David's Feed
Jun 18, 2014

Argentina debt falls on newest restructuring proposal

June 18 (Reuters) – Argentina’s debt prices fell again on
Wednesday, as investors reacted to the South American nation’s
newest proposal to place its restructured debt under local law
after a series of adverse U.S. court rulings.

Economy Minister Axel Kicillof said on Tuesday that the
country is taking steps to swap bonds governed by U.S. law for
those governed by Argentine law so they would not be subject to
U.S. courts that have made paying existing bondholders more
difficult.

Jun 16, 2014

Republican gains in November may boost chances of U.S. trade deals

By David Gaffen

(Reuters) – American companies can expect progress on some critical U.S. trade initiatives if the Republican Party takes control of both houses of the U.S. Congress this November.

A Republican victory in the Senate may prevent the chamber’s Democrats, backed by labor unions concerned about the impact of free trade on American jobs, from blocking trade legislation favored by both President Barack Obama and Republican leaders.

Jun 13, 2014

Iraq unrest drives up oil; world shares edge higher

NEW YORK (Reuters) – Escalating violence in Iraq drove crude oil prices to nine-month highs on Friday while damping the appetite for risk, even as bullish news from the U.S. tech sector lifted shares on Wall Street and helped buoy stocks in global equity markets.

Brent crude edged above $113 a barrel, up more than $4 this week, on concerns that an insurgency in Iraq could trigger civil war and eventually crimp oil exports.

Jun 13, 2014

Iraq unrest drives up oil; equities slip

NEW YORK/LONDON, (Reuters) – Escalating violence in Iraq drove oil higher and sent stocks lower on Friday, putting a global equity index on track for its first weekly loss in five weeks.

Wall Street was little changed, but U.S. averages were set for their first loss in four weeks, while European shares .FTEU3 were set to interrupt eight weeks of gains. The MSCI All World Index fell 0.2 percent and is down 0.5 percent for the week.

Jun 13, 2014

Iraq unrest drives up oil; global equities slip

LONDON (Reuters) – Escalating violence in Iraq drove oil higher and sent stocks lower on Friday, putting a global equity index on track for its first weekly loss in five weeks.

Wall Street was little changed, but U.S. averages were set for their first loss in four weeks, while European shares .FTEU3 were set to interrupt eight weeks of gains. The MSCI All World Index .MIWD00000PUS fell 0.2 percent and is down 0.5 percent for the week.

Jun 13, 2014
via Counterparties

MORNING BID – Oil and trouble

Riskiest markets saw their first hiccup in a while in the last couple of days, with a 100-point loss in the Dow Thursday that has raised a bit of concern for the first time in ages, it seems. Of course, 100-point drops in the Dow aren’t really what they used to be, but that doesn’t mean this nascent selloff should be ignored. Worldwide issues – the sudden rise in oil prices on the growing insurgency in Iraq – have investors backing away from equities and shifting a bit into safer assets like the Treasury market. The indirect bidders in Thursday’s auction of 30-year notes took the highest amount of the auction since 2006, perhaps as a way to offset worries about weak growth worldwide and the uncertainty in the Middle East.

The declines translated directly to the transportation stocks, where a confluence of factors have conspired to knock down the likes of airlines (just when they stopped seeming so horrible as investments). Lufthansa’s warning earlier in the week brought some fresh worries about discretionary spending, while the rise in oil prices translated directly to a falloff in the airlines.

Jun 12, 2014
via Counterparties

MORNING BID – The first step is a Lulu

It will be interesting to see if the spiral that yogawear retailer Lululemon Athletica has found itself in over the last year is one that can be arrested. Companies rise and fall often in this world, but the U.S. stock market’s history is littered with retailers that went into a tailspin after series of missteps that turn once-interesting investments into a veritable death trap for investors, and result in the kind of drop that benefits mostly short-sellers, late-night comedians and eventually restructuring lawyers.

It’s particularly rough for companies that inspire cult-like followings, be they as a stock or as a retail purchase, as markets eventually become saturated, competitors jump into the fray, and investors go forth and look for the next big thing to occupy their time. And a stock like Lululemon, which quintupled between late 2010 and early 2012, is kind of the definition of a cult stock. That’s well and good when earnings keep going, which kept the stock price in a range (albeit elevated) through December 2013, but those days are over.

Jun 11, 2014

Cantor exit raises Wall Street fears of renewed debt fight

NEW YORK (Reuters) – House Majority Leader Eric Cantor’s shocking defeat isn’t likely to have much effect on U.S. financial markets — unless his departure emboldens Tea Party Republicans to again threaten a government shut-down over the debt ceiling next year, investment strategists said.

Even though most of the items on Wall Street’s legislative wish list, particularly corporate tax reform, were already viewed as non-starters over the next two years, Cantor’s departure may roil the relative calm that’s prevailed since the bipartisan budget deal of December 2013.

Jun 11, 2014

Analysis – Cantor exit raises Wall Street fears of renewed debt fight

NEW YORK (Reuters) – House Majority Leader Eric Cantor’s shocking defeat isn’t likely to have much effect on U.S. financial markets — unless his departure emboldens Tea Party Republicans to again threaten a government shut-down over the debt ceiling next year, investment strategists said.

Even though most of the items on Wall Street’s legislative wish list, particularly corporate tax reform, were already viewed as non-starters over the next two years, Cantor’s departure may roil the relative calm that’s prevailed since the bipartisan budget deal of December 2013.

Jun 10, 2014
via Counterparties

MORNING BID – The Beautiful Game, and Less Beautiful Markets

In two days the World Cup will open in Brazil, with the home country generally believed to be the favorite once again. There are others better placed to look at the odds for every country, though at least this year will avoid the spectacle of seeing thousands of Brazilians hang around after their team has been vanquished (the Brazilians tend to book hotels through the end, assuming they’ll be there in the final – hence lots of them out all night in Berlin in 2006 when it was Italy and France going for the cup). For the short-term investing crowd, there’s some reason to bet on the winner too – Goldman Sachs, in a report so detailed it makes us wonder about their obsessiveness with the game – points out that the winners tend to outperform in the stock market after the final.

“On average, the victor outperforms the global market by 3.5% in the first month – a meaningful amount, although the outperformance fades significantly after three months,” they wrote in a 67-page bit on the World Cup and economics. “But sentiment can only take you so far, in markets at least – the winning nation doesn’t tend to hold on to its gains and, on average, sees its stock market underperform by around 4% on average over the year following the final.” Host nations also tend to see outperformance too – about 2.7 percent for the month following, though, again, the glow of hosting a whole load of 1-0 matches tends to fade over time, leaving investors with other things on their minds, like fundamentals, and maybe all the debt the host took on to build a truckload of stadiums.

    • About David

      "David Gaffen oversees the stocks team, having joined Reuters in May 2009. He spent four years at the Wall Street Journal, where he was the original writer of the web site's MarketBeat blog. He has appeared on Fox Business, CNN International, NPR, and assorted other media and is the author of the forthcoming book "Never Buy Another Stock Again.""
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