Category: zerohedge

China’s escalation and re-escalation described in detail yesterday, has just been met with a corresponding re-re-escalation by Japan.

• China’s Ministry of Defense reports that the nation identified Japanese military planes that entered into Chinese air defense identification zone today.
• 7 batches of 10 Japanese planes consisting of E-767, P-3 and F-15 entered into the zone
• China has also identified 2 batches of 2 U.S. surveillance planes consisting of P-3 and EP-3, without specifying whether the planes entered into the zone
• China scrambled Su-30, J-11 and other aircraft in response.

And now it’s China’s turn to, once again, respond. And then Japan and the US again, and so on, until someone gets hurt.

Source

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/vp55kCBqcow/story01.htm Tyler Durden

That greatest of all American traditions – the Black Friday Thursday stampede, this year accompanied with a stabbing and a shooting, is back. A quick review of all readers may have missed by not lining up in droves outside of stores that were selling products at just above cost instead of the usual massive pre-Thanksgiving markup, via the Mail:

• The rush for Black Friday bargains has resulted in outbreaks of violence as shoppers clash over reduced price goods
• Police in Virginia have reporting a stabbing incident after two men got into a fight in the car park over a space
• Shoppers cutting in line sparked a Black Friday Brawl at another Walmart
• Some retailers opened their doors as early as 6am on Thanksgiving Day

Some details before we get into the documentary evidence:

A man has been stabbed in Virginia, a shoplifter has been shot by cops in Chicago and brawls have broken out across the nation as shoppers clash in a scramble for the best Black Friday bargains.

 

Chaotic scenes at several Walmart stores have already been filmed and posted to YouTube, revealing the madness that has become a tradition the day after Thanksgiving.

 

In one of the most violent incidents, a police officer responded to the scene of a shoplifting at a Kohl’s store in Romeoville, Illinois just after 10pm on Thursday to see the alleged thief dragging another officer along with his car. The responding officer shot the driver to stop him.

 

Police Chief Mark Turvey said at a news conference that the injured officer had headed into the store when a man ran out, and the officer chased him to his car. ‘The officer was struggling with the subject as he got into the car and then the car started to move as the officer was partially inside the car. The officer was dragged quite some distance. He couldn’t get out,’ Turvey said.

 

The driver and the officer were both taken for hospital treatment of non-life-threatening shoulder injuries, and three people were arrested, Turvey said.

 

Police in Virginia also reported a stabbing after two men got into a fight in the car park over a space around 6.30pm on Thursday at a Walmart store in Tazewell County. Sheriff Brian Hieatt told WVVA that the incident occurred in the parking lot. Two men, 61-year-old Ronnie Sharp of Russell County and 35-year-old Christopher Jackson of Jewell Ridge in Tazewell County, were arguing over a parking space.

 

This escalated into a threat with a firearm, and then Hieatt says Sharp used a knife to cut Jackson in the arm, slicing down to the bone. Sharp is charged with malicious wounding and brandishing a firearm. Police seized a rifle from him. He is Southwest Regional Jail in Tazewell and is out on $5000 bond.

… at which point he proceeded to return to his favorite zoo store and buy “stuff” at 90% off.

So what did it all look like? The answer: like this…

Wal-Mart Fight, Brawl, Madness compilation

Wal-Mart Black Friday fight for TV 2013

Black Friday Walmart Stampede in Puerto Rico 2013

More people going crazy in Walmart

Walmart black Friday 2013 – Pushing, shoving Black Friday madness in Covington

People fighting at a Wal-mart in Fort Worth, Texas on Thanksgiving night.

Man attacks girl at Walmart

And the winner is… Video of women fighting for Rachael Ray cookware at Wal Mart Turkey Creek in Knoxville, TN

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/g9Nv9tCKJtc/story01.htm Tyler Durden

Following the “good” news in the inflationary front, in which European November CPI rose and beat expectations if posting the first sub-Japan inflationary rate in Eurozone history, Eurostat followed with more holiday cheer when it reported a surprising decline in the overall Eurozone unemployment rate from 12.2% to 12.1%, the first such drop since late 2010. This was driven by a decline in the jobless rate in France (from 11.1% to 10.9%), Portugal (from 15.8% to 15.7%) Ireland (from 12.7% to 12.6%) and Lithuania (from 11.4% to 11.1%). The offset was as usual Spain which rose to a new record high of 26.7%, and Belgium rising to 9.0%.

The sequential change is shown in the next table:

It was not all good news however, and when one looks at Europe’s weakest link – youth unemployment – the number once again rose to a fresh all time high, of 24.4%:

In October 2013, 5.657 million young persons (under 25) were unemployed in the EU28, of whom 3.577 million were in the euro area. Compared with October 2012 youth unemployment decreased by 29 000 in the EU28, but increased by 15 000 in the euro area. In October 2013, the youth unemployment rate5 was 23.7% in the EU28 and 24.4% in the euro area, compared with 23.3% and 23.7% respectively in October 2012. In October 2013, the lowest rates were observed in Germany (7.8%), Austria (9.4%) and the Netherlands (11.6%), and the highest in Greece (58.0% in August 2013), Spain (57.4%) and Croatia (52.4% in the third quarter of 2013).

