Bloomberg:
- China’s Credit Hole Seen Limiting 2014 Growth Prospects. China’s new credit probably fell by a record in the second half amid a crackdown on speculative lending, limiting prospects for economic expansion this year as policy makers focus on controlling financial risks. The broadest measure, aggregate financing, was 7.1 trillion yuan ($1.2 trillion) based on published figures plus economists’ median estimate for December data due in coming days. That would be about 931 billion yuan less than in July-to-December 2012, the largest drop in figures going back to 2002.
- Crisis Risk Flagged by Haitong as Debt Snowballs: China Credit. China's second-biggest brokerage said record debt threatens to trigger a financial crisis as borrowing costs jump to unprecedented highs despite a cooling economy. Liabilities at non-financial companies may rise to more than 150% of gdp in 2014, raising default risks, according to Haitong Securities Co. The ratio of 139% at the end of 2012 was already the highest among the world's 10 biggest economies, according to the most recent data. "We are concerned that the debt snowball may be bigger and bigger and turn into a crisis," Li Ning, a Shanghai-based bond analyst at Haitong Securities, said in an interview.
- Thai Army Chief Urges Public to Ignore Rumors of a Coup. Thailand’s army chief urged the public not to believe rumors of a possible coup, saying the movement of military hardware into Bangkok was for an annual parade and not to oust Prime Minister Yingluck Shinawatra. “People are scared of something that hasn’t taken place yet,” Army Chief Prayuth Chan-Ocha told reporters in Bangkok yesterday. “Don’t be scared if you can’t see it. Everything must happen for a reason,” he said, before adding, “without a reason, nothing will happen.”
- Asian Stocks Rebound Before Minutes; Gas Climbs on Cold. Asian stocks climbed for the first time this year as Japanese shares rallied on a weaker yen before the release of Federal Reserve minutes. Gold fell a second day while natural gas advanced. The MSCI Asia Pacific Index rose 0.5 percent by 12:53 p.m. in Tokyo, after falling to a 2 1/2-week low yesterday.
- Rebar Climbs From 7-Month Low on Signs China Supporting Equities. Steel reinforcement-bar futures rose for the first time in four days on speculation that China’s government will take steps to shore up equity markets and as some investors considered a drop to a seven-month low overdone. Rebar for May delivery on the Shanghai Futures Exchange gained as much as 0.5 percent to 3,481 yuan ($575) a metric ton and traded at 3,471 yuan at 10:15 a.m. local time. The most-active contract ended at 3,465 yuan yesterday, the lowest close since its inception in May.
- Arctic Cold Cuts Fuel Supplies as Refineries to Pipelines Freeze. Record cold weather pummeled energy infrastructure across the U.S., prompting gas pipeline operators to reduce flows, fuel terminals to shut loading racks and refineries to scale back production.
- Stress Tests Spurring $82 Billion Bad Debt Selloff: Euro Credit. Skaters gliding across the ice rink at the five-star Le Meridien Lav hotel are unwitting extras in the final acts of the financial crisis as they practice their turns on the shores of the Adriatic Sea. Paying as much as 700 euros ($952) a night, they’ve kept the Split, Croatia-based hotel afloat since it was seized by Hypo Alpe-Adria-Bank International AG when the owners failed to manage repayments on about 50 million euros of loans.
- EU Puts Banking-Union Credibility on Line in Resolution Talks. The credibility of Europe’s efforts to restore confidence in its financial system hangs in the balance as lawmakers try to broker a deal on a bank-failure authority for the 18-nation euro area. As U.S. Treasury Secretary Jacob J. Lew tours European Union capitals to push for tougher banking regulations, negotiators in Brussels begin a sprint today to create a central agency for saving or shuttering euro-zone banks before elections in May.
- Hedge Funds Up 7.4% in 2013 to Trail S&P 500 for Fifth Year. Hedge funds returned an average of 7.4 percent in 2013, trailing the Standard & Poor’s 500 Index (SPX) for the fifth straight year as U.S. markets rallied to record levels. Hedge funds rose less than 0.1 percent in December, compared with the S&P 500’s 2.4 percent return. The Bloomberg Hedge Funds Aggregate Index is down 1.8 percent from its July 2007 peak. The index is weighted by market capitalization and tracks 2,257 funds, 1,264 of which have reported returns for December.
- Sony Corp.(SNE) to Offer Web-Based TV Service in U.S. Sony Corp. (6758) will begin testing an Internet-based pay-television service in the U.S. this year, bringing live and on-demand programming to TVs and its PlayStation game consoles.
- Top 10 Revelations From Robert Gates’s Memoir. Mr. Gates says that domestic politics factored into “virtually every major national security problem” the Obama White House faced. At one point, Mr. Gates writes, he witnessed a conversation between Mr. Obama and Mrs. Clinton in which the president “conceded vaguely” that his opposition to the 2007 military surge in Iraq was a political calculation. Mr. Gates called the exchange “remarkable.”
- Selloff Accelerates in Emerging Markets. Worries Over Coming Elections, Growth Prospects Rattle Investors. Investors are bailing out of emerging markets from Turkey and Brazil to Thailand and Indonesia, extending a selloff that began last year, amid concerns about faltering economies and political unrest. Indonesia's currency on Tuesday hit its lowest level against the dollar since the financial crisis in Asia trading. Meanwhile, the Turkish lira plumbed record lows against the greenback this week. The MSCI Emerging Markets Index, a gauge of stocks in 21 developing markets, slipped 3.1% in the first four trading days of 2014, building on a 5% loss in 2013. This compares with double-digit-percentage rallies in stock markets in the U.S., Japan and Europe last year.
