Today's Market Take:
Broad Market Tone:
- Advance/Decline Line: Slightly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- ISE Sentiment Index 135.0 +26.2%
Credit Investor Angst:
- North American Investment Grade CDS Index 94.55 +.12%
- European Financial Sector CDS Index 152.11 +.43%
- Western Europe Sovereign Debt CDS Index 110.41 bps -1.34%
- Emerging Market CDS Index 209.0 bps -.69%
- 2-Year Swap Spread 12.75 +1.25 bps
- TED Spread 28.75 +3.0 bps
- 3-Month EUR/USD Cross-Currency Basis Swap -22.50 -1.0 bp
Economic Gauges:
- 3-Month T-Bill Yield .02% -3 bps
- China Import Iron Ore Spot $129.30/Metric Tonne +2.29%
- Citi US Economic Surprise Index 50.6 -.5 point
- 10-Year TIPS Spread 2.46 -1 bp
Overseas Futures:
- Nikkei Futures: Indicating +37 open in Japan
- DAX Futures: Indicating +7 open in Germany
Portfolio:
- Slightly Lower: On losses in my retail, tech and biotech sector longs
- Market Exposure: 25% Net Long
Style Underperformer:
Sector Underperformers:
- 1) HMOs -2.15% 2) Oil Service -1.82% 3) Disk Drives -1.17%
Stocks Falling on Unusual Volume:
- AAPL, ASPS, CRUS, SWKS, EZPW, BHI, DFS, TVL, ECA, CTCM, SNFCA, MET, LPI, BBY, SLB, FINL, LPL, GIII, ETH, CNC, DWRE, PAY, AVGO, QCOM, MCRS, UNXL, TEVA, CRUS, JBL, NOV, IPAR, CGNX, TSRA, EXLP, WCG, USNA and ARIA
Stocks With Unusual Put Option Activity:
- 1) LMT 2) XLV 3) QCOM 4) ADBE 5) SLB
Stocks With Most Negative News Mentions:
- 1) NOV 2) ZUMZ 3) ETN 4) BBY 5) AIG
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Steel +2.59% 2) Coal +2.47% 3) Alt Energy +1.32%
Stocks Rising on Unusual Volume:
- SZYM, NIHD, YPF, AVG, ADBE, PPG, X, CLF and VMED
Stocks With Unusual Call Option Activity:
- 1) NRG 2) APC 3) AEP 4) INFI 5) PAY
Stocks With Most Positive News Mentions:
- 1) UTX 2) VVI 3) MSCI 4) DAL 5) S
Charts:
Evening Headlines
Bloomberg:
- German-French Sparring Over Euro Caps 2012 Crisis Fight. European Union leaders capped a
third year of debt-crisis management with Greece obtaining fresh
financial aid, a euro bank regulator taking shape, and Germany
and France sparring over what to do next. German Chancellor Angela Merkel and French President
Francois Hollande, stewards of the euro area’s top two
economies, promoted conflicting visions of how to revamp
economic management once the fiscal crisis subsides.
- EU Seeks Plan to Handle Failing Banks Amid Cost Concerns. European
Union chiefs pledged to
seek a joint strategy for handling failing banks as German Chancellor
Angela Merkel demanded taxpayers be spared the costs. Leaders agreed to
start work next year on a single
resolution mechanism for euro-area banks to complement the
European Central Bank oversight role approved yesterday by
European finance chiefs. Lenders should underwrite financial
stability by repaying governments as needed, EU leaders said. Resolution “may not be at the cost of the taxpayers, but
has to be structured so that those responsible for the failures
of the banks carry the burden,” Merkel told reporters at 2:15
a.m. after nine hours of talks in Brussels.
- Euro Negative Yield Hits Jobless Spaniard to Munich Fund Manager. Divorced and unemployed, Fran Lopez
is back at home with his parents again. Five years ago, he was living in Madrid’s wealthiest suburb
with his wife and new-born daughter and earning as much as 4,000
euros ($5,175) a month upgrading electricity substations for
Iberdrola SA (IBE), Spain’s largest utility. Now Lopez, 26, is
studying for his high-school diploma. “I’m starting from zero,” Lopez said. “They want a load
of qualifications. So I’m studying. My aim is to work, and if
there’s no work, I’ll keep studying.”
