Bloomberg:
- King Abdullah, Saudi Monarch Who Modernized Economy, Dies. King Abdullah, the monarch who oversaw a fivefold increase in the size of the Arab world’s biggest economy and met the Arab Spring with a mixture of force and largesse, has died after almost a decade on the throne. He was born in 1924. Crown Prince Salman bin Abdulaziz, Abdullah’s half-brother, will succeed him, state television announced early on Friday in Riyadh. Abdullah had been in hospital in the Saudi capital since last month, receiving treatment for pneumonia. He became Saudi Arabia’s sixth king in August 2005, after years as de facto ruler since 1996 when King Fahd was incapacitated by a stroke.
- Saudi Arabia’s New King Seen Sticking With Oil Production. King Salman, Saudi Arabia’s new ruler, probably will stick to the oil policy of his predecessor, the late King Abdullah, maintaining production levels to preserve market share even at the cost of depressing prices. A key indicator will be whether Salman, 79, retains the oil minister, Ali al-Naimi, who has driven decision-making since 1995. Naimi, who turns 80 this year, has said he’d like to devote more time to his other job, chairman of the science and technology university named after the late sovereign. “The Saudi leadership has already taken the tough decision to live with lower oil prices,” Florence Eid-Oakden, chief economist at London-based consultants Arabia Monitor, said by phone. “Naimi is well established, he is respected and there shouldn’t be a change as long as the current cabinet is in place.”
- Putin Said to Shrink Inner Circle as Ukraine Hawks Trump Tycoons. Vladimir Putin isn’t just angering leaders from Berlin to Washington. He’s irking some of his richest friends, too, by snubbing their pleas to end the conflict in Ukraine and ostracizing all but a handful of hardliners. The ruble’s plunge has heightened opposition to Putin’s backing of the rebellion in Ukraine among his wealthiest allies, prompting the president to shrink his inner circle from dozens of confidants to a small group of security officials united by their support for the separatists, two longtime associates said. Putin is increasingly suspicious of men who owe their wealth to their ties to him and who are being hurt the most by U.S. and European sanctions, according to the people, who spoke on condition of anonymity to avoid reprisal. The 21 most affluent people in the country lost a total of $61 billion last year, a quarter of their combined fortune, according to the Bloomberg Billionaires Index.
- Clock Ticks for Samaras as Greek Election Campaign Enters Climax. The fight for power in Greece enters its final hours, with Prime Minister Antonis Samaras making a last-ditch appeal to voters as he tries to defy opinion polls showing a victory for his anti-austerity opponent. The monthlong election campaign wraps up on Friday when Samaras addresses a rally of his New Democracy party at 6 p.m. in Athens. Alexis Tsipras, who leads the opposition Syriza group, will speak on the island of Crete in the evening.
- China Bank Bad-Loan Ratio Jumps Most in at Least a Decade. Chinese banks’ bad-loan ratio jumped the most in at least a decade in the fourth quarter as a property-market slump and an economic slowdown constrained borrowers’ repayment ability. Nonperforming loans accounted for 1.29 percent of commercial banks’ total advances as of Dec. 31, up from 1.16 percent three months earlier, the China Banking Regulatory Commission said in a statement today. The bad-loan ratio for all banking institutions, including policy banks, stood at 1.64 percent at the end of last year, according to the CBRC. Bad loans may swell to 1.6 percent this year as economic growth weakens, adding pressure on Chinese banks to boost provisions, Bank of Communications Co. estimated last week.
- Everyone Wants to Be China's LendingClub. That Sounds Risky. China’s booming online lending industry will have more failures as it matures beyond a fad, said Soul Htite, whose venture in the nation just sold a stake to Tiger Global Management, the U.S. investment firm run by Chase Coleman. A rush by Internet firms into financial services is a repeat of the mimicry that saw Chinese ventures rise and fall after styling themselves on U.S. discount company Groupon Inc., Htite, 41, said in an interview in Shanghai this week.
- Korean Economy Grows at Slowest Pace in More Than Two Years. South Korea’s economy expanded at the slowest pace in more than two years, underscoring the challenge facing the Park administration and the central bank to spur growth. Gross domestic product grew 0.4 percent in the three months through December from the previous quarter, the Bank of Korea said Friday in Seoul. That matched the median estimate in a Bloomberg News survey and was the weakest gain since the third quarter of 2012. The economy expanded 2.7 percent from a year earlier, compared with expectations for a 2.8 percent gain.
- Euro Set for 6th Weekly Loss on ECB; Aussie Falls Below 80 Cents. The euro headed for a sixth weekly decline against the dollar after an expansion in the European Central Bank’s bond-buying program pared yields on German bunds relative to U.S. Treasuries. Australia’s currency held a four-day drop after monetary easing by the ECB and Bank of Canada this week spurred speculation the Reserve Bank of Australia will lower borrowing costs.
- Asian Stocks Gain on ECB; Oil Jumps After Saudi King Dies. Asian shares rose, with the regional benchmark index heading for a seven-week high, while the euro traded near an 11-year low after the European Central Bank expanded its asset-buying program. Oil jumped after Saudi Arabia’s King Abdullah died. The MSCI Asia Pacific Index climbed 0.7 percent by 11:58 a.m. in Tokyo, heading for the highest close since Dec. 4.
