Cops Per Capita: Who Has The World’s Most And Least Concentrated Police Force

The more the cops, the safer: that’s what conventional wisdom says. The contrarian view, of course, is that when police per capita are far above average, there is usually a reason. Or, it the distribution could be just pure noise, depending on how much money can be allocated to police budgets or how prone to cop extortion a given country is. The chart below doesn’t provide a definitive answer, with Russia leading the world in most police per 100,000 persons according to the UN and ONS, while Greece and Serbia mark the trailing end. Still, those who would rather avoid police brutality and paying a bribe to corrupt law enforcers, may be urged to avoid the left end of the chart below…


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/LxP_3MS9Ho4/story01.htm Tyler Durden

Frontrunning: December 12

  • J.P. Morgan to Pay Over $1 Billion to Settle U.S. Criminal Probe Related to Madoff (WSJ)
  • Ford board aims to pin down CEO Mulally’s plans (Reuters)
  • Raising Minimum Wage Is a Bad Way to Help People (BBG)
  • Japan Lawmakers Demand Speedy Pension Reform (WSJ)
  • EU reaches landmark deal on failed banks (FT)
  • In which Hilsenrath repeats what we said in August: Fed Moves Toward New Tool for Setting Rates (WSJ)
  • Senators Vow to Add to Iran Economic Sanctions in 2014 (BBG)
  • Centerbridge in $3.3bn LightSquared bid (FT)
  • Banks, Agencies Draw Battle Lines Over ‘Volcker Rule’ (WSJ)
  • Swedish Housing Surges to Unsafe Value as Debt Soars (BBG)
  • In the land of the holy cow, fury over beef exports (Reuters)
  • Pensions Make the Most of Stocks’ Surge (WSJ)
  • No Longer Motor City (BBG)
  • Pilots of Asiana crash knew speed was low (Reuters)

 

Overnight Media Digest

WSJ

* Stanley Fischer, widely seen as a dean among the world’s top central bankers, is President Barack Obama’s choice to become second-in-command at the Federal Reserve, according to people familiar with the matter.

* Private-equity firm Centerbridge Partners LP reached a tentative deal to buy LightSquared Inc out of bankruptcy proceedings, said people familiar with the matter, potentially upstaging a bid by Dish Network Corp to take over the wireless-telecommunications firm.

* Just days before the latest “Hobbit” movie hits theaters on Friday, it has landed in court. Independent movie moguls Harvey and Bob Weinstein, along with their former company Miramax LLC, sued Time Warner Inc’s Warner Bros late Tuesday for a share of the proceeds from the coming second and third “Hobbit” movies.

* Avon Products Inc is pulling the plug on a $125 million software overhaul that has been in the works for four years after a test of the system in Canada drove away many of the salespeople who fuel the door-to-door cosmetics company’s revenue.

* Top Google Inc executives for six years flew their private jet fleet on discounted fuel purchased from the federal government that they weren’t entitled to buy, according to a new inspector general review released Wednesday.

* Japan overtook the United States to become the world’s No. 1 country in app store revenue, thanks to an explosion in growth of smartphone and tablet games. Japanese consumers spent roughly 10 percent more than U.S. consumers did on all apps found on smartphones and tablets in October, according to app tracker App Annie.

* PokerStars’ ambitions to re-enter the U.S. market suffered a major setback Wednesday when New Jersey gambling regulators, citing the company’s legal woes, said that it would not receive a license to operate online poker in the state for at least two years.

* After a years-long decline in Barnes & Noble Inc’s stock price, even the company’s chairman, Leonard Riggio, is taking a loss on at least a portion of his shareholding. Riggio disclosed on Wednesday that he sold 2 million shares a day earlier, realizing a loss of about $40 million.

* Fortis Inc has signed a deal to acquire UNS Energy Corp for about $2.5 billion, as the Canadian utility moves to boost exposure within the U.S. by acquiring a firm with a presence in the U.S. Southwest.

* Boeing Co’s largest union presented a preliminary contract proposal to the aerospace giant to secure manufacturing of the planned 777X jetliner in Washington state, marking a fresh start to negotiations after the union overwhelmingly rejected a Boeing offer last month.

* Kontagent and Medium Entertainment, two closely held companies that create tools for mobile game makers to improve their products, are merging businesses in an effort to offer a fuller set of products to customers.

