Bloomberg:
- China’s Treasury Holdings Climb to Record in Government Data. China’s holdings of U.S. Treasuries increased $12.2 billion to a record $1.317 trillion in November, data released on the Treasury Department’s website showed.
- China Money Rate Jumps Most This Year as PBOC Skips Injections. China’s benchmark money-market rate surged by the most this month as the central bank refrained from adding funds even as dealers expect tax payments and pre-holiday demand to reduce the supply of cash. The People’s Bank of China didn’t issue 14-day reverse-repurchase agreements today, the second week it hasn’t injected any money, according to data compiled by Bloomberg. The seven-day repurchase rate, a gauge of cash availability in the banking system, jumped 27 basis points to 4.29 percent as of 11:01 a.m. in Shanghai, according to a weighted average from the National Interbank Funding Center. That was the biggest increase since Dec. 31.
- Actavis to Exit China as Unfriendly Government Not Worth It. Actavis Plc, the second-biggest generic drugmaker by market capitalization, said it will end its presence in China because of the difficult business climate. While the country has more than 1.3 billion potential customers, the government has made it a difficult place to conduct business, Actavis Chief Executive Officer Paul Bisaro said in an interview. The company has sold one operation there and is in talks to sell another. “It is not a business friendly environment,” Bisaro said at the JPMorgan Chase & Co. health-care conference in San Francisco. “If we’re going to allocate capital, we’re going to do so where we can get the most amount of return for the least amount of risk. And China is just too risky.”
- Asian Stocks Rise. Asian stocks rose for a second day as better-than-projected bank earnings boosted investor confidence and drove U.S. stock gauges to record highs. China South City Holdings Ltd. soared 57 percent in Hong Kong as Tencent Holdings Ltd. said it will buy a stake in the logistics-center operator. Newcrest Mining Ltd., Australia’s biggest gold producer, jumped 6.6 percent after saying gold production will be around the top of its forecast range. Tokyo Electric Power Co. rose 1.4 percent as the Japanese utility’s profit forecast exceeded analyst estimates. The MSCI Asia Pacific Index rose 0.2 percent to 139.67 as of 11:24 a.m. in Tokyo.
- Rebar Falls From One-Week High Amid China’s Lower Credit Growth. Steel reinforcement-bar futures dropped for the first time in three days in Shanghai, slipping from a one-week high, amid concern that China’s lower credit growth may crimp demand for the building material. Rebar for May delivery on the Shanghai Futures Exchange retreated as much as 0.5 percent to 3,481 yuan ($576) a metric ton before trading at 3,490 yuan at 10:14 a.m. local time.
- Brazil Lifts Rate to 10.5% as CPI Defies Biggest Rate Rise. Brazil’s central bank maintained the pace of the world’s biggest interest rate increases after inflation last month surged the most in more than a decade. The bank’s board, led by President Alexandre Tombini, voted 8-0 to raise the benchmark Selic by a half-point for a sixth straight meeting to push the key rate to 10.50 percent from 10 percent.
- RBS to UBS Boosting Junk-Debt Teams Once Gutted: Credit Markets. Dealers from Royal Bank of Scotland Group Plc to UBS AG that gutted their credit units after the 2008 financial crisis are now hiring to trade junk debt, seeking to tap into the biggest fixed-income gains during the past year.
- BNP Derivatives Boss Says Few Banks Are Making Money in Equities. Most banks are losing money trading stocks in Europe when their cost of capital is considered, said the top equity derivatives executive at BNP Paribas SA. (BNP) “A lot of banks are running unprofitable equity businesses, which cannot be sustainable,” Yann Gerardin, head of global equities and commodity derivatives at France’s largest bank, said in an interview in Paris. Barclays Plc (BARC), UniCredit SpA and Nomura Holdings Inc. are among banks that have cut their equity businesses in Europe amid a decline in trading volumes and profitability. Europe’s biggest investment banks’ return on equity has tumbled to between 10 percent and 12 percent on average in the past three years, close to their cost of capital, according to analysts at Barclays Capital.
- Big Banks Face Sharper Risk-Management Focus in OCC Policy Shift. Big banks such as JPMorgan Chase & Co. (JPM) may face quicker reprimands for risk-management failures under a new Office of the Comptroller of the Currency effort set to be announced tomorrow. The national-bank regulator’s policy shift will remove hurdles to targeting lenders with certain enforcement actions, according to OCC Chief Counsel Amy Friend. The change follows Comptroller Thomas Curry’s push to clean up management at banks hit with billions of dollars in penalties over misdeeds in the wake of the 2008 credit crisis.
- Banks Push for Changes to Volcker Rule Following CDO Fix. Bank-industry groups and Republican lawmakers called for broader Volcker Rule revisions a day after regulators permitted exemptions for some collateralized debt obligations faulted for obscuring lenders’ capitalization. Representatives of the Securities Industry and Financial Markets Association and other groups joined House Financial Services Committee members in highlighting the “unintended consequences” of the proprietary-trading rule at a Washington hearing today. Lawmakers and lobbyists alike said yesterday’s move to shield some CDOs backed by trust-preferred securities wasn’t enough to protect banks and the public from harm.
