Bloomberg:
- Rajoy Stealth Order Adds to Off-Balance Sheet Debt: Euro Credit. Spanish Prime Minister Mariano Rajoy added more than 3 billion euros to his debt load in the closing hours of 2012 with a New Year's Eve order removing a cap on utilities' government-guaranteed losses. The decision, announced in the official gazette, added to the snowballing power-tariff debt, which isn't included in the public accounts. The shortfall exceeded 20 billion euros at year end, according to government filings.
- More Gloom for Britain’s Shrinking High Streets. Britain’s shrinking shopping streets are poised to become smaller still, thinning out what have long been Europe’s densest retail districts. With U.K. consumers spending more online and making fewer trips to the high street, the number of store closings is set to double this year, according to real estate researcher Local Data Company. The country’s 500 busiest retail locations will lose a net 4,000 outlets this year, versus about 2,000 in 2012, Local Data predicts. “We clearly have tens of thousands too many retail stores out there,” said Bryan Roberts, director at market research firm Kantar Retail in London.
- Asian Stocks Drop for Second Day as Japan Exporters Fall. Asian stocks fell, with the regional benchmark index heading for its second day of decline, as Japanese exporters dropped after the yen’s advance dimmed the outlook for overseas earnings. Mazda Motor Corp. (7261), which gets about 72 percent of its sales outside of Japan, sank 3.9 percent. Aozora Bank Ltd. (8304) declined 2.4 percent, extending losses for a second day, after the Japanese lender confirmed Cerberus Capital Management LP will sell most of its holdings. HTC Corp. slipped 3.8 percent in Taipei after Asia’s second-largest smartphone maker posted fourth-quarter operating income that missed analystestimates.
- Emerging Market Puts Drop to Cheapest Ever on Economy: Options. Options dealers are charging the lowest prices ever to protect against declines in emerging market equities. Implied volatility for three-month options closest to the iShares MSCI Emerging Markets Index has fallen 41% in the past year and reached a record of 18.18 on Jan. 4. The key gauge of options prices reached its lowest level ever relative to the SPDR S&P 500 ETF Trust on Dec. 27, according to data complied by Bloomberg.
- China Should Boost Local Brands to Be Auto Superpower, CAAM Says. China should strive to become an “automotive superpower” to maintain economic growth, by increasing investment in research and encouraging official use of local brands, the head of the nation’s carmakers group said.
- China Paper Anti-Censorship Push Backed by Celebrities, Protests. Some of China’s most famous celebrities and executives declared their support for a group of Chinese newspaper journalists protesting what they called the unprecedented censorship of a New Year editorial. More than a hundred people lingered late into the night yesterday outside of the Southern Weekly offices in the southern city of Guangzhou. Some laid flowers at the building’s entrance while others pushed their children in baby carriages amid a police presence, according to television footage and an employee who requested anonymity.
- Sears(SHLD) Names Edward Lampert CEO as D’Ambrosio Steps Down. Sears Holding Corp. (SHLD) said Edward Lampert, the hedge-fund manager who controls the retailer, will become chief executive officer, replacing Louis D’Ambrosio. D’Ambrosio will step down for family health matters at the end of the company’s fiscal year on Feb. 2, 2013, the Hoffman Estates, Illinois-based company said today in a statement.
- Paulson Said to Pare Advantage Plus 2012 Loss Last Month. John Paulson, the hedge-fund manager overseeing $19 billion, pared losses in his Advantage Plus fund after gaining 4.5 percent last month, according to a person with knowledge of the returns. The performance left the fund down 19 percent in 2012, said the person, who asked not to be identified because the information is private.
- Merck(MRK) CEO Says ‘Worth Thinking About’ Bausch & Lomb Deal. Merck & Co. Chief Executive Officer Kenneth Frazier said the drugmaker may be interested in buying Bausch & Lomb, the eye-care company for sale by Warburg Pincus LLC for at least $10 billion.
- Obama Security Picks Court Controversy. Hagel for Defense, Brennan for CIA Expected to Face Grilling. President Barack Obama, accepting the certainty of at least one bitter confirmation battle with Senate Republicans, rounded out his national security team Monday by picking nominees who likely see eye-to-eye with him on ending the Afghan war and using drones and special-operations forces to fight terrorism.
- Fiscal Cliff: Live Stream.
- Another Fire Hits a Boeing(BA) Dreamliner. U.S. aviation safety officials are probing an electrical fire that hit a three-week-old Boeing Co. BA -2.01% 787 Dreamliner on Monday just after passengers and crew had left a Japan Airlines Co. 9201.TO +1.07% flight at Boston's Logan International Airport.
- Could Verizon(VZ), AT&T(T) Follow T-Mobile in Ending Subsidies? The biggest U.S. wireless carriers are watching T-Mobile USA’s experiment with ending smartphone subsidies, but they aren’t sure if subscribers are ready to make the change.
- TD Ameritrade to Launch Behavior-Based Index to Track Investor Sentiment. In a bid to shine a light on the trading habits of retail investors and attract new clients along the way, TD Ameritrade Holding Corp. on Tuesday will roll out a behavior-based index that reveals investors’ moods by tracking buying and selling by TD Ameritrade’s customers.
- Japan Executives Warn Yen May Get Too Weak.
Some Japanese executives, after months of demanding the government
take action to weaken the yen, are now warning that such weakness could
go too far if the currency loses value too fast and for the wrong
reasons, or if it leaves the country exposed to soaring fuel costs that
would undermine the economy.
