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.”
- Henninger: Obama's State of Disunion. His operating method has been social and political division.
Zero Hedge:
- Where Does This Market Rally Rank? (graph)
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.
- 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'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.
- 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.
- 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.
- None of note
- 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.
- FTSE-100 futures -.26%.
- S&P 500 futures +.14%.
- NASDAQ 100 futures +.29%.
Earnings of Note
Company/Estimate
- (DGX)/.93
- (BX)/.83
- (BTU)/-.10
- (HOG)/.33
- (NOC)/1.94
- (ARG)/1.18
- (PHM)/.45
- (HSY)/.86
- (ESI)/1.09
- (BC)/.13
- (CELG)/1.51
- (AN)/.76
- (SHW)/1.28
- (OXY)/1.67
- (LLL)/1.97
- (PBI)/.45
- (RYL)/1.19
- (V)/2.16
- (COP)/1.32
- (BZH)/-.24
- (RGLD)/.23
- (VIAB)/1.16
- (WHR)/3.03
- (LLY)/.73
- (ALXN)/.84
- (MO)/.58
- (CL)/.74
- (RTN)/1.34
- (UA)/.53
- (CAH)/.84
- (MMM)/1.61
- (MAN)/1.25
- (ZMH)/1.62
- (CAM)/.96
- (UPS)/1.25
- (XOM)/1.91
- (CMG)/2.52
- (RHI)/.48
- (MCK)/1.84
- (CSC)/.83
- (GOOG)/12.26
- (BRCM)/.57
- (WYNN)/1.74
- (AMZN)/.69
- (CB)/2.03
- (JDSU)/.14
- (MCHP)/.61
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.
- Pending Home Sales for December are estimated to fall -.3% versus a +.2% gain in November.
- (TD) 2-for-1
- 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.
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