Today's Headlines

Bloomberg:

• Ruble’s Plunge Surrounds Central Bank Chief With Rotten Choices. (video) Russian central bank Governor Elvira Nabiullina is running out of policy options for stabilizing the ruble without inflicting deeper damage to the economy. On one side, she wants to support the currency to slow inflation and keep Russians from abandoning the ruble. On the other, the scale of interest-rate increases required to do that would further strangle an economy on the verge of a recession, and pile pressure on companies struggling to refinance debt as sanctions cut them off from international capital markets.

• BOJ Said to Reject Adding Stimulus to Ease Blow to CPI From Oil. The Bank of Japan rejects the idea that additional monetary stimulus is needed to prevent the decline in oil prices in recent months from pulling down inflation, according to people familiar with the discussions. For now, policy makers assess that while cheaper energy costs may weigh on consumer prices for a time, they ultimately will boost the economy -- spurring inflation, the people said, asking not to be named as the talks are private. Less agreement is found on how much capacity the central bank has to expand its buying of government debt, some of the people said.

• China’s Slowdown Deepens as Factory Output Growth Wanes: Economy. (video) Bloomberg’s gross domestic product tracker came in at 6.78 percent year-on-year in November, down from 6.91 percent in October and a fourth month below 7 percent, according to a preliminary reading. Factory production rose 7.2 percent from a year earlier, retail sales gained 11.7 percent, and investment in fixed assets expanded 15.8 percent in January through November from a year earlier, official data showed. 

• Greek Bonds Extend Worst Week Since Euro Crisis. The last time Greece’s bonds had this bad a week, the nation had just undergone the biggest debt restructuring in history, inconclusive elections had stoked concern it may exit the euro and Mario Draghi’s “whatever it takes” pledge was more than two months away. The yield on Greek 10-year bonds has surged about 200 basis points this week, the biggest leap since the height of the euro-area sovereign-debt crisis in May 2012. Worse still, the yield on three-year notes, issued in July as part of Greece’s emblematic return to capital markets, have jumped more than 450 basis points, climbing above the longer-dated rates in a sign that investors are increasingly concerned the nation will be unable to pay its debt. 

• Euro-Area Industrial Output Grows a Less-Than-Forecast 0.1%. Industrial output in the 18-nation region rose 0.1 percent, less than the 0.2 percent increase forecast by economists in a Bloomberg News survey. The data from Luxembourg-based Eurostat also showed production was up 0.7 percent from a year earlier.

• Ibovespa Poised for Worst Week Since October as Petrobras Slumps. The Ibovespa was set for the worst week since October, approaching a bear market, as a decline in crude oil below $60 a barrel sank Petroleo Brasileiro SA. Petrobras, as the state-run company is known, extended a five-day slide to 16 percent. Itau Unibanco Holding SA, Latin America’s largest bank by market value, contributed the most to the benchmark equity index’s drop. Homebuilder Rossi Residencial SA surged 11 percent after a six-day slump. Cia. Paranaense de Energia, the utility known as Copel, jumped on a plan to invest 2.5 billion reais ($940 million) next year. The Ibovespa fell 2.6 percent to 48,580.38 at 3:31 p.m. in Sao Paulo, bringing its losses from this year’s high to 22 percent. The gauge has dropped 6.6 percent for the week. 

• Europe Stocks’ Worst Week in 3 Years Eclipses U.S., Asia Drops. Tumbling oil prices and the worst rout in Greek equities since 1987 sent European shares for their biggest weekly slump in more than three years. Today’s 2.6 percent plunge in the Stoxx Europe 600 Index was the largest in almost two months and extended the week’s losses to 5.8 percent. That’s more than double the five-day drop in the MSCI Asia Pacific Index and Standard & Poor’s 500 Index. With oil tumbling to a five-year low, European energy companies slumped to their lowest level since April 2009 and commodity producers had their worst week since May 2012. In Greece, anxiety that voters will kick out leaders committed to the nation’s bailout sent the ASE Index down 20 percent, making it this year’s worst performing equity market after Russia. 

