FT : Lighter headwinds for China as US and EU demand boosts trade

Lighter headwinds for China as US and EU demand boosts trade

Chinese exports grew at a faster rate than expected in November, helped by strong shipments to the US and EU, suggesting that the domestic economy is facing lighter headwinds.
The government said shipments rose 12.7 per cent from a year earlier, a much higher rate than the roughly 7 per cent clip expected by analysts surveyed by Bloomberg and Reuters. Just one day after trade ministers agreed the first global trade deal in a generation, the General Administration of Customs said the cumulative trade balance for the first 11 months of the year had increased to $234bn.

“There are signs that the global activity and trade cycle is gaining momentum, driven by the recovery in high income countries and China’s exporters are benefiting from that,” Louis Kuijs, an economist with RBS, wrote in a research note.
ANZ bank said strong export figures were due to better demand from developed economies. Shipments to the US rose 18 per cent, a big jump from October’s 8 per cent rise, while exports to the EU grew 18 per cent, compared with 13 per cent in the previous month.
The rise in Chinese exports comes several days after the US revised sharply upwards its gross domestic product figures for the third quarter, saying the economy grew an annualised 3.6 per cent.
Chinese imports in November grew 5.3 per cent, which Mr Kuijs suggested “solid expansion of China’s domestic demand”.
China imported 23.57m tonnes of crude and 2.8m tonnes of refined products in the month, with oil imports so far this year up 3 per cent as Chinese oil importers benefit from lower international crude prices.
Unwrought copper imports rebounded from an October dip to 435,613 tonnes, with copper scrap accounting for another 430,000 tonnes. Manufacturers are finishing out the year, with a lull in factory operations to begin in mid-January ahead of the lunar new year.
Separately, on Saturday, Chinese state media said regulators would step up efforts to make sure that companies were using foreign currency obtained for trade deals for genuine transactions.

Xinhua, the state news agency, said the State Administration of Foreign Exchange, the foreign exchange regulator, would “intensify supervision on commercial banks’ trade finance businesses to curb fake financing activities and prevent abnormal cross-border forex movement”.
China has faced criticism over the past year as export figures from its customs authorities appeared at odds with the numbers recorded by places such as Hong Kong through which many Chinese goods are re-exported.
Critics have suggested that companies were disguising capital inflows as trade invoices to help them evade China’s capital controls. Exporters also came under more scrutiny over suggestions that they were faking orders to gain tax rebates.

>>> ThyssenKrupp activist shareholder Cevian would not rule out further stake in

ThyssenKrupp activist shareholder Cevian would not rule out further stake increase

Activist investor Cevian Capital would not rule out further increasing its stake in listed German steel group ThyssenKrupp, German daily Boersen Zeitung reported. The report cited a Cevian spokesperson who declined to reveal a target shareholding figure.

Cevian increased its stake to 10.96% through the ThyssenKrupp capital increase which also saw the largest shareholder, the Krupp foundation, fall below the 25% threshold to to 23.03%.

Cevian announced it wants representation on the ThyssenKrupp board to reflect its stake, but did not reveal whether it is targeting one or two seats, the report noted. The next opportunity to vote Cevian representatives to the ThyssenKrupp board is at the AGM on 17 January.

ThyssenKrupp declined to comment on the Cevian stake increase and desire for board representation.
Boersen-Zeitung

>>> Jap. Mkt : Short selling rose to 30%of sell orders / CB Iss. at 7y Highs

Issuance of convertible bonds in Japan said to have risen from ¥292B in FY12/13 to ¥665B in FY13/14 YTD, highest level since 2006 - Nikkei
- Said to be reflecting rising confidence in higher stock prices. - Report noting the overseas institutional investors are the main buyers of these bonds.

According to the Tokyo Stock Exchange, short selling has risen to nearly 30% of all sell-orders from 22% average following short-selling deregulation announced on Nov 5th - Nikkei- Report noting that "under the new rules, investors can now short-sell at any price unless a stock has fallen at least 10% since the previous close.

(ZH) Ghost Of 1929 Re-Appears - Pay Attention To The Signals

They say those who forget the lessons of history are doomed to repeat them.

As a student of market history, I’ve seen that maxim made true time and again. The cycle swings fear back to greed. The overcautious become the overzealous. And at the top, the story is always the same: Too much credit, too much speculation, the suspension of disbelief, and the spread of the idea that this time is different.

