Bloomberg:
- China Manufacturing Gauge Falls to Six-Month Low. A Chinese manufacturing gauge fell to a six-month low in January as output and orders slowed, adding to signs that government efforts to rein in excessive credit will cool growth in the world’s second-largest economy. The Purchasing Managers’ Index (EC11CHPM) was at 50.5, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Feb. 1 in Beijing. That matched the median estimate of analysts surveyed by Bloomberg News and compared with December’s 51 reading.
- Cost of Bearish Chinese ETF Bets Surges as Growth Slows. Options traders are paying the most in six months to protect against declines in the largest Chinese exchange-traded fund on concern economic growth is slowing amid a selloff in emerging-market equities. Puts hedging against a 10 percent decline on the iShares China Large-Cap ETF cost 5.8 points more than calls betting on a 10 percent increase, according to three-month implied volatility data compiled by Bloomberg. The Bloomberg China-US Equity Index (EC11CHPM) of the most-traded Chinese stocks in the U.S. fell 1 percent last week, led by Sina Corp. (SINA) The gauge dropped 8.4 percent in January, the worst monthly slide since 2012.
- China-Japan Relations Reach Low Point, Chinese Official Says. China’s relationship with Japan is “probably at its worst” amid a territorial dispute and the Communist government will take action to maintain stability in the region, a senior Chinese official said. Fu Ying, chairwoman of the Foreign Affairs Committee of China’s National People’s Congress, told a panel at the Munich Security Conference today that the government in Beijing would “respond effectively to any provocation” that risked upsetting the “order of tranquility” in East Asia.
- S. Korea Crackdown on Underground Economy Stokes Angst: Economy. Extra pressure on groups from bar owners to doctors to mom-and-pop retailers contrasts with Park’s 2012 election-campaign focus on reducing the scope of industrial groups, known as chaebol, to create space for small- and medium-sized businesses. The clampdown may have the opposite effect, said Jean Lim, a Seoul-based economist at Korea Institute of Finance, a non-profit research center.
- Dollar Rises Most Since May as Taper Fuels Emerging-Markets Rout. The dollar had its biggest monthly gain against a basket of peers since May as a global selloff of emerging-market currencies prompted investors to seek the relative safety of haven assets. “The dollar has benefited from the broad-based flight out of risk assets and into safer ones,” Omer Esiner, chief market analyst in Washington at the currency brokerage Commonwealth Foreign Exchange Inc., said yesterday in a phone interview. “That we didn’t really get even an acknowledgment of the selloff in emerging markets by the Fed shows that it sees little risk of contagion at this point, which is also dollar-positive.”
- Asian Stocks Extend January Rout After China Factory Data. Asian stocks fell, with the regional benchmark gauge extending its steepest monthly slump since May, after a slowdown in Chinese manufacturing growth added to concern a global economic recovery is faltering. Hokkaido Electric Power Co. (9509) slumped 8.4 percent, leading losses on the MSCI Asia Pacific Index, as the Japanese utility forecast a full-year loss. Hyundai Merchant Marine Co., the biggest shareholder in a company that ran tours to North Korea’s Mount Geumgang resort, the site of reunions in 2010 between families separated by war, fell 4.2 percent in Seoul after North Korea didn’t respond to South Korea’s suggested dates for a new round of reunions. Fanuc Corp. advanced 3.3 percent in Tokyo after orders at the factory-robotics maker topped projections. The MSCI Asia Pacific Index lost 0.5 percent to 134.14 at 10:01 a.m. in Tokyo, heading for the lowest close since Sept. 6.
- Record Momentum Unwinding in S&P 500 as China Quashes Euphoria. After U.S. stocks gained 30 percent last year and almost everything went up, measures of Standard & Poor’s 500 Index price momentum are slipping just as concern mounts that emerging markets will snuff out the rally. Almost 160 companies in the benchmark gauge for American equities traded below their average level over the past 200 days last week, more than any time last year, when stocks posted the biggest rally since the technology bubble, according to data compiled by Bloomberg. A total of 86 stocks set one-year highs as the index hit a record Jan. 15. That’s down from an average of 112 when peaks were reached in the third quarter.
- Hedge Funds Raising Gold Wagers Dump Copper: Commodities. Hedge funds raised bullish gold wagers by the most since July and sold copper holdings as emerging-market turmoil boosted concern the global economy will slow and increased demand for precious metals as a haven. The net-long position in gold jumped 40 percent to 60,672 futures and options in the week ended Jan. 28, U.S. Commodity Futures Trading Commission data show. Long wagers rose 5.5 percent to the highest since September, and short bets dropped 16 percent. Net-bullish copper holdings tumbled 62 percent as shorts gained by the most in 11 weeks.
