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Sun, 04th December 2016

Anirudh Sethi Report

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Archives of “stock” Tag

CEO of India’s National Stock Exchange resigns ahead of IPO filing

Chitra, Chitra RamakrishnaThe head of the National Stock Exchange of India has resigned weeks before the country’s largest exchange was due to file details about a public listing.

The group said on Friday that Chitra Ramkrishna had decided to step down. “Ms Ramkrishna had tendered her resignation due to personal reasons and expressed her desire to step down with immediate effect,” the NSE said in a statement.

Her decision comes as the NSE was due to announce to file with markets regulators about a stock market flotation. The NSE said in June that it would file a draft prospectus by January. Analysts have said a listing could value the NSE at around $6bn.

Most global equities trade on listed exchanges, but plans to float India’s bourses have repeatedly run into problems with the country’s markets regulator, the Securities and Exchange Board of India.

Gundlach Turns Bearish Again: “Stocks Have Peaked, It’s Too Late To Buy The Trump Trade”

Having predicted the Donald Trump victory, and nailing the upturn in US Treasury yields as well as the concurrent stork market rally, DoubleLine’s Jeffrey Gundlach has once again taken the other side of the trade after riding it for the past 3 weeks, and is now considerably less exuberant on Trumponomics.

Speaking to Reuters, Gundlach, who went “maximum negative” on Treasuries on July 6 when the yield on the benchmark 10-year Treasury note hit 1.32 percent and bottom-ticked what may have been a generational low in rates, said that markets could reverse the recent momentum in equities, and at the very latest by U.S. President-elect Donald Trump’s Jan. 20, 2017 inauguration.

The “new bond king” said that the strong U.S. stock market rally, surge in Treasury yields and strength in the U.S. dollar since Trump’s surprising presidential victory more than three weeks ago look to be “losing steam,” Gundlach told Reuters in a telephone interview.

“The bar was so low on Trump to the point people were expecting markets will go down 80 percent and global depression – and now this guy is the Wizard of Oz and so expectations are high,” Gundlach said. “There’s no magic here.”

Gundlach had warned last month that federal programs take time to implement, rising mortgage rates and monthly payments are not positive for the “psyche of the middle class and broadly,” and supporters of defeated White House candidate Hillary Clinton are not in a mood to spend money.

There is going to be a buyer’s remorse period,” said Gundlach, who voted for Trump and accurately predicted in January the winner of the presidential election.

What happens next: “The dollar is going to go down, yields have peaked and will move sideways, stocks have peaked as well and gold is going to go up in the short term.”

Chinese Bond Yields Jump Most In 10 Months On “Liquidity Fears”

It is probably a coincidence that one day after we commented on what is emerging as “the market’s next headache”, namely China’s (not so) stealth tightening, which in the last few weeks has led to a creep higher across the curve, the yield on China’s sovereign 10Y bond jumped 6.5bps to 2.94% on what Bloomberg dubbed were “liquidity fears.” This was the biggest one day spike for the benchmark bond since Jan. 25, according to ChinaBond data.

As a result of the selloff, the most actively traded 10-year govt bond futures were down 0.72%, while five-year futures dropped 0.74%.

The tightening was broad-based, with 1-year rate swaps rising 13bps to 19-month high at 3.17%; additionally the overnight repo rate also rose to 2.31%, the highest level this month.

Quoted by Bloomberg, Wu Sijie, bond trader at China Merchants Bank said “tightening interbank liquidity and the expectation of even higher short-term borrowing costs are driving up swap costs and affecting sentiment on the cash bond market.”

Meanwhile, signalling no change at all in its posture, overnight the PBOC drained funds in open-market operations for the fourth consecutive day, bringing the total withdrawal to 130 billion yuan.

Facebook announces surprise $6bn share buyback

Facebook unveiled a surprise share buyback scheme saying it would repurchase up to $6bn of its stock beginning early next year.

In a regulatory filing, Facebook said that the board had approved the buyback on Friday. It will begin in the first quarter of 2017.

“The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities,” Facebook said. “The program will be executed consistent with the Company’s capital allocation strategy of prioritizing investment to grow the business over the long term.”

But many tech companies have amassed huge stockpiles of cash in recent years, in some cases prompting activist investors to pressure boards to redistribute earnings to shareholders.

Overnight US Market :Dow closed -55 points. (Breaks 7 days winning streak )

Stocks closed mixed Wednesday as the Dow broke a seven-day winning streak and a rebound in oil prices stalled.

The Dow Jones industrial average fell 54.92, or 0.3%, to 18,868.14 after closing at a record high for the past 4 sessions. The Standard & Poor’s 500index dropped 0.2% to 2176.94. But technology companies advanced as they continued a rally from a day earlier and the Nasdaq composite index rose 0.4% to 5294.58.

In the week since Donald Trump’s victory, stock markets have rallied as investors hoped his presidency would augur in a period of more government spending on such things as infrastructure. However, there’s a growing sense that Trump’s policies may lead to higher inflation and interest rates. That’s been particularly notable in the bond markets, where yields have gone up, a development that’s seen the dollar in the ascendant.

The yield on the 10-year Treasury note was unchanged at 2.22%.

Overnight US Market :Dow Closed + 54 points.S&P 500 + 16 Points

Stocks ended higher Tuesday as energy stocks jumped on a sharp rise in oil prices and as big technology stocks, which have been mostly left out of a post-election rally, turned sharply higher.

The Dow set another closing high, building on its record close of Monday, notching seven straight days of gains.

The big gainer was the Nasdaq composite, up 1.1%, while the S&P 500 climbed 0.8% and the Dow Jones industrial average finished 0.3% higher.