 

FT

The second-largest U.S. oil company Chevron said the Australian Gorgon project it is leading has slipped further behind schedule and over budget – the plant’s expected cost, which was estimated at $37 billion when it was launched in 2009, has been increased to $54 billion.

Six years after taking Hilton Worldwide private in one of the largest deals of the leveraged buyout boom, Blackstone Group LP is set to return the hotel operator to the public markets after it raised $2.35 billion in its IPO.

State-backed Royal Bank of Scotland will pay U.S. regulators a $100 million fine to resolve probes that the lender violated sanctions prohibiting business dealings with Iran, Sudan and other regimes.

The European Central Bank could make eurozone banks hold capital against sovereign bonds, in a bid to stop weak lenders from using its cash to buy up debt from crisis-hit countries, according to ECB executive board member Peter Praet.

JPMorgan Chase Chief Executive Jamie Dimon signalled the bank intended to pay penalties over allegations that it had failed to notify U.S. authorities that it suspected Bernard Madoff was running a Ponzi scheme.

PSA Peugeot Citroen and state-owned Chinese carmaker Dongfeng have agreed to an industrial and commercial alliance that will include a sizable capital injection into the French group in return for technology sharing.

 

NYT

* JPMorgan Chase and federal authorities are nearing settlements over the bank’s ties to Bernard Madoff, striking tentative deals that would involve roughly $2 billion in penalties and a rare criminal action. The government will use a sizable portion of the money to compensate Madoff’s victims.

* The number of people selecting health insurance plans in the federal and state marketplaces increased last month at a brisk pace, bringing the overall figure to nearly 365,000, the Obama administration said on Wednesday. The November number was more than double the one for October, but still well below the administration’s goal.

* In an unusual deal that goes far beyond the soda wars, PepsiCo is to announce on Thursday that it is unseating Coca-Cola as the beverage supplier to one of the nation’s hottest restaurant chains, Buffalo Wild Wings.

* The Boies, Schiller & Flexner law firm is paying bonuses of as much as $300,000 to some of its associat
es, with the average young lawyer taking home an additional $85,000, a firm spokeswoman, Dawn Schneider, confirmed late Tuesday. Last year, the maximum bonus handed out to some of the young lawyers at the firm, which specializes in trial and appellate litigation, was $250,000.

* Shares in China Cinda Asset Management rose as much as 33 percent on their trading debut in Hong Kong on Thursday after it raised around $2.5 billion last week on huge demand for its initial public offering.

* They might prominently feature the Barclays logo and the bank’s light-blue corporate color, but ever since a popular bike-sharing program started here three years ago, Londoners have referred to the bicycles as “Boris bikes,” after the capital’s cycling mayor, Boris Johnson. But Barclays is ending its sponsorship of the program in 2015, the bank and Transport for London, a city agency, said Wednesday.

* Spanish lender Banco Santander has agreed to buy an 8 percent stake in Bank of Shanghai for 470 million euros as part of its strategy to increase its presence in Asia.

* The British soccer team Manchester United has made a poor showing on the field this season. Now the British hedge fund manager Crispin Odey is making a multi-million dollar bet that the club’s New York-listed shares are destined for a similar trajectory. Odey Asset Management, Odey’s fund, has taken a $22 million short position against Manchester United shares.

* With competition growing in the streaming music market, Spotify announced a series of changes meant to entice new customers and extend its digital footprint farther around the world.

* The Royal Bank of Scotland is paying $100 million in fines to New York and federal banking regulators to settle civil investigations into accusations that some of its former employees helped conceal transactions involving customers from Iran, Sudan and other nations subject to international sanctions for about a decade.

 

Canada

THE GLOBE AND MAIL

* Ontario Premier Kathleen Wynne is seeking her legislature’s blessing for an expansion of the Canada Pension Plan in a final push ahead of a crucial federal-provincial meeting next week.

* First Nations leaders in British Columbia are seeking multibillion-dollar loan guarantees from the federal government to enable them to take ownership stakes in various liquefied natural gas projects being planned in the province, and have also traveled to China and Japan looking for backers.

