- China’s Record Number of IPOs to Curb Small-Cap Equities. The number of Chinese initial public offerings will accelerate to a record pace in coming months, dragging down small-company stocks, according to UBS AG. There will be some 60 to 80 IPOs each month from March to June, Chen Li, chief China equity strategist at UBS, said at a briefing in Shanghai. Increased stock supply will hold back share prices of smaller companies on the ChiNext Index after they surged last year, he said. The regulator approved about 50 companies to sell stock in China following new rules in November aimed at strengthening investor protection and stamping out price manipulation. The ChiNext gauge of Shenzhen-listed companies with an average market capitalization of $1.5 billion is more than four times more expensive than the Shanghai Composite Index. “The sales pace is unprecedented,” Chen said. “Starting March, that’ll pose a big challenge to the valuation of ChiNext companies.”
- Brazil Swap Rates Rise on Outlook for Inflation; Real Advances. Brazil’s shorter-term swap rates climbed to a six-week high as economists increased their inflation forecast for 2014, adding to speculation that the central bank will extend borrowing cost increases. Swap rates on the contract maturing in January 2015 rose for a fourth straight day, increasing 12 basis points, or 0.12 percentage point, to 10.73 percent at 1:56 p.m. in Sao Paulo. The real appreciated 0.6 percent to 2.3443 per U.S. dollar, the strongest level since Dec. 27.
- Rise of 'Common Man' in India Threatens Stability of Government Coalition. The sudden popularity of India’s anti-graft Aam Aadmi Party is prompting concern at companies such as Maruti Suzuki India (MSIL) Ltd. that this year’s general election will fail to create a stable government. Arvind Kejriwal’s one-year-old Aam Aadmi plans to contest as many as 300 seats after taking power in the national capital last month, according to senior party leader Yogendra Yadav. That threatens to reduce the chances of the ruling Congress Party or main opposition Bharatiya Janata Party emerging with a majority in the election, which is due by May.
- European Stocks Advance Second Day as Bank Shares Climb. European stocks advanced for a second day, after the Stoxx Europe 600 Index posted its first full-weekly gain of 2014, as a global banking-supervision body eased rules linked to minimum-capital requirements for lenders. A gauge of banking shares climbed to its highest level since April 2011 after the Basel Committee on Banking Supervision’s announcement on capital requirements. UBS (UBSN) AG added 3.1 percent as Chief Executive Officer Sergio Ermotti said the lender won’t spin off its investment-banking business. ICAP (IAP) Plc fell 1.1 percent as Goldman Sachs Group Inc. downgraded the world’s biggest interdealer broker. The Stoxx 600 climbed 0.2 percent to 330.72 at the close of trading.
- WTI Crude Drops. WTI for February delivery fell 85 cents, or 0.9 percent, to $91.87 a barrel at 1:36 p.m. on the New York Mercantile Exchange. The volume of all futures traded was 12 percent below the 100-day average. Oil is down 6.7 percent so far this year.
- Federal Reserve Said to Probe Banks Over Forex Fixing. The Federal Reserve is investigating whether traders at the world’s biggest banks rigged benchmark currency rates, raising the risk that firms will be penalized for lax controls as regulators look for wrongdoing.
- Elizabeth Warren’s War on Job Creators. Senator Elizabeth Warren is drawing praise from progressives for her legislation that would bar companies from requiring prospective hires to submit to a credit check as a condition of employment.
- Lululemon(LULU) Falls After Cutting Revenue, Earnings Forecast. Lululemon Athletica Inc. (LULU) shares dropped the most in seven months after the yogawear retailer cut its revenue and earnings forecast for the quarter ending Feb. 2. Lululemon fell 15 percent to $50.86 at 9:41 a.m. in New York and earlier fell as much as 16 percent for the largest intraday decline since June 11.
- Suntory to Buy Beam(BEAM) in $16 Billion Deal. Suntory Holdings Ltd., the closely held Japanese whiskey and beer maker, agreed to buy Beam Inc. (BEAM) for $16 billion including debt to gain brands such as Maker’s Mark whiskey and create the world’s third-largest premium spirits company.
