Today's Headlines

Bloomberg:

• Rouhani Sees Financial Windfall as Iran Sanctions Are Lifted. President Hassan Rouhani said Iran’s financial resources will “increase significantly” after its compliance with the terms of an accord to curb its nuclear program paved the way for the removal of crippling economic sanctions. The International Atomic Energy Agency concluded on Saturday that the Islamic Republic had curbed its ability to develop an atomic weapon as required under the July accord with world powers. The U.S. and five other nations agreed to lift economic sanctions related to Iran’s nuclear program “simultaneously with the IAEA-verified implementation” of the deal. “The shackles of sanctions have been removed and it’s time to thrive,”’ Rouhani said Sunday on Twitter. Addressing parliament later in a televised speech, he said it’s up to Iran to “seize the opportunity for an economic leap.”

• Iran Could Get Five Times More From Oil Sales by Year-End. Iran could get more than five times as much cash from oil sales by year-end as the lifting of economic sanctions frees the OPEC member to boost crude exports and attract foreign investment needed to rebuild its energy industry. The Persian Gulf nation will be able to access all of its revenue from crude sales after the U.S. and five other global powers removed sanctions on Saturday in return for Iran’s curbing its nuclear program. The fifth-biggest producer in the Organization of Petroleum Exporting Countries had been receiving only $700 million of each month’s oil earnings under an interim agreement, with the rest blocked in foreign bank accounts. Iran is striving to add 1 million barrels to its daily crude production and exports this year amid a  global supply glut that has pushed prices 22 percent lower this month.

• Mideast Stocks Plummet as Iran Plans to Boost Crude Exports. Stocks across the Middle East tumbled as the easing of sanctions against Iran raised the prospect of a surge in oil supplies to a market already reeling from the lowest prices in more than a decade. Shares in Tehran gained. Saudi Arabia’s Tadawul All Share Index dropped 5.4 percent to its lowest level since March 2011. Abu Dhabi’s ADX General Index fell into a so-called bear market. The Bloomberg GCC 200 Index, which tracks 200 of the six-nation Gulf Cooperation Council’s biggest companies, traded at 9.5 times estimated 12-month earnings, the lowest in almost seven years. Iran’s TEDPIX Index climbed 0.9 percent, according to data on the bourse’s website, extending Saturday’s 2.1 percent advance. Qatar’s QE Index tumbled 7.2 percent, the most since December 2009, and Abu Dhabi’s ADX General Index slumped 4.2 percent to the lowest level since November 2013. It has declined 23 percent since a peak in July. Dubai’s DFM General Index lost 4.6 percent in the highest trading volume this year. Oman’s MSM 30 Index fell 3.2 percent, the most since December 2014, and Kuwaiti stocks also dropped 3.2 percent to the lowest level since May 2004.

• China's Hot Bond Market Seen at Risk of Default Chain Reaction. China’s bond investors are raking it in as an equity rout scatters cash into fixed-income securities. But concerns are rising that spreading defaults and a sliding yuan will spark a selloff. Credit derivatives that are seen as a gauge of risk in the market have spiked 22 basis points since Dec. 31, the worst start to a year in data going back to 2008. The number of listed firms with debt double equity has jumped to 339 amid a weakening economy, from 185 in 2007. Traders surveyed by Bloomberg in December said note failures will spread. “2016 is a year when we will see systemic risks emerge in China’s credit market,” said Ji Weijie, credit analyst in Beijing at China Securities Co., the top arranger of bond offerings from state-owned and listed firms. "There may be a chain reaction as more companies are likely to fail in a slowing economy and related firms could go down too."

• China's Stock Strategists Are Bracing for a Deeper Bear Market. There will be little let up for investors in China’s beleaguered stock market. That’s the consensus of strategists interviewed last week as the benchmark Shanghai Composite Index fell into a bear market on waning confidence that the government can manage the country’s transition to a new growth model and to a more freely-traded currency. Analysts from Bocom International Holdings Co. and Wells Fargo Funds Management say the index may drop 14 percent to 2,500. Zhongtai Securities Co. sees the gauge losing as much as 300 points, or 10 percent, before bottoming out. Phillip Securities and Central China Securities Co. expect more selling pressure even after the Shanghai Composite sank 3.5 percent to 2,900.97 on Friday, falling 21 percent from its December high.

• PBOC Said to Impose Reserve Ratio on Offshore Bank Yuan Accounts. China’s central bank will impose required reserve ratios on yuan deposits of offshore participant banks in the mainland in a bid to stabilize the currency. The move will take effect from Jan. 25, according to four people familiar with the matter, who declined to be identified because the information isn’t public. The reserve ratio was previously at zero percent on offshore banks’ yuan deposits in the mainland. The deposits will now attract the same ratio as applicable to Chinese banks. Chinese Premier Li Keqiang on Friday pledged a “stable” yuan exchange rate after interbank borrowing costs in Hong Kong surged to a record as the People’s Bank of China sought to narrow its discount to the mainland rate. The offshore yuan capped its biggest weekly advance since October after the central bank repeatedly bought the currency in Hong Kong.