- UN Telecom Treaty Approved Against U.S. Web-Censorship Concerns. An agreement to update 24-year-old United Nations
telecommunications rules was approved against the opposition of
countries including the U.S. and the U.K., whose delegates walked out on
the talks on concerns about Internet regulation and censorship. The
new pact includes measures that would give countries a right to access
international telecommunications services and the ability to block spam,
which delegations that declined to sign the amended text argued would
pave the way for government censorship and control over the Web. Canada,
Denmark, Australia, Norway, Costa Rica, Serbia and others followed the
U.S. in refusing to sign on these grounds. The treaty is not binding for
the countries that didn’t sign it. “It’s with a heavy heart and a
sense of missed opportunity that the U.S. must communicate that it’s
not able to sign the agreement in its current form,” the U.S. delegation
said in a statement at the plenary after the final changes were adopted
last night.
- Japan Tankan Business Confidence Falls to Near 3-Year Low. Big Japanese manufacturers are the
most pessimistic in almost three years after a diplomatic
dispute with China and Europe’s austerity measures dragged exports to a fifth monthly decline in October. The
quarterly Tankan index for large manufacturers fell to minus 12 in
December from minus 3 in September, the Bank of Japan (8301) said in
Tokyo today, a fifth straight negative reading and
the lowest since March 2010. The median estimate of 25
economists surveyed by Bloomberg News was for minus 10. A
negative figure means pessimists outnumber optimists.
- China Stocks Rally Most in Three Months After HSBC Factory Data.
China’s stocks rose the most in three months after a survey showed the
nation’s manufacturing may expand at a faster pace this month and amid
speculation Ping An Insurance (Group) Co. is buying shares. The Shanghai Composite Index (SHCOMP) climbed 2.9 percent to
2,120.84 at the 11:30 a.m. local-time break.
- Prices in
China for marbled pork meat rose 2.5% to 26.17 yuan a kilogram between
Dec. 1 to 10 as compared with the previous ten days, the National Bureau
of Statistics said.
- Bank of America(BAC) Says MBIA(MBI) Defaulted on Contested Securities. Bank
of America Corp. (BAC) said it’s issued a notice of default to MBIA
Inc. (MBI) after buying some of the bond insurer’s notes in an attempt
to block a legal maneuver in their three-year dispute over toxic
mortgage assets. Bank of America, which failed to persuade investors to sell
it a majority of the $329 million of 5.7 percent bonds due in
2034 that were outstanding early in November, said in a
statement yesterday that it has acquired $136 million of the
notes. MBIA said on Nov. 26 that it repurchased $170 million of
the securities, leaving $159 million in investors’ hands,
according to data compiled by Bloomberg.
Wall Street Journal:
- Trading Plans Under Fire. In 2007, a top securities regulator
warned that executives could be abusing preset plans to buy and sell
their companies' stock "to facilitate trading based on inside
information." "We're looking at this—hard," Linda Chatman
Thomsen, then-enforcement chief at the Securities and Exchange
Commission, told a conference of corporate lawyers. Since then,
corporate insiders have filed more than one million forms with the SEC
related to changes in ownership of their shares. The agency has brought
more than 260 cases alleging insider-trading since the speech—but
securities-law experts say very few of the cases allege fraud by
executives trading their companies' stock.
- Oversupply Buries Raw Materials. A glut of raw materials from crude oil to copper and cotton is
driving down prices and dimming the outlook for commodities over the
next few months. Stores of crude in the developed world are forecast to end 2012 at a
two-year high, thanks largely to a slowdown in world demand growth and
an unexpected surge in production in the U.S. In China, copper
stockpiles are at record levels as the country's slowing economy limits
use of the metal. Cotton bales held in warehouses are predicted to reach
an all-time high next year. With global demand still weak, supplies are likely to continue to loom over the market in 2013, investors and analysts say.
Fox News:
CNBC:
- Aggressive Easing Wrong Medicine for Japan: Roach. "I don't think it's going to work. QE (quantitative easing) is good at
containing the downside, addressing crisis and disruptive markets, but
it definitely doesn't give you traction in regenerating demand in the
real economy," Yale University senior fellow Stephen Roach told CNBC on
Friday.
- Rice Withdraws From Sec of State Running. Susan Rice withdrew her name from consideration as U.S. secretary of
state Thursday in the face of what promised to be a difficult Senate
confirmation battle.
Zero Hedge:
Business Insider:
IBD:
Washington Post:
- Solar firms probed for possible ‘misrepresentations’ in getting public money.
Three of the country’s most prolific installers of residential solar
panels are under federal investigation to determine if they inflated the
cost of their work to increase the payments they would receive from the
government, according to government and industry officials familiar
with the probe. SolarCity, SunRun and Sungevity have received subpoenas
from the Treasury Department’s office of inspector general for financial
records to justify more than $500 million in federal grants and tax
credits the firms tapped for performing work. The probe seeks to
determine whether the companies accurately reported the market value of
their costs when applying for federal reimbursement, which was
calculated at one-third of the costs.
Reuters:
- Moody's revises Illinois outlook to negative on pensions. Illinois'
public pension funding problems, likely to persist if not worsen, led
Moody's Investors Service on Thursday to revise the state's credit
outlook to negative from stable, putting more pressure on state
lawmakers to act. Illinois' finances are buckling under a $96.8 billion
unfunded pension liability while Governor Pat Quinn and various state
lawmakers are pushing to get various reform measures passed by the
legislature in early January.
- United Tech(UTX) sees 2013 profit up about 13 percent. United Technologies Corp
expects its profit to rise about 13 percent next year,
with growing demand for its systems that are used in buildings
helping to offset lower U.S. defense spending. The
world's No. 1 maker of elevators and air conditioners, whose other
businesses include jet engines and helicopters, on Thursday projected
2013 earnings of between $5.85 to $6.15 per share. The midpoint would
represent a 13 percent rise from the $5.32 per share it expects to
report for 2012. Analysts, on average, expect 2013 earnings of $6.12 per
share, according to Thomson Reuters I/B/E/S.
- VeriFone(PAY) says slowdown in Latin America to hurt profit. Credit card swipe machine maker VeriFone Systems Inc forecast smaller-than-expected
earnings for the current quarter due to a slowdown in Latin America,
sending its shares down 6.6 percent after the bell. The company forecast
earnings of 70 cents to 73 cents per
share on revenue of $490 million to $500 million for
November-January. Analysts on average were expecting earnings of 75 cents per
share on revenue of $498.4 million, according to Thomson Reuters
I/B/E/S. "We see single-digit growth in Latin America following two
years of nearly 40 percent average growth," Chief Executive Doug
Bergeron said on a conference call.
- Adobe(ADBE) forecasts weak 2013 results, expects growth beyond. Adobe Systems Inc, maker of
Photoshop and Acrobat software, forecast full-year results below
analysts' estimates but expects profit and earnings to grow 2013
onwards. The company forecast adjusted earnings of about $1.40 a
share on revenue of about $4.1 billion for 2013. Analysts on average were expecting earnings of $2.35 per
share on revenue of $4.47 billion, according to Thomson Reuters
I/B/E/S.
Telegraph:
Securities Times:
- China's property market may face a risk of collapse in some areas, while at the same time other areas may see price rebounds if curbs aren't implemented effectively, citing a Chinese Academy of Social Sciences report.
gsweb.com.cn:
- A man stabbed 22 primary school children in the central province of Henan, according to the propaganda bureau of Guangshan county, where the attack took place.
Evening Recommendations
Keefe Bruyette:
- Downgraded (CME) to Underperform, target $47.
Barclays:
- Downgraded (CIEN) from Overweight to Underweight, target $11.
Night Trading
- Asian equity indices are -.75% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 111.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 84.25 -.75 basis point.
- NASDAQ 100 futures +.24%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Consumer Price Index for November is estimated to fall -.2% versus a +.1% gain in October.
- The CPI Ex Food & Energy for November is estimated to rise +.2% versus a +.2% gain in October.
8:58 am EST
- Preliminary Markit US PMI for December is estimated to fall to 51.8 versus 52.4 in November.
9:15 am EST
- Industrial Production for November is estimated to rise +.3% versus a -.4% decline in October.
- Capacity Utilization for November is estimated to rise to 78.0% versus 77.8% in October.
Upcoming Splits
Other Potential Market Movers
- The French/German Flash PMIs, Eurozone Unemployment, 140M share (FB) lock-up expiration, (CNC) investor day, (LUV) investor day, (ITW) investor meeting and the (SMG) analyst day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by real estate and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.
Broad Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Most Sectors Declining
- Volume: Slightly Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- ISE Sentiment Index 107.0 -25.2%
- Total Put/Call .86 -1.15%
Credit Investor Angst:
- North American Investment Grade CDS Index 94.81 +1.61%
- European Financial Sector CDS Index 151.27 -.34%
- Western Europe Sovereign Debt CDS Index 111.88 bps +.68%
- Emerging Market CDS Index 212.02 bps +.73%
- 2-Year Swap Spread 11.5 +.5 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -21.50 +.5 bp
Economic Gauges:
- 3-Month T-Bill Yield .05% -2 bps
- China Import Iron Ore Spot $126.40/Metric Tonne +1.1%
- Citi US Economic Surprise Index 51.1 +2.6 points
- 10-Year TIPS Spread 2.47 -3 bps
Overseas Futures:
- Nikkei Futures: Indicating -5 open in Japan
- DAX Futures: Indicating -15 open in Germany
Portfolio:
- Slightly Higher: On gains in retail sector longs, index hedges and emerging markets shorts
- Market Exposure: 25% Net Long
BOTTOM LINE: Today's
overall market action is bearish as the
S&P 500 trades near sessions lows, testing its 50-day moving average, on rising global growth fears, eurozone debt angst and increasing US "fiscal cliff" fears. On
the positive side, Retail, Gaming and Airline shares are higher on the day. Oil is down -.8%, gold is falling -1.0% and the UBS-Bloomberg Ag Spot Index is down -.3%. Major Asian indices were mostly higher, boosted by a +1.7% gain in Japanese shares. On
the negative side, Homebuilding, Biotech, Semi, Computer, Oil Service and Alt Energy shares are under meaningful pressure, falling -1.5%. Energy and tech shares have been heavy most of the day. Lumber
is down -.8% and Copper is falling -1.5%. The Spain sovereign cds is
rising +.8% to 295.34 bps, the Spain 10Y Yld is rising +.75% to 5.4%,
the Ireland sovereign cds is gaining +1.3% to 219.68 bps, the UK sovereign cds is up +1.7% to 34.37 bps and the Israel sovereign cds is up +2.1% to 143.65 bps. The The benchmark China Iron/Ore Spot Index is down -31.0% since 9/7/11. As well,
copper and oil continue to trade poorly given investor perceptions that the Eurozone has successfully kicked-the-can which will further boost the euro,
US housing
has hit a major bottom, China's economy is rebounding, Mideast tensions
are rising, a US fiscal cliff deal is imminent and Hurricane Sandy will
spur rebuilding. Shanghai Copper Inventories have risen +368.0% ytd. US weekly retail sales are rising at a +2.2% sluggish rate. Moreover,
the weekly MBA Home Purchase Applications Index has been around the
same level since May 2010 despite investor perceptions of a big
improvement in the nationwide housing market. The Baltic Dry Index has
plunged around -60.0% from its Oct. 14th high and is now down around
-50.0% ytd. US rail traffic is weakening too much. Oil tanker rates have plunged, with the benchmark Middle East-to-US voyage down to 27.50 industry-standard worldscale points. The 10Y T-Note continues to trade too well. There still appears to be a fairly high level of complacency among US investors regarding the deteriorating macro backdrop and any fiscal cliff "solution". The recession in Europe is worsening even before more tax hikes and spending cuts hit next year. A lack of economic competitiveness and growth incentives remain unaddressed problems in the region. The European debt crisis continues to drag on emerging market economies, despite investor perceptions that China's economy is accelerating on more infrastructure project state spending, which will further pressure exports from the region and further raise the odds of more sovereign/bank downgrades over the coming months. I continue to believe that China's problems are much larger than commonly perceived