Of all, Spain was most notable, because its record high youth unemployment rate of 57.4%, is now just why of the sad Greek record of 58.0%. At this pace there should be parity between the two countries in 1-2 months.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/fi6Rp6u3BdA/story01.htm Tyler Durden

• So much for the euphoria: Stores open early on Thanksgiving but shoppers in no rush (Reuters)
• Get to work Mr. Chairwoman: Do-Nothing Congress Dithers on Budget as Deadline Nears (BBG)
• FX to Libor Probes Leave U.K. Traders Looking for Lawyers (BBG)
• Protesters Briefly Storm Thai Army Headquarters (WSJ)
• Berlusconi accused of bribing witnesses in prostitution trial (Reuters)
• Japan Price Gauge Rises Most Since ’98 in Boost to Abe (BBG)
• S&P downgrades Netherlands’ AAA credit rating (FT)
• GrainCorp Verdict Clouds Australia Open-For-Business Pledge (BBG)
• Hertz Fix in Dollar Thrifty Deal Fails as Insider Warned (BBG)
• Narrow Budget Agreement Comes Into View (WSJ)
• Billionaire Agarwal Regrets $8 Billion Aluminum Spending (BBG)
• No Door-Busters Here: Small Merchants Tread Cautiously on Black Friday (WSJ)
• Prisoners Fight U.S. Over Repatriation From Guantanamo Bay (WSJ)
• Structured credit: They’re back! Leveraged super seniors return (Euromoney)
• Brazil’s OGX Asks for More Help (WSJ)

 

Overnight Media Digest

WSJ

* Investors are piling into bets against the yen, taking another run at a trade that proved lucrative for some of the industry’s largest money managers earlier this year.

* Fortress Investment and Centerbridge Partners have shown interest in LightSquared, the wireless venture that is up for sale in bankruptcy proceedings. The private-equity firms, both with penchants for buying distressed assets, have each expressed interest to LightSquared in acquiring the company’s spectrum – the limited pockets of airwaves that telecommunications firms need to operate wireless networks.

* Brazil’s OGX wants to persuade creditors to put up more money as it strives to avoid outright failure. The oil company posted a third-quarter loss of nearly $1 billion.

* An attempt by regulators to prevent the kind of lax underwriting that exacerbated the financial crisis is running into resistance from corporations, investors and asset managers who said new rules will cripple a $300 billion market for loans to U.S. companies.

* UBS is shaking up its investment bank, and has removed a top foreign-exchange executive, amid a burgeoning investigation into potential manipulation of currency markets.

* Australia blocked a $2.7 billion bid by U.S. agribusiness company Archer Daniels Midland to buy grain handler GrainCorp Ltd, saying a takeover would go against the national interest.

* Negotiators in Congress are moving toward a narrow agreement on this year’s federal budget that would scale back some spending cuts set to take effect in January but likely wouldn’t ask either party to compromise on its core stands on taxes and entitlements.

* A former top executive at UBS AG who has been sitting in an Italian jail for about a month is headed to the U.S. to face charges that he helped Americans evade taxes by stashing their money in Swiss bank accounts.

 

FT

David Cameron’s government faces accusations of a soft stance on human rights issues in China. An investigation by the Financial Times casts doubts over groups with Chinese backing that are looking to fund projects in the UK.

The Bank of England announced pulling off stimulus to mortgage lending and personal loans, popularly known as the Funding for Lending scheme.

Lloyds Banking Group is likely to announce the appointment of Lord Norman Blackwell as its new chairman replacing outgoing chairman Sir Win Bischoff in 2014.

Barclays is set to announce new salary structure for Chief Executive Antony Jenkins as the European Union imposed bonus caps early this year. Based on the revamped plan, Jenkins will get a part of his salary in shares next year.

Hedge fund Aurelius Capital Management has sold most of its stake in Co-operative Bank, which has recently restructured its debt, sources told The Financial Times.

Private equity firm Apollo Global Management is the preferred bidder for a 400 million pounds UK property of Aviva, sources told The Financial Times.

 

NYT

* The struggle of low-income workers, many in retailing, is adding momentum to efforts to increase the federal minimum wage.

* Many retailers didn’t wait for the predawn hours of Black Friday this year. They were open before breakfast on Thanksgiving Day, and customers were waiting.

* The Swiss bank UBS is combining its currency, interest rates and credit trading businesses into one unit, according to a memo circulated at the bank earlier this month.

* Calpers and Calstrs, the giant employee and teachers’ pension funds in California, and others are beginning to take a more aggressive role in the operation and election of corporate boards of companies they have invested in.

* The French telecommunications company Orange has reached an agreement to sell its Dominican Republic operations to the Luxembourg cable and broadband provider Altice for $1.4 billion.

* Jon Horvath, the federal government’s star witness in an insider trading case, said his former boss, Michael Steinberg, wanted him to cross a legal line.

