Market News

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Crimea, it's the most serious crisis in relations between the West and Russia since the Cold War. And until it's over, risk aversion should remain the play of the day, analysts say.. Analysts said that with the referendum out of the way, focus is on what shape Western sanctions against Russia take and how Moscow reacts.

Crimea vote keeps risk aversion in play

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Meanwhile, in China..

Nomura said the number of ghost towns has spread beyond the well-known disaster stories of Ordos and Wenzhou to at least eight other sites. Three developers have abandoned half-built projects in the 2.5m-strong city of Yingkou, on the Liaodong peninsular. They have fled the area, a pattern replicated in Jizhou and Tongchuan.

“As far as we know, this is the largest property developer in recent years at risk of bankruptcy,” said Zhiwei Zhang, from Nomura. “We believe that a sharp property market correction could lead to a systemic crisis in China, and is the biggest risk China faces in 2014. The risk is particularly high in third and fourth-tier cities, which accounted for 67pc of housing under construction in 2013,” he said.

Land sales and property taxes provided 39pc of the Chinese government’s total tax revenue last year, higher than in Ireland when such “fair-weather” taxes during the boom masked the rot in public finances.

Floor space per capita has reached 30 square metres, surpassing the level in Japan in 1988 just before the Tokyo market collapsed. A new study by the International Monetary Fund said the ratio of residential investment to GDP reached 9.5pc in 2012, higher than the peaks in Japan and Korea, and much higher than in the US during the subprime bubble. It also warned that China is running a budget deficit of 10pc of GDP, once the land sales are stripped out, and has “considerably less” fiscal leeway than assumed.

Looming property default in China raises fears of broader crisis - Telegraph

Hardly reassuring..

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About time..

New York's top law enforcer has opened a broad investigation into whether U.S. stock exchanges and alternative venues provide high-frequency traders with improper advantages, a person with direct knowledge of the matter said... "This new breed of predatory behavior gives a small segment of the industry an enormous advantage over all other competitors and allows them to use new technologies to reap huge profits based on unfair advantages," according to a draft of Schneiderman's speech to be delivered today at New York Law School.

High-Speed Trading Said to Face N.Y. Probe Into Fairness - Yahoo Finance

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According to a new Business Roundtable survey of CEOs, while 72% of these leaders see an increase in sales in the next six months, only 37% expect to boost U.S. employment. The Daily Ticker spoke with Derek Thompson, a senior editor at The Atlantic, to find out why.

"Half the earnings in the S&P 500 come from overseas," says Thompson. "These are globalized companies ... so hiring where the sales are means not hiring in the U.S. Sales growth is in these emerging countries in Asia, in Latin America, even in places like Turkey."

CEOs are spending more this year but not on new workers. Why not? | Daily Ticker - Yahoo Finance

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In a case which offers a microcosm of the cracks emerging in China’s shadow banking system, Zhejiang Xingrun Real Estate, the provincial developer, had been offering usurious rates of interest to individuals after being shut out by conventional banks... Here’s J-Cap’s Anne Stevenson-Yang acting as the voice of many:

In solar and coal, analysts would be hard-pressed to find a single profitable company for nearly two years before defaults began to be threatened. Property is moving into the same situation as the solar and coal industries, despite the glorious company reports. High sales numbers obscure the fact that a large but unknown proportion of what are reported as sales actually represents loan transactions, as Chinese institutions take tranches of housing units as collateral for debt. Maturities in property trusts came and went in 2013 Q4, but the next, much higher peak is in the second quarter of 2015, with about RMB 80 bln coming due in that quarter.

The house that China built | FT Alphaville

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Triangles are a common chart pattern. Often viewed as a continuation pattern, the breakout direction ultimately determines if the prior trend is continuing or reversing. These four stocks have all experienced strong trends recently, so the breakout direction will help determine if that trend continues or reverses.

Chart Advisor | Investopedia

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"In recent weeks, a trip to the region and further research into China’s shadow banking system have convinced us that China is approaching its “Minsky Moment,” (Display 1) which increases the chances of a disorderly unwind of China’s excesses. The efficiency with which credit generates economic activity is already deteriorating, as more investments are made in non-productive projects and more debt is being used to repay old debts."

Has China's Minsky Moment Has Arrived - Business Insider

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The SPDR S&P 500 (ARCA:SPY) ETF rose 1.67% this week as of Thursday’s close. After moving off of its highs, the index rebounded towards its R1 resistance at 191.06 in a choppy week. Traders should watch for a move to these levels on the upside or a move down to the 50-day moving average at 183.28 on the downside. Looking at technical indicators, the RSI appears neutral at 59.45, but the MACD recently experienced a bearish crossover that suggests a downtrend.

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Albert Edwards, Societe Generale's uber-bearish strategist, has once again taken aim at economists bullish on the U.S. economy, highlighting a contraction in corporate profits that could leave the country exposed to external shocks and an "inevitable" recession. Edwards said economists used "dodgy" metrics to gauge profit and pointed to the MSCI Operating Profits Indicator - as the one measure that investors should watch.

Declining US profits signal inevitable recession: SocGen Bear

"Emerging market assets have switched from 'priced for perfection' to value or even deep value," Societe Generale said in a note, advising investors start to add exposure, particularly in emerging Asia.

Has the emerging market buying moment arrived?

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On Wednesday, I noted that the recent decline in the so-called “momentum” stocks--particularly in the S&P 500 Biotechnology, Internet Retailing, and Internet Software & Services industries--has raised fears that this might signal a market top. I noted that the S&P 500 remains near record territory despite the weakness in these stocks and that investors may simply be rotating into stocks with lower valuation multiples.

Rotating Into Systems Software - Business Insider

Once this year's harsh weather has faded, the U.S. economy could be poised for a breakout year — its strongest annual growth in nearly a decade.

Why economists say 2014 could prove breakout year - Yahoo Finance