Saturday, January 30, 2016

Today's Headlines

  • Trauma Lingers as Stocks' Worst January Since 2009 Incites Angst. (video) Maybe the best thing you can say about the worst January for stocks in seven years is that an excess of optimism won’t be a problem for equities in 2016. Even with the Standard & Poor’s 500 Index’s rebound in the final two weeks, it wasn’t enough to reverse a selloff that at its lowest point erased $2.5 trillion from American shares. It could’ve been worse. After tumbling to a 21-month low, the benchmark ended the month with its biggest one-day rally since September to trim the monthly loss to 5.1 percent. “The question is: Do we get it all washed out in January and then move on, or is it a harbinger of doom to come? I don’t know if I have a great answer either way,” Gina Martin Adams, equity strategist at Wells Fargo Securities LLC, said by phone. “A significant portion of upside equity returns usually do happen in November, December and January, so to lose the performance in January puts pressure on later this year.”
  • BOJ Shock Heralds Currency War Return as Yen Drops Most in Year. (video) The yen dropped the most in more than a year after Bank of Japan Governor Haruhiko Kuroda unexpectedly adopted negative interest rates, risking another round of competitive devaluations. The currency fell against all 16 of its major peers after Japan’s central bank voted 5-4 to apply an interest rate of minus 0.1 percent to current accounts held at the central bank. The surprise move prompted Morgan Stanley to remove its yen trading strategies for now, according to a research note from the bank.
  • Russia’s Great Shift Downward. Putin has shown little interest in changing the economic model. For Russia’s battered economy, 2016 already looks miserable. The ruble has slumped to record lows as oil prices have fallen 11 percent since Jan. 1, to around $30 a barrel. The government, which gets nearly half its revenue from oil and gas, is scrambling to plug a 1.5 trillion-ruble ($19.2 billion) hole in its budget. The International Monetary Fund forecasts the economy will shrink 1 percent this year, after contracting 3.7 percent in 2015. The situation has created “an atmosphere of extreme nervousness,” Economy Minister Alexei Ulyukayev told President Vladimir Putin in a meeting on Jan. 26, according to a transcript released by the Kremlin
  • Iran Cancels London Summit for New Oil Deals. Iran canceled a London conference to promote new contracts for global oil companies, two weeks after economic sanctions were lifted, because the British government hasn’t been able to issue visas for Iranians to travel, an official told the weekly Iranian magazine Seda. The ministry spent the past two years working on a new model contract, in which fees paid to international companies will be linked to the oil price and determined on a sliding scale, with riskier developments paying more.
  • Birchbox Cuts 15% of Staff Amid Tech Startup Belt-Tightening. Birchbox Inc., a startup that sells subscriptions for personalized beauty samples, said it’s cutting 15 percent of staff and suspending operations in Canada. The cutbacks, which affect 45 people out of a staff of 300, are the latest sign that technology startups are struggling to create sustainable businesses as venture funding begins to cool. “The cuts made today will allow us to reinvest in our biggest opportunities and grow even more quickly in the future,” Birchbox co-founder and Chief Executive Officer Katia Beauchamp said in a statement. "Our vision for Birchbox has always been to build a standalone company, and today’s market demands that we reach profitability this year."
Wall Street Journal:
  • Turkey Says Russia Violated Its Airspace Again. Turkey summons Russian envoy, issues warning to Moscow. Turkey said Saturday that a Russian warplane breached its airspace, accusing Moscow of seeking to escalate tensions and warning of consequences two months after Turkish F-16s downed a Russian jet for violating its territory from Syria.
  • The U.S. Has No Global Strategy. The former defense secretary on U.S. gains forfeited in Iraq, America’s rudderless foreign policy and the ‘completely unrealistic’ Donald Trump. Many Americans probably had misgivings when U.S. troops were withdrawn from Iraq in 2011, but even the most pessimistic must be surprised at how quickly things went south. Turn on the TV news: Western Iraq, including the Sunni triangle that the U.S. once worked so hard to pacify, is in the hands of a terrorist group, Islamic...
  • Germany, Car Makers Near a Plan to Give Electric Vehicles a Boost. Heads of Volkswagen, BMW and Daimler to meet with Chancellor Merkel next week. German Chancellor Angela Merkel’s government and the top brass of car makers Volkswagen AG, BMW AG, and Daimler AG are nearing agreement on a plan to charge up the country’s sluggish market for electric vehicles by providing a combination of cash incentives and massive expansion of charging stations.
  • Had bullish commentary on (C), (JPM), (BAC), (CTRP), (VIAB) and (FELE).
Fox News:
  • Official: Some Clinton emails 'too damaging' to release. (video) The intelligence community has deemed some of Hillary Clinton’s emails “too damaging" to national security to release under any circumstances, according to a U.S. government official close to the ongoing review. A second source, who was not authorized to speak on the record, backed up the finding. The determination was first reported by Fox News, hours before the State Department formally announced Friday that seven email chains, found in 22 documents, will be withheld “in full” because they, in fact, contain “Top Secret” information.
Zero Hedge:
  • 2016's "Biggest Risk": Markets Will "Need To Panic" To Wake Up "Impotent" Policymakers. In addition to the risk of a deeper profit recession, there is no doubt the recent sell-off has been exacerbated by policy impotence; the sense that policy-makers have little solution for global demand deficiency. A weak, disjointed recovery may also be threatened by the political shift toward capital controls in China, border controls in Europe and the US, as well as more aggressive redistributive taxation at a time of ongoing fiscal austerity.
Business Insider:
  • RAY DALIO: The 75-year debt supercycle is coming to an end. He's worried that one of the fixed constants of economics — the ability of central banks to stimulate economic growth through lowering the cost of debt — is coming to an end. What I am contending is that there are limits to spending growth financed by a combination of debt and money. When these limits are reached, it marks the end of the upward phase of the long-term debt cycle. In 1935, this scenario was dubbed "pushing on a string."
  • Trump may not have done his homework in Iowa — and it could cost him. Trump could hand Ted Cruz or Marco Rubio a victory in Iowa because he believes it when he says he could shoot someone right in the middle of Fifth Avenue and not lose a single voter. That arrogance, which has fed off his remarkable success in recent months, has convinced the New York billionaire that he does not have to do the grunt work required of lesser mortals who want to win the nation’s first election showdown – and it might well do him in. Data points:

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