Week of Dec 19 2014 Weekly Recap & The Week Ahead
“Obviously the thing to do was to be bullish in a bull market and bearish in a bear market… I came to learn that even when one is properly bearish at the very beginning of a bear market it is not well to begin selling in bulk until there is no danger of the engine back-firing.” – Jesse Livermore
1. China Economic Growth May Slow to 7.1 Percent in 2015 — NYTimes, China’s economy may slow to 7.1% in 2015 from an expected 7.4% this year as a sagging property sector weighs on the world’s second-largest economy, researchers from the nation’s central bank said. Stronger global demand could boost exports, but not by enough to counteract the impact from weakening property investment. China’s economic growth came in at 7.3% in Q3, its slowest pace in five years.
2. Russia Lifts Interest Rate to 17% from 10.5% — FT, despite hiking interest rates to 17% from 10.5% in an emergency midnight move, Russia’s central bank has still failed to halt the ruble’s collapse. The currency fell more than 10%, its worst intraday drop against the dollar since the 1998 financial crisis.
3. Obama to sign new Russian sanctions bill by end of week — The additional sanctions will hit the Russian weapons and energy sector, hammering an economy that is already being battered by a fall in oil prices and a plunging currency. The ruble dropped to record lows yesterday, falling as much as 20% against the dollar despite the Russian central bank’s move to raise interest rates to 17%.
4. A Pimco Emerging-Market Fund Hit by Russian-Debt Bet — WSJ, Pimco is facing mounting losses on its Russian bond holdings, following the ruble’s single worst day since 1998. The $3.3B Pimco Emerging Markets Bond Fund (MUTF:PAEMX) had total exposure to Russia of 18.2% – mostly in corporate bonds – as of September 30, more than twice the 8.43% Russia weighting in the benchmark index. Up 5.65% year-to-date at the start of December, the fund is now lower by 3.4% for the year and has lost 9% of its value this month.
5. U.S. to Restore Full Relations With Cuba — Obama has ordered the restoration of full diplomatic relations with Cuba and the opening of an embassy in Havana in the coming months. The move will ease travel restrictions to Cuba and the eventual lifting of the Cuban embargo.
6. Putin Says Economy to Rebound, Wants End to Ukraine Crisis in Annual Speech — Reuters, addressing Russia in his annual speech, Vladimir Putin said that the country’s current economic difficulties could last for the next two years but the situation could improve faster. Putin also declared that the central bank and government were taking adequate measures to support the ruble and that Russia’s current economic situation was caused by external factors, mainly from the price of oil and gas.
7. DuPont Names Planned Performance Chemicals Spinoff — WSJ, the new public company created by the spinoff of its company’s performance chemicals business The Chemours Company, which will be led by Mark Vergnano, current EVP of the Performance Chemicals segment. DuPont (NYSE:DD) will record a pre-tax charge of about $315M in Q4 related to the spinoff, which is expected to result in at least $1B in savings.
The week ahead — Economic data from Econoday.com:
Tags: Rubble Currency Crisis