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  • 8/13/2019 TPL November 13

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    ABRAHAM GULKOWITZ

    [email protected]

    2013 issue 2November 26, 2013

    MeagerGrowthbuttheMarketRoarsAn interim deal on Irans nuclear program pushed oil prices lower and sent global equities higher as investors risk appetite rose on an eaof some Middle East tensions. As we close in to year-end and the start of a new year, one finds little evidence of serious inflationary concIndeed, the opposite is feared. Major economies face debilitating deflation pressures. In Europe, for example, the latest annual inflastatistics fell in twenty-three Member States, remained stable in one and rose in only four. The HSBC/Markit Flash China PMI came in atin November, marking a two-month low and missing expectations. The survey still indicated that the Chinese economy is expanding but iraised fears that growth may be tailing off in the fourth quarter. China will be lucky if it manages to hit its official target of 7.5% growth in 20far cry from the double-digit rates that the country had come to expect in the 2000s. Growth in India (around 5%), Brazil and Russia (aro2.5%) is barely half what it was at the height of the boom. In Europe, the Markit Flash Eurozone PMI fell from 51.9 to 51.5, the lowest reafor three months. The French index was particularly weak the PMI was at its lowest level since June. Germany continued to improve burest of the (cont. )

    US oil outputpasses imports for first t ime since 1995Oil production in the United States surpassed its oil imports for the first time in nearly

    two decades in October, the government said Helped mainly by production from

    newly-tapped shale-based reserves, domestic output hit 7.7 million barrels a day last

    month, a 24-year high. Oil imports, long seen as a strategic and economic

    vulnerability for America, sank well below that figure to a 17-year low, according to

    the Energy Information Agency.

    Is This a Bubble?As stocks hit new records and smallinvestors finally return to the

    market, some analysts are gettingworried.

    Junk Glistens Under Bernankecare

    as Worst Stocks Win

    Some investors say prices for risky assets

    have climbed so high its possible to look

    ahead and see an ugly end, argued

    Laurence Fink, ceo of BlackRock Inc

    EUBANKMAYMOVETONEGATIVEDEPOSITRATE...Gold hits four-year lowTaper tantrum and weak economic data weigh

    Business activity across the euro zone and at Chin

    manufacturers have slowed, surveys showed

    The yen depreciated to a six-month low versus the dollar and a four-

    year low against the euro as the increased risk appetite in the wake of

    Irans nuclear deal damped the demand for the safe-haven currency.

    Japan's exports have seen the

    biggest annual rise for three yExports rose 18.6% to 6.1 trilli

    ($61bn; 38bn) in the year to O

    largely thanks to more car shipits ministry of finance said. A

    yen and an improving global ec

    has seen oversees demand pick u

    despite this and Prime Minister

    Abe's looser monetary policies, J

    economy remains fragile.

    Iran Deal Supports Markets Rally for now

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    The PunchLine.

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    November 26, 2013

    Go Figure More Intl Considerations

    Not enough growth risks deflation

    If disinflation is a healthy response to falling oil and commodity

    prices - that may be good. Consumers and growth will benefit

    But if it is a result of low economic activity, that may become a

    problemU.S. producer prices fell for a second straight month in October

    Lower wages forced on Spanishworkers are a tough sell, but could help

    shrink skyhigh unemployment. Theburden of adjustment is likely to fall on

    the newly employed. Yet tackling the

    countrys problems requires morereforms than brutal pay cuts.

    Adding to the fears of an Eurozonedeflation, Spains producer price index

    fell 0.2% (y/y

    The rich world, and especially the euro zone,

    risks harmfully low inflationThe near-stagnation of the Eurozone economy in the third

    quarter raises concerns about deflation in the region

    Portugal's producer prices decreased for the third

    consecutive month in October, data released by

    Statistics Portugal showed on Tuesday. The

    producer price index fell 1.6 percent year-on-year,

    following a revised 1.5 percent decline in

    September. Month-on-month, prices dropped for

    the second successive month, down 0.6 percent in

    October. In September, prices decreased 0.5 percent.

    Business activity in the eurozones two

    largest economies is diverging sharply

    with Frances private sector contracting

    after two months of growth while in

    Germany it accelerated to a 10-month high,

    according to a survey. Employment levels

    and order books in France both fell at the

    sharpest rate since May, underlining the

    weakness of the recovery in the eurozones

    second-biggest economy.

    Shares of profits in national incomes

    are soaring; those of wages are

    falling. Its a recipe for corrosive and

    creeping deflation.

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    The PunchLine.

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    November 26, 2013

    The Return to Normal ?

    OnlymodesthopesforglobalgrowthSecondhalfofthisyearhadbeenwidelytippedastheperiodwhengrowthinthemainadvancedeconomieswouldbegintogatherpaceGlobal growth for 2013 and 2014 has been downgraded "significantly"

    after weak prospects in emerging markets, says the Organization for

    Economic Cooperation and Development. Global GDP this year is now

    expected to grow by 2.7%, down from 3.1% forecast in May. But it said

    global economic growth would speed up by 2015.

    Fed remains cluelessThere are no asset bubbles not in equity markets, not in

    the housing market. Thats according to Federal Reserve

    chair nominee Janet Yellen, who was asked about bubbles in

    her confirmation hearing before the Senate Banking

    Committee

    Walmart Struggliing the Arkansas-based discounter beat thirdquarter EPS estimates by a penny, thanks in parts to an aggressive and

    ongoing share buyback program. But their revenues and comparablestore sales were both short of expectations, and the company trimmed a

    dime off of its fourth quarter and full year guidance.

    ART AUCTIONS - Emerging market billionaires, driven by vanity, e

    money from the world's central banks and a quest for safe investments,

    taking the contemporary art market to new heights. Art collectors made n

    for a second straight night on Wednesday as Sotheby's held the biggest auc

    in its history, led by the record-setting $105 million paid for a work by An

    Warhol. The previous day, hedge fund managers, oil princes and oligarchs w

    bidding by telephone at Christie's when the auction house sold Francis Bac"Three Studies of Lucian Freud" for a record $142.4 million, in what was s

    as a test of the global art market's health.

    U.S. retailers reveal monetary easing diviRecent results show high-end stores like Willia

    Sonoma and those catering to DIYers like Home D

    are thriving. Sales at Wal-Mart and other disc

    retailers, though, are flat or barely growing. The gu

    another sign of how the Fed has created an a

    inflation economy.

    Eurozone finance ministers are losing

    patience with Greece as the country

    submitted it s 2014 budget.Greece will exit its six-year long recession next

    year with 0.6% growth, the budget said. The

    debt-laden country has received international

    bailouts since May 2010. At The Hague, Mr

    Dijsselbloem told a Greek newspaper, the Ta

    Nea daily, that "many finance ministers of the

    eurozone are starting to lose patience". Greece's

    deputy finance minister, Christos Staikouras,

    said the country's economy would shrink by 4%

    this year, below the 4.5% predicted.

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    The PunchLine.

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    November 26, 2013

    The Likelihood of Unlikely Events

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    The PunchLine.

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    November 26, 2013

    Engine Drivers

    Maersk Line called the bottom of the global trade cycle at the end of September, saying that

    decline that started with the financial crisis in 2008 had ended and global demand for containers sh

    be double this years rate in 2014 and 2015. Signs of that were already apparent in the third qua

    where Maersk said global demand rose by 5 per cent compared with a year previously. Maersk L

    which transports about 15 per cent of global sea freight, stuck by its prediction of 2-3 per cent gro

    this year, followed by 4-6 per cent in the next two years. But Mr Andersen cautioned that pre-finan

    crisis levels of trade were unlikely to be reached soon. We see the trade multipliers being much low

    meaning that the same GDP will not lead to as big a growth in trade ...We cant rely on Gdevelopments to help us; we need to do it ourselves, he said.

    Wave of M&A predicted for

    telecoms and technology sectorsThe telecoms and technology sectors will be

    transformed by unprecedented mergers and acquisitions

    activity in the next two years as industries consolidatearound key companies, according to annual predictions

    made by CCS Insight, the research group.

    Caterpillar Inc. continuing a cost-cutting campaign, said Friday it

    would close a plant in Pulaski, Va., that makes underground

    mining equipment. The plant employs about 240 people. The

    Peoria, Ill.-based maker of