- Emerging-Market Stocks Decline as Vale Tumbles on China. Emerging-market stocks fell to a four-month low as concern China’s economic growth will falter sank commodity producers from Vale SA (VALE5) to Minmetals Development Co. South Africa’s rand slid to the lowest level in five years. The MSCI Emerging Markets Index dropped 0.9 percent to 964.84 at 11:03 a.m. in New York. The Shanghai Composite Index (SHCOMP) declined to a five-month low as Great Wall Motor Co. (2333) led a slide in automakers and Minmetals retreated 6.3 percent. Brazil’s Ibovespa (IBOV) drove losses among major stock indexes in the Americas as Vale, the world’s biggest iron-ore producer, fell 2 percent. The rand slumped to the lowest since October 2008 on speculation the Federal Reserve will end debt purchases this year. All 10 groups in the measure for developing-nation stocks retreated, led by consumer and commodity companies. “China is slowing down; what they don’t want is a hard landing,” Quincy Krosby, a market strategist at Prudential Financial Inc. in Newark, New Jersey, said by phone. Her firm oversees more than $1 trillion. “There’s also an adjustment process as the Fed begins to taper. As the data begin to gain more traction than initially expected, you’d have the Treasury market making adjustments, and that has ramifications in the emerging markets.”
- Copper Declines Most in Eight Weeks Amid China Growth Concerns. Copper fell the most in eight weeks amid signs of a slowing economy in China and speculation that the Federal Reserve will further curb stimulus in the U.S., fueling demand concerns in the two biggest users of the metal. China’s producer prices, a measure of cost of goods as they leave the factory, extended the longest slide since the 1990s in December, adding to evidence that the economy weakened last month. Fed officials saw diminishing economic benefits from the central bank’s asset purchases, according to minutes of last month’s policy meeting released yesterday. “Metals are taking their cue from China-related concerns,” Edward Meir, an analyst at INTL FCStone in New York, wrote in a note. “The eagerly awaited Federal Reserve minutes showed a central bank that is now intent on proceeding with its tapering program.”
- Fitch China Analyst Chu, Who Warned on Debt, Leaving Agency. Charlene Chu, a Beijing-based analyst at Fitch Ratings who said China could face a debt crisis after lending reached double the size of its economy, is leaving the company after almost eight years. Her warnings that China’s debt could spark a crisis preceded Fitch’s April downgrade of the country’s long-term local-currency debt rating, the first cut by one of the top three rating companies in 14 years. Albert Edwards, global strategist at Societe Generale SA, said in 2013 Chu was “a heroine” and “deserves a medal of honor for her stark warnings about the Chinese credit bubble.” “I have to commend them for giving me the freedom to express what is a pretty negative view on China, despite the complications it has brought to Fitch’s own business development here,” said Chu.
- China Vehicle Sales Seen Slowing on Pollution Controls. China’s main car association forecast that the world’s biggest automobile market will see slower growth this year as anti-pollution and austerity campaigns spread.
- Draghi Strengthens Pledge to Keep Rates at Record Lows. Mario Draghi strengthened the European Central Bank’s pledge to keep interest rates low for as long as necessary and warned that it’s too soon to say the euro region is out of danger. “The Governing Council strongly emphasizes that it will maintain an accommodative stance of monetary policy for as long as necessary,” Draghi told reporters in Frankfurt today after the ECB kept its key rate at a record low of 0.25 percent.
- EUR Money Markets May Push-Back Against Dovish Draghi. Euro money-market rates likely to drift higher in coming weeks as LTRO payback restarts, Bert Lourenco, head of EMEA rates research at HSBC says in an interview, even as ECB President Draghi says would act if unwarranted monetary tightening seen.
- Draghi Faces Mission Conflict as ECB Reviews Banks. Mario Draghi’stwo biggest policy tasks for this year threaten to run into conflict. The European Central Bank president convenes the first rate-setting meeting of 2014 in Frankfurt today with a to-do list that includes supporting the recovery in the 18-nation currency bloc and carrying out a balance-sheet review of its largest lenders. The risk is that banks pull back even further on loans, derailing the already-fragile economic revival, to avoid being ordered to raise more capital.
