“If you have an approach that makes money, then money management can make the difference between success and failure… … I try to be conservative in my risk management. I want to make sure I’ll be around to play tomorrow. Risk control is essential.” – Monroe Trout

1. Conservative Mauricio Macri Wins Argentina Presidency — Argentina conservative opposition candidate Mauricio Macri has been confirmed as the winner in Argentina’s presidential elections, defeating the ruling Peronist party’s Daniel Scioli by a smaller margin than expected. Macri will have to deal with the difficult economic legacy of Cristina Fernandez de Kirchner, who with Nestor Kirchner, her late husband and predecessor, ruled Argentina for the past 12 years. Since taking over in 2007, Fernandez has seized pension fund assets and the nation’s largest energy company, while increasing welfare programs and battling U.S. hedge funds over defaulted debt.
2. Turkish Warplanes Shot Down a Russian Military Aircraft On the Border With Syria — Turkish Officials said the Su-24 jet was downed after it knowingly violated Turkish airspace and its two pilots ejected before it crashed. Russia has warned its former ally and trade partner that diplomatic and commercial relations between the countries are at risk, calling the downing “a stab in the back.” The incident also dims the prospects for a grand international coalition to change the course of chaos in Syria.
3. U.S. Probe into Wal-Mart Foreign Bribery Finds Possible Misconduct — WSJ reported A Justice Department probe has found evidence of possible misconduct by Wal-Mart (NYSE:WMT) in Brazil, after uncovering little to support sweeping allegations involving the company in Mexico, WSJ reports. Prosecutors have focused on $500K believed to have gone to an individual hired to secure government permits to construct two stores in Brasilia between 2009 and 2012. Investigators are now assessing whether Wal-Mart employees knew about or approved of the suspected payments.
4. China Battered as Brokerage Probe Sparks Selloff — Chinese equities dove sharply last Friday after the Chinese authorities disclosed investigations into several major brokerages over suspected trading violations. The probes into Citic, Guosen, Founder and Haitong Securities followed additional souring market sentiment that revealed lackluster Chinese industrial data in October. The Shanghai Composite Index fell 5.5% to 3,436, wiping out most of its gains this month and recording its biggest one day drop since Aug. 25.

The week ahead — Economic data from Econoday.com:

“I’m always thinking about losing money as opposed to making money. Don’t focus on making money, focus on protecting what you have” – Paul Tudor Jones.

1. Japan’s Economy Relapses Into Recession — Japan’s economy slid back into recession in the third quarter, marking the latest setback for Prime Minister Shinzo Abe and his “Abenomics” policies. With consumer spending still soft and businesses cutting back on investment, gross domestic product shrank at an annualized rate of 0.8%, putting policymakers under pressure to deploy more stimulus measures. The GDP figure follows a revised 0.7% contraction in April-June, which was the first decline in three quarters.
2. S&P 500 Shows Q3 Earnings With Negative Growth — with more than 90% of companies having already reported results, S&P 500 earnings are on track to close their first season of negative growth since 2009. Thomson Reuters data suggests this will occur again in Q4, predicting a bigger 2.4% contraction and setting up for a bona fide ‘earnings recession’ (two consecutive periods of declines).
3. U.S. Investigative Panel Plans Hearing on Drug Pricing — a U.S. House of Representatives investigative panel plans to hold a 2016 hearing on skyrocketing drug costs, a move that comes at a time when Valeant Pharmaceuticals (NYSE:VRX) is facing increased scrutiny into its pricing practices. Earlier this month, the U.S. Senate Special Committee on Aging launched a probe into drug pricing at Valeant and Turing, signaling growing bipartisan agreement over the need to review prescription medicine costs across the nation.
4. Fed Closer to Dec Rate Hike — minutes from the central bank’s Oct 28 policy meeting showed “most participants” think Dec’s meeting “could well be” the time to increase benchmark rates for the first time in nearly a decade. A strong jobs report and comments from Fed officials since Oct’s meeting have pointed to a Dec rate hike.
5. U.S. Sets Tax Inversion Curbs — the Treasury released new measures to limit US companies ‘ use of overseas takeovers to shift their tax domocile overseas, cutting their exposure to high US tax rates. Some of the rules are retroactive to Sept ’14.

