Volkswagen Tumbles Again As Emissions Scandal Deepens, Gasoline Engines Dragged In: Wall Street's ReactionSubmitted by Tyler Durden on 11/04/2015 07:09 -0500
"VW is leaving us all speechless."
“This can get pretty ugly.”
Following a recent report documenting the surge in empty malls littering China, many suggested that this is indicative of a shift to online shopping and migration to platforms such as Alibaba. That may well be the case, but unlike in the US where one is assured at least some quality control and has a rational expectation that what was ordered online is what will be delivered, in China the reality is far different. According to China's official news agency, Xingua, more than 40% of goods sold online in China last year were either counterfeits or of bad quality, illustrating the extent of a problem that has bogged down the fast-growing online sector.
While the Valeant soap opera has had constant, heart-pounding drama for weeks and following yesterday's report that it allegedly fabricated prescriptions, even an element of career-ending (and prison-time launching) criminality, so far one thing had been missing: an antagonist tied to Goldman Sachs. We are delighted to reveal the "missing link", one which ties everything together. Its name is Howard Schiller.
Just when you thought the M&A boom is over after a surge in bond yields that Goldman has repeatedly dubbed as "recessionary", and which will make the debt cost of any funding so high that there is barely any room for execution error, moments ago as had been extensively leaked previously, private Dell announced it would acquire tech giant EMC in a deal valued roughly $67 billion, while maintaining VMWare as a publicly-traded corporation. Good luck with raising the tens of billions in debt the deal will require: our best wish to Barclays, BofA, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, RBC who will all be underwriting the required debt financing to Dell.
Evercore ISI, the company which unlike the ISM, conducts business surveys that are not only credible, but actionable, just looked at the latest data, and had the following observation: "Evercore ISI trucking survey is down a big -1.3 to 51.0 versus its peak last year of 65.4. The tech survey slipped below 50.0. If they don't stop declining soon, we will become more worried about recession risk."
With the market's perceived risk of default across the energy space at record highs, it should be no surprise that willingness to lend (even for the greater-fool reach-for-yielders) is collapsing. As Bloomberg reports, oil services companies are finding alternative ways to raise cash and repay debt after falling crude prices has made it difficult for them to get funding from traditional sources. As one restructuring firm warned, "bond markets are closed for these companies, especially small ones, and banks may not be lending to them at this stage," with another ominoulsy warning, "getting new liquidity in this market could be a painful exercise. For many companies, financial restructuring seems inevitable."
"The [Chinese] slowdown was predictable, predicted, unavoidable," Lagarde was quoted as saying." Well, yes, it was... by everyone but the IMF. Here is the history of the IMF's Chinese GDP growth forecasts taken straight from its World Economic Outlook quarterly pieces. The graph needs no explanation.
Courtesy of Evercore ISI, which using its own GDP equivalent index - the Synthetic Growth Index (SGI) - we get a vastly different China GDP result from the official one, namely Chinese growth of -1.1% annually. Or rather, contraction.
- No End in Sight for Oil Glut (WSJ)
- Dozens of Clinton emails were classified from the start, U.S. rules suggest (Reuters)
- China August Manufacturing Activity Hits Lowest Level Since 2009 (WSJ)
- German Manufacturing Strengthens as Economy Shifts Up a Gear (BBG)
- Israel responds to rocket attack with protest and air strikes (FT)
- ASX carnage: 2015 fast becoming a year to forget (Canberra Times)
- Hong Kong Stocks Enter Bear Market After Falling From April Peak (BBG)
News That Matters...
Athletes in next year's Summer Olympics here will be swimming and boating in waters so contaminated with human feces that they risk becoming violently ill and unable to compete in the games. An AP analysis of water quality revealed dangerously high levels of viruses and bacteria from human sewage in Olympic and Paralympic venues — results that alarmed international experts and dismayed competitors training in Rio, some of whom have already fallen ill with fevers, vomiting and diarrhea.
In the middle of the biggest criminal scandal involving the Fed, but also an FT-owned expert network (an FT which until today was owned by Pearson), the expert network known as Medley Global Advisors just changed its owners, from the FT/Pearson to Japan's Nikkei, in a transaction advised by Rothschild for the buyer and Goldman, Evercore and JPM for the seller.
This charmed circle includes Google, Amazon, Baidu, Facebook, Saleforce.com, Netflix, Pandora, Tesla, LinkedIn, ServiceNow, Splunk, Workday, Ylep, Priceline, QLIK Technologies and Yandex. Taken altogether, their market cap clocked in at $1.3 trillion on Friday. That compares to just $21 billion of LTM net income for the entire index combined. The talking heads, of course, would urge not to be troubled. After all, what’s a 61X trailing PE among today’s leading tech growth companies?
- Greece faces last chance to stay in euro as cash runs out (Reuters)
- Tsipras Begins Brussels Campaign to Keep Greece Inside the Euro (BBG)
- Greek Crisis Shows How Germany’s Power Polarizes Europe (WSJ)
- Eurogroup Head Dijsselbloem Calls for ‘Credible’ Greece Package (BBG)
- Europe Not Playing ‘Domino Theory’ Leaves Markets Calm on Greece (BBG)
- China stocks fall again despite support measures (Reuters)
- Chinese Trading Suspensions Freeze $1.4 Trillion of Shares Amid Rout (BBG)
- Crude Creeps Higher After Downturn (WSJ)