Monday, February 10, 2014

Monday Watch

Weekend Headlines 
Bloomberg:
  • Hong Kong Students Clear Barricades as Crisis Talks Start. Pro-democracy protesters allowed civil servants to enter Hong Kong’s government offices as demonstrations that had paralyzed parts of the city for 10 days thinned after the start of talks with student leaders. Civil servants started entering offices from at least 7 a.m. after protesters who had besieged the buildings cleared some barricades yesterday. The move followed an ultimatum from the city’s leader to open the site where 3,000 people work by today or face possible police action.
  • Ukraine Prepares for East Buffer Zone With Artillery Vow. Ukrainian troops prepared to set up a buffer zone to cement a monthlong truce between them and the pro-Russian separatists they’ve been battling for half a year. While the government said some insurgents are continuing to violate the truce and reported the deaths of two soldiers, the military declared a complete halt to artillery fire. The move is a precursor to an army pullback to help create a demilitarized zone, President Petro Poroshenko said. An international commission is determining the boundaries of the no-fire area. 
  • World Bank Cuts Developing East Asia 2015 GDP Forecast. The World Bank lowered its forecasts for growth in developing East Asia this year and next as China’s expansion moderates and policy makers brace for tighter global monetary conditions. The region is forecast to grow 6.9 percent in 2014 and 2015, down from 7.1 percent projected in April, the Washington-based lender said in its East Asia and Pacific Economic Update released today. China will expand 7.4 percent this year and 7.2 percent next year, compared with 7.6 percent and 7.5 percent previously forecast, the report showed.
  • Neves to Face Rousseff in Brazil in Surprise Comeback. Aecio Neves pulled off a surprise second-place finish to force a runoff with Brazilian President Dilma Rousseff, pitting a candidate favored by investors against an incumbent who says the end of her party’s 12-year rule threatens policies that pulled 35 million out of poverty. The incumbent of the Workers’ Party, or PT, has 41 percent of the votes, followed by Neves of the Brazilian Social Democracy Party, known as PSDB, with 34 percent and Marina Silva with 21 percent, Brazil’s Superior Electoral Court reported based on 97 percent of ballots counted.
  • Seven Economic Shifts Underlying Hong Kong’s Divide With Beijing. Underlying the test to China’s control of Hong Kong with pro-democracy protests over the past 10 days are economic tensions that have fueled social unease and concern over the city’s place within the nation. Without the release valve of free elections to vent their frustration, demonstrators have taken their anger towards what they perceive as an unrepresentative government to the streets.
  • Asian Stocks Rise on U.S. as Hong Kong Swings; Gold Falls. Asian stocks rose, rebounding from a six-day slide in the regional index, while Hong Kong shares fluctuated as protesters in the city vowed to fight on. The dollar was near a four-year high after American payrolls data and gold slid to a 2014 low as platinum and palladium tumbled. The MSCI Asia Pacific Index added 0.5 percent by 11:36 a.m. in Tokyo, as Japan’s Topix index jumped 1.3 percent after the yen’s biggest drop for 2014 on Oct. 3.
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          Wall Street Journal:
          • Hong Kong Protests Enter New Phase. Police Show No Signs of Clearing Protest Areas With Force. This city’s government met for the first time late Sunday with student leaders in an effort to resolve a political stand-off that has paralyzed three commercial districts here, while fears of a crackdown eased at the main protest site outside government headquarters Monday morning. As dawn broke on the protest sites Monday, protesters were mostly asleep on the roads. Police were standing back and taking no action to enforce an earlier threat to clear the areas.
          • BHP(BHP) Plows Ahead on Iron-Ore Production. Shakeout Is Possible, With Further Pressure on Already-Falling Prices.
          • Weak Export Growth Raises Prospect of Currency Moves. Sluggish Global Trade Growth Is Tempting Officials to Devalue Their Currencies to Jump-Start Economies.
          • The Next Front Line in the Islamic State Onslaught. Lebanon’s precarious state has worsened as ISIS beheads citizens and holds hostage Lebanese troops and police.
          Barron's:

          MarketWatch.com:

             

          Zero Hedge:
             
                  ValueWalk:

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                  Seeking Alpha:
                  Financial Times:

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                  Telegraph:
                  BBC:

                  Focus:
                  • Bundesbank's Weidmann Warns of ECB Taking ABS Credit Risk. ECB risks being offered lower-quality asset-backed securities, Bundesbank President Jens Weidmann quoted by Focus magazine as saying. The ECB is at risk of overpaying, he said.
                  Handelsblatt:


                  Sueddeutsche Zeitung:

                  To Vima:
                  • ECB Measures Will Have Limited Impact, Ackermann Says. Recent liquidity-enhancing steps by ECB, including TLTRO program, ABS purchases will have limited impact as stand-alone measures, former Deutsche Bank CEO Josef Ackerman cited as saying in interview. ECB's policy tools are exhausted, he said. It rests up euro area national govts to implement structural reforms that will kick-start private investment, Ackermann said. US-style quantitative easing not likely in euro area due to political difficulties. The Federal Reserve may start raising rates in 1Q, instead of 2Q currently projected, and faster than currently anticipated, he said.
                  Folha de Sao Paulo:

                  Nikkei:

                  Kyodo:

                  China Securities Journal:

                  China Daily:

                  Xinhua:

                  Shanghai Securities News:

                  Financial News:

                  Al-Arabiya:

                  Weekend Recommendations
                  Barron's:
                  • Bullish commentary on .
                  • Bearish commentary on .
                  Night Trading
                  • Asian indices are -.25% to +.75% on average.
                  • Asia Ex-Japan Investment Grade CDS Index 96.0 -2.0 basis points.
                  • Asia Pacific Sovereign CDS Index 70.0 -1.75 basis points.
                  • FTSE-100 futures +.18%.
                  • S&P 500 futures +.27%.
                  • NASDAQ 100 futures +.31%.
                  Morning Preview Links

                  Earnings of Note

                  Company/Estimate
                  • (CAMP)/.19
                  • (TCS)/.11
                  • (TISI)/.34
                  Economic Releases
                  • None of note
                  Upcoming Splits
                  • None of note
                  Other Potential Market Movers
                  • The Fed's George speaking, RBA decision, German Factory Orders, (ADBE) analyst briefing, (BKH) analyst day and the (CDE) investor day could also impact trading today.
                  BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and consumer shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 75% net long heading into the week.

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