Evening Headlines
Bloomberg:
- Abenomics at Risk as Workers Struggle to Keep Up With Inflation.
For his economic strategy to work, the Prime Minister says
earnings at companies like Toyota, where profit is projected to double
to a record 1.86 trillion yen ($18.2 billion) this year, must lead to
higher pay. Employees like Matsui have yet to see the benefits -- in the
11 months through November, pay for the average Japanese worker rose
just 0.2 percent; it’s fallen 15 percent in the past decade and a half.
Japan’s unions will begin contract negotiations next month in labor’s
biggest bid so far to share in the benefits of Abenomics. “This is a litmus test for whether Abenomics works or falls apart,” said Martin Schulz, an economist at Fujitsu
Research Institute in Tokyo. “How can you get growth to go up
without getting money into people’s pockets?”
- Emerging Market Rout May Signal ‘Sudden Stop’: Cutting Research.
Brazil, South Africa, Turkey and Ukraine are the emerging markets most
at risk of a “sudden stop,” in the view of Morgan Stanley. That’s
defined as a halt or even a reversal in capital flows into a country,
slashing access to international financial markets for an extended
period and weakening the economy. The term is often linked to 1995
work by Rudi Dornbusch, the late international economics professor at
the Massachusetts Institute of Technology in Cambridge. Mexico,
Indonesia, India and Thailand are also in some jeopardy of such a
phenomenon as investors turn sour on emerging markets, London-based
economists Manoj Pradhan and Patryk Drozdzik said in two reports to
clients over the past week. They wrote as central banks in India, Turkey
and South Africa raised interest rates to shoreup confidence in their
currencies.
- Emerging-Market Shocks Pressure Dormant
Volatility: Currencies. Volatility in foreign exchange markets, after
falling to some of the lowest levels since before the financial crisis,
has nowhere to go but up as emerging economies falter, say the world's
biggest dealers. "The market hasn't accepted some of the risk events
that are on the horizon," Ian Stannard, the head of Europe currency
strategy at Morgan Stanley in London, said in a Jan. 27 phone interview.
"Foreign-exchange volatility is still at relatively low levels so
there's scope for it to move higher. China still poses the biggest
spillover risk from emerging markets."
- China Making Air Force, Navy Upgrades, U.S. Officials Say. China’s air force is fielding new precision-guided cruise missiles, long-range bombers and drones
as its Navy expands its long-range punch, according to U.S.
military intelligence officials. “While we would not characterize the modernization as
accelerated,” it’s “progressing at a steady pace” and is
significant, Lee Fuell, a director at the Air Force’s National
Air and Space Intelligence Center, said in a presentation
released today.
- Rubber Futures in Tokyo Advance, Paring Monthly Loss.
Rubber in Tokyo advanced, paring the biggest monthly decline since May
2012, as increased spending by U.S. consumers raised optimism that
demand for the commodity used in tires may increase. The contract for
delivery in July rose as much as 1.7 percent to 231.8 yen a kilogram
($2,255 a metric ton) on the Tokyo Commodity Exchange, before trading at
230.6 yen at 11:24 a.m. local time. Futures tumbled 16 percent this
month and fell into a bear market amid swelling inventories in China,
the
biggest consumer. Rubber fell 9.3 percent last year.
- Ukraine Warring Factions Trade Barbs With President Sick. Ukraine’s
opposition accused Viktor Yanukovych of foul play as the president
placed himself on sick leave and said his rivals are escalating the
nation’s two-month political crisis. The two sides are in dispute
over steps meant to reduce tension in the wake of deadly anti-government
clashes last week. While Yanukovych’s cabinet fell with the Jan. 28
resignation of former Prime Minister Mykola Azarov, the opposition
rejected an
amnesty law for protesters pushed through yesterday and said he
may use illness to avoid canceling anti-protest laws.
- Puerto Rico Will Be Cut to Junk Within 30 Days, UBS Says. Puerto Rico’s general-obligation
bonds are poised to be cut to junk within the next month,
according to UBS AG. “Given the myriad obstacles facing Puerto Rico, we believe
that at least one rating agency will take such an action within
the next 30 days,” analysts Thomas McLoughlin and Kristin
Stephens at UBS Wealth Management in New York wrote in a report
dated yesterday.
