Bloomberg:
- Bank of Japan Sticks to Record Easing as Inflation Picks Up. The Bank of Japan maintained its record easing, as accelerating price gains mark progress in its bid to end 15 years of deflation. Governor Haruhiko Kuroda’s board stuck to its pledge to expand the monetary base by an annual 60 trillion to 70 trillion yen ($671 billion) today after a two-day meeting in Tokyo, in line with the forecasts of all 36 economists surveyed by Bloomberg News. The BOJ maintained its forecast that core inflation will reach 1.9 percent in the year starting April 2015, excluding the effects of sales-tax increases. With the BOJ’s preferred inflation gauge at more than half of its target 2 percent pace, analysts from HSBC Holdings Plc. to Daiwa Securities Co. have pushed back forecasts for when the central bank may add to easing. Kuroda’s policy makers may wait to assess trends in wages and the effects of the sales-tax increase in April before deciding on any extra stimulus.
- China Bailout Costs Jump Seen in Policy Bank Yield Surge. Doubts over the Chinese government’s ability to cope with escalating debt are showing up in record borrowing costs for the nation’s policy banks. The average yield premium over the sovereign for five-year debt sold by China Development Bank, Export-Import Bank of China and Agricultural Development Bank of China widened 90 basis points from an August low to 142 basis points on Jan. 17, the highest in Chinabond data going back to 2007. The gap was 138 basis points yesterday. Yields have climbed on safer assets, including CDB’s, as delays in restructuring bad loans are stretching the central government’s ability to guarantee debt, Bank of America Merrill Lynch wrote in a report this week.
- China Money Rate Plunge Is No Relief for Bonds: Chart of the Day. Borrowing costs for the most creditworthy Chinese companies are climbing toward a 19-month high relative to the government, a sign the easing of the country's cash crunch is failing to quell concern that corporate defaults could mount. Yields on five-year AAA-rated corporate bonds traded at 1.80 percentage points above government securities. The gap, a proxy for broader Chinese corporate credit risk, is within .04 percentage point of a 23-month high set Dec. 30 and is up from 1.17 percentage points in July, according to Bloomberg data and Chinabond.
- Australia Inflation Accelerates Above RBA Midpoint; Aussie Gains. Australian inflation unexpectedly accelerated above the mid-point of the central bank’s target range last quarter, reducing scope for policy makers to lower interest rates further. The trimmed mean gauge of core prices rose 2.6 percent in the three months through December from 12 months earlier, the Bureau of Statistics said in Sydney today, compared with the median forecast of 23 economists for a 2.3 percent gain. The consumer price index advanced 2.7 percent, compared with economists’ forecast for a 2.4 percent increase.
- Rajan Panel Proposes 4% CPI Target in India Policy Overhaul. An Indian central bank committee proposed adopting a 4 percent consumer-price-inflation target by 2016 as part of a sweeping monetary-policy overhaul, a shift that signals elevated interest rates if adopted.
- Asia Stocks Fluctuate as Yen Gains on BOJ; Gas Climbs. Asian stocks fluctuated as gains by Chinese shares on lower money-market rates were offset by declines in Tokyo equities as the yen rose after the Bank of Japan left policies unchanged. The Australian dollar jumped the most in a week after inflation data dimmed rate-cut prospects. The MSCI Asia Pacific Index was little changed as of 1:22 p.m. in Tokyo. China’s Shanghai Composite Index surged the most in two months and Japan’s Topix index fell 0.5 percent.
- Rubber in Tokyo Declines for Fourth Day on China Demand Concerns. Rubber in Tokyo extended losses for a fourth day as concerns grew that abundant supply in China will slow purchases from the largest consumer. The contract for delivery in June on the Tokyo Commodity Exchange fell as much as 1.4 percent to 246 yen a kilogram ($2,357 a metric ton), the lowest level for a most-active contract since Aug. 8. Futures traded at 247.9 yen at 10:37 a.m. local time.
- Rebar Advances as Investors Weigh Improved China Money Supply. Steel reinforcement-bar futures in Shanghai climbed for the first time in five days as investors assessed improvement in China’s money markets and as iron ore futures rose. Rebar for May delivery on the Shanghai Futures Exchange gained as much as 0.9 percent to 3,439 yuan ($568) a metric ton and traded at 3,429 yuan at 11:19 a.m. local time.
- Loan Surge Above Par Putting Investors at Risk: Credit Markets. More speculative-grade U.S. loans are trading above par than at any time since May, exposing investors who are funneling record amounts of cash into the debt to greater risks as rising prices encourage borrowers to refinance at lower interest rates.
- IBM’s(IBM) Sales Drop for Seventh Quarter as It Forgoes Bonuses. International Business Machines Corp., the world’s biggest computer-services provider, reported a seventh straight quarterly sales decline amid plunging demand for servers, prompting top executives to forgo annual bonuses.
- Australia's Housing Boom Spreads Beyond Sydney. Prices Fuel Debate Over Whether Central Bank Should Act. This once-downtrodden Sydney suburb is on the rise, an emblem of Australia's booming housing market. Dilapidated cottages and housing estates are giving way to large homes and modern multistory apartments. Vacant land for residential development here goes for as much as A$400,000 ($352,574) per acre, compared with about A$200,000 five years ago, according to Australand Property Group, a developer in the area.
