- China Spurs Market Rout Blamed on Fed, Goldman Sachs AM Says. China’s policy shifts are a bigger driver of the selloff in emerging markets than the Federal Reserve’s decision to dial back stimulus, according to Goldman Sachs Asset Management. Volatility will rise toward its long-term average and that means an increase in risk premiums, said Philip Moffitt, head of fixed income in Sydney for Asia and the Pacific at Goldman Sachs Asset Management, which had $991 billion of assets under supervision worldwide as of September. The risks for different emerging economies will become more idiosyncratic and Mexico presents a buying opportunity following the rout, he said.
- Turkey Outlook Cut by S&P Citing ‘Hard Landing’ Risk. Turkey’s credit rating outlook was cut to negative from stable by Standard & Poor’s, which said there’s a growing risk of a “hard economic landing” as reserves decline and policy makers spar over interest rates. The move by S&P, the only one of the three main credit rating companies that doesn’t classify Turkish debt as investment grade, comes after the country’s central bank reversed policy and raised interest rates to halt a currency slump. The government has been calling for borrowing costs to be kept low, and says it has alternative plans to revive the economy and the lira.
- German Industrial Output Unexpectedly Fell in December: Economy. German industrial output unexpectedly fell in December, signaling that Europe’s largest economy remains vulnerable to weakness in the rest of the region. Production (GRIPIMOM), adjusted for seasonal swings, decreased 0.6 percent from November, when it rose a revised 2.4 percent, the Economy Ministry in Berlin said today. Economists predicted a gain of 0.3 percent, according to the median of 40 estimates in a Bloomberg News survey.
- European Stocks Climb as Investors Assess U.S. Employment. European stocks advanced, following their biggest rally in seven weeks, as investors assessed a report that showed the U.S. economy created fewer new jobs last month than forecast. Statoil ASA (STL) added 5.7 percent after saying it will cut spending to increase cash flow. EMS-Chemie Holding AG advanced 3.8 percent after posting better-than-expected profit in 2013 and saying it will pay an extraordinary dividend. SBM Offshore NV, the Dutch supplier of floating oil and gas rigs, tumbled 12 percent for its largest decline since November 2012. The Stoxx Europe 600 Index increased 0.7 percent to 325.09 at the close of trading, taking its advance this week to 0.8 percent.
- Gold Futures Advance After U.S. Payrolls Rise Less Than Expected. “Gold definitely got a bid to it from the weaker numbers,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “What remains to be seen is if this is a one-off thing or the economy is showing signs of weakness.” Gold futures April delivery added 0.5 percent to $1,263.50 an ounce at 10:54 a.m. on the Comex in New York. This week, the metal has risen 1.9 percent this week, the most since Jan. 3.
- Homeland Chief Says U.S. Responding in ‘Real Time’ to Threats. Recent warnings and restrictions on air travelers heading to Russia are a “real time” response to threats associated with the Winter Olympics, which opened today, Homeland Security Secretary Jeh Johnson said. “DHS monitors world events in real time and takes action, when necessary, to confront and respond to threats,” Johnson said, according to excerpts of a speech he planned to deliver today at the Woodrow Wilson International Center for Scholars in Washington. “In support of Russian authorities, we are keeping a close eye on the Sochi Olympics.”
- As the Winter Olympics Open, Putin Showcases a Defiant Russia. Games Highlight Hostility to Russian President's New Political Creed. On Friday night, Russian President Vladimir Putin will entertain world leaders at a reception under soaring, Corinthian-style columns and a giant, sparkling chandelier in the Atrium ballroom of the Stalin-era Rus Sanatorium. It will be one of the most exclusive events of the Winter Olympics here, but Mr. Putin's guest list has some big gaps. Few of the Western world's most prominent leaders will be there, declining entreaties to attend, according to diplomats and government officials.
- Fitch Downgrades Ukraine to Triple-C on Political Uncertainty. Ukraine's Currency Has Weakened To Its Lowest Level in Years in Recent Weeks.
- The Singularity: Hedge Funds Become One with the S&P 500. Hedge funds appear to be facing their own singularity in the form of the S&P 500. They’re slowly but surely becoming one with the large-cap stock index.
- Severe unemployment overwhelms meager job gains. Opinion: Failure to extend jobless benefits is most recent harmful policy error.
- Moody's downgrades Puerto Rico GO debt rating two notches to 'junk' status. Turkish security officials searched a passenger plane at an Istanbul airport after a bomb threat was made and a passenger demanded to fly to Sochi, Russia, where the Winter Olympics got underway Friday. The Pegasus Airline flight with 110 passengers from Kharkov, Ukraine, landed safely at Istanbul’s Sabiha Gokcen airport.
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- U.S. oil hits 2014 high as widespread cold lifts heating demand. Oil rose by more than $1 to one-month highs on Friday, fueled by a sharp rally in gasoline and heating oil as supplies tightened and refiners started to shut down plants for maintenance.
- Brazil power failures may trigger fiscal short circuit. Brazil's fiscal accounts, already under close scrutiny by rating agencies, could suffer a new blow this year as the government picks up the bill for rising energy prices. A blackout in large swathes of the country this week raised serious questions about the capacity of the power system to cope with rising consumption and a drop in supply as low water reservoir levels sap output at hydroelectric plants.
- Fed is not swayed by any single number, Fisher tells CNBC. The U.S. central bank is unlikely to reverse its decision to wind down its bond-buying program in reaction to the weaker-than-expected January jobs report released on Friday, a top Federal Reserve official suggested. "I will say this about the rest of our committee, is they are not swayed by a single number. They are thoughtful people," Dallas Federal Reserve Bank President Richard Fisher said on CNBC, referring to the Fed's policy-setting Federal Open Market Committee.
- German court warns there are 'important reasons to assume' ECB bond-buying is illegal. Germany's constitutional court "inclined" to rule ECB's eurozone crisis backstop is illegal.
- Webchat: Are we entering the third phase of the Great Financial Crisis? Ambrose Evans-Pritchard answers your questions about the global economy amid tightening in the US and China, ECB inaction and emerging markets turmoil.
- French 2014 Industrial Investment Seen 10% Below 2007. Investment by French industrial companies is being held back by low margins, citing several research institutes.
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