and cannot be solved with another massive stimulus package given their
real estate bubble, rising food prices/labor costs, massive
overcapacity in certain key parts of the economy and growing bad loans
problem. As well, little being done by global central bankers that will help boost global economic growth to an extent that overcomes the growing
macro headwinds over the intermediate-term, in my opinion. Over the intermediate-term the Fed's recklessness greatly increases the chances of hard-landings in key emerging markets
and of a serious global stock swoon, in my opinion. The
most likely outcome for the US fiscal cliff crisis is our own
can-kicking or "small bargain" after a complete breakdown in talks
occurs sometime before year-end, which would boost
stocks in the short-run and leave much investor uncertainty over the
intermediate-term. Moreover, any of the likely fiscal cliff "solutions"
being bandied about would hurt economic growth, which would more than
offset the benefits to investors from less uncertainty going forward. Moreover,
uncertainty surrounding the effects on businesses of Obamacare and
more regulations will likely become pronounced economic headwinds next
year. The Mid-east continues to unravel at an alarming rate, as well. Overall, broad market health remains poor as
breadth, volume, leadership, lack of big volume/gainers and
copper/oil relative weakness all continue to be concerns. For this
year's equity advance to regain
traction, I would expect to see further European credit gauge
improvement, a further subsiding of hard-landing fears in key emerging
markets,
a rising 10-year yield, better volume, stable-to-lower food/energy
prices, a US "fiscal cliff" solution/can-kicking, a calming in Mid-east
and China/Japan tensions and higher-quality stock market leadership. I
expect US stocks to trade modestly lower into the close from
current levels on eurozone debt angst, rising global growth fears,
increasing US fiscal cliff fears, more shorting, technical selling,
profit-taking and tech/energy secotor weakness.
Bloomberg:
- Boehner Says Obama’s Budget Plan ‘Anything But’ Balanced.
U.S. House Speaker John Boehner repeated his insistence that President
Barack Obama’s budget proposal is “anything but” balanced, and accused
the president of being “not serious” about cutting spending. Still,
the speaker today didn’t rule out allowing a House
vote on extending tax cuts for income up to $250,000 a year for
married couples, as Obama has demanded, if a broader tax-and-
spending deal isn’t reached soon. “The law of the land today is that
everyone’s income taxes
are going to go up on Jan. 1,” Boehner said when asked by
reporters if he would rule out such a vote. “I have made it clear I
think that is unacceptable. Until we get this issue resolved, that risk
remains.” “He wants far more in tax hikes than spending cuts,”
Boehner, an Ohio Republican, said of the president. Obama, responding to
questions from reporters as he walked
to a holiday event across the street from the White House, said
the negotiations are “still a work in progress.”
- Senate Won’t Consider Stand-Alone AMT Fix, Reid Says. The Senate won’t consider a small-
scale bill to avoid an expansion of the alternative minimum tax
or a cut in Medicare reimbursements to physicians if no broader
budget deal is reached, Senate Majority Leader Harry Reid said. Reid, a Nevada Democrat, today said the Senate won’t
address any tax or spending provisions that expire at year’s end
unless Republicans agree to let tax rates rise for the top 2
percent of earners, as Democrats are demanding.
- UK's Osborne Says Credit Rating Is ‘One Test’ as S&P Cuts Outlook. Chancellor
of the Exchequer George Osborne played down the importance of Britain’s
top credit rating, saying it is only one gauge of the economy’s health.
Osborne made his comments to lawmakers today hours before Standard
& Poor’s lowered its outlook on the U.K. to negative from stable,
citing weak economic growth and a worsening debt profile. “It’s one
test alongside others and the ultimate test is what you can borrow money
at,” Osborne told Parliament’s Treasury Committee in London today. “The
test we have is one we
have to meet every week when we go and try and sell our gilts.”
- Europe’s Headway on Greece, Banks Masks Deeper Divisions.
European policy makers made headway
in fighting the three-year-old debt crisis, keeping Greece’s lifeline
intact and laying the groundwork for a bank supervisor to prevent
financial miscues. Finance ministers declared the two-front victory
hours before a summit of European leaders that is set to expose
differences between a German-led bloc and France and its allies over the
long-term retooling of the euro zone.
- Bersani Says He Backs Role for Monti in Italy After Vote.
Italy’s Pier Luigi Bersani, the front-runner for next year’s
parliamentary elections, said he wants Prime Minister Mario Monti to
remain in public service after the vote. “I confirm my absolute
resolution and intention to see Prime Minister Monti engaged again,”
Bersani, head of Italy’s Democratic Party, said today at a conference at
the foreign press association in Rome. “The role will be discussed.” Bersani confirmed his adherence to Monti’s austerity
program.
- Iron Ore Prices in China Show Imports to Slow: Chart of the Day. Chinese iron-ore import costs rose above prices from local mines for the first time in five months indicating shipments to the world's biggest buyer will slow, Oslo-based investment bank RS Platou Markets AS said. The cost of ore arriving at Tianjin port rose above the average price of the steelmaking raw material
mined in China for the first time since July, according to Bloomberg.
Imports, which climbed to a 22-month high of 65.78 million metric tons
in November, may fall from that level as a result, worsening a slump in
rates for ore-carrying Capesize ships, Platou analyst Frode Moerkedal said.
- Brazil Calls Hit Four-Year High: Options. Options traders are the
most bullish on Brazilian equities in almost four years. The ratio of
outstanding calls to buy the iShares MSCI Brazil Index Fund climbed to
1.03-to-1 on Dec. 10 and reached 1.05 last week, the highest level since
February 2009, according to Bloomberg. The Bovespa has tumbled 13%
since March as the economy grew half as fast as the government predicted
during the third quarter.
- U.K. Said to Lift Fracking Ban to Boost Gas Production.
U.K. Energy Secretary Ed Davey will rescind a ban on shale-gas
exploration, opening the door for Cuadrilla Resources Ltd. to resume its
activities, according to
a person familiar with the decision.
Fox News:
- Italy Tobin Tax to Levy All Equity, Derivatives Trading in Milan. Italy's
proposed financial transactions tax would impose a 0.12% levy on all
equity trades from March 2013, according to a proposed amendment made
Thursday
to the 2013 Budget Law. The tax on stock trades is due to decline to
0.1% in 2014. A higher 0.22% levy will be made on trades done in
unregulated markets, while
trading in shares of companies with market capitalization of below 500
million
euros ($650 million) will be exempt from the tax. A 0.02% tax will be
levied on so-called high-frequency trading activity,
including in derivatives such as interest-rate swaps, according to the
latest
version of the measure, which is part of a broad European move toward
adopting a
"Tobin Tax," named after a Nobel Prize winner who once proposed a levy
on
cross-border capital flows.
CNBC:
- How the Fed Is Pushing Investors to Buy Junk Bonds. With no end in sight for the Federal Reserve's fixation on low interest
rates, a likely scramble for yield has intensified worries about dangers
ahead for junk-bond investors.
- Only 15 States Opt to Run Obamacare Exchanges. Only 15 states have told the federal government they plan to operate
health insurance exchanges under President Barack Obama's reform law,
leaving Washington with the daunting task of creating online
marketplaces for two-thirds of the country.
- Retail Up; Jobless Claims, Producer Prices Down. U.S. retail sales rose in November and jobless claims fell sharply
last week, hopeful signs for an economy that appears to have slowed
sharply in the fourth quarter. Retail sales rose 0.3 percent,
rebounding from a 0.3 percent decline in October, the Commerce
Department said on Thursday. Economists polled by Reuters had expected
an increase of 0.5 percent last month.
- UBS Faces $1 Billion Fine for Libor Rigging: Source.
Bespoke Investment Group:
Diana Olick:
- Check this out (graph) ...for all those folks yelling that "household formation" is
rising and that's going to boost the builders and home prices
alike...household formation also means renters. Thanks to Capital
Economics' Paul Diggle for pointing this out so well.
Senator Pat Toomey:
- More Quantitative Easing Is A Mistake. U.S. Senator Pat Toomey (R-Pa.) issued the following statement today
on the Federal Reserve's announcement that it will continue monetizing
our deficits by buying additional long-term Treasury securities: "The problems damaging our nation's economy are our unsustainable
deficit, new regulatory burdens, and the threat of a looming,
debilitating tax increase. Creating evermore money to fund our
irresponsible deficits might reflate certain assets in the short term,
but more quantitative easing will not solve - and might exacerbate - our
underlying fiscal mess. This mistaken policy could be very difficult to
unwind, will likely lead to future inflation, and will likely not
result in stronger job growth."
Reuters:
- Gold falls as post-Fed rally fails to gain traction. Gold prices fell more than 1
percent on Thursday, failing to sustain gains made after the
Federal Reserve unveiled a fresh round of bond purchases, as
investors switched focus to the prospect of a looming U.S.
fiscal crisis. Fed chairman Ben Bernanke also warned that monetary
policy would not be enough to offset the damage to growth if
talks to close the fiscal deficit in Washington failed,
triggering mandatory tax increases and spending cuts. Gold quickly dropped in line with other markets as the new
stimulus measures were overshadowed by concerns that the budget
talks might fail to head off what would be a crushing blow to
growth. Traders cashed in gains ahead of the year-end, with the
statement containing few surprises to justify a stronger rise.
- Senate vote deals blow to crisis-era deposit insurance. Efforts by small banks to protect a
financial crisis-era deposit insurance program suffered a
significant setback on Thursday when a bill to extend the
program failed to survive a procedural vote in the U.S. Senate. The Transaction Account Guarantee (TAG) program insures bank
deposits above the $250,000 normally covered by the Federal
Deposit Insurance Corp in checking accounts that do not collect
interest. It is set to expire at the end of the year.
- METALS-Copper falls after Fed announcement; fiscal worries drag.
Financial Times:
- China flies aircraft over disputed islands. China
turned up the heat in its simmering dispute with Japan on Thursday when
for the first time it used a government aircraft to challenge Tokyo’s
control of a contested island group. Tokyo scrambled fighters and made a formal diplomatic protest after a
Chinese maritime surveillance aeroplane was spotted in the territorial
air space of the remote and uninhabited islands, which Tokyo calls the
Senkaku and Beijing knows as the Diaoyu.
Sueddeutsche Zeitung:
- Germany's middle class is shrinking
as income declines, pushing wage earners into lower social and economic
brackets, citing a study of the DIW institute and Bremen University.
Xinhua:
- China won't have large-scale economic stimulus plans for next year, citing analysts.
- Report warns on China's real estate rebound. A government think tank has warned that 2013 may see
continued rises in real estate prices and face the risks of market
collapses in some localities. According to a green paper on China's housing sector released by the
Chinese Academy of Social Sciences (CASS) on Thursday, the academy is
worried that many indexes of the country's housing market have shown
rising trends in recent months. According to a report by the National Bureau of Statistics on Dec. 9,
China's real estate investment rose 16.7 percent year on year in the
first 11 months of this year, compared with 15.4 percent in the first 10 months. The
green paper said housing prices in most of Chinese cities will continue
rapid increases in the fourth quarter of this year and into 2013, and
real estate bubbles in some
cities will burst due to a retreat of investment and speculative funds. Some small- and medium-scale real estate companies' fund chains will
break, which will leave more unfinished buildings and financial risks in
the country, it added. The green paper expressed the CASS's belief that, while the Chinese
government's macro-control policies implemented in restraining
speculation in real estate have worked, they have not achieved optimal
results.
