Bloomberg:
- Putin's High Tolerance for Pain and Europe's Reluctance to Inflict It. As a cease-fire emerges in Ukraine that gives Putin a lot of what he wants, the comments are a reminder of how the country remains trapped between the weight of Russian history and the force of European economics. In this squeeze, Putin’s narrative backed by Cold War memories is coupled with leaders unwilling to blow up ties with a major trading partner and energy supplier.“ Some EU member states just don’t care that much about Ukraine,” Paul Ivan, a former Romanian diplomat now with the European Policy Centre in Brussels, said this week. “There are countries with historical ties and good relations with Russia, and for some others they think they’re far away from Ukraine and they’re willing to compromise that country’s territorial integrity for their own economic interests.”
- EU Stands by Sanctions on Russia After Ukraine Truce Sealed. European leaders said Russia will have to wait for relief from economic sanctions, reflecting concern that Thursday’s cease-fire agreement will only mark a pause in the war that has devastated eastern Ukraine. The accord was struck after more than 18 hours of non-stop talks between Ukrainian President Petro Poroshenko, his Russian counterpart Vladimir Putin, German Chancellor Angela Merkel and French leader Francois Hollande. It envisages a truce from midnight at the start of Feb. 15 and reaffirms some commitments from a failed September bid to end the conflict that has devastated eastern Ukraine. The collapse of previous cease-fires has stoked doubts as to whether this one will hold. Ten months of fighting have killed more than 5,000 people, crushed Ukraine’s economy and propelled Russia toward a recession through U.S. and European sanctions. European Union sanctions -- whether to ease or stiffen them -- remained off the agenda for a summit in Brussels, with the bloc awaiting proof the truce is holding.
- China Money Rate Set for Longest Run of Weekly Gains Since 2013. The seven-day repurchase rate, a gauge of interbank funding availability, climbed for a fifth week, adding 27 basis points to 4.62 percent as of 10:26 a.m. in Shanghai, according to a weighted average from the National Interbank Funding Center. The rate fell one three basis point Friday.
- Too Many Car Factories in China? Automakers have been successful at adding factories. Maybe too successful. Domestic and foreign-based carmakers are building more factories in China than anywhere else, a construction binge that risks hurting margins in what remains one of the world’s most profitable vehicle markets. By 2017 there will be 140 car production plants in China, vs. 123 at the end of 2014, estimates JSC Automotive Consulting. According to IHS Automotive forecasts, factories across the mainland in 2015 will be able to build 10.8 million more vehicles than will be sold in Greater China. In North America, however, IHS expects plants to churn out about 3.2 million more cars this year than the factories were intended to produce when they were built.
- Collateral Damage From China's Antigraft Drive. Drooping sales of prepaid cards are hurting retailers.
- Asian Stocks Advance With Emerging Currencies; Yen Gains. Asian stocks climbed with emerging-market currencies after a ceasefire deal in Ukraine and signs of compromise on Greece’s debt negotiations. The yen held gains on bets that the Bank of Japan will refrain from additional stimulus. The MSCI Asia Pacific Index added 0.7 percent by 12:13 p.m. in Tokyo, as mining and energy shares drove Australia’s S&P/ASX 200 Index toward its highest close since May 2008.
- U.S. Yield Increase in February Hurts Bondholders to Homebuyers. From bondholders to home buyers, this month’s jump in Treasury yields is starting to bite. U.S. government debt has fallen 1.9 percent in February, headed for the biggest monthly loss since May 2013, based on Bloomberg World Bond Indexes. U.S. mortgage rates increased this week. Benchmark Treasury yields are climbing as investors prepare for the Federal Reserve to raise interest rates.
- Ukraine Peace Talks Yield Cease-Fire Deal. Leaders Caution There Is Much to Do to Ensure Truce Holds. Germany and France’s leaders emerged from 17 hours of all-night negotiating with Russian President Vladimir Putin on Thursday with a truce for Ukraine intended to glue together the shards of the last one—but with little confidence in the West that it would.