The week ahead — Economic data from Econoday.com:

“One characteristic I’ve found among successful traders is that they function effectively when they’re not trading. When markets become very quiet and range bound, they occupy themselves with a variety of activities, from sharing ideas with peers to conducting research. Traders who do not tolerate inactivity well inevitably feel the need to trade, often when there is no objective edge present. For them, losing money is less onerous than experiencing boredom.” — unknown

1. OECD Lowers Global Growth Outlook Again — the OECD is cutting its world forecast as slower growth in emerging markets spilled over into countries such as Germany and Japan. The Paris-based organization stated “Global growth prospects have clouded this year, the outlook for emerging-market economies is a key source of global uncertainty at present.” The OECD now expects the world economy to expand 2.9% in 2015 and 3.3% in 2016, down from the 3% and 3.6% it predicted in September.
2. OPEC Policy Change Unlikely at Upcoming Meeting on Dec. 4 in Vienna — Saudi Arabia is determined to stick to its policy of pumping enough oil to protect its global market share, indicating that the country is in no mood to change tack ahead of OPEC’s Dec. 4 meeting in Vienna. “The only thing to do now is to let the market do its job,” said Khalid al-Falih, chairman of Saudi Aramco. “There have been no conversations here that say we should cut production now that we’ve seen the pain.”
3. G20 Summit on Nov. 15-16 in Turkey — at the G20 summit this week, the U.S. will likely urge leaders to use monetary, fiscal and structural tools at their disposal to offset a shortfall in global demand and will push countries with extra fiscal space to spend. Treasury Secretary Jack Lew will join President Obama and others at the summit on Nov. 15-16. The U.S. is also expected to support the inclusion of the yuan in the IMF’s benchmark currency basket, provided China meets existing criteria of the international lender.
4. Three Men Charged Over Massive Cyberfraud That Hit J.P. Morgan — U.S. prosecutors have unveiled criminal charges against three men accused of running a sprawling computer hacking scheme that included the largest ever theft of 100M customers’ data from twelve financial institutions and publishers. The cyberfraud, which began in 2007, also involved inflated stock prices, online casinos, payment processing for criminals and an illegal bitcoin exchange. Among the hack victims: JPMorgan (NYSE:JPM), TD Ameritrade (NYSE:AMTD), E*Trade (NASDAQ:ETFC), Scotttrade and News Corp. (NWS, NWSA).
5. Puerto Rico Likely to Default on Some Debt According to Moody Credit Rating Agency — according to Moody’s Investor Service, Puerto Rico is likely to default on at least some of its $355M in debt payments due Dec. 1. the U.S. commonwealth, facing around $70B in total debt, is struggling to breathe life into a stalled economy with a roughly 45% poverty rate. Moody’s, which has Puerto Rico rated at Caa3 negative, said the island “continues to operate with extremely limited internal liquidity and no access to external sources of financing.”
6. US Retail Sales Rose 0.1% in Oct vs 0.3% Rise Expected — the Commerce Department said on last Friday retail sales edged up 0.1 percent last month after being unchanged in September. Retail sales excluding automobiles, gasoline, building materials and food services rose 0.2 percent after an upwardly revised 0.1 percent gain in September. “Core” retail sales correspond most closely with the consumer spending component of gross domestic product. Core retail sales previously were reported to have dipped 0.1 percent in September.

