Monday, November 28, 2016

The US dollar is under pressure in Asia

The US dollar is under pressure in Asia

DAVID SCUTT 
   
Photo by Ian Walton/Getty Images
It’s been a quiet start to the week for Asian markets.
While some of the prevailing themes of recent weeks are being maintained — developed market stocks are, as a whole, outperforming their emerging market peers while base and bulk commodity futures continue to rip higher — others are starting to show signs of fatigue.
Of note, the US dollar is coming under some rare selling pressure, at least compared to recent norms, undermined by a continued retracement in US bond yields.
The largest move has been in the USD/JPY which has plunged 1.16% to 111.75, something which is creating weakness in Japanese stocks as a consequence.
The weakness in the US dollar has become more acute since mainland Chinese markets opened with both the Chinese yuan and stocks pushing higher in recent trade.
The Shanghai Composite index is currently up 0.23% at 3,269.29, sitting at the highest level since January 7 this year.
Here’s the scoreboard as at 2pm in Sydney:
Stocks
  • Australia ASX 200 5485.60 , -0.40%
  • NZ NZX 50 6908.19 , 0.12%
  • Japan TOPIX 1459.13 , -0.37%
  • Shanghai Comp 3269.29 , 0.23%
  • Shenzhen Comp 2129.95 , 0.01%
  • HK Hang Seng 22865.85, 0.63%
  • Sth Korea KOSPI 1981.47 , 0.36%
  • Sinagpore STI 2882.64 , 0.82%
  • Taiwan TAIEX 9226.58 , 0.74%
  • Philippines PSI 6853.73 , -0.52%
  • Indonesia JKSE 5101.94 , -0.39%
  • Malaysia KLCI Index 1626.06 , -0.07%
  • Thailand SET 1502.76 , 0.16%
  • India Nifty 50 8114.3 , 0.00%
  • S&P 500 Futures 2205.25 , -0.27%
Currencies
  • AUD/USD 0.7463 , 0.44%
  • NZD/USD 0.7084 , 0.63%
  • USD/JPY 111.75 , -1.16%
  • USD/CNY 6.9013 , -0.24%
  • USD/CNH 6.9247 , -0.29%
  • USD/HKD 7.7555 , 0.00%
  • USD/KRW 1170 , -0.45%
  • USD/SGD 1.4226 , -0.43%
  • USD/TWD 31.79 , -0.17%
  • USD/PHP 49.76 , -0.13%
  • USD/MYR 4.457 , 0.09%
  • USD/IDR 13475 , -0.30%
  • USD/THB 35.54 , -0.22%
  • USD/INR 68.36 , -0.21%
  • US Dollar Index 100.74 , -0.74%
Commodities
  • Brent Crude $47.22 , -0.04%
  • Gold $1,193.60 , 0.91%
  • Silver $16.74 , 1.45%
  • SHFE Copper ¥48,590 , 0.68%
  • SHFE Aluminium ¥13,985 , -0.04%
  • SHFE Zinc ¥24,270 , 6.38%
  • SHFE Nickel ¥96,210 , 1.07%
  • SHFE Rebar ¥3,193 , 4.89%
  • DCE Iron Ore ¥652.00 , 2.11%
  • DCE Coking Coal ¥1,598.00 , 2.63%
  • DCE Coke ¥2,225.00 , 4.66%
10-Year Government Bond Yields
  • United States 2.329% , -0.041%
  • Japan 0.011% , -0.024%
  • Australia 2.711% , -0.064%
As this chart from IG Markets chief market strategist Chris Weston shows, the selling in the US dollar has the US dollar index, or DXY, now testing a crucial support level on the charts.
A break below this level could lead to an even greater reversal of some of the market moves seen since the US election on November 8.
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Thanksgiving, Black Friday store sales fall, online rises




Thanksgiving, Black Friday store sales fall, online rises

U.S. crowds pick up slightly on Black Friday, online sales jump
01:19

By Siddharth Cavale

Sales and traffic at U.S. brick-and-mortar stores on Thanksgiving Day and Black Friday declined from last year, as stores offered discounts well beyond the weekend and more customers shopped online.
Internet sales rose in the double digits on both days, surpassing $3 billion for the first time on Black Friday, according to data released on Saturday.
Data from analytics firm RetailNext showed net sales at brick-and-mortar stores fell 5.0 percent over the two days, while the number of transactions fell 7.9 percent.
Preliminary data from retail research firm ShopperTrak showed that shopper visits to such stores fell a combined 1 percent during Thanksgiving and Black Friday when compared with the same days in 2015.
The data highlights the waning importance of Black Friday, which until a few years ago kicked off the holiday shopping season, as more retailers start discounting earlier in the month and opened their doors on Thanksgiving Day.
"We knew it (holiday season) was going to be off to a slow start," Shelley Kohan, vice president of retail consulting at RetailNext, said.

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right
Shoppers stand in a checkout line during Black Friday sales at a Target store in Culver City, California, U.S. November 25, 2016. REUTERS/David McNew
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"The first couple of weeks with the election were a complete distracter from the normal course of business and...a warmer climate in November may have made the sales more stubborn," she said, adding that she saw sales picking up in December.
Net sales on Black Friday slid 10.4 percent for brick-and-mortar chains, according to RetailNext.
"Stores that opened on Thursday were not very busy on Black Friday,... and while the Thanksgiving Day opt-outs were busier on Black Friday, they didn't see the crowds they saw in previous years," NPD group's Chief Industry analyst Marshal Cohen said.
ONLINE SALES SHINE
Still, total holiday season sales are expected to jump 3.6 percent to $655.8 billion this year, according to the National Retail Federation, due to a tightening job market.