- Copper Set for Longest Slump Since 1996 on China Manufacturing. Copper fell for a ninth day, the longest losing streak since January 1996, after manufacturing slowed in China, the world’s largest user of base metals. Aluminum traded near a four-year low. Copper for delivery in three months on the London Metal Exchange slid as much as 0.4 percent to $7,035 a metric ton and was at $7,045 at 10:31 a.m. in Tokyo. The industrial metal, used in wires and pipes, lost 4 percent in January, the most since June, extending a 7.2 percent drop in 2013.
- Rubber Reaches 16-Month Low as China Manufacturing Growth Slows. Rubber fell to the lowest level since September 2012 after data showed Chinese manufacturing dropped to a six-month low, adding to concerns that demand may weaken from the largest consumer. Futures for delivery in July lost as much as 1.9 percent to 223.1 yen a kilogram ($2,181 a metric ton) on the Tokyo Commodity Exchange, the lowest price for a most-active contract in 16 months. Prices traded at 223.7 yen by 10:14 a.m. local time. The commodity used in tires entered a bear market last week and tumbled 17 percent in January.
- U.S. 10-Year Yield Falls Most Since 2011 on Emerging-Market Rout. Treasury 10-year yields dropped the most since August 2011 as uneven economic data and an exodus from emerging-market assets fueled demand for the safety of U.S. government securities. Benchmark 10-year yields reached the least in 12 weeks as growth slowed in China and Russia and as central banks in India, Turkey and South Africa sought to stem capital outflows, as the Federal Reserve cut bond purchases. U.S. central bank policy makers expressed optimism about improved U.S. economic growth before a Labor Department report on Feb. 7 forecast to show an increase of 180,000 in January nonfarm payrolls.
- London Housing Market Shows Rising Bubble Risk as Asians Pile In. London’s housing market is beginning to show “bubble-like conditions” as overseas investors bid up prices and buyers take on more debt to purchase properties, according to a report today by the EY Item Club.
- German, French Banks Broke Pact on Greek Debt. German, French, Dutch lenders sold Greek debt in 2010, breaching govt promise, citing minutes of IMF meeting from May that year.
- Detroit Bankruptcy Exit Plan Threatens Munis as Pensions Favored. Detroit’s proposal to restructure its $18 billion of debt by paying pensioners at more than twice the rate of some municipal bondholders threatens to increase borrowing costs for localities throughout Michigan.
- Apple(AAPL) Faces $840 Million Claim in E-Books Antitrust Lawsuits. Apple Inc. faces as much as $840 million in state and consumer antitrust claims related to electronic-book deals with publishers that led to a U.S. lawsuit and court-ordered monitor.
- Award-winning Actor Philip Seymour Hoffman Found Dead in Manhattan. The actor was found dead of an apparent drug overdose late Sunday morning in his New York City apartment.
- Michael Barone: How ObamaCare Misreads America. The Washington elites who designed the law must be bewildered: Why doesn't everyone behave as they do? People learn from their mistakes. Or they can—and should. Which is the reason we should try to learn from the revelations of mistakes about health care and health insurance since the passage of ObamaCare. The evidence is not all in. But it seems that Americans are not behaving as ObamaCare's architects—and many critics—expected.
Fox News:
- ‘Not even a smidgen of corruption’: Obama downplays IRS, other scandals. President Obama, in an interview with Fox News’ Bill O’Reilly, tried to put behind him the scandals that have hung over his second term, suggesting his administration did not mislead the public on the Benghazi attack and going so far as to say the IRS targeting scandal had “not even a smidgen of corruption.”
- Japan in danger of missing 2020 budget target. Japan is on course to break a pledge to balance its budget by 2020, according to a new government forecast that sets up a battle between fiscal hawks at the ministry of finance and doves in the cabinet of Shinzo Abe, prime minister.
- Severe drought has US west fearing the worst. The punishing drought that has swept California is now threatening the state's drinking water supply.
Zero Hedge:
Business Insider:- "The 'Recovery' Is A Mirage" Mark Spitznagel Warns, "With As Much Monetary Distortion As In 1929". (graph)
- Schrodinventory. (graph)
- LIVE: Thousands Of Companies Around The World Reveal The Truth About The Global Economy.
New York Times:
- Banks Could Still Face Tougher Capital Requirements to Prevent Crises. Ever since the end of the 2008 financial crisis, the world’s leaders have searched for ways to shore up the banking system. Earlier this month, the committee that sets standards for the global financial system proposed changes to a crucial indicator of bank risk in a way that critics considered a sop to big European lenders like Deutsche Bank.
