Bloomberg:
- Draghi Spared as Confidence Mood Swing Quells ECB Rate-Cut Talk. Mario Draghi might be spared from having to make the thorniest of interest-rate cuts. Improving confidence indicators have eased pressure on the European Central Bank president to reduce the benchmark rate from a record low, a move fraught with the unknown consequences of possibly pushing the deposit rate below zero. While officials discussed a cut in borrowing costs last month, only five out of 55 economists in a Bloomberg survey predict that outcome today. The rest see the benchmark staying at a record-low 0.75 percent.
- Hollande Faces Having to Force Labor Revamp as Talks Splutter. President Francois Hollande may be forced to unilaterally overhaul French labor rules as employers and unions struggle to find common ground in final negotiations today and tomorrow. Hollande, who called for the talks when he took office last year, wants the parties to find ways to give employers more flexibility when the economy slows while also improving job security sought by unions. The Socialist president has repeatedly said he’ll act on the issue if they fail to reach an accord on their own.
- Peugeot Battles Cash Crunch as European Slump Continues. PSA Peugeot Citroen (UG), more exposed to slumping European auto demand than any other carmaker, will probably see its cash cushion shrink in 2013 with industrywide sales in the region due to contract for the sixth straight year. Peugeot will run through about 1.7 billion euros ($2.2 billion) of its 8 billion euros in cash reserves in 2013, according to estimates by CM-CIC Securities analyst Florent Couvreur. The burn rate may bring the carmaker closer to a liquidity crunch as its market share erodes further.
- Spain’s Shrinking Bank Network Leaves CaixaBank Top-Heavy. CaixaBank (CABK) SA is among lenders that look increasingly bloated as Spain’s economic slump adds pressure on banks to cut branches after the busted credit boom.
- China Shipyards Set to Spark Price War Among Rigmakers. China’s shipbuilders are set to spark a price war in the oil-rig market. With orders for new ships plunging to an eight-year low in 2012, China Rongsheng Heavy Industries Group Holdings Ltd. (1101) and its local rivals are foraying into the offshore business, lured by a market that will reach about $328 billion in 2017. The new entrants are lowering prices to grab contracts, hurting margins at Singapore-based Keppel Corp. (KEP) and Sembcorp Marine Ltd. (SMM), the world’s two-biggest rig makers. “It’s like moving from one bottomless pit to another,” said Park Moo Hyun, an analyst at E*Trade Securities Co. in Seoul. “Chinese shipyards are competitively trying to get into what they see as a lucrative business. But the consequence of that is they could end up distorting the whole market.”
- Lew Taking Over at Treasury Puts Perennial Aide at Head.
- U.S. Labor Chief Solis Resigns to Be Closer to Family. U.S. Labor Secretary Hilda Solis, who started her job four years ago when unemployment was at a 15- year high, resigned, saying she wanted to be closer to family and friends. “I have decided to begin a new future, and return to the people and places I love and that have inspired and shaped my life,” Solis, 55, said today in a letter to the more than 17,000 employees in the agency.
- California Cities Sue Banks Over Libor Rates, Law Firm Says. Eight California counties and public entities sued UBS AG (UBSN), Barclays Plc (BARC) and 20 other banks alleging they lost millions of dollars because the financial institutions manipulated the benchmark Libor rate. The plaintiffs claim they were cheated out of higher interest payments on investments such as interest-rate swaps and corporate bonds tied to Libor.
- BATS Says 'System Issue' Has Led to Pricing Problems Over Past 4 Years. Stock-exchange operator BATS Global Markets Inc. said Wednesday that a "system issue" has allowed hundreds of thousands of transactions to be executed at prices that weren't the regulator-required best ones available at the time. At issue are transactions in which investors "short" shares, or bet a stock will fall.
- Bank Made Huge Bet, and Profit, on Libor. Deutsche Bank(DB) made at least €500 million ($654 million) in profit in 2008 from trades pegged to the interest rates under investigation by regulators world-wide, internal bank documents show. The German bank's trading profits resulted from billions of euros in bets related to the London interbank offered rate, or Libor, and other global benchmark rates.
- Henninger: Hurricane Christie. The governor howls at the Republicans who were trying to help him.
- Rove: A GOP Strategy for the Debt-Ceiling Fight. The House should pass a bill pairing spending cuts with a dollar-for-dollar debt-ceiling increase.
- Watchdog calls tax code 'unconscionable burden,' asks Congress to reform system. The country’s top taxpayer advocate urged Congress on Wednesday to simplify the tax code, saying it is the most serious problem facing taxpayers and that individuals and businesses spend about 6.1 billion hours annually complying with tax-filing requirements. The analysis and recommendation are included in the 2012 report to Congress by the national taxpayer advocate, the IRS' internal watchdog.
