(ZH) The "China-And-Japan-PMI-Beat-So-Things-Must-Be-OK" Meme In 2 Simple Charts

The "China-And-Japan-PMI-Beat-So-Things-Must-Be-OK" Meme In 2 Simple Charts
The reactions in USDJPY, Nikkei 225, S&P futures, Gold, Treasury futures, and oil (in a word - none!) tells you all you need to know about the market's total loss of faith in the soft-survey-based PMI data from around the world (and in particular China and Japan). Despite dramatic weakness in a slew of hard-date economic indicators for both nations, the PMIs rose and beat. Japan's to 7-month highs (so much for moar QQE?) but New orders and Output tumbled. China rose and beat but all key components dropped. As the two charts below suggest... things in PMI data production-land need some better "adjustments" if they are to keep the dream alive...
Just two simple charts...Soft-Survey-based PMI vs hard-data-based Industrial Production
China nailed it!
By some accounts, these data are better indicators than the hard numbers that come out of the government. After all, they are released very early, they are raw unfiltered data (other than seasonal adjustment), they are never revised and they are simple to interpret. We disagree. In our view, they are useful as a rough and ready early read on the economy. However, once the corresponding official data are released, we put very little weight on these surveys.
...
It is important to understand how crude these surveys are. Each month, a few hundred purchasing managers are asked if a variety of activity variables are up, down, or the same relative to the prior month. Their responses are then converted into diffusion indexes: the sum of the number managers reporting activity is “increasing” and half of those reporting “the same.” Note that there is some guesswork involved: the survey is taken before the month is over and some of the questions cover areas of the firm that are difficult for a purchasing manager to get a timely read on. For example, a purchasing manager may not have a very precise idea of what is happening to hiring in a large, diverse firm. Moreover, since they don’t gather specific numbers for each series, they may have to make a rough guess, particularly if the trend is slightly up or down.
Fans of the two indexes point out that they are relatively stable, easy to interpret and never revised. However, in our view, the simplicity of the data is a drawback, not an advantage. It means no attempt is made to correct misreporting or to include late respondents. Moreover, the sample they use is not representative of the overall economy. They represent a broad cross-section of industries, but they oversample big firms and they make no attempt to adjust for the birth and death of firms.
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Of course - what really matters is the narrative is alive... (from HSBC/Markit)
"The HSBC China Manufacturing PMI improved to 50.4 in the flash reading for October, up from 50.2 in the final reading for September. Domestic as well as external demand showed some signs of slowing although both remained in expansion territory. Disinflationary pressures intensified, as both the input and output price indices declined further. Meanwhile both employment and inventory indices improved. While the manufacturing sector likely stabilized in October, the economy continues to show signs of insufficient effective demand. This warrants further policy easing and we expect more easing measures on both the monetary as well as fiscal fronts in the months ahead."

(Pimco) Ready, Steady, Stress! Capital Structure Investing in a Changing Eurozon

Ready, Steady, Stress! Capital Structure Investing in a Changing Eurozone Banking Landscap
  • We have a high conviction that over half of the 130 banks under review – including all large systemic national champions – will pass the ECB’s stress test.
  • Nervousness about the asset quality review and stress test has not played a major role in the recent selloff of risk asset classes, rather it was driven by broader risk-off sentiment.
  • Subordination premia remain historically high and valuations across the capital structure are heavily dislocated, offering exciting relative value and capital structure arbitrage opportunities.

(ManagerMagazin) Tchibo Holding Maxingvest is recruiting (Google Translate)

Tchibo Holding Maxingvest is recruiting

The Maxingvest Holding is planning a staff restructuring. A new manager should reinforce the holding company of coffee and grocery retailer Tchibo and Beiersdorf Nivea manufacturer in leadership.

Hamburg - corporate circles confirmed the manager magazin (release date: October 24) that the Hamburger Maxingvest look around for a new manager. This is to assist the owner and Managing Director Michael Herz (71) more in future.

The aim of the proposed personnel action is to create a broader human resource base for the future of Maxingvest. Both the Executive Board, consisting of the heart and the Chief Financial Officer Thomas Wood Greve (57), and the Supervisory Board are medium in front of a generational change.

Changes are also on the board of Dax Group Beiersdorf. Co-owner Michael Herz achieved in the coming year, the age limit of 72 years. Therefore, he should resign in 2016 on the advisory board.

The two Maxingvest investments Beiersdorf and Tchibo developed last quite different. During the Nivea maker 2013 sales and profits increased significantly, Tchibo has led to losses. In the first half of 2014, the weakness of the coffee roaster continued.

Some executives have left recently, including the sales manager Dirk Engehausen (49) Tchibo. For him Maxingvest currently looking for a successor. This search has currently a top priority, it says from the Tchibo environment.

>>> Check Point Software beats by $0.02, reports revs in-line

Check Point Software beats by $0.02, reports revs in-line
Reports Q3 (Sep) earnings of $0.93 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.91; revenues rose 7.6% year/year to $370.4 mln vs the $367.01 mln consensus.
  • Deferred Revenues: $660 million, representing a 16 percent increase year over year
  • Share Repurchase Program: During the third quarter of 2014, the company repurchased 2.8 million shares at a total cost of $192 million.

