News Summary: October 26-30

News for the Week of 10/26/2015 – 10/30/2015

by David Abuaf Investment Manager, RJFS

 

Government / Political / Economic

 

1.     Afghanistan has asked Russia for weapons and helicopter gunships, creating another opening for the Kremlin to assert power.

2.     Leaders of 11 nations in Central and Eastern Europe agreed on measures aimed at slowing the influx of migrants and providing aid.

3.     Pope Francis failed to win bishops’ support for proposed changes to the church’s treatment of divorced or gay Catholics.

4.     China’s Communist Party is expected to approve an economic blueprint for scaling back the state’s role.

5.     The WH and congressional leaders were nearing a deal on a two year budget plan that would also raise the debt limit.

6.     A powerful earthquake struck Afghanistan near the Pakistan border, cutting a swatch of death and destruction in both countries.

7.     The EU said it had agreed on principle with the US on anew trans-Atlantic data-transfer pact.

8.     The House finally approved reauthorizing the Export-Import Bank, passingthe measure in a 313-118 vote.

·       Who on Earth voted against this? Do they not understand how small businesses in the US work!?

9.     Wonderful! US students’ scores on math and reading mostly ticked down in the latest national results.

10.  Paul Ryan is now Speaker of the House.

11.  The hacking group Anonymous said it will ID up to 1,000 members of the KKK.

12.  China is abolishing its 1-child policy. Now it’s a two child policy.

·       To answer your unasked question – non-racial Chinese living in China are not required to follow the 1 or now 2 child policy, rather China is working with non-native Chinese to help build up their populations.

13.  Austria plans to build a fence at its main border crossing with Slovenia to slow a wave of migrants – hmmm, xenophobia in Austria, that’s new!

  

General Markets / Economic

 

1.     Oil companies are struggling to generate enough cash to cover spending and dividends in the face of tumbling oil prices.

2.     The Fed is striving to better manage expectations for rates and the economy as the year winds down.

·       This is very important. A standard tenant of both microeconomics and macroeconomics states that economic “surprises” never have their intended effects; rather it’s substantially more valuable to allow the financial system to know what economic changes will be made before the fact. This allows all players, including consumers, to think through their actions ahead of time and make the more “rational” decision. As such, better highlighting to the world what the Fed will be doing with interest rates is actually a positive and not just a “political” move.

3.     US imports of foreign oil are rising again after a long decline, as domestic producers scale back.

4.     New homes sales declined in September, with the biggest drop in the Northeast.

·       Just last week we noted how existing home sales rose the most since 2007. Coincidence, I think not!

5.     US durable goods orders fell for a second consecutive month in September.

6.     The Fed decided against raising rates in October, however they do continue to keep the market on its toes and have said that a rate hike in December is still very possible.

7.     The US economy grew at 1.5% in the third quarter.

 

Company News

 

1.     VW has suspended more engineers than previously disclosed at the recommendation of a law firm probing the emissions scandal.

2.     GM and the UAW reached a tentative labor deal before a strike deadline on pay and benefits.

3.     A Citigroup technology snafu this summer linked to a UK hedge fund resulted in trades that could have cost the bank as much as $400m.

4.     USAA is switching its card portfolio to Visa, in a blow to MasterCard.

5.     ICE agreed to acquire Interactive Data for about $5.2B, a bet that there is big money to made from bond-price data. ICE is a financial trading exchange company.

6.     Duke Energy said it would buy Piedmont Natural Gas for $4.9B.

7.     Xerox said it would launch a full review of its business as it posted its first quarterly loss since 2010.

8.     Icahn and John Paulson are pressing AIG to split into three pieces, saying the move would let the insurer escape new federal rules.

9.     Pfizer and Allergan are considering combining, in what would be a blockbuster merger capping off a torrid stretch for investors!

10.  Walgreens agreed to purchase Rite Aid for about $9.4B, a combination that would create a drugstore giant.

11.  The SEC wants to curb JP Morgan’s ability to raise funds for clients, as it takes a harder line in settlements.

  

Interesting Stories

 

1.     Too funny. Visitors to Karl Marx’s grave are balking at the fee they must pay to fund the conservation of the grounds.

2.     A 24 year old Nevada woman died because she was stuck in a cryo chamber. The chamber gets down to -240 degree Fahrenheit. It APPEARS she was cleaning up and closing the store when she got locked in and succumbed to either suffocation or freezing. The store offers “cryo chamber saunas”

3.     An EMT was suspended because it is “against company policy to make a stop without being called.” During a transportation of an elderly patient, he and his partner were flagged down by a frantic man who told them a student was choking. No one at school was rendering first aid and the girl had already turned blue. The seven year old girl, Noelia Echavarria, is on life support at NYU.

4.     Scientists have created a tractor beam that can move objects. It does this through sound waves, and it’s called a sonic tractor beam. Presently it can only be done on small objects. The study co-author (there was a proof of concept, so it did work in reality), Bruce Drinkwater (how awesome is that last name?) said the technique could be adapted to remotely manipulating cells inside the human body or target the release of medicine locked in acoustically activated drug capsules.

5.     The WHO now classifies Bacon with smoking and asbestos, believing it increases the risk of cancer.

6.     You have already heard of comet C/2014 Q2, Lovejoy. But, did you know that it leaves behind the alcoholic equivalent of 500 bottles of wine every second? In case you haven’t heard, it is a comet who’s trail is a mix of sugar and alcohol