- Citigroup(C) Sells Servicing to Fannie Mae on $10 Billion Loans. Citigroup Inc. (C), the third-largest U.S. lender, agreed to sell servicing rights for about 64,000 Fannie Mae residential first-mortgage loans as it seeks to reduce a portfolio of unwanted assets. The contracts, held in the Citi Holdings unit, are tied to loans with about $10.3 billion in unpaid principal balances, the New York-based bank said today in a statement. Fannie Mae acquired the rights and will transfer the servicing of the loans to another firm, Andrew Wilson, a Fannie Mae spokesman, said in a phone interview. Terms weren’t specified.
- Yahoo's(YHOO) No. 2 Is Out After Clash With CEO Mayer. Henrique de Castro, One of the Highest Paid Silicon Valley Executives, to Depart This Week.
- Australia Dollar Tumbles After Weak Jobs. Asian stocks moved higher on Thursday, while the Australian dollar fell to its lowest in over three years against the U.S. dollar following weak jobs data. The Australian dollar fell as low as US$0.8796, a level not seen since August 2010, from US$0.8912 late Wednesday in New York as the number of people employed unexpectedly fell by 22,600 in December, undershooting a forecast for a 10,000 increase.
- How Big Government Drives Inequality by Daid Malpass. Stifling economic growth and benefiting insiders with Washington access do not help the middle class. Inequality is the wedge issue that Democrats hope will carry them through the 2014 and 2016 elections, neutralizing the ObamaCare fiasco. The issue has popular appeal because median incomes (after inflation) have been falling throughout the recovery, while high-end incomes are increasing rapidly. For progressives, this situation seems made to order: If you want a flatter income distribution, don’t you need bigger government to get it? Yet experience shows the opposite: Washington’s increased size and power has concentrated income and wealth in fewer hands. Making government bigger will exacerbate this problem—it is already too big, intrusive and expensive to allow a robust economy that benefits everyone.
- NLRB files retaliation complaint against Wal-Mart. The National Labor Relations Board said Wednesday it filed a complaint against Wal-Mart Stores Inc, alleging the world's largest retailer threatened people with reprisal if they mounted strikes against the company.
- South Korean fund weighs Bank of America stake sale. Korea Investment Corp (KIC) will decide whether to sell its around $1 billion stake in Bank of America within a month, after watching its value fall by half since 2008, Korean media reported on Thursday.
- Amazon(AMZN) Warehouse Workers Vote Against Joining Union. In the first vote of its kind among workers employed by Amazon in the U.S., a group of up to 30 of the commerce giant’s warehouse workers at a Delaware distribution center voted against unionization today. The group, which consists of equipment technicians and mechanics, was voting on whether it wanted to join the International Association of Machinists and Aerospace Workers. A source with knowledge of the vote told Re/code that 27 of the 30 workers voted, and 21 voted against unionization.
Business Insider:
NY Post:
- Another 25 Million ObamaCare Victims. It now looks like ObamaCare will hurt twice as many people as it helps — because the law isn’t nearly done with canceling people’s insurance. The 5 million-plus Americans who’ve seen their health plans canceled thanks to ObamaCare will be joined by millions more this year — because the Affordable Care Act makes their employer-provided policies illegal, as well.
- With China Awash in Money, Leaders Start to Weigh Raising the Floodgates. Move over, Janet Yellen and Ben Bernanke. Step aside, Mario Draghi and Haruhiko Kuroda. When it comes to monetary stimulus, Zhou Xiaochuan, the longtime governor of the People’s Bank of China, has no rivals. The latest data released by China on Wednesday show that the country’s rapid growth in money supply has continued. Mr. Zhou and his colleagues at the Chinese central bank have only begun the difficult and dangerous task of reining it in. The amount of money sloshing around China’s economy, according to a broad measure that is closely watched here, has now tripled since the end of 2006.
- Early holidays point to grim outlook for China's small factories. Scores of factories in China's manufacturing heartlands have closed earlier than usual for the country's biggest annual holiday due to weak orders and rising costs, workers and owners say, suggesting a rocky outlook for a key sector of the economy. While official trade data remains mildly positive, visits to five factory towns in coastal industrial hubs found that in some areas perhaps a third of manufacturers had already begun closing weeks before the Lunar New Year break in late January. In some cases anemic orders from key markets such as the United States and Europe were blamed. Others were being forced to curtail production because of a labor shortage, a symptom of shifting demographics, that has afflicted manufacturers for several years and many say is getting worse. "Lots of people have left already. I would say around a third of the workers," said Ren Lipeng, a factory worker riding a rusty bicycle along a dusty avenue where many shops and restaurants were shuttered in Changping, southern China.
