Bloomberg:
- Biggest Money Fund Shuns Companies on Default Risk: China Credit. China’s biggest money-market fund has cut its holdings of corporate debt by more than 50 percent and sought safety in deposits as rising borrowing costs increase the threat of default. “We won’t touch high-risk bonds that can have credit risks,” said Wang Dengfeng, Beijing-based manager at Tianhong Asset Management Co., which oversees the Yu’E Bao fund sold online by Internet billionaire Jack Ma. “Liquidity will remain relatively tight this year, as deleveraging continues to be the central bank’s focus. Authorities’ regulation of the interbank business and shadow banking may result in a period of pain.”
- Citic Group Unit May Invest in Trust Product, Morning Post Says. A unit of Citic Group Corp., a Chinese state-backed conglomerate, may take part in bailing out investors in a troubled 3 billion-yuan ($496 million) trust product, Oriental Morning Post reported. The transaction is under way, the newspaper reported yesterday, citing a person close to Industrial & Commercial Bank of China Ltd. (601398) The person declined to give the name of the unit or the amount it plans to invest, according to the report.
- China Starts Briefing Officials on Zhou Probe, Morning Post Says. China has started briefing officials about a corruption investigation of Zhou Yongkang, the nation’s former security chief, paving the way for a public announcement soon, the South China Morning Post said. The briefings indicate that the probe of the former Politburo Standing Committee member is in its “final stage” and results may be disclosed as soon as after the Lunar New Year break, which ends next week, the Hong Kong-based newspaper said, citing two unidentified people who received the information. The investigation focused solely on financial issues and corruption, not on any larger offenses, and the “amount of money involved in the case would be far less than some reports have suggested,” the newspaper said.
- Chinese Homebuyers Thronging Sydney Create Mini-Bubble Frenzy. Such buying by locally resident Chinese and those from mainland China is inflating housing bubbles in and around Sydney, where prices in some suburbs have surged as much as 27 percent in the past year. That’s almost three times faster than the overall market. Many of the neighborhoods with the biggest price gains “are areas that are popular with Chinese buyers,” said Andrew Wilson, senior economist at real estate data firm Australian Property Monitors. “Some of these suburbs are seeing price growth that we haven’t seen in Sydney since the early 2000s.” The proportion of foreigners purchasing new homes in Australia more than doubled to 12.5 percent in the three months to September, from 5 percent throughout most of 2011, according to a survey of more than 300 property professionals by National Australia Bank Ltd.
- Turkey Raises Rates to End Lira Fall as Basci Defies Erdogan. Turkey's central bank raised all its main interest rates at an emergency late-night meeting in an effort to shore up the lira, resisting government pressure and reversing years of policy aimed at stoking growth. The currency surged after the bank raised the one-week repo rate to 10 percent from 4.5 percent. Investors should treat that as the benchmark, the Ankara-based bank said on its website at midnight, promising to “simplify” policy after an experiment in using a variety of rates left many analysts baffled.
- Asian Stocks Snap 4-Day Rout After Turkey Rate Increase. Asian stocks rose, with the regional benchmark index on course for its first gain in five days, after Turkey’s central bank more than doubled interest rates to arrest a currency slide that roiled global markets. Honda Motor Co., which gets 83 percent of its car sales outside Japan, gained 2.2 percent as the yen weakened against the dollar. Atlas Iron Ltd. (AGO) climbed 7.6 percent in Sydney after the producer of the metal used to make steel raised its production target. Advantest Corp., a maker of electronic measuring instruments, sank 7.3 percent in Tokyo after widening its full-year net loss forecast. The MSCI Asia Pacific Index advanced 1.1 percent to 135.74 as of 11:01 a.m. in Tokyo, with all 10 industry groups in the measure rising.
- Rubber Rebounds From 16-Month Low as Weaker Yen Raises Appeal. Rubber rallied from the lowest level in 16 months as Japan’s currency weakened against the dollar before the U.S. Federal Reserve ends a policy meeting, boosting the appeal of yen-denominated futures. The contract for delivery in July, the most-active by volume, climbed to 233.1 yen a kilogram ($2,258 a metric ton) on the Tokyo Commodity Exchange by 11:40 a.m. local time. Futures slipped into a bear market yesterday, settling at 226.7 yen, the lowest level since September 2012.
- Rebar Rises for First Time in Three Days on Production Cost Gain. Steel reinforcement-bar futures in Shanghai rose for the first time in three days as a rebound in iron ore prices increased production costs. Rebar for May delivery gained as much as 0.5 percent to 3,448 yuan ($570) a metric ton before trading at 3,439 yuan at 11:06 a.m. local time on the Shanghai Futures Exchange. The contract has declined 3.7 percent in January.
- Too-Big-to-Fail Plan for EU Banks Seen Too Late to Win Approval. Michel Barnier, the European Union’s financial services chief, faces opposition as he prepares to unveil plans to curb the activities of about 30 of the bloc’s biggest banks to prevent them being too big to fail. While France and Germany (GDBR10) say parts of today’s proposals may hamper lending and threaten an exodus of banking services, European Parliament lawmakers argue the plans have simply come too late for them to review and approve ahead of May elections. Many will have left office or switched jobs by the time the assembly gets a chance to vote on the measures.