Benchmark U.S. crude gained $1.95, or 4.5%, to $45.27 a barrel in electronic trading on the New York Mercantile Exchange.

Bond yields pulled back slightly after a week of sharp increases. The yield on the 10-year Treasury note fell to 2.23% from 2.26% Monday.

The focus in markets in the past few sessions has been on the upcoming Donald Trump presidency, which will begin on Jan. 20. Analysts say his promises of tax cuts and higher infrastructure spending could boost economic growth but also spur inflation. That’s seen a rally in stocks, a sell-off of U.S. bond yields and a concurrent rise in the dollar.

Central Banks Become World’s Biggest Stock Speculators

At first, the idea of central banks intervening in the equity markets was probably seen even by its fans as a temporary measure. But that’s not how government power grabs work. Control once acquired is hard for politicians and their bureaucrats to give up. Which means recent events are completely predictable:

(Bloomberg) – The value of the Swiss National Bank’s portfolio of U.S. equities rose nearly 1 percent to a record in the three months through September on the back of rallying share prices.

The holdings increased to $62.4 billion from $61.8 billion at the end of June, according to calculations by Bloomberg based on the central bank’s regulatory filing to the U.S. Securities and Exchange Commission and published on Monday.

 

snb-stock-buying-nov-16

 

The central bank had stakes in some 2,500 companies listed in the U.S., according to the SEC filing. Its biggest holdings were Apple Inc., Microsoft Corp. and Exxon Mobil Corp., according to data compiled by Bloomberg.———————-

The Bank of Japan’s Unstoppable Rise to Shareholder No. 1

(Bloomberg) – The Bank of Japan’s controversial march to the top of shareholder rankings in the world’s third-largest equity market is picking up pace.

Already a top-five owner of 81 companies in Japan’s Nikkei 225 Stock Average, the BOJ is on course to become the No. 1 shareholder in 55 of those firms by the end of next year, according to estimates compiled by Bloomberg from the central bank’s exchange-traded fund holdings. BOJ Governor Haruhiko Kuroda almost doubled his annual ETF buying target last month, adding to an unprecedented campaign to revitalize Japan’s stagnant economy.

While the BOJ doesn’t acquire individual shares directly, it’s the ultimate buyer of stakes purchased through ETFs. Estimates of the central bank’s underlying holdings can be gleaned from the BOJ’s public records, regulatory filings by companies and ETF managers, and statistics from the Investment Trusts Association of Japan. Forecasts of the BOJ’s future shareholder rankings assume that other major investors keep their positions stable and that policy makers maintain the historical composition of their purchases.

The central bank’s influence on Japanese stocks already rivals that of the biggest traders, often called “whales” in the industry jargon. It’s the No. 1 shareholder in piano maker Yamaha Corp., Bloomberg estimates show, after its ownership stake via ETFs climbed to about 5.9 percent.

boj-stock-buying-nov-16

The BOJ is set to become the top holder of about five other Nikkei 225 companies by year-end, after boosting its annual ETF buying target to 6 trillion yen last month. By 2017, the central bank will rank No. 1 in about a quarter of the index’s members, including Olympus Corp., the world’s biggest maker of endoscopes; Fanuc Corp., the largest producer of industrial robots; and Advantest Corp., one of the top manufacturers of semiconductor-testing devices.

The central bank owned about 60 percent of Japan’s domestic ETFs at the end of June, according to Investment Trusts Association figures, BOJ disclosures and data compiled by Bloomberg. Based on a report released on Friday by the Investment Trusts Association, that figure rose to about 62 percent in July.

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Yellen says Fed purchases of stocks, corporate bonds could help in a downturn

(Reuters) – The Federal Reserve might be able to help the U.S. economy in a future downturn if it could buy stocks and corporate bonds, Fed Chair Janet Yellen said on Thursday.

Speaking via video conference with bankers in Kansas City, Yellen said the issue was not a pressing one right now and pointed out the U.S. central bank is currently barred by law from buying corporate assets.

But the Fed’s current toolkit might be insufficient in a downturn if it were to “reach the limits in terms of purchasing safe assets like longer-term government bonds.”

“It could be useful to be able to intervene directly in assets where the prices have a more direct link to spending decisions,” she said. If your first reaction to the above (especially Yellen’s clear misunderstanding of the respective roles of central banks and stock markets) is “these guys are idiots,” you’re probably in the minority. Most modern citizens see government intervention of any kind as at least a potentially good thing, depending on the situation. They’re wrong in this case, for the following reasons:

Overnight US Market :Rally continue for 2nd Day.Dow closed up 73 points.

Coming off its biggest stock market rally in eight months, Wall Street added to the gains on Election Day as Americans hit voting booths and investors wait to see who will be the next president of the United States.

At the 4 p.m. ET close, the Nasdaq stood 0.5% higher on the day. The Dow closed up 73 points, a 0.4% climb. The S&P 500 also gained 0.4%.

Tuesday marked the Dow’s best two-day gain since a 520-point jump on June 28-29. The S&P 500’s two-day gain of 2.6% wipes out much of the 3.1% drop registered by its previous, nine-session losing streak.

Investors began the trading day cautiously but stocks pushed ahead at midday and jumped higher, a day after the Dow Jones industrial average closed up 371 points and the broad stock market snapped its longest losing streak in 36 years after FBI director James Comey said the agency is not recommending criminal charges against Democratic nominee Hillary Clinton over her emails. Investors interpreted the FBI decision as boosting Clinton’s chance to win the tight election race with Republican challenger Donald Trump as well as clearing a legal hurdle for Clinton in the event that she does prevail on Election Day.