It doesn’t matter whether it was the expansion of railroads heading into the crash of 1893 or the excitement over the consolidation of the steel industry in 1901 or the mixing of speculation and banking heading into 1907. Or whether it involves an epic expansion of mortgage credit, IPO activity, or central-bank stimulus. What can’t continue forever ultimately won’t.

The weaknesses of the human heart and mind means the swings will always exist. Our rudimentary understanding of the forces of economics, which in turn, reflect ultimately reflect the fallacies of people making investing, purchasing, and saving decisions, means policymakers will never defeat the vagaries of the business cycle.

So no, this time isn’t different. The specifics may have changed, but the themes remain the same.

In fact, the stock market is right now tracing out a pattern eerily similar to the lead up to the infamous 1929 market crash. The pattern, illustrated by Tom McClellan of the McClellan Market Report, and brought to his attention by well-known chart diviner Tom Demark, is shown below.
Excuse me for throwing some cold water on the fever dream Wall Street has descended into over the last few months, an apparent climax that has bullish sentiment at record highs, margin debt at record highs, bears capitulating left and right, and a market that is increasingly dependent on brokerage credit, Federal Reserve stimulus, and a fantasy that corporate profitability will never again come under pressure.

On a pure price-analogue basis, it’s time to start worrying.

Fundamentally, it’s time to start worrying too. With GDP growth petering out (Macroeconomic Advisors is projecting fourth-quarter growth of just 1.2%), Americans abandoning the labor force at a frightening pace, businesses still withholding capital spending, and personal-consumption expenditures growing at levels associated with recent recessions, we’ve past the point of diminishing marginal returns to the Fed’s cheap-money morphine.

All we’re doing now is pushing on the proverbial string. Trillions in unused bank reserves are piling up. The housing market has stalled after the “taper tantrum” earlier this year caused mortgage rates to shoot from 3.4% to 4.6% between May and August. The Treasury market is getting distorted as the Fed effectively monetizes a growing share of the national debt. Emerging-market economies are increasingly vulnerable to a currency crisis once the taper finally starts.

The Fed knows it. But they’re trapped between these risks and giving the market — the one bright spot in the post-2009 recovery — serious liquidity withdrawals.

But the specifics of the run up to the 1929 crash provide true bone-chilling context for what’s happening now.

The Bernanke-led Fed’s enthusiasm for avoiding the mistakes that worsened the Great Depression—- a mistimed tightening of monetary conditions — has led him to repeat the mistakes that caused it in the first place: Namely, continuing to lower interest rates via Treasury bond purchases well into an economic expansion and bull market justified by low-to-no inflation.

(Side note here: As economist Murray Rothbard of the Austrian School wrote in America’s Great Depression, prices dropped then, as now, because of gains in productivity and efficiency.)

Here’s the kicker: The Fed (mainly the New York Fed under Benjamin Strong) was knee deep in quantitative easing in the late 1920s, expanding the money supply and lowering interest rates via direct bond purchases. Wall Street then, as now, was euphoric.

It ended badly.

Fed policymakers felt like heroes as they violated that central tenant of central banking as outlined in 1873 by Economist editor Walter Bagehot in his famous Lombard Street: That they should lend freely to solvent banks, at a punitive interest rate in exchange for good quality collateral. Central-bank stimulus should only be a stopgap measure used to stem panics, a lender of last resort; not act as a vehicle of economic deliverance via the printing press.

It’s being violated again now as the mistakes of history are repeated once more. Bernanke will be around to see the results of his mistakes and his misguided justification that quantitative easing is working because stock prices are higher, ignoring evidence that the “wealth effect” isn’t working.

Strong died in 1928, missing the hangover his obsession with low interest rates and credit expansion caused after bragging, in 1927, that his policies would give “a little coup de whisky to the stock market.”

(Barron's) Buy the Asset Sellers

Buy the Asset Sellers

Revenue growth may be hard to come by these days. Look for companies with assets to sell or businesses to unload.

It's not easy to find bargains when U.S. stock prices have soared while revenue growth has slowed, especially since companies that are still growing quickly look expensive. One solution: Look for companies that can grow by shrinking—companies that can fetch higher stock prices by selling off underperforming assets and putting the cash to good use. Consider Dow Chemical, Royal Dutch Shell, General Electric and Time Warner .

The Standard & Poor's 500 index is up 27% this year, but its underlying revenue increased just 2.9% during the third quarter. Companies that are increasing revenue at a double-digit pace go for a median of 20 times this year's projected earnings. Weed out those whose revenue is up on acquisitions or rebounding from depressed levels, and what's left are true fast-growers with much higher prices, like Chipotle Mexican Grill (ticker: CMG) at 50 times earnings; Whole Foods Market (WFM) at 33 times; and Netflix (NFLX), Amazon.com (AMZN), and Salesforce.com (CRM), all more than 100 times.

However, fast growth isn't the only path to handsome stock returns. Companies can increase their profit margins, boost their overall growth rates or reduce risk by selling assets that have been holding them back, and putting the cash toward debt reduction or larger dividends. The results are often lucrative for shareholders. A 2008 study published in the Journal of Finance found that over the long term, U.S. stocks in the market's bottom decile ranked by recent asset growth outperformed those in the top decile by 13 percentage points a year. A 2012 paper that focused on international markets reported similar findings. So while rising stock valuations may be better news for sellers than for buyers, buyers can improve their prospects by seeking out reasonably priced companies with plenty to sell.

For instance: Last week, Dow Chemical (DOW) announced it will sell chlorine, epoxy and other commodity businesses with revenue of $5 billion, or nearly 10% of total revenue. Since 2009, Dow has already sold businesses with revenue of about $10 billion. After the latest divestiture, three-quarters of the company's revenue will come from high-margin businesses, according to Deutsche Bank. The sales have reduced payroll costs and helped Dow more than double its spending on dividends and share repurchases over the past three years. The stock yields 3.3%. Earnings per share are expected to increase 21% this year, to $2.29, and to grow even faster next year, hitting $2.84. That puts shares below 14 times next year's earnings.

WHEN SELLING ASSETS, it helps to have buyers who are willing to overpay because their motivations extend beyond profits. Countries such as China, Indonesia, and South Korea are keen to reduce dependency on foreign oil and diversify savings away from low-yield Treasury bonds. So far this year, government-controlled energy companies have scooped up assets worth $94 billion, JPMorgan reported in late November. That's 12 times what they spent in 2006 and 78% higher than last year.

Meanwhile, many big oil firms remain stuffed with under-developed assets ripe for spinning off. Royal Dutch Shell (RDS.B) has targeted $15 billion in sales over the next two years, or 7% of its recent stock market value, but JPMorgan says it holds twice that much in non-core assets that could fetch good prices. Shares of Royal Dutch go for nine times earnings and yield 4.9%.

[image]
In September, Barron's wrote that General Electric (GE) shares look likely to shine after more than a decade of underperformance, based in part on the company selling off financial operations that don't directly relate to its industrial businesses (Sept. 23, "GE: Not Too Big to Grow"). Last month, the company said it will sell up to 20% of its North American consumer finance business in an initial public offering next year and distribute the rest to stockholders. Shares of GE are up 12% since our story, versus 6% for the S&P 500. They still look affordable at 15 times next year's earnings forecast. One reason is the 2.8% dividend yield. Another, according to Barclays, is that changes in profit margins are one of the best predictors of stock performance for industrial companies, and GE leads its peer group by that measure. One of its goals is to drive operating margins for its industrial businesses 0.7 percentage point higher this year to 15.8%. Last quarter, it reported a 1.2 percentage-point increase.

It's a worrisome sign when companies build grandiose headquarters; think of the Sears Tower in Chicago, now called the Willis Tower, finished in 1973, before a long decline for the retailer. It's probably a good sign, then, that Time Warner is reportedly unloading an ultra-posh retail and office development in Manhattan that holds its headquarters—to a group that includes Singapore's sovereign wealth fund. The company also plans to spin off its publishing business next year. What's left will be lucrative television and film properties, including Home Box Office, Turner Broadcasting System and Warner Brothers Entertainment. After the sale, about 35% of revenue will come from subscriptions and only 20% from advertising, and earnings per share should grow by 15% a year on falling corporate overhead and rising fees from TV affiliates, according to Morgan Stanley. Shares go for 16 times next year's earnings forecast.

Novartis CEO Says Acquisitions Possible: Schweiz am Sonntag

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Novartis CEO Says Acquisitions Possible: Schweiz am Sonntag 2013-12-08 10:50:22.866 GMT

By Elena Logutenkova Dec. 8 (Bloomberg) -- Novartis can spend $4b-$6b each yr on dividends, acquisitions, CEO Joseph Jimenez says in interview with Schweiz am Sonntag. * Says co. can spend $2b-$4b per acquisition in pharmaceuticals, eye-care and generics * Acquisitions for smaller divisions would be smaller: Jimenez * NOTE: Novartis sets $5b buyback as it seeks faster growth * NOTE: Novartis willing to Sell Roche stake * NOTE: Novartis starts strategic review of units, would consider $10b deal, Chairman Joerg Reinhardt said in Aug.