- Oil Gain Seen Short-Lived After Saudi King Death Amid Oversupply. An increase in oil prices after the death of Saudi Arabia’s King Abdullah will probably be short-lived amid an oversupply in the crude market.
- Copper Heads for Sixth Weekly Drop as China Manufacturing Slows. Copper headed for a sixth weekly loss after data showed manufacturing contracted in China, the world’s biggest consumer. The metal in London fell as much as 0.8 percent. The preliminary Purchasing Managers’ Index (BCOM) from HSBC Holdings Plc and Markit Economics was at 49.8 in January compared with 49.6 last month. Numbers below 50 indicate contraction. A similar measure for the U.S. on Friday will signal further expansion, according to a survey of economists by Bloomberg News. “The PMI was still low even if it was a little bit better than the previous month,” said Tetsu Emori, a senior fund manager at Astmax Asset Management Inc. “The Chinese market is still slowing.” Copper for delivery in three months on the London Metal Exchange slipped 0.8 percent to $5,622.50 a metric ton ($2.55 a pound). The metal fell 1.8 percent to $5,665 a ton on Thursday, the lowest since Jan. 15. It’s down 1.7 percent this week.
- Skyrocketing Cancer Drug Prices Are Express Scripts’(ESRX) Target. Express Scripts Holding Co. (ESRX), which this year forced price concessions from makers of $1,000-a-day hepatitis C medicines, has set its sights on $37 billion in U.S. spending on cancer medications. Its goal is to start influencing the drugs’ costs as soon as next year.
- Starbucks(SBUX) First-Quarter Profit Surges 82% as Food Sales Gain. The shares rose 3.3 percent to $85.51 at 4:27 p.m. in late trading in New York. They increased 4.7 percent in 2014, the sixth straight year of gains.
- U.S., Iraq, Prepare Offensive to Retake Mosul From Islamic State. Half of Islamic State Leadership Removed in Strikes. The U.S. and Iraq have begun preparations for an assault by summer to retake Mosul, selecting and training military units and cutting supply lines to Islamic State militants who control Iraq’s second-largest city, the top American commander in the Middle East said.
- GOP lawmakers face pressure from base to target ObamaCare – or else. (video) Republican lawmakers are facing rising pressure from conservative groups and activists to go big – or potentially go home – in their fight against ObamaCare.
CNBC:
- Currency expert: Euro going ‘well below parity’. "The divergence between the ECB, the [Bank of Japan] easing policy more, and the Federal Reserve—even if you don't fully accept my view that the Fed raises rates in the middle of this year, no matter how you slice it, the Federal Reserve will raise rates well before the ECB and the BOJ—I think that this pushes the euro well below parity next year," he said Thursday on CNBC's "Futures Now."
- Deflation Is A Problem For The Fed. (graph)
- ""Whatever It Takes" Or "Make It Stop"". (graph)
- "Government Is Waging A Perpetual War Against Human Nature... They Can Never Win". Government cannot win against the business cycle. All they ever do is aggravate the cycle and increase the velocity resulting in panics.
- The ECB Can't Save The Eurozone Economy. Unless governments make structural reforms to address the root causes of deflation, any economic boost Europe gets from the ECB's actions this week will likely be temporary.
Reuters:
Telegraph:
- Mario Draghi's QE blitz may save southern Europe, but at the risk of losing Germany. The ECB has put German political consent for the euro project at risk. Nobody should have any illusions about the implications of such defiance. What is at stake is German political consent for the euro project. Bernd Lucke, the leader of the AfD anti-euro party, called today's decision an "act of desperation and the introduction of eurobonds by the back door" by the ECB. The Bavarian Social Christians (CSU) are also furious. "With this decision, the ECB has crossed the Rubicon," said Angelika Niebler, the party's parliamentary leader. The Bavarian finance minister, Markus Soder, said: "unlimited purchases of sovereign bonds threaten to bring down the whole system." On the Left, Die Linke lashed out at the decision, calling it a gift for insiders. It plunders the savings of the poor to make the "super-rich even richer" by driving up asset prices.
- German exports to Russia dropped by 18% or EU6b last year, Eckhard Cordes, head of committee on Eastern European Economic Relations, said in an interview. Says 2015 may be even worse if crisis isn't solved soon. Says permanent 20% drop in exports to Russia may translate into 60,000 jobs lost in Germany.
- None of note
- Asian equity indices are +.75% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 109.0 -4.0 basis points.
- Asia Pacific Sovereign CDS Index 68.5 -3.0 basis points.
- S&P 500 futures -.11%.
- NASDAQ 100 futures -.10%.
Earnings of Note
Company/Estimate
- (BK)/.59
- (GE)/.55
- (HON)/1.42
- (KSU)/1.23
- (KMB)/1.37
- (MCD)/1.22
- (COL)/1.12
- (STT)/1.27
8:30 am EST
- The Chicago Fed National Activity Index for December is estimated to fall to .48 versus .73 in November.
- The Preliminary Markit US Manufacturing PMI for January is estimated to rise to 54.0 versus 53.9 in December.
- Existing Home Sales for December are estimated to rise to 5.08M versus 4.93M in November.
- The Leading Index for December is estimated to rise +.4% versus a +.6% gain in November.
- None of note
- The Eurozone PMI and UK retail sales reports could also impact trading today.
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