Bloomberg:
- Inflation Outpaces Annual Earnings Gain for Japanese Workers. Rising living costs in Japan outpaced annual earnings that increased for the first time in four years in 2014 as the government sought to reflate the world’s third-largest economy. Average earnings climbed 0.8 percent last year while adjusted for inflation, pay fell 2.5 percent, the labor ministry said in Tokyo. Base wages excluding overtime and bonuses were unchanged in 2014, ending eight years of declines, preliminary data released Wednesday show. Earnings that trail inflation crimp the spending power of Japanese households, undermining the sustainability of price gains.
- Russia’s Shock Rate Turnaround Seen as Harbinger of More Easing. It didn’t take long for economists to change their minds about the road ahead for Russian monetary policy. After a surprise cut on Jan. 30, the Bank of Russia’s next move will be another reduction, according to 30 of 33 economists surveyed by Bloomberg, with 70 percent forecasting the move by the end of April. That compares with a majority predicting last week that borrowing costs would be held until at least June. Four economists now said the key rate may be lowered at an unscheduled meeting as early as this month.
- PBOC Resists Rate-Cut Wave on $91 Billion Outflow: China Credit. China’s markets signal the central bank won’t join a global wave of interest-rate cuts, as capital outflows that reached $91 billion last quarter weaken the yuan. The cost of one-year swaps, a fixed payment to receive the floating seven-day repurchase rate, climbed 16 basis points last week, the most in two months, and was at 3.36 percent as of 10:50 a.m. in Shanghai Wednesday. The Shanghai Composite stock index fell 4.2 percent, the biggest five-day drop in more than a year, as regulators curbed buying of shares with borrowed funds.
- China Services Gauge Slips to Six-Month Low as Slowdown Spreads. A gauge of China’s services industry expanded at the weakest pace in six months as a slowdown spreads to areas of the economy that had been outperforming the nation’s flagging factories and sagging property market. The Services Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics for January was at 51.8, down from 53.4 a month earlier. Numbers above 50 indicate expansion.
- Asia Stocks Extend Global Gains; Oil Slips as Bonds Slide. Asian stocks headed for the biggest gain in six weeks and emerging-market currencies strengthened after a three-day rally in commodities. The yen weakened and sovereign bonds fell. The MSCI Asia Pacific Index gained 1.5 percent by 11:08 a.m. in Tokyo, as sub-indexes of materials and energy companies surged more than 2 percent. Standard & Poor’s 500 Index futures were little changed. U.S. oil slipped 1.7 percent after a four-day, 19 percent rebound through yesterday, its biggest such rally since January 2009. Malaysia’s ringgit rose with the country’s stocks after a two-day holiday. The yen was 0.4 percent weaker as yields on Japan’s 10-year bond rose three basis points and Australian and U.S. notes dropped.
- Russian Intransigence on Ukraine Prompts U.S. to Reconsider Policy. As Kerry Heads to Kiev, Obama Administration Reconsiders Lethal Military Aid. Nearly a year after Russia began its military campaign in Ukraine, the U.S. and its European allies find themselves in a familiar predicament: struggling to devise a strategy to get Moscow to back off. While Western economic sanctions, combined with a steep drop in the price of oil, have inflicted heavy damage on the Russian economy, they’ve done nothing to temper the Kremlin’s support for eastern Ukraine’s separatist insurgency, U.S. officials acknowledge. “It’s fair to say that costs haven’t risen high enough for the Russian leadership to rethink their course of action,” a senior Obama administration official said.
- Wisconsin GOP Gov. Walker Takes Aim at College Outlays, Professors. Likely Presidential Candidate Proposes a $300 Million Cut to State’s University System. Wisconsin Gov. Scott Walker’s 2011 fight with public-sector unions sparked huge protests—and elevated him into a national figure in conservative politics. Now, as he eyes a run for president, he is targeting another group on the public payroll: university professors.
- As Oil Prices Climb, Some Harbor Doubts. Crude Jumps 7% on Indications of Production Slowdown, Even as Inventory Data Point to Supply Glut.
Zero Hedge:
- Chelsea Clinton's Husband Suffers Massive Hedge Fund Loss On Greek Investment. By 'incorrect' Chelsea Clinton's husband means the Eaglevale fund focused on Greece lost a stunning 48% last year and, as The Wall Street Journal reports, is impacting the overall returns of the roughly $400 million fund which has spent 27 of its 34 months in operation below its "high-water mark."
- Chipotle(CMG) sales disappoint, stock falls 6%. Chipotle's fourth-quarter results are out, and the numbers are mostly in line with expectations, though same-store sales came in below expectations. In after-hours trading following the results, shares of the Mexican-food chain were down as much as 7%.
- Wynn(WYNN) earnings were somehow worse than everyone imagined. Macau's malaise strikes again. This time its victim is Steve Wynn and his Wynn Resorts casino empire. The company just released its fourth quarter 2014 earnings, and they were even worse than the mess analysts had pictured. The stock is now falling in after hours trading, down about 3.5%.
- Gilead(GILD) boosts hepatitis C drug discounts, shares slide. Gilead Sciences Inc on Tuesday said it is offering steeper-than-expected discounts on its hepatitis C drugs to health insurers and other group payers who had complained about the price, and the drugmaker's shares slid more than 5 percent.
- Three-Fourths of Germans Oppose New Aid for Greece. 73% believe the European Union shouldn't yield to Greek demands for additional financial assistance, citing a survey by the research institute INSA for the newspaper.
- Weidmann Says Sovereign QE Is Not Normal Policy Instrument. "The purchase of government bonds is not a normal monetary-policy instrument in my opinion," Bundesbank President Jens Weidmann says in interview. QE entails "too many risks and side effects, which outweigh the benefits from the current point of view," he said.
- Japan to Consider Patrolling South China Sea. Govt will consider dispatching self-defense force ships, aircraft to South China Sea, citing Japanese Defense Minister Gen Nakatani.
- None of note
- Asian equity indices are +.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 107.0 -3.0 basis points.
- Asia Pacific Sovereign CDS Index 67.75 -2.25 basis points.
- S&P 500 futures -.11%.
- NASDAQ 100 futures -.19%.
Earnings of Note
Company/Estimate
- (ADP)/.68
- (BSX)/.21
- (CLX)/.90
- (GM)/.82
- (HUM)/1.15
- (MRK)/.86
- (RL)/2.52
- (SNE)/29.0
- (SO)/.38
- (WHR)/3.16
- (ALL)/1.68
- (CBG)/.70
- (GMCR)/.89
- (NE)/.49
- (PRU)/2.37
- (UA)/.39
- (WFT)/.32
- (YUM)/.66
8:15 am EST
- The ADP Employment Change for January is estimated at 220K versus 241K in December.
- Final Markit US Services PMI for January is estimated at 54.1 versus a prior estimate of 54.0.
- ISM Non-Manufacturing Composite for January is estimated to rise to 56.4 versus 56.2 in December.
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +3,940,000 barrels versus a +8,874,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -450,000 barrels versus a -2,587,000 barrel decline the prior week. Distillate supplies are estimated to fall by -1,210,000 barrels versus a -3,892,000 barrel decline the prior week.
- None of note
- The Fed's Mester speaking, Fed's Powell speaking, Eurozone Services PMI, weekly MBA Mortgage Applications Report, Cowen Aerospace/Defense Conference, (TXN) strategy update and the (NAV) analyst day could also impact trading today.
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