“Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.” — George Soros

1. EPA Curbs Ethanol Mandate — the Environmental Protection Agency proposed trimming corn-based ethanol use in fuels as fuel demand levels off. The draft rule would cut ethanol content to a bit less than 10% of fuels, 16% lower than currently. Refiners will have to buy fewer pricey ethanol credits. Some companies to benefit from this change — Valero(VLO), Tesoro(TSO), Phillips66(PSX).
2. China issues new reform details — Marketwatch, the recent third plenum of the party’s 18th issued a 20,000-word document detailing decisions finalized at the closed-door meeting. Key items include state-owned enterprises (SOE) to contribute more of their profits to the government and allow more couples to have a second child.
3. Japanese export growth accelerates — Japanese exports rose at their fastest pace in three years in October, jumping 18.6% on year vs 11.5% in September and beating consensus. Exports also grew 4.4% in volume terms, suggesting that Japan is not just relying on the weak yen to boost trade. Imports jumped 26.1% – again driven higher by soaring fuel costs – helping the trade deficit rise to ¥1.09T ($11B) from ¥932.1B a month earlier.
4. FOMC Meeting Minutes: Taper in Coming Month — the minutes from the Central Bank minutes from the Oct 29-30 meeting shows Policymakers said they might cut their $85 bil-a-month bond buying program even if the job market isn’t strong. Fed officials also discussed telling markets that they wouldn’t raise rates until unemployment falls below 6.5% from the stated goal.
5. Bank of Japan keeps ultra-loose policy unchanged — the Bank of Japan has left its key interest rate at 0.1%, and maintained its program of expanding the monetary base at an annual rate of ¥60-70T ($611-713B) a year.
6. Latest Key ETFs Performance — courtesy of BIG, below is the recent performance of various ETF asset classes.

The week ahead — Economic data from Econoday.com:

”Stock market bubbles don’t grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception” — George Soros

1. State-Run Obamacare Exchanges Reported 49,100 Enrollees versus initial target of 800,000 — Bloomberg, fewer than 50,000 people had reportedly managed to enroll in private insurance plans via the government’s problem-plagued HealthCare.gov Web site as of last week. The number represents less than 10% of the 500,000 people that had been projected. Twelve of the 14 states that are operating their own exchanges have signed up 49,000.
2. U.S. Investigates Currency Trades By Major Banks — nine of the largest banks in currency trading have announced they are facing inquiries by the United States Attorney General, Eric H. Holder Jr.,. AG Holder said in a rare interview discussing an active investigation. ”We’ve recognized that this is potentially an extremely consequential investigation.” Banks include Barclays, the Royal Bank of Scotland and Citigroup.
3. Obamacare fix puts insurers in a tough spot — President Obama will allow insurance companies to continue to offer existing policies in 2014 even if they fail to meet the standards set by the healthcare law. Obama’s U-turn follows pressure from the public and his own party after it emerged that his repeated pledge that people could keep their insurance plans if they wanted to contradicted the terms of the law.
4. Berkshire takes 40M-share stake in Exxon Mobil — Berkshire Hathaway (BRK.A, BRK.B) bought a 40.1M-share position in Exxon Mobil (XOM. Berkshire also added to existing stakes in Bank of New York Mellon (BK), DaVita HealthCare Partners (DVA), Suncor Energy (SU), U.S. Bancorp (USB) and VeriSign (VRSN); Berkshire lowered its holdings in ConocoPhillips (COP), DirecTV (DTV), GlaxoSmithKline (GSK) and Sanofi (SNY).
5. Japan Q3 GDP growth tops estimates — economic growth slowed in Japan during the July-September quarter, but at 1.9% (annualized), the economy still expanded faster than economists were expecting. Despite the headline beat, capex growth printed at just 0.2% for Q3, far below consensus estimates. Private consumption rose 0.1% while inventories chipped in 40 bps after pulling the overall figure 10 bps lower in Q2.
6. Janet Yellen, new FOMC Chairman leans dovish in prepared remarks — she stated ”We have made good progress, but we have farther to go to regain the ground lost in the crisis and the recession,” Janet Yellen told the Senate Banking Committee in her confirmation hearing that to continue supporting Bernanke accommodative policies.