- The Future of Coal: New Pollution Rules Choke Old Power Plants. Southern Co. Builds New Plant That Captures CO2. The Price: $5.24 Billion. The world was riveted in October by eerie photos of Harbin, an industrial city in northeastern China that was smothered by thick smog from burning coal. The U.S. had its own encounters with choking pollution several decades ago. Though nearly forgotten today, the incidents sparked the creation of the Environmental Protection Agency and federal regulations that have reshaped the electricity industry—then and now the country's largest industrial source of air pollution.
- Shanghai Tower Developers Seek Leasing Agent. The state-owned developer of what will be China's tallest building is taking the unusual step of moving to hire a leasing agent, underscoring the challenges of finding tenants as the country's economy cools.
- Federal Probe Targets Banks Over Bonds. Inquiry Looks for Deliberate Mispricing of Mortgage Bonds Key to Financial Crisis. Federal investigators are probing whether a number of Wall Street banks cheated clients in the years following the financial crisis by deliberately mispricing a type of mortgage bond that was central to the economic turmoil, according to people close to the inquiry. The investigation is a potential blow to the banks, who are just starting to move on from years of intense scrutiny tied to their roles in the crisis.
- Former Defense Secretary Robert Gates slams Obama's leadership style in new book. Former Defense Secretary Robert Gates, in his upcoming memoir, has harsh words for President Obama’s leadership style and commitment to the Afghanistan war, accusing the president of losing faith in his own strategy. “For him, it’s all about getting out,” he wrote. The tone of Gates’ book is a break from Washington decorum, in which former Cabinet members rarely level tough judgments against sitting presidents. Gates writes that by early 2010 he had concluded the president “doesn’t believe in his own strategy, and doesn’t consider the war to be his.” The book, “Duty: Memoirs of a Secretary at War,” is scheduled for a Jan. 14 release by the Knopf DoubleDay Publishing Group. Excerpts, confirmed by Fox News, were first reported by The Washington Post and New York Times.
- Vermont plots course for single-payer health care system. While all eyes are on the ObamaCare rollout, an ambitious health care experiment is going forward in Vermont that would create a government-run alternative know as a "single-payer" system -- and it's starting to attract more attention from liberals frustrated with the Affordable Care Act's implementation.
Zero Hedge:
Business Insider:
FXStreet.com:
Crain's Chicago Business:
- Chicago vote set on $15 minimum wage. In a potentially big development that hasn't drawn much attention, the Chicago Board of Elections gave the OK for a vote in March on whether the city ought to implement a $15-an-hour minimum wage for many companies.
Reuters:
- Goldman(GS), JPMorgan(JPM) and peers must rethink pay to meet EU cap. Investment bankers working in London for many top U.S. and European groups face a major overhaul of their pay structure, as their recent bonuses have far exceeded new EU rules which will curb payouts to be made this time next year.
- Container Store(TCS) posts quarterly loss, shares fall. Storage products retailer Container Store Group Inc reported a third-quarter loss, hurt by costs associated with its initial public offering, sending its shares down 9 percent after the bell.
- Chipmaker Micron(MU) posts quarterly profit. Memory chip maker Micron Technology Inc posted a first-quarter net profit, compared with a loss a year earlier, helped by a strong recovery in chip prices.
- Fed's Williams expects steady, measured cuts to bond buys. The Federal Reserve will make gradual cuts to its massive bond- buying program in coming months as long as the economy continues to improve, and only a significant deviation from those expectations would force it to change tack, a top Fed official said on Tuesday. "I see us continuing, over the next few meetings, steady measured reductions in the pace of asset purchases," San Francisco Federal Reserve Bank President John Williams told reporters after a speech.
- China Develops 'Too Dangerous' Web-Profiling Program. Program developed by Chinese Academy of Sciences can determine an Internet-user's personality with 90% accuracy, citing Zhu Tingshao, director of academy's Computational Cyber Psychology Lab. Program is too dangerous to let out of lab without greater privacy protections.
- Chinese health agency pledges smoking ban by year's end. Health agency's pledge for nationwide regulation outlawing smoking in public places seen as first timetable towards meeting WHO commitment.
- China May Levy Property Taxes on Rural Real Estate. Chinese authorities are considering the possibility of levying property taxes on real estate built on collectively-owned land in rural areas, citing a person close to the Ministry of Housing and Urban-Rural Development.
CSFB:
- Rated (CAKE), (CMG), (EAT), (SBUX) Outperform.
- Rated (DRI) Underperform.
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 137.0 +2.5 basis points.
- Asia Pacific Sovereign CDS Index 109.50 unch.
- FTSE-100 futures -.03%.
- S&P 500 futures +.03%.
- NASDAQ 100 futures +.04%.
Earnings of Note
Company/Estimate
- (STZ)/.91
- (MON)/.64
- (RT)/-.28
- (BBBY)/1.15
- (GPN)/1.02
- (SCHN)/-.06
- (GBX)/.53
8:15 am EST
- ADP Employment Change for December is estimated at 200K versus 215K in November.
- Bloomberg
consensus estimates call for a weekly crude oil inventory decline of
-1,651,000 barrels versus a -7,007,000 barrel decline the prior week.
Gasoline supplies are estimated to rise by +2,430,000 barrels versus a
+844,000 barrel gain the prior week. Distillate inventories are
estimated to rise by +2,060,000 barrels versus a +5,042,000 barrel gain
the prior week. Finally, Refinery Utilization is estimated to rise by
+.28% versus a -.3% decline the prior week.
- Dec. 17-18 FOMC Meeting Minutes.
- Consumer Credit for November is estimated at $14.250B versus $18.186B in October.
- None of note
- The China Trade data, Eurozone retail sales, $21B 10Y T-Note auction, Goldman Sachs Energy Conference, (ROVI) investor meeting and the weekly MBA mortgage applications report could also impact trading today.
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