- Exclusive: China's CITIC backs new fund set up by ex-FX Concepts execs. CITIC Capital Holdings Ltd, a unit of China's sovereign wealth fund, has invested in a new U.S.-based asset management fund set up by former executives of bankrupt hedge fund FX Concepts, two sources familiar with the matter said on Wednesday. The new fund will be run by Bob Savage, FX Concepts' former chief operating officer and chief strategist, and Ron DiRusso, the firm's co-chief investment officer and director of research.
- CSX(CSX) 4th-qtr profit misses Street view; coal volumes weak. CSX on Wednesday posted a fourth-quarter profit that fell short of Wall Street's estimates as rising shipments of chemicals, autos and agricultural products failed to make up for weak coal volumes. Shares of the company fell 3 percent after the bell.
- Shrugging off China risks, Australia miners dig deep for more iron ore. Australian miners shoveled record tonnages of iron ore in the December quarter, supported by billions of dollars worth of expansion plans coming on stream and despite signs of weakening demand from top consumer China. Iron ore continues to generate big returns even as prices fall, and miners in Australia - the world's biggest supplier - are counting on economies of scale to maintain profits for the steel making material.
- Riskier financings persist amid regulatory warnings. Investor demand for deals that regulators view as risky, including a $1.1 billion loan for software maker Applied Systems , shows no signs of abating, but banks are looking at new transactions more carefully to try to avoid raising red flags with regulators. U.S. market watchdogs are trying to clamp down on loans with higher leverage levels and dodgier repayment prospects, seeking to avert the problems emanating from the mortgage market that spurred the last financial markets meltdown and recession.
- Coming 'oil glut' may push global economy into deflation. OPEC spare capacity set to reach levels last seen in the depths of the financial crisis in 2009, analysts say.
- Household-debt surge merits caution, but don’t panic, Harper says. Prime Minister Stephen Harper says rising household debt levels are “not a reason to panic,” but urged Canadians to consider what will happen when interest rates rise in the coming years. Mr. Harper made the comments in a 45-minute discussion with what he called “cultural media” in Vancouver last week. It was unannounced publicly and closed to major media outlets, including The Globe and Mail, but a recording of the event was obtained and posted online by 24 Hours, a Sun Media paper in Vancouver.
Liquidity crunch a
catalyst for big China slowdown – analysts
The mini liquidity crunch is the early warning sign of a substantial
economic correction long overdue, amid rising leverage and a broken
growth model, say bearish analysts.
While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3222433/Liquidity-crunch-a-catalyst-for-big-China-slowdownanalysts.html?copyrightInfo=true
NHK:While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3222433/Liquidity-crunch-a-catalyst-for-big-China-slowdownanalysts.html?copyrightInfo=true
- Abe Aide Says 10% Sales Tax Possible if 3Q GDP Growth >3%. Etsuro Honda, an adviser to Japanese Prime Minister Shinzo Abe, says it is possible for Japan to raise sales tax to 10% if 2014 3Q real GDP growth is above 3% and nominal GDP growth above 4%.
- China Reforms Should Reduce Financial Risks. China should use financial reforms to effectively reduce financial risks, Chen Daofu, a researcher at the State Council's Development Research Center, writes in an article. Financial risks include more bad loans from banks and shocks in the stock and property markets, Chen writes.
- None of note
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 139.0 -1.0 basis points.
- Asia Pacific Sovereign CDS Index 106.50 -2.0 basis points.
- FTSE-100 futures +.24%.
- S&P 500 futures +.05%.
- NASDAQ 100 futures +.11%.
Earnings of Note
Company/Estimate
- (SCHW)/.21
- (PNC)/1.64
- (BLK)/4.33
- (BBT)/.72
- (PPG)/1.73
- (UNH)/1.40
- (GS)/4.18
- (C)/.95
- (COF)/1.55
- (INTC)/.52
- (AXP)/1.25
- (WEN)/.11
8:30 am EST
- The Consumer Price Index for December is estimated to rise +.3% versus unch. in November.
- The CPI Ex Food & Energy for December is estimated to rise +.1% versus a +.2% gain in October.
- Initial Jobless Claims are estimated to fall to 328K versus 330K prior.
- Continuing Claims are estimated to fall to 2850K versus 2865K prior.
- Net Long-Term TIC Flows for November are estimated to fall to $18.5B versus $35.4B in October.
- The Philly Fed Business Outlook Index for January is estimated to rise to 8.7 versus 7.0 in December.
- The NAHB Housing Market Index for January is estimated at 58 versus 58 in December.
- None of note
- The Fed's Bernanke speaking, Fed's Williams speaking, Eurozone CPI, weekly EIA natural gas inventory report, Bloomberg Jan. US Economic Survey, Bloomberg Economic Expectations Index for January, weekly Bloomberg Consumer Comfort Index, (ILMN) investor day and the (BBY) holiday sales report could also impact trading today.
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