Bloomberg:
- Abe Eyes Window for Biggest Military-Rule Change Since WWII. Prime Minister Shinzo Abe, pressed by China and seeking to strengthen ties with the U.S., is considering Japan’s biggest change in military engagement rules since World War II. Barred by its interpretation of a pacifist constitution from protecting other nations’ troops, Japan needs broader deployment abilities, according to Abe, 59. Having increased defense spending two years running and set up a U.S.-style National Security Council, Abe is now seeking to allow Japan to come to the aid of its allies, telling parliament yesterday that “it’s about whether we can exercise this right that every country has.”
- Hedge Funds Rework Positions in Emerging-Market Drop. Traders who anticipated a year when riskier bets would pay off are overhauling their foreign-exchange positions after an emerging-markets rout led to the biggest currency-fund losses to start the year since 2004. Hedge funds and other large speculators shuffled holdings of the dollar, yen, pound, Mexican peso and four other major currencies by a net 102,115 contracts in the week ended Jan. 28, according to Commodity Futures Trading Commission data. That’s the biggest realignment since September, with updated figures due tomorrow. Currencies from the U.K., Japan and Europe saw the biggest increase in bets on appreciation, while traders added wagers on declines for Mexico’s and Australia’s currencies.
- Ford(F) to Cut Third of Australia Workforce in June as Demand Falls. Ford Motor Co. (F) will cut about 300 jobs at its Australian manufacturing plants and slash production by a third in June as it prepares to close its car lines in the nation in 2016. Daily production will fall to between 80 and 90 cars from 133 cars at present, Wes Sherwood, a spokesman for the Dearborn, Michigan-based carmaker, said by phone today.
- Asian Stocks Climb With Aussie; Won to Ringgit Advance. Asian stocks advanced for a second day as Australia’s currency climbed after the nation reported a surprise trade surplus on exports to China and the U.S. Emerging-market currencies in the region increased with silver. The MSCI Asia Pacific Index added 0.4 percent by 10:55 a.m. in Tokyo, as Australia’s S&P/ASX 200 Index and Hong Kong’s Hang Seng Index snapped three days of losses.
- Draghi as ECB Master of Suspense Keeps Investors on Edge. Mario Draghi’s habit of springing surprises means that few can say what he’ll do when European Central Bank officials decide on monetary policy today. Inflation at a four-year low and volatile market rates speak for further action by the Governing Council, even after it cut official rates to record lows in November. At the same time, signs of economic improvement and the central bank’s prediction that price gains will gradually return to target suggest the ECB president may prefer to hold fire. That’s the call by 62 of the 66 economists surveyed by Bloomberg News, while 4 predict a cut in the benchmark rate to 0.1 percent from 0.25 percent.
- Torture Stokes Fear and Resolve as Ukraine Standoff Intensifies. As demonstrations aimed at ousting Russia-backed President Viktor Yanukovych have spread, so has the brutality of the response, stiffening his opponents’ resolve and deepening the standoff. Protest groups say seven activists have died and 26 have been missing since Jan. 16, when Yanukovych pushed through a series of anti-protest laws that rekindled unrest. Officials deny acting illegally and accuse the opposition of falsifying claims to win public support -- a position dismissed by the U.S. and the European Union.
- Iraqi Militants Seeking Recruits to Attack U.S., Lawmaker Says. Members of a militant group operating in Iraq and Syria are recruiting people to attack the U.S., according to the lawmaker who heads the House Foreign Affairs Committee in Washington. The Islamic State of Iraq and the Levant “has reportedly been actively recruiting individuals capable of traveling to the U.S. to carry out attacks,” Representative Ed Royce, a California Republican, said at a hearing of his panel yesterday.
- Jihadist Threat Grows as Egypt Turns to al-Seesi for Security. The rise of Abdelfatah al-Seesi in Egypt is pouring fuel on an Islamist militant campaign that threatens his image as the only man who can restore stability. The defense minister, who overthrew elected leader Mohamed Mursi in July, is increasingly touted as a presidential candidate himself, winning the blessing of fellow generals last month. Expectations that he’ll end Egypt’s turmoil are helping to drive gains on markets. Yet the army-backed government’s strategy for restoring order risks fueling reprisals by militant Islamist groups who are expanding their capacity to attack.
- Currency Market Roiled by Trader Exits as Lawsky Probes Banks. The foreign-exchange trading business was in upheaval across Wall Street as senior executives resigned and others were fired amid an expanding probe of possible currency manipulation. Benjamin Lawsky, superintendent of New York’s Department of Financial Services, asked more than a dozen firms including Deutsche Bank AG, Goldman Sachs Group Inc. and Citigroup Inc. for documents on their currency-trading practices, said a person with knowledge of the matter. Deutsche Bank, the top foreign-exchange trader, fired four dealers after an internal probe, people with knowledge of the move said. Goldman Sachs lost two partners while Citigroup said its foreign-exchange chief will leave in March.
- Fed’s Tarullo Says Efforts Needed to Curb Too-Big-to-Fail Risk. Federal Reserve Governor Daniel Tarullo said more efforts are needed to end the perception that the biggest banks are “too big to fail” and to reduce risks that could spread rapidly through the financial system.