 

Canada

THE GLOBE AND MAIL

* A delicate balancing act is playing out among the growing number of retailers in Canada offering deep Black Friday discounts. The challenge is to slash prices and lure shoppers, and still come out in the black.

* Quebec child-protection authorities are in talks with their counterparts in Ontario to determine the fate of 14 children in an ultra-Orthodox Jewish community who have been ordered into foster homes.

* A New Brunswick Mountie is questioning his employer’s decision not to allow him to smoke medically prescribed marijuana while in uniform. Corporal Ronald Francis told the CBC that he received a prescription for medical-grade marijuana earlier this month to help treat his post-traumatic s
tress disorder. He is allowed three grams of marijuana a day, although he said that he does not usually use that much.

Reports in the business section:

* Entrepreneurs seeking to launch a western discount carrier say their recipe to woo budget-minded travelers will start with two planes in the summer of 2014. Canada Jetlines Ltd describes its proposal to open an ultra low-cost carrier as a strategy to meet demand from bargain hunters turned off by higher fares charged by Air Canada and WestJet Airlines Ltd .

* Cable operator Cogeco Cable Inc is promising it will fight any large fee increases that follow the NHL’s blockbuster agreement to sell its Canadian broadcasting rights to Rogers Communications Inc, an early sign of the friction the C$5.2-billion deal could create.

NATIONAL POST

* With temperatures beginning their inevitable plunge below freezing on Thursday, Canada, one of the world’s coldest nations, reminded its citizens to wear a hat, a scarf and “something to keep your face warm.”

* With no prospect of continuing their short-lived TV talk show, the Ford brothers are planning to take their concept to YouTube, Councillor Doug Ford said on Thursday. In the aftermath of a series of scandals, U.S. and Canadian production houses have flooded Mayor Rob Ford’s office, said his brother, all pitching a reality show concept. Councillor Ford said they have passed on all offers.

FINANCIAL POST

* In a stunning miss of budgetary forecasts that will trigger credit rating reviews, the Quebec government has pushed back its goal of wiping out its budget deficit by two years.

* Quebec’s professional engineering association is vowing to “clean house” and sanction crooked members as revelations of corruption and shady business liaisons continue to surface almost daily in the province’s construction industry.

 

China

CHINA SECURITIES JOURNAL

– Twenty-five more policies for the planned Shenzhen Qianhai economic zone have been submitted for approval, according to an unnamed government official.

– China could allow eligible financial corporations to issue bonds, said Li Jianhua, a senior official at the China Banking Regulatory Commission.

SHANGHAI SECURITIES

– The China Securities Regulatory Commission will support banks to issue preferred shares in future, said Jia Wenqin, a senior official of CSRC’s accounting department.

CHINA DAILY

– President Xi Jinping has urged officials to push forward with reforms but avoid being rash and reckless in the process.

PEOPLE’S DAILY

– Government workers need to take concrete actions, not just words, said a commentary in the paper that acts as the party’s mouthpiece.

 

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Commerzbank (CRZBD) upgraded to Equal Weight from Underweight at Morgan Stanley
Concha Y Toro (VCO) upgraded to Buy from Neutral at Citigroup
Prudential plc (PUK) upgraded to Outperform from Market Perform at Keefe Bruyette
Rentokil (RTOKY) upgraded to Buy from Neutral at BofA/Merrill

Downgrades

Experian (EXPGY) downgraded to Sell from Neutral at Goldman
Remy Cointreau (REMYF) downgraded to Sell from Hold at Societe Generale
Remy Cointreau (REMYF) downgraded to Sell from Neutral at Citigroup
Renren (RENN) downgraded to Underperform from Hold at Jefferies
Volvo (VOLVY) downgraded to Underweight from Equal Weight at Morgan Stanley

Initiations

Antofagasta (ANFGY) initiated with an Outperform at Bernstein

HOT STOCKS

Archer Daniels (ADM) said ‘disappointed’ by rejection of GrainCorp (GRCLF) application
KKR (KKR), Gland Pharma announced partnership
Rio Tinto (RIO) to suspend production at Gove alumina refinery
DSS Technology (DDS) filed patent lawsuit against Apple (AAPL)
Vale (VALE) said will pay back tax bill for overseas operations to Brazil, Reuters reports

NEWSPAPERS/WEBSITES

• An attempt by the Fed, SEC and other regulators to prevent the kind of lax underwriting that exacerbated the financial crisis is running into resistance from corporations, investors and asset managers (WFC, WEN, DNKN, JCP, SEAS) who said new rules will cripple a $300B market for loans to U.S. companies, the Wall Street Journal reports
• Dish Network’s (DISH) $2.2B bid for LightSquared can go forward with the involvement of Dish Chairman Charlie Ergen, a Nevada judge ruled. Separately, Fortress Investment Group (FIG) and Centerbridge Partners have shown interest in LightSquared, the Wall Street Journal reports
• Amazon.com (AMZN) has no intention of bowing to pressure from striking workers in Germany, its second biggest market behind the U.S., and is more concerned about bad weather hurting Christmas deliveries, Reuters reports
• Exxon Mobil (XOM) turned over a 25% stake in Iraq’s West Qurna-1 oilfield project to China energy company PetroChina (PTR), said Iraq’s deputy prime minister for energy, Reuters reports
• Morgan Stanley (MS) is set to take the top spot in Japanese M&A’s for the first time in 16 years, a sign the firm’s three-year-old tie-up with Mitsubishi UFJ Financial Group (MTU) is paying off. Goldman Sachs (GS) is second, Bloomberg reports
• Sotheby’s (BID) is bringing works by Picasso, Rembrandt and Zao Wou-Ki to Beijing where it will hold its first mainland commercial auction on December 1. The auction house said it’s offering $212M worth of western and Chinese art, jewelry and furniture, Bloomberg reports

