Global PMI strength fails to lift markets as taper timescale shrinks
Good PMI numbers from Asia and the UK have failed to lift markets higher as good economic news continues to be overshadowed by its implication on tapering. They follow yesterday’s huge October Chicago PMI number which stunned many analysts, surging to 65.9 from last months’ 55.7 reading, and has some considering the possibility of a shock December taper.
While December remains an outside bet, any shortening of the time scale seems a big step having barely got the debt debacle out of our rear view mirrors. At what point can we say with complete confidence that any knock on effects from the shutdown have passed? We should at least get an idea of how much of an anomaly the PMI number might be with October ISM number due later today.
RBS has confirmed that it will fall short of a much debated good bank/bad bank model, and instead ring fence around 38 billion of toxic assets internally with a view to sell off within 3 years . The move to isolate the bad loans will be of no surprise to investors, but it seems many feel the pace of the sale effectively advertises a discounted price to any potential bidders, and might not represent the best value to shareholders. However, the exercise clearly concentrates on drawing a line under RBS’s recent past, increasing confidence and transparency to create the right environment for a government sale.
Renault stock has been pegged back by a release from its Asian partner Nissan overnight. Nissan has slashed annual profit forecasts by 20% to 355 billion yen, with a Chinese slowdown and a number of recalls to blame.
Vodafone has emerged as a potential takeover target for AT&T, as the US telecoms giant tries to push its way into the European market. The merger would create a Telecoms beast, a $250 billion firm with a truly global presence, but any deal would not got through until 2014 allowing the completion of Vodafone’s sale of its $130 billion Verizon stake.
Aircraft parts firm Meggitt has lowered full year revenue guidance after sales slowed in the last 4 months. The firm has also set aside £20 million for a raw material supply issue with a product in supply since 2012.
Direct line moved higher this morning after reporting a 6% hike in operating profits for Q3. The firm noted that net insurance claims were down 7.2% to £547.7 million, and that early indications are that claims from the severe storms that bulldozed through the southern counties on Monday should fall within Q4 expectations for major weather events.
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