Bloomberg:
- Ukraine Violence Forces Rush of Diplomacy as Airport Fight Rages. The escalation of fighting in Ukraine after a lull last month, which is threatening to tip the country into full-blown war, is forcing diplomats across Europe to seek ways to stem the violence. Foreign Ministers from Ukraine, Russia and France have been invited by Germany to meet in Berlin Wednesday to try to revive peace negotiations as some of the fiercest clashes in months go on in the shattered remains of Donetsk airport in eastern Ukraine between separatists and government troops. “The situation is very dangerous,” Anton Lavrov, an independent defense analyst in Torzhok, Russia, said by phone. “It’s not clear at all that they will be able to renew the cease-fire. It could lead to full-scale clashes across the front and big losses on both sides.”
- World’s Wildest Stocks Show Chinese Booms and Busts Getting Bigger on Debt. The one thing China’s bulls and bears can agree on is that swings in the world’s most-volatile major stock market are only going to get bigger after equity traders took on record amounts of debt. Both Bank of America Corp. strategist David Cui, who predicts Chinese shares will fall, and JPMorgan Chase & Co.’s Adrian Mowat, who has an overweight rating, say the surge in margin lending to all-time highs is amplifying price fluctuations in the $4.9 trillion market. Volatility in the benchmark Shanghai Composite Index reached the highest level since 2009 this week after rising more than fourfold since July.
- China Stock Euphoria Fading, 58% of Investors Say Rally Over: Bloomberg Poll. China’s world-beating stock rally is over, according to the latest Bloomberg Global Poll. Fifty-eight percent of the survey’s 481 respondents said the Shanghai Composite Index (SHCOMP) will either decline or remain little changed over the next six months after posting a 55 percent advance since June. Only 30 percent said the gauge will extend gains. The number of poll participants that picked China as among the best opportunities for investing fell by almost half from the fourth quarter to just 13 percent.
- Samaras Pledges No More Cuts for Greeks in Election Fight. The following are the main pledges of Greek Prime Minister Antonis Samaras, leader of governing New Democracy party, ahead of the national election on Jan. 25. Samaras, 63, made the pledges in New Democracy’s election prospectus and on the campaign trail. -- Victory for New Democracy “will keep Greece in the euro area,” Samaras says, while a Syriza win would set the country on a collision course with its creditors, potentially forcing it out of the currency bloc
- Abe Leaves Middle East Facing Islamic State Hostage Crisis. Japanese Prime Minister Shinzo Abe shortened a Middle East trip to deal with a hostage crisis after Islamic State militants threatened to kill two Japanese hostages within 72 hours. Abe departed Israel an hour earlier than planned on Tuesday evening having earlier pledged $200 million in non-military aid to nations confronted by the al-Qaeda breakaway group, public broadcaster NHK reported. Islamic State demanded a ransom equivalent to the promised financial support.
- Asian Stocks Retreat Before BOJ Decision as Consumer Shares Fall. Asian stocks fell, led by consumer-discretionary shares, ahead of a Bank of Japan statement on monetary policy. The MSCI Asia Pacific Index (MXAP) dropped 0.2 percent to 138.29 as of 9:03 a.m. in Tokyo. All 33 economists surveyed by Bloomberg forecast no change to BOJbond-buying after it expanded the already unprecedented program in October. Japanese shares slid in Tokyo.
- Oil Trades Near $47 as U.S. Crude Stockpiles Seen Worsening Glut. Oil traded near $47 a barrel as forecasts for a second weekly gain in U.S. crude inventories bolstered speculation that a global glut that spurred last year’s price collapse may persist.
- Druckenmiller Alums at PointState Make $1 Billion on Oil. Hedge fund manager Zach Schreiber stood on stage at Avery Fisher Hall in New York eight months ago and made a bold prediction. “We believe crude oil is going lower -- much lower,” Schreiber, 42, told the audience of roughly 3,000 investors, including some of the biggest money managers in the industry. “If you are long, I’m sorry for you.” Then he showed a slide of a car stuffed with clowns.
- Junk Replaces Government Debt as Most-Disdained in Investor Poll. Junk bonds have supplanted sovereign debt as the asset investors would most like to bet against amid concern that a slowdown in global economic expansion will make it harder for the world’s neediest borrowers to meet their obligations. With both the International Monetary Fund and World Bank lowering their world growth forecast this month, 18 percent of the respondents to a quarterly Bloomberg Global Poll chose speculative-grade debt as the favored asset class to short, or set up trades that would profit from a decline in prices, given the chance. That exceeds the 13 percent that would bet against government securities from the Group of Seven nations.
- Uprising in Yemen Fans U.S. Concerns. Capture of Presidential Palace Raises Worries About Instability That Could Plague Fight Against Terrorism. A militia group demanding a greater say over Yemen’s new constitution took over the presidential palace here Tuesday, sparking fresh concerns about a country that has become a cornerstone of U.S. counterterrorism strategy.
- Dollar’s Rise Squeezes U.S. Firms. Avon(AVP), Expedia(EXPE), P&G(PG) Face Challenges as Currency Strengthens.
- China Confronts ‘New Normal’ of Slower Growth. Companies Struggle to Find Their Footing as Government Seeks Ways to Boost Economy.
- Climate Reporting’s Hot Mess. AP takes the cake in the relentless campaign by global-warming journalists to discredit their own profession.
- The Gaslight Presidency. Obama’s policies have crushed middle-class incomes, and he proposes more of the same. In the 1944 film “Gaslight,” a con artist manipulates his new wife psychologically to make her doubt her own sanity in a scheme to steal her inheritance. That’s increasingly the way to understand President Obama’s behavior toward Congress and especially the tax increase he floated in Tuesday’s State of the Union. The only plausible rationale is that he thinks he can gain politically by driving Republicans nuts.
- Al Qaeda operative freed from US federal prison early for ‘time served'. Ali Saleh Kahlah al Marri -- an admitted Al Qaeda operative in the United States -- was released last week from a federal prison prior to completing his 15-year sentence because of “time served,” the Justice Department told Fox News on Tuesday.
Zero Hedge:
- 'Everything Is Awesome' SOTU Post-Mortem: "It's Not Government's Job To Make Everybody Rich". (graph)
- Spot The (IMF) Difference. (graph)
Politico:
AFP:
Telegraph:- Ukrainian President Cuts Short Visit to Davos. President cuts short visit as situation deteriorates in rebel-held east.
- Tensions simmer over eurozone QE as investors buy up Spanish debt. Investors piled into peripheral eurozone debt on Tuesday ahead of the European Central Bank’s widely expected launch of large-scale bond purchases even as political resentment mounted over German attempts to water down the programme.
- Central bank prophet fears QE warfare pushing world financial system out of control. Former BIS chief economist warns that QE in Europe is doomed to failure and may draw the region into deeper difficulties. The economic prophet who foresaw the Lehman crisis with uncanny accuracy is even more worried about the world's financial system going into 2015. Beggar-thy-neighbour devaluations are spreading to every region. All the major central banks are stoking asset bubbles deliberately to put off the day of reckoning. This time emerging markets have been drawn into the quagmire as well, corrupted by the leakage from quantitative easing (QE) in the West. "We are in a world that is dangerously unanchored," said William White, the Swiss-based chairman of the OECD's Review Committee. "We're seeing true currency wars and everybody is doing it, and I have no idea where this is going to end."
- QE is not the long-term cure required for the ailing euro. Throwing billions of euros at the eurozone's problems won't solve the single currency's underlying problems and contradictions.
- Boko Haram claims Baga massacre and threatens Nigeria's neighbours. Boko Haram’s leader Abubakar Shekau has claimed responsibility for the recent massacre of hundreds of people in the northeast Nigerian town of Baga and made renewed threats to neighbouring Niger, Chad and Cameroon in a video published online on Tuesday.
- None of note
- Asian equity indices are -.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 121.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 74.75 -1.75 basis points.
- S&P 500 futures +.04%.
- NASDAQ 100 futures +.10%.
Earnings of Note
Company/Estimate
- (NTRS)/.81
- (UNH)/1.50
- (FITB)/.42
- (USB)/.77
- (AMTD)/.39
- (FFIV)/1.49
- (AXP)/1.38
- (EBAY)/.89
- (URI)/2.10
- (BGG)/.14
- (SNDK)/1.24
- (XLNX)/.61
- (DFS)/1.30
- (NVEC)/.71
- (RJF)/.86
- (CCI)/1.07
8:30 am EST
- Housing Starts for December are estimated to rise to 1040K versus 128K in November.
- Building Permits for December are estimated to rise to 1060K versus 1035K in November.
- Chicago Purchasing Managers Revise Seasonally Adjusted Data.
- None of note
- The UK unemployment rate, CIBC Institutional Investor Conference, weekly MBA mortgage applications report and the (MSFT) Windows 10 Event could also impact trading today.
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