- Amazon(AMZN) Considering Online Pay-TV Service. Live TV Channels Would Compete With Cable, Satellite.
- Banks Sit Out Riskier Deals. Regulatory Pressures Push Some Lenders to Let Lucrative Deals Go.
- Ex-Virginia Governor, Wife Indicted on Corruption Charges. Prosecutors Allege the Pair Illegally Accepted Gifts, Other Benefits.
- Pimco CEO Mohamed El-Erian to Leave Pimco in March. El-Erian Will Stay on Parent Company's International Executive Committee.
- Target(TGT) Cuts Health Coverage for Part-Time Workers. Retailer Points to Insurance Options Available Through Public Exchanges.
- Exchanges See Little Progress on Uninsured. Early Estimates Suggest That Majority of Sign-Ups Already Had Health Plans.
- The President Inhales. Mr. Obama is now the President, not a stoned teenager riffing with his Choom Gang, and he might have set a better example. Parents trying to teach their kids to make better choices than getting high are at a disadvantage when the person in charge of upholding the law says breaking the law is no big deal.
- Report claims Syrian government behind 'systematic killing' of 11,000 detainees. A report compiled by three international war crimes prosecutors claims that the Syrian government is behind the "systematic killing" of approximately 11,000 detainees between March 2011 and August 2013.
- Analysts forecast a corrosive year for copper prices. The outlook for copper isn’t very bright, with analysts expecting prices for the metal to fall this year. Goldman Sachs analysts on Tuesday said they expects copper prices on the London Metal Exchange to average $6,850 per metric tons, or about $3.11 a pound this year. That’s down from an estimated average of $7,328 per metric ton, or $3.32 a pound in 2013. The analysts see a surplus of 385,000 metric tons in 2014.
- Texas Instruments(TXN) to cut 1,100 jobs in restructuring. Texas Instruments Inc plans to cut 1,100 jobs worldwide as part of a corporate restructuring intended to help it save $130 million by the end of 2014. The U.S. chipmaker, which in 2012 announced it would lay off 1,700 people as it wound down its mobile processor business, said on Tuesday it wanted to reduce expenses in its embedded-processing division and in Japan.
Business Insider:
Washington Post:
- Obama goal for quick revamp of NSA program may be unworkable, some U.S. officials fear. U.S. officials directed by President Obama to find a way to end the government’s role in gathering Americans’ phone records are deeply concerned that there may be no feasible way to accomplish the task soon, according to individuals familiar with the discussions.
- Engineer charged with trying to leak details on U.S. F-35 program to Iran. A former engineer for defense contractors has been indicted on charges that he tried to send Iran secret details on the U.S. Air Force's F-35 joint strike fighter program, the office of the U.S. Attorney for Connecticut said on Tuesday.
- Citi(C) warns against Britain's exit from the EU -FT. Citigroup Inc. has warned against the United Kingdom opting out of the European Union, saying such a move could hurt the British economy and reduce investment from international companies, the Financial Times reported on Tuesday.
- Chipmaker Xilinx(XLNX) forecasts weak current-quarter revenue. Chipmaker Xilinx Inc forecast current-quarter revenue largely below analysts' estimates, hurt by weak sales to telecom, aerospace and defense customers, sending its shares down 4 percent in extended trading.
- LED maker Cree's(CREE) profit jumps 75 pct. LED maker Cree Inc reported a 75 percent rise in second-quarter profit, driven by higher sales in its lighting products business, sending its shares up 5 percent in extended trading.
- In 2013, Brazil added fewest net payroll jobs in a decade. Brazil's economy added the fewest net payroll jobs in a decade last year, a sign that three consecutive years of weak economic growth had weighed down profit margins and hiring at shops and services firms, government data showed on Tuesday. Excluding seasonal adjustments, farms, industrial factories and retail firms created a net 730,687 payroll jobs in 2013, the smallest number since 2003, the labor ministry said.
- China's Tight Liquidity Unlikely to Change in 2014. China's tight liquidity situation is unlikely to change in 2014, according to a front-page commentary. PBOC will continue to strictly control financial risks and push for de-leveraging, commentary says.
- None of note
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 143.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 111.50 +5.0 basis points.
- FTSE-100 futures +.35%.
- S&P 500 futures +.13%.
- NASDAQ 100 futures +.20%.
Earnings of Note
Company/Estimate
- (EAT)/.58
- (USB)/.75
- (NTRS)/.75
- (ABT)/.58
- (TXT)/.59
- (PH)/1.24
- (UTX)/1.53
- (GD)/1.75
- (ATI)/-.21
- (COH)/1.11
- (STJ)/.99
- (FCX)/.80
- (NSC)/1.51
- (SYK)/1.22
- (NFLX)/.66
- (EBAY)/.80
- (SNDK)/1.67
- (CCI)/.94
- (VAR)/./90
- (RJF)/.73
- (WDC)/2.08
- (JEC)/.74
- (PGR)/.42
- (ETH)/.40
- None of note
- (MA) 10-for-1
- The HSBC China PMI, Bank of Canada rate decision, weekly retail sales reports, weekly MBA mortgage applications report and the CIBC Institutional Investor Conference could also impact trading today.
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