• Crude Oil Extends Drop Below $60 as IEA Cuts Forecast. (video) Benchmark U.S. oil prices extended losses below $60 a barrel as the International Energy Agency cut its global demand forecast for the fourth time in five months. West Texas Intermediate crude is poised for a weekly decline of 12 percent while Brent has lost 10 percent. The IEA reduced its estimate for oil demand growth in 2015 by 230,000 barrels a day, the agency said in a report today. U.S. output, already at a three-decade high, will continue to rise in 2015, the IEA said.

• Oil Rot Spreading in Credit. Credit investors are preparing for the worst. They’re cleaning up their portfolios, selling riskier debt that’s harder to trade in bad times and hoarding longer-term government bonds that do best in souring markets. While investors have pruned energy-related holdings in particular as oil prices plunge, they’re also getting rid of other types of corporate bonds, causing yields to surge to the highest in more than a year. 

• Junk-Bond Yields Poised for Biggest Jump Since August. Junk-rated companies are facing the biggest weekly jump in borrowing costs in four months as the plunge in oil prices roils the U.S. bond market. The average yield on speculative-grade bonds has surged 0.34 percentage point this week to 7.1 percent, heading for the largest increase since it rose 0.38 percentage point in the period ended Aug. 1, according to Bank of America Merrill Lynch index data. The rise in August was the biggest since yields soared 0.48 percentage point in September 2011.

• Junk-Bond Well Runs Dry as Oil Shock Quells Debt Supply. The market for new junk bonds has all but shut as plunging oil prices and borrowing costs at an 18-month high deter issuers. Even as sales of high-yield, high-risk notes in the U.S. reached a record $353.1 billion this year, offerings have stalled this month with the slowest pace for a December since 2011. Junk is on track to deliver its second straight quarterly loss, the first time that’s happened since 2008, and trimming gains for the year to 1.47 percent, according to Bank of America Merrill Lynch index data. “Momentum in high-yield is coming to a halt,” Margie Patel, a money manager who oversees $1.4 billion for Wells Capital Management in Boston, said in a telephone interview. “We are still seeing the results of oversupply, most of which comes from the sector that has been disproportionately impacted by big changes in energy prices, along with global growth worries that have caught the market wrong-footed.”

ZeroHedge: 

• Presenting The $303 Trillion In Derivatives That US Taxpayers Are Now On The Hook For. 

• US Oil Rig Count Tumbles Most In 2 Years. (graph)

• What Would Happen "If It Was A Free Market" - Deutsche Bank Explains.

• We Have Just Escaped The Earth's Gravity And Are Now In Space Orbit. (graph)

• WTI Crashes To $57 Handle; 80% Of Shale Production Non-Economic. (graph)

• Treasury Yields Are Crashing-er. (graph)

• What's The Biggest Loser Since Oil Prices Peaked? (graph)

• The Financialized-Oil Dominoes Are Toppling. (graph)

• Oil Producers' Currencies Are Collapsing-er. (graph)

• PPI Slides, Misses Estimates, After Finished Goods Prices Tumble Most Since July 2009. (graph)

Business Insider: 

• The Oil Crash Is Not The Biggest Story In The Global Markets Right Now. The most talked-about story in the market is oil, but there is a more important move happening in markets: US Treasury bonds are on fire. The yield on long-dated US Treasury bonds — meaning the 10- and 30-year bonds — has been falling sharply over the past week. 

• OBAMA: 'I Spend Most Of My Time Watching ESPN In The Morning'.

• Airline Shares Just Slumped As A Massive Computer Failure Closed London's Airports.

• LARRY FINK: I Was Just In The Middle East And I Came Back 'More Bearish' On Oil.

Reuters:

• EMERGING MARKETS-Brazil leads Latam stocks lower on oil, Petrobras woes.

ZeeNews:

• India Industrial Production Plunges to 3-Year Low; Contracts -4.2% in October. India's industrial output growth rate contracted by 4.2 percent in October, dragged down by a fall in the manufacturing and the capital goods sector.