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

--Editors: Amy Teibel, John Viljoen

To contact the reporter on this story: Elena Logutenkova in Zurich at +41-44-224-4101 or elogutenkova@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at +33-1-5365-5063 or fconnelly@bloomberg.net

Geberit 2014 Buyback Possible, Baehny Tells Schweiz am Sonntag

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Geberit 2014 Buyback Possible, Baehny Tells Schweiz am Sonntag 2013-12-08 11:16:41.759 GMT

By Elena Logutenkova Dec. 8 (Bloomberg) -- Geberit will more probably start another share buyback next year rather than pay out special dividends, CEO Albert Baehny tells Schweiz am Sonntag in an interview. * Says nothing has been decided yet, topic to be discussed early 2014 with board of directors: Baehny * Co. not planning acquisitions, not in any talks: Baehny * NOTE: Geberit Quarterly Sales Gain on Northern European Recovery

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

--Editors: Kim McLaughlin, Anthony Aarons

To contact the reporter on this story: Elena Logutenkova in Zurich at +41-44-224-4101 or elogutenkova@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at +33-1-5365-5063 or fconnelly@bloomberg.net

Noble Expects Leviathan Production Before End 2017, Globes Says

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Noble Expects Leviathan Production Before End 2017, Globes Says 2013-12-08 13:32:02.289 GMT

By Shoshanna Solomon Dec. 8 (Bloomberg) -- Development of Israel’s largest offshore natgas field will cost $8b, Noble Energy VP Keith Elliott says at conference in Tel Aviv, according to Globes website. * Leviathan production has been delayed by a year from original forecast due to delays in govt export policy: Elliott * “We plan to develop Leviathan at quickest pace we can”: Elliott * “There is huge potential for oil discoveries in the region”: Elliott

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

--Editor: Robert Lakin

To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at +972-3-542-7108 or ssolomon22@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at +971-4-364-1025 or cmaedler@bloomberg.net

Delek, Avner Decline as Noble Energy Says Leviathan Delayed

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Delek, Avner Decline as Noble Energy Says Leviathan Delayed 2013-12-08 13:37:15.613 GMT

By Shoshanna Solomon Dec. 8 (Bloomberg) -- Delek Group, which has stakes in Leviathan via Delek Drilling, Avner units, drops 3.4%, most since Nov. 18, to 1,320 shekels. * Avner -3.4%, most since Nov. 18, to 3.294 shekels * Delek Drilling -2.2%, most since Nov. 26, to 19.08 shekels * Ratio, also a partner in Leviathan, -2.7% * NOTE: Noble Expects Leviathan Production Before End 2017, Globes Says NSN MXHPLE6JTSEI <GO> * NOTE: Delek to Depend on Asset Sales as Gas Boon Slows: Israel Markets NSN MXA96J6S972Y <GO>

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

--Editor: Robert Lakin

To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at +972-3-542-7108 or ssolomon22@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at +971-4-364-1025 or cmaedler@bloomberg.net

Covidien Agrees to Buy Given Imaging for ~$860 Million

Covidien Agrees to Buy Given Imaging for ~$860 Million --> $30 per share

Covidien to acquire all outstanding shares of developer of gastrointestinal diagnostics and monitoring products for $30 each in cash, according to a statement. NSN MXH8SCMEQTXC <GO> * Transaction subject to approval by Given Imaging shareholders and regulators; has been approved by both boards * Deal expected to be completed by Mar. 31 * Covidien will finance deal with cash on hand * Given Imaging will add $40m - $50m per quarter in incremental revenue * "Acquiring Given will enable Covidien to significantly expand its presence in a $3 billion GI market," Bryan Hanson, Group President, Medical Devices and U.S. for Covidien, said in the statement * NOTE: Given Imaging products include PillCam swallowed capsule endoscope * NOTE: Given shrs advance 22% on news to 6-yr high in Tel Aviv to 100 shekels, or $28.55

Link to Company News:COV US <Equity> CN <GO> Link to Company News:GIVN US <Equity> CN <GO>