- Bankers Propose Bigger Role for Treasury Managing Dealer System. Wall Street bankers are asking the U.S. Treasury Department to get more involved in selecting and monitoring the 21 primary dealers that bid at government debt auctions and serve as counterparties to the Federal Reserve. The Treasury should periodically disclose performance evaluation of the dealers, as publicized rankings will help foster competition among the banks and securities companies, according to a presentation at a meeting yesterday of the Treasury Borrowing Advisory Committee, known as TBAC.
- Coca-Cola(KO) to Buy 10% Stake in Green Mountain(GMCR). Coca-Cola Co. (KO) agreed to buy a 10 percent stake in Green Mountain Coffee Roasters Inc. (GMCR) for about $1.25 billion and help the maker of Keurig coffee brewers introduce its new cold-beverage system.
- U.S. to Curb Pakistan Drone Program. CIA To Target Shorter List of High-level Terrorists.
- Regulators Again May Clip Volcker. Agencies Weigh Whether to Loosen Provisions for Collateralized Loan Obligations.
- Obama's IRS 'Confusion'. New evidence undercuts White House claims about IRS motivation. House committees are still digging into the IRS political targeting scandal, and based on a hearing Wednesday there's more to learn. The day produced more evidence blowing apart President Obama's claims that there was "not even a smidgen of corruption" or political motivation in the IRS handling of groups applying for tax-exempt status.
- Calls mount to end ban on oil exports as US production booms. When the Arab oil embargo of 1973 shocked the U.S. into long gas lines and rationing, Congress approved what was a no-brainer at the time -- a ban on exporting crude oil produced at home. But today, with domestic oil production booming, some are questioning whether that ban should stay in place. The new concern is that the U.S. has more oil than its refineries can handle.
Zero Hedge:
Business Insider:
Reuters:
- Growing concern with China's behavior at sea - senior U.S. diplomat. The United States has growing concerns that China's maritime claims in the disputed South China Sea are an effort to gain creeping control of oceans in the Asia-Pacific region, a senior U.S. official said on Wednesday. In congressional testimony, U.S. Assistant Secretary of State for East Asian and Pacific Affairs Danny Russel said China's vague territorial claims in the South China Sea had "created uncertainty, insecurity and instability" among its neighbors.
- BOJ Iwata: Japan can withstand tax hike pain. Bank of Japan Deputy Governor Kikuo Iwata said on Thursday the economy can withstand the pain from a sales tax hike in April as exports and capital expenditure will gradually pick up and offset the drop in household spending. He also said the central bank will not end its ultra-loose monetary policy unless its 2 percent inflation target is achieved in a stable manner.
- For Pandora(P), costs to get more listeners grow. Pandora Media Inc reported higher revenue and profit for the quarter ending in December but said that costs to expand its audience are rising.
- Kazakh central banker sees many emerging market devaluations in 2014. Kazakhstan's central bank governor Kairat Kelimbetov expects to see a lot of emerging market currency devaluations this year, with the Russian rouble likely to be "close to collapse again," he said in Geneva on Wednesday. "I think it's kind of a beginning," he said of a recent emerging markets sell-off. "It's not only a Russian economy problem but a problem for all the emerging markets and I think we will see a lot of devaluation this year. And the situation with the rouble will be, let's say, close to collapse again."
- U.S. has warned France about doing business with Iran -Kerry. The United States has warned France that French companies - which sent executives to Tehran this week - will be punished if they violate U.S. sanctions with Iran, U.S. Secretary of State John Kerry said on Wednesday.
- German SPD Wants Counterespionage Against U.S. SPD's interior policy expert Michael Hartmann says that "who spies on us must expect to become a target as well," in an interview. Says U.S. cos should be excluded from future contracts for communication technologies.
- None of note
- Asian equity indices are +.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 149.0 -2.0 basis points.
- Asia Pacific Sovereign CDS Index 114.25 -2.5 basis points.
- FTSE-100 futures +.33%.
- S&P 500 futures +.24%.
- NASDAQ 100 futures +.28%.
Earnings of Note
Company/Estimate
- (PM)/1.37
- (ADS)/2.33
- (DNKN)/.40
- (VMC)/-.03
- (SMG)/-1.08
- (AET)/1.36
- (DO)/.81
- (AOL)/.61
- (CMI)/1.97
- (SEE)/.37
- (GM)/.87
- (MWW)/.11
- (K)/.82
- (EXPE)/.84
- (AAP)/.81
- (ATVI)/.73
- (LNKD)/.38
- (BYI)/1.00
- (OPEN)/.52
- (NWSA)/.19
- (NDLS)/.11
8:30 am EST
- The Trade Deficit for December is estimated at -$36.0B versus -$34.3B in November.
- Preliminary 4Q Non-Farm Productivity is estimated to rise +2.8% versus a +3.0% gain in 3Q.
- Preliminary 4Q Unit Labor Costs are estimated to fall -.7% versus a -1.4% decline in 3Q.
- Initial Jobless Claims are estimated to fall to 335K versus 348K the prior week.
- Continuing Claims are estimated to rise to 2998K versus 2991K prior.
- None of note
- The Fed's Rosengren speaking, ECB rate decision, Draghi Press Conference, Challenger Job Cuts Report for January, weekly EIA natural gas inventory report, RBC Consumer Outlook Index for February, weekly Bloomberg Consumer Comfort Index and the (FIO) analyst day could also impact trading today.
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