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News & Views: Monday, November 3

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What you need to know for today's trading day.

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This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time.

Apple Plans Investor Call Ahead of Potential Bond (WSJ)

HSBC sets aside $378m in currency probe (BBC)

Unknown election outcome is stocks' big fear (Reuters)

China Oct PMIs point to cooling economic momentum, growth target at risk (Reuters)

Ringgit Falls to Seven-Month Low on BOJ, China Growth Concern (Bloomberg)

Views
Japan was closed last night for Culture Day. However, note that USD-denominated Nikkei futures are up 8.92% (0.88% for "today") from last Thursday's close after trading limit up (+7%) on Friday. Additionally, the USDJPY cross is showing the largest positive risk-adjusted return in currencies overnight. The GPIF/BoJ trade has yet to run its course.

Part of the related weakness in the Yen is due to the Malaysian Ringgit. The Malaysian state oil company set the prices for its basket of crude oil lower by 10%, putting them more in line with the rest of the world. Additionally in Asia, the Chinese state oil company Chinaoil bought a record amount of crude oil in October - 47 cargo ships or the equivalent of 23.5m barrels, all from the Middle East. Forecasters see another possible 20m barrels that could be purchased by the end of the year to continue building up China's strategic petroleum reserve.

Note that commodities - gold, oil, metals - are not under pressure today in spite of the stronger dollar. One trade that carried over out of Friday is that deflation is being exported into the US, which is negative for commodities and positive for Treasuries in a bull flattening nature. The 10yr yield dropped as much as 3.5bps when the UK session opened early this morning, but has since given up some of those gains.

The Ruble basket continues to weaken again today. The market continues to test the Russian government on its willingness to let the Ruble completely free float - interest rate hikes and interventions won't do the trick anymore. This seems to be the area where the next "crisis" could arise from.

European equities (Italy) and credit (HY) are the weakest performing assets on a risk-adjusted basis overnight behind the Aussie dollar and Malaysian Ringgit. China's official manufacturing PMI for October - released on Friday - showed a slight deceleration in growth, which is negative for Australia. Also, Australia's September building approvals fell 11% from the prior month, the most since July 2012, which caused a snap weakening in the Aussie.

Chicago Fed President Charles Evans (dove, nonvoter) is speaking this morning in Chicago. He should be the first FOMC member that discusses what went on at the latest meeting. Recently he has said that it is too early to be concerned about falling market inflation expectations and that the Fed should be "exceptionally patient" on raising rates. Also note that he is a voter next year and has publicly said he will vote against a rate hike at every meeting. His polar opposite - Dallas President Richard Fisher, who retires in March - will speak in the early afternoon.

Data:
- China manufacturing PMI (Oct) down to 50.8 vs 51.2 expected, prior 51.1
- China non-manufacturing PMI (Oct) down to 53.8, prior 54.0
- China HSBC manfuacturing PMI (Oct final) unchanged at 50.4 vs 50.4 exp
- Australia building approvals MoM (Sep) down -11.0% vs -1.0% exp, prior 3.4%
-- YoY down -13.4% vs -0.9% exp, prior 16.0%
- Eurozone manufacturing PMI (Oct final) down to 50.6 vs 50.7 exp, initial 50.7
- German manufacturing PMI (Oct final) down to 51.4 vs 51.8 exp, initial 51.8
- UK manufacturing PMI (Oct) up to 53.2 vs 51.4 exp, prior 51.5

US Economics (Time Zone: EST)
 
09:45 Markit US Manufacturing PMI (Oct final) - expected 56.2, initial 56.2
10:00 ISM Manufacturing (Oct) - exp 56.1, prior 56.6
10:00 ISM Prices Paid - exp 58.0, prior 59.5
10:00 Construction Spending MoM (Sep) - exp 0.7%, prior -0.8%
5:00 Domestic Vehicle Sales - exp 13.10M, prior 12.89M
5:00 Total Vehicle Sales - exp 16.40M, prior 16.34M
11:30 Treasury to sell $24b 3-month bills and $30b 6-month bills
 
Fedspeak
 
9:30am Evans (dove, nonvoter) speaks in Chicago
12:40pm Fisher (hawk, voter) speaks in NY
 
Earnings
 
Before:
Sysco (SYY)
 
After:
AIG (AIG)
Marathon Oil (MRO)
Herbalife (HLF)
Sprint (S)

Twitter: @MichaelSedacca

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No positions in stocks mentioned.

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