Reports in the business section:

* Canada Post’s decision to raise stamp prices and shift to community mailboxes has sent shivers through small businesses and home offices. The mail carrier unveiled a series of changes on Wednesday aimed at reversing its losses, including phasing out urban home delivery and cutting between 6,000 and 8,000 jobs.

* Shopify Inc has become Canada’s first internet startup since the dot-com crash to reach a billion-dollar valuation, thanks to one of the largest venture financings in Canadian history.

* A spokesman for TransCanada says the company is looking to address concerns raised by the mayor of Edmundston about the route for the Energy East pipeline project.

NATIONAL POST

* The governing Liberals confirmed on Wednesday that ousted Ornge CEO Chris Mazza collected $9.3 million over six years at Ontario’s publicly funded air ambulance service.

* Police Chief Bill Blair flatly denied any suggestion that a probe into Toronto Mayor Rob Ford’s dealings was payback for past budget cuts, before facing questions at a meeting of the budget committee on Wednesday that did not produce anticipated fireworks.

FINANCIAL POST

* Toronto-Dominion Bank surpassed Royal Bank of Canada as Canada’s largest lender by assets for the first time after a decade-long expansion in U.S. consumer lending.

* The Canadian economy is forecast to lag that of the United States in 2014, even as exports and business investment begin to recover next year. That’s the new outlook from CIBC World Markets, which expects the Canadian economy to grow by 2.3 percent in 2014, compared with a forecast of 3 percent for the United States.

* The head of Canadian National Railway Co says he understands public concern about the movement of dangerous goods by rail through urban centers in the aftermath of the Lac-Megantic disaster last summer. But Claude Mongeau said it would be impractical to reroute the shipments elsewhere because many of those goods are integral to the way Canadians live.

 

China

CHINA SECURITIES JOURNAL

– China’s plans to make the management of growth enterprise market (GEM) refinancing easier aim at opening up companies to market forces, said industry insiders. A key proposal is that the refinancing of GEM companies no longer be limited by equity investment projects.

– The number of A-share accounts opened under China’s QFII scheme in November hit a 4-month high, according to statistics from the China Securities Depository and Clearing Limited. On the Shanghai stock exchange 12 accounts were opened, while Shenzhen saw 10.

SHANGHAI DAILY

– An expat who knocked down a woman while on a motorcycle without a license will be deported after serving five days administrative detention for working without a permit, said police in Beijing on Wednesday. His father, who was also working without a permit, will also be departed, while their employer will be fined 20,000 yuan ($3,300).

CHINA DAILY

– China’s antitrust office plans to recruit at least 170 new employees for its enforcement team, said Xu Kunlin, head of the department of price supervision at the National Development and Reform Commission. The expansion is being hailed as a means for protecting fair competition in China.

PEOPLE’S DAILY

– To build a beautiful and sustainable Chinese nation is the grand goal of the government, said a commentary in the paper that acts as the party’s mouthpiece. Xi Jinping has stressed repeatedly the extreme importance of environmental concerns, it said.

 

Britain

The Telegraph

RBS AGREES $100 MLN U.S. SETTLEMENT OVER SANCTION BREACHES

The Royal Bank of Scotland has agreed to pay $100 million to a trio of U.S. regulators to settle civil allegations that the bank broke sanctions relating to Iran, Sudan, Cuba and Burma.

FIRSTGROUP INVESTOR CLAIMS HE HAS BACKING FOR BREAK-UP

The activist investor proposing a break-up of FirstGroup said he had early expressions of support from other investors as he claimed the group’s U.S. assets alone were worth more than the current share price.

FERROVIAL EYES HEATHROW’S REGIONAL AIRPORTS

Spain’s Ferrovial, the biggest investor in Heathrow, has expressed an interest in buying the airport’s three regional businesses, the Aberdeen, Glasgow and Southampton airports.

GSK TO PUMP 200 MLN STG INTO UK MANUFACTURING

GlaxoSmithKline is to pour 200 million pounds ($327.4 million) into two of its oldest UK manufacturing sites as it continues to buck industry trends by investing in Britain.

SUPERMARKETS URGED TO BIN “DAMAGING” FUEL PROMOTIONS TIED TO GROCERY SHOPPING

Independent forecourts beg Office of Fair Trading to reopen petrol market investigation after Australia’s biggest supermarkets agree to limit fuel promotions funded by other parts of their business.

