue.”
Ferrari has priced its initial public offering at $52 a share (the top end of its expected price range) raising more than $894M for its corporate parent, Fiat Chrysler (FCAU), and valuing the luxury sports car brand at about $9.8B. The stock is set to begin trading on the New York Stock Exchange today under the symbol “RACE.”
Starbucks and Fiat Chrysler have been ordered to pay tens of millions of euros in tax repayments, under a new ruling that may spell big trouble for other corporations. “All companies, big or small, multinational or not, should pay their fair share of tax,” EU antitrust chief Margrethe Vestager declared at a news conference, stating Starbucks (SBUX) and Fiat’s (FCAU) European tax deals were illegal. Who’s up next? European regulators are finishing up investigations into McDonald’s (MCD) and Amazon’s (AMZN) tax affairs in Luxembourg and Apple’s (AAPL) arrangements in Ireland.
Yahoo has signed a search advertising deal with Google, providing a potential boost to Marissa Mayer’s efforts to turn around the company. The deal with Google (GOOG, GOOGL) builds on an existing search partnership with Microsoft (MSFT) under which the company gets a percentage of revenue from ads displayed on its sites. The move also follows disappointing Q3 results from Yahoo (YHOO) that missed expectations and unveiled cost cuts, content write-offs, and more soft guidance.
Early ticket sales for December’s Star Wars: The Force Awakens have broken IMAX records with more than $6.5M for U.S. screenings, after a new trailer for the film was aired during ESPN’s Monday Night Football. IMAX (IMAX) said presales for The Force Awakens far outpaced first day sales for 2012’s The Dark Knight Rises and Avengers and 2013’s Hunger Games: Catching Fire, all in the $1M presale range. The new movie from Disney (DIS) will see the return of veterans Harrison Ford and Carrie Fisher, as well as newcomers Daisy Ridley, John Boyega and Adam Driver.
The top two lawmakers on the Senate’s Subcommittee on Antitrust, Mike Lee and Amy Klobuchar, plan to hold a hearing on AB InBev’s (BUD) planned $104.2B takeover of SABMiller (SBMRY), as regulators weigh concerns surrounding the MegaBrew deal in the U.S. “We want to know what the impact is on American consumers, how it affects small craft brewers to be able to get product to market and how would [AB InBev] ensure this wouldn’t have a major impact on price or market entry,” said Klobuchar. The hearing hasn’t been scheduled but is expected to be held before the end of the year.
FedEx has been informed that it won’t be challenged by European regulators over its acquisition of Dutch parcel firm TNT Express (TNTEY), clearing one of the biggest hurdles for its €4.4B deal. While FedEx (NYSE:FDX) must still receive approvals from regulators in other countries, the news was an unexpectedly easy pass from Europe’s antitrust authorities, which blocked a similar deal between rival UPS (UPS) and TNT in 2013.