- Croatia Cut to Junk by Moody’s on Fiscal Weakness, External Risk. Croatia’s credit rating was cut to junk by Moody’s Investors Service, which cited a stalled recovery, lack of budget discipline and the nation’s vulnerability to external shocks. The Balkan country’s government bond rating was lowered to Ba1 from Baa3, joining Hungary and Ireland at that level, Moody’s said in a statement released in London today. Standard & Poor’scut Croatia to junk in December. Moody’s also changed the nation’s outlook to stable from negative, saying the risk the government’s fiscal position and debt will “materially deteriorate any further” is limited.
- Russian GDP Growth Slowest Since 2009 as Investment Wanes. Russia’s economy grew slower than analysts forecast last year, expanding at the weakest pace since a 2009 contraction after record oil prices failed to offset $56.8 billion of net capital outflows and investment sagged.
- BlackRock(BLK) Cautious as Sales End Dollar Bond Rally: China Credit. Chinese dollar-denominated bonds lost money for the first month since May as record issuance by developers prompted caution at funds including BlackRock Inc.
- Australia Manufacturing Gauge Fell to 3 1/2-Year Low in January. A gauge of Australian manufacturing fell to a 3 1/2-year low in January as the sustained strength of the currency outweighed the central bank’s reduction in interest rates to a half-century low. The manufacturing index dropped 4.1 points to 40.2 last month, the lowest level since June 2009, the Australian Industry Group said in a survey released today. The last reading above 50, the divide between expansion and contraction, was in February 2012.
- Egypt Opposition Gears Up for Protest After Pledge to End Unrest. Egypt’s secular opposition pushed ahead with plans for protests today against President Mohamed Mursi, hours after joining forces with their Islamist rivals in pledging to work to stabilize a nation mired in violence. Exactly a week earlier, demonstrations marking the second anniversary of the Jan. 25 uprising that ousted Hosni Mubarak unleashed a wave of street battles that left over 50 dead. The rallies today may risk more of the kind of conflict that prompted Mursi’s secular and youth activist critics to band with the Islamists in backing an initiative they hoped would lay the foundation for a “serious dialogue.”
- Militants in Northern Africa Said to Pose Growing Threat. Islamist groups in northern Africa are trading personnel, equipment and expertise and pose a growing threat to potential targets there, including Western businesses and diplomats, according to U.S. officials. Three intelligence officials said that what they called cross-pollination among groups such as al-Qaeda in the Islamic Maghreb, Ansar al-Dine and al Mulathameen have prompted U.S. agencies to focus more closely on the desert lands from Mauritania to Niger, especially in light of recent terrorist attacks in Libya, Algeria and Mali.
- Biden Presses Senate Democrats to Support Assault Weapon Ban. Vice President Joe Biden urged Democrats to back an assault weapons ban a day after few of the party’s lawmakers championed the issue during the Senate’s first hearing on gun violence after the Dec. 14 school shootings in Connecticut.
- Chinese Hackers Target U.S. Media. Chinese hackers have been conducting wide-ranging electronic surveillance of media companies including The Wall Street Journal in an apparent effort to spy on reporters covering China and other issues, people familiar with incidents said. Journal publisher Dow Jones & Co. said Thursday that the paper's computer systems had been infiltrated by Chinese hackers for the apparent purpose of monitoring its China coverage. New York Times Co. disclosed Wednesday night that its flagship newspaper also had been the victim of cyberspying. Chinese hackers for years have targeted major U.S. media companies with hacking that has penetrated deep inside some newsgathering systems, several people familiar with the response to the cyberattacks said.
- Lingering Bad Debts Stifle Europe Recovery. Many Europeans are on the hook for unpaid mortgage balances even after losing their homes. And millions struggle to pay for apartments and houses that are worth far less than they paid. Data released by Eurostat on Thursday showed average euro-zone house prices declined further in the third quarter, dropping 0.7% from the previous quarter. Prices in the Netherlands fell 3.9%, the biggest drop in the euro zone, and prices fell 3.7% in Spain.
- ObamaCare's Broken Promises. Every one of the main claims made for the law is turning out to be false. As the federal government moves forward to implement President Obama's Affordable Care Act, the Department of Health and Human Services is slated to spend millions of dollars promoting the unpopular legislation. In the face of this publicity blitz, it is worth remembering that the law was originally sold largely on four grounds—all of which have become increasingly implausible.
- S&P Says China Spending Puts Economy Most at Risk. (video) More than 40% of China's economy is made up of spending on infrastructure, factories and housing.
- Here Are Some Horrific Numbers Out Of Australia. (table) It's "a credit bubble built on a commodity market built on an even bigger Chinese credit bubble," wrote strategist Dylan Grice in a note last year.