- ECB Seeking to Unmask Weak Banks Wants Risky Loan Details. The
European Central Bank asked Europe’s biggest lenders to disclose loans
on their balance sheets that are at risk of default as part of its
review of the health of the region’s financial system. Banks also had to
provide figures on loans they have
restructured for clients, a document distributed to 128 banks
taking part in an asset quality review and obtained by Bloomberg
showed. The document, in the form of an excel spreadsheet, asked
banks to note how many of their loans classified as
“performing” have already been restructured, and how many
loans that don’t yet meet the standard definition of non-performing -- 90 days past due -- are “unlikely to pay.”
- Bonds Prove Bears Wrong in Best Start Since 2008 as Stocks Tank. Bonds are up, stocks are down and
it’s snowing in Atlanta. The start of the year in financial markets has gone as
almost no one expected, with fixed-income assets worldwide
posting their biggest January returns since 2008 and equity
prices falling the most since 2010. Gold, given up for dead in
2013 as prices tumbled 28 percent, is rallying.
Wall Street Journal:
- Selloff's Spread to Europe Is Sign of Broad Fear. Until This Week, European Emerging Markets Had Largely Dodged Weakness That Hit Peers Elsewhere.
Until this week, European emerging markets had largely dodged the
vicious selloff that has swept through their peers elsewhere. Now, they
are cracking. The Hungarian forint took a heavy blow early Thursday,
dropping as much as 1% against the dollar. The Polish zloty and the
Czech koruna also stumbled. The currencies clawed back
some ground late in the day, but analysts cited Thursday's gyrations as a
sign that the market's fear of investments seen as risky is broad.
Whether bouts of weakness in such countries persist will be a barometer
of wider emerging-market strains.
Fox News:
- House GOP leaders back limited path to legal status for illegal immigrants. House Republican leaders on Thursday endorsed a limited path to legal
status for some illegal immigrants, in a move Democrats said could open
the door to a deal on comprehensive immigration legislation. The
position was included in a document released by party leaders during
their annual retreat in Maryland. The "standards for immigration reform"
document ruled out a special path to citizenship for illegal
immigrants.
CNBC:
- Blankfein’s pay to rise 10% to $23 million for 2013. Lloyd
Blankfein, chairman and chief executive of Goldman Sachs, may earn as
much as $23 million in 2013 – a 10 percent increase on the
previous year – despite the bank's struggle to overcome a slump in fixed
income trading.
- Will Argentina’s woes hit this country? (video) Argentina's latest monetary ailment may prove contagious for some
of its Latin American neighbors, with Brazil likely to be the first to
catch the fever. "What has been happening in Argentina will
have a negative impact on the Brazilian economy," Tony Volpon, a
strategist for Latin America at Nomura, told CNBC, citing long-standing
trade ties. "For example, about 70-80 percent of Brazilian car exports
actually go to Argentina. So they are vulnerable."
Zero Hedge:
Business Insider:
Quartz:
- Will the emerging market rout get even worse? Watch corporate bonds. Global investors have suddenly remembered that emerging markets have a rich, recent history of florid financial crises. The cracks are starting to emerge everywhere:
wobbly “wealth management products” in China, the Turkish lira’s
tumble, the selloff in Brazilian bond markets and last summer’s
mini-rupee crisis.
Reuters:
Telegraph:
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 149.25 +1.75 basis points.
- Asia Pacific Sovereign CDS Index 115.0 -.75 basis point.
- NASDAQ 100 futures +.19%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Employment Cost Index for 4Q is estimated to rise +.4% versus a +.4% gain in 3Q.
- Personal Income for December is estimated to rise +.2% versus a +.2% gain in November.
- Personal Spending for December is estimated to rise +.2% versus a +.5% gain in November.
- PCE Core for December is estimated to rise +.1% versus a +.1% gain in November.
9:45 am EST
- Chicago Purchasing Manager for January is estimated to fall to 59.0 versus a reading of 59.1 in December.
9:55 am EST
- Final Univ. of Michigan Consumer Confidence for January is estimated to rise to 81.0 versus a prior estimate of 80.4.