The executives, who gathered at an annual New Year's reception held by Japan's three biggest corporate lobbies, praised Prime Minister Shinzo Abe's new government for its proposals to boost the economy and tame the strong yen, which erodes exporters' profits and makes it harder to sell Japan-made goods overseas. But they also cautioned that if the economy stays weak, or if the government doesn't take steps to get its bloated finances under control, investors could lose confidence in Japan and flee, sending the yen into free fall.
- Graham seeks delay to confirmation of Brennan until Benghazi questions answered. A top Republican senator called Monday for a delay in the confirmation of President Obama's pick for CIA director until more questions are answered on the deadly attack last year on a U.S. consulate in Libya. Sen. Lindsey Graham of South Carolina didn't single out Obama's nominee, John Brennan, for criticism, but he accused the administration of ignoring requests for more information about the Sept. 11 attack, which also targeted a CIA annex in Benghazi. "I have not forgotten about the Benghazi debacle and still have many questions about what transpired before, during and after the attack on our consulate," Graham said.
- Oops! This Earnings Season Comes With Plenty of Excuses. Fourth quarter earnings growth was tepid at best, as Sandy and the "fiscal cliff" gave companies plenty of excuses for sluggish revenue growth and weak profits. The S&P 500 companies are expected to post earnings growth of 2.8 percent for the fourth quarter, up from the barely positive 0.1 percent growth in the third quarter, according to Thomson Reuters. Some analysts say that after the market's big run, earnings could provide an excuse for profit taking, as investors assess the forward comments of companies that have so far been fairly quiet about the outlook for 2013.
- The Three Key Charts Before The Launch Of Earnings Season.
- Greek Banks To Merkel: "Please Ma'am, Can We Have Some Moar", Or Here Comes Bailout #4.
- Meet Jack Lew: Tim Geithner's Replacement.
- Japan May Or May Not Mint Quadrillion Yen Coins, But It Will Monetize European Debt.
- Gérard Depardieu May Have Just Devoured Francois Hollande's Presidency. French newspaper says tax protests resulting in "disaster" for Hollande.
- The 10 Biggest Risks The World Faces In 2013.
- All The Money We're Pouring Into Emerging Markets Has Created A Massive Bubble.
NY Times:
Reuters:- Chemical Weapons Showdown With Syria Led to Rare Accord. In the last days of November, Israel’s top military commanders called the Pentagon to discuss troubling intelligence that was showing up on satellite imagery: Syrian troops appeared to be mixing chemicals at two storage sites, probably the deadly nerve gas sarin, and filling dozens of 500-pounds bombs that could be loaded on airplanes.
- Verizon(VZ) CEO says 'planning on 2013 being relatively flat'. Verizon Communications Inc Chief Executive Lowell McAdam said, 'We are planning on 2013 being relatively flat.' He also said, "I don't think many people in the business community are enthusiastic about what's going on in Washington now."
- Fitch: won't change Japan's rating based on campaign promises. Fitch Ratings will not change its sovereign rating on Japan based on promises made by the ruling Liberal Democratic Party ahead of its election victory last month, a Fitch official said on Tuesday. Andrew Colquhoun, head of Asia-Pacific sovereign rating at Fitch, told reporters on a conference call that the ratings agency would evaluate the actions the new government takes from now.
- Yum Brands(YUM) warns China sales fell more than expected. KFC parent Yum Brands Inc warned on Monday that sales in its top market of China shrank more than expected in the fourth quarter, citing bad publicity from a government review of its chicken supply. China sales fell 6 percent in the quarter, worse than its earlier forecast of a 4 percent decline, Yum said in a regulatory filing. The media coverage associated with the government's review had a "significant impact" on KFC sales in China in the last two weeks of December, it said. Yum, which also owns the Taco Bell and Pizza Hut fast-food chains, repeated a full-year earnings forecast that was below Wall Street's expectations and its shares fell more than 5 percent in after-hours trading.
- Plan to curb volatility in US stock markets likely to be delayed. A pilot program to limit volatility in the U.S. stock markets scheduled to be implemented next month is not likely to be rolled out until April as exchanges and financial industry groups take more time to prepare.
- Deloitte opposes SEC move to re-start action seeking China audit papers. Accounting giant Deloitte has asked a federal judge to reject a request from the U.S. securities regulator to resume a court case in which it is trying to force the auditor to hand over work papers from its audit of an allegedly fraudulent Chinese IT company.
- Fitch: China & HK comments. Anecdotal evidence that China has a debt problem that is building. China needs to rebalance towards consumption-led growth. HK rating likely to be unchanged over 1-2 years.
- Sterling crisis looms as UK current account deficit balloons. Is the UK heading for a currency crisis?
- None of note
- Asian equity indices are -1.0% to -.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 101.5 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 78.25 -1.0 basis point.
- FTSE-100 futures -.02%.
- S&P 500 futures -.08%.
- NASDAQ 100 futures -.13%.
Earnings of Note
Company/Estimate
- (IHS)/1.10
- (AYI)/.83
- (RPM)/.42
- (LNN)/.75
- (SCHN)/.06
- (MON)/.36
- (WDFC)/.55
- (AA)/.06
- (GPN)/.87
- (APOL)/.90
7:30 am EST
- The NFIB Small Business Optimism Index for December is estimated to fall to 87.2 versus 87.5 in November.
- Consumer Credit for November is estimated to fall to $12.75B versus $14.16B in October.
- None of note
- The Fed's Lacker speaking, Eurozone retail sales/unemployment rate/confidence data, Germany trade data, 3Y T-Note auction, Goldman Sachs Energy Conference, IBD/TIPP Economic Optimism Index for January and the weekly reatail sales reports could also impact trading today.
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