10 Things You Need To Know Today (DIA, SPY, SPX, QQQ)

Sam Ro

Good morning! Here's what you need to know:

China Is Slowing. The world's second largest economy is decelerating at a much sharper rate than economists have been forecasting. Here's the roundup of the latest crummy data dump from Westpac's Jonathan Cavenagh: "Over the weekend, China released industrial production (IP), fixed asset investment and retail sales data for August. All prints came in weaker than expected but the very sharp deceleration in year-on-year (yoy) IP growth will draw the most attention. IP rose just 6.9% versus 8.8% expected and a 9.0% print in July. Retail sales rose 11.9% versus 12.1% expected and 12.2% previously, although the month-on-month number improved from July. Fixed asset investment was up 16.5% versus 16.9% expected and 17.0% previously. In addition, the national statistics bureau released other data on Saturday, which showed that house sales dropped close to 11%yoy through January to August, versus a 10.5% drop in the first 7 months of the year. It also came after weaker monetary aggregate figures on Friday."

Chinese Policymaker's Have A High Tolerance For Pain. Considering the stunning deceleration in growth, there seems to be a growing need for stimulus to prevent a hard landing. So far, we've heard very little from Chinese policymakers. "What is more suprising is the calm response from Beijing, which emphasized the resilience of the labour market and once again downplayed the importance of the short-term growth target," Societe Generale's Wei Yao said. "The new leadership’s tolerance level for short-term pain appears to have just jumped up by another big notch, making even our below-consensus growth and policy forecast look a tad too sanguine. Q3 GDP growth looks set to clock in at around 7% yoy."

Markets Are Mostly In The Red. Hong Kong's Hang Seng closed down 0.9%. In Europe, Britain's FTSE is down 0.2%, France's CAC 40 is down 0.2%, and Spain's IBEX is down 0.3%. U.S. futures are in the red with Dow futures down 24 points and S&P 3.6 points.

Scottish Independence Gets Set Back. According to a new poll, the "no" votes pulled ahead with 54% of respondents saying they would vote against independence from the UK. Scots head to the voting booths on Thursday.

Let's Not Forget About Spain. "A trickier, potentially more explosive situation is unfolding in Spain, where the region of Catalan (which includes Barcelona) is scheduled to vote on November 9 on whether it is to leave Spain," Business Insider's Joe Weisenthal writes. Here's The Spain Report's Matthew Bennett: "Catalonia is 19% of Spanish GDP, 26% of exports, and more than 50% of land exits to Europe. Catalonia is systemically important to Spain's economy, and Spain is systemically important to Europe's economy. I can't imagine bond traders would find that scenario positive in the short term."

Germany's Got That Separatist Feeling. "Germany's fledgling anti-euro party won parliamentary seats in elections in two eastern states on Sunday, heightening an emerging threat for Chancellor Angela Merkel's conservatives," the AFP reported. "The Alternative for Germany (AfD), formed early last year, gained 10 percent in Thuringia state and 12 percent in Brandenburg, two weeks after also entering parliament in Saxony state, said exit polls by public broadcasters ARD and ZDF." Economists have warned that the separatist mood in Scotland would be contagious.

Sweden's Far Right Is Rising. Even though they ultimately lost the election, Sweden's far right, anti-immigration, anti-Europe Sweden Democrats party took a large 13% of the vote. This is yet another sign of rising discontent for the status quo in Europe.

The Alibaba IPO Is Looking Red Hot. "Alibaba Group Holding Ltd plans to increase the size of its U.S. initial public offering because of "overwhelming" demand  for the deal, people familiar with the deal said on Monday," Reuters' Supriya Kurane reported. "The Chinese e-commerce company launched the IPO last week and had enough investor demand to cover the entire deal within two days, people familiar with the process said last week. Alibaba could set a new record for the world's biggest IPO if underwriters exercise an option to sell additional shares to meet demand, pushing it as high as $24.3 billion and overtaking Agricultural Bank of China Ltd's $22.1 billion listing in 2010."

Heineken Turns Down SABMiller. "SABMiller Plc was rebuffed in an attempt to buy smaller brewer Heineken NV, a deal that would have strengthened it against a potential bid by Anheuser-Busch InBev NV, people with knowledge of the matter said," Bloomberg's David Welch, Matthew Campbell and Manuel Baigorri reported. "Heineken, the brewer of Amstel Light, confirmed in a statement that it turned down the offer and said it intends to remain independent."

US Econ Check. At 9:15 a.m. ET, we'll get the August industrial production report. Economists estimate the production climbed 0.3% in August while capacity utilization ticked up to 79.3% from 79.2%. "With regional purchasing manager surveys continuing to firm and the solid jump in the ISM manufacturing index in August, we expect another monthly gain in manufacturing output in August," Wells Fargo's John Silvia said. "However, the flat reading in average weekly hours of production workers in the factory sector suggests there could be some downside risks to the forecast. That said, average weekly hours declined in June and July while manufacturing output eked out gains in both months."

See Also: