Weighing In On The Dollar
The G7 meeting of finance ministers, instead of an aggressive statement on the dangers of a weak dollar, opted for a mealy-mouth remark that "excess volatility and disorderly movements in FX rates have adverse implications for economic and financial stability."
Strange, since officials spent last week worrying about the rise of the Euro.
But Friday's weak nonfarm payroll figure may have been a game changer, as many are coming to the realization that the U.S. recovery may lag that of the emerging markets and even Europe.
1) This week, we will have the dual listing of the Santander Brazil IPO (at about $7.3 billion the 2nd biggest IPO of the year, worldwide), September retail sales, and the start of earnings season. Retail sales is the key data point.
2) Several large banks up 2 percent pre-open as Goldman Sachs upgrades large cap banks to Attractive from Netural, but remains cautious on regional banks.
"The market has failed to recognize the dramatic improvement in earning power at the large banks versus the regionals," Goldman says.
Wells Fargo up 4 percent pre-open, was upgraded to Buy, while Capital One, up 5 percent pre-open, was added to the Conviction Buy List.
3) everybody likes banks this morning: UBS sees a stronger third quarter in U.K. banks Barclays and Royal Bank of Scotland due to "better funding environment" and better results in fixed income and equities. As a result, it has adjusted its forecasts "substantially" and also upgrades Barclays to "neutral" from "sell."
4) A consortium led by U.S. private equity firms is reportedly eyeing a bid for Ford's Volvo operations. The Financial Times reports that the consortium, which would challenge the bid previously made by China's Geely Automobile, hopes to get additional funding from Swedish investors to help keep interest of the Volvo brand in its native country.
5) Japan Airlines has reportedly halted its discussions with each AMRand Delta Air Lines, which were separately interested in making an investment in the Japanese carrier. Japanese news agency Kyodo says that Japan Airlines, which recently received a $1.1 billion loan from the Japanese government, currently wants to focus on constructing a proper restructuring plan right now, but may consider resuming the discussions once that plan is on track.
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