- Fresenius Bond Offering Seen Setting Record-Low Euro Junk Coupon. Fresenius SE, a German health-care services provider, is marketing high-yield bonds that may pay a record-low coupon for non-financial debt, as the average cost of borrowing holds at the lowest ever.
- European Stocks Decline as Draghi Warns Danger Not Over. European stocks declined as President Mario Draghi reiterated the European Central Bank’s pledge to keep interest rates low as he warned that it’s too soon to say the euro region is out of danger. Arkema SA dropped 3.1 percent after cutting its full-year earnings forecast. Wm Morrison Supermarkets Plc slid the most in more than five years after saying annual profit will be at the lower end of analysts’ estimates. TGS Nopec Geophysical Co. jumped 17 percent after raising its annual revenue projection. AstraZeneca Plc rose 0.7 percent after a diabetes pill it developed with Bristol-Myers Squibb Co. won U.S. approval. The Stoxx Europe 600 Index retreated 0.4 percent to 328.41 at the close of trading.
- WTI Crude Declines to Seven-Month Low on Ample Supply. “The fundamentals don’t look good,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “Crude production continues to surge ahead and the refiners are processing this into fuel that is going into storage. There’s also economic uncertainty before tomorrow’s employment report.” WTI for February delivery slipped 56 cents, or 0.6 percent, to $91.77 a barrel at 12:24 p.m. on the New York Mercantile Exchange. Futures touched $91.70, the lowest level since June 3. The volume of all futures traded was 4.4 percent lower than the 100-day average. The contract has fallen 6.8 percent since the start of the year.
- Corn Pile Biggest Since 1994 as Crop Overwhelms Use: Commodities. Stockpiles of corn in the U.S., the world’s top grower, are rising at the fastest pace in 19 years as a record crop overwhelms increased demand for the grain used to make livestock feed and ethanol. Inventories on Dec. 1, the first tally since the harvest was complete, probably totaled 10.764 billion bushels (273.4 million metric tons), 34 percent more than a year earlier, according to the average of 24 analyst estimates in a Bloomberg survey. The biggest gain for that date since 1994 signals ample supplies may extend the slump in March futures by 10 percent to $3.75 a bushel, according to Newedge USA LLC’s Dan Cekander.
- Aussie Falls for 3rd Day Versus Dollar on Fed Taper Speculation. The Aussie slid 0.3 percent to 88.72 U.S. cents at 5:18 p.m. in Sydney from yesterday, and fell 0.2 percent to NZ$1.0751. On Dec. 18, it reached 88.21 U.S. cents, the weakest since August 2010, and touched NZ$1.0733, a level unseen since October 2008.
- Mexico Stock Exchange Indexes Fail in Latest Bourse Breakdown. Mexican stock investors couldn’t see updates on the benchmark IPC gauge early today, the latest technical breakdown for an exchange that has halted trading at least five times since mid-April because of glitches.
- Retailers Cut Forecasts as December Discounts Hurt Profits. Retailers of all stripes -- from home-goods merchant Pier One Imports Inc. (PIR) to discounter Family Dollar Stores Inc. (FDO) and luxury lingerie seller L Brands Inc. -- are providing hard evidence that the discount war that marked the holiday season will take a toll on profit. L Brands, which owns the Victoria’s Secret and Bath & Body Works brands, and Family Dollar today cut profit forecasts after reporting disappointing December sales as promotions that failed to lure shoppers hurt margins. Pier One cut its fourth-quarter forecast after December sales trailed the chain's expectations. The early results are showing that the discounts -- as steep as 75 percent off at luxury department-store chain Neiman Marcus Group LLC -- didn’t generate sufficient traffic or spur enough purchases of full-priced merchandise to make up for the lost revenue.
