Thursday, January 02, 2014

Today's Hedlines

Bloomberg: 
  • China LGFV Sells First Dollar Bond as Yuan Borrowing Costs Rise. Shanghai Chengtou Corp. sold the first onshore dollar-denominated bond by a local-government financing vehicle in China as yuan borrowing costs surge. The Shanghai interbank offered rate, or Shibor, for six-month yuan loans has climbed 71 basis points since the end of November to 4.93 percent, according to the National Interbank funding Center. In contrast, six-month dollar Libor has held at 0.35 percent, according to data compiled by Bloomberg. Local-government debt swelled to 17.9 trillion yuan ($2.96 trillion) as of June, compared with 10.7 trillion yuan at the end of 2010, according to data compiled by the National Audit Office
  • Indian Rupee Falls From Two-Week High as Manufacturing PMI Drops. India’s rupee fell from the highest level in two weeks as a drop in a manufacturing gauge sparked concerns about growth in Asia’s third-largest economy. A purchasing managers’ index released by HSBC Holdings Plc and Markit Economics was at 50.7 in December, lower than November’s 51.3.
  • European Stocks Retreat as RWE Leads Utilities Lower. European stocks dropped, following their biggest annual advance since 2009, as utilities declined, while a report showed U.S. manufacturing slowed last month. RWE AG slipped 3.6 percent after Handelsblatt reported that the German utility may ask shareholders to give it the option to raise capital. CGG SA fell 3 percent after UBS AG lowered its rating on the surveyor of oilfields. Fiat (F) SpA rallied the most since April 2009 after agreeing to buy the rest of Chrysler Group LLC, enabling the Italian and U.S. companies to merge. The Stoxx Europe 600 Index slipped 0.7 percent to 325.82 at the close in London, its largest decline in two weeks. Their biggest increase since 2009 sent the Stoxx 600 to 15.4 times its constituents’ projected earnings, up from 12.7 times at the beginning of 2013
  • WTI Crude Falls. WTI for February delivery fell $2.10, or 2.1 percent, to $96.32 a barrel at 12:10 p.m. on the New York Mercantile Exchange. The contract touched $96.30, the lowest level since Dec. 16. The volume of all contracts traded was 3.4 percent lower than the 100-day average for the time of day.
  • Euro Falls Versus Dollar on Bets Rally Is Overdone; Real Drops. The yen gained after dropping to the lowest level since 2008 against the dollar as Bank of Japan Governor Haruhiko Kuroda said policy makers will continue stimulus until inflation stabilizes at 2 percent. The euro dropped versus most major peers a day after Latvia became the currency bloc’s 18th member. Brazil’s real declined to a four-month low and the Turkish lira weakened to a record.
  • Euro Supporter Credit Suisse Joins Bears: Currencies. Credit Suisse Group AG went against the consensus in June and correctly called the euro’s rally. Now, the bull has turned into a bear, with the firm predicting the common currency’s biggest annual drop in almost a decade
  • Bomb Explodes in Hezbollah’s Lebanese Stronghold: NNA. A car bomb exploded in the stronghold of Hezbollah in south Beirut, killing four people and wounding nine in the latest attack on the Iranian-backed group since it acknowledged joining the conflict in neighboring Syria.
  • Bonus-Boosting Rally in U.S. Bank Stocks Seen Fading. Shares of U.S. financial firms just staged their biggest annual rally since 1997, creating a bonanza for Wall Street employees who received bonuses in deferred stock. The new year doesn’t hold the same promise. The rise in share prices that began in October 2011 has been a boon to traders and dealmakers at firms including Morgan Stanley (MS) that retooled bonuses after the financial crisis to include more deferred stock. The gains may slow as valuations near or exceed historic norms and the Federal Reserve phases out a policy that suppressed interest rates and boosted equities. “It could be difficult for stock prices to generate similar gains in 2014,” Terry McEvoy, an analyst at Oppenheimer & Co., said in an interview. Financial firms are still operating in “a challenging environment to grow revenue,” he said. 
  • Mortgage Rates in the U.S. Increase to Highest Since September. U.S. mortgage rates rose to the highest since September, increasing borrowing costs for homebuyers as prices climbed across the country. The average rate for a 30-year fixed mortgage was 4.53 percent this week, up from 4.48 percent, according to a statement today from Freddie Mac. (FMCC:US) The average 15-year rate climbed to 3.55 percent from 3.52 percent, the McLean, Virginia-based mortgage-finance company said. 
Wall Street Journal: 
  • Turkish Lira, South African Rand Tumble. First Trading Day of New Year Sparks Renewed Selloff in Emerging-Market Assets. The Turkish lira sank to an all-time low Thursday as the new year's first trading day sparked a renewed selloff in emerging-market assets. The South African rand also tumbled, hitting a 4½-year low against the dollar, with the repercussions of last month's decision by the U.S. Federal Reserve to scale back its bond-buying stimulus program continuing to echo through financial markets. 
  • One Bear’s Gloomy Forecast: Stocks Down 20% in 2014. That view comes courtesy of Peter Boockvar, managing director and chief market analyst at the Lindsey Group, who on Thursday predicted the S&P 500 could drop 15% to 20% in 2014 and finish the year between 1550 and 1600.
Fox News: 
  • Civilian death toll in Iraq highest in years, fueling concern of Al Qaeda 'resurgence'. Violence in Iraq soared in 2013 to levels not seen in years, U.N. officials reported this week, stoking concerns that the country is descending into the kind of sectarian bloodshed that gripped the country before the U.S. troop surge. The United Nations said 7,818 civilians were killed in 2013, a return to 2008 levels. The startling figure follows warnings from lawmakers and analysts that the violence threatens to undo hard-fought gains by the United States. "The level of indiscriminate violence in Iraq is unacceptable," U.N. Special Representative Nickolay Mladenov said in a statement, calling on the Iraqi government to curb "this infernal circle."
ZeroHedge:
ValueWalk:
Business Insider:
Minyanville:
Seeking Alpha:
  • The Fed's Betrayal Of The Middle Class. (graph) In September of 2012 the Fed announced a new QE program - QE3. It didn't make sense to me that the Fed would be adding more liquidity to a banking system that was already overflowing with liquidity. At that point it was obvious to me that Fed policy had little to do with rejuvenating the economy.
re/code:
Telegraph:
Xinhua:
  • Vice Premier Says China to Stick to Family Planning. Vice Premier Liu Yandong says China will stick to its family planning policy and punish those who violate the laws.

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