- China Auditors Barred for Six Months Over Blocking SEC Probes. Chinese affiliates of the four largest accounting firms were barred for six months from leading audits of U.S.-listed companies after failing to comply with Securities and Exchange Commission orders for documents at the heart of a series of accounting fraud probes.
- Abe Comparing China to Pre-World War One Germany Fuels Tensions. China said Prime Minister Shinzo Abe was evading Japan’s “history of aggression” by comparing Sino-Japanese relations to those of the U.K. and Germany prior to World War I. “There’s no need to make an issue of the U.K.-Germany relationship,” Foreign Ministry spokesman Qin Gang told reporters in Beijing yesterday. “Such remarks by Japanese leaders are to evade the history of aggression, to confuse the audience.” Abe told a group of editors at the World Economic Forum in Davos, Switzerland that Germany and the U.K. went to war despite their strong economic ties. He said Japan and China must do everything to avoid a similar fate. The Japanese government later confirmed the remarks.
- Argentina’s Peso Plunges as Central Bank Scales Back Support. Argentina devalued the peso the most in 12 years after the central bank scaled back its intervention in a bid to preserve international reserves that have fallen to a seven-year low. The peso plunged 13.9 percent to 7.9295 per dollar at 2:02 p.m. in Buenos Aires, after falling to as low as 8.2435, according to data compiled by Bloomberg. The decline in the peso marks a policy turn for Argentina which had been selling dollars in the market to manage the foreign exchange rate since abandoning a one-to-one peg with the U.S. dollar in 2002. “They’re running out of cash and they’re sitting in the corner at the moment,” Phillip Blackwood, who oversees $3.5 billion in emerging market assets as a managing partner at EM Quest Capital LLP, said in a phone interview from London. “There’s a feeling in the market that they’re not going to intervene any more.”
- Chilean Peso Drops to Weakest Since 2009 as Copper Prices Sink. Chile’s peso plunged to the weakest level in three years as copper fell and investors fled emerging-market currencies. The currency dropped 1.2 percent to 549.19 per U.S. dollar, the biggest decline in two months and the weakest close since October 2009.
- Venezuela Bonds Plunge After Bolivar Weakened for Travel. Venezuelan bonds plunged to the lowest in more than two years after the government announced the latest partial devaluation of the bolivar, this time for airlines and foreign direct investment. Venezuelans traveling abroad, airlines and foreigners sending remittances home must use a secondary exchange rate determined at weekly auctions, Economy Vice President Rafael Ramirez said yesterday. The rate set at the latest auction was 11.36 bolivars per dollar, compared with the official rate of 6.3. Airlines operating in Venezuela fell and one carrier suspended flights.
- Rio Olympic Organizers Say Costs Rise by 25% to 7 Billion Reais. Brazil’s operating budget for the 2016 summer Olympics in Rio de Janeiro has increased by 25 percent above initial estimates to about 7 billion reais ($2.91 billion) as a result of new sports and inflation. The original spending plan was for 5.6 billion reais, mostly funded through sponsorships and an International Olympic Committee grant.
- Spanish Unemployment Stays Above 25% as Rajoy Seeks Growth. Spain’s unemployment remained above 25 percent for a sixth straight quarter, underpinning the extent of the damage wrought by a six-year slump in the euro region’s fourth-largest economy. The jobless rate was at 26.03 percent of the workforce in the three months through December compared with 25.98 percent in the previous quarter, the National Statistics Institute in Madrid said today. Economists expected the rate to remain unchanged, according to the median of seven forecast in a Bloomberg News survey.
- Turkey Central Bank Fails to Arrest Lira Slide With Intervention. The Turkish central bank’s first unscheduled currency interventions in more than two years failed to stem the lira’s slide. The currency plunged as much as 2 percent to a record 2.3029 per dollar after the central bank sold foreign currency in multiple attempts to shore up the lira. The bank bought the local currency because of “unhealthy price formations,” according to a statement on its website, which didn’t specify the size of the purchases. It sold about $3 billion, according to HSBC Holdings Plc, citing market estimates.
- European Stocks Drop as Chinese Manufacturing Contracts. European stocks dropped from a six-year high as a report showed manufacturing in China probably contracted this month, and media and technology companies slid. Pearson Plc plunged the most in more than 11 years after saying it probably spent more on reorganization last year than it had forecast. Nokia (NOK1V) Oyj slid the most in 16 months after predicting that profit margins at its network-equipment division will drop in the current quarter. Logitech International SA rallied 18 percent after reporting quarterly profit and sales that exceeded analysts’ estimates. The Stoxx Europe 600 Index fell 1 percent to 332.69 at the close of trading, its biggest decline in more than seven weeks.
- Hard-to-Sell Junk Debt Lures Oaktree to JPMorgan: Credit Markets. Bond investors are losing their aversion to difficult-to-trade corporate debt that handed them some of the biggest losses in the credit crisis. The extra yield note buyers demand to own older, smaller junk bonds that trade infrequently has shrunk to an average 0.25 percentage point this month from more than 1 percentage point a year ago, according to Barclays Plc data. The evaporating premium for illiquid assets is showing the depths to which money managers are reaching to boost returns after a five-year rally that pushed relative yields on junk bonds to the least since August 2007.
- Consumer Confidence in U.S. Held Last Week at One-Month Low. Consumer confidence was little changed last week at a one-month low as Americans confronted having to pay holiday bills.The Bloomberg Consumer Comfort Index held at minus 31 for the period ended Jan. 19.