The week ahead — Economic data from Econoday.com:

“Never follow the crowd.” ― Bernard M. Baruch

1. MSCI Prepares for Chinese A-share Inclusion Through ADRs — MSCI will begin to add overseas-listed Chinese shares to its emerging market indexes this month, which could eventually lead to mainland-listed stocks, known as A-shares, finding their way into global equity portfolios. The addition of American Depositary Receipts will be the first test of foreign demand for greater exposure to China since its stock market plunge over the summer. About $1.6T tracks the MSCI Emerging Markets Index (ETF: EEM), which will be the most affected fund by the ADR inclusion.
2. Google Plans to Start Delivering Packages By Drone in 2017 — Google disclosed a delivery drone initiative called Project Wing. Wing chief David Vos has publicized that the company aims to begin delivering packages to consumers via drones in 2017. However, details remain scant on what types of packages will be supported, where they’ll be delivered, and at what scale. The Atlantic previously reported Google’s (GOOG, GOOGL) drone design is “a hybrid of a plane and a helicopter that takes off vertically, then rotates to a horizontal position for flying around.”
3. More Car Pollution Problems at VW — VW (OTCQX:VLKAY) revealed it has understated carbon dioxide emissions for about 800K of its vehicles sold in Europe, and overstated the cars’ fuel economy, a move that could result in an estimated €2B in financial penalties. Those costs would be on top of the €6.7B the company has already set aside to address its central emissions crisis, which affects 11M diesel vehicles worldwide.
4. Facebook To Launch Notify App Next Week — Facebook’s new standalone news app called Notify is scheduled to launch next week, FT reports, featuring content from dozens of media partners including Vogue, The Washington Post, CNN and CBS. Notify, which will send out push notifications from news sources, follows a positive response from publishers and readers to Facebook’s (NASDAQ:FB) Instant Articles, which embeds stories in its mobile app.
5. U.S. Economy Added 271,000 Jobs in October, Unemployment Rate at 5% — the American economy added 271,000 jobs in October, the government reported. The unemployment rate dipped to 5 percent, from 5.1 percent in September. Average hourly earnings also bounced back, rising 0.4 percent in October after showing no increase in September; that lifted the gain to 2.5 percent over the last 12 months, the healthiest since 2009. The combination of the surge in job creation, rising wages and the falling unemployment rate, the odds of a hike by the Federal Reserve have jumped above 70%, according to the CME Group’s FedWatch tool.

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
–> Apology for the late post as we enjoyed a long weekend <--- 1. China Currency Yuan Poised to Join IMF Currency Basket — IMF representatives are set to give the all-clear for China’s yuan to be included in the lender’s Special Drawing Rights basket, laying the groundwork for a favorable decision by policymakers. Meanwhile, China took another step toward liberalizing its financial system, after the PBOC removed the cap on deposit rates. That move was paired with another cut to interest rates and banks’ reserve requirements.
2. White House, Congress Reach Tentative Budget Deal — the White House and Congressional leaders have reached a tentative deal on a two-year budget plan that would suspend the debt limit through mid-March 2017 and boost spending by $80B through September 2017. Those increases would be offset by cuts in spending on Medicare and Social Security disability benefits, and savings and revenue from other programs.
3. Walgreens Boots (WBA) to buy Rite Aid (RAD) –Walgreens Boots Alliance Inc.(WBA), said it would buy Rite Aid Corp. for $17.2 billion in an all-cash deal. The tie-up with Rite Aid(RAD), uniting two of the country’s three biggest drugstore owners, would create a drugstore giant as companies across the U.S. health-care industry look for ways to bulk up. CVS is the overall leader. Drug distributor AmerisourceBergen (ABC) is seen as a benefactor, which as a deal with Walgreens while McKesson (MCK) supplies Rite Aid (RAD).
4. Third-quarter GDP Growth Just 1.5% — Gross domestic product (GDP) the value of everything a nation produces — rose at a 1.5% annual pace from July through September, the government reported. The U.S. had grown at a crisp 3.9% rate in the second quarter. In the third quarter as companies cut back production to prevent a worrisome buildup in inventories, particularly of goods destined for foreign markets. However, consumer spending, the single largest determinant of U.S economic growth, rose at a 3.2% annual pace following an even larger gain in the second quarter.
5. FOMC Stands Pat, Drops Hints — the Central Bank left rates alone, but cut its reference to the global market turmoil that kept it on hold in Sept. The question is whether it will hike in Dec., rather than when, if ever, a rate rise will be appropriate, policymakers reported. Fed funds futures raised the odds of a year end hike.

The week ahead — Economic data from Econoday.com: