In comments over the weekend following Friday’s rate cut by the People’s Bank of China — the third so far this year — Premier Li Keqiang downplayed the importance of his government’s 7 percent gross-domestic-product target. Speaking to Communist Party officials in the leadup to the fifth plenary session this week, he said that the goal was never intended to be “defended to the death” and that a “reasonable range” of growth would be sufficient. As Chinese leaders plot a new five-year plan, the emphasis in official statements is likely to focus on long-term growth prospects driven by expanding domestic consumption, as the limits of policy actions to offset weak global demand in the near-term grow increasingly apparent. In a note to clients, China economist at Barclays Capital Jian Chang stated “the risks to our growth forecasts of 6.8 percent in 2015 and 6 percent in 2016 remain tilted to the downside.”
Valeant defends accounting practices. Quebec, Canada-based Valeant Pharmaceuticals International held a shareholder conference call on Monday in an attempt to assuage concerns raised after a report from short-seller Citron Research sent the company’s shares tumbling by over 30 percent last week. The company announced that Mason Moffitt, president of San Francisco-based activist hedge fund firm ValueAct Capital, had rejoined its board of directors and that a special committee will review the business relationship with specialty pharmacy Philidor RX Services. Valeant management also disclosed an investigation by the U.S. Department of Justice into pricing calculations relating to Medicaid rebates.
German business confidence results are mixed. Ifo Institute’s German corporate sentiment data for October released today registered a sequential contraction to 108.2 versus 108.5 in September, while still managing to best consensus economist forecasts. Separately the organization’s expectations index reading was also higher than anticipated while the current assessment measure weakened significantly, suggesting that business leaders in the Eurozone’s largest economy feel that current economic challenges will pass as fresh policy measures come into play.
Toyota reclaims global sales lead. With total sales through September of nearly 7.5 million automobiles, Japan’s Toyota Motor Corp. has reclaimed the worldwide lead over Wolfsburg, Germany’s Volkswagen hurt by an ongoing emissions test scandal, according to data released today. A combination of recalls for up to 11 million vehicles that led to a halt in the distribution of diesel models in some markets and sales in China that dipped by over 7 percent over the same period last year, has eroded Volkswagen’s momentum, Meanwhile, its Japanese rival prepares for the launch of its widely anticipated Prius redesign.
Argentina election sets the stage for a runoff. Mauricio Macri, the right-center pro-business mayor of Buenos Aires, secured sufficient votes on Sunday to prompt a national runoff versus Daniel Scioli, governor of Buenos Aires province. A poor showing by Scioli, the Peronist Victory Front coalition candidate, is a blow to outgoing president Christina Kirchner, who endorsed him as her chosen successor.
Kaczynski wins Polish election by wide margin. The leader of the Law and Justice Party, Jaroslaw Kaczynski, secured a decisive majority in the Polish election over the weekend, clearing the way for him to form a government without coalition partners. The conservative, Eurosceptic party secured a sweeping victory on a platform to hike social benefits and strengthen NATO defenses in the face of aggressive Russian polices.
Aberdeen denies seeking buyer. Aberdeen Asset Management spokespersons denied U.K. media reports this morning suggesting that CEO Martin Gilbert had initiated talks with potential buyers for the firm. The Scottish investment manager, which boasts a current market capitalization of more than $7 billion, has suffered setbacks in its emerging markets investment franchise. The firm’s buyout of Flag Capital in May earlier this year nearly doubled assets under management.
Deal reached in GM labor dispute. Over the weekend, United Auto Workers union leaders announced a tentative agreement with management at General Motors that would avert a strike. While details are not yet public, the new four-year contract raised expectations that GM will follow rivals Ford and Fiat Chrysler in raising compensation for tier-two employees, reversing lower pay levels for new hires that the union agreed to in the wake of the credit crisis.
