Rise in fuel prices, US inflation surges Support Planned Fed
US Department of Labor has announced that the country's inflation rate rose in October as expected earlier. US inflation rose from deflation that occurred in the previous month.
US inflation rose 0.2 percent in October after deflation of 0.2 percent in September. The increase in inflation driven by rising fuel prices which rose 0.3 percent after the previous month dropped or contracted at -4.7 percent.
Then food prices also rose, but only thin at 0.1 percent in October as previously climbed 0.4 percent in September.
If it does not include the price of food and fuel, the core consumer price index is still up 0.2 percent, the increase in core prices is due to the rising cost of renting and selling homes, the cost of medical care and personal care, airline fares, recreation, alcohol, and tobacco.
On the other hand, the US Labor Department also reported prices for clothing, new vehicles, household furnishings and operations, and used cars and trucks all downhill.
Compared with the same month last year, the main consumer price index rose 0.2 percent in October. In addition the price of core inflation rose 1.9 percent on an annual basis in October, which is unchanged from the previous month.
The inflation rate released is different from the producer price level report Labor Department reported Friday that the producer price index for final demand fell 0.4 percent in October after previous contraction of 0.5 percent in September.
With the rise in inflation this country, gives beliefs directed toward the Fed not to delay further raise interest rates that had been planned long.
The Fed plan this December benchmark interest rate will be raised after in a low position for a long time since the financial crisis.
Here Are the Most Important Things to Look for in the Fed Minutes
Some of the world’s top hedge fund managers scaled back their U.S. stock investments last quarter as markets tumbled.
The value of Stan Druckenmiller’s disclosed U.S.-listed equity holdings dropped 41 percent to $868 million, according to a filing from the billionaire’s family office. The listed holdings at Louis Bacon’s Moore Capital Management fell 39 percent to $1.65 billion, while at David Tepper’s Appaloosa Management, they dropped 30 percent to $2.82 billion.
The money managers retreated from U.S. stocks after the market has more than tripled from its 2009 low. Druckenmiller, who produced average annual returns of 30 percent from 1986 through 2010 at his Duquesne Capital Management, told an investor conference earlier this month that his outlook on equities could turn negative. Tepper, Appaloosa’s billionaire founder, said in September that he’s not as optimistic on the stock market as he could be because expectations for corporate earnings were high.
“I could see myself getting bearish, and I can’t see myself getting bullish,” Druckenmiller, a longtime hedge fund manager who worked for George Soros for more than a decade, said on Nov. 3 at the New York Times DealBook conference.
The Standard & Poor’s 500 Index is little changed in 2015 after slumping 6.9 percent during the third quarter as investors reacted to signs of a slowdown in China.
Hedge fund managers had $1.5 trillion in U.S. stocks at the end of the third quarter, down from $1.7 trillion on June 30, according data compiled by Bloomberg based on filings. The decrease is about $80 billion more than can be accounted for by the fall in the S&P index in the period.
Earnings Multiples
Even as Druckenmiller’s Duquesne Family Office sold out of 18 equity positions in the third quarter, it divested its $324 million stake in an exchange-traded fund that tracks gold prices, according to the filing. It also reported seven new positions. Moore divested 187 investments, such as Chinese search engine Baidu Inc., while adding 81 new stakes. Appaloosa got out of seven stocks, including Alibaba Group Holding Ltd., and reported five new holdings.
“I’m not as bullish as I could be because I have problems with earnings growth, problems with multiples,” Tepper told CNBC in the September interview, referring to price-to-earnings ratios. “I can’t really call myself a bull.”
Other hedge fund managers who reduced their U.S. equity positions in the third quarter include Zach Schreiber, who had previously worked for Druckenmiller. His PointState Capital’s U.S. stock holdings fell in value by more than half to $3.2 billion, according to filings. The hedge fund sold out of 69 equity positions including energy companies TransCanada Corp. and Whiting Petroleum Corp., while adding 18 new stakes, according to a filing.
