Author: admin

From its peak in October 2012, mortgage applications have collapsed 66% and this week printed at new 13-year lows. Since rates started to crack on Taper talk in May 2013, mortgage applications have fallen in a one-way street (but hey, rising rates won’t affect the housing recovery, right? remember 15% mortgages… as the usual bullshit meme goes, entirely missing the shift in house prices, affordability, and marginal price-setter). Of course, the usual ‘seasonal’ effect wil be blamed and recovery will re-blossom in the new year… except, seasonally this is among the worse drop in the last few weeks of the year in the last decade. Adding further salt to the wound of wealth generation, the refi index has dropped to a fresh 5-year low as the home equity ATM remains shut (having dropped 73% in the last few months).

 

New 13-year low in mortgage applications…

 

and no – its not seasonals, its worse…

 

But hey, the Fed’s economic-confidence inspiring Taper will fix all this and housing will rise once again… on the shoulders of cheap money Wall Street landlords…

 

Charts: Bloomberg

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/-XHXZqalag0/story01.htm Tyler Durden

That it has been one of the most lacklustre shopping seasons in recent years has already been repeatedly covered, with average holiday spending expected to decline for the first time since the Great Financial Crisis of 2008, all this despite record promotions and an ever earlier start to Black Friday.

Another chart showing the same trend from Bloomberg, with the comment that the “eroding middle class can no longer drive activity as it has in the past” – that’s odd: we said the same thing in late 2009 for which we got yet another label of tinfoil conspiracy theorists…

However, while the early start to shopping season has missed expectations, driven primarily by an unprecedented weakness in traditional bricks and mortar outlets, there was some hope that the last stretch into Christmas and the New Year would provide a much needed, last minute bump. Those hopes were dashed last night when Shopptertrack reported that retail traffic plummeted by an unprecedented 21% last week, and in-store sales decreased 3.1% from the year before, dashing retailers’ hopes that the final stretch before Christmas would offset soft sales numbers earlier in the holiday shopping season.

UT San Diego reports:

The disappointing numbers, released by ShopperTrak on Monday, are “kind of staggering,” said the research firm’s founder, Bill Martin, who last week voiced optimism that retailers would see a noticeable spike in traffic and sales the week of Dec. 16-22 after two consecutive weeks of decreases in both.

 

He attributed the latest nosedive to successful November promotions, and bad weather last week in the Midwest and other central states. An increase in virtual window-shopping has prevented consumers throughout the shopping season from setting foot in many stores to look, feel and compare prices, he added.

Wait, November promotions were successful? For whom: retailers whose bottom lines got crushed in the margin collapse, or buyers who decided to wait and keep waiting for even better deals, until in the end they decided not to buy at all. Blaming the weather we understand, as do the trend to convert purchases to “window shopping” – in a world in which everything is turning virtual, it only makes sense that Americans pretend to shop asl well.

What’s worse, however, is that the deus ex of online sales is not appearing and will not save the day:

But even online sales aren’t growing at the expected pace. Online spending from home and work desktop computers in the U.S. from Nov. 1 through Dec. 15 was up 9 percent from the same period last year to $37.8 billion, according to the most available data from comScore.

 

That’s below the 14 percent growth that the Internet research firm is forecasting for the season.

 

Even though Black Friday holds the title as single busiest shopping day of the holiday season, the week before Christmas is traditionally the busiest week in the most important shopping season of the year. Many retailers depend on November and December to make as much as 40 percent of their annual revenue, the National Retail Federation says. But while 2013 is shaping up to be the largest holiday shopping season on record, retailers are not getting the photo finish they expected.

 

“The numbers are not devastating, but they are a bit alarming,” Martin said.

 

He is not revising his forecast of 2.4 percent overall growth in retail sales for November and December, already the slowest growth since 2009, because it was strong sales in early November that caused the softer late-season sales.

Finally, it appears that the strategy of pulling forward demand to the present through record discounts, and crushing margins in hopes of “making it up in volume” only works for those perpeptual non-cash flow generating juggernauts like Amazon, which on a long enough timeline will do everything (badly), and supposedly put everyone out of business. Just not yet.

Retailers began earlier than ever promoting deep discounts and deals to appeal to frugal consumers. Retail sales in November were up 4.7 percent from 2012, the Commerce Department reported.

 

“November was pretty strong, and that’s going to carry some weight into December,” Martin said. “If December ends up being flat, I expect we’re still going to have a 2.4 percent increase.”

 

There are some strong shopping days left before the end of the month, he said, and retailers will push hard to get shoppers back into their stores post-Christmas to exchange gifts, use gift cards and take advantage of post-holiday promotions. Gift cards are not recorded as sales until they are exchanged for merchandise, and because 80 percent of shoppers plan to buy them this year, bringing total gift card spending to an all-time high of $29.8 billion, they could have a big influence on sales after the Christmas holiday.

