Bloomberg:
- JPMorgan(JPM) Sees Asian Currencies Extending Rout on Economy. Asian currencies are poised to extend declines amid concern an increase in borrowing costs in China and a weakening yen threaten economic growth in the region, JPMorgan Chase & Co. said. “A trend of bearish” Asian currencies will “kick off,” JPMorgan analysts including Hong Kong-based Bert Gochet wrote in a report yesterday. “Worries over China’s tight liquidity stance generate downside risks to growth.” China’s money market rates jumped in December to a six-month high, raising concern that tighter lending conditions may slow the world’s second-largest economy. The yen’s 15 percent decline over the past year is fueling speculation that a cheaper currency may help Japanese companies to grab export market shares from its competitors in South Korea and Taiwan.
- BOJ Silence on Exit Strategy Stokes Concern as Prices Rise. Japan’s success in rekindling inflation is raising the stakes for policy makers to map out the endgame for monetary stimulus, given the risk of a surge in yields when the Bank of Japan winds down bond purchases. With the BOJ’s benchmark inflation gauge past halfway to Governor Haruhiko Kuroda’s 2 percent target, yields on 10-year government securities are still the world’s lowest at 0.67 percent -- held down by central bank purchases of unprecedented scale. Even so, Kuroda, who meets with fellow board members next week, says it’s “too early” to discuss an exit strategy.
- Chinese Developers Face Tighter Financing, Local Curbs, S&P Says. Chinese developers face risks such as narrowing financing channels and more property tightening measures by local governments this year, according to Standard & Poor’s. Developers’ balance sheets and access to funding are likely to weaken in 2014, while big cities including Beijing and Shanghai may impose further curbs if prices rise too fast, S&P Hong Kong-based analyst Bei Fu said on a conference call today. The credit-rating company maintained a stable outlook for the sector, though said developers that overly expanded in the past 18 months could be downgraded.
- China Money Rate Jumps This Week as Cash Demand Seen Increasing. China’s benchmark money-market rate jumped this week on speculation banks are hoarding funds to meet increased customer withdrawals before holidays at the end of this month. The gauge of interbank funding availability rose for a second day today after the central bank refrained from adding cash to markets this week and as official data signaled policy makers are reining in credit growth. The People’s Bank of China has suspended liquidity injections via reverse-repurchase operations after pumping in 29 billion yuan ($4.8 billion) on Dec. 24. Bank lending fell 23 percent in December, official data showed. The Chinese New Year holidays start Jan. 31.
- Asian Stocks Fall as Aussie Bonds Rally; Baht Strengthens. Asian stocks fell as U.S. bank earnings disappointed and investors waited for Chinese economic data due next week. Australian bonds rallied and Thailand’s baht headed for its biggest weekly advance since September. The MSCI Asia Pacific Index dropped 0.3 percent at 10:52 a.m. in Tokyo.
- Rebar Heads for Sixth Weekly Drop on Iron Ore, Chinese Economy. Steel reinforcement-bar futures in Shanghai headed for a sixth weekly loss after iron ore fell to a six-month low and on concern that Chinese demand is weakening. Rebar for May delivery on the Shanghai Futures Exchange fell as much as 0.8 percent to 3,455 yuan ($571) a metric ton, before trading at 3,456 yuan at 9:52 a.m. local time. The contract declined 1 percent this week.
- Numerous Retailers Said Hit by Data Attacks Similar to Target’s. Numerous retailers were probably hit by an unprecedented series of hacking attacks that extends beyond thefts of credit-card data from Target Corp. and Neiman Marcus Group, according to a security company working with the Secret Service. The attacks on retailers may involve multiple groups of hackers who appear to be working from a sophisticated piece of software code that began circulating on underground websites last June, according to a report from iSIGHT Partners, a Dallas, Texas-based security company that tracks cyber criminals.
- Google(GOOG) Unveils Smart Contact Lens Project to Monitor Glucose. The Mountain View, California-based company said in a blog post today that it’s testing an ocular device that’s designed to measure glucose levels in tears, as the company pursues long-term projects at its secretive X Lab research group. The lenses use a tiny wireless chip and glucose sensor to provide readings once per second, project co-founders Brian Otis and Babak Parviz wrote in the post.
- China Beige Book: ‘Credit Transmission Is Broken’. Although China’s economic prospects strengthened in the fourth quarter, the credit landscape remains largely bleak as many borrowers are shut off from bank credit and many new loans are made to roll over old ones, according to a survey of businesses here. The China Beige Book, a quarterly survey of Chinese businesses and banks, concluded that the country’s “credit transmission is broken.” While banks have money to lend, “fewer and fewer firms are doing the borrowing,” the fourth-quarter report said, noting that this suggests “that credit is largely being siphoned off by a privileged elite.”
- Intel's(INTC) Profit Rises, But So Do Concerns. Chip Maker's Shares Slump After 2014 Forecast for Flat Revenue Growth Amid Ailing PC Market. Intel Corp. INTC -0.49% said sales of chips for the ailing personal computer market improved in the fourth quarter, but demand for larger systems was weaker than expected. The Silicon Valley giant's guidance for the current quarter and for all of 2014 also concerned analysts, sending Intel's shares down more than 3% in after-hours trading Thursday. Intel said net income rose 6.4% for the period ended in December, while revenue rose 2.6%. The company's closely watched gross profit margin was 62% in the quarter, compared with its prior projection of about 61%.
- Stores Confront New World of Reduced Shopper Traffic. E-Commerce Not Only Siphons Off Sales, but Changes Shopping Habits. Best Buy Co. on Thursday became the latest retailer to chime in with weak holiday results. Like other chains, the electronics retailer blamed the race to offer the deepest discounts, a game of brinkmanship that hurt profit margins and held back revenue. But there is a deeper malaise at work: A long-term change in shopper habits has reduced store traffic—perhaps permanently—and shifted pricing power away from malls and big-box retailers.