Upcoming Splits
Other Potential Market Movers
- The China Manufacturing PMI, Eurozone CPI and the Eurozone Unemployment rate could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity
and industrial shares in the region. I expect US stocks to open
modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Substantially Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- Volatility(VIX) 16.24 -6.40%
- Euro/Yen Carry Return Index 145.19 -.39%
- Emerging Markets Currency Volatility(VXY) 10.11 -2.32%
- S&P 500 Implied Correlation 55.54 -2.70%
- ISE Sentiment Index 131.0 +32.32%
- Total Put/Call .79 -15.96%
Credit Investor Angst:
- North American Investment Grade CDS Index 71.07 -1.82%
- European Financial Sector CDS Index 99.94 -2.97%
- Western Europe Sovereign Debt CDS Index 56.0 +4.38%
- Asia Pacific Sovereign Debt CDS Index 115.20 -.45%
- Emerging Market CDS Index 337.49 +.17%
- 2-Year Swap Spread 12.50 +.5 basis point
- TED Spread 2.25 +2.75 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -5.25 -1.25 basis points
Economic Gauges:
- 3-Month T-Bill Yield .02% -2.0 basis points
- Yield Curve 235.0 +3.0 basis points
- China Import Iron Ore Spot $122.60/Metric Tonne unch.
- Citi US Economic Surprise Index 48.10 -2.6 points
- Citi Emerging Markets Economic Surprise Index 11.2 +.8 point
- 10-Year TIPS Spread 2.14 unch.
Overseas Futures:
- Nikkei Futures: Indicating +198 open in Japan
- DAX Futures: Indicating +34 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech/biotech/medical/retail sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
Bloomberg:
- Rajan Warns of Global Policy Breakdown as Emerging Markets Slide. India
central bank Governor Raghuram Rajan warned of a breakdown in global
policy coordination a day after the Federal Reserve further cut
stimulus, weakening emerging-market currencies from the rupee to the
Turkish lira. Rajan, a former chief economist at the International
Monetary Fund, called for greater cooperation among policy makers weeks
before finance chiefs from the world’s top developed and emerging
markets gather in Sydney. The Fed’s
statement yesterday made no mention of developing economies.
- Japan Inc Profits Boom Masks Fading Export Gains From Yen. Soaring profits among Japanese
manufacturers are masking weakness in exports as the yen’s slide
against the dollar fails to deliver the boost seen after
previous bouts of currency depreciation. Export volumes fell 1.5 percent in 2013 from the previous
year, Finance Ministry data show, even following a 12 percent
decline in the yen against the dollar during 2012. That
contrasts with a 7.8 percent surge in 2006 after a similar
currency move.
- Abe Doomsday Risk Prompts Moody's Warning on JGBs: Japan Credit.
Moody's Investors Service says Japan's biggest banks need to cut bond
holdings and boost loans to protect their balance sheets from potential
losses should Prime Minister Shinzo Abe's stimulus spur yield surges.
Lenders' stockpiles of sovereign debt were at 138.9 trillion yen($1.36
trillion) in November, after peaking at a record 171 trillion yen in
March 2012, Bank of Japan data show. "Banks need to rebalance their
portfolios away from JGBs," Graeme Knowd, a Tokyo-based associate
managing director at Moody's who overseas financial institutions, said
in a phone interview. "It if turns out that Abenomics hasn't worked and
only ended up leaving Japan with a bigger pile of debt," a "doomsday
scenario for JGBs" isn't "a zero probability scenario," he said.
- Ukrainian Bonds Tumble Second Day as Russia Threatens Aid Delay. Ukrainian bonds slumped, pushing
yields to a six-week high, as Russia threatened to delay an aid
package and President Viktor Yanukovych refused to unconditionally pardon protesters. Yields on dollar-denominated debt due in June surged 127 basis points to 13.25 percent at 2:48 p.m. in Kiev, the highest since Dec. 16 on a closing basis. The cost of insuring the country’s debt with credit-default swaps jumped 50 basis points to 1,004 basis points, Europe’s highest, according to CMA data.
- Lift 'EM Cookie Crumble' Hedges as Tightening Hurts Growth: HSBC.