ACTIVIST/PASSIVE FILINGS

Brave Warrior Advisors reports 5.7% passive stake in Higher One (ONE)
Gabelli raises stake in Mocon (MOCO) to 8.34% from 6.94%
Greenwoods reports 4.9% passive stake in Noah Holdings (NOAH)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/IgaaRkZ81LI/story01.htm Tyler Durden

A hungover America slowly wakes up from a day of society-mandated consumption and purchasing excess to engage in even more Fed-mandated excess in the equity markets. The only difference is that while the “90%” was engaged in the former and depleting their equity, and savings, accounts in the process, far less than 10% will be doing the latter.

Overnight attention was drawn to the rapidly escalating territorial dispute between China and Japan, now in the air, Bitcoin’s brief surge above the price of an ounce of gold, and the ejection of the Holland from the AAA Eurozone club (where only Germany and Finland remain), following an S&P downgrade of the Netherlands from AAA to AA+, which however had been largely priced in long ago (and was coupled with an upgrade of Spain from negative to stable outlook, as well as an upgrade of Spain from CCC+ to B-). Europe surprised pleasantly on both the inflation (better than expected) and unemployment rate (dropped from an all time high of 12.2% to 12.1%), even if youth unemployment rose to fresh record highs.

A few quick remarks on “Black Friday” from Deutsche: welcome to Black Friday although this long standing tradition seems to be losing its relevance over time. Indeed major retailers such as Wal-Mart, Target, Best Buy, Kohl’s, JCPenney, Kmart and Toys R Us were all opened for business last night to kick-off the all-important holiday shopping season. Not to be outdone, Macy’s also ended a 155-year tradition to follow suit by opening their doors on Thanksgiving Day. ‘Grey Thursday’ is fast becoming the norm. For bargain hunters who prefer to let their fingers to do the walking, online shopping has also gained increasing popularity in recent years. Indeed the latest poll from AC Nielsen’s Holiday Spending Forecast study, which surveys over 22,000 households throughout the US, indicates that 85% of consumers plan on skipping the stores on Black Friday this year. This is up from 82% in 2012, 82% in 2011 and 80% in 2010 so a negative four-year trend is taking shape. Black Friday shopping seems to be merging with Cyber Monday as well with 51% of consumers say they will do their Black Friday shopping online this year. According to the National Retail Federation, the holiday season generally accounts for about 20% of the retail industry’s annual sales so all eyes will be on retail sales updates/snippets over the weekend.

The US event calendar is empty which means the low volume levitation can continue without fears that on this POMO-free day something may surprise the NY Fed “long only” trading desk.

 

Overnight bulletin summary from Bloomberg and RanSquawk

• Despite the risk-on sentiment, Bunds were supported by month-end flows and this morning’s CPI releases as market participants expected a higher number following yesterday’s inflation reading from Germany which buoyed expectations
• S&P cut Netherlands to AA+ from AAA; outlook stable, change Spain’s outlook to stable from negative, maintains BBB- rating and raise Cyprus sovereign rating to B- from CCC+, outlook stable.
• As was the case yesterday volumes are expected to be light as a result of the Thanksgiving Holiday
• Treasuries head for modest weekly loss in quiet holiday trading; 5/10 and 5/30 curve spreads holding near steepest levels since 2011 on expectations Fed aims to taper asset purchases while holding short rates low indefinitely.
• Sifma recommends 2pm close for U.S. fixed-income markets; stock markets close at 1pm
• Bank of England’s Mark Carney took steps yesterday to head off a potential housing bubble by diluting a credit-boosting program, two weeks after raising growth  forecasts and signaling interest rates might increase sooner than previously projected
• Euro-area inflation rose to 0.9% in Nov., more than foreacst, moving toward the ECB’s goal for the first time in four months
• The jobless rate in the EU fell to 12.1% in October from a record 12.2% the prior month
• S&P cut its rating on the Netherlands to AA+ from AAA, leaving Germany, Finland and Luxembourg as the only euro- area countries with a AAA rating at the three main ratings companies
• While the Obama administration has said the government’s troubled healthcare.gov website will function smoothly by the end of tomorrow, those paid to help enroll Americans in Obamacare remain doubtful
• Small businesses won’t be able to use the federal government’s health-insurance website until November 2014 in most U.S. states, the latest delay for Obamacare
• China sent planes over a new air defense zone off its  eastern coast for a second day, asserting Communist Party leaders’ determination to enforce control over the area after challenges from the U.S., Japan and South Korea
• Sovereign yields mixed; EU peripheral spreads narrow. Asian stocks mixed, European stocks, U.S. equity-index futures gain. WTI crude, copper and gold higher

 

Market Re-Cap from RanSquawk

European equities are mixed across the board over the course of the European session this morning with French banks benefiting in early trade after a broker recommendation by UBS and thus providing some gains for the financial sector across Europe. Despite the risk-on sentiment, Bunds were supported by month-end flows and this morning’s CPI releases as market participants expected a higher reading following yesterday’s inflation reading from Germany which buoyed expectations. In turn, EUR/USD failed to benefit from the upward trending EUR/GBP which itself was driven by the regular month-end demand out of EU sovereign names. At the same time, a combination of profit taking related flows, together with optionality plays continues to weigh on JPY, with both USD/JPY and EUR/JPY now trading in negative territory. Looking ahead for the session, there is the release of Canadian GDP, but other than that, it is set to remain a quiet one, following yesterday’s US Thanksgiving Holiday.

Asian Headlines

China is likely to maintain 2014 economic growth at 7.5% or higher according to China’s National Development and Reform Commission macroeconomic research institute deputy director Wang Yiming.

BoJ governor Kuroda said they need to keep watching impact of BoJ’s JGBs buying on debt market and that JGBs may fluctuate sharply if confidence in Japan’s finances erode, which would inflict severe damage to the economy.

Japanese National CPI (Oct) Y/Y 1.1% vs. Exp. 1.1% (Prev. 1.1%).

– National CPI Ex Food and Energy (Oct) Y/Y 0.3% vs. Exp. 0.2% (Prev. 0.0%)

EU & UK Headlines

S&P cut Netherlands to AA+ from AAA; outlook stable.
S&P changed Spain’s outlook to stable from negative, maintains BBB- rating.
S&P raised Cyprus sovereign rating to B- from CCC+, outlook stable.

ECB’s Coeure said that quantitative easing like that in Japan and the U.S. is not right for the Euro area and that current inflation is low but clearly positive and we don’t see deflation threats at the moment UK Mortgage Approvals (Oct) M/M 67.7k vs Exp. 68.5k (Prev. 66.7k, Rev. 66.9k) – Highest since Feb 2008 UK October gross mortgage lending GBP 15.7bln – Highest since October 2008

Euro-Zone CPI Estimate (Nov) M/M 0.9% vs Exp. 0.8% (Prev. 0.7%)
Euro-Zone CPI Core (Nov A) M/M 1.0% vs Exp. 0.9% (Prev. 0.8%)
Euro-Zone Unemployment Rate (Oct) 12.1% vs Exp. 12.2% (Prev. 12.2%)

Barclays month-end extensions: Euro Aggr (+0.04y)
Barclays month-end extensions: Sterling Aggr (+0.06y)

US Headlines

Newsflow in the US continues to be light amid yesterday’s Thanksgiving holiday.

Barclays month-end extensions: Treasuries (+0.11y) Of note, although the avg. is around 0.06y, larger than avg. increase had been expected given the 3y, 10y and 30y refunding auctions last week.

< p>Equities

Stocks in Europe have recovered from a lower open and are now seen mixed across the board, with financials as the best performing sector after positive broker recommendations by UBS on French banking names. In terms of specific indices, the Ibex is leading the way after being supported by Santander who are up around 0.5%. In terms of other news Rio Tinto are trading with gains as the Co. have approved expansion of its annual iron ore output capacity to 360mln tons by 2017 and said that they will deliver the expansion at an estimated capital cost of more than USD 3bln below previous expectations.

FX

Despite the upward move seen in EUR/GPB, EUR/USD has failed to benefit despite today’s inflation figure from the Eurozon which did see a higher than expected reading, although some market participants were expecting an even higher reading as a result of yesterday’s CPI reading from Germany. JPY is being weighed on by optionality plays which can be observed in USD/JPY and EUR/JPY.

Commodities

Heading into the North American open, WTI and Brent crude futures trade in positive territory with volumes still remaining light following yesterday’s US Thanksgiving holiday. The WTI-Brent spread has been narrowing throughout the session this morning despite a recent widening of the spread with levels not seen since February amid an increase in supply from the US and supply continuing to be constricted from OPEC nations such as Libya following domestic disturbances.

Japan crude imports have fallen 2.9% in October with Iran specific imports falling 18.9% in October as the nation struggled to adhere to the US sanctions targeting Tehran.

Rio Tinto to suspend production at Gove Alumina refinery. Co. says refinery no longer viable due to low alumina prices and high exchange rate.

China’s official media pointedly said that Japan is the “prime target” of Beijing’s newly declared air control zone over the East China Sea, warning that China is willing to engage in “a protracted confrontation with Japan.” (Yonhap). In other reports, an official from Japan’s Liberal Democratic party is considering asking lawmakers to consider a ruling that would demand immediate withdrawal of China’s air defense zone.

DB’s Jim Reid concludes the overnight summary

Welcome to Black Friday although this long standing tradition seems to be losing its relevance over time. Indeed major retailers such as Wal-Mart, Target, Best Buy, Kohl’s, JCPenney, Kmart and Toys R Us were all opened for business last night to kick-off the all-important holiday shopping season. Not to be outdone, Macy’s also ended a 155-year tradition to follow suit by opening their doors on Thanksgiving Day. ‘Grey Thursday’ is fast becoming the norm. For bargain hunters who prefer to let their fingers to do the walking, online shopping has also gained increasing popularity in recent years. Indeed the latest poll from AC Nielsen’s Holiday Spending Forecast study, which surveys over 22,000 households throughout the US, indicates that 85% of consumers plan on skipping the stores on Black Friday this year. This is up from 82% in 2012, 82% in 2011 and 80% in 2010 so a negative four-year trend is taking shape. Black Friday shopping seems to be merging with Cyber Monday as well with 51% of consumers say they will do their Black Friday shopping online this year. According to the National Retail Federation, the holiday season generally accounts for about 20% of the retail industry’s annual sales so all eyes will be on retail sales updates/snippets over the weekend.

Back in the world of financial markets, European investors were also in a bit of a shopping mood yesterday as major bourses closed moderately higher across the region. Gains were paced by the FTSE MIB (+0.92%), the IBEX (+0.52%), and the DAX (+0.39%). Italian markets were said to be supported by Berlusconi’s removal from the Senate and a slightly stronger than expected business confidence reading (98.1 v 97.5 expected). In reality it was a relatively uneventful day for the market with the US out on holiday. Elsewhere in the region, the Eurozone economic confidence index (98.5 v 98.0 expected) also printed somewhat better than expected.

Moving on to the overnight session, Asian equities are a mixed bag and there isn’t really a clear theme to drive the market. Most are expecting another quiet session ahead as it will be a half-day session for US equities and bond markets today. The Hang Seng (+0.1%) and the Nifty (+1.3%) advanced overnight whilst the Nikkei (-1.0%) gave back some of yesterday’s gains after having reached a 6-year high. The S&P 500 futures are up +0.2% as we type. On the data front, Korea’s Industrial Production rose 1.8% mom/+3.0%yoy in October, much stronger than the 0.8%mom/0.9%mom expected by the market. Japan’s industrial production in October fell short of consensus thought, which came at +0.5% mom v +2.0%mom expected. But at least Japan’s inflation data offered some hope that Abenomics seems to be gaining an upper hand in the battle against deflation with its core CPI (ex energy and food) up 0.3% yoy, its highest reading since 1998.

Staying in the region, both Japan and South Korea have both flown planes unannounced through China’s newly declared air defence zone according to BBC News. Japanese officials did not specify when the flights happened but confirmed the surveillance activity, and expressed no intention to change such activities. South Korea and China apparently held talks on this issue yesterday but failed to reach any agreement. South Korea’s foreign minister had previously said that the air zone issue had made already tricky regional situations even more difficult to deal with. The market reaction to these developments has been fairly muted so far.

In terms today, European data will be the focus as we get retail sales data from Germany, consumer spending data and PPI from France, and unemployment rate from Italy. All in all we should be in for a relatively quiet day again ahead of the year’s final non-farm payrolls in the US next week.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/jK0J78P52hw/story01.htm Tyler Durden

If October’s stunning(ly low) inflation print of 0.7% is what conventional wisdom believes is the reason for the surprising ECB rate cut (it isn’t – the culprit was the record low increase in private loan creation), then the just released modest increase in Eurozone November CPI, which was expected to print at 0.8%, instead rising just above that, or 0.9%, will likely mean less surprises out of the ECB in the future. Core CPI (excluding food, energy, alcohol and tobacco) rose 1.0%, following a 0.8% increase in October and 0.9% expected, while the biggest headline bounce was in energy prices which rose from -1.7% to -1.1%, if still rather negative. Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in November (1.6%, compared with 1.9% in October), followed by services (1.5%, compared with 1.2% in October), non-energy industrial goods (0.3%, stable compared with October) and energy (-1.1%, compared with -1.7% in October).

The full breakdown is shown in the table below:

The market response to the better than expected print was subduded with the EUR going nowhere fast. Perhaps this is due to the complete impotence of the ECB to talk down the currency and the fact that it is now at a higher level than where it was when it announce the November 7 rate cut. Furthermore, with strong German inflation prints yesterday, the market may have been expecting an even larger number out of Eurostat.

