Bloomberg:
- Greek Leaders Return Home for Rethink After Rebuff From Germany. Prime Minister Alexis Tsipras is preparing to set out the most detailed account yet of his plans to revive the Greek economy after a diplomatic push ended with a rebuff from Germany and a warning shot from the European Central Bank. Tsipras, 40, was greeted by the rare sight of a pro-government demonstration in downtown Athens on Thursday night after he vowed to stick to his anti-bailout campaign pledges, despite their rejection by German Finance Minister Wolfgang Schaeuble. The prime minister will lay out his policy plans on Sunday, in the opening speech of the three-day-long parliamentary debate leading up to a confidence vote to confirm his government.
- Putin Risks New Unrest, Says Economist Who Forecast 2011 Protest. The economist who predicted the largest protests of Vladimir Putin’s rule in 2011-2012 says Russia may be entering a new era of revolt provoked by the economic slump and the deepening conflict in Ukraine. Discontent at tightening political controls at a time of worsening economic hardship may boil over by the next parliamentary elections at the end of 2016, Mikhail Dmitriev said in an interview in Moscow. Serious unrest could be triggered even sooner if fighting increases significantly between Ukraine and pro-Russian separatists, provoking fresh U.S. and European Union sanctions and a deeper economic crisis, he said. “A further escalation of the conflict in Ukraine can increase economic risks,” said Dmitriev. “We will fall further behind developed countries. This is a very dangerous scenario.”
- In the Shadow of Abenomics, Japan's Poor and Elderly Are Being Left Behind. Since Abe took office two years ago, aggressive monetary easing devalued the yen, bolstering earnings at big companies and lifting the stock market 70 percent. It’s been good for exporters and those who own shares and property, but not so good for those without assets. For them, Abenomics means higher prices and dwindling government support. “If inflation accelerates further under Abe’s policies, inequality will widen,” said Hideo Kumano, chief economist at Dai-ichi Life Research Institute Inc. “The socially vulnerable and low-income classes will be worst affected and a cut in livelihood subsidies deals them a double punch.”
- Conquering China’s Mountain of Debt. Cities and townships must give up their unorthodox borrowing.
- The Diverging Fates of China's Provinces. (graph) As the tide goes out, not all boats are floating like before. While the world's second-largest economy slowed to a 7.4 percent expansion last year -- just squeaking into the communist government's "about 7.5 percent" target range -- regional data presents a fractured landscape more akin to Europe's than the rising-tide-floats-all-boats numbers we're used to from China.
- China’s Stocks Head for Longest Weekly Losing Streak Since May. China’s stocks fell, with the benchmark index heading for its longest weekly losing streak since May, on concern an economic slowdown is deepening and new share sales will draw capital from existing shares. Huadian Power International Corp. tumbled 3.8 percent to lead a gauge of utilities lower. Inner Mongolian Baotou Steel Union Co. paced declines by commodity producers. A property index slumped 1.5 percent as China Vanke Co. and Poly Real Estate Group Co. retreated. The Shanghai Composite Index declined 0.9 percent to 3,109.36 at 9:40 a.m. local time, taking this week’s loss to 2.8 percent after manufacturing and services gauges signaled a worsening outlook for the economy and 24 companies prepared to sell shares in initial public offerings.
- Groups Urge U.S. Fight Against China Foreign Tech Purge. U.S. business groups are calling for immediate action to reverse “troubling” new Chinese government policies in the information technology industry, according to a letter sent to key U.S. officials. If fully implemented, the policies threaten the ability of U.S. companies to participate in China’s $465 billion market for information technology products, according to the letter sent to U.S. Secretary of State John Kerry and other government officials that was signed by 17 business groups. The rules raise “serious” questions about China’s international trade commitments and will have a “significant negative impact” on opportunities for U.S. companies in China, according to the Feb. 4 letter, which was signed by groups including the American Chamber of Commerce in China, the National Foreign Trade Council and the U.S. Information Technology Office.
- Asia Stocks Rise as Ringgit Strengthens With Oil. Asian equities rose, with a gauge of Australian shares heading for a record streak of gains, before U.S. payrolls data. China’s yuan rose the most this year and Malaysia’s ringgit advanced with oil. The MSCI Asia Pacific Index climbed 0.3 percent by 11:17 a.m. in Tokyo, with the S&P/ASX 200 Index up for a 12th straight day in Sydney.
- Saudis Deepen Asia Oil Discount to a a Record Low. Saudi Arabia, the world’s largest crude exporter, cut prices for March oil sales to Asia, a sign that the desert kingdom is fighting for market share. State-owned Saudi Arabian Oil Co. lowered its official selling price for Arab Light 90 cents to $2.30 a barrel less than Middle East benchmarks, the company said in an e-mailed statement Thursday. That’s the lowest in at least 14 years since Bloomberg began gathering data.
- Iron Ore Seen Below $40 by Andy Xie on China Steel Slowdown. Iron ore will slump into the $30s a metric ton this year as low-cost supplies rise and steel demand in China shrinks, according to Andy Xie, a Shanghai-based independent economist who’s forecast a rout for years. “When it peaked at $190, I started talking about a collapse and nobody believed me,” Shanghai-based Xie, a former Asia-Pacific chief economist at Morgan Stanley, said in a phone interview on Thursday. “We need to see prices much, much lower. It can still go down through $40 before we bounce back.”
- Treasuries Not Buying Stock Optimism in Move-VIX Spread: Options. While bond and equity investors often see the world differently, the gap in perceptions is getting extreme. Measures tracking levels of nervousness in the government debt and stock markets have been diverging all year and this week reached the widest since September 2013, according to data compiled by Bloomberg. Most of the spread reflects a 34 percent jump in fixed-income price turbulence as measured by the Bank of America-Merrill Lynch Option Volatility MOVE Index.