ASDA CLAIMS BLACK FRIDAY WAS A ‘PHENOMENON’ IN UK

The boss of supermarket group Asda claims its U.S.-style “Black Friday” discounts were a “phenomenon” with customers and has pledged to run the initiative again next year despite scuffles between customers battling for products.

The Guardian

LLOYDS BANKING GROUP FINED RECORD 28 MLN STG IN NEW MIS-SELLING SCANDAL

Former and current directors of Lloyds Banking Group could fa
ce having their bonuses clawed back, after the bailed-out bank was hit with a record £28m fine for putting staff under intense pressure to sell products customers did not want – or face demotion and pay cuts.

HOUSE PRICE RISES REALISE BUBBLE FEARS, SAYS ECONOMIST

The average UK home has seen its value rise by 10,329 pounds over the past year, or by 28.30 pounds a day, according to figures from property search engine Zoopla. This follows research from a leading economics professor that around three-quarters of properties in the UK are overvalued, with a 93 percent probability that London is already in the grip of a house price “bubble”.

The Times

BORIS FURY AS COMMISSION ‘PLUMPS FOR HEATHROW’

Boris Johnson called into question the independence of the Airports Commission yesterday amid claims it is backing Heathrow to the exclusion of a new hub airport.

MILLBURN INSURANCE SLIPS INTO ADMINISTRATION

A specialist insurer that was founded in the aftermath of the Second World War has collapsed into administration in a rare example of an underwriter failing.

The Independent

GLENCORE OIL TRADER ANDREW KEARNS LOSES WRONGFUL DISMISSAL CLAIM AFTER HE WAS SACKED FOR ‘HEAVY NIGHT’ OF DRINKING

An oil trader sacked because he was said to be not in a fit state after a heavy night out in Singapore has lost his damages action for wrongful dismissal and now faces having to pay at least 150,000 pounds in costs.

VICTOR DAHDALEH CORRUPTION CASE: BILLIONAIRE’S FRAUD TRIAL COLLAPSES AFTER KEY SFO WITNESSES REFUSE TO GIVE EVIDENCE

A major anti-corruption trial involving a billionaire Labour donor who is a friend of Tony Blair collapsed yesterday following an embarrassing error by Britain’s Serious Fraud Office.

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Hancock Holding (HBHC) upgraded to Buy from Hold at Wunderlich
ICICI Bank (IBN) upgraded to Buy from Hold at Jefferies
iRobot (IRBT) upgraded to Neutral from Underweight at JPMorgan
Johnson Controls (JCI) upgraded to Overweight from Equal Weight at Barclays
LyondellBasell (LYB) upgraded to Top Pick from Outperform at RBC Capital
Micron (MU) upgraded to Buy from Neutral at Nomura
NewBridge Bancorp (NBBC) upgraded to Outperform from Market Perform at Raymond James
Southwest (LUV) upgraded to Buy from Neutral at BofA/Merrill
Synchronoss (SNCR) upgraded to Strong Buy from Outperform at Raymond James
Zale (ZLC) upgraded to Buy from Neutral at Northcoast

Downgrades

Apache (APA) downgraded to Neutral from Buy at Citigroup
Brown & Brown (BRO) downgraded to Underperform from Market Perform at William Blair
HD Supply (HDS) downgraded to Sell from Neutral at Goldman
ImmunoCellular (IMUC) downgraded to Hold from Buy at MLV & Co.
ImmunoCellular (IMUC) downgraded to Neutral from Buy at Roth Capital
Infinity Pharmaceuticals (INFI) downgraded to Neutral from Outperform at Credit Suisse
Marathon Oil (MRO) downgraded to Neutral from Buy at Citigroup
Oracle (ORCL) downgraded to Equal Weight from Overweight at Morgan Stanley
Oracle (ORCL) downgraded to Sector Perform from Outperform at RBC Capital
Progress Software (PRGS) downgraded to Market Perform  at JMP Securities
Scripps Networks (SNI) downgraded to Sector Perform from Outperform at RBC Capital
Sherwin-Williams (SHW) downgraded to Outperform from Top Pick at RBC Capital
Sigma Designs (SIGM) downgraded to Hold from Buy at Needham
Teradata (TDC) downgraded to Sector Perform from Outperform at RBC Capital