- Funds With $100 Billion May Be Too Big to Fail, FSB Says. Investment funds that manage more than $100 billion in assets may be labeled too big to fail, global regulators said, as they seek to expand financial safeguards beyond banks and insurers. Hedge funds with trading activities exceeding a set value of $400 billion to $600 billion would also be assessed by national authorities to gauge whether they need extra rules because their collapse could spark a crisis, the Financial Stability Board said in a statement yesterday.
Wall Street Journal:
- Beijing Moves to Bolster Claim in South China Sea. China is trying to bolster the legal basis for its maritime-security forces operating in contested areas of the South China Sea, threatening to complicate already-fraught relations with southern neighbors. A new regulation enacted by the southern island province of Hainan requires non-Chinese fishing vessels wanting to operate in the South China Sea to first obtain permission from China's central government. The new regulation is the latest move by China to assert its claim to disputed territories on its fringes.
- Christie apologizes over lane closures, fires top aide. New Jersey Gov. Chris Christie publicly apologized Thursday for controversial lane closures last year that were arranged by his associates as an apparent act of political revenge, and fired a top aide who was at the center of the scandal. "I come out here to apologize to the people of New Jersey," he said. "I am embarrassed and humiliated." The governor added: "I am stunned by the abject stupidity that was shown here."
CNBC:
ZeroHedge:
- JPMorgan(JPM) To Exit Foodstamp, Other Prepaid Cards Business. Mess with us, we'll mess with you. That is the message one can derive from JPMorgan's surprise announcement that it plans to "sell or wind down its business of issuing prepaid cards for corporate payrolls and government tax refunds and benefits."
Business Insider:
NY Times:
- Chinese Film Director Fined for Exceeding Child Limits. China’s most internationally known film director, Zhang Yimou, and his wife were ordered by a government office on Thursday to pay a $1.24 million fine for violating family planning limits by having three children.
- Janet Yellen: The Sixteen Trillion Dollar Woman. In her first and only interview as Fed chief, the economist says why she thinks the housing market is back on track, companies will invest, and more new jobs are on the way this year. She now has the world's largest economy in her hands.
- Iran's Fingerprints in Fallujah. Four years ago, al-Qaeda appeared to have been destroyed in Iraq. Last week, fighters from the group captured Fallujah, a city where hundreds of Americans were killed or wounded in the last decade fighting the jihadists. How did this stunning reversal of fortune happen?
- France's debt load in 'danger zone' - national audit office. France's national debt has reached a danger zone at an estimated 93.4 percent economic output last year, the head of the public audit office said on Thursday. "The level that's been reached has put our country in a danger zone," the president of the audit office Didier Migaud said in a speech. "Efforts undertaken so far are not sufficient to get out." France's national debt stood at 90.2 percent of GDP at the end of 2012.
- Brazil sells new 10-year local bond at record-high yield. Brazil's Treasury on Thursday paid the highest yield ever to launch a new 10-year benchmark fixed-rate domestic bond, underscoring investor concerns about the deterioration of the country's fiscal and economic fundamentals.
- Federal Reserve faces prospect of bond market showdown over rates. Bond traders are bringing forward their expectations of when the Federal Reserve will start to tighten policy, leading to a jump in short-term US borrowing costs. Recent economic data have pointed to a gathering American recovery, and could result in a showdown between policy makers and the Treasury market.
- Majority of Chinese business leaders 'unwilling' to trade with Japan amid tensions. Poll reveals growing reluctance among Chinese businessmen to deal with Japanese firms.
- China to Crack Down on 'Illegal' Journalism, Publishing. Five "special campaigns" to target "counterfeit" reporters, for-profit journalism, children's books, teaching materials for primary, middle school students, paper, magazine publishing, citing statement from State General Administration of Press, Publication, Radio, Film & TV.
- China Bank-Card Consumer-Confidence Index Drops in December. Bankcard Consumer Confidence Index drops 1.25 points y/y, .77 points m/m to 85.43 points.
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