Bloomberg:
- Draghi’s Bond Rally Masks Debt Doom Loop Trapping Spain. The bond rally that has sent Spanish borrowing costs to 10-month lows has distracted attention from the nation’s growing debt pile. Spain’s budget deficit probably exceeded 9 percent for a fourth year in 2012 as Europe’s highest unemployment rate, a third recession in four years and the cost of bailing out its banks offset almost all of the government’s 62 billion euros ($83 billion) of spending cuts and tax increases, according to economists at Societe Generale SA (GLE), Lombard Street Research and the Madrid-based Applied Economic Research Foundation. Total debt will reach 97 percent of gross domestic product this year, the International Monetary Fund forecasts. “This is a classic example of the doom loop,” Societe Generale’s London-based chief European economist, James Nixon, said in a Jan. 10 telephone interview. “They just aren’t making any progress.”
- Berlusconi Gains in Polls as Italians Swayed by Media Blitz. Public support for Berlusconi’s coalition rose to 27.9 percent from 25.3 percent a month ago, according to a poll by EMG released by television station La 7 late yesterday. Front- runner Pier Luigi Bersani’s coalition of center-left parties slipped to 37.4 percent from 40.3 percent.
- RBS Said to Face $800 Million Libor Fine as Early as Next Week. Royal Bank of Scotland Group Plc may pay as much as 500 million pounds ($804 million) in fines next week to settle allegations traders tried to rig interest rates, two people with knowledge of the matter said.
- KeyBanc Cuts 2013 U.S. Steel-Scrap Forecast on Lower Demand. Scrap-price outlook lowered to $360 a long ton, from $410-$415, KeyBanc Capital Markets analysts led by Cleveland-based Mark Parr said today. Lower prices for seaborne iron ore and "tepid" demand for scrap exports signal lower prices, KeyBanc said.
- Bernanke to Scrutinize QE Costs as Fed Assets Near Record. Federal Reserve Chairman Ben S. Bernanke indicated he will closely scrutinize the potential costs of asset purchases aimed at spurring economic growth as the Fed’s balance sheet approaches $3 trillion. “So far, we think we are getting some effect, it is kind of early,” Bernanke said today at the University of Michigan’s Gerald R. Ford School of Public Policy in Ann Arbor. “We are going to continue to assess how effective” the program is “because it is possible that as you move through time and the situation changes that the impact of these tools could vary.”
- Bernanke Sees ’No Completely New’ Stimulus Method for Fed. Federal Reserve Chairman Ben S. Bernanke said he isn’t aware of any new stimulus tool for the central bank to use to try to boost growth. “As far as I’m aware, there’s no completely new method that we haven’t” already tapped, Bernanke said today in Ann Arbor, Michigan. The Fed lowered its benchmark interest rate to near zero in December 2008. Since doing so, its two main approaches for further easing have been communications about the outlook for interest rates and asset-purchase programs, both of which the central bank has used, Bernanke said.
- IMF’s Zhu Says Japanese Debt Overhang Is Getting More Serious. International Monetary Fund official Zhu Min said Japan’s debt burden is becoming “more serious” as the government takes extra steps to stimulate growth in the world’s third-biggest economy. “The debt overhang is becoming more serious so they need to go further in fiscal consolidation,” Zhu, a deputy managing director at the IMF, said in an interview in Hong Kong today, where he’s attending the Asian Financial Forum. Japan announced 10.3 trillion yen ($115 billion) in fiscal stimulus last week as Prime Minister Shinzo Abe followed through on election pledges to weaken the yen, counter deflation and spur economic growth. The risk is that the nation’s debt burden, estimated by the IMF at 237 percent of gross domestic product last year, will lead to a surge in government bond yields.
- Yen Rallies as Japan Official Amari Comments on Currency. The yen rose against its major peers after comments by Japan’s economy minister stoked speculation the nation won’t try to spur further weakness in its currency. The yen ended four days of declines against the dollar after Akira Amari said an excessively weak currency has negative effects on livelihoods. The dollar traded near a 10-month low against the euro as Treasury Secretary Timothy F. Geithner warned that failure to raise the debt ceiling by early March would “impose severe economic hardship.” “The world has gone massively short yen on the idea that Japan is going to be more aggressive with its stimulus under the new prime minister,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC) “Comments like Amari’s are likely to spook those holding yen shorts.”
- Morgan Stanley(MS) Said to Pare Asia Investment Bank Jobs by 15%.
- Blavatnik Says JPMorgan(JPM) ‘Stuffed’ Fund With Risky Mortgages. JPMorgan Chase & Co. filled a fund started by billionaire Leonard Blavatnik with risky mortgage securities instead of the conservative investments it was told to make, lawyers for Blavatnik told a New York state judge today. Blavatnik, 55, sued New York-based JPMorgan in New York state Supreme Court in June 2009, accusing the biggest U.S. bank by assets of putting more money into mortgage securities than his investment guidelines allowed.
- Lululemon(LULU) Drops as Quarterly Outlook Trails Analysts’ Estimates. Lululemon Athletica Inc. slid by as much as 10 percent after the Canadian yoga-wear retailer forecast fourth-quarter sales that trailed analysts’ estimates. The shares fell 7.7 percent to $66.70 at 4:38 p.m. in New York after earlier dropping to $65. The Vancouver-based company, which gained 63 percent in 2012, closed at $72.30 today.
- Apple(AAPL) IPhone Suppliers Decline on Report Orders Cut by 50%.
- Obama Escalates Debt Fight. President Warns Congress He Won't Pay 'Ransom'; GOP Insists on Spending Cuts. President Barack Obama, facing a battle over raising the U.S. borrowing limit, made clear Monday that he sees no alternative to Congress voting for an increase and said that not doing so would be "irresponsible" and "absurd." Mr. Obama's confrontational message—that a debate over the debt limit was already harming the economy and could push the U.S. into a recession—was primarily aimed at Republicans, who plan to use the debt-limit vote as leverage to extract cuts in federal spending. But it also served as a warning to Democrats who have pressed him to increase the borrowing limit unilaterally by invoking executive powers.
- Wall Street Pay Gets Tougher Look. Hedge-Fund Manager Loeb Takes Aim at Morgan Stanley(MS) Compensation Levels.
- Hedge Funds' Manhattan Migration. Hedge-fund managers have long viewed New York as a prime location for business because of its appeal to employees and its status as one of the world's financial centers. It doesn't hurt that many managers call the island home. But in a difficult fundraising environment that favors funds that already oversee billions of dollars, startup managers have had to work harder to get noticed. More are betting they can catch the eye of potential investors by helping them avoid the journey up the New England Thruway.
- CBOE Revamping Board to Drop Traders. The biggest U.S. stock-options exchange is cutting ties between its board and traders on its markets following a federal probe into the exchange's regulation of its members, according to people close to the situation. CBOE Holdings Inc. plans to revamp its 15-member board by replacing three directors who also run trading firms with existing board members that have no direct ties to the options business, while adding several new directors.
- Behind Lance Armstrong's Decision to Talk. Last month, Lance Armstrong boarded a plane for Denver to do something several of his lawyers had advised against: sitting down for a private conversation with the head of the U.S. Anti-Doping Agency.
- The Next Tax Increase. The new tax hike is barely law and Obama already wants more. In case you missed it, President Obama held a press conference Monday to make essentially two points: He won't negotiate with Republicans over raising the federal debt limit, and if Republicans want any spending cuts at any time in the next four years they'll have to raise taxes along with it. He won, so get used to it, chumps.
- CFTC Follows SEC in Permitting Offsets for Cleared CDS at ICE. A federal regulator gave the green light Monday for investors clearing credit derivatives trades with a unit of IntercontinentalExchange Inc. (ICE) to offset certain positions in the clearinghouse, a move that is expected to lead to savings for traders.
- JPMorgan(JPM) Ordered to Bolster Risk Management After London Whale. JPMorgan Chase has been ordered to take steps to correct poor risk management that led to a surprise trading loss last year of more than $6 billion. Federal regulators are also citing the nation's largest bank for lapses in control that allowed the bank to be used for money laundering.