• Offshore Yuan Gains as China Steps Up Defense of Its Currency. The offshore yuan strengthened, building on its biggest weekly gain since October, after China stepped up efforts to curb speculation against its currency beyond its borders. The People’s Bank of China will impose reserve-requirement ratios on yuan deposits held on the mainland by offshore participant banks from Jan. 25. according to people familiar with the matter. Premier Li Keqiang on Friday pledged a “stable” exchange rate, and said the nation has no intention of stimulating exports through competitive currency devaluation. The central bank strengthened its daily reference rate for the yuan by 0.07 percent on Monday, the biggest gain in four weeks. 

• Five Charts Show How Bad the Emerging-Market Stock Rout Really Is. Here’s a technical analysis look at the current state of the selloff across developing markets. 

• South Korean Won Drops to Five-Year Low as Stock Outflows Mount. South Korea’s won fell to a five-year low and stocks dropped due to deteriorating sentiment as a global rout in equities deepened and oil extended its decline. The selloff in shares boosted demand for the relative safety of government debt, pushing South Korea’s 10-year bond yield to a record low. Overseas investors have dumped a net $1.3 billion of the nation’s stocks in 2016 as equities in China, the country’s biggest trading partner, entered a bear market. Oil slumped to its lowest in more than 12 years as Iran prepares to boost exports after the lifting of international sanctions. The won depreciated 0.2 percent to 1,215.17 a dollar as of 9:48 a.m. in Seoul, according to data compiled by Bloomberg. It earlier weakened to 1,216.23, the lowest since July 2010, and is Asia’s worst-performing currency this year with a 3.5 percent loss.

• Miners Routed as Crude Oil Tumbles, Goldman Predicts More Losses. Mining giants including BHP Billiton Ltd. and Rio Tinto Group tumbled as commodities producers slumped along with oil on Monday, which sank after Iran secured the lifting of sanctions that have capped crude sales. BHP, the world’s biggest mining company, declined as much as 3.5 percent in Sydney, near the lowest level since May 2005, as Rio fell as much as 2.9 percent and nickel-to-gold producer Independence Group NL slipped as much as 7.6 percent. Iron ore miner Fortescue Metals Group Ltd. has declined 21 percent since the start of the year.

• Asian Stock Rout Deepens as Japan, Australia Bear Markets Loom. Asian stocks slumped, with Japanese and Australian shares on the cusp of joining China in a bear market, as concern grew over the strength of the global economy amid a continuing collapse in oil prices. The MSCI Asia Pacific Index lost 1 percent to 118.94 as of 11:10 a.m. in Tokyo, extending this year’s slide to 9.9 percent. Japan’s Nikkei 225 Stock Average declined 1.4 percent after plunging as much as 2.8 percent in early trading. The gauge is down 19 percent from a June peak. A drop of more than 20 percent at the close would meet the definition of a bear market. Australia’s S&P/ASX 200 Index slipped 0.7 percent, and is currently down 19 percent from an April high.

• Hedge Fund Bets Signal There's More Pain Ahead for Commodities. The commodity meltdown that pushed oil to a 12-year low and copper to the cheapest since 2009 isn’t over yet. At least, that’s how hedge funds see it. Money managers increased their combined net-bearish position across 18 raw materials to the biggest ever, doubling the negative bets in just two weeks. A measure of returns on commodities last week slid to the lowest in at least 25 years. Metals, crops and energy futures all slumped amid supply gluts and an anemic outlook for the global economy.

Wall Street Journal:

• Iran Accord Stokes Anxiety Among Its Rivals. Foes worry about how Tehran will use billions of dollars of unfrozen oil receipts. Iran celebrated the removal of economic sanctions on Sunday, even as regional rivals warned that it was still out to destabilize the Middle East and needed to be closely monitored. Western officials said the implementation of Iran’s nuclear deal with six world powers, which allowed for the lifting of some economic sanctions, raised prospects for overhauls within Iran’s political system. The deal has been a priority for President...

• China’s High Stock Valuations Worry Investors. Even after drop in mainland shares this year, price-to-earnings ratios are much higher than in U.S. and Europe. The plunge in Chinese stock markets this year has already grabbed global attention. Judging by the frothy prices at which shares there still trade relative to their earnings, they could have further to fall. The main index of Shanghai, China’s biggest stock market with a total value of $3.7 trillion, has already dropped 18% this year, to its lowest level in more than a year. Still, the median stock traded in Shanghai is valued at 24 times the profit analysts expect the company to generate this year, a common...

• Australian Shares Could Join China in Bear-Market Territory. Concerns about China’s economy, falling commodity prices and weak U.S. economic data sparked fresh falls.     

• Netflix’s(NFLX) Global Growth Faces New Threats. Rivals abroad band together as competition at home intensifies, putting fresh pressure on the streaming giant. 

• Iran’s Hostage Triumph. The U.S. pays a steep ransom for the release of four innocents. Now we know that Washington Post correspondent Jason Rezaian and three other Americans were hostages held by Iran in return for U.S. concessions, in case there was any doubt. And on Saturday we learned the ransom price: $100 billion as part of the completed nuclear deal and a prisoner swap of Iranians who violated U.S. laws. Iran’s Revolutionary Guards Corps should call this Operation Clean Sweep.

Fox News:

• Cruz on prisoner swap: Obama administration was 'negotiating with terrorists'. (video) GOP presidential candidate Ted Cruz on Sunday criticized the prisoner swap this weekend between the U.S. and Iran, saying the Obama administration is “negotiating with terrorists” and suggested the deal is part of the president’s overall weak foreign policy. “Our enemies are laughing at us,” the Texas senator said on “Fox News Sunday.”

CNBC:

• Expect a lot more pain for emerging markets: Trader. (video)

Zero Hedge:

• China Stocks, Credit Risk Worsen Despite "Short-Squeezed" Yuan Strength. (graph)

• Japanese Stocks Enter Bear Market, Credit Risk Surges To 20-Month Highs. (graph)

• Mid-East Massacre: Qatar Crashes, Saudi Stocks Plunge Most Since Black Monday. (graph)

• The Fed's Stunning Admission Of What Happens Next. (graph)

• Oil Plunges To $28 Cycle Lows As Iran Supply Looms, Stocks Slide. (graph)

• "China Banks Seem To Be Doing Whatever They Can To Avoid Paying Anyone In Dollars".

• What Crisis Is The Gold/Oil Ratio Predicting This Time? (graph)

• Wells Fargo(WFC) Is Bad, But Citi Is Worse.

• Wells Fargo's(WFC) Problem Emerges: $17 Billion In Junk Energy Exposure. (graph)

• Here Is The Stealthy Way Some Are Betting On A Market Crash. (graph)

• US Bank Counterparty Risk Soars After Energy MTM Debacle. (graph)

• JPM(JPM) Explains How Crude Carnage Creates $75 Billion SWF "Contagion" For Equities. (graph)

• Cracks At The Core Of The Core.

• Independence Is A "Poison Hallucination As Useless As Looking For Fish In A Tree," China Warns Taiwan, After Vote.

• Peak Desperation: Clinton Campaign Deploys Wall Street 'Strategist' To Attack Bernie Sanders.

• US Economy – Slip-Sliding Away. (graph)

• Iran Unleashes Oil Flood, Will Quintuple Crude Revenue In 2016.

Business Insider:

• The No. 1 fear for investors a month ago has now become reality. (graph)

• Report: 3 Americans kidnapped in Iraq. 

• Trump on God: "I don't like to have to ask for forgiveness'. After months of reflection, Donald Trump says he still doesn't regret his decision not to ask God for forgiveness for his sins. In an interview on Sunday with CNN, the Republican presidential frontrunner said that he does not regret never asking God for forgiveness, partially because he says he doesn't have much to apologize for.

• The US' prisoner swap with Iran shows that the landmark nuclear deal 'wasn't a nuclear deal at all'.

• The Saudi stock market is in free fall. The Saudi Tadawul All-Shares Index (TASI), the largest Arab market, dived 6.5 percent to below 5,500-points just minutes after the start of trading. The level was last seen in early 2011. The leading petrochemicals sector dipped 8.0 percent, while banks lost 5.3 percent. Since the start of 2016, the TASI has dropped 21.1 percent, more than all of its losses last year.

• WEF: The immigration crisis is a bigger and more likely threat to the world than weapons of mass destruction in 2016.

Frankfurter Allgemeine Sonntagszeitung:

• Munich Re CEO Says Market Situation More Dangerous Than '08. Chinese stock-market turmoil, terrorism, refugee crisis among factors creating less-controllable situation than in aftermath of Lehman collapse, Munich Re CEO Nilolaus von Bomhard says in interview. ECB's low interest rate policy creates "comfortable feeling of security," leading to wrong political decisions, capital allocation; volatile markets show large degree of nervousness. Doesn't expect Chinese stock market collapse, but he is keeping eye on possibility.