- Chinese Shake Up Aluminum. Tax Quirks Prompt Smelters to Mask Metal for Export as Processed. A surge in aluminum exports from China is altering market dynamics for one of the world’s most heavily traded commodities. Because of quirks in China’s tax system, the trend involves reshaping the metal itself.
- GOP Contender Walker Draws Wall Street Cash. New York Fundraisers Plan Donor Events for the Wisconsin Governor in the Coming Days. Wall Street is warming up to Wisconsin’s Republican Gov. Scott Walker. Several GOP fundraisers from the financial-services industry and other Manhattan business sectors are hosting donor events for Mr. Walker, a likely presidential candidate, when he visits New York next week.
- Putin’s Latest Victory. The Minsk accord ratifies a Russian satrapy in Ukraine. The last time the Kremlin signed an agreement to end the war in Ukraine—as recently as September—it promised to withdraw “military equipment as well as fighters and mercenaries” from the war zone, ban offensive operations and abide by an immediate cease-fire. In exchange the Ukrainian government granted unprecedented political autonomy to its rebellious eastern regions.
- These EM bonds are vulnerable to king dollar’s reign. Expectations that the Federal Reserve will hike interest rates later this year have powered a rally in the U.S. dollar, and with further gains likely, analyst warn that some dollar-denominated emerging market (EM) debt is vulnerable. "The dollar's appreciation has pushed up the local-currency value of EM debt that is denominated in U.S. dollars, making it harder to service," said Capital Economics' Senior Asia Economist Daniel Martin.
- The New-Normal Down-Under. (graph)
Washington Post:
- Which image of Obama mugging for BuzzFeed’s cameras diminishes the presidency the most, ranked. (pics)
- Euro zone needs radical change, Juncker tells leaders. The euro zone needs fundamental changes to the way it is run or faces endemic unemployment and the trap of low economic growth for years to come, the European Union's chief executive told the bloc's leaders on Thursday. In a presentation, European Commission President Jean-Claude Juncker called for a deepening of the cooperation that underpins the 19-member currency area, despite the reluctance of countries to cede more sovereignty to EU institutions.
AFP:
Economic Information Daily:- EU leaders warn of further sanctions, if Ukraine deal breached. The leaders of Germany and France have said that more sanctions could be brought against Russia if a new Ukraine ceasefire fails. A deal aimed at ending the bloodshed in eastern Ukraine was reached on Thursday.
- European leaders cautious over ‘Minsk 2’ agreement. European leaders and analysts were sceptical of the 13-point document that emerged on Thursday after 16 hours of bruising, all-night discussions in Minsk. Some gave warning that President Vladimir Putin of Russia appeared to have come out on top.
- China May See More Privately Placed Bond Defaults. A combined 17b yuan of privately placed bonds listed on the Shanghai and Shenzhen exchanges will mature this year amid an environment of higher-risk default, citing Wind Info. The economic slowdown and worsening operating environment for small cos. may lead to more defaults, the report cites researchers. Private bonds defaults may also spread to larger cos. the report said.
- China Rate Cut Unlikely in Near Future. An interest rate cut is unlikely as the latest monetary policy moves need time to take effect and a narrower interest margin between China and overseas may intensify capital outflow, a front-page commentary said.
- None of note
- Asian equity indices are +.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 107.50 -2.5 basis points.
- Asia Pacific Sovereign CDS Index 68.25 -1.25 basis points.
- S&P 500 futures -.06%.
- NASDAQ 100 futures +.01%.
Earnings of Note
Company/Estimate
- (MT)/.25
- (CPN)/-.11
- (DTE)/1.05
- (EXC)/.51
- (ITT)/.57
- (SJM)/1.51
- (RUTH)/.22
- (TRW)/1.87
- (VFC)/.98
8:30 am EST
- The Import Price Index for January is estimated to fall -3.2% versus a -2.5% decline in December.
- Preliminary Univ. of Mich. Consumer Sentiment for February is estimated at 98.1 versus 98.1 in January.
- None of note
- The Fed's Fisher speaking, Eurozone GDP and the (MU) analyst conference could also impact trading today.
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