REUTERS/StringerLeaked oil is seen on the sea after an explosion at a Sinopec Corp oil pipeline in Huangdao, Qingdao, Shandong Province November 23, 2013. Crude pipelines have been shut-off in the eastern Chinese oil hub of Qingdao pending safety checks a day after a leak triggered a huge explosion that killed 47 people, a refinery official and state media said on Saturday.
Good morning! Here’s what you need to know.
- Markets in Asia were uneven. Japan’s Nikkei fell 0.67%. Korea’s Kospi climbed 0.33%. Hong Kong’s Hang Seng was flat. European markets and US futures are a bit lower.
- Oil prices have recovered all the ground they lost when Monday trading opened following the announcement of the Iran deal, with Brent trading up 0.03% this morning. This was what most analysts had been saying would happen. As part of the deal, Western import bans remain in place for another six months, and sanctions have caused major production setbacks so it’s unclear how much will be returning to the market even once export levels are full restored.
- Reserve Bank of Australia Deputy Governor Philip Lowe delivered a blistering warning about stagnating living standards down under. Speaking at the University of New South Wales, he said that after having seen unprecedented growth on the back of the emerging economies boom, “in terms of Australia’s demographics, the sweet spot is now behind us,” he said. “At some point over coming years, the share of the working-age population in employment is likely to decline, given the ageing of the population that is occurring.” He added, “We can no longer depend on a rising terms of trade and favourable demographics to make us richer.”
- Consumer confidence appears to be stalling in Europe. Although Italy’s November index improved to 98.3 from 97.3, beating expectations, the future outlook print declined to 97.3 from 98.5. And in Norway, consumer confidence dropped to the lowest level in two years — though in that case, the FT says, it may be the result of declining Norwegian property prices.
- U.S. homeowners are increasingly missing payments on home equity lines of credit, and banks may get hammered as a result. Reuters’ Peter Rudegeair explains: “The loans are a problem now because an increasing number are hitting their 10-year anniversary, at which point borrowers usually must start paying down the principal on the loans as well as the interest they had been paying all along…banks can lose an eye-popping 90 cents on the dollar, because a home equity line of credit is usually the second mortgage a borrower has. If the bank forecloses, most of the proceeds of the sale pay off the main mortgage, leaving little for the home equity lender.”
- The specter of deflation may now be haunting the entire world, as commodities prices continue to flag, SocGen says. “Commodities can be seen as a leading indicator of the threat of deflation,” firm analysts wrote in a new note picked up by BI contributor Cullen Roche. “As Fed policy is likely to change, with tapering now expected in 2014, commodity prices may correct further with the rise of US rates. And, this decline in commodity prices also reflects fears of a strong deceleration in emerging markets… already, LME and agricultural index are close to three-year lows.”
- A slightly unusual day for economic data: Thanks to the government shutdown, the Census bureau will hit us with housing permit data covering both September and October at 8:30 am. Consensus is for the seasonally adjusted annual rate to climb to 930,000 from 918,000. Usually we’d get housing starts too, but those are now delayed for another month, when we’ll get a triple data release of starts for September, October, and November.
- At 9 am we get both the FHFA home price index for September (consensus is for a month-over-month gain of 10 bps to 0.4%) and the 20-city Case-Shiller home price index, which is expected to show no change MUM.
- At 10 am we get November consumer confidence data from the Conference Board. Consensus is for 1.7 point gain to 72.9. We also get the Richmond Fed’s latest manufacturing index reading; consensus is for a three-point increase to 4.
- Barnes and Noble (-$0.04/share exp.), H-P ($1/share exp.) and Tiffany’s ($0.58/share) are among companies delivering earnings today.