- Senate ethics panel reviews gift accusations against Menendez. The Senate Ethics Committee is reviewing allegations that Sen. Robert Menendez accepted inappropriate gifts from a Florida doctor who has flown the New Jersey Democrat to his estate in the Dominican Republic, a senior member of the panel confirmed Thursday. Sen. Johnny Isakson (Ga.), the ranking Republican on the committee, said the panel saw reports of the Tuesday FBI raid on the West Palm Beach offices of Salomon Melgen, a Menendez friend and political supporter who is also in an $11 million tax dispute with the Internal Revenue Service. That was followed by Menendez’s confirmation Wednesday night that he wrote a personal check of more than $58,000 to pay for flights on Melgen’s private jet to his Dominican estate — for a pair of trips there more than two years ago.
- Doubt Is Cast on Firms Hired to Help Banks. Federal authorities are scrutinizing the private consultants hired by banks to clean up financial misdeeds like money laundering and foreclosure abuses, taking aim at a conflict-riddled, billion-dollar industry.
- US looking at action against China cyberattacks. The Obama administration is considering more assertive action against Beijing to combat a persistent cyber-espionage campaign it believes Chinese hackers are waging against U.S. companies and government agencies. As The New York Times and Wall Street Journal reported Thursday that their computer systems had been infiltrated by China-based hackers, cybersecurity experts said the U.S. government is eyeing more pointed diplomatic and trade measures.
- Israel may feel need to strike Syria again. An Israeli air attack staged in Syria this week may be a sign of things to come.
- Korea becomes the red flag for Asia's currency war. South Korea's threat to impose a broad tax on financial transactions is the first sign of deepening concern in Asia that speculation of competitive currency devaluations is prompting investors to head for the exit.
- US seeks greater ethanol use despite efforts to cut it. Corn ethanol would get a larger share of the U.S. gasoline market under a government proposal on Thursday while ranchers, environmentalists and the oil industry aim to kill the renewable fuels mandate altogether. The Obama administration proposed a 9 percent increase in the so-called renewable fuels standard from 2012, in line with a 2007 law. Half of the 1.35 billion-gallon increase would go to corn ethanol and half to "advanced" biofuels that produce half the greenhouse gases of first-generation ethanol. Overall, biofuels would be allotted 16.5 billion gallons of the fuel market for cars and light trucks. The mandate reaches 36 billion gallons in 2022, with half of the mandate going to new-generation biofuels.
- Wynn(WYNN) posts lower-than-expected profit, cites Macau decline. Hotel-casino operator Wynn Resorts Ltd on Thursday posted a quarterly profit that was below Wall Street's estimates as its share of the Macau market declined. Fourth-quarter profit, excluding items, totaled $118.2 million, or $1.17 per share, down from $194.4 million, or $1.55 per share, a year earlier.
- Canadians' possible role in Algeria attack of great concern to US. Signs that Canadian citizens were involved in the attack by hostage-taking Islamist militants on a remote gas plant in Algeria are of great concern to American authorities, U.S. intelligence officials said on Thursday. While Algerian authorities apparently have not yet provided Western governments with cast-iron proof, a senior U.S. intelligence official said, "We're taking very seriously the reports of the two Canadians' involvement."
- US banks squeezed as mortgage profits hit. US banks are suffering a squeeze on mortgage profits after a bumper two years, adding to pressure on the earnings of Wells Fargo, Bank of America and the other large lenders.
- Wenzhou Pressures Banks to Not Call in Loans. The eastern Chinese city of Wenzhou may withdraw deposits from banks that call loans from companies.
- Rated (ZTS) Buy, target $30.
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 115.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 90.0 +1.0 basis point.
- FTSE-100 futures -.18%.
- S&P 500 futures +.29%.
- NASDAQ 100 futures +.37%.
Earnings of Note
8:30 am EST
- The Change in Non-farm payrolls for January is estimated at 165K versus 155K in December.
- The Unemployment Rate for January is estimated at 7.8% versus 7.8% in December.
- Average Hourly Earnings for January are estimated to rise +.1% versus a +.3% gain in December.
- The Final Markit US PMI for January is estimated to fall to 55.5 from a prior estimate of 56.1.
- Final Univ. of Michigan Consumer Confidence for January is estimated to rise to 71.5 versus 71.3 in December.
- Construction Spending for December is estimated to rise +.6% versus a -.3% decline in November.
- ISM Manufacturing for January is estimated to rise to 50.6 versus 50.2 in December.
- ISM Prices Paid for January is estimated to rise to 56.0 versus 55.5 in December.
- Total Vehicle Sales for January are estimated to fall to 15.2M versus 15.3M in December.
- None of ntoe
- The Fed's Dudley speaking, Eurozone/UK PMI data and the (STJ) investor meeting could also impact trading today.