“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:

“If everyone is thinking alike, then somebody isn’t thinking.” George S. Patton

1. Oil Slumps to Five-Year Low — Bloomberg, brent crude fell to a new five-year low as a number of banks, including Morgan Stanley cut price forecasts, saying oversupply would peak next year after OPEC decided not to cut output. WTI for January delivery also slumped, dropping as much as $1.25 to $64.59 a barrel on the New York Mercantile Exchange.
2. Beijing Tightens Rules for Loans On Stocks — regulator banned investors from using low-grade corporate debt as collateral to borrow cash as Beijing took fresh steps to rein in growing risks in the country’s debt-laden financial system. Policymakers gathering in Beijing this week for a key summit are signaling to the investing public they should prepare for a lengthy period of slower economic growth after years of binging on debt to fuel high growth levels.
3. Retail Sales Grow the Most in Eight Months — MarketWatch, U.S. retail sales rose 0.7% in November, up from 0.5% in October, the U.S. Commerce Department reported. U.S. retail sales in November grew the fastest in eight months as shoppers snapped up everything from cars to clothing, according to the latest government data released.
4. Congress Reaches Deal for $1.1 trillion U.S. Spending Bill — a final agreement has been reached on a $1.1T U.S. spending bill that would prevent a government shutdown at midnight on Thursday and fund every government agency but the Department of Homeland Security through next September. The bill largely keeps fiscal 2015 domestic spending unchanged, but as the deadline loomed, a number of policy provisions were negotiated into the measure, including easing of regulations on the environment and financial derivatives trading.
5. Halliburton Lays off 1,000 Employees in Eastern Hemisphere — fuelfix, unrelated to its proposed $35B acquisition of Baker Hughes (NYSE:BHI), Halliburton (NYSE:HAL) has announced that it is laying off about 1,000 employees across multiple regions in the Eastern Hemisphere, effective immediately. The Middle East “seems to be the nexus of our current woes in terms of dropping prices and production,” CFO Mark McCollum told investors late last week.

The week ahead — Economic data from Econoday.com:

“I think to be in the upper echelon of successful traders requires an innate skill, a gift. It`s just like being a great violinist. But to be a competent trader and make money is a skill you can learn”. – Michael Marcus, Trader

1. Russian Ruble Registered the Biggest One-Day Fall Since 1998 As Oil Drops Below $70 — the ruble registered its steepest one-day fall since the Russian financial crisis of 1998 last Monday, plunging more than 6 percent against the dollar before recovering to losses of around 4 percent due to a drop in oil prices. Oil and gas account for about two thirds of Russia’s exports and half of federal budget revenues, making its economy and asset prices heavily dependent on global energy prices.
2. ‘Black Friday’ Fades as Weekend Retail Sales Sink — WSJ, Retail spending over this year’s four-day Thanksgiving weekend fell 11% to $50.9B according to the National Retail Federation, although total holiday sales through the end of the year are expected to rise 4.1%. The decline, the second annual drop in a row, comes as retailers, including Target (NYSE:TGT) and Wal-Mart (NYSE:WMT), offer their sales and promotions days or even weeks before the holiday weekend.
3. Cyber Monday sales start slower than Expected — Cyber Monday sales grew by much less than expected, according to data from IBM. Online retailers began their web promotions and sales during and even before the Thanksgiving weekend. Cyber Monday sales, which were projected to grow between 13%-15%, only reported an 8% rise.
4. U.S. Oil and Gas Well November Permits Tumble Nearly 40 Percent — Reuters, falling oil prices sparked a decline of almost 40% in new oil and gas well permits issued across the U.S. in November. A total of only 4,520 new well permits approved last month, down from 7,227 in October. New permits, which outline what drilling rigs will be doing 60-90 days in the future, showed heavy declines for the first time this year across the top three U.S. onshore fields: the Permian Basin, Eagle Ford and Bakken shale.
5. More Than $150 Billion of Oil Projects Face the Axe in 2015 — Reuters, Oslo-based research firm Rystad Energy stated that global oil and gas exploration projects worth more than $150B are likely to be put on hold next year as plunging oil prices render them un-economic. With rising costs of production and analysts forecasting oil to average $82.50 a barrel next year, around one third of the spending on a total of 800 oil and gas projects worth $500B, is unlikely to be approved.

The week ahead — Economic data from Econoday.com:

“Be Patient – There’s the Rarest Thing On Wall Street” – Jeff Saut

1. OPEC Share of US Oil Imports At 30-year Low — FT, U.S. imports of crude oil from OPEC nations are at their lowest level in almost 30 years, underlining the impact of the shale revolution and advances in hydraulic fracturing. OPEC’s share of U.S. crude oil imports in August dropped to 40% – accounting for 2.9M bpd. The import is the lowest since May 1985.
2. U.S. House to Hold Hearing On Oil Export Ban — according to Reuters, the House subcommittee on energy and power, chaired by Representative Ed Whitfield, will hold a hearing on Dec. 11 over whether Washington should lift its nearly 40-year crude oil export ban. The debate will come into sharper focus in January, when Republicans take over leadership of both the House and Senate.
3. Carl Icahn Raises Stake In Car Rental Company Hertz — Activist investor Carl Icahn has raised his stake in Hertz (NYSE:HTZ) to 10.8% from 8.5%, now owning 49.3M shares. Icahn landed three Hertz board seats in September, and has backed the recent hiring of John Tague as CEO.
4. Q3 GDP Revised Up — the second reading of Q3 GDP was released by the Bureau of Economic Analysis was 3.8%. Wall Street economists were looking for a revision downward from 3.5% quarter-over-quarter seasonally-adjusted annual rate (SAAR) growth in the initial reading from one month ago to 3.3% QoQ SAAR.
5. OPEC Sticks To Oil Production Targets — MarketWatch, OPEC members agreed late last week to stick to the oil-producer group’s existing output target with minimal cuts in production. The Organization of the Petroleum Exporting Countries said its 12 members, who collectively pump around one-third of the world’s oil, would comply with its current production ceiling of 30 million barrels a day. That would involve a supply cut of around 300,000 barrels a day. As of last week, the enery ETF (XLF) dropped nearly 9% on the news.