- Obama Recovery Fails to Resonate as Americans Left Behind. Obama will carry into next week’s State of the Union address weakening approval ratings on the economy. What’s happening, Republicans and some Democrats say, is that voters left behind in the recovery now blame him and not his predecessor, George W. Bush, and could punish Obama’s fellow Democrats in this year’s congressional elections. “At some point, the president is going to start owning the economy,” said Simon Rosenberg, president of NDN, a Democratic-leaning research group. “It could be we’re at that point.”
- Cold Gripping U.S. Preview of Worse Weather Coming Next Week. Frigid temperatures plunging south across the U.S. will hold on through the rest of the week and are a preview of an even sharper cold snap to come, driving energy demand and potentially crimping production. Temperatures across the eastern U.S. and parts of Ontario and Quebec will be at least 8 degrees below normal through Jan. 27, said Matt Rogers, president of the Commodity Weather Group LLC in Bethesda, Maryland. Next week will be worse, he said.
- United(UAL) Sees Bookings Slowdown as Pacific Travel Drops. United Continental Holdings Inc. (UAL), the biggest U.S. airline on flights to Asia, said a benchmark revenue measure may show little growth this quarter amid a slowdown in bookings for trans-Pacific travel. Revenue from each seat flown a mile on main jet routes will rise in a range of 0.3 percent to 2.3 percent from a year earlier, the Chicago-based carrier said in a U.S. regulatory filing today. The percentage of available seats sold on flights to Asia over the next six weeks is down 4.9 percentage points.
- Wal-Mart(WMT) Aims To Match Amazon's Service Offerings. Wal-Mart Will Continue To Build Out New Distribution Centers for Online Delivery.
- Central Banks Should Lean In Against Bubbles, BIS Official Says. The world’s major central banks should be more proactive about restraining excessive asset price increases rather than just trying to clean up the mess after the bubbles pop, according to a new working paper from Claudio Borio, head of the Monetary and Economic Department at Bank for International Settlements. “For monetary policy, this means leaning more deliberately against booms and easing less aggressively and persistently during busts,” the author writes.
- ObamaCare death debt? States can seize assets to recoup Medicaid costs. Tom Gialanella, 56, was shocked to find out he qualified for Medicaid under ObamaCare. The Bothell, Wash., resident had been able to retire early years ago, owns his home outright in a pricey Seattle suburb and is living off his investments.
CNBC:
- Cashin: Why 'everybody is on alert'. (video)
- It's Black Friday again! Retail woes as deep as the discounts. (graph) The pain retailers felt at the end of 2013 isn't showing signs of relief in the new year. Following the worst holiday season since 2008—one that was underscored by dramatically reduced prices and lower margins—the heavily promotional environment has persisted into January, according to Morgan Stanley analyst Kimberly Greenberger.
- Bob Janjuah: "Tick Tock, Not Yet Bear O’Clock". The only real "success" of these current policies is to create significant investment distortions and misallocations of capital, at the expense of the broad real economy, leading to excessive speculation and financial engineering.
- Guess The Mystery Chart. If you said the underlying data is comparable store sales for McDonalds(MCD) in the United States, which just dipped by 1.4% - the most since the Lehman crash - then you were 100% accurate.
NY Times:
- Watchdog Report Says N.S.A. Program Is Illegal and Should End. An independent federal privacy watchdog has concluded that the National Security Agency’s program to collect bulk phone call records has provided only “minimal” benefits in counterterrorism efforts, is illegal and should be shut down. The findings are laid out in a 238-page report, scheduled for release by Thursday and obtained by The New York Times, that represent the first major public statement by the Privacy and Civil Liberties Oversight Board, which Congress made an independent agency in 2007 and only recently became fully operational.
- Dollar hits session low against yen after U.S. jobs report. USD/JPY hit 103.93, the lowest since January 20 and was last down 0.44% to 104.05.
- IMF warns more work is needed to tackle big bank risk. Big banks still pose a threat to the world financial system because there is a general assumption that governments will come to their rescue in case of trouble, an International Monetary Fund executive said on Thursday. "It is astonishing that officials in countries are still largely ill-equipped to deal with a Lehman Brothers-style bankruptcy, where assets and liabilities are scattered across multiple jurisdictions and entities," Jose Vinals, tasked with financial oversight at the IMF, said in a blog post.
- European equity investors brace for deflation threat. European equity investors, worried by the threat of deflation, are turning more cautious on companies with high debt levels and preferring luxury and technology stocks to food retailers. A dip in euro zone inflation in December has fuelled concerns that the region could be on course for an era of falling prices - traditionally bad news for equities shares as it crimps profits and curbs economic growth.
- Global steel output hits record. Global steel production reached a record high in 2013, with growth speeding up as Asia put a foot an the accelerator and offset a contraction in Europe and the United States.
- US manufacturing growth slows in Jan-Markit. U.S. manufacturing growth slowed in January for the first time in three months, hobbled by new orders, though a recent trend of stronger growth appeared to be intact, an industry report showed on Thursday.
Telegraph:
- Japan's recovery at risk of stalling on 'premature' tax rise fears Nobel economist Stiglitz. Nobel laureate warns that Japan's premier is pursuing a "risky strategy" by raising the consumption tax from 5pc to 8pc in April.
- US to run out of money sooner than expected. Government will likely run out of borrowing authority needed to help pay its bills by late February.
- China Warned Some Foreign Planes That Enter Air Zone. China's air force has given voice warnings to some foreign military planes that entered China's air defense identification zone.
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