Further accumulation of "EM cookie crumble" hedges is warranted for
developed-market investors, Bert Lourenco, head of EMEA rates research
at HSBC, writes in e-mailed comments. Only way for EM countries to stop
capital outflows is to raise rates to reset a financing equilibrium -
and in turn destroy domestic demand. Cumulative impact of just about
every major emerging-market policy tightening will probably be negative
for global growth outlook and risky assets.
- Diageo’s Sales Growth Trails Estimates Amid China Cutbacks.
Diageo Plc (DGE), the world’s biggest distiller, said a slowdown in
emerging markets including China and Nigeria weighed on first-half sales
growth, sending the shares down the most since 2009. “Diageo is not
immune to broader macroeconomic pressures, especially at present in many
key emerging markets,” Eddy Hargreaves, an analyst at Canaccord in
London, said in a note.
- European Stocks Advance; Givaudan Increases, Diageo Falls.
European stocks rose, paring this month’s loss for the Stoxx Europe 600
Index (EC11CHPM), as companies from Givaudan SA (GIVN) to Hennes &
Mauritz AB (HMB) reported earnings. Givaudan jumped 6.3 percent after
posting full-year net income that beat analyst estimates. Roche Holding
AG (ROG) climbed 4.3 percent after forecasting that profit will increase
faster amid rising sales. Diageo Plc (DGE), the world’s biggest
distiller, lost 4.7 percent after the world’s biggest distiller reported
sales growth that missed analysts’ estimates. H&M dropped 3.6
percent. The Stoxx 600 added 0.3 percent to 323.32 at the close of trading in London.
- Oil, Mining Stocks Face Emerging-Currency Risk: Chart of the Day.
Energy and raw-material producers may have the most at stake among U.S.
stocks as emerging-market currencies fall, according to Gina Martin
Adams, a Wells Fargo strategist. "High correlations between
emerging-market currencies and commodity prices suggest
commodity-sensitive sectors in the S&P 500 are likely to suffer
most" as the decline worsens, Martin Adams wrote in a report.
- Consumer Confidence in U.S. Fell Last Week to Two-Month Low. Consumer confidence dropped last week to the lowest level in two months as more Americans said it was not a good time to shop. The
Bloomberg Consumer Comfort Index declined to minus 31.8 in the week
ended Jan. 26 from minus 31 reading the prior period. The buying-climate
gauge slumped to a three-month low.
- UPS(UPS) Profit Fell 8.5% After Holiday Shipping Snafu.
UPS said fourth-quarter profit dropped 8.5 percent as a late surge in
online Christmas shopping snarled operations and led to missed
deliveries that boosted costs. Bloomberg's Lee Klaskow reports on
Bloomberg Television's "In The Loop."
Wall Street Journal:
Fox News:
CNBC:
- Wall Street's new housing bonanza. Wall Street's latest trillion-dollar idea involves slicing and dicing
debt tied to single-family homes and selling the bonds to investors
around the world.
- Outlook for company profits is getting pretty ugly. (video) Some 80 percent of those companies have lowered their outlook, according
to S&P Capital IQ, contradicting the widely held narrative that the
economy is beginning to achieve the escape velocity it needs to attain a
full-fledged recovery.
ZeroHedge:
Business Insider:
recode:
ABC:
Reuters:
- Potash Corp(POT) sees weaker than expected year ahead, shares dive. Potash Corp of Saskatchewan
, the world's biggest fertilizer company, on Thursday
reported a sharply lower quarterly profit and produced 2014
forecasts that were below Wall Street expectations. The company's disappointing outlook shows that the global
potash market has far to go to recover from a slide in prices,
due to years of soft demand, burgeoning supplies and last
summer's breakup of rival Belarusian Potash Company (BPC).
Telegraph:
- Emerging market currency falls in graphs. Emerging markets are experiencing the worst rout in five years, with their
currencies plummeting against the dollar. Here we take a look at those
countries most exposed to risk.