- New York Has Gun Deal, With Focus on Mental Ills. Gov. Andrew M. Cuomo and legislative leaders tentatively agreed on Monday on a broad package of changes to gun laws that would expand the state’s ban on assault weapons and would include new measures to keep guns away from the mentally ill.
- Payroll Tax Hike Will Affect Your Paycheck and the Economy. (video)
- Geithner Unleashed: Sends Letter To Boehner, Warns Even Brief Default Would Be "Terribly Damaging", Channels Reagan.
- It Begins: Bundesbank To Commence Repatriating Gold From New York Fed.
- Despite Sanctions, Iran's Economy Limps Along.
- These Photos Show Why China's Smog Problem Is Completely Out Of Control.
- ANALYST: At This Point, We Have To Assume That The Government Is Going To Shut Down.
- HUSSMAN: The Current Syndrome Of Market Conditions Has A Long History Of Being Hostile For Stocks.
- The Winners And Losers Of The 2013 Consumer Electronics Show.
- An Eye-Popping Number Of People Support The NRA's Plan To Put Armed Officers In Schools.
- 'Sugar Daddy' Dating Website Says A Lot More College Girls Are Signing Up To Help Pay For School.
- Japan-China tension weighs on Nissan investments. Nissan Motor Co. will remain cautious about future Chinese investments including Infiniti brand production until the country's relations with Japan improve, Chief Executive Carlos Ghosn said on Monday. Ghosn was speaking at the Detroit auto show after the three main Japanese automakers all said an anti-Japan consumer backlash continued to depress their Chinese sales by between 16 and 30 percent. "Unless there's a complete normalization between the two countries, every single investment decision is going to have to be weighed" against the risk of further disruption, the Nissan chief told Reuters in an interview.
- Bremmer: Nasty economic battle looms for China & Japan. (video) Risk expert and Eurasia Group President Ian Bremmer says Japan and China have switched places as the world’s second and third largest economies and “ hate each other.” Bremmer adds with growing nationalism in each country and Japan’s position as a key U.S. alley, it’s one of the biggest financial risks of 2013.
- EU berates China over steel subsidies. The European Commission has concluded that China is providing illegal subsidies to its steel manufacturers, paving the way for European companies to seek higher import tariffs on a wide range of Chinese products. The EU executive arm said Beijing was helping makers of organic coated steel – used in construction and to make household appliances – to obtain materials at below market prices, according to a report obtained by the Financial Times.
- When it comes to Europe, David Cameron represents the silent majority. Remember "Business for Sterling"?
CSFB:
- Rated (INFI) Outperform, target $42.
- Asian equity indices are -.75% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 104.0 -2.0 basis points.
- Asia Pacific Sovereign CDS Index 83.50 -1.25 basis points.
- FTSE-100 futures -.21%.
- S&P 500 futures -.16%.
- NASDAQ 100 futures -.11%.
Earnings of Note
Company/Estimate
- (LEN)/.45
- (CBSH)/.72
- (FRX)/-.08
- (IBKR)/.21
- (LLTC)/.39
8:30 am EST
- Empire Manufacturing for January is estimated to rise to 0.0 versus -8.1 in December.
- Advance Retail Sales for December are estimated to rise +.2% versus a +.3% gain in November.
- Retail Sales Less Autos for December are estimated to rise +.2% versus unch. in November.
- Retail Sales Ex Autos & Gas for December are estimated to rise +.4% versus a +.7% gain in November.
- The Producer Price Index for December is estimated to fall -.1% versus a -.8% decline in November.
- The PPI Ex Food & Energy for December is estimated to rise +.2% versus a +.1% gain in November.
- Business Inventories for November are estimated to rise +.3% versus a +.4% gain in October.
- (HEP) 2-for-1
- (SGA) 4-for-3
- The Fed's Plosser speaking, Fed's Kocherlakota speaking, Fed's Rosengren speaking, Eurozone trade data, Eurozone inflation data, weekly retail sales reports, Needham Growth Conference, Deutsche Bank Auto Industry Conference and the (FB) speak event could also impact trading today.
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