- Natural Gas Prices Should Continue to Cool.
- Fed Hawks Fly After ECB Meets. Central bankers on both sides of the Atlantic could stir the markets Thursday.
- Panic In California As Thousands Of Food Stamps Cards Suffer Brief Outage.
- 20 Facts About The Collapse Of Europe That Everyone Should Know.
- Postponement, Draghi, And Accounting.
- Brodsky's Thompsonesque Trip Into The World Of Monetary Idiots Vs Krugman's Barbarians. The trillion dollar coin idea is a marvel of political imagination and public ignorance (and so it seems to have legs!).
- Small Business Optimism Stagnates (Even Before Higher Taxes). (graph)
- There's An Arms Race Going On In Asia Unlike Anything Since The Cold War.
- There's A Problem With The Recent Rally In Chinese Stocks.
- CHART: The Major Holders Of The US Stock Market.
- Today We Saw A Major Turning Point For The Movement To Mint A Trillion Dollar Platinum Coin.
- Doctors looking for an out. Some doctors are quitting medicine after they find a new passion; others are burned out and fed up with shrinking reimbursements or being overloaded with patients.
- Riskiest Subprime Auto Bonds Shift Into Higher Gear. Santander Consumer USA on Wednesday sold $1.25 billion in asset-backed securities at record low yields for the subprime auto lender, as investors bet eroding loan quality wouldn't produce losses on their bonds, while paying relatively higher yields. Demand was strongest on some of the lowest-rated debt, where investor orders for more than seven times what was available let dealers cut yields during a two-day marketing period.
- Afghans say total U.S. pullout would trigger disaster. Afghan lawmakers said on Wednesday disaster and civil war would follow if Washington pushed ahead with a suggestion to withdraw all its troops from the country after 2014. The White House said a day earlier it was considering the so-called "zero option" of a complete pullout - despite earlier recommendations from the top military commander in Afghanistan to keep soldiers there to help the government. That option and the angry reaction from Afghan officials are likely to dominate talks between U.S. President Barack Obama and his Afghan counterpart Hamid Karzai in Washington on Friday. The meeting was already likely to be tense, given ongoing strains in their relationship over the war. "If Americans pull out all of their troops without a plan, the civil war of the 1990s would repeat itself," said Naeem Lalai, an outspoken lawmaker from volatile Kandahar province, the birthplace of the Taliban. "It (full withdrawal) will pave the way for the Taliban to take over militarily," Lalai told Reuters.
- China exports pick up more than expected in December.
- Spain starts heavy borrowing year with crisis-clause bond. Spain's first debt sale of 2013 is likely to attract enough investors on Thursday to keep the country's borrowing costs down despite its heavy financing needs and the prospect of sustained economic recession.
- UBS’s Orcel admits banks must change. Bankers have become too arrogant and the industry must change, the chief executive of UBS’s investment bank told British lawmakers on Wednesday.
- Central banks must switch off the printing presses before it’s too late. Only a year to go now. Ben Bernanke, chairman of the US Federal Reserve, has let it be known that he won’t be seeking a third term once his present one expires in January 2014, and few can blame him.
- 'Disappointing' trade deficit figures a drag on recovery renewing triple-dip fears. Britain's trade deficit narrowed in November as exports rose more than imports, but the fall was below forecasts, which economists warn will act as a drag on growth and further threatens a triple-dip recession.
Citigroup:
- Rated (AFL) Buy, target $62.
- Rated (HIG) Buy, target $27.
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 105.0 +.5 basis point.
- Asia Pacific Sovereign CDS Index 81.0 unch.
- FTSE-100 futures +.07%.
- S&P 500 futures +.23%.
- NASDAQ 100 futures +.28%.
Earnings of Note
Company/Estimate
- (MSM)/1.00
- (SNX)/1.03
8:30 am EST
- Initial Jobless Claims are estimated to fall to 365K versus 372K the prior week.
- Continuing Claims are estimated to fall to 3228K versus 3245K prior.
- Wholesale Inventories for November are estimated to rise +.2% versus a +.6% gain in October.
- None of note
- The ECB rate decision, Fed's Kocherlakota speaking, Fed's Bullard speaking, Fed's George speaking, China New Loan/Money Supply/Trade data, Spanish 10Y bond auction, BoE rate decision, 30Y T-Note auction, Japan Trade data, (HLF) analyst day, weekly EIA natural gas inventory report, JOLTs Job Openings report for November, RBC Consumer Outlook Index for January, Bloomberg Economic Survey for January, weekly Bloomberg Consumer Comfort Index, (KBR) earnings guidance and the (CVX) Q4 interim update could also impact trading today.
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