Bloomberg:
- Ruble Sees Worst Annual Drop Since 1998 as Oil, Sanctions Weigh. The ruble had its worst annual slide since its 1998 default as a slew of government interventions failed to support the currency. Russia’s currency lost 41 percent this year, the most in the world after Ukraine’s hryvnia. Government bonds fell the most in emerging markets in 2014, with the five-year yield climbing 822 basis points to 15.44 percent. The Micex Index posted the first decline in three years. The ruble rose 5 percent to 55.5495 a dollar by 7:01 p.m. in London after dropping 7.4 percent yesterday.
- China Needs Its Lehman Moment. The travails of Abenomics should be a warning to President Xi Jinping of China, whose nation increasingly seems at risk of a Japan-like lost decade. Although speculation has focused on the "why" and the "how" of the Japanization of China's economy, the year ahead will provide clues to the question of "when." China in 2015 is likely to look a lot like Japan in 1998. when the zombification of its economy truly began. The Japanese government had recently allowed Yamaichi Securities to crash, an epochal moment for a government that had spent the preceding decade resisting any kind of reform. The collapse of Yamaichi, a 100-year old institution founded at the height of the Meiji Restoration, was Japan's Lehman Moment, and suggested a new political will to force banks to write down bad loans from the 1980s. Then Japan lost its nerve. When Long-Term Credit Bank of Japan and other institutions teetered on the edge in 1998, the government rescued them. Many weak institutions and irresponsible bankers were propped up in subsequent years. Rather than fix a financial system suffocating under liabilities and beset by complacent executives, the Japanese government chose to treat the symptoms of the dysfunction with zero interest rates and fiscal handouts. Abe's government is the latest to follow this tired strategy.
- Emerging Fund Outflows Biggest Since June 2013, IIF Says. Global investors pulled the most funds out of emerging markets this month since June 2013 as oil plunged and concern grew the U.S. Federal Reserve will soon raise interest rates. Net outflows from developing funds totaled $11.5 billion in December, with $7.8 billion withdrawn from debt and $3.7 billion taken out of equities, the International Institute of Finance said in a statement dated yesterday.
- Oil Falls in Worst Year Since 2008 as Asian Stocks Gain. Crude oil resumed its slump, heading for its worst year since 2008 amid speculation U.S. stockpiles data today will fuel concern over a global supply glut. Asian stocks climbed while gold and nickel gained. West Texas Intermediate crude fell 0.5 percent to $53.83 a barrel by 11:00 a.m. in Hong Kong, slipping for the fourth time in five days to trade near a five-year low. Gold added 0.2 percent while nickel rose 0.5 percent. The MSCI Asia Pacific excluding Japan Index increased 0.2 percent.
- OPEC Resolve on Supply Promises No Calm for Oil Markets: Energy. Oil’s biggest price swings in three years are poised to continue as OPEC cedes no ground to competing suppliers. Oil traders’ expectations for future swings, known as implied volatility, surged since Saudi Arabia and fellow members of the Organization of Petroleum Exporting Countries decided Nov. 27 to keep pumping crude despite a supply glut. That will mean prices fluctuating in the next several years by even more than the $57-a-barrel move in 2014, Bank of America Corp. says.
- Iron Ore to Cap Annual Loss. Iron ore is poised to cap the biggest annual decline in at least five years as surging supplies from the world’s biggest producers outstrips demand growth in China, with the raw material dropping for four straight quarters in 2014. Ore with 62 percent content delivered to Qingdao, China, lost 47 percent this year to $71.15 a dry metric ton yesterday, according Metal Bulletin Ltd. The commodity fell to $66.84 on Dec. 23, the lowest level since June 2009.
- Copper Poised for Worst Year Since 2011 as China’s Economy Cools. Copper headed for the biggest annual loss in three years amid signs of a sustained economic slowdown this year in China, the world’s largest metals consumer. The final reading this month for the manufacturing Purchasing Managers’ Index for China from HSBC Holdings Plc and Markit Economics came in at 49.6, the lowest in seven months. A figure below 50 signifies contraction. China is on course for the slowest year of economic growth since 1990, a separate survey shows. Copper for delivery in three months on the London Metal Exchange was little changed at $6,328 a metric ton by 10:20 a.m. in Hong Kong. The metal is poised to fall for a second month andis headed for a 14 percent decline this year, the second-worst performer among the six main base metals on the LME.
- Five Charts Show Why IBM(IBM) Is Worst Dow Performer for Second Year. Since Ginni Rometty became chief executive officer in January of 2012, the shares have fallen 16 percent -- 14 percent of that this year alone. Investors have dumped the stock as Rometty struggles to re-imagine International Business Machines Corp. as a contender in cloud computing, data analytics and mobile technology. So far, those new areas haven’t made up for a decline in sales of legacy hardware and technology consulting services.