Finally, what drives the ECB next will once again not be the rigged inflation print but other considerations. Deutsche Bank had a good summary of just these earlier today:

• ECB may choose to announce measures to alleviate concerns about year-end liquidity, Deutsche Bank strategists led by Francis Yared, write in a note.
• Liquidity measures may help accommodate the turn of the year and any cash hoarding from banks ahead of Asset Quality Review
• The fact ECB didn’t manage to fully sterilize SMP this week suggests some liquidity relief may be supported
• ECB could reduce reserve requirements further by 0.5%, generating ~EU50b additional liquidity
• Sterilization of SMP could be suspended which would temporarily add EU180b of liquidity
• Expect ECB to remain dovish but refrain from any material new easing decision

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/8ieOmXA977Q/story01.htm Tyler Durden

It seems the growing tensions in Asia (Japan-China sabre-rattling and Indian capital controls) have prompted more great rotation out of fiat and into digital currency as China/India markets open. For the first time ever, the price of one unit of Bitcoin exceeds the price of an ounce of gold…

 

1 oz of Gold = $1241.98 (Bloomberg)

1 unit of Bitcoin = $1242.00 (Bitcoinwisdom.com)

 

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0lUih9twhFM/story01.htm Tyler Durden

Following the to-ing and fro-ing of the last 2 days with US and Japan “testing” China’s new Air Defense Zone (ADIZ), China has not only escalated (as we noted earlier) but as the day begins in Asia is stepping up the rhetoric significantly. Official media said that Japan is the “prime target” and it is an “urgent task for China to further train its air force to make full preparation for potential conflicts.” Japanese lawmakers, meanwhile, are pushing for a bill “demanding an immediate withdrawal of China’s ADIZ.” While the Western world goes on its merry way buying S&P futures, China’s concluding message rings its most defint so far, “We are willing to engage in a protracted confrontation with Japan. Our ultimate goal is to beat its willpower and ambition to instigate strategic confrontation against China.”

The Chinese just stepped up the rhetoric notably,

Via Yonhap,

China’s official media pointedly said Friday that Japan is the “prime target” of Beijing’s newly declared air control zone over the East China Sea, warning that China is willing to engage in “a protracted confrontation with Japan.”

 

China’s declaration of its Air Defense Identification Zone (ADIZ), announced last week, has sparked strong resistance from Japan, the United States, South Korea and other neighboring Asian nations. The new zone partly overlaps those of South Korea and Japan.

 

The U.S. flew two B-52 bombers through the Chinese zone without informing China this week. South Korea and Japan followed suit. In response, China sent several fighter jets and an early warning aircraft on patrol Thursday into the disputed air space.

 

In an editorial titled “Japan prime target of ADIZ tussle,” the official Global Times newspaper said, “We should carry out timely countermeasures without hesitation against Japan when it challenges China’s newly declared ADIZ.”

 

“If Tokyo flies its aircraft over the zone, we will be bound to send our planes to its ADIZ,” the editorial said.

 

“If the trend continues, there will likely be friction and confrontations and even tension in the air like in the Cold War era between the U.S. and the Soviet Union,” it said.

 

“It is therefore an urgent task for China to further train its air force to make full preparation for potential conflicts,” the editorial said.

 

“We are willing to engage in a protracted confrontation with Japan. Our ultimate goal is to beat its willpower and ambition to instigate strategic confrontation against China,” it said.

 

Analysts said the Chinese declaration of air control zone is mainly aimed at bolstering its claims to a group of islets in the East China Sea at the center of a bitter territorial dispute with Japan, which are known as Diaoyu in China and Senkaku in Japan.

 

The Japanese are not backing down…

Via Kyodo News,

An official of Japan’s ruling Liberal Democratic Party is considering asking lawmakers to adopt a bill demanding an immediate withdrawal of China’s air defense zone in East China Sea

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/7W9yuDHvR8E/story01.htm Tyler Durden

Following the to-ing and fro-ing of the last 2 days with US and Japan “testing” China’s new Air Defense Zone (ADIZ), China has not only escalated (as we noted earlier) but as the day begins in Asia is stepping up the rhetoric significantly. Official media said that Japan is the “prime target” and it is an “urgent task for China to further train its air force to make full preparation for potential conflicts.” Japanese lawmakers, meanwhile, are pushing for a bill “demanding an immediate withdrawal of China’s ADIZ.” While the Western world goes on its merry way buying S&P futures, China’s concluding message rings its most defint so far, “We are willing to engage in a protracted confrontation with Japan. Our ultimate goal is to beat its willpower and ambition to instigate strategic confrontation against China.”

The Chinese just stepped up the rhetoric notably,

Via Yonhap,

China’s official media pointedly said Friday that Japan is the “prime target” of Beijing’s newly declared air control zone over the East China Sea, warning that China is willing to engage in “a protracted confrontation with Japan.”

 

China’s declaration of its Air Defense Identification Zone (ADIZ), announced last week, has sparked strong resistance from Japan, the United States, South Korea and other neighboring Asian nations. The new zone partly overlaps those of South Korea and Japan.

 

The U.S. flew two B-52 bombers through the Chinese zone without informing China this week. South Korea and Japan followed suit. In response, China sent several fighter jets and an early warning aircraft on patrol Thursday into the disputed air space.

 

In an editorial titled “Japan prime target of ADIZ tussle,” the official Global Times newspaper said, “We should carry out timely countermeasures without hesitation against Japan when it challenges China’s newly declared ADIZ.”

 

“If Tokyo flies its aircraft over the zone, we will be bound to send our planes to its ADIZ,” the editorial said.

 

“If the trend continues, there will likely be friction and confrontations and even tension in the air like in the Cold War era between the U.S. and the Soviet Union,” it said.

 

“It is therefore an urgent task for China to further train its air force to make full preparation for potential conflicts,” the editorial said.

 

“We are willing to engage in a protracted confrontation with Japan. Our ultimate goal is to beat its willpower and ambition to instigate strategic confrontation against China,” it said.

 

Analysts said the Chinese declaration of air control zone is mainly aimed at bolstering its claims to a group of islets in the East China Sea at the center of a bitter territorial dispute with Japan, which are known as Diaoyu in China and Senkaku in Japan.

 

The Japanese are not backing down…

Via Kyodo News,

An official of Japan’s ruling Liberal Democratic Party is considering asking lawmakers to adopt a bill demanding an immediate withdrawal of China’s air defense zone in East China Sea

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/7W9yuDHvR8E/story01.htm Tyler Durden

Back in March 2011, author Carmen
Reinhart wrote a comment in Bloomberg describing the terms “financial
repression.”  He wrote:

“As they have before in the
aftermath of financial crises or wars, governments and central banks are
increasingly resorting to a form of “taxation” that helps liquidate the huge
overhang of public and private debt and eases the burden of servicing that
debt.

Such policies, known as financial
repression, usually involve a strong connection between the government, the
central bank and the financial sector. In the U.S., as in Europe, at present,
this means consistent negative real interest rates (yielding less than the rate
of inflation) that are equivalent to a tax on bondholders and, more generally,
savers.”

http://www.bloomberg.com/news/2012-03-11/financial-repression-has-come-back-to-stay-carmen-m-reinhart.html

In
the FDIC data released this week, the financial repression imposed by Ben
Bernanke, Janet Yellen and the rest of the Federal Open Market Committee over
the past five years is very apparent.  Chief
among the data points to be noted is that net interest expense, which is the
money paid to depositors at banks, continues to fall.  While all banks earned about $118 billion in
interest income last quarter, they paid just $13 billion to depositors, a
graphic example of the “financial repression” used by the Fed to subsidize the
US banking industry.

http://www2.fdic.gov/qbp/qbpSelect.asp?menuItem=QBP

Notice
that while the Fed has maintained the net interest income to banks, the
earnings of depositors have fallen more than 90% since 2008.  Via QE, the Fed is subsidizing all banks to
the tune of over $100 billion per quarter in artificially depressed interest
cost and income to depositors of all stripes. By robbing consumers and all
savers of income, the FOMC is in fact feeding deflation and hurting growth and
employment.  The chart below using data
from the FDIC shows the interest earnings, expenses and net interest income through
the end of September 2013 for all US banks.

Prior to the 2007 financial
crisis, total interest expense for all US banks was over $100 billion every
three months and interest income was almost $200 billion.  In order to maintain the net interest margin
for banks at +/- $100 billion per quarter, the Fed is confiscating income of US
savers, including companies, investors and the elderly, of almost the same
amount each quarter in badly needed income. 
This data graphically illustrates the deflationary nature of current Fed
interest rate policies and why Janet Yellen and the Federal Open Market
Committee need to raise interest rates soon.

In a paper published this month
by Carmen Reinhart and Ken Rogoff, the authors argue that financial repression
is a necessary part of the adjustment process for heavily indebted nations,
even the advanced nations.  The Guardian
reports: “They say that if history is any guide countries will not be able to
return to more sustainable levels of public debt through a combination of
austerity and growth. They cite Europe, where the assumption is that normality
can be restored by a combination of belt-tightening, forbearance and rising
output, as an example of Panglossian thinking.”

http://www.theguardian.com/business/economics-blog/2013/nov/20/reinhart-rogoff-latest-paper-harvard-financial-repression

Say Reinhart and Rogoff:   “The
claim is that advanced countries do not need to apply the standard toolkit used
by emerging markets, including debt restructurings, higher inflation, capital
controls and significant financial repression. Advanced countries do not resort
to such gimmicks, policy makers say.”

The Guardian:  “Historically, this is poppycock according to
Reinhart and Rogoff. Rich countries, when faced with high levels of debt in the
past have been more than happy to default, inflate away their debts or indulge
in financial repression (capping interest rates or putting pressure on savers
to lend to the government).”

The current policy mix in the US
certainly shows this tendency to resort to financial repression, but the real
question is whether current Fed policy has not resulted in a deflationary trap,
with falling income driving consumption, jobs and economic activity lower.  Taking $100 billion in income away from
savers each quarter does not seem to be a recipe for economic growth. 

But as Reinhart and Rogoff
document well, there is no easy solution available for the US, EU, Japan and
other heavily indebted developed nations. 
Once interest rates start to rise, the necessity of debt restructuring
in Europe, Japan and even the US will become more apparent.  There is no free lunch.  Either we kill growth via financial
repression of savers or we embrace the painful process of debt restructuring
for the major industrial nations.

www.rcwhalen.com

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/BPhAOa4tWOo/story01.htm rcwhalen