Bloomberg:
- Goldman(GS) to JPMorgan(JPM) Say Sell Emerging Markets After 2013 Tumble. Wall Street’s biggest banks say the slump in emerging-market assets that left equities trailing advanced-nation shares by the most since 1998 last year will prove more than a fleeting selloff. Goldman Sachs Group Inc. recommends investors cut allocations in developing nations by a third, forecasting “significant underperformance” for stocks, bonds and currencies over the next 10 years. JPMorgan Chase & Co. expects local-currency bonds to post 10 percent of their average returns since 2004 in the coming year, while Morgan Stanley projects the Brazilian real, Turkish lira and Russian ruble will extend declines after tumbling as much as 17 percent in 2013. The MSCI Emerging Markets Index is down 3 percent this year, compared with a 1.2 percent drop in the developed-market index, and hit a four-month low yesterday as data from China showed weakness in manufacturing and services.
- China’s Cabinet Imposes New Rules in Shadow Banking Fight. China's Cabinet imposed new controls on the multi-trillion-dollar shadow-banking industry with an order that targets off-the-books loans and shores up enforcement of current rules, two people familiar with the matter said. The rules include a ban on transactions designed to avoid regulations, such as moving interbank loans off balance sheets to reduce reported levels of lending, said the people, who asked not to be identified because the order hasn’t been made public. Such operations are part of shadow finance, a term that describes lending outside the banking system. In a separate step to reform the system, the bank regulator said it will let as many as five privately owned lenders start operating this year.
- Samsung Posts Profit Decline Amid Battle With Apple(AAPL). Samsung Electronics Co. (005930) posted its first profit decline in nine quarters as Apple Inc. (AAPL:US)’s newest iPhones won high-end handset sales and competition from cheaper makers crimped prices.
- Rupiah Hits 2008 Low on Taper as Indonesia Markets Dollar Bonds. Indonesia’s rupiah fell to the lowest level since 2008 on concern a foreign-currency shortage in local markets will worsen as the Federal Reserve cuts stimulus. The local currency has lost 0.8 percent since Dec. 18, when the Fed said it will cut its monthly debt purchases, which have spurred fund flows to emerging markets, by $10 billion to $75 billion from January. Indonesia’s sovereign dollar bonds fell as the nation markets new securities to global investors.
- Malaysians Seen Curbing Spending as Living Costs Surge: Economy. Millions of middle-class Malaysians are grappling with the biggest increase in state controlled electricity and gasoline costs since 2008, threatening consumer spending growth and reasserting the country’s reliance on exports this year.
- Asian Stocks Decline on Slower U.S. Services Growth. Asian stocks fell, with the regional benchmark index poised to drop for a fourth day, as a report showed U.S. service industries expanded less than expected and raw-material shares led declines. Sinopec Shanghai Petrochemical Co., an oil processor, slumped 6.3 percent, leading material shares lower. Oversea-Chinese Banking Corp., Southeast Asia’s second-biggest lender, fell 1.1 percent in Singapore after it entered exclusive talks for a possible takeover of Hong Kong’s Wing Hang Bank Ltd. Li & Fung Ltd., the world’s largest supplier of clothes and toys to retailers, gained 7.3 percent in Hong Kong as the company called its 2013 performance “solid.” The MSCI Asia Pacific Index lost 0.2 percent to 138.97 as of 12:17 p.m. in Tokyo after rising as much as 0.2 percent.
- Rebar Falls as China Imposes Controls on Shadow Banking. Steel reinforcement-bar futures in Shanghai declined to the lowest level in more than seven months as China’s Cabinet was said to have imposed new controls on shadow banking. Rebar for May delivery on the Shanghai Futures Exchange lost as much as 1.1 percent to 3,475 yuan ($574) a metric ton, the lowest since the contract’s inception in May, and traded at 3,481 yuan at 10:14 a.m. local time.
- Rubber Extends Losses to 1-Month Low on Chinese Demand Concerns. Rubber in Tokyo fell for a third day and reached the lowest level in more than a month amid concern that demand may weaken in China, the largest consumer. The contract for delivery in June on the Tokyo Commodity Exchange fell as much as 1.6 percent to 258.3 yen a kilogram ($2,477 a metric ton), the lowest level since Nov. 28, before trading at 258.8 yen at 11:35 a.m. Futures have lost 5.7 percent in the past two days, heading for the largest drop since June.
- Lew Will Push Europe to Avoid Race to Bottom on Financial Rules. Treasury Secretary Jacob J. Lew will press European officials to follow the U.S. lead in adopting tougher banking regulations to ensure that American financial firms aren’t put at a competitive disadvantage.
- Yellen Confirmed by U.S. Senate to Become Fed Chairman. Janet Yellen won U.S. Senate confirmation to become the 15th chairman of the Federal Reserve and the first woman to head the central bank in its 100-year history. Yellen, 67, was confirmed today by a 56-26 vote, with 11 Republicans supporting her. She’ll replace Ben S. Bernanke, whose second term as chairman expires Jan. 31, as the Fed trims monthly bond purchases in a first step toward lessening the unprecedented stimulus.
- ‘Ferocious’ System to Deliver Record-Setting Cold Weather. The frigid cold that has set records across the Midwest, stopping trains and planes and driving up energy use, may deliver the coldest day across the U.S. in almost 20 years by a measure of heating demand.
- Slump in Trading Threatens a Wall Street Profit Engine. Industry Could Post 11th Trading Decline in 16 Quarters. The trading boom that helped reshape global investment banks over the past decade is sputtering, raising fears that one of Wall Street's biggest profit engines is in peril. Executives have warned that lackluster markets could lead to year-over-year declines in fixed-income, commodities and currency trading revenue when banks begin reporting fourth-quarter results next week. That would mark the fourth consecutive drop and the 11th in the past 16 quarters.
- Telecom Deal by China's ZTE, Huawei in Ethiopia Faces Criticism. For Ethiopians, a Chinese Telecom Project Changes Lives but Draws Scrutiny.
- Mark Warshawsky: Millionaires on Medicaid. Got a house worth $802,000, lots of savings and a nice car? You might still qualify for benefits. Expanding Medicaid coverage to an estimated nine million more Americans—as mandated by the Affordable Care Act—reinforces the idea that Medicaid only serves the poor. That perception is not accurate. And it distracts from a looming budgetary threat to the program: long-term care.
- 'Polar vortex' descends into US, bringing sub-zero temperatures. A so-called "polar vortex" of dense, frigid air descended upon much of the U.S. Monday, dropping temperatures in some parts of the country to near-record lows, prompting wind chill warnings from Montana to Alabama and grounding over 3,000 flights.
- China’s reforms: The pain begins. Commentary: Analysts warn of bumpy ride ahead.
Is this the year Beijing finally puts its blank-checkbook away? Investors need to be on the lookout for casualties, as signs emerge that China is readying to bring its massive debt spree to a close.
- Here’s how bad China’s bad loan problem could get. Steps to curb shadow
banking in China are a positive sign, but a sharp rise in
non-performing loans remains a key risk to the world's second biggest
economy, independent economist Andy Xie told CNBC.
"The trust industry alone is like 10 trillion renminbi ($1.65 trillion), that industry is in deep trouble and it's where most non-performing assets will come from," he told CNBC Asia's "Squawk Box."
- US still faces 'too big to fail’: Fed's Gary Stern. (video) The United States and global markets alike are still plagued by the threat of financial institutions that are "too big to fail," Gary Stern, former president of the Minneapolis Federal Reserve Bank, told CNBC on Monday. "We still have a 'too big to fail' problem," he said, referring to the theory that some financial institutions are so large that their collapse could send shock waves through the economy.
- Executives spared in JPMorgan's(JPM) Madoff deal, sources say. (video) JPMorgan Chase is expected to pay approximately $2 billion to settle a criminal and regulatory investigation into its dealings with Bernard Madoff, though no individuals at the bank will be implicated, according to sources familiar with the agreement.
- Is Inflation Understated? (graph)
AllAboutAlpha:
Reuters:
- U.S. Congress begins new year as showdown on jobless benefits looms. The U.S. Congress on Monday began what promises to be another combative year by bracing for a showdown over a White House-backed bill to renew unemployment benefits for 1.3 million Americans.
- China Telecom Cuts iPhone 5s, 5c, Contract Prices. China Telecom Corp. cut contract prices for iPhone 5s and 5c, citing an announcement by the co.'s Beijing branch. The price reductions will have a negative impact on the sales of China Mobile's iPhones, the report cites Sandy Shen, an analyst with Gartner Inc., as saying.
- China to See Lengthy Cash Crunch in 2014, Researcher Says. China will probably see a relatively lengthy cash squeeze in 2014, on pressure from money demand by local governments and increasing housing credit, China Academy of Social Sciences researcher Yi Xianrong writes in an article today. Yi expects PBOC to maintain a neutral-to-tight monetary policy in 2014.
- None of note
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 134.50 +3.5 basis points.
- Asia Pacific Sovereign CDS Index 109.50 +2.0 basis points.
- FTSE-100 futures +.10%.
- S&P 500 futures +.14%.
- NASDAQ 100 futures +.17%.
Earnings of Note
Company/Estimate
- (IHS)/1.31
- (CMC)/.23
- (MU)/.42
- (APOL)/.90
- (TCS)/.07
8:30 am EST
- The Trade Deficit for November is estimated at -$40.0B versus -$40.6B in October.
- None of note
- The Fed's Rosengren speaking, Fed's Williams speaking, Eurozone Unemployment/PPI data, $30B 3Y T-Note auction, weekly retail sales reports, CES 2014 and the (MNST) Investor Meeting could also impact trading today.
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