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -2.15% 2) Coal -1.08% 3) Education -1.01%
Stocks Falling on Unusual Volume:
- ADT, NSR, SI, CTXS, ESI, OSTK, ALGT, ORMP, CHEF, DEO, CARB, WCC, EXAR, ABAX, BEAV, CLB, USLV, WHR, KMT, MLNX, TSCO, MGAM, FBHS, SYMC, POT, MUR, BTU, NTLS, AMCC, KMT, SYMC, NSR and ESI
Stocks With Unusual Put Option Activity:
- 1) ADT 2) UA 3) CTXS 4) SYMC 5) CAM
Stocks With Most Negative News Mentions:
- 1) POT 2) BTU 3) CNH 4) APOL 5) CTXS
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gaming +3.72% 2) Biotech +3.23% 3) HMOs +2.65%
Stocks Rising on Unusual Volume:
- ACCL, UA, CNQR, FLDM, ALXN, CRR, NOW, ACXM, MEOH, HAR, CSII, AUXL, HBI, CAVM, HSH, FB, PBI, P, UTEK, FIO, FLDM, WWE, FOXA, DKS, CAM, SPLK, BC, AN, BX, DRE, LVS, ARWR and WYNN
Stocks With Unusual Call Option Activity:
- 1) ADT 2) CWH 3) AMCC 4) CTXS 5) MJN
Stocks With Most Positive News Mentions:
- 1) AAPL 2) V 3) A 4) BC 5) AN
Charts:
Evening Headlines
Bloomberg:
- Calm Broken in Global Markets Amid Concern of Emerging Contagion.
Declines that erased $1.7 trillion
from global stocks as currencies from Turkey to Argentina slid are
proving a Wall Street maxim, according to Brian Barish of Cambiar
Investors LLC. “You’re never fully prepared for something like this,” Barish, president of Denver-based Cambiar, which manages $9
billion, said in a phone interview. “You say to yourself, ‘I
know the froth is picking up, I know this is starting to get a
little out of hand, this is going to get ugly when the hammer
comes down.’ You know all of that, but you just don’t know what
is going to get sold and why and by who.”
- China Said to Probe Credit Loophole Used to Access Cash. China is probing a loophole that allowed executives at steel traders and other companies to
bridge liquidity shortages for their firms by exceeding credit-card limits, according to three people familiar with the matter. The People’s Bank of China opened an investigation into
abuses of credit card pre-authorizations earlier this month, the
people said, asking not to be identified because the probe
hasn’t been made public. The probe is examining transactions in
December and early January, and found that companies and people
gained an aggregate of as much as 10 billion yuan ($1.6 billion)
in that time.
- Record Cash Leaves Emerging Market ETFs on Lira Drop: Currencies.
Investors are pulling money from exchange-traded funds that track
emerging markets at the fastest rate on record, as China's slowing
growth and cuts to central-bank stimulus sink currencies from Turkey to
Brazil. More than $7 billion flowed from ETFs investing in
developing-nation assets in January, the most since the securities were
created, data compiled by Bloomberg show. The iShares MSCI Emerging
Markets ETF(EEM) has seen its assets shrink by 11%, while the Vanguard
FTSE Emerging Markets ETF is poised for the biggest monthly redemption
since the fund was started in 2005. The WisdomTree Emerging Markets
Local Debt Fund is on track for an eighth straight month of withdrawals.
- Abe Crunch Year Sees Biggest Risk Jump Among Peers: Japan Credit. Japan’s
default risk jumped the most
among developed nations this year as the world’s third-largest
economy faces mounting challenges from energy import costs and a
budget overhaul. Credit-default swaps that insure Japanese government
bonds against nonpayment for five years touched 56 basis points on Jan.
27, the highest since Nov. 5, according to data provider
CMA. It has risen 14 basis points this month, the most among the
22 sovereigns tracked by Bloomberg, followed by Iceland’s 13
basis point increase.
- Treasury Wine Slumps as China Austerity Hits Earnings. Treasury Wine Estates Ltd. (TWE), the Australian maker of A$785-a-bottle ($686) Penfolds Grange, said
first-half earnings fell as China’s crackdown on official gift
giving curbed demand for premium vintages. The shares slumped by
a record. Profit before interest, tax and other items dropped to
between A$42 million and A$46 million in the six months ended
Dec. 31, from A$73.4 million a year earlier, the Melbourne-based
company said in a regulatory filing based on unaudited figures.
