Saturday, February 06, 2016

Today's Headlines

  • North Korea Launches Long-Range Rocket a Month After Nuclear Test. North Korea launched a long-range rocket Sunday, drawing immediate condemnation from Japan and the U.S. a month after the isolated nation conducted a fourth nuclear test. A South Korean official said the rocket was launched around 9:30 a.m. Seoul time and disappeared off the radar south of Jeju island, while adding it was too soon to determine whether it had been a success. Yonhap News, without citing anyone, said the launch was possibly a failure. The United Nations Security Council will hold an emergency meeting on the launch at 11 a.m. New York time.
  • China's Foreign-Exchange Reserves Fall to $3.23 Trillion. China’s foreign-exchange reserves fell to $3.23 trillion in January from $3.33 trillion a month earlier as the central bank continued its defense of the yuan. The median forecast of economists surveyed by Bloomberg was January reserves of $3.21 trillion.
  • Another Sign of Rough Sledding Ahead: Dividend Cuts Surpass 2008. Tightening credit puts pressure on companies to scale back payouts. In 2015, equity investors looking for yield suffered death by 394 cuts. Last year, the number of dividend reductions far surpassed 2008, according to Bespoke Investment Group, citing data from Standard & Poor's. The ratcheting down of payouts to shareholders is a function of weak commodity prices, sluggish growth dampening corporate profits, and a tightening of credit conditions. This combination—and in particular the stingier lending—could exacerbate the carnage already seen this year in financial markets, further dampening economic activity. The number of payout cuts enacted was almost 100 more than at the outset of the Great Recession—a time when the implosion of Lehman Brothers Holdings Inc. caused equity markets to plummet in the later stages of the third quarter: 
  • Treasuries Extend Best Start to Year Since the Financial Crisis. Treasuries advanced for a fourth week in five, extending their best start to a year since the financial crisis, as slowing growth in U.S. services and tumbling commodity prices left traders doubting whether the Federal Reserve will raise rates this year. Yields rose early Friday after a Labor Department report showed wages increased more than forecast in January, before longer-dated government debt erased losses. A bond-market gauge of inflation expectations known as the 10-year break-even rate still fell to the lowest since 2009. Earlier in the week a report showed U.S. service industries expanded in January at the slowest pace since 2014, dimming the outlook for growth.
  • Gundlach Says Financials Below Crisis Prices ‘Frightening’. DoubleLine Capital’s Jeffrey Gundlach said it’s “frightening” to see major financial stocks trading at prices below their financial crisis levels. He cited Deutsche Bank AG and Credit Suisse Group AGas examples in a talk outlining bearish views at a conference in Beverly Hills, California, on Friday. Both banks fell this week to their lowest levels since the early 1990s in European trading. “We see the price of major financial stocks, particularly in Europe, which are truly frightening,” Gundlach said. “Do you know that Credit Suisse, which is a powerhouse bank, their stock price is lower than it was in the depths of the financial crisis in 2009? Do you know that Deutsche Bank is at a lower price today than it was in 2009 when we were talking about the potential implosion of the entire global banking system?”
  • Obscure Chinese Firm Dives Into $22 Trillion U.S. Market. When Cromwell Coulson heard that an obscure Chinese real estate firm had agreed to buy the Chicago Stock Exchange, he was shocked. “My first reaction was, ‘Wow, that’s who they’re selling to?”’ said Coulson, the chief executive officer of OTC Markets Group Inc. in New York. “These new buyers have no connection to Chicago’s existing business. They’re completely disconnected from the current business of supporting the Chicago trading community. So wow, that’s out of left field.”
  • Insider Sales Raise Extra Red Flag.
Wall Street Journal:
  • Had bullish commentary on (GILD), (TOWN), (SBCF), (TMO) and (CELG).
  • Had bearish commentary on oil, (KMI), (LINE) and (CHK).
Fox News:
  • GOP Debate: Live Blog.
  • North Korea fires rocket seen as covert missile test. (video) North Korea on Sunday defied international warnings and launched a long-range rocket that the United Nations and others call a cover for a banned test of technology for a missile that could strike the U.S. mainland. The rocket was fired from North Korea's west coast and tracked separately by the governments Japan and South Korea, which immediately convened a an emergency national security council meeting. South Korean media reported that the rocket may have failed, but provided no other details. The South Korean government couldn't immediately confirm the reports.
  • More than 3,100 pregnant women in Colombia infected with Zika virus, raising fears of spread. (video) The president of Colombia said Saturday that more than 3,100 pregnant women in the country are infected with the mosquito-borne virus which has been linked to birth defects and has no vaccine or treatment. Reuters reported that President Jaun Manuel Santos pointed out, however, that there has been no recorded cases of Zika-linked microcephaly, the birth defect that involves the fetus’ brain.
Zero Hedge: 
Business Insider:
  • PRESIDENT Hillary Clinton (D) 41% Marco Rubio (R) 48% (Quinnipiac U., RV, 2/2-4).
  • PRESIDENT Hillary Clinton (D) 46% Donald Trump (R) 41% (Quinnipiac U., RV, 2/2-4).
Financial Times:
  • Lending to emerging markets comes to halt. The surge in lending to emerging markets that helped fuel their own — and much of the world’s — growth over the past 15 years has come to a halt, and may now give way to a “vicious circle” of deleveraging, financial market turmoil and a global economic downturn, the Bank for International Settlements has warned.

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