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. Japan’s Economy Falls Into Surprise Recession — MarketWatch, a sales tax increase pushed Japan’s economy into a recession in the third quarter. Japan’s real GDP shrank 1.6% on an annualized basis as firms cut inventories and held back on capital investment. The figure marked the second quarter of contraction, after the economy shrank 7.3% in the April-June quarter after the national sales tax ticked up to 8% from 5% on April 1. Many economists consider two quarters of economic contraction to be a recession.
2. Intel Unveiled The Luxury Wearable Device for Fashion-Forward Women — via TheVerge, it features a 1.6″ OLED display, and delivers texts, e-mails, and Facebook (NASDAQ:FB)/Google (GOOG, GOOGL) notifications over AT&T’s (NYSE:T) 3G network independently of the user’s smartphone. Intel (NASDAQ:INTC) has priced the device at $495.
3. West African Mining Projects Take Hit From Ebola Crisis — WSJ, the Ebola epidemic in west Africa has led mining companies in the region to put expansion plans on hold, delaying the roll-out of jobs meant for residents of the countries hardest hit by the virus. ArcelorMittal (NYSE:MT) has delayed a $1.7B expansion at its iron ore mine in Liberia, Rio Tinto (NYSE:RIO) has stopped work on a $20B iron ore mine in Guinea, and Sierra Leone-focused London Mining filed for bankruptcy last month.
4. Alibaba To Launch International Version of Taobao Marketplace — Reuters, Jack Ma has announced that Alibaba will set up an international version of its e-commerce marketplace Taobao to serve buyers worldwide in multiple languages, including English and Chinese. Alibaba (NYSE:BABA) currently has an international e-commerce platform specializing in wholesale goods called Aliexpress but does not have an international offering for consumers to sell to each other.
5. China’s Central Bank Cuts Interest Rates — WSJ, China cut lending rates for the first time in more than two years, in an acknowledgment that its piecemeal efforts to bolster its flagging growth have failed. The People’s Bank of China lowered one-year benchmark lending rates by 40 bps to 5.6% and reduced the one-year deposit rate by 25 bps to 2.75%. China’s economic growth slowed to a five-year low of 7.3% last quarter. The last time China cut lending rates was July 2012.
6. ECB Begins Buying Asset-Backed Securities Under Private QE — The European Central Bank (ECB) has started buying asset-backed securities,in a move to encourage banks to lend and revive the economy. The program is one plank in a strategy which ECB chief Mario Draghi hopes will increase its balance sheet by up to 1 trillion euros. It already buys covered bonds, a secure form of debt often backed by property. The ABS and covered bond programs will last for at least two years.

The week ahead — Economic data from Econoday.com:

“In the business world, the rearview mirror is always clearer than the windshield.” – Warren Buffett

1. Elon Musk’s Plans Internet Satellites — WSJ, Elon Musk is working with Greg Wyler on building and launching cheap, lightweight satellites that would blanket the Earth with Internet access. Musk and Wyler are said to have “discussed launching around 700 satellites, each weighing less than 250 pounds.” The constellation would be 10x as large as Iridium’s (NASDAQ:IRDM), currently the world’s largest, and would likely cost $1B+ to finance.
2. The Fed and DOJ probing bank conduct in forex markets — Reuters, the U.S. Federal Reserve is investigating possible improper conduct in foreign exchange markets by large banking institutions. The announcement was made as global regulators fined five major banks, including UBS, HSBC and Citigroup, $3.4 billion for failing to stop their traders from trying to manipulate the foreign exchange market.
3. U.S., China to Drop Tariffs on Range of Tech Products — WSJ, the U.S. and China have reached an agreement to drop tariffs on a wide range of tech products, expanding upon their previous Information Technology Agreement at a time of strained relations. Eliminating tariffs on sales of roughly $1T, the deal would liberalize trade in more than 250 categories ranging from semiconductors to medical devices.
4. Ackman Takes Stake in Animal-Health Company Zoetis (ZTS) — WSJ, Bill Ackman’s Pershing Square has taken a $2B stake in Zoetis (NYSE:ZTS) and could push the animal-health company to sell itself to a large drug maker such as Valeant Pharmaceuticals (NYSE:VRX). The stake amounts to a roughly 10% in Zoetis, and includes an investment by fellow hedge fund Sachem Head Capital Management.
5. Sony unveils web-based TV service PlayStation Vue — Sony’s PlayStation Vue will allow users to access live TV and on-demand content without a cable or satellite service. PlayStation Vue will begin an invite-only beta preview during November for select PlayStation owners, consisting of about 75 channels, and will later offer the service to more Sony (NYSE:SNE) and non-Sony devices. The new cloud-based TV is expected to be commercially launched during the first quarter of 2015.

The week ahead — Economic data from Econoday.com:

“Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.” — Warren Buffett