 

Final sales figures for the holiday shopping season are expected in January.

We can’t wait. In the meantime, we expect seasonally adjusted government retail sales data to indicate once again, that all is well, and that it is not the ARIMA X 12 seasonal fudge-factor goalseeker that is wrong, but that it is reality which is at fault.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/zNeSKT0_syI/story01.htm Tyler Durden

That it has been one of the most lacklustre shopping seasons in recent years has already been repeatedly covered, with average holiday spending expected to decline for the first time since the Great Financial Crisis of 2008, all this despite record promotions and an ever earlier start to Black Friday.

Another chart showing the same trend from Bloomberg, with the comment that the “eroding middle class can no longer drive activity as it has in the past” – that’s odd: we said the same thing in late 2009 for which we got yet another label of tinfoil conspiracy theorists…

However, while the early start to shopping season has missed expectations, driven primarily by an unprecedented weakness in traditional bricks and mortar outlets, there was some hope that the last stretch into Christmas and the New Year would provide a much needed, last minute bump. Those hopes were dashed last night when Shopptertrack reported that retail traffic plummeted by an unprecedented 21% last week, and in-store sales decreased 3.1% from the year before, dashing retailers’ hopes that the final stretch before Christmas would offset soft sales numbers earlier in the holiday shopping season.

UT San Diego reports:

The disappointing numbers, released by ShopperTrak on Monday, are “kind of staggering,” said the research firm’s founder, Bill Martin, who last week voiced optimism that retailers would see a noticeable spike in traffic and sales the week of Dec. 16-22 after two consecutive weeks of decreases in both.

 

He attributed the latest nosedive to successful November promotions, and bad weather last week in the Midwest and other central states. An increase in virtual window-shopping has prevented consumers throughout the shopping season from setting foot in many stores to look, feel and compare prices, he added.

Wait, November promotions were successful? For whom: retailers whose bottom lines got crushed in the margin collapse, or buyers who decided to wait and keep waiting for even better deals, until in the end they decided not to buy at all. Blaming the weather we understand, as do the trend to convert purchases to “window shopping” – in a world in which everything is turning virtual, it only makes sense that Americans pretend to shop asl well.

What’s worse, however, is that the deus ex of online sales is not appearing and will not save the day:

But even online sales aren’t growing at the expected pace. Online spending from home and work desktop computers in the U.S. from Nov. 1 through Dec. 15 was up 9 percent from the same period last year to $37.8 billion, according to the most available data from comScore.

 

That’s below the 14 percent growth that the Internet research firm is forecasting for the season.

 

Even though Black Friday holds the title as single busiest shopping day of the holiday season, the week before Christmas is traditionally the busiest week in the most important shopping season of the year. Many retailers depend on November and December to make as much as 40 percent of their annual revenue, the National Retail Federation says. But while 2013 is shaping up to be the largest holiday shopping season on record, retailers are not getting the photo finish they expected.

 

“The numbers are not devastating, but they are a bit alarming,” Martin said.

 

He is not revising his forecast of 2.4 percent overall growth in retail sales for November and December, already the slowest growth since 2009, because it was strong sales in early November that caused the softer late-season sales.

Finally, it appears that the strategy of pulling forward demand to the present through record discounts, and crushing margins in hopes of “making it up in volume” only works for those perpeptual non-cash flow generating juggernauts like Amazon, which on a long enough timeline will do everything (badly), and supposedly put everyone out of business. Just not yet.

Retailers began earlier than ever promoting deep discounts and deals to appeal to frugal consumers. Retail sales in November were up 4.7 percent from 2012, the Commerce Department reported.

 

“November was pretty strong, and that’s going to carry some weight into December,” Martin said. “If December ends up being flat, I expect we’re still going to have a 2.4 percent increase.”

 

There are some strong shopping days left before the end of the month, he said, and retailers will push hard to get shoppers back into their stores post-Christmas to exchange gifts, use gift cards and take advantage of post-holiday promotions. Gift cards are not recorded as sales until they are exchanged for merchandise, and because 80 percent of shoppers plan to buy them this year, bringing total gift card spending to an all-time high of $29.8 billion, they could have a big influence on sales after the Christmas holiday.

 

Final sales figures for the holiday shopping season are expected in January.

