- 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.
- Carney Says U.S. Concerned by China Pressure on Reporters. The U.S. government is “deeply concerned” about rising pressure China is putting on foreign journalists operating in the country, White House Press Secretary Jay Carney said in a statement released today.
- 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."
Fox News:
- Rep. Waxman, key ObamaCare architect, to retire after 20 terms in office. Longtime Democratic Rep. Henry Waxman announced Thursday he will not seek reelection in the fall, becoming the latest architect of the Affordable Care Act to announce his retirement.
- 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.
- Housing Bubble 2.0: "More Flipping, Bigger Profits, In Less Time" With 156,862 Homes Flipped In 2013. (graph)
- Presenting The US&PJPY 500. (graph)
recode:
- PayPal Wants Role in Apple’s(AAPL) Mobile Payments Dreams. Apple may finally appear serious about facilitating the purchase of physical products in retail stores through its devices — and that has gotten the attention of at least one potential major competitor.
Reuters:
- Latam needs monetary policy, floating FX to battle turbulence-IMF. Latin America and the Caribbean should rebuild fiscal buffers and use monetary policy and flexible exchange rates to absorb any shocks generated by major shifts in the global economy, the International Monetary Fund warned on Thursday.
- 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).
- 3M(MMM) revenue growth slows, misses Wall Street target. Diversified manufacturer 3M Co reported lower-than-expected quarterly sales on Thursday, hurt by declines in its consumer business and slowing growth in Latin America.
- 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.
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