- Dollar’s Surge Pummels Companies in Emerging Markets. From Brazil to Thailand, Firms That Sold Bonds in Dollars Now Face Steep, Even Staggering Costs. The soaring U.S. dollar is squeezing companies in emerging markets from Brazil to Thailand that now face higher costs on roughly $1 trillion in bonds sold to investors before the greenback’s surge.
- Seattle Police Chafe Under New Marching Orders. City Reins in Prosecution for Minor Crimes, Sends Some Offenders to Social Services Instead of Criminal Courts.
- 2014 Year in Review: The Events That Shaped a Turbulent Year. From the Rise of Islamic State to Republicans’ Sweep of the Midterms, the Past Year Brought a Number of Game-Changing Developments.
- Progressives and Disorder. The next two years may be the most dangerous since the Cold War ended.
- As families mourn, attention turns to cause of AirAsia disaster. (video) While authorities desperately rushed to recover bodies from the crash site of AirAsia Flight 8501 on Wednesday, focus shifted from locating the plane’s wreckage to determining the causes behind the disaster that likely killed all 162 aboard.
CNBC:
- Everyone involved in oil will be squeezed: Pro. (video) Oil will continue to fall and everybody involved is going to get squeezed, energy pro John Kilduff told CNBC on Tuesday. That includes the so-called picks and shovels companies that aren't directly involved in oil production.
- This market trend could be 'very negative'. Both mutual and exchange-traded funds saw their biggest weekly inflows in history last week. ETFs alone have witnessed their largest-ever three-month run, according to data analysis firm TrimTabs. U.S. funds took in a combined $36.5 billion over the most recent reporting week, according to Thomson Reuters Lipper. That comes as part of a run that has seen $81.3 billion alone come into the $2 trillion ETF space since October, according to TrimTabs. That's the largest three-month flow ever, topping the influx from July through September 2008. TrimTabs CEO David Santschi said the strong flows are "very negative from a contrarian perspective."
- Should I Buy A House In 2015? (graph)
Reuters:
- FOREX-Dollar index on track for best annual gain in 9 years. The dollar was on track to end 2014 with a gain of 12 percent against a basket of major currencies, and anticipated U.S. interest rake hikes may strengthen its appeal in the new year. This year's gain will be the dollar's largest since 2005, when it climbed nearly 13 percent.
- Investors eye 2015 with big appetite for hedge funds -report. Wealthy investors are poised to put at least $90 billion into hedge funds next year, even after returns have largely been lackluster this year, research firm eVestment said on Tuesday.
- How the world fell back into economic meltdown: 2014 in charts. From Russia's economic collapse, the threat of deflation, and another year of record low interest rates, here's how crisis beset the world economy once again.
- ECB's Knot Says There's No Proposal for QE Yet. ECB Governing Council member Klaas Knot says policy makers will have a discussion next month on the necessity of quantitative easing and whether it will help, citing an interview. "As long as Europe isn't politically willing to share more risks within the eurozone, it's not up to us to take such a decision ourselves via the back door." Economic and monetary cooperation without further political cooperation is unstable, he said. Population in northern Europe has "deep distrust" of willingness of southern European countries to make "painful, internal reform measures". Sees a threat of a transfer union whereby money flows structurally from north to south. Knot is also president of the Dutch central bank.
- Greek exit from euro zone conceivable if Syriza wins elections, Michael Fuchs, deputy chairman of German Chancellor Angela Merkel's party, says in interview. If Syriza cuts back reform, austerity measures, Troika can cut back loans to Greece.
- None of note
- Asian equity indices are -.25% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 106.0 +3.0 basis points.
- Asia Pacific Sovereign CDS Index 67.0 +3.25 basis points.
- S&P 500 futures +.08%.
- NASDAQ 100 futures +.09%.
Earnings of Note
Company/Estimate
- None of note
8:30 am EST
- Initial Jobless Claims are estimated to rise to 290K versus 280K the prior week.
- Continuing Claims are estimated to fall to 2368K versus 2403K prior.
- Chicago Purchasing Manager for December is estimated to fall to 60.0 versus 60.8 in November.
- Pending Home Sales for November are estimated to rise +.5% versus a -1.1% decline in October.
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +133,330 barrels versus a +7,267,000 barrel gain the prior week. Gasoline inventories are estimated to rise by +1,677,780 barrels versus a +4,083,000 barrel gain the prior week. Distillate supplies are estimated to rise by +1,694,440 barrels versus a +2,303,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.19% versus unch. prior.
- (GNTX) 2-for-1
- The China Official PMI, weekly Bloomberg Consumer Comfort Index and weekly MBA mortgage applications report could also impact trading today.
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