We can’t wait. In the meantime, we expect seasonally adjusted government retail sales data to indicate once again, that all is well, and that it is not the ARIMA X 12 seasonal fudge-factor goalseeker that is wrong, but that it is reality which is at fault.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/zNeSKT0_syI/story01.htm Tyler Durden

What time can you go home today? Find out with the schedule of early market closures below:

Floor Trade:

• CME/CBOT – Early Close: Equities – 12:15PM Central; Interest Rates, FX, Commodities – 12:00PM Central
• NYMEX – Early Close: 1:30PM Eastern
• COMEX – Early Close: 11:30AM Central
• NYSE – Early Close: 1:00PM Eastern

 

Electronic Trade:

• CME Globex – Early Close Equities, Interest Rates, FX: 12:15PM Central
• NYMEX – Early Close: 1:45PM Eastern
• NYSE LIFFE – Early Close 7:00AM Eastern
• Eurex – Closed

 

Individual Cash Index:

• FTSE – 7:30AM Eastern
• IBEX 35 – 8:00AM Eastern
• Amsteram Exchange, CAC 40, PSI 20, BEL 30: 8:05AM Eastern  
• (Germany, Italy, Switzerland, Norway and Sweden Closed)

Source: RanSquawk

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/DxMvW2YahZQ/story01.htm Tyler Durden

What time can you go home today? Find out with the schedule of early market closures below:

Floor Trade:

• CME/CBOT – Early Close: Equities – 12:15PM Central; Interest Rates, FX, Commodities – 12:00PM Central
• NYMEX – Early Close: 1:30PM Eastern
• COMEX – Early Close: 11:30AM Central
• NYSE – Early Close: 1:00PM Eastern

 

Electronic Trade:

• CME Globex – Early Close Equities, Interest Rates, FX: 12:15PM Central
• NYMEX – Early Close: 1:45PM Eastern
• NYSE LIFFE – Early Close 7:00AM Eastern
• Eurex – Closed

 

Individual Cash Index:

• FTSE – 7:30AM Eastern
• IBEX 35 – 8:00AM Eastern
• Amsteram Exchange, CAC 40, PSI 20, BEL 30: 8:05AM Eastern  
• (Germany, Italy, Switzerland, Norway and Sweden Closed)

Source: RanSquawk

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/DxMvW2YahZQ/story01.htm Tyler Durden

There is an intellectual fashion that has been inspired by the past decade in which there has been some convergence between the GDP per capita of emerging markets and those of the developed countries.  After diverging from 1950 to around 2000,  the out-performance of emerging markets over the past decade has nearly unwound growing disparity of second half of the twentieth century.

 

It may have inspired the idea that the world is flat or flattening, a la Thomas Friedman, or that power is so dispersed now that it makes sense to talk about a G-Zero world a la Ian Bremmer.

 

Some have seen this as a rise of the rest, such as Alice Amsden and Fareed Zakaria.  Others have written countless tracts about what they posit as America’s decline.  My book, Making Sense of the Dollar (2009), was an early response to the wave of declinists; ultimately suggesting that the US dollar and the evolutionary expansion strategy, based on direct investment rather than an export-oriented approach, would prove more durable than many of America’s friends and enemies may suspect. 

 

While the jury may still be out, there has an important development in Q4 13 that speaks to global governance issues and the financial architecture in the post-crisis period.  Without much fanfare, though covered by the business press of the day, at the end of October, six countries agreed to convert their swap line to standing arrangement.  This seemingly technical move is significant.  It replaces what was temporary with permanence (as permanent as these things are). 

 

The Federal Reserve and the central banks of England, euro area, Japan, Switzerland and the Canada had agreed about six years ago to initiate these swap lines that ultimately had to do making dollar funding available to foreign financial institutions, via the central banks, minimizing the risk on the part of the US.  The swaps are bilateral in the sense that allow the Federal Reserve to access those respective foreign currencies, if needed (here is a link to a video from the Federal Reserve explaining why the swap lines are beneficial for America).

 

These swap lines were set to expire in February.  They were deemed highly successful in reassuring investors of access to liquidity in these currencies.  Rather than simply roll them over (extend the duration), these swap lines have become a permanent feature in the post-crisis international financial architecture.    When first established, the swap lines were thought of, and legally were, temporary.  In 2010 Bernanke defended the temporary nature of the agreements, not wanting financial institutions to come to rely on them.   

 

What has changed the thinking?  Of all that which may motivate officials, cynics may suspect fear is at work.  Maybe Europeans officials are afraid of the results of coming stress tests of systemically important banks in Europe.  Maybe Fed officials were anticipating capital outflows as it prepared to announce tapering.  

 

As intriguing as that reasoning may be, it seems to misunderstand the role of the swaps in general and the role of dollar in particular.   Recall that prior to the crisis, the dollar was used to fund the purchases of other assets.  While the media would some times get infatuated with the yen-carry trade, the edifice of the post-tech boom finance was constructed on dollar funding. This was especially true of European financial institutions.    The crisis brought this mismatch to the surface.  

 

The swap lines were arranged primarily to provide access to dollar funding, without which a greater financial crisis would likely have ensued. Rather than the Federal Reserve provide it and take on potentially high counter-party risk, the swap lines were arranged with foreign central banks, who in turn offered them to their members.    

 

That the lines became reciprocal was largely a symbolic gesture and symbols are important. It allowed the European, Japanese and Canadians to deflect criticism of relying on the Americans and it gave American policy makers the ability to claim reciprocity.  But make not mistake about it, the swap lines for first and foremost about making dollars, not SDRs, not gold, or euros, or sterling available.  

 

That these lines become permanent shows that policy makers have begun thinking about post-crisis global governance.   The swap lines strengthen the investment climate by assuring investors to a permanent dollar liquidity backstop, without a world government.   

 

China was not included, though the Bank of England Governor and Chairman of the Financial Stability Board Mark Carney did suggest that it could be invited to join.   Indeed, it is not only China’s absence that is notable, but this is primarily a G7 creation, not G20.  

 

China does have numerous bilateral swap lines including with the Bank of England, the European Central Bank and the Swiss National Bank.    It does not have swap lines with the US, Japan or Canada.   Although many observers have cited the bilateral swap lines as evidence of the internationalization of the renminbi, they have not been utilized.  Neither have the bulk of the other bilateral swap lines.  Outside of dollars swap lines being used, the only other noteworthy activity was with the Swiss franc.  At its peak the ECB auctioned around $170 bln of francs, acquired in the swap line with the SNB.  

 

Lastly, we note that the agreement to make the swap lines a standby agreement was signed at the end of October.  Bernanke’s replacement at the head of the Fed was still not secure.  Yet the swap lines did not expire until February.  Waiting for the new Fed Chairperson to make this official would have arguably been helpful in solidifying the central bank’s new leadership and more clearly demarcate the beginning of a new era that is neither flat not leaderless.  

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4gQDtZESLfA/story01.htm Marc To Market

• Edward Snowden, after months of NSA revelations, says his mission’s accomplished (WaPo)
• Japan’s Nikkei 225 Extends Six-Year High on U.S. Data  (BBG)
• Retailers blend stores, e-commerce to snag holiday stragglers (Reuters)
• Storm wreaks havoc in Britain, France ahead of Christmas (Reuters)
• Big Rally to Pump Up Wall Street Bonuses (WSJ)
• Obamacare Sign-Up Extended as Record 1 Million Use Site (BBG)
• Merkel Hits Wall With Europe Fix (WSJ)
• Boaz Weinstein Loses for Second Year as European Bet Sours (BBG)
• UniCredit has reached an agreement to sell almost €1 billion in nonperforming loans to Cerberus (WSJ)
• U.S. mortgage applications fall as refinance hits five-year low (Reuters)
• Cohen Said to Have Warned Friend About Possible Federal Investigation (NYT)
• ‘Duck Dynasty’ Dad Risks $500 Million With Gay-Sin Remark (BBG)
• Wall Street Landlord Loses Round One in Ohio School Tax Fight (BBG)
• Target meets with state attorneys as lawsuits pile up (Reuters)
• Any corruption in Turkey will not be covered up: President Gul (Reuters)
• Pentagon Probes Firm for Violation of Iran Rules (WSJ)
• Khodorkovsky Pardon Signals Putin Rift With Russia Oil Czar (BBG)

 

Overnight Media Digest

WSJ

* A strong rally in financial markets over the past two months is expected to add a last-minute boost to bonus packages for Wall Street’s traders and investment bankers, partially offsetting an otherwise grim year.

* U.S. companies are showering cash on shareholders, powering the stock market’s record-breaking rally. Share buybacks and dividends are reaching levels unseen since before the financial crisis, as persistent economic uncertainty prompts cash-rich companies to reward shareholders rather than invest in other activities.

* Phoenix-based mining and energy company Freeport-McMoRan Copper & Gold awarded Chief Executive Richard Adkerson shares currently valued at about $36 million to compensate him for agreeing to give up rights to severance pay.

* Target Corp, working to contain damage from a 20-day breach of credit and debit-card security, held a conference call with several state attorneys general, to update them on the investigation.

* Carlyle Group is in exclusive talks with Johnson & Johnson to acquire the health-care company’s blood-testing unit, which is expected to fetch about $4 billion, according to people familiar with the matter. The unit can screen for viruses like HIV and hepatitis C. It also makes tests that help diagnose a heart attack and assess damage to the heart.

* Jos. A. Bank Clothiers Inc rejected a roughly $1.5 billion acquisition offer from men’s clothing retailer Men’s Wearhouse Inc, which replied by saying it might seek seats on its rival’s board.

* Walt Disney is adding Twitter Inc co-founder Jack Dorsey to the board. The company also said compensation for Chief Executive Robert Iger fell 15 percent to $34.3 million in its latest fiscal year.

* T-Mobile US Inc has teamed up with Facebook Inc to offer users of its GoSmart Mobile prepaid service free wireless access to the social network. T-Mobile has been boosting its postpaid customer rolls to turn around a long-struggling business. Facebook, meanwhile, may get wider access to wireless users who wouldn’t otherwise have a connection to the social-media site.

* Tribune Co said it will buy Sony Corp’s unit Gracenote Inc, best known for a large database of music data that is used by music services, for $170 million. The Chicago-based media company said Gracenote will be combined with Tribune Media Services, which sells TV listings to cable operators and other customers, as well as movie show times and other data.

* Rolls-Royce Holdings PLC on Monday said the U.K.’s Serious Fraud Office has opened a formal investigation into foreign bribery and corruption allegations involving employees of the U.K.-based jet and marine engine maker.

 

FT

The International Finance Corporation, the World Bank’s private sector lending arm, has toughened rules for staff engagement with client companies after controversy over the way two executives jumped to groups that had received investments from the body.

More than 6m children stand to benefit from higher returns and lower charges on their savings after the Treasury announced plans to lift a ban on the transfer of poor value “zombie” Child Trust Fund accounts into Junior Individual Savings Accounts.

There was no stopping equity bulls in the run-up to the holiday season as US stocks climbed to record highs and European bourses advanced for a fourth successive session.

BTG Pactual is to double its London staff by the end of next year, as the Brazilian investment bank embarks on a global hiring spree to build its fledgling commodities business.

The UK Serious Fraud Office has launched a criminal investigation into allegations of bribery and corruption at Rolls-Royce, the leading aircraft engine maker.

 

NYT

* After a flood of visitors to the HealthCare.gov site on Monday, White House officials established a 24-hour extension for consumers to sign up for Jan. 1 insurance coverage under the Affordable Care Act. The grace period was the latest example of the administration’s willingness to fiddle with deadlines that once seemed set in political concrete.

* Airlines are shrinking the size of their seats, raising revenue but also tensions between frustrated passengers. Over the last two decades, the space between seats, hardly roomy before, has fallen about 10 percent, from 34 inches to somewhere between 30 and 32 inches. Today, some airlines are pushing it even further, leaving only 28 i
nches.

* The Energy Department, environmental groups and the companies that deliver television signals to 90 million homes announced an agreement on Monday to tame “vampires,” the term used for devices that use electricity even when they are turned off. Such devices, which include set-top boxes like DVRs, as well as cable and satellite receivers. The agreement will save consumers more than $1 billion a year, both government and industry officials said.

* SFX Entertainment Inc, a dance-focused new company founded by the media mogul Robert Sillerman, announced on Monday that it had struck a global marketing partnership with Anheuser-Busch InBev, whose brands also sponsor mainstream events like the Super Bowl and Major League Baseball games. Terms of the deal were not disclosed.

* Hotels in the United States are offering rooms and meeting facilities for short periods, seeking to wring greater revenue out of their properties. American hotels like the Hilton Garden Inn Chelsea in New York and the Sofitel Miami are following the micro-stay model and appearing on day-use booking sites.

* Elliott Management, the New York-based hedge fund company founded by Paul Singer, reiterated Monday that it had no plans to participate in a tender offer by McKesson Corp for the German pharmaceutical wholesaler Celesio unless the deal was sweetened. The hedge fund has an economic interest of more than 25 percent in Celesio.

 

Canada

THE GLOBE AND MAIL

* Toronto city councillors are divided over whether Mayor Rob Ford should have called a state of emergency in the wake of downed power lines, freezing temperatures and hundreds of thousands of people without hydro in their homes following Sunday’s ice storm. In an emergency, Ford would have to relinquish his mayoral duties to Deputy Mayor Norm Kelly as per a council decision that recently stripped Ford of some of his powers. However, the decision on whether to call a state of emergency remains Ford’s under the law.

* Within three hours of the Joint Review Panel giving conditional approval for Enbridge Inc’s proposed Northern Gateway pipeline, the Lake Babine First Nation threatened to proceed with the lawsuit it has been preparing for months. The aboriginal community, based around the Babine Lake in British Columbia, has already retained one of the top aboriginal law experts in Canada.

Reports in the business section:

* Canadian insurers are grappling with the prospect of financial damage from yet another severe storm, capping off a brutal year that raised serious questions about how the industry will deal with the costs of climate change.

* Imperial Oil Ltd told regulators the estimated cost of its long-delayed Mackenzie Valley Project has surged more than 40 percent to at least C$20 billion ($19 billion) since its last tally almost seven years ago, and that it has no idea when North American gas markets might turn around to rescue the project from limbo.

* OMERS Private Equity, the private equity arm of the Ontario Municipal Employment Retirement System, has agreed to sell Maxxam Analytics International Corp to French company Bureau Veritas SA in a deal valued at about C$650 million including assumed debt. Maxxam Analytics operates a network of laboratories across Canada that serve the energy, environmental, food and DNA industries

* Shares in Reitmans Canada Ltd rose 6.9 percent on Monday, following an announcement by Toronto-based Fairfax Financial Holdings Ltd that it now owns 13.8 percent of Reitmans’ Class A shares. Fairfax, which is led by Prem Watsa, is now the second largest investor in the retailer behind a group of Reitmans’ directors and senior officers.

NATIONAL POST

* A paltry 9 percent of Canadian adults, fewer than one in 10, meet the criteria for “ideal” cardiovascular health, says a new study based on nearly half a million Canadians.

FINANCIAL POST

* The massive ice storm that has caused havoc in Toronto just days before Christmas, leaving hundreds of thousands without power and snarling public transit, is also expected to have a “negative impact” on the crucial holiday shopping season, prompting some retailers to stay open later and give people more time to get those last-minute gifts.

* The Bank of Canada announced Monday that deputy governor John Murray will step down on April 30. Murray, who has been a deputy governor since in January 2008, has overseen the central bank’s analysis of domestic and international economic developments.

 

China

SHANGHAI DAILY

– Chinese police have arrested a gang in Shanghai and Beijing after it made over $50,000 dealing in black market personal information. Police said they had seized data belonging to nearly a million people.

– Migrant children in Shanghai will be able to enjoy the same rights as local children from next year, if their parents have a city residence. In some cases there will also be a points-based evaluation, authorities said on Monday.

CHINA SECURITIES JOURNAL

– China will hold its quota for rare earths exports stable in 2014, Shen Danyang, spokesman for China’s Ministry of Commerce, said on Monday. International demand for rare earths fell short of China’s export quota this year.

– China’s net foreign financial assets amounted to $1.8 trillion by the end of September, according to the State Administration of Foreign Exchange.

SHANGHAI SECURITIES NEWS

– Only five of the original 40 companies listed on the Shenzhen composite exchange still remain, highlighting the changes that China’s economy has seen over the last two decades.

– Plans for a free trade zone (FTZ) linking China’s southern Guangdong with Hong Kong and Macau has undergone high level inspection and has a good chance of receiving approval. Some sources said it will be even bigger than Shanghai’s FTZ.

CHINA DAILY

– China’s anti-corruption watchdog will crackdown on extravagance and excess behind close doors in private clubs, the Central Commission for Discipline Inspection said on Monday.

PEOPLE’S DAILY

– China should cultivate and practice the core values of socialism, in order to achieve the “China dream” to realize national prosperity, said a commentary in the paper that acts as the Party’s mouthpiece.

 

Britain

The Telegraph

SFO STARTS FORMAL PROBE INTO BRIBERY AT ROLLS-ROYCE

The Serious Fraud Office has launched a formal investigation into allegations of bribery and corruption at engine maker Rolls-Royce that could lead to criminal prosecutions.

COMPANIES COULD BE FORCED TO REVEAL SCOTTISH INDEPENDENCE RISKS

Britain’s biggest companies could be forced to give investors an assessment of the risks arising from Scottish independence. Lawyers have told directors of major companies they should consider including an update on the impact that a “yes” vote in favour of independence would have on their operations.

The Guardian

ROYAL MAIL’S FTSE 100 DEBUT SPARKS PROFIT-TAKING BY SHARES INVESTORS

Royal Mail has been a spectacular stock market performer since its flotation in October, but its debut in the FTSE 100 yesterday was an excuse for investors to cash in some of their gains.

CHRISTMAS DAY COULD BE BIGGEST YET FOR ONLINE RETAILERS

The last-minute festive shopping rush is set to spill over into a record-breaking online Christmas Day splurge with 117m visits to retail websites expected on the big day itself.

The Times

BT LIGHTS UP THE END OF THE LINE

Some of Britain’s most remote households soon will be connected to superfast broadband after BT signed up three companies to lay subsea cables between the mainland and the outer islands of Scotland.

SWAPPING BRITISH GAS HOT SEAT FOR DRIVING SEAT AT THE AA

A former energy executive who too
k the flak from customers through years of price rises at British Gas is to move into the driving seat at the Automobile Association.

Sky News

WEATHER DAMAGES ‘BIGGEST XMAS SHOPPING DAY’

A predicted high street spending spree dubbed ‘Manic Monday’ has largely failed to materialise, with strong winds and heavy rain combining to force late-Christmas shoppers indoors.

 

Fly on the Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Allergan (AGN) upgraded to Outperform from Market Perform at Wells Fargo
Eagle Rock Energy (EROC) upgraded to Outperform from Market Perform at Wells Fargo
Enbridge (ENB) upgraded to Conviction Buy from Buy at Goldman
Engility Holdings (EGL) upgraded to Buy from Fair Value at CRT Capital

Downgrades

CalAmp (CAMP) downgraded to Equal Weight from Overweight at First Analysis
Heartland Express (HTLD) downgraded to Hold from Buy at Stifel

Initiations

Archer Daniels (ADM) initiated with a Hold at Stifel
CECO Environmental (CECE) initiated with an Outperform at Boenning & Scattergood
Cumulus Media (CMLS) initiated with a Buy at Ascendiant
EVERTEC (EVTC) initiated with a Buy at Stifel
Extended Stay America (STAY) initiated with a Buy at Deutsche Bank
First Busey (BUSE) initiated with a Neutral at DA Davidson
Houghton Mifflin (HMHC) initiated with a Buy at Goldman
Houghton Mifflin (HMHC) initiated with a Buy at Stifel
Houghton Mifflin (HMHC) initiated with a Neutral at Piper Jaffray
Houghton Mifflin (HMHC) initiated with an Outperform at BMO Capital
Houghton Mifflin (HMHC) initiated with an Overweight at Morgan Stanley
NGL Energy Partners (NGL) initiated with a Buy at UBS
QCR Holdings (QCRH) initiated with a Buy at DA Davidson
Telecom Italia (TI) re-instated with a Neutral at Credit Suisse
TransCanada (TRP) initiated with a Neutral at Goldman

HOT STOCKS

MGM Resorts (MGM) found to be suitable candidate for casino license in Massachusetts
Brookfield Infrastructure (BIP) to invest $350M in South America with institutional investors in VLI stake (VALE)
Caterpillar (CAT) committed to a restructuring plan for Gosselies, Belgium operations
Baxter (BAX) initiated recall of select lots of injections

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
CalAmp (CAMP)

NEWSPAPERS/WEBSITES

• Stocks rose to another record yesterday propelled by investors’ surprisingly positive response to the Fed’s decision to start withdrawing its post-crisis stimulus. Now that the Fed has removed a key element of uncertainty from financial markets, many investors say the coast is clear for further gains, the Wall Street Journal reports
• The number of music-streaming services is set to explode next year, as record labels have warmed up to the idea of renting consumers access to a vast collection of tunes, rather than selling them individual albums or songs (P, AAPL, AMZN, VIV, SNE, LEAP, SSNLF, GOOG), the Wall Street Journal reports
• Retailers (WMT, TGT, GPS, EBAY, M, KSS) are trying new ways to win over Christmas procrastinators. More customers this year will be able to pick up in stores today orders placed online. For retailers, it can mean lower shipping costs – protecting profit margins, and the potential for more last-minute business, Reuters reports
• Dallas Fed President Richard Fisher, who will be a voting member of the policy-setting committee next year, said he argued for a $20B reduction in the Fed’s monthly bond purchasing pace instead of the $10B announced last week, Bloomberg reports
• As Chinese President Xi Jinping promises the nation’s biggest market opening in two decades, the reality for some of the most successful foreign companies (SBUX, QCOM, AAPL, VLKAY, FUJHY) in the country is a raft of probes and laws that curb their operations, Bloomberg reports

SYNDICATE

Dara BioSciences (DARA) files to sell $12.5M of common stock
Heritage-Crystal Clean (HCCI) files $100M mixed securities shelf
Merit Medical (MMSI) files $200M mixed securities shelf
Quantum (QTWW) requests withdrawal of registration statement

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0Dd1DCSR1IA/story01.htm Tyler Durden

While shortened Christmas Eve trading is traditionally the lowest volume day of the year, based on recent trends it may be difficult for today’s action to stand out from the landscape thanks to an ongoing volume collapse, which however should make the even more traditional low-volume melt up that much easier. Sure enough, futures are modestly higher driven by their favorite signal, the EURJPY. Not surprisingly there has been particularly light newsflow with market closures in Germany, Italy and Switzerland in addition to early market closures for UK, France, Netherlands and Spain. Those markets that are open are trading in positive territory with the FTSE 100 being supported by BSkyB following an upbeat pre-market report for the company and their customer base, whilst the IBEX 35 is being supported by the financial sector. Overnight in China there was news of an injection of CNY 29bln via a 7-day reverse repo, although market commentators have said that this is more of a gesture than any meaningful intervention given the size of the country’s banking market. Fixed income markets are particularly light with there being no trade in the bund future given the Eurex closure, with other trading products relatively flat given the lack of newsflow. However, the short-sterling curve has bear-steepened and thus continuing the trend seen since the end of last week as a result of both UK unemployment and UK GDP coming in better than expected.

Looking ahead, volumes are expected to remain thin, with the release of
US Durable Goods Orders, New Home Sales and Richmond Fed Manufacturing
Index taking focus ahead of the festive period

Overnight news bulletin from RanSquawk and Bloomberg

• The few European equity markets still open drift higher as yesterday’s record close on Wall Street pushes the Nikkei 225 to 6-year intraday highs
• China’s liquidity squeeze temporarily sated as the PBoC inject CNY 29bln in 7-day reverse repos – prompting short-term funding rates to fall at the fastest rate in two years, however sentiment not sustained as markets disregard the move as a mere gesture into year’s end
• Treasuries steady, with yields across the curve holding near Sept. highs; curves little changed after taper-spurred bear-flattening that pushed to 5/10 and 5/30 spreads to three-month tights.
• Market close early for Christmas Eve, with futures trading  over at 1pm, cash Treasuries at 2pm
• Trading in London quiet as storms that lashed southern England yesterday have closed dozens of railway lines, halted ferry sailings and left airports struggling to restore services
• Boaz Weinstein’s Saba Capital Management LP is headed for its second losing year in a row, hurt in part by a wager that European equities would rise more than high-yield credit, according to four people with knowledge of the hedge-fund firm
• The healthcare.gov web site yesterday experienced a single-day record number of visits and consumers were moved into a queuing system deployed when the website approaches 50k simultaneous users
• Obama’s staff, in a symbolic move, signed the president up for a health-care plan this past weekend through the District of Columbia exchange, according to a White House spokesman; the president, who receives his health care from the military, enrolled “as a show of support” for the new marketplaces
• Sovereign yields mostly higher. EU peripheral spreads tighten. Asian and European stocks gain, and U.S. equity index futures rise. WTI crude and copper rise, gold little changed

Asian Headlines

The PBoC injected CNY 29bln via 7-day reverse repo; first injection in 3 weeks. The 7-day bond repurchase rate, a key gauge of short-term funding, fell 344 basis points to 5.4%, the steepest decline in more than two years, as liquidity improved.

10yr JGBs moved marginally higher overnight by 7 ticks to 143.93, supported by reports that Japan is to cut its bond issuance to JPY 155.1trl in fiscal 2014. The Nikkei 225 initially outperformed and climbed above the 16000 level for the first time since 2007. However, the Nikkei 225 then pared the majority of its gains, finishing with gains of 0.1% at 15889.33 amid profit taking heading into the close in Japan.

EU & UK Headlines

French GDP (Q3 F) Q/Q -0.1% vs. Exp. -0.1% (Prev. -0.1%)
French GDP (Q3 F) Y/Y 0.2% vs. Exp. 0.2% (Prev. 0.2%)
Barclays pan-Euro agg month-end extensions: +0.03y
Barclays Sterling month-end extensions:+0.06y
Europe Closed, UK Early Closure.

US Headlines

Fed’s Fisher (non-voter, hawk) said he argued in favour of a USD 20bln taper at last FOMC meeting says market could have absorbed that scale of reduction. (Fox Business)

Shoppertrak says US retail sales have fallen 2.1% for the weekend of December 20-22. (Newswires)

Barclays US Tsys month-end extensions:+0.07y

US Early Closure.

Equities

The FTSE and CAC40 drift higher, as positive equity sentiment carries across from the Wall Street and Tokyo sessions, with the US growth picture continuing to climb after the well-received Fed taper and strong US growth numbers. BSkyB top the FTSE-100 this morning after the Co. disclose their HD service added 107,000 subscribers during Q1, with over a third of customers now using the triple play offering of TV, broadband and telephone, according to the Daily Mail. Elsewhere, ARM Holdings pull back from yesterday’s Apple-inspired rally, to head into the early close down just under 1.5%.

FX

After a printing a Nikkei-inspired high at 104.41 in Tokyo trade, USD/JPY pulled back from the highs alongside the Japanese index, as Asia-Pacific assets came under mild profit-taking into their respective closes. Elsewhere, there is little to report, with chatter of stops in EUR/USD below 1.3670, with little in the way of bids until the 1.3650 mark.Meanwhile in Turkey, TRY is seeing some strength following comments from the Turkish central bank governor saying the bank is to sell a minimum of USD 450mln in regular forex auctions every day until year-end.

Commodities

After residing below USD 1,200/oz for the entirety of the Asia-Pacific session, spot gold managed to briefly push above the handle mid-morning in Europe, however yesterday’s highs at USD 1,206/oz came under no threat, as prices declined below USD 1,200/oz well ahead of the US crossover. Energy trading remains muted, with Brent being somewhat supported by the continued refinery closures in France (the strike at 3 refineries has now entered the 12th day), and the ongoing conflict in South Sudan, which has cut 45,000bpd from the country’s oil output.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1gzHkkZ1TIA/story01.htm Tyler Durden