At David Einhorn’s Greenlight Capital, whose main hedge fund has slumped 16 percent this year through October, equity holdings dropped by a quarter to $5.9 billion. The firm sold out of seven investments and added six, a filing showed.
John Burbank, the Passport Capital founder, told clients last month that his hedge fund has “greatly” reduced its market exposure worldwide as it prepares for a China-led global downturn. The firm’s U.S. equity holdings fell by almost a fifth to $2.5 billion, according to a filing. Passport got out of 112 investments while adding 44.
(An earlier version of this story corrected the year of the stock market low.)
Dollar Holds Near Highs as Fed Minutes Seen Backing 2015 Liftoff
The dollar held near a seven-month high against the euro ahead of minutes from the Federal Reserve’s October gathering, when policy makers signaled the potential for an interest-rate increase this year.
The greenback climbed Tuesday after data showed U.S. inflation and factory output increased last month, strengthening the case for liftoff as soon as the Fed’s next meeting on Dec. 15-16. It’s at its strongest level in 12 years as Chair Janet Yellen and other Federal Open Market Committee members have made numerous pronouncements this month that it may be appropriate to end near-zero interest rates at that time. Futures traders put the odds of action by year-end at 66 percent.
“The onus is on the minutes to highlight some sort of discussion about whether October was possible in order to move the pricing for a December hike further from here,” said Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd. in Auckland. “The tone is still positive overall for the U.S. dollar.”
The dollar was little changed at $1.0644 per euro at 9:33 a.m. in Tokyo, after reaching $1.0631 on Tuesday, the strongest level since April 16. The U.S. currency bought 123.40 yen from 123.45 in New York, following a two-day, 0.7 percent advance.
The Dollar Spot Index, which tracks the value of the greenback against major currencies, rose 0.2 percent to 99.631 on Tuesday, the highest closing level since March 13.
A trade-weighted gauge of the U.S. currency reached 121.4995 on Nov. 13, the most since April 2003, according to data compiled by Bloomberg.
The odds of December liftoff have risen from a 50 percent probability at the end of October, according to futures data compiled by Bloomberg. The calculation is based on the assumption that the effective fed funds rate will average 0.375 percent after the first increase.
Druckenmiller Among Top Managers Who Cut Back U.S. Stocks
Some of the world’s top hedge fund managers scaled back their U.S. stock investments last quarter as markets tumbled.
The value of Stan Druckenmiller’s disclosed U.S.-listed equity holdings dropped 41 percent to $868 million, according to a filing from the billionaire’s family office. The listed holdings at Louis Bacon’s Moore Capital Management fell 39 percent to $1.65 billion, while at David Tepper’s Appaloosa Management, they dropped 30 percent to $2.82 billion.
The money managers retreated from U.S. stocks after the market has more than tripled from its 2009 low. Druckenmiller, who produced average annual returns of 30 percent from 1986 through 2010 at his Duquesne Capital Management, told an investor conference earlier this month that his outlook on equities could turn negative.
Tepper, Appaloosa’s billionaire founder, said in September that he’s not as optimistic on the stock market as he could be because expectations for corporate earnings were high.
“I could see myself getting bearish, and I can’t see myself getting bullish,” Druckenmiller, a longtime hedge fund manager who worked for George Soros for more than a decade, said on Nov. 3 at the New York Times DealBook conference.
The Standard & Poor’s 500 Index is little changed in 2015 after slumping 6.9 percent during the third quarter as investors reacted to signs of a slowdown in China.
Hedge fund managers had $1.5 trillion in U.S. stocks at the end of the third quarter, down from $1.7 trillion on June 30, according data compiled by Bloomberg based on filings. The decrease is about $80 billion more than can be accounted for by the fall in the S&P index in the period.
Earnings Multiples
Even as Druckenmiller’s Duquesne Family Office sold out of 18 equity positions in the third quarter, it divested its $324 million stake in an exchange-traded fund that tracks gold prices, according to the filing. It also reported seven new positions.
Moore divested 187 investments, such as Chinese search engine Baidu Inc., while adding 81 new stakes. Appaloosa got out of seven stocks, including Alibaba Group Holding Ltd., and reported five new holdings.
“I’m not as bullish as I could be because I have problems with earnings growth, problems with multiples,” Tepper told CNBC in the September interview, referring to price-to-earnings ratios. “I can’t really call myself a bull.”
Other hedge fund managers who reduced their U.S. equity positions in the third quarter include Zach Schreiber, who had previously worked for Druckenmiller. His PointState Capital’s U.S. stock holdings fell in value by more than half to $3.2 billion, according to filings.
The hedge fund sold out of 69 equity positions including energy companies TransCanada Corp. and Whiting Petroleum Corp., while adding 18 new stakes, according to a filing.
At David Einhorn’s Greenlight Capital, whose main hedge fund has slumped 16 percent this year through October, equity holdings dropped by a quarter to $5.9 billion. The firm sold out of seven investments and added six, a filing showed.
John Burbank, the Passport Capital founder, told clients last month that his hedge fund has “greatly” reduced its market exposure worldwide as it prepares for a China-led global downturn. The firm’s U.S. equity holdings fell by almost a fifth to $2.5 billion, according to a filing. Passport got out of 112 investments while adding 44.
Everything Except Headline Inflation Is Saying the Same Thing About Inflation
There are dozens upon dozens of ways to measure inflation, which at times means that monetary policymakers might be receiving conflicting signals on how much upward or downward pressure on prices there really is.
But after October's Consumer Price Index report, most gauges of prices are all pointing toward the same thing: inflationary pressures that are far more consistent with an economy that's on the verge of a tightening cycle than one slated to enter a deflationary spiral.
Is simple
The carnage in the commodities complex is putting a large amount of downward pressure on the headline inflation rate. Other measures of inflation that remove outliers or food and energy prices are considerably higher, thanks to the pace of price increases in medical care services and shelter
While the collapse in oil prices is still an immense weight on the annual inflation rate, there are also signs of firming headline inflation. Tom Porcelli, chief U.S. economist at RBC Capital Markets, observed that inflation gained some serious breadth in October
"Critically, the internals were very strong, with our diffusion index of 15 categories printing a net +9 and the highest in 18 months," Porcelli noted.
The Federal Reserve's preferred gauge of inflationary pressures is the Personal Consumption Expenditures index. The core version of this metric, running at an annual rate of 1.3 percent, should converge with the core CPI "very quickly" as increases to subsidized health-care premiums kick in next year, according to Porcelli. Similarly, Goldman Sachs's Alec Phillips believes that medical inflation is poised to pick up in 2016 as policy-induced drags dissipate.
"There is not a lot here to be very happy about if you want the Fed to stay on hold," wrote Michael Ashton, managing principal at Enduring Investments. "The only argument that is stronger now is that they are even further behind the curve."
US rate hike expectations Pressing Back Gold Prices
Gold prices retreat, fell more than 1 percent to its lowest price in nearly six years at the close of Wednesday's trading this morning (18/11), again pressured by expectations that the US will raise interest rates in December, and the strengthening of the dollar after the action terror Friday in Paris.
LLG spot gold prices fell 1.1 percent on 1,070.18 dollars per troy ounce, after earlier falling to 1,065.18 dollars per troy ounce, the lowest since February 2010. While the price of US gold futures for December delivery closed down 1.4 percent at 1,068.60 dollars per troy ounce.
Gold prices have fallen for 14 of the last 15 sessions under pressure from expectations that the US Federal Reserve will raise interest rates for the first time in almost a decade.
Data economic indicators showed that US consumer prices rose in October after two months of declines, it is included in the expectations of US interest rate hikes.
Stocks in major markets rallied, while the dollar and Treasury yields rose stabilizing inflation expectations of US interest rate hikes will come.
Meanwhile, the price of silver fell 0.1 percent to $ 14.08, its lowest since late August. The spot price of platinum down 1.7 percent at $ 845 per ounce, the lowest since December 2008, after falling in 16 of 18 sessions.
While palladium dropped 1.5 percent to $ 540 per ounce. Analyst Vibiz Research Center estimates that the gold price will potentially continue weakening in sentiment is getting stronger expectations of rise in US interest rates make the dollar even rose.
It is estimated that the price of gold will try to penetrate the support level of 1068-1066, and if the price rebounded turn will try to penetrate the resistance level of 1072 to 1074.
Post a terrorist attack in France last weekend that sparked geopolitical concerns in the European region did not manage to lift safe-haven assets and pushed the dollar as usual.
Because the disaster is in the location of the release of a safe haven currency Euro also impact on foreign exchange trading pound.
Hence the dollar increasingly uphill continue trading the weekend and beat up the movement of other major currencies. Enter the second day of the week US dollar exchange rate again showed his prowess by the strong fundamentals of the Fed's plan to raise the rate is.
The positive sentiment that encourages the exchange rate today come from expectations of rising US inflation rate released this evening.
The increase in inflation largest economy is further strengthening the reason the Fed to raise interest rates later this year, namely in December.
Tersebutlah of data on the US dollar exchange rate continued to climb against other major currencies opening Asian trading session this morning.
The US Bureau of Statistics will tonight announce the country's inflation rate in October are expected to jump to 0.2% from the position deflation previous month at -0.2% contraction position.
Besides this night rate will be reinforced by the expectation of rising industrial production levels Anerika the expected rise of 0.1% from the previous month's contraction of -0.2 percent.
Monitor the strength of the US dollar exchange rate against other currencies on the US dollar index today (02:00:40 GMT) rolling in the range of 99.56, up from 99.38 opening at 0000 GMT.
Technically, Analyst Vibiz Resarch Center see the movement of the US dollar index is based on the high price at 99.51 and the low at 98.85 earlier today, the index is expected to have a resistance in the range of 99.63 and 99.90, while immediate support in the range of 98.88 and 99.97 ,
Although new car sales business in Europe increased for 26 consecutive months last October but the growth of new car sales in the European market in the most in the last five months.
Developments over the corresponding report on the European Automobile Manufacturers Association (ACEA) today reported a decrease occurred after the crisis experienced by the region's largest producer, namely Volkswagen AG in addition to weak sales in the five major markets.
ACEA record car sales in the European Union rose 2.9% in October to 1.1 million vehicles were in September increased by 9.8%, which contributed to poor sales of the largest manufacturers such as Volkswagen, PSA Peugeot Citroën, Renault SA and General Motors Co. Unit Opel / Vauxhall. But also reported an increase in producer Fiat Cars NV Chrysler and Ford Motor Co. 's.
Overall, sales of new cars in the European Union rose 8.2% to 11.5 million in the first 10 months of this year.
Sales of new cars in five major countries such as Germany, Britain, France, Italy and Spain-fell, but sales in the core region of Western Europe grew 2.5% to 1.06 million vehicles in October.
The association expressed car sales in Italy, Spain, Germany and France continue to grow, albeit less powerful than last month, while the UK car market declined in October.
When compared with the growth of the past 5 months, the growth rate in October was the slowest since May, when sales of new cars in the European Union when it rose 1.3%.
Buying Marriot Starwood, Create the World's Largest Hotel Chain
Marriott International Inc. to buy shares of Starwood Hotels & Resorts Worldwide Inc. for 12.2 billion US dollars (more than 167 trillion) to create the largest hotel chain in the world to beat top hotel brands such as Sheraton, Ritz Carlton and the Autograph Collection.
The combination of this network will have more than 5,500 hotels with 1.1 million rooms available throughout the world, and will give Marriott a stronger market penetration in Europe, Latin America and Asia and strengthen the ability of competence against startups like Airbnb shaped apartment sharing.
Market analysts have warned that Airbnb will be pushed into the hotel business with more and more agreements are built with many homeowners.
Currently about three-quarters of rooms Marriott is in the United States. While half of the rooms Starwood located outside North America, but it gives almost two poertiga of revenue in 2014.
"Our success is driven by our ability to anticipate market changes and face the change directly," said Arne Sorenson, Marriott's CEO, who will lead the combined company is later, to the media, told Reuters.
This is one of the biggest deal since Blackstone Group LP bought Hilton Worldwide Holdings Inc. for 26 billion US in 2007. It is estimated that this will affect the global hospitality industry consolidation.
Starwood, owner of hotel brands St. Regis and Sheraton had indicated in April that the partnership with Marriott is a strategic move.
Starwood also create opportunities to potential bidders such as InterContinental Hotel Group and Wyndham Worldwide in July. Prior to last Friday's close, Starwood shares have fallen about 14 percent since 29 April. Along with this, Starwood also recognizes exploring strategic alternatives.
Starwood hopes a deal with Marriott could occur in mid-2016. Analysis Research Vibiz see a map of the world hotel industry that will probably change.
The strength of a giant network may be choke group hotel chain were half-hearted because generally large business group more capable to dictate the market.
Each group, therefore, likely to be trying to strengthen the positioning of his or her comparative advantage, in the form characteristic of each individual hotel or a hotel chain. Meanwhile, the expansion of the market in startups such as Airbnb would be interesting to monitor.
Will appear more sophisticated kind of startups, as is generally the case in the IT business world, and then grind a conventional hotel group market Time will tell.
Export Destinations Largest Trade Partner Descending Except China
The Indonesia Central Statistics Agency (BPS). reported that Indonesia's trade balance in October 2015 again recorded a surplus of $ 1.01 billion, or US $ 0.95 billion.
For information only, the amount of trade surplus of over US $ 1 billion trade surplus for the month is the fifth month after starting in June.
However, Indonesia's exports reached $ 12.08 billion in October, down 20.98% from a year earlier and down 4.0% from the previous month.
The decline in exports occurred in almost all the leading commodity and to almost all countries except China's major trading partners.
The cumulative value of Indonesia's exports from January to October 2015 to reach US $ 127.22 billion, down 14.04 percent over the same period in 2014, as well as non-oil exports reached US $ 111.46 billion, down 8.77 percent.
Until now, the United States (US) is still the largest destination Indonesian non-oil commodity exports, ie within the first 10 months reached US $ 12.82 billion, or 11.51 percent of total non-oil exports.
Nevertheless, in nominal terms was a decline in exports to the land of Uncle Sam by 2.87 percent in the 10 months as well as in October.
While the share of non-oil exports is China's second largest, with exports of US $ 11.006 billion, or 9.88 percent. Although in October, Indonesia's exports to China increased, but during January-October 2015 fell 20.10 percent.
Japan's third largest at US $ 10.91 billion, or 9.79 percent. Meanwhile Indonesia's non-oil exports to Japan was down 9.55 percent compared to January-October 2014 acquisition as well as last October fell 9.43 percent.
It can be seen that overall, Indonesian exports to countries recorded a decline in the main objective.
The slowdown was caused by the global economic downturn that hit countries of Indonesia mainstay export destination so that the number of requests from these countries declined significantly on domestic demand.
For much of the past few years, central bankers have lamented how they were left on their own to prop up economic growth.
It appears the whining is paying off. Governments are starting to loosen their grip on public expenditures, providing a fiscal boost to complement the unprecedented monetary-policy measures.
The budget deal President Barack Obama signed into law this month paves the way for stepped-up spending on domestic programs and the military. Japanese Prime Minister Shinzo Abe has pledged to cut corporate taxes next year, and economists anticipate he will put together a supplementary budget package soon.
Europe looks set to increase outlays to cope with a surge in immigration and improve infrastructure. French President Francois Hollande said he will step up spending on security in the wake of the terrorist attacks in Paris.
While the economic impact probably will be limited, “every penny from the government counts” when growth is so slow, said Joachim Fels, global economic adviser for Pacific Investment Management Co. By supporting expansion, the shift also should help equities and other riskier assets “to continue to do reasonably well.”
Balanced-Budget Orthodoxy
China and Canada also are turning to fiscal policy to help promote growth. Economists expect Beijing will increase investment on public transport and other construction projects. Ottawa, under newly elected Prime Minister Justin Trudeau, is breaking from previous orthodoxy on balancing the budget.
The moves stand in contrast to the experience of the past four years, when governments reined in spending after ramping up budget deficits to combat the Great Recession. That led to complaints by then Federal Reserve Chairman Ben S. Bernanke about fiscal headwinds holding back the very growth the U.S. central bank was trying to promote.
Both Bernanke and European Central Bank President Mario Draghi have said recently -- using the same phrase -- that monetary policy shouldn’t be “the only game in town” to aid the economy.
Help is on the way. The budget agreement in the U.S. raises discretionary-spending caps on everything from food aid to military equipment by $50 billion in the current fiscal year, ending Sept. 30, and by $30 billion the year after.
The new budget, combined with increased outlays by state and local governments, will lift gross domestic product by 0.3 percentage point in 2016, according to Alec Phillips, an economist in Washington with Goldman Sachs Group Inc. The New York-based investment bank sees GDP expanding 2.3 percent in 2016, in line with this year’s rise.
Next year will be the first since 2010 that fiscal policy adds to growth, Phillips said. As recently as 2013, a budget squeeze clipped more than 2 percent off GDP after lawmakers capped federal spending and allowed a temporary payroll-tax cut to expire.
The shift comes as the Fed is poised to raise interest rates for the first time since 2006 after holding them near zero for seven years. “They’re handing a bit over to fiscal policy,” said Fels, whose Newport Beach, California-based firm manages $1.47 trillion.
That "bolsters the case for the Fed to hike in December," Ernie Tedeschi, an economist in Washington for Evercore ISI, said in a report to clients.
The ECB meanwhile, remains in full-blown stimulus mode, buying up assets and holding its deposit rate below zero. That strategy has driven down bond yields, saving money in interest costs for the region’s governments and allowing them to pursue easier budget stances than otherwise, according to Mark Wall, chief euro-area economist in London for Deutsche Bank AG.
Infrastructure Investment
He said fiscal stimulus could rise in 2016 as a European-wide fund to finance infrastructure investment kicks into higher gear and Germany and other countries spend more to cope with the influx of immigrants. While the terrorist attacks in Paris probably will spur efforts to stem the inflow, “the sheer number of refugees already in Europe will weigh on public finances and ease the fiscal stance” next year, he said.
Noting that lower oil prices helped boost growth this year, Wall said such outlays “could play the same role in 2016, keeping the economic expansion going at about 1.5 percent.”
That would be welcome news at the ECB, which is considering more monetary stimulus as it struggles to accelerate expansion and inflation throughout the region.
“Fiscal policies should support the economic recovery while remaining in compliance” with European Union rules, Draghi said at an Oct. 22 press briefing. “Monetary policy shouldn’t be the only game in town.”
Supplemental Budget
In Japan, the Abe government is expected to assemble a supplementary budget package of about 4 trillion yen ($32.5 billion) soon to help promote growth, said Yuichi Kodama, an economist at Meiji Yasuda Life Insurance Co. in Tokyo.
“It’s good for Japan’s economy, but it may not have a large impact,” he said.
Japanese GDP declined by an annualized 0.8 percent in the three months ended Sept. 30, following a revised 0.7 percent drop in the second quarter, meeting the common definition of a recession.
The Abe administration is wary about leaning too hard on monetary policy to spur expansion because further weakness in the yen could hurt households’ purchasing power and the smaller companies that rely on domestic demand, Kodama said.
Abe also has pledged to back a bigger-than-anticipated reduction in corporate taxes next year as he urges businesses to step up domestic investment and boost wages. Current plans call for a 0.78 percentage point cut in the tax rate to 31.33 percent in the fiscal year starting next April.