Lenovo acqusition of BlackBerry unlikely


Recently, rumors that China's Lenovo Group, the world's largest personal computer maker, might offer to buy BlackBerry have been circulating in the market, Beijing-based IT Time Weekly reports.
Although Lenovo swiftly denied the rumors, could they really make this kind of acquisition?
Benzinga, a financial news media outlet, said an offer worth US$15 a share could come as early as this week, citing an unnamed source familiar with the matter. A Lenovo executive swiftly denied the report, declining to elaborate further.
Rumors about Lenovo's possible acquisition of the Canadian technology company have surfaced several times already.
The Wall Street Journal previously reported that Lenovo and BlackBerry had signed an undisclosed agreement and in January 2013, Lenovo's chief financial officer Wong Ming-wai said BlackBerry is a potential acquisition target, but eventually all related speculation of the merger between the two has proved to be just a speculation, and this time is no exception.
The reason for so much speculation on the deal can mostly be attributed to commentators seeing the deal as a perfect match. Lenovo is the world's largest PC maker which has transformed itself into a PC plus tech firm and has recently established a new company focusing on internet operations. While BlackBerry remains a big international player, despite competition from Samsung. The company is also in possession of lots of patents.
To assess the liklihood of a deal three things need to be examined. The first is whether BlackBerry is looking to sell its shares. BlackBerry has been seeking a buyer and in September 2013, BlackBerry signed a memorandum of understanding with a consortium led by Fairfax Financial, with the latter agreeing to buy BlackBerry for US$4.7 billion, but the plan was abandoned by the company in November 2013.
The second issue is whether Lenovo can afford to buy BlackBerry. Currently, Lenovo has a market value of just over US$10 billion, while BlackBerry has an estimated value of US$4.7 billion. Lenovo doesn't have the capability for quick expansion, as the global PC market is dwindling and the growth of the smartphone market is slowing down. Lenovo's cash flow is tight after it spent US$2.9 billion in acquiring Motorola's mobile business in January 2014, and US$2.1 billion in purchasing IBM's x86 server business on Sept. 29. As of June 30, 2013, Lenovo had a cash reserve of US$3.1 billion.
The third issue is whether the Canadian and US governments will approve the acquisition. The Canadian government may oppose the deal because of national security concerns or if the acquisition doesn't benefit the nation. The US government tends to oppose these kinds of deals due to national security concerns, as lots of government officials and multinational firms use BlackBerry smartphones.
This makes any acquisition very unlikely, the report said.

>>>Intesa Sanpaolo CEO says it is considering buys in private banking and asset

Intesa Sanpaolo CEO says it is considering buys in private banking and asset management sectors (translated)


Intesa Sanpaolo, the listed Italian bank, is considering acquisitions, according to the Italian newspaper Il Sole24 Ore.

The report, which cites Carlo Messina, Intesa’s chief executive, notes that the bank could acquire potential targets which operate in the asset management and in the private banking sectors, in Italy or abroad.

Intesa Sanpaolo has a market cap of EUR 37bn.

Source Il Sole 24 Ore

Name to Watch in Europe : Julius BAer, EFG, Ashmore, Jupiter, MLP, Avanza, BinckBank, Man Group...

NY Post : KKR sniffing around PetSmart

PetSmart has caught the eye of billionaire Henry Kravis.

The giant pet-supplies retailer, which announced in August it will groom itself for a new owner, has attracted the interest of buyout firms including Kravis’s KKR, The Post has learned.

It’s not yet clear that KKR and others are necessarily panting over PetSmart, sources cautioned. The Phoenix-based chain has been dogged by slowing growth, with its comparable year-to-date sales swinging into negative territory.

Indeed, PetSmart’s own board briefly pooh-poohed the idea of a sale this summer, denying a claim by activist investor Jana Partners that the company was a takeover target.

Jana, headed by billionaire Barry Rosenstein, disclosed a stake of nearly 10 percent in July.

Insiders speculate KKR wants a peek at PetSmart’s books as it basks in the success of its investment in Pets at Home, a British-based chain it took public in March for nearly $2 billion, reaping a 30 percent return on a 2010 buyout.

Other logical bidders for PetSmart could include Apax Partners, Bain Capital and Carlyle, sources said.

First-round bids for PetSmart are due by Halloween in a process that’s being run by JPMorgan Chase, according to two sources close to the action.

PetSmart isn’t allowing archrival Petco, which is owned by buyout firms TPG and Leonard Green & Partners, to participate in the auction, sources said.

“I think there is a reasonable chance the company sells,” according to one banker close to the process. “It all comes down to valuation.”
PetSmart and KKR didn’t return calls seeking comment. A Jana spokesman declined to comment.

Sources said KKR’s turnaround tack could include an aggressive move to expand PetSmart’s online business — an area where critics say management fiddled while the Web became increasingly populated with upstarts looking to sell pet food directly to consumers.

The 1,300-store chain is valued at $6.8 billion, which amounts to a big bite for a private-equity deal.

PetSmart’s revenue in 2014 rose only 1.6 percent from the year-ago period, with a minuscule 1.1 percent gain expected for next year, according to a July report from IBIS.

The research firm expects pet ownership will rise over the next five years, citing demand from “more single-person households and the aging population.”

As an alternative to a sale, PetSmart could borrow money and buy back shares to boost its stock price, an option Jana has roundly rejected.
PetSmart shares, which were trading at about $60 a share before Jana disclosed its stake, fell 13 cents Wednesday, to close at $68.88.