- Here’s Why Your Social Security Number Is Holy Grail for Hackers. The hackers who infiltrated Anthem Inc. made off with one of the most prized possessions in computer crime: the Social Security numbers of as many as 80 million customers of the nation’s second-biggest health insurer.
- U.S. Boosts Estimated Cost of Student Debt Forgiveness. Higher Forecast Is Driven by Expansion of Pay as You Earn Program.
- Natural Gas Sinks Amid Plentiful Supplies. Prices Fall to a 2½-Year Low Despite Cold Snap in the U.S. Northeast. Not even the freezing weather gripping the U.S. Northeast can stop natural-gas prices from plunging. Investors, convinced that abundant supplies and strong production are more than enough to withstand the current cold snap, sent natural-gas prices to a 2½-year low on Thursday. Sinking natural-gas prices are the latest example of a turn in the commodities cycle.
- Computer-Driven, Automatic Trading Strategies Score Big. So-Called Quant Traders Take Advantage of Volatility. Recent market volatility caught many investors flat-footed. Among the few winners were traders who let a computer be their guide. Hedge-fund managers who employ complicated, automatic-trading strategies made millions off the wild swings in currency and commodity markets in recent weeks, investors said.
- Big Pharma’s ObamaCare Reward. For helping pass the law, the drug companies get price controls. Wow, the breakup between President Obama and his former corporate health-care partners must have been bad. The deal he cut with the pharmaceutical industry to pass ObamaCare didn’t even last as long as his Presidency. We can’t wait for the memoir.
- ISIS expanding ‘international footprint’ with affiliates in more countries, officials warn. The Islamic State, despite being driven by Kurdish fighters from its one-time Syrian stronghold in Kobani last week, nevertheless is extending its reach well beyond Iraq and Syria, military officials and analysts warn -- represented, by some estimates, in nearly a dozen countries. Lt. Gen. Vincent Stewart, director of the Defense Intelligence Agency, delivered a grim assessment earlier this week in testimony to the House Armed Services Committee, as he described how the group was surfacing in North Africa. "With affiliates in Algeria, Egypt, Libya, the group is beginning to assemble a growing international footprint that includes ungoverned and under governed areas,” Stewart said.
- Twitter(TWTR) earnings strong, user growth disappoints. (video) Twitter stock soared in Thursday after-hours trading as the company confirmed that it had reached a deal with Google, and reported quarterly earnings and revenue that beat analysts' expectations.
- Chinese Rating Agency Warns Coming Crisis Is Worse Than 2008, Blames US "Printing Press". "I believe we’ll have to face a new world financial crisis in the next few years. It is difficult to give the exact time but all the signs are present, such as the growing volume of debts and the unsteady development of the economies of the US, the EU, China and some other developing countries," he said, adding the situation is even worse than ahead of 2008."
- The most important thing in the Middle East that no one is talking about. "In a wider political sense, the real victor of the Syrian war and in Iraq has been Iran, a triumph for which the Islamic Republic has its militia forces to thank," Smyth writes. Tehran succeeded in turning Syria's war into a sectarian conflict and has benefitted greatly as a result.
- Yelp(YELP) signs up fewer visitor for its websites; shares down. Yelp Inc signed up fewer subscribers and business customers in the fourth quarter, raising concerns about the consumer review website operator's slowing growth in the United States and its ability to boost revenue from overseas markets.
- Expedia(EXPE) 4th-qtr profit misses estimates, shares slide. Expedia Inc on Thursday posted a fourth-quarter profit below analysts' expectations and over 30 percent lower than the same quarter a year ago, due in part to currency headwinds and heavy competition in China. The travel services company's shares slid more than 7 percent in extended trading.
- Instead of paying down its debts, the world’s gone on another credit binge. Global debt has jumped by $57 trillion, or 17pc of global GDP, since the fourth quarter of 2007.
- PBOC Official Says RRR Cut Not Start of Strong Stimulus. The reserve requirement ratio cut announced by People's Bank of China on Wednesday was based on liquidity and economic conditions, citing Lu Lei, head of PBOC's research bureau. Solely relying on open market operations can't fill funding gap around Chinese New Year holiday because of current yuan positions situation, Lu said. The central bank will stick to the principle of balance between tight and loose while making moves in future based on economic indicators, he said.
- Record China IPO Numbers to Lock Up Almost 2t Yuan. 24 Chinese cos. will start the IPO process next week, a record since CSRC restarted IPO approvals last year, locking up nearly 2t yuan in investor money, without citing anyone.
- None of note
- Asian equity indices are -.50% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 108.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 67.75 -.75 basis point.
- S&P 500 futures -.08%.
- NASDAQ 100 futures +.01%.
Earnings of Note
Company/Estimate
- (ALU)/.06
- (AXL)/.54
- (AON)/1.86
- (CBOE)/.66
- (FLILR)/.48
- (MMC)/.66
- (MCO)/.95
- (STRA)/1.18
- (CCJ)/.30
- (D)/.83
8:30 am EST
- The Change in Non-Farm Payrolls for January is estimated at 230K versus 252K in December.
- The Unemployment Rate for January is estimated at 5.6% versus 5.6% in December.
- Average Hourly Earnings for January are estimated to rise +.3% versus a -.2% decline in December.
- The Labor Force Participation Rate for January is estimated at 62.7% versus 62.7% in December.
- Consumer Credit for December is estimated to rise to $156.0B versus $14.08B in November.
- None of note
- The Fed's Lockhart speaking, German industrial production report, weekly EIA natural gas inventory report, (GLW) investor meeting and the (STJ) investor meeting could also impact trading today.
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