Initiations

ARM Holdings (ARMH) initiated with an Outperform at FBR Capital
Accenture (ACN) initiated with an Outperform at RBC Capital
Altera (ALTR) initiated with an Outperform at JMP Securities
Brixmor (BRX) initiated with a Buy at UBS
CONSOL Energy (CNX) coverage reinstated with a Buy at Deutsche Bank
Cempra (CEMP) initiated with an Outperform at RW Baird
FTI Consulting (FCN) initiated with a Hold at Stifel
L Brands (LB) initiated with a Buy at Brean Capital
Microchip (MCHP) initiated with a Buy at Drexel Hamilton
Microsemi (MSCC) initiated with a Hold at Drexel Hamilton
Navigant Consulting (NCI) initiated with a Hold at Stifel
Plum Creek Timber (PCL) initiated with a Neutral at JPMorgan
Rayonier (RYN) initiated with an Underweight at JPMorgan
Relypsa (RLYP) initiated with a Buy at B. Riley
Sapiens (SPNS) initiated with an Outperform at William Blair
Tetra Technologies (TTI) initiated with a Neutral at Credit Suisse
United Natural Foods (UNFI) initiated with a Hold at Jefferies
Weyerhaeuser (WY) initiated with an Overweight at JPMorgan
Xilinx (XLNX) initiated with an Outperform at JMP Securities
Yelp (YELP) initiated with a Neutral at B. Riley

HOT STOCKS

Ziggo said in talks to be acquired by Liberty Global (LBTYA)
Toyota (TM): GM (GM) Holden decision to place ‘unprecedented’ pressure on supplier network in Australia
Peugeot (PEUGY), GM (GM) reported progress on strategic alliance implementation
UNS Energy (UNS) to be acquired by Canada’s Fortis for $60.25 per share
Air Canada (AIDIF) to buy up to 109 Boeing (BA) 737 Max jets, replacing Airbus aircraft (EADSY)
Rouse Properties (RSE) acquired two malls for $292.5M
Emergent BioSolutions (EBS) to acquire Cangene Corp.
Exelis (XLS) to spin off new publicly traded military and government services company
Vista Gold (VGZ) to convert interest in Awak Mas project into royalty

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Men’s Wearhouse (MW), Amtech Systems (ASYS), Coldwater Creek (CWTR), Vera Bradley (VRA)

Companies that missed consensus earnings expectations include:
Sigma Designs (SIGM), Nordson (NDSN), Oxford Industries (OXM)

NEWSPAPERS/WEBSITES

  • Exxon Mobil (XOM) is calling for the U.S. to lift restrictions on exporting domestic oil that date back to the Arab oil embargo of 1973, the Wall Street Journal reports
  • A day after the “Volcker rule” was approved by U.S. regulators, banks and their law firms were busy figuring out how to comply with strict new guidelines on Wall Street firms’ trading activities and how to mitigate any hit to profits. Also, regulators were on a collision course over who gets supremacy in enforcing the rule, the Wall Street Journal reports
  • Ford Motor’s (F) board  plans to press CEO Mulally soon for a decision on his future, as speculation intensifies that he may be offered the job of CEO at Microsoft (MSFT), Reuters reports
  • Morgan Stanley (MS) launched a formal effort to sell its controlling stake in U.S. oil terminal and transport business TransMontaigne, sources say, following other Wall Street powerhouses in yielding to intense regulatory pressure to get out of commodity investments, Reuters reports
  • Daimler (DDAIF) is working to end rebates on its Mercedes-Benz vehicles in China, including pricing of its C- and E-Class sedans, while matching the premium segment’s growth next year, Bloomberg reports
  • Samsung Electronics (SSNLF) built the world’s largest smartphone business in China, but will now shift output to Vietnam to secure even lower wages and defend profit margins as growth in sales of high-end handsets slows, Bloomberg reports