- CEO Corbat's Cachet Is Diminished as Citi's(C) Latest Results Disappoint. For Citigroup Inc. Chief Executive Michael Corbat, his first full year at the helm ended with a thud. The New York bank, the third-largest in the U.S. by assets, on Thursday reported fourth-quarter and full-year results that showed Mr. Corbat wasn't as successful as many investors had hoped at cutting costs and generating profit growth.
- IRS Targeting and 2014. Democrats are working hard to make sure conservative groups are silenced in the 2014 midterms. President Obama and Democrats have been at great pains to insist they knew nothing about IRS targeting of conservative 501(c)(4) nonprofits before the 2012 election. They've been at even greater pains this week to ensure that the same conservative groups are silenced in the 2014 midterms. That's the big, dirty secret of the omnibus negotiations. As one of the only bills destined to pass this year, the omnibus was—behind the scenes—a flurry of horse trading. One of the biggest fights was over GOP efforts to include language to stop the IRS from instituting a new round of 501(c)(4) targeting. The White House is so counting on the tax agency to muzzle its political opponents that it willingly sacrificed any manner of its own priorities to keep the muzzle in place.
- The Washington Way: Top officials rarely fired in times of scandal. Everyone who works for someone does so knowing that at any time, they might be handed the pink slip. Don't do your best at the job you have, and it's sure to come sooner than later. In Washington, things work ... differently.
- Senate passes $1.1 trillion spending bill. Congress sent President Barack Obama a $1.1 trillion government-wide spending bill Thursday, easing the harshest effects of last year's automatic budget cuts after tea party critics chastened by October's partial shutdown mounted only a faint protest.
- Elizabeth Arden(RDEN): Lack of deep discounts hurt us. Beauty products maker Elizabeth Arden estimated quarterly results below analysts' expectations, saying sales were hurt by its refusal to discount deeply even as other retailers offered heavy promotions. Shares of the company, which also withdrew its full-year forecast, fell 21 percent in trading after the bell. In 2013, U.S. retailers offered the biggest promotions since the 2008 recession to get shoppers to spend in a shortened holiday season. "Our results were significantly impacted by an increased level of highly promotional and discounted activity globally and weaker than anticipated holiday retail sales and replenishment orders at a number of our non-prestige retail accounts in North America," Chief Executive E. Scott Beattie said in a statement.
- Money worries keep Gen Y from getting wheels. (video) Generation Y members are still worried about the affordability of buying or leasing a car, according to a new study from Deloitte. Among Gen Y respondents—whom the study defines as people born between 1977 and 1994—61 percent plan to buy or lease a car within the next three years and 23 percent within the next year; 8 percent have no plans to buy or lease a vehicle.
- The Death Cross Of US Manufacturing. (graph)
NY Times:
- Banks Keep Their Mortgage Litigation Reserves a Secret. From JPMorgan Chase’s $13 billion settlement over mortgage securities to lawsuits brought by bondholders, a barrage of litigation has been raining down on Wall Street banks. Yet the banks are not disclosing a number that is crucial for assessing their ability to deal those legal costs. And, curiously, the regulator that has sway over companies’ disclosure practices has not called on the industry to reveal this important figure so that investors can weigh the institutions’ health.
- U.S. Fed balance sheet grows to $4 trillion. The U.S. Federal Reserve's balance sheet reached $4 trillion in the latest week as its latest stimulus program aimed to help the economy added more Treasuries and mortgage-backed securities to its holdings, central bank data released on Thursday showed. On Jan. 15, the Fed's liabilities, which are a broad gauge of its lending to the financial system, rose to $4.029 trillion from $3.986 trillion a week earlier.
- NSA collects millions of text messages daily in 'untargeted' global sweep. The National Security Agency has collected almost 200 million text messages a day from across the globe, using them to extract data including location, contact networks and credit card details, according to top-secret documents. The untargeted collection and storage of SMS messages – including their contacts – is revealed in a joint investigation between the Guardian and the UK’s Channel 4 News based on material provided by NSA whistleblower Edward Snowden.
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
The Hindu: 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’s grandfather shown as ‘war criminal'. China on Thursday threw open to journalists for the first time a museum in this north-eastern city — where the Japanese occupation of China first began in 1931 — that showcases the atrocities committed by invading forces and also describes the grandfather of current Japanese Prime Minister Shinzo Abe – at the time a Japanese leader – as “a Class-A war criminal.”
- None of note
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 140.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 106.50 unch.
- FTSE-100 futures +.26%.
- S&P 500 futures +.12%.
- NASDAQ 100 futures +.12%.
Earnings of Note
Company/Estimate
- (BK)/.54
- (CMA)/.74
- (GE)/.53
- (MTB)/1.92
- (MS)/.42
- (SLB)/1.33
- (STI)/.69
- (WIT)/8.06
8:30 am EST
- Housing Starts for December are estimated to fall to 990K versus 1091K in November.
- Building Permits for December are estimated to rise to 1014K versus 1007K in November.
- Industrial Production for December is estimated to rise +.3% versus a +1.1% gain in November.
- Capacity Utilization for December is estimated to rise to 79.1% versus 79.0% in November.
- Manufacturing Production for December is estimated to rise +.3% versus a +1.1% gain in November.
- Preliminary Univ. of Mich. Consumer Confidence for January is estimated to rise to 83.5 versus 82.5 in December.
- JOLTs Job Openings for November are estimated to rise to 3930 versus 3925 in October.
- None of note
- The Fed's Lacker speaking, China Dec. Property Prices and the UK retail sales report could also impact trading today.
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