Bear Radar

Style Underperformer:

• Small-Cap Value -.92%

Sector Underperformers:

• 1) I-Banks -2.15% 2) Defense -2.12% 3) Steel -2.06%

Stocks Falling on Unusual Volume:

• PCTY, SSTK, ESL, AKR, TBI, LUK, MEI, HUN, CZR, WLL, NX, SPR, TRCO, EXLP, RUSHA, ALDR, ABY, BPT, AER, OXM, ZIV, VNR, FLR, PUK, SMLP, ENTA, FCX, CONN, PWR, CLMT, EMR, OLN, HUN, WLH, TBI, JOY, LINE, W, TERP, MEI and NX

Stocks With Unusual Put Option Activity:

• 1) IBM 2) XLF 3) XLB 4) SNDK 5) MON

Stocks With Most Negative News Mentions:

• 1) COST 2) EMR 3) MET 4) RAX 5) AMBC
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth -.91%

Sector Outperformers:

• 1) Restaurants +.45% 2) Retail +.16% 3) Biotech -.04%
  

Stocks Rising on Unusual Volume:

• DDC, ADBE, LULU, CTRP, ISIS and TGTX

Stocks With Unusual Call Option Activity:

• 1) MWE 2) SAVE 3) ADBE 4) SIRI 5) USO
  

Stocks With Most Positive News Mentions:

• 1) LULU 2) GPRO 3) GWW 4) ADBE 5) VIA/B
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Friday Watch

Evening Headlines 
Bloomberg:

• Putin in ETFs Hits Investors as Assets Plunge. Investors are abandoning WisdomTree Investments Inc.’s flagship emerging-markets exchange-traded fund at the fastest pace ever, and the fund provider has President Vladimir Putin to blame. Asset managers have pulled a record $1.59 billion from the WisdomTree Emerging Markets Equity Income Fund in the past year, the sixth-most among more than 1,000 U.S. ETFs tracked by Bloomberg. Russian companies, which have plunged an average 43 percent this year in dollar terms, make up 17 percent of the ETF’s holdings, five times as much as in MSCI Inc.’s industry benchmark. WisdomTree’s Emerging Markets SmallCap Dividend Fund, where Russian stocks comprise 0.1 percent, posted an outflow of less than $270,000.

• Chinese Leaders to Maintain Prudent Monetary Policy in 2015. China’s leaders will keep growth on track next year by applying a prudent monetary stance with a balance between loosening and tightening, according to a statement from a key economic meeting that ended yesterday. While China faces challenges to arrest a slowdown, growth is showing resilience and potential, giving the government plenty of room to maneuver, the official Xinhua News Agency said in a summary of the policy-setting Central Economic Work Conference yesterday. As in past years, Xinhua didn’t announce detailed growth targets for next year.

• China Rate Swap Rises for a Second Week as Stimulus Bets Recede. China’s benchmark interest-rate swaps were set to climb for a second week as the central bank’s use of targeted fund injections damped speculation there will be a more broad-based loosening of policy.

• Stevens Pushes Back on RBA Cut Calls, Sees Aussie Falling. Reserve Bank of Australia Governor Glenn Stevens indicated the nation’s currency will probably decline further next year and pushed back against calls for near-term interest rate cuts because the economy is performing as the central bank forecast.

• Asian Stocks Follow U.S. Higher as Oil Trades Below $60. Asian stocks advanced, following U.S. stocks higher on better-than-estimated retail sales in the world’s biggest economy. Oil in New York extended declines below $60 a barrel and the dollar strengthened. The MSCI Asia Pacific Index increased 0.6 percent by 11:10 a.m. in Tokyo, paring the biggest weekly decline since Oct. 17 as Japanese shares gained before elections this weekend.

• Oil Extends Drop Below $60 as Producers Tussle for Market Share. Oil extended losses below $60 a barrel amid speculation that OPEC’s biggest members will defend market share against U.S. shale producers. Brent also slid after closing at the lowest price since July 2009. West Texas Intermediate futures fell as much as 1.9 percent in New York and are down 10 percent this week. Iraq, the second-largest producer in the Organization of Petroleum Exporting Countries, said its decision to widen a discount for January sales to Asia isn’t proof of a price war. Crude will drop further next week, a Bloomberg News survey of analysts and traders shows.

• Skepticism Jumps in Options as VIX Rises 70% in Four Days. Options traders aren’t buying the stock market’s message. While the Standard & Poor’s 500 Index (VIX) posted its first gain of the week on Dec. 11, rising 0.5 percent, the Chicago Board Options Exchange Volatility Index also jumped, climbing 8.4 percent to cap its biggest four-day advance since 2011. The two gauges, one measuring share prices and the other anxiety among traders, only move in unison about 20 percent of the time. 