- SodaStream(SODA) Plunges Most Since 2011 After Earnings Data. SodaStream International Ltd. (SODA), the Israeli maker of home soda machines, fell the most since 2011 in New York after the company reported preliminary earnings that missed analyst estimates. Shares of Lod, Israel-based SodaStream dropped 22 percent to $39.07 at 11:52 a.m. in New York, the biggest decline since August 2011.
- Obama backer leading IRS probe visited White House in ’09, records show. The Justice Department attorney leading the probe into whether the IRS improperly targeted Tea Party groups visited the White House in 2009 as a guest of President Obama, according to official visitor logs. The visit raises more questions about possible ties between Barbara Kay Bosserman and Obama, after Republican lawmakers complained last week she should not be leading the probe into the IRS.
- Retailers' present to Wall Street? A lump of coal. A few weeks after consumers finished unwrapping presents, a wave of retailers are gifting Wall Street with lumps of coal. On Monday, Lululemon Athletica and Express became the latest retailers to warn investors of disappointing earnings in the holiday quarter. These negative forecasts follow similar warnings last week from a range of retail companies, including American Eagle Outfitters and Zumiez. In response, Lululemon stock shed 16 percent and Express shares dropped about 2.5 percent.
- Scared? This could be the perfect time to get protection. Even as stocks see a soft start to the year, investors don't seem to be getting too fearful. In fact, the market's "fear gauge" fell Monday to a low touched only once in the past 10 months, and that could give investors a great chance to get protection.
- BofAML Warns USDJPY Trend Has Turned. (graph)
- The Valuation Question: Rich By Any Measure? The forward P/E ratio for the S&P 500 during the past 5-year, 10-year, and 35- year periods has averaged 13.2x, 14.1x, and 13.0x, respectively. At 15.9x, the current aggregate forward P/E multiple is high by historical standards.
- The Average Hedge Fund These Days Is Basically An Overpriced Index Fund. According to this chart from Morgan Stanley's Adam Parker, "hedge funds in aggregate are essentially long the S&P 500."
The Federalist:
- Why Is Religion Invisible To The Media? A 12-year-old girl wrote herself a note before she died. It contained an amazing message of hope and redemption. That was before the media got to it.
- FOREX-Dollar tumbles vs yen after jobs shock prompts stimulus rethink. The dollar tumbled to its lowest in almost a month against the yen on Monday, as investors caught out by Friday's soft U.S. jobs data reassessed how quickly the Federal Reserve might scale back its stimulus.The dollar's weakness also helped push the Australian dollar to a one-month high and the New Zealand dollar to a near-two-month high against the greenback. The U.S. dollar slid 0.7 percent to 103.37 yen, having fallen to 103.26 at one point, its lowest level since Dec. 18. The greenback's losses accelerated after it breached Friday's intraday low of 103.83 yen.
- Low interest rates may spur asset bubbles -German ECB candidate. A prolonged period of accommodative monetary policy brings risks and low interest rates may spur asset price bubbles, said Sabine Lautenschlaeger, Germany's candidate for a vacant seat on the European Central Bank's board. Speaking to a European parliament committee on Monday as part of her vetting, Lautenschlaeger said economic data from the euro zone suggested "we have seen the trough in economic activity, even in the member states hit hardest by the crisis." "A period of prolonged monetary policy accommodation with interest rates being low for a long period is not without its risks," she added. "In fact low interest rates may be associated with spurring asset price bubbles", she told the committee in Strasbourg.
- Merck(MRK) shares jump on early filing for skin cancer drug. Shares of Merck & Co Inc rose as much as 6.5 percent Monday after it filed the first part of an application to market its experimental drug, MK-3475, for advanced melanoma, putting the treatment on track to become the first in a new class of promising cancer drugs to reach the market.
- Japan to Tax Online Content Sales in 2015. Govt will implement tax on sales of electronic books, digital music and other online products from abroad as early as fiscal 2015.
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