Bloomberg:
- ‘Polar Pig’ Threatens Coldest U.S. Weather in Two Decades. The coldest air in almost 20 years is sweeping over the central U.S. toward the East Coast, threatening to topple temperature records, ignite energy demand and damage Great Plains winter wheat.
- Junk Risk Rises as Deutsche Bank Sees Deficit Flop: India Credit. India's budget deficit reached 94% of the full-year target after just eight months, fueling concern Prime Minister Manmohan Singh's efforts to avoid a junk debt rating are faltering.
- Australia Local Auto Sales Fall by Record as Carmakers Seek Exit. Australian sales of locally-produced vehicles fell a record 15 percent last year as Ford Motor Co. (F) and General Motors Co. (GM)’s Holden unit announced plans to cease production in the country amid surging imports.
- HTC Profit Misses for a Fourth Quarter as Slump Continues. HTC Corp., Taiwan’s largest smartphone maker, posted net income that missed analyst estimates for a fourth consecutive quarter as rising competition from Chinese brands led to a decline in sales.
- Baht Drops to Three-Year Low, Bonds Fall Amid Political Tensions. The Thai baht dropped to its lowest level since 2010 as overseas funds pulled cash from the nation’s debt amid the two-month-long political protests that are sapping investor confidence. Demonstrators plan to surround government ministries and occupy 20 major traffic intersections in Bangkok on Jan. 13 until caretaker Prime Minister Yingluck Shinawatra agrees to step down and allow an unelected council to reform the electoral system, Suthep Thaugsuban, a former opposition lawmaker who is leading the movement, said last week. Thai bonds declined as official data showed global funds sold $104 million more local fixed-income securities than they bought on Jan. 3.
- China’s Stocks Drop to Five-Month Low as China Railway Tumbles. China’s stocks declined, dragging down the benchmark index to its lowest level in five months, as industrial and consumer discretionary companies slumped. China Railway Group Ltd. slid the most in almost three months after the company said its president died in an accident. CSR Corp., a trainmaker, fell 3.1 percent. Gree Electric Appliances Inc. dropped 2.7 percent. Shanghai Pudong Development Bank Co. (600000) rose 1.1 percent after saying profit increased 20 percent last year. The Shanghai Composite Index (SHCOMP) slumped 1.4 percent to 2,055.33 at 9:52 a.m. local time, extending last week’s 0.9 percent decline.
- Asia Stocks Fall on China Data as Gas Gains on U.S. Snows. Asian stocks fell, led by Chinese and Japanese shares, as a private services report pointed to slower growth in the world’s second-largest economy. Natural gas and wheat climbed as the coldest air in two decades sweeps across the U.S. The MSCI Asia Pacific Index retreated 0.8 percent by 10:59 a.m. in Tokyo as the Hang Seng China Enterprises Index of mainland shares in Hong Kong slid 1.5 percent. The Topix lost 1.2 percent and rubber sank 4.3 percent in Tokyo as Japan’s markets reopened after a four-day break.
- Rubber Slumps Most in Seven Months as Stockpiles Swell in China. Rubber in Tokyo slid the most in seven months on the first trading day of the year after data showed stockpiles in China expanded to a nine-year high, raising concern that demand from the largest consumer is weakening. The contract for delivery in June on the Tokyo Commodity Exchange lost as much as 4.5 percent, the largest drop for a most-active contract since May 23, to 262.1 yen a kilogram ($2,516 a metric ton) and traded at 262.5 yen at 10:41 a.m. local time. Futures lost 9.3 percent last year, the first annual decline since 2011.
- Erdogan Eye on ‘Crazy Projects’ Links Turkey Scandal to Builders. A tiny fishing village called Garipce holds a clue to understanding the largest corruption scandal in Turkish history. An hour’s drive north of Istanbul, two giant concrete towers straddle the Bosporus, one foot in Asia, the other in Europe. By 2015, a $2.5 billion suspension bridge will hang between the 322 meter (1,056 feet)-high towers. Nearby, a swath of forest the size of Manhattan is being readied for a $14 billion airport.
- Al-Qaeda Forces Get Control of Fallujah as Iraq Army Attacks. Al-Qaeda-linked militants held control of much of the Iraqi city of Fallujah and other nearby towns, fighting off efforts by troops with air support to dislodge them, according to a witness. The al-Qaeda fighters have seized military equipment provided by the U.S. Marines to Fallujah police, whose headquarters have been taken over, Uthman Mohamed, a local reporter in the city in Iraq’s western Anbar province, said in a phone interview late yesterday. There’s no sign of government forces inside Fallujah, and most of the fighting is occurring on a highway that links the city to Baghdad, he said.
- Central Banks Split on Stimulus in 2014 as Fed Tapers. The united stimulus front of central banks is starting to splinter as 2014 dawns. The Federal Reserve -- soon to be led by Janet Yellen, who is poised for confirmation by the Senate today -- begins pulling back on its quantitative easing amid stronger U.S. growth, and the Bank of England is trying to cool its housing market. The European Central Bank and Bank of Japan lean toward more monetary action to fight weak inflation. The ECB and BOE both hold policy meetings this week.
- Dudley Sees Fed Needs Better Grasp of How QE Works. Federal Reserve Bank of New York President William C. Dudley said the Fed needs to better understand how its bond buying provides stimulus to the economy. “We don’t understand fully how large-scale asset purchase programs work to ease financial market conditions,” Dudley said today in a speech in Philadelphia. “Is it the effect of the purchases on the portfolios of private investors, or alternatively is the major channel one of signaling?”
- Treasury Yields Climb to Highest Since 2011 as Tapering to Begin. Treasury yields rose to the highest levels since 2011 as the Federal Reserve prepared to start cutting bond purchases amid data that signaled the recovery of the world’s biggest economy is picking up speed. Ten-year note yields exceeded 3 percent and 30-year (USGG30YR) yields approached 4 percent before a report forecast to show the unemployment rate held at a five-year low. Fed Chairman Ben S. Bernanke said yesterday the headwinds that have held back the U.S. economy may be abating. A gauge of traders’ outlook for inflation rose to a three-month high. The Treasury is scheduled to sell $64 billion of notes and bonds next week.
- Fallout From Syria Conflict Takes Rising Toll on Mideast. Spiraling violence and advances by al Qaeda-linked fighters in Iraq, Syria and Lebanon are underscoring the cost of Syria's civil war as it increasingly spills over the country's borders. The rise of the Islamist forces in Iraq is particularly worrisome to the Obama administration. In response, U.S. officials said Sunday they were seeking to boost military support—though they emphasized no troops—for Iraqi Prime Minister Nouri al-Maliki to help in his campaign to push back al Qaeda. U.S. officials are also considering new military aid for Lebanon, which is plagued by rising sectarian violence.
- Where Deflation Risks Stir Concerns. In Europe, Fears Grow of Falling Prices and the Economic Destruction They Cause. Relatively few people alive today in the West have experienced deflation, but for Europeans, that may be changing. Anxieties are rising in the euro zone that deflation—the phenomenon of persistent falling prices across the economy that blighted the lives of millions in the 1930s—may be starting to take root as it did in Japan in the mid-1990s. "Deflation: the hidden threat," ran a headline emblazoned across a December research note by economists at HSBC. At last count, prices are falling only in Latvia, Greece and Cyprus. And most forecasters, including those at HSBC, see low inflation as more likely than deflation on average in the euro zone.
- I'm Suing Over ObamaCare Exemptions for Congress. If the president wants to change the health-care law, he must ask Congress to do it.
Fox News:
CNBC:
CNBC:
- US put China-made parts in F-35 fighter program. The Pentagon repeatedly waived laws banning Chinese-built components on U.S. weapons in order to keep the $392 billion Lockheed Martin F-35 fighter program on track in 2012 and 2013, even as U.S. officials were voicing concern about China's espionage and military buildup.
- Fed's Plosser at odds with policy approach favored by Yellen. The Great Recession could have done permanent damage to potential U.S. output, a top Federal Reserve official said on Saturday, taking an indirect shot at more cyclical approaches to policy-making favored by many economists, including the next Fed chair. Philadelphia Fed President Charles Plosser said in a speech he is skeptical of so-called "optimal control" approaches to monetary policy in which mathematical models are used to predict when things like unemployment and economic growth will return to more normal levels.
Zero Hedge:
Business Insider:- The NSA Responds To Bernie Sanders Whether It Spies on Congress. Of course, it is no surprise that the US superspies spy on Congress. After all they spy on everyone. But the bigger question is if the NSA is itself, by implication, above the checks and balances of the US legislative apparatus, just who is in charge of determining the targets of the most powerful spying agency in the history of the world? In other words, who watches the watchmen? And just how is any of this even remotely legal?
Financial Times:
Yomiuri:- Europe set to ease reform on bank splits. Brussels is set to ease financial reforms so that big European banks are not forced automatically to split lending operations from risky trading. In a draft European Commission proposal, seen by the Financial Times, the separation is no longer mandatory, would be less costly and restrictive than first envisaged and national supervisors are given wide discretion in applying the reforms.
- Honda, GM(GM) Consider Joint Production of Fuel Cells. Honda and General Motors are considering joint production of fuel cell parts as they seek to develop lower-cost, clean vehicles fueled by the cells.
Weekend Recommendations
Barron's:- Bullish commentary on (NOV) and (IVZ).
- Bearish commentary on (PCL) and (N).
- Asian indices are -1.5% to -.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 131.0 +.5 basis point.
- Asia Pacific Sovereign CDS Index 107.5 +1.5 basis points.
- FTSE-100 futures +.07%.
- S&P 500 futures -.06%.
- NASDAQ 100 futures +.02%.
Earnings of Note
Company/Estimate
- (SONC)/.13
- (SHLM)/.46
10:00 am EST
- ISM Non-Manufacturing Composite for December is estimated to rise to 54.6 versus 53.9 in November.
- Factory Orders for November are estimated to rise +1.7% versus a -.9% decline in October.
- None of note
- The Fed's Yellen confirmation, Eurozone Services PMI, Germany CPI and the Citi Internet/Media/Telecom Conference could also impact trading today.
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