• Sony's Hacking Nightmare Gets Worse: Employees Medical Records Revealed. Documents stolen from Sony Corp. (6758) by hackers include detailed and identifiable health information on more than three dozen employees, their children or spouses -- a sign of how much information employers have on their workers and how easily it can become public.

• Tesla’s(TSLA) China President Resigns After Less Than 9 Months.

Wall Street Journal:

• House Passes $1.1 Trillion Spending Bill Ahead of Midnight Deadline. Measure Expected to Pass Senate, but Timing Remains Unclear. The House narrowly passed Thursday a $1.1 trillion spending bill aimed at avoiding a government shutdown just hours before the midnight deadline.

• High-Yield Bond Funds See $1.9 Billion Outflow in Latest Week. Marks Largest Weekly Decline Since Week Ended Oct. 1, According to Lipper.

• A Flawed Report’s Important Lesson. Americans regardless of party should agree torture is wrong. The “torture report” exists. It shouldn’t—a better, more comprehensive, historically deeper and less partisan document should have been produced, and then held close for mandatory reading by all pertinent current and future officials—but it’s there. Anyone in the world who wants to read it can do a full download, and think what they think.

Fox News:

• Brennan defends CIA interrogation program, challenges Senate report. CIA Director John Brennan on Thursday delivered a lengthy and detailed defense of his agency's post-9/11 interrogation techniques, reminding the nation that agents used the tactics in pursuit of a single goal -- preventing another devastating terror attack.

Zero Hedge:

• What Do They Know? CME Implements Gold, Precious Metals Circuit Breakers Up To $400 Wide.

• Cromnibust! Hindenburg Cluster Grows As Crude, Credit, & US Government Credibility Crash. (graph)

• 10 Legendary Investment Rules From Legendary Investors.

• Duck And Cover - The Lull Is Breaking, The Storm Is Nigh.

• Greece Suffers Biggest 3-Day Crash In 27 Years. (graph)

• WTI Crude Crashes Into The $50s. (graph)

• Habitual Chinese Gamblers Dump Macau, Go All In On Chinese Stocks. (graph)

Business Insider:

• Investors Are Still Bullish On The US Energy Boom Even As Oil Crashes.

• Halliburton(HAL) Cuts 1,000 Jobs As Oil Prices Tank.

Reuters:

• U.S.-based stock funds post $2.9 bln outflows in week-Lipper. 

• 'Grexit' threat could complicate ECB QE: James Saft.

• Number of hedge fund launches falls to 240 in Q3 -HFR.

Telegraph:

• Crisis as Dubai stock market suffers biggest crash in five years. The plunging oil price has dragged the Dubai stock market down in its biggest one day fall since 2009.

• France drifts into deflation as ECB 'pea-shooter' falls short. The Bank of Italy warns that any further falls in prices at this stage could have 'extremely grave consequences for economies with very high public debt levels'.

China Business News:

• China Cuts 2015 GDP Growth Target in Work Conference. China lowered its planned GDP growth target for next year at the Central Economic Work Conference which ended yesterday, without saying how much.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.25% to +.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 106.0 unch.

• Asia Pacific Sovereign CDS Index 66.5 -1.25 basis points.

• S&P 500 futures -.18%.

• NASDAQ 100 futures  -.21%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (NX)/.20

Economic Releases
8:30 pm EST

• PPI Final Demand for November is estimated to fall -.1% versus a +.2% gain in October.

• PPI Ex Food & Energy for November is estimated to rise +.1% versus a +.1% gain in October.
  

9:55 am EST

• Preliminary Univ. of Mich. Consumer Confidence for December is estimated to rise to 89.5 versus 88.8 in November.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The China Industrial Production data, (CAH) analysts day and the (NUS) analyst day could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Higher into Final Hour on US Economic Data, Yen Weakness, Short-Covering, Retail/Healthcare Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 18.18 -2.43%

• Euro/Yen Carry Return Index 154.03 +.57%

• Emerging Markets Currency Volatility(VXY) 9.25 +1.76%

• S&P 500 Implied Correlation 70.19 +4.03%

• ISE Sentiment Index 53.0 -36.90%

• Total Put/Call .99 +3.13%

• NYSE Arms 1.18 -65.05% 

Credit Investor Angst:

• North American Investment Grade CDS Index 68.61 +.29% 

• America Energy Sector High-Yield CDS Index 628.0 +4.13%

• European Financial Sector CDS Index 61.88 +.99%

• Western Europe Sovereign Debt CDS Index 30.72 +3.31%

• Asia Pacific Sovereign Debt CDS Index 65.82 -.81%

• Emerging Market CDS Index 351.28 +.25%

• China Blended Corporate Spread Index 336.50 +1.73%

• 2-Year Swap Spread 23.0 unch.

• TED Spread 21.50 +.25 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -8.50 -1.5 basis points

Economic Gauges:

• 3-Month T-Bill Yield .03% unch.

• Yield Curve 158.0 -1.0 basis point

• China Import Iron Ore Spot $69.37/Metric Tonne +.33%

• Citi US Economic Surprise Index 24.80 +6.7 points

• Citi Eurozone Economic Surprise Index -20.60 -1.2 points

• Citi Emerging Markets Economic Surprise Index -6.2 +.9 point

• 10-Year TIPS Spread 1.71 unch.

Overseas Futures:

• Nikkei Futures: Indicating +198 open in Japan

• DAX Futures: Indicating -40 open in Germany

Portfolio: 

• Slightly Higher: On gains in my retail/tech/biotech/medical sector longs and emerging markets shorts

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg:

• Ukraine Truce Shudders as PM Warns of Possible ‘Default’. Pro-Russian rebels killed three Ukrainian soldiers, jolting a two-day-old truce in the nation’s east as Prime Minister Arseniy Yatsenyuk called for an international donor conference to avoid a possible “default.” The casualties follow Ukraine’s Dec. 9 decision to halt hostilities in an attempt to start new talks with insurgents its it’s fighting in the Donetsk and Luhansk regions. Ukraine needs to expand a $17 billion international bailout program that’s keeping its economy afloat after bonds fell to a record, Economy Minister Aivaras Abromavicius said yesterday, adding it’s too early to say how much more aid Ukraine requires.

• Ruble Touches Record Low as Interest-Rate Rise Seen Inadequate. The ruble touched a record low and government debt rallied as the central bank steered clear of an aggressive rate increase to avoid driving the economy into recession. The Russian currency lost as much as 1.4 percent to 55.5955 per dollar before trading 1.3 percent weaker at 5:13 p.m. in Moscow. The Micex Index (INDEXCF) of equities slid 2.2 percent, while the dollar-denominated RTS Index dropped 3.5 percent. Yields on 10-year government bonds, known as OFZs, dropped 29 basis points to 12.42 percent.
• Greek Stock Rout Means ASE Index Is 2014 Worst After Russia. Anxiety that voters will kick out leaders committed to Greece’s bailout wreaked havoc on markets for a third day, extending losses in stocks to 20 percent and making them this year’s worst performers behind Russia. The ASE Index (ASE) dropped 7.4 percent to 827.98 today, its lowest level since July 2013. That’s brought its loss for the year to 29 percent. Only Russia’s RTS Index did worse, with a 43 percent slump. The rout also spread to Greek bonds, with rates on three- and five-year notes jumping to the highest level since the nation restructured its debt in 2012. 

• Blankfein Says ‘I Don’t Know’ If China Manipulates Economic Data. Lloyd Blankfein said he isn’t sure he can trust China’s official economic data. “I don’t know; how do I know?” the Goldman Sachs Group Inc. chief executive officer said today when asked at a DealBook conference in New York if he thinks China manipulates government statistics. “I’m not taking it that they are.” 

• Gulf Shares Plunge After OPEC as Dubai Declines Most Since 2008. Dubai stocks dropped the most since October 2008 and equity markets across the oil-producing Gulf Cooperation Council tumbled after OPEC reduced its estimate for crude demand in 2015. The DFM General Index (DFMGI) slumped 7.4 percent to the weakest since Jan. 15 at the close. In neighboring Abu Dhabi, home to almost 6 percent of the world’s proven oil reserves, the ADX General Index fell 4.7 percent, the most since November 2009. Oman’s MSM 30 Index lost 4.2 percent, becoming the third GCC gauge to enter a bear market in two weeks. Qatar’s QE Index slid 4.3 percent and Saudi Arabia’s Tadawul All Share Index retreated 0.2 percent.

• European Stocks Are Little Changed as Greece’s ASE Index Slides. European stocks were little changed, after swinging between gains and losses, as U.S. data showed the world’s biggest economy is strengthening. Greek shares slid a third day, sending the ASE Index down 20 percent this week. The Stoxx Europe 600 Index lost less than 0.1 percent to 339.31 at the close of trading, having fallen as much as 0.8 percent and gained as much as 0.3 percent.

• WTI Oil Drops Below $60 After Saudis Question Need to Cut. WTI for January delivery dropped as much as $1.09 to $59.85 a barrel at 2:19 p.m. on the New York Mercantile Exchange. Total volume was 14 percent above the 100-day average for the time of day. The U.S. benchmark is down 38 percent this year.

• Fed Bubble Bursts in $550 Billion of Energy Debt: Credit Markets. The danger of stimulus-induced bubbles is starting to play out in the market for energy-company debt. Since early 2010, energy producers have raised $550 billion of new bonds and loans as the Federal Reserve held borrowing costs near zero, according to Deutsche Bank AG. With oil prices plunging, investors are questioning the ability of some issuers to meet their debt obligations. Research firm CreditSights Inc. predicts the default rate for energy junk bonds will double to eight percent next year. “Anything that becomes a mania -- it ends badly,” said Tim Gramatovich, who helps manage more than $800 million as chief investment officer of Santa Barbara, California-based Peritus Asset Management. “And this is a mania.” 

• Stock Traders Ignoring the Message From Junk Bond Traders. Perhaps 2014 will go down in history as the year that junk bonds sent a warning signal as oil plummeted and stocks just kept rallying. Prices on high-yield bonds have declined 2.4 percent this month and 5.7 percent since the end of August, even as U.S. equities have climbed to new highs. The dollar-denominated debt is now yielding the most relative to a comparable measure on the Standard & Poor’s 500 index since 2011. The divergence may signal junk-bond traders are picking up on a fundamental problem of overvalued energy companies in frothy markets fueled by six years of record Federal Reserve stimulus -- and that stock investors should pay attention. While falling oil prices mean consumers have extra cash to deploy elsewhere, boosting the economy, the price plunge may also crimp the capital spending by energy companies that has been a driver of growth in recent years.

ZeroHedge:

• Russell Napier: This Has Never Happened Before Without A Drop In Stock Prices. (graph)

• 3 Things Worth Thinking About. (graph)

• A Gentle "Deja Vu" Reminder For Today's Energy Stock Traders. (graph)

• After 11 Quarters In A Row, US Households See Net Worth Tumble $141 Billion In Q3. (graph)

• How Wal-Mart(WMT) Fabricated And Lied About Its "Strong" Chinese Sales For Years.

• Continuing Claims Surge To 4Mo. Highs, Biggest Spike Since Lehman. (graph)

• US Imports Most Deflation From Japan Since 2010. (graph)

• Car-Buying Surge Sparks Best Retail Sales Rise Since April. (graph)

• Greek Stocks Crash, Default Risk Spikes After PM GREXIT Comments. (graph)

• Norway Central Bank, Slammed By Oil Plunge, Warns Of "Severe Downturn", Unexpectedly Cuts Rates. (graph)

ArmyTimes:

• U.S. readying military, economic options to Russian missile treaty violation. Pentagon and State Department officials are reviewing what military and economic options they can employ if Russia continues development of a cruise missile it has tested in violation of a cornerstone nuclear weapons treaty between Washington and Moscow, senior U.S. officials say.

iMFdirect:

• Managing House Price Booms in Emerging Markets. Is this steady increase in housing prices a cause of worry? History teaches us to be wary when house price surges are accompanied by booms in the availability of credit. Such ‘twin booms’ in house prices and credit are more likely to end in busts, and the recovery from those busts is slower and more costly in terms of lost income.

Telegraph: 

• Opec veteran says oil price a 'disaster' and cartel powerless. Senior adviser to Qatar's emir and former Opec president tells the Telegraph the global oil market is now over-supplied by as much as 2m barrels per day of crude.