Daily Agenda: Global Equities, Oil, Decline in Light Trading

Equity markets slide and the ruble hit a low; Pep Boys accepts offer below Icahn target; Star Wars box office sets record.


As another light holiday trading session begins, equity markets in Asia and Europe have pulled back with the Stoxx down by nearly half a percent in early trading and the Shanghai Composite down by more than 2.5 percent, the biggest one-day swing for the index since November. Standard & Poor’s 500 futures indicate that selling will continue when equities open in the U.S. and early trading in West Texas Intermediate grade crude-oil futures saw front delivery-month contracts down by nearly 3 percent. Even after rising by more than 9 percent last month, WTI oil futures appear likely to lock in a decline of more than 30 percent for 2015 as a massive supply imbalance continues to erode confidence that energy commodities will recover in the near term. Despite last week’s rally in crude prices, the ruble, highly levered to commodity values, sank by 2 percent versus the dollar on Monday to reach a low for the year as sanctions by Western powers continue to bleed the Russian economy.

Pep Boys accepts Bridgestone buyout. Reports on Monday morning indicate that Philadelphia-based automotive retailer Pep Boys has accepted a takeover bid by Tokyo-based Bridgestone Corp. that falls short of the valuation targeted by activist shareholder Carl Icahn. At $17 per share the offer will total at slightly less than $950 million. Icahn has in the past indicated that the enhanced value for the chain was justified by an ageing U.S. car fleet distorted by massive sales incentives during the post credit-crisis period.

“Star Wars” sets box-office record. With total box office receipts totaling more than $150 million over the weekend, “Star Wars: The Force Awakens” has surpassed $1 billion in ticket sales in less than two weeks, a record-breaking launch. The film had already secured a record opening weekend total ticket sales. The film opens in the critical Chinese market on January 9th.

Chinese gold imports drop. Figures from the Hong Kong Census & Statistics Department released Monday indicate that gold imports from the Special Administrative Region by China declined for the second consecutive month in November. Statistics released by the Swiss customs authority earlier in the month also saw a sharp decline in China-bound gold shipments as mainland investors braced for a stronger dollar.

Retail sales weaken in Japan. In the latest signal that massive easing by the Bank of Japan has failed to spur domestic demand, retail-sales figures for November released today by the Economy, Trade and Industry Ministry registered weaker than consensus economist forecasts. Headline index levels declined by 1 percent versus the same month last year with an increase in food and beverage consumption that failed to offset weak electronic-device receipts.


Portfolio Perspective: Between Holidays

Keep it simple. Between holidays the volume is light, momentum isn’t to be trusted and the window dressing and squeezes for cash into year-end notoriously dangerous. Many see this as a dead week for trading and justifiably so. The news from Christmas Eve to today has been mixed with more about global geopolitical fears, less about Japan deflation and yet the demand part of the global equation remains a big doubt and one that rests on the emerging markets getting it right. No one seems particularly happy this holiday — there is a flatness to the U.S. spending and a shift to not going out. Blame it on the weather, with horrific storms in the Midwest, rain in the East along with abnormally warm weather, and you have the makings of an excuse for January. Between the holidays, many are looking for safe-haven yields and deep discounts—and that was the play for last week with oil bouncing, commodity currencies rebounding and many content to wait out for better times in 2016. Happy New Year!?

Robert Savage is the chief executive officer of CCTrack Solutions in New York.