Full-year earnings will be between A$190 million and A$210
million, compared with an earlier forecast for as much as A$250
million, it said.
“Chinese austerity may be an ongoing issue for some
time,” said Will Seddon, who helps manage about A$550 million
at White Funds Management Pty. in Sydney.
- Erdogan to Give Rate Rise Time Before Trying Plan B. Turkey’s prime minister said he’ll give the central bank’s
emergency interest-rate increase time to succeed in halting a market
slump, before trying alternative measures that he said are ready to be
deployed. Recep Tayyip Erdogan said his government will be
“patient” as it waits to see the impact of the decision to raise all
Turkey’s main rates, according to Hurriyet newspaper and other local
media, which cited comments he made to reporters late yesterday during a
plane journey back from Iran. Erdogan said he won’t be able to
maintain faith in the central bank’s policy shift unless it leads to a
revival in the lira and the country’s stock market, and interest rates
come back down. He said rates “aren’t the only instrument” and the
government may announce its “plan B or plan C” within a few weeks,
without giving details.
- Asian Stocks Slump on Fed Cuts to Bond Buying, China PMI.
Asian stocks fell for the fifth time in six days after the Federal
Reserve pressed on with cuts to U.S. economic stimulus and as a report
showed China’s manufacturing industry contracted. Honda Motor Co., which
gets 83 percent of its auto sales abroad, lost 2.6 percent as Japanese
exporters retreated after the yen gained from the close of equity
markets in Tokyo yesterday. Treasury Wine Estates Ltd. (TWE) slumped by a
record 20 percent in Sydney as the world’s second-largest publicly
traded wine maker said earnings fell. Hitachi Metals Ltd. surged 4.9
percent in Tokyo, leading gains on the regional benchmark index, after
profit at the steel manufacturer topped analyst estimates. The MSCI Asia Pacific Index lost 1.6 percent to 134.54 as of 12:23 p.m. in Hong Kong, with all 10 industry groups on the
gauge falling.
- Rubber Near 16-Month Low as Yen Gains After Fed Cuts Bond Buying.
Rubber in Tokyo declined, trading near a 16-month low as Japan’s
currency advanced against the dollar, reducing the appeal of
yen-denominated futures, after the Federal Reserve cut the pace of bond
buying. The contract for delivery in July fell as much as 1.7 percent to 228.6 yen a kilogram ($2,238 a metric ton) on the
Tokyo Commodity Exchange. Futures have lost 16 percent in
January, heading for the biggest monthly drop since September
2011. They slipped into a bear market on Jan. 28.
- Rebar Heads for Monthly Drop on Iron Ore Before Chinese Holidays.
Steel reinforcement-bar futures in
Shanghai headed for a second monthly decline as iron ore prices dropped
to the lowest in more than six months and as demand for the construction
material slowed before Lunar New Year holidays. Rebar for May delivery fell as much as 0.3 percent to 3,433
yuan ($567) a metric ton on the Shanghai Futures Exchange before
trading at 3,442 yuan by 10:37 a.m. local time. The most-active
contract is set for a 3.6 percent declined in January after a
2.7 percent loss in December.
- Fed Officials Unite Behind Taper as Yellen Era Begins: Economy. Federal
Reserve policy makers cut the pace of bond buying for a second straight
meeting, uniting behind a strategy of gradual withdrawal from Ben S.
Bernanke’s unprecedented easing policy as Janet Yellen prepares to
succeed him as chairman. The Federal Open Market Committee said it will trim monthly purchases by
$10 billion to $65 billion, citing labor-market indicators that “were
mixed but on balance showed further improvement” and economic growth
that has “picked up in recent quarters.”
Wall Street Journal:
CNBC:
Zero Hedge:
Business Insider:
The Blaze:
Reuters:
- Exclusive - Mitsubishi UFJ, Morgan Stanley eye deal to serve hedge funds. Morgan
Stanley and Mitsubishi UFJ Financial Group Inc (8306.T) are considering
forming a partnership to provide administrative services to hedge funds,
a senior official of the Japanese lender said on Wednesday. The two
banks have been examining ways to collaborate in that area since MUFG
purchased a fund-servicing business last year, Masaaki Tanaka, deputy
president of MUFG, told Reuters in an interview.