- AT&T(T) Forecasts Profit on Low End of Estimates Amid Rivalry. AT&T Inc. (T:US), the second-largest U.S. wireless carrier, forecast 2014 profit on the low end of analysts’ estimates as price competition heats up with T-Mobile US Inc. Earnings per share will grow this year at a “mid-single-digit” rate, AT&T said today. That compared with analysts’ estimates for an increase of 7 percent, according to data compiled by Bloomberg. Sales will climb 2 percent to 3 percent, AT&T said, compared with analysts’ 2 percent projection.
- Republicans Criticize Obama's Push to Use Executive Power. GOP Lawmakers Accuse President of Overreaching His Authority in Use of 'Pen and Phone'. President Barack Obama's new drive to use executive power to advance his policy goals is drawing fire from Republicans who accuse him of overreaching his authority. "House Republicans will continue to look closely at whether the president is faithfully executing the laws, as he took an oath to do," House Speaker John Boehner (R., Ohio) said.
- Ted Cruz: The Imperial Presidency of Barack Obama. In the nation's history, there is simply no precedent for an American president so wantonly ignoring federal law. Of all the troubling aspects of the Obama presidency, none is more dangerous than the president's persistent pattern of lawlessness, his willingness to disregard the written law and instead enforce his own policies via executive fiat. On Monday, Mr. Obama acted unilaterally to raise the minimum wage paid by federal contracts, the first of many executive actions the White House promised would be a theme of his State of the Union address Tuesday night.
- Obama vows to act without Congress in 2014, amid second-term woes. President Obama vowed Tuesday to use the power of the pen to chip away at his agenda in 2014, making clear he’ll sidestep Congress through executive actions while also lowering his sights for what is achievable at this stage in his presidency. In his State of the Union address, Obama stopped short of proposing any sweeping new initiatives. He renewed his call for Congress to approve an immigration overhaul “this year,” but for the most part narrowed his focus to smaller-ticket items he’s vowing to do on his own.
- Some More Fun With Market Timing. (graph)
CNN:
- Yahoo(YHOO) shares sink as sales and profit continue to slide. Yahoo's core business shows no signs of improving after the company once again announced lower earnings and sales Tuesday. Sales of banner and video ads slipped 6% in the fourth quarter and search ad sales fell 4%. Yahoo (YHOO, Fortune 500) was once the Web's advertising leader, but over the past several years has fallen behind rivals Google (GOOG, Fortune 500) and Facebook (FB, Fortune 500).
- Hedge Funds Sniff for Even Bigger Payouts From Banks. One of the biggest bets on Wall Street rests on a theory that also deeply unsettles Wall Street. The provocative theory is that the big banks have not paid enough in recent legal settlements to make amends for their role in stoking the subprime housing boom and bust. Hedge funds, contending that the banks have so far underpaid, have bought subprime mortgage-backed bonds, which they hope will rise in value. That would happen if Wall Street banks ultimately pay out a lot more money to settle other, more stringent litigation tied to these bonds. And the hedge funds holding the bonds may often be behind these more demanding lawsuits.
- Rising risk that German court will block Bundesbank rescue for Southern Europe. Court can force German institutions to withdraw support for EU operations, wrecking market credibility for the ECB's rescue policies.
- Biden in Mid-Dec. Asked Abe Not to Visit Yasukuni Shrine. U.S. Vice President Joe Biden asked Japanese PM Shinzo Abe to avoid visiting the war shrine in a teleconference on Dec. 12, citing people familiar with the matter. Abe replied he would make the final decision by himself.
- None of note
- Asian equity indices are +.50% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 141.0 -9.0 basis points.
- Asia Pacific Sovereign CDS Index 112.75 -4.75 basis points.
- FTSE-100 futures +.65%.
- S&P 500 futures +.45%.
- NASDAQ 100 futures +.50%.
Earnings of Note
Company/Estimate
- (MKC)/1.19
- (GNTX)/.43
- (TUP)/1.84
- (KNX)/.24
- (DOW)/.43
- (BIIB)/2.27
- (JBLU)/.13
- (VLO)/1.57
- (PX)/1.55
- (ENR)/2.13
- (WLP)/.87
- (EMC)/.59
- (BA)/1.57
- (SO)/.45
- (HES)/1.07
- (PSX)/1.10
- (QCOM)/1.18
- (IRF)/.18
- (TSCO)/.65
- (LVS)/.84
- (LRCX)/1.03
- (SYMC)/.43
- (AVB)/1.46
- (SLG)/1.35
- (FB)/.27
- (MUR)/1.18
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory build of
+2,560,000 barrels versus a +990,000 barrel gain the prior week.
Gasoline supplies are estimated to rise by +1,370,000 barrels versus a
+2,123,000 barrel gain the prior week. Distillate supplies are estimated
to fall by -2,125,000 barrels versus a -3,212,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.49% versus a -3.5% decline the prior week.
- The FOMC is expected to leave the benchmark fed funds rate at .25%.
- The Fed's QE3 Pace for January is estimated to fall to $65B versus $75B in December.
- None of note
- The Japan Retail Trade data, German GFK Consumer Confidence, weekly MBA mortgage applications report and the (KMP) analyst meeting could also impact trading today.
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