Washington Post:
- UN says more than 733 Iraqis killed in January. The United Nations said Saturday that at least 733 Iraqis were killed during violence in January, even when leaving out casualties from an embattled western province. The figures issued Saturday by the U.N.’s mission to Iraq show 618 civilians and 115 members of the security forces were killed in January. But the UNAMI statement excluded deaths from ongoing fighting in Anbar, due to problems in verifying the “status of those killed.” The figures also leave out insurgent deaths.
- HealthCare.gov can’t handle appeals of enrollment errors. Tens of thousands of people who discovered that HealthCare.gov made mistakes as they were signing up for a health plan are confronting a new roadblock: The government cannot yet fix the errors.
Reuters:
- Jos. A. Bank(JOSB) says no benefit in commencing negotiations with Men's Wearhouse(MW). Jos. A. Bank Clothiers Inc on Sunday rejected yet another offer by rival Men's Wearhouse Inc, the latest in a prolonged acquisition battle between the two men's clothing retailers. In response to Men's Wearhouse offer last week that it is open to sweetening its spurned buyout offer under certain conditions, Jos. A. Bank said the proposal was still undervaluing the company.
Financial Times:
Telegraph:- French business delegation aims for early bird advantage in Iran. A delegation of more than 100 French companies is set to visit Tehran on Monday in the biggest demonstration of western business interest in Iran for more than a decade.
- Currency crisis at Chinese banks 'could trigger global meltdown’. A rise in foreign funding at China's banks poses a threat for international lenders. The growing problems in the Chinese banking system could spill over into a wider financial crisis, one of the most respected analysts of China’s lenders has warned. Charlene Chu, a former senior analyst at Fitch in Beijing and now the head of Asian research at Autonomous Research, said the rapid expansion of foreign-currency borrowing meant a crisis in China’s financial system was becoming a bigger risk for international banks.
- Currency wars loom as capital flows expose the weak. Will the emerging market rout be different this time? The fear is it won't.
- Asian indices are -1.0% to -.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 151.0 +1.75 basis points.
- Asia Pacific Sovereign CDS Index 116.0 +1.0 basis point.
- FTSE-100 futures -.22%.
- S&P 500 futures +.19%.
- NASDAQ 100 futures +.16%.
Earnings of Note
Company/Estimate
- (SYY)/.40
- (YUM)/.80
- (HIG)/.90
- (ADVS)/.30
- (TTWO)/1.42
- (APC)/.90
- (DNB)/2.83
- (GGP)/.35
- (PPS)/.66
8:58 am EST
- Final Markit US PMI for January is estimated at 53.9 versus a prior estimate of 53.7.
- ISM Manufacturing for January is estimated to fall to 56.0 versus 57.0 in December.
- ISM Prices Paid for January is estimated to rise to 54.0 versus 53.5 in December.
- Construction Spending for December is estimated unch. versus a +1.0% gain in November.
- Total Vehicle Sales for January are estimated to rise to 15.7M versus 15.3M in December.
- (TD) 2-for-1
- The Eurozone Manufacturing PMI and RBA rate decision could also impact trading today.
1 comment:
The cost of governance in Michigan is going to soar.
Bloomberg reports Detroit bankruptcy exit plan threatens munis as pensions favored. Detroit’s proposal to restructure its $18 billion of debt by paying pensioners at more than twice the rate of some municipal bondholders threatens to increase borrowing costs for localities throughout Michigan.
The state of Michigan already has one of the highest debt per-person ratios in the nation. Michigan Capitol Confidential recently reported Budget Watchdog: Debt Burden In Michigan Now $25,300 Per Taxpayer.
Michigan debt, being toxic because of the large amount of it and because of the collapse of government in Detroit, has been in the great demand as credit rallied.
Between December 11, 2013, when Aggregate Credit, AGG, started to recover from a falling Benchmark Interest Rate, ^TNX, and January 31, 2014, the closed end debt fund, Eaton Vance Michigan Municipal Bond Fund, MIW, closed higher outperforming its peers EIP, HYD, and HYMB, as is seen in combined ongoing Yahoo Finance chart. Rising from 11.00; it pays a monthly dividend of 6.30%, based upon a price of 11.57. Thus, those who invested in Michigan Closed End Debt, MIW, garnered a 7% return on their investment, plus a 6.30% yield on that investment, from the beginning of the credit rally, and the end of January.
There is coming a time very soon when the cost of credit will become so expensive, that Michigan governments will have to awesomely lay off workers, cut back services, and yes even abandon their pensions, despite what judges may rule, because no one will buy Michigan debt and because taxpayer simply will not pay taxes.
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