- Egypt to put Al Jazeera journalists on trial -prosecutor. Egypt will put an Australian, two
Britons and a Dutchwoman on trial for aiding 16 Egyptians
belonging to a "terrorist organisation", the public prosecutor
said on Wednesday, describing the four as Al Jazeera
correspondents. Three of the Qatar-based television network's journalists -
Peter Greste, an Australian; Mohamed Fahmy, a Canadian-Egyptian
national; and Baher Mohamed - were detained in Cairo on Dec. 29
and remain in custody, Al Jazeera said.
- Qualcomm(QCOM) says year on track, focuses on China. Leading mobile
chipmaker Qualcomm Inc posted higher fiscal first-quarter revenue that
slightly missed estimates as smartphone growth shifted to China, but it
bumped up its full-year earnings outlook and said 2014 was playing out as expected.
- FOREX-Yen in favour again as risk aversion flares up. Investors ploughed back into the
yen early on Thursday as safe-haven demand returned with a
vengeance, while the New Zealand dollar came in the cross hair
of sellers after the central bank left interest rates steady.
- Weak PC shipments hit Symantec revenue. Symantec
Corp reported a 5 percent fall in quarterly revenue as a decline in
sales of personal computers hurt demand for its security software. Shares of the company, the maker of Norton anti-virus software, fell 3 percent after the bell.
- Turkey's face-saving rate hike spares lira, may hit growth. A massive rate hike
may have stalled the Turkish lira's fall and salvaged the central
bank's credibility, but it stunts growth at a politically fraught time
for Prime Minister Tayyip Erdogan and may not shield Turkey from a fragile global backdrop for long.
Telegraph:
- World risks deflationary shock as BRICS puncture credit bubbles. As matters stand, the next recession will push the Western economic system
over the edge into deflation.
Half the world economy is one accident away from a deflation trap. The
International Monetary Fund says the probability may now be as high as 20pc.
China Securities Journal:
- China's Property Cos. May Face Financing Problems. Some property
developers in China may face financing problems as regulators rein in
shadow lending. There is an oversupply of real estate in tier-3 and
tier-4 cities, says Chen Yifeng, chairman of Topina Capital, adding co.
is "very cautious" in choosing property projects to finance.
People's Daily:
- China Should Probe China Credit Trust, Product Seller. China
should investigate China Credit Trust Co. and its sales agency,
Industrial & Commercial Bank of China, about why a bailed-out
trust co. failed to conduct due diligence on underlying projects,
according to a commentary. China should investigate on if China Credit
Trust fulfilled its duty in investigating investment targets, if it got
any kickback and if it highlighted investment risks.
Shanghai Securities News:
- China PBOC May Control M2 Growth at About 13% in 2014. People's
Bank of China may control M2 growth at about 13% this year and new yuan
loans at about 9t yuan, citing research jointly made with Industrial and
Commercial Bank of China.
Evening Recommendations
Night Trading
- Asian equity indices are -1.25% to -.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 147.50 +6.5 basis points.
- Asia Pacific Sovereign CDS Index 115.75 +3.0 basis points.
- NASDAQ 100 futures +.29%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Advance 4Q GDP is estimated to rise +3.2% versus a prior estimate of +4.1%.
- Advance 4Q Personal Consumption is estimated to rise +3.7% versus a +2.0% prior estimate.
- Advance 4Q GDP Price Index is estimated to rise +1.2% versus a prior estimate of a +2.0% gain.
- Advance Core PCE is estimated to rise +1.1% versus a prior estimate of a +1.4% gain.
- Initial Jobless Claims are estimated to rise to 330K versus 326K the prior week.
- Continuing Claims are estimated to fall to 3000K versus 3056K prior.
10:00 am EST
- Pending Home Sales for December are estimated to fall -.3% versus a +.2% gain in November.
Upcoming Splits
Other Potential Market Movers
- The
Japan CPI, 7Y T-Note auction, German Unemployment rate, Eurozone
Consumer Confidence, weekly EIA natural gas inventory report and the
Costco(COST) annual meeting could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by technology
and industrial 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.