The week ahead — Economic data from Econoday.com:

“It is not the creation of wealth that is wrong, but the love of money for its own sake.” – Margaret Thatcher

1. China premier warns against loose money policies — Reuters, China needs to sustain economic growth of 7.2 percent to ensure a stable job market, Premier Li Keqiang said as he warned the government against further expanding already loose money policies. The People’s Bank of China has also warned about inflation, saying that “upwards pressure on prices still exists.”
2. FDA to ban artery-clogging trans fats — The FDA stated that it will require the food industry to gradually phase out all trans fats, saying they are a threat to people’s health.
3. The US economy grew at an annualised pace of 2.8% in the third quarter — growth was lifted by rising exports, businesses restocking shelves and a pick-up in home construction.
However, the pace of growth in consumer spending – which accounts for about two-thirds of US economic activity – slowed from the previous quarter.
Consumer spending grew at annual pace of 1.5%, down from 1.7% in the April-to-June period and the slowest rate since 2011.
4. Q3 Earnings Beat Rate — courtesy of BIG, the percentage of companies that have beaten earnings estimates this season has dropped below the 60% mark (59.8%).


5. S&P cuts France’s sovereign credit rating —CNBC Ratings agency Standard and Poor’s cut France’s sovereign credit rating to AA from AA plus, citing lack of progress in government reforms of the country’s economy. However,the agency revised the country’s sovereign credit outlook up to stable from negative.

The week ahead — Economic data from Econoday.com:

“Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.” — Bernard Baruch

1. Obamacare helping health-insurance stocks — the Affordable Care Act appears to have so far proved beneficial to investors in health insurers Over the last 12 months. The top five publicly traded health insurance companies — Aetna(AET), WellPoint(WLP), UnitedHealth Group(UNH), Humana(HUM) and Cigna(CI) — have increased by an average of 32 percent versus the Standard & Poor’s 500-stock index (SPX)has risen by just 24 percent.
2. Oil’s $5 Trillion Permian Boom Threatened by $70 Crude — Bloomberg, prices for West Texas crude have dropped below $100 a bbl. The Permian remains the largest U.S. oil producer, although it’s also the most expensive U.S. shale formation in which to drill, meaning the boom could become a bust if crude moves near $70 a bbl.
3. SAC Hedgefund to admit securities fraud and pay $1.2B — WSJ, SAC Capital will reportedly pay a penalty of $1.2B and plead guilty to securities fraud to settle a criminal investigation into insider trading. The fine would be the largest ever for such misconduct and SAC will also stop managing external money.
4. Spain ends two-year recession with 0.1% growth — BBC, Spain has seen its first quarterly economic growth since 2011, according to data from the country’s National Statistics agency INE. The country’s GDP grew 0.1% in the July-to-September period, after contracting for the previous nine quarters. The INE said an increasing number of exports supported the growth, with a boost to the tourist industry from holidaymakers avoiding northern Africa and the Middle East.
5. The latest Oct 29 – 30 Fed’s Policy Statement – December Taper Not Off the Table — WSJ, the Federal Reserve emerged from its October meeting effectively in a wait-and-see mode on the economy and policy, making few substantive changes to its statement. the Fed isn’t taking a December adjustment to the bond-buying program off the table. But that comes with the strong caveat that it depends on whether the economy is living up to its expectations.
6. S&P 1500 Most Heavily Shorted Stocks — courtesy of BIG, the latest figure released on Oct 15, 2013 shows the 36 stocks in the S&P 1500 that have at least 25% of their free-floating shares sold short.

The week ahead — Economic data from Econoday.com: