China's economy grew 6.9% in the third quarter from a year ago, beating forecasts for 6.8% growth, but decelerating to its slowest pace since the global financial crisis. The results add to doubts the country can meet its year-end GDP target of about 7%, and raises pressure on Beijing to roll out more stimulus measures following a summer stock market plunge and devaluation of the yuan. More weakness in China: Other data released today showed that factory output rose 5.7% in September, missing forecasts of a 6% rise, while fixed-asset investment climbed 10.3%, below estimates of 10.8%.
Economy
Canada's drawn-out election campaign has come to an end as voters hit the polls today in fiercely-contested parliamentary elections. At stake are issues ranging from the economy and environment to immigration and foreign policy. While opinion polls suggest many people are still undecided, the frontrunner appears to be Liberal leader Justin Trudeau. Conservative PM Stephen Harper and NDP head Tom Mulcair are not far behind.
Meanwhile, Egyptians have begun a long-awaited parliamentary election, the first since the military-led ouster of Islamist President Mohammed Morsi in 2013. One of the major issues in the ballot is the economy, which is beset by massive poverty, power shortages, high unemployment and attacks by militants that have hurt the tourism industry. The elections are taking place over two rounds on October 18-19 and November 22-23. Switzerland also took to the polls yesterday, with results showing a parliamentary shift to the right.
The U.S. has approved conditional sanctions waivers for Iran, though it cautioned they wouldn't go into effect until Tehran completes its requirements under the nuclear accord reached in Vienna on July 14. "These waivers will not take effect until Implementation Day, after Iran has completed all necessary nuclear steps, as verified by the IAEA," Secretary of State John Kerry said in a statement. On Sunday, the EU also published legal acts that open the way for the bloc to lift sanctions on the country.
Separately, Iranian Oil Minister Bijan Namdar Zanganeh is urging OPEC member states to cut crude output to boost prices to a range of $70-$80 a barrel. "No one is happy" with prices at current levels, Zanganeh told reporters in Tehran. Iran will be able to boost oil exports by 500K barrels a day within one week following the removal of sanctions, and could raise exports by 1M bpd within six months after the curbs are lifted. Crude futures -1.1% to $47.18/bbl.
Stocks
More fallout from the emissions-rigging scandal: Former Volkswagen (OTCQX:VLKAY) chief executive Martin Winterkorn is stepping down as the head of Porsche Automobil (OTCPK:POAHY), the family-owned holding company that controls a majority stake in Volkswagen. Hans Dieter Pötsch, Porsche's finance chief and the chairman of Volkswagen's supervisory board, will succeed Winterkorn as CEO on Nov. 1. The news comes as the carmaker weighs whether to reduce its number of temporary workers and follows a recent announcement to cut $1.1B from its annual investment budget.
Police have also raided Volkswagen's main offices in France as part of an investigation into the automaker's cheating on diesel emissions tests. The move suggests VW's legal troubles are spreading across Europe as similar searches have already been carried out at the company's headquarters in Italy and Germany. On Friday, Volkswagen (OTCQX:VLKAY) reported its group sales fell 1.5% in September, although the larger impact from its scandal will likely be reflected in the sales volume of October.
Again!? General Motors has discovered another ignition switch problem that causes engines to shut off and disables power steering, power brakes and possibly the air bags. The automaker is now recalling about 3,300 big pickup trucks and SUVs mainly in North America. The issue was discovered by an employee who owned one of the defective trucks and reported it to higher-ups through GM's (NYSE:GM) new "Speak Up For Safety" program.
Ferrari's long-awaited initial public offering is finally at the starting line, with the stock likely to be priced Tuesday night and begin trading on the NYSE on Wednesday. Fiat Chrysler (NYSE:FCAU) is selling about 10% of Ferrari in the IPO. At the top of its projected range of $48-$52 a share, the luxury sports-car maker would have a stock-market valuation of $9.8B.
Ahead of a critical vote this week, leaders at the United Auto Workers union have launched a social-media blitz to help sell a new tentative labor deal to Fiat Chrysler (FCAU) workers. While offering a path to higher wages for new hires, many members still find the deal lacking and some even criticized union leaders for spending members' dues to hire an outside public-relations firm. Voting on the new contract starts Tuesday and concludes on Wednesday.
Deutsche Bank is splitting its investment bank into two units as part of a sweeping overhaul that will send several key executives packing. The move will see the separation of Deutsche's (NYSE:DB) Corporate Banking and Securities division into one group focused on corporate finance and investment banking and the other on sales and trading. Who's being shown the door? Colin Fan, the bank's co-head of investment banking, and Michele Faissola, head of the bank's asset management business. Deutsche is also abolishing its group executive committee, which is made up of 19 senior managers, and streamlining how its main units are represented on the management board. DB +3.4% premarket.
U.S. banks are going to new lengths to ward off big cash deposits, judging that the cash may be too costly to keep. For the first time, State Street (NYSE:STT) has begun charging some customers for large dollar deposits, and JPMorgan (NYSE:JPM) has already cut unwanted deposits by more than $150B this year. The actions are driven by profit-crunching low interest rates and new regulations adopted since the financial crisis, such as reserves of as much as 40% against certain corporate deposits and as much as 100% against some deposits from hedge funds.
Shareholders will get their say this week on two proposed health insurer mergers: Aetna's (NYSE:AET) $37B offer for Humana (NYSE:HUM), and Centene's (NYSE:CNC) $6.3B bid for Health Net (NYSE:HNT). Although consumer advocates have raised concerns about whether the combination will lead to less competition and higher prices, proxy advisors ISS and Glass Lewis have given both deals a thumbs-up. Aetna and Humana investors are scheduled to vote this afternoon and Centene and Health Net shareholders will cast their ballots on Friday.
United Continental is still silent on the medical condition of its new CEO Oscar Munoz, who was admitted to the hospital on Thursday after suffering a heart attack, but investors are questioning who will lead the company in his absence. Munoz's health problems come barely a month after he took on the job of improving the profitability and reputation of United (NYSE:UAL), the No. 2 U.S. carrier by capacity.
U.S. ATM manufacturer Diebold is in talks to buy Germany's Wincor Nixdorf (OTCPK:WNXDF) for €52.50 per share and company stock, in a deal that would value the latter at more than €1.7B. A takeover would enable both companies to move away from ATMs, for which prices are declining, and increase their focus on digital-payment services. It would also boost Diebold's (NYSE:DBD) European presence, having previously concentrated on North America. DBD +7.3% premarket.
Slowing growth and rising costs are driving a historic wave of consolidation in the semiconductor industry as firms look to streamline their organizations and product lines. "It's buy or be sold," summed up Alex Lidow, chief executive of Efficient Power Conversion Corp. Chip companies have so far announced $100.6B in mergers and acquisitions this year, exceeding the $37.7B in 2014, and totals could go even higher. Bloomberg reported last week that four chip companies - Analog Devices (NASDAQ:ADI), Maxim Integrated Products (NASDAQ:MXIM), SanDisk (NASDAQ:SNDK), and Fairchild Semiconductor (NASDAQ:FCS) - were in talks concerning different deal options.
Yahoo's chief development officer, Jacqueline Reses, is leaving the company to join mobile payments company Square, according to Bloomberg. The new arrival from Yahoo (NASDAQ:YHOO) comes shortly after Jack Dorsey was named permanent chief executive officer of Twitter (NYSE:TWTR), a role he also holds at Square. Adding Reses' leadership could help lighten Dorsey's load amid concerns about his dual responsibilities.
Alibaba is lobbying hard to stay off the U.S. Trade Representative's blacklist this year after coming under renewed pressure over suspected counterfeits sold on its shopping platforms. While two of Alibaba's (NYSE:BABA) sites were on the USTR's "Notorious Markets" list from 2008, Alibaba.com was removed in 2011 and Taobao was taken off in 2012. Re-inclusion on the annual list would be a blow to the company's efforts to shed perceptions that its anti-piracy policies are inadequate and could hurt its beleaguered stock price (-31% YTD).
Today's Markets
Companies reporting earnings today
In Asia, Japan -0.9% to 18131. Hong Kong flat at 23076. China -0.1% to 3387. India +0.6% to 27365.
In Europe, at midday, London -0.1%. Paris +0.4%. Frankfurt +0.9%.
Futures at 6:20, Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude -1.1% to $47.18. Gold -1.1% to $1171.80.
Ten-year Treasury Yield +2 bps to 2.04%
Today's Economic CalendarIn Europe, at midday, London -0.1%. Paris +0.4%. Frankfurt +0.9%.
Futures at 6:20, Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude -1.1% to $47.18. Gold -1.1% to $1171.80.
Ten-year Treasury Yield +2 bps to 2.04%
Companies reporting earnings today
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