ALSO IN U.S.

Unemployment rates hit their lowest in eight years in October and hourly wages this year saw their biggest increase since 2009, boosting consumers' confidence and spending.
Consumers are expected to spend $636 on average on holiday purchases this year, up 3 percent from their 2015 spending plans, according to NPD.
Thanksgiving and Black Friday online sales tracked by Adobe Digital Index were $5.27 billion, up 18 percent from a year earlier and higher than its prior estimate of $5.05 billion.
Black Friday sales rose 21.6 percent to $3.34 billion, with purchases made on mobile devices contributing more than $1 billion in revenue, both record sales for the day.
(Reporting by Siddharth Cavale in Bengaluru; Editing by Jonathan Oatis and Andrew Hay)







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REPORT: Samsung might split itself in two

REPORT: Samsung might split itself in two

Reuters
  • 14h
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Kwon Oh-Hyun, chief executive officer of Samsung Electronics Co., speaks during the companyÕs extraordinary general meeting of shareholders at the Seocho office building in Seoul, South Korea, on Thursday, Oct. 27, 2016. REUTERS/SeongJoon Cho/PoolKwon Oh-Hyun, chief executive officer of Samsung Electronics Co., speaks during the companyÕs extraordinary general meeting of shareholders at the Seocho office building in Seoul, South KoreaThomson Reuters
SEOUL (Reuters) - South Korea's Samsung Electronics Co Ltd will consider splitting itself into two as proposed by U.S. activist hedge fund Elliott Management, Seoul Economic Daily reported on Monday citing an unnamed source.
A split would allow the heirs of the founding Lee family to strengthen their grip on the global smartphone leader, the crown jewel of the Samsung Group business empire. Elliott proposed a split in October to boost shareholder value.
Samsung's board of directors will meet on Tuesday and respond to Elliott's proposals, the newspaper said. The Korea Exchange separately asked Samsung to comment by 6 p.m. (0900 GMT) on whether it planned a spinoff.
The company did not immediately comment on the newspaper report.
The hedge fund wants Samsung Electronics to divide into a holding vehicle for ownership purposes and an operating company, pay a $26 billion special dividend, pledge to return at least 75 percent of free cash flow to investors and agree to appoint some independent directors.
Neither the Lee family nor Samsung Group have commented on restructuring plans, but the conglomerate's reorganization efforts have accelerated since Jay Y. Lee took over the reins after his father and Samsung patriarch Lee Kun-hee was incapacitated following a May 2014 heart attack.
Samsung has sold non-core assets while pushing through a merger of two affiliates in 2015 to consolidate stakes in key affiliates under a company controlled by Jay Y. Lee and his two sisters, as the founding family moves to secure a stable transfer of control.
"Even if Samsung Electronics does not comment on specifics such as the timing of a split ... the firm will at least say it will implement ownership structure changes in a reasonable manner," HI Investment said in a report on Monday.
(Reporting by Se Young Lee; Editing by Stephen Coates)
Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter.

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Friday, November 25, 2016

The European Central Bank just outlined 4 of the biggest risks to financial stability

The European Central Bank just outlined 4 of the biggest risks to financial stability

  • Nov. 24, 2016, 7:57 AM
  • 795
stormy londonReuters
The European Central Bank just outlined the four biggest risks to financial stability over the next two years, which are partly triggered by heightened political uncertainty.
In a statement titled "Global risk repricing endangers financial stability," the Financial Stability Review from the ECB outlined the following four "systemic risks" to financial stability.
  • Financial contagion stemming from political uncertainty — "Global risk repricing leading to financial contagion, triggered by heightened political uncertainty in advanced economies and continued fragilities in emerging markets."
  • A vicious circle between banks not making much money and not being able to grow — "Adverse feedback loop between weak bank profitability and low nominal growth, amid challenges in addressing high levels of non-performing loans in some countries," says the ECB.
  • Debt sustainability — The ECB said that "re-emerging sovereign and non-financial private sector debt sustainability concerns in a low nominal growth environment, if political uncertainty leads to stalling reforms at the national and European levels."
  • Investment funds — These funds, which are a supply of capital belonging to a group of investors that are used to buy securities such as stocks, are seen as risk factor. "Prospective stress in the investment fund sector amplifying liquidity risks and spillovers to the broader financial system," says the ECB.
In other words, the ECB see heightened political uncertainty, most likely borne out of the Brexit vote, a range of elections in Europe, and the Italian referendum on constitutional reform, hurting markets and therefore causing big risks spreading across to the economy.
ECB said in a statement (emphasis ours):
"Risks extend also to the real economy. In particular, concerns about debt sustainability might re-emerge despite relatively benign financial market conditions. Higher political uncertainty may lead to more domestically focused, growth-hindering policy agendas. This, in turn, could delay much needed fiscal and structural reforms and could in a worst-case scenario reignite pressures on more vulnerable sovereigns."
The ECB's assessment echoes the sentiment of some investors in the market.
Earlier in November, Steve Eisman, an investor who made a fortune by successfully predicting the 2007-2008 financial crash, said European banks cause him concern. 
"Europe is screwed. You guys are still screwed," he said. "In the Italian system, the banks say they are worth 45-50 cents in the dollar. But the bid price is 20 cents. If they were to mark them down, they would be insolvent."
His concern is that European banks — particularly Italy's — hold bad "non-performing loans" that are improperly valued, posing a very serious risk to the banks' solvency.
In short: If many European banks admitted the true value of their loans, they'd go under, Eisman believes — potentially sparking a new financial crisis.

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