SYNDICATE

AES Corp. (AES) files to sell 40M shares of common stock for holders
ARAMARK (ARMK) 36.25M share IPO priced at $20.00
American Midstream Partners (AMID) 2.4M share Secondary priced at $22.47
CatchMark Timber (CTT) 10.526M share IPO price $13.50
Constellium (CSTM) 8.345M share Secondary priced at $19.80
Empire Resorts (NYNY) files to sell 1.08M shares of common stock for holders
Harbinger Group (HRG) files to sell 105.16M sha
res of common stock for holders
Hilton Worldwide (HLT) 117.64M share IPO priced at $20.00
HomeAway (AWAY) 6.019M share Spot Secondary priced at $37.00
Northstar Realty (NRF) files to sell 50M shares of common stock
Pinnacle Foods (PF) 17M share Secondary priced at $26.75
Synthetic Biologics (SYN) files automatic common stock offering
Taminco (TAM) 10M share Secondary priced at $20.00


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/tTlyB83M_dA/story01.htm Tyler Durden

"Something Has Changed" In Overnight Trading As Futures No Longer Track EURJPY Ramps

It has been another session of overnight weakness, in which, to quote Deutsche Bank, “something has changed” as ES algos no longer track every tick of the EURJPY (or other JPY pair variants). Usually in such transition periods where the robots are not sure how to trade risk based on highly leveraged inputs, things go bump in the night, and they did just that with the E-Mini trading just off its overnight lows, despite a notable rise in the EURJPY from yesterday’s close. Keep a close eye on the now traditional pre-market ramp in the EURJPY – if unaccompanied by an increase in the E-mini, it may be time to quietly exit stage left.

This morning the taper theme is weighing on Asian EM assets including a number of EMFX crosses such as USDINR (+0.67%) and USDMYR (+0.4%). Despite this, the EUR continues its strong run against the USD and is poised for its eighth consecutive gain. The AUDUSD spiked up shortly after the release of a stronger than expected Australian employment report (+21k vs +10k expected) but the gains were quickly reversed on the combination of the overnight USD strength and resetting of shorts. Asian equities are trading broadly lower with laggards being the Nikkei (-1.3%) and Jakarta Composite (- 1.2%). It’s been a heavy trading session for Asian credit and sovereign bonds which is unsurprising given the weak tone in EM fixed income yesterday.

Stocks traded lower throughout the session, with consumer goods underperforming its peers and Peugeot shares trading lower by 10% in reaction to reports citing sources that the board has approved in principal EUR 3.5bln capital increase with Dongfeng and French government. Initial selling pressure on Bunds which largely stemmed from market participants reacting to reports citing ECB’s Praet who signalled that the ECB will try to force Eurozone banks to hold capital against sovereign bonds gradually ebbed and better buying by Asian, as well as European based real money accounts saw Bunds move into positive territory.

Looking at the rest of the US session, today we get the release of the weekly jobless data from the US and US retail sales.

Overnight bulletin summary from Bloomberg and RanSquawk

  • Stocks traded lower throughout the session following the negative sentiment from the US and Asia asFed taper concerns continue to linger.
  • ECB’s Praet signalled the ECB will try to force Eurozone banks to hold capital against sovereign bonds, in an attempt to stop weak lenders using its cash to hoover up the debts of crisis-hit countries.
  • Looking ahead for the session, today sees the release of the US weekly jobless data, retail sales as well as a 30y bond auction from the US.
  • Treasuries 7Y and longer gain before week’s debt auctions conclude with $13b 30Y bonds; yield 3.87% in WI trading after drawing 3.81% in November.
  • Yesterday’s $21b 10Y sale awarded at 2.824%, about 0.7bp above 1pm WI yield, first 10Y reopening to tail since July, biggest tail since Jan.; directs lowest since Aug. 2012
  • A U.S. budget accord is on track to win passage in Congress largely because its most important accomplishment is pushing off automatic spending cuts that neither party likes
  • New Zealand’s central bank stepped up its inflation-fighting rhetoric and signaled it will start raising rates in the first half of next year as the economy strengthens
  • The ECB will seek to combine its new powers as principal banking regulator with current role as currency issuer to strengthen requirements on sovereign bonds, which have traditionally been classed as risk free, ECB’s Peter Praet said in an interview with the FT
  • Japan’s Government Pension Investment Fund should decrease its allocation to JGBs and increase investments in other assets, Takatoshi Ito, chairman of a group advising lawmakers on pension allocations, said to a LDP committee  today
  • Stanley Fischer, said to be the leading candidate for the No. 2 job at the Fed, offers crisis-fighting experience and a dose of skepticism about efforts to shape expectations on the outlook for interest rates
  • The U.S. said it’s considering sanctions against Ukraine after riot police tried to clear thousands of anti-government activists off the streets of Kiev
  • Sovereign yields higher. EU peripheral spreads widen. Asian and European stocks, U.S. equity index futures fall. WTI crude gains, gold and copper fall

US event calendar

  • 8:30am: Retail Sales Advance, Nov., est. 0.6% (prior 0.4%)
  • Retail Sales Ex-Autos, Nov., est. 0.2% (prior 0.2%)
  • Retail Sales Ex-Autos and Gasoline, Nov., est. 0.3% (prior 0.3%)
  • 8:30am: Initial Jobless Claims, Dec. 7, est. 320k (prior 298k)
  • Continuing Claims, Nov. 29, est. 2.757m (prior 2.744m)
  • 8:30am: Import Price Index m/m, Nov., est. -0.7% (prior -0.7%)
  • Import Price Index y/y, Nov., est. -1.7% (prior -2%)
  • 9:45am: Bloomberg Consumer Comfort, Dec. 8 (prior -31.3)
  • 10:00am: Business Inventories, Oct., est. 0.3% (prior 0.6%) Central Banks
  • 3:00am: Draghi speaks in EU Parliament debate Supply
  • 11:00am: Fed to purchase $3b-$4b in 2019-2020 sector
  • 1:00pm: U.S. to sell $13b in 30Y bonds in reopening

Market Re-Cap from RanSquawk

Stocks traded lower throughout the session, with consumer goods underperforming its peers and Peugeot shares trading lower by 10% in reaction to reports citing sources that the board has approved in principal EUR 3.5bln capital increase with Dongfeng and French government. Initial selling pressure on Bunds which largely stemmed from market participants reacting to reports citing ECB’s Praet who signalled that the ECB will try to force Eurozone banks to hold capital against sovereign bonds gradually ebbed and better buying by Asian, as well as European based real money accounts saw Bunds move into positive territory. Furthermore, in spite of the upticks seen in the Euribor fix which came in at 0.227% vs. yesterday’s previous fix of 0.267%, together with the fact that the EONIA fix rose to 0.144 from 0.131 the day before, the Euribor curve reversed much of that price action in reaction to the release of the latest ECB daily liquidity update which showed that excess liquidity in the system has increased. Elsewhere, Gilts have underperformed their EU counterparts, with prices weighed on by the supply and also  reaction to the BCC increasing its UK 2013 GDP forecast to 1.4% vs. 1.3% and also raising its 2014 GDP forecast to 2.7% vs. 2.2%. Looking ahead for the session, today sees the release of the weekly jobless data from the US and US retail sales.

Asian Headlines

Head of the GPIF reform panel Takatoshi Ito said the GPIF needs to decrease JGBs, increase other assets and should buy inflation linked bonds.

According to BofAML forecasts, the BoJ are to ease in February, buy more ETFs and boost average maturity of bonds it buys.

Japan Cabinet has approved JPY 5.46trln extra budget for 2013/2014 to fund economic stimulus, no need to sell additional new bonds. Japan Finance Minister Aso plans to approve FY14 budget at December 24th cabinet meeting.

EU & UK Headlines

SNB 3-Month Libor Target Rate (Dec-12) Q/Q unchanged at 0.00-0.25%, as expected; maintains EUR/CHF floor at 1.2000

The SNB expects economy to expand 1.5% to 2% in 2013, does not see inflation approaching 2% price stability threshold for entire forecast horizon. The SNB also sees 2013 CPI at -0.2% vs. Prev. -0.2%. and are prepared to take further steps if necessary, with the value of CHF still high.

ECB’s Praet signalled the ECB will try to force Eurozone banks to hold capital against sovereign bonds, in an attempt to stop weak lenders using i
ts cash to hoover up the debts of crisis-hit countries.

Bondholders and large depositors in a failing European Bank face taking losses from the start of 2016, EU negotiators agreed on Wednesday, in a provisional deal on rules to spare taxpayers from further bailouts.

ECB’s Liikanen said capacity of monetary policy has not been exhausted and ECB are ‘ready and able to act’, whilst ECB’s Hansson said negative deposit rate probably option for ECB in more adverse cases with Deutsche Bank economist says an ECB negative deposit rates would be ‘extortion’.

