- China Spawns New Debt Market to Ease Burden on Local Governments. China’s government is promoting a new tool to raise funds for infrastructure projects as debt levels at municipalities mount. Regulators gave the green light last month for public-private partnerships with at least two years of operations and stable cash flows to sell asset-backed securities. The nation is seeking to lure more private money into infrastructure projects, while limiting its responsibility for the debt needed to fund them. China’s economic slowdown is hampering local governments’ ability to support the 5.6 trillion yuan ($814 billion) of outstanding onshore notes sold by local government financing vehicles, which ballooned after the financial credit crisis when municipalities used them to meet funding shortfalls. While analysts have mixed views as to how much responsibility local governments will ultimately have in meeting payments on ABS issued by PPPs, they agree the notes offer an improvement over LGFV bonds because of cash-flow visibility.
- These Are the Biggest Global Risks for 2017.
- Asian stocks fell as investors weighed policy uncertainty ahead of Donald Trump’s inauguration. The ringgit and won climbed to the highest levels in a month after the U.S. president-elect called the dollar “too strong.” Tokyo shares sank with those in Sydney and Seoul, following losses on the S&P 500 index. Asian currencies saw strength as the greenback fell against most peers on Tuesday after Trump told the Wall Street Journal its value is too high in part because China holds down its own currency. Sterling paused following its biggest rally against the dollar since 1993 on British Prime Minister Theresa May’s plans to leave the European Union. Politics is continuing to have a large impact on global markets with traders assessing the significance of Trump’s comments ahead of his inauguration on Friday. May’s confirmation that parliament will get a vote on the final Brexit deal added to the pound’s momentum against the greenback. Meanwhile trading firms are reaping the rewards from stronger currencies and bond-trading in the wake of the U.S. election, with Morgan Stanley saying momentum from a strong fourth quarter continued into the first weeks of 2017. The MSCI Asia Pacific Index lost 0.2 percent as of 9:45 a.m. in Tokyo. Australia’s S&P/ASX 200 fell 0.7 percent and South Korea’s Kospi dropped 0.4 percent.
- Why the Fed May Raise Rates Faster Than We Think. (video)
- Further gradual Federal Reserve interest-rate increases are warranted to keep the U.S. economy on a sustainable course and avoid excess inflation or damaging asset bubbles, said San Francisco Fed President John Williams. “In the context of a strong economy that has reached our maximum employment goal and with inflation nearing our price stability goal, it makes sense that the FOMC has undertaken a process of raising interest rates,” Williams said Tuesday in Sacramento, California, referring to the policy-setting Federal Open Market Committee. “Looking ahead, further gradual increases in the target fed funds rate will likely be appropriate.”
Wall Street Journal:
- Treasury Pick Steven Mnuchin, Like His Would-Be Boss Donald Trump, Followed His Own Rules. While at OneWest, Mr. Mnuchin tried to persuade regulators to sell him a California thrift that hadn’t failed yet.
- Obama commutes Chelsea Manning's sentence for leaking Army documents. (video) President Obama commuted the vast majority of former Army intelligence analyst Chelsea Manning's 35-year prison sentence for leaking classified documents, the White House announced Tuesday. The White House said that Manning is one of 209 inmates whose sentences Obama is shortening. Obama is also pardoning 64 people, including retired Gen. James Cartwright, who was charged with making false statements during a probe into disclosure of classified information.
Earnings of Note
8:30 am EST
- Obama Commutes Remaining Prison Sentence Of Chelsea Manning.
- China Orders No Market Selloffs During President's Davos Trip.
- Trump Advisor Anthony Scaramucci Pockets $100MM From Sale Of SkyBridge To Chinese Conglomerate.
- "Will Trump Continue The Bush-Obama 'Big Spending' Legacy?"
- "Get Paid Fighting Against Trump" - Ads Across American Cities Reportedly Offer Money To Inauguration Agitators.
- NY Fed President Dudley Thinks A New Housing Bubble Is A Perfect Cure For Soft Retail Sales.
- Florida Airport Shooter Claims He Carried Out Attack For ISIS.
- US Equities... Last. Man. Standing. (graph)
- Trump Bump Stalls Amid Bullion, Brexit, Banks, Bonds, Brazil, & Black Gold. (graph)
- Top Republicans blast Obama's decision to commute Chelsea Manning's sentence.
- Trump's big foreign policy shift: Looser ties with Europe.
- Traditional retailers are using a trick to make same-store sales look better.
- These 8 billionaires are worth as much as the poorest half of the world.
- United Airlines(UAL) beat fourth quarter earnings estimates, but a massive tax bill is killing profits.
- Qualcomm(QCOM) allegedly paid Apple billions of dollars in rebates to use its chips.
- This chart shows when robots might take over all trucking jobs.
- US-China Trade War to Hurt Both Sides. China has many countermeasures to deal with possible trade protectionism by the incoming Trump administration, a front-page commentary says.
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 116.5 unch.
- Asia Pacific Sovereign CDS Index 34.50 +.5 basis point.
- Bloomberg Emerging Markets Currency Index 70.35 +.02%.
- S&P 500 futures +.03%.
- NASDAQ 100 futures +.03%.
Earnings of Note
8:30 am EST
- The CPI MoM for December is estimated to rise +.3% versus a +.2% gain in November.
- The CPI Ex Food and Energy MoM for December is estimated to rise +.2% versus a +.2% gain in November.
- Real Avg. Weekly Earnings YoY for December.
- Industrial Production MoM for December is estimated to rise +.6% versus a -.4% decline in November.
- Capacity Utilization for December is estimated to rise to 75.4% versus 75.0% in November.
- Manufacturing Production for December is estimated to fall to 69 versus 70 in December.
- Net Long-Term TIC Flows for November.
- (NAVG) 2-for-1
- The Eurozone CPI report, Australia unemployment report, weekly US retail sales reports, weekly MBA mortgage applications report and the TD Securities Mining conference could also impact trading today.