Eurozone Industrial Production SA (Oct) M/M -1.1% vs Exp. 0.3% (Prev. -0.5%, Rev. -0.2%)

– Eurozone Industrial Production WDA (Oct) Y/Y 0.2% vs Exp. 1.1% (Prev. 1.1%, Rev. 0.2%)

This marked the biggest month on month contraction in output since Sept 2012 with declines across goods were broad based in the Euro Area, with energy appearing to lead the contraction.

Italy Premier Letta’s government wins confidence vote in the Senate as expected.

French CPI (Nov) M/M 0.0% vs Exp. 0.0% (Prev. -0.1%)

– French CPI (Nov) Y/Y 0.7% vs Exp. 0.7% (Prev. 0.6%).

The British Chambers of Commerce said that UK Business Sentiment is to fall 5.3% in 2013 and rise 5.7% in 2014. The BCC also increased its UK 2013 GDP forecast to 1.4% vs. 1.3%, raised its 2014 GDP forecast to 2.7% vs. 2.2%.

US Headlines

Goldman Sachs on Former Bank of Israel’s Fischer (the front-runner for the Fed Vice-Chair position) says that with respect to monetary policy at the zero lower bound, he has generally spoken favorably about quantitative easing but has expressed more skepticism about forward guidance. Nonetheless, we think forward guidance will continue to be a key item in the Fed’s toolkit.

Equities

Stocks traded lower throughout the session following the negative sentiment from the US and Asia after Fed taper concerns continue to linger. In terms of sector specific news, consumer goods are underperforming its peers and Peugeot shares trading lower by 10% in reaction to reports citing sources that the board has approved in principal EUR 3.5bln capital increase with Dongfeng and French government. The underperforming stock this morning in European trade has been Wood Group, following their pre-market release, whilst Ziggo shares are seen up with gains of around 7% following reports that Liberty Global are said to prepare renewed takeover bid for the Co.

FX

Market talk of real names selling EUR/GBP has seen weakness across the board in EUR and strength in GBP as volumes continue to remain light. Furthermore, JPY weakness is being observed despite a lower close in Asia as there is talk of hedge fund buying in EUR/JPY. Furthermore, EUR/CHF proved to be relatively unreactive to the decision by the SNB in early trade as it fell in line with expectations. Whilst overnight despite AUD seeing brief strength after Employment Change for November exceeded expecations, the gains in were quickly pared due to a revision lower to the previous reading.

The lower than expected Swedish inflation and higher than expected unemployment has prompted Nordea and Handelsbanken to revise their interest rate expectations to a cut on December 17th.

Commodities

The RBI said it will infuse an additional INR 10,000 crore into the system on Friday to ease the tight liquidity situation, ahead of commencement of advance tax payments.

China November copper output 654,000 tons and lead production 386,000 tons. according to Statistics Bureau data.

China are to raise fuel prices, raise gasoline price by CNY 60/ton, raise diesel price by CNY 60/ton and raise fuel prices by tomorrow, according to Chem99.com.

 

DB’s Jim Reid concludes the overnight recap

The taper continues to dominate trading and thoughts at the moment. Indeed with less than two weeks to go until Xmas markets are on edge ahead of next week’s ‘in-the-balance’ FOMC meeting. As we discussed yesterday, news of a possible imminent US budget deal must surely increase the probability of a taper even if they are still below 50%. As such the deal creates a source of market volatility even if it should in theory be a welcome development. The S&P 500 fell 1.13% in its worst day in more than a month and equities finished the day at the lows. Taper nervousness was evident in EM currencies particularly MXN (-1.3%) and BRL (- 1.5%) which underperformed against the USD. The UST curve steepened while 10yr yields added 5bp to take it back above 2.85%. So after a brief bounce following Friday’s payrolls, we’ve now had two days of consolidation which have taken equities and 10yr yields back to their pre-payrolls levels.

In the second half of the US trading session, Israeli television reported that former Bank of Israel governor Stanley Fischer is the leading candidate for the job of Fed Vice Chair. The potential appointment of Fischer is reportedly backed by Obama and Yellen. The reports did not cite a source but were quick to point out that Fischer has previously criticised forward rate guidance. This probably exacerbated the selloff that we saw late yesterday. Most commentators pointed to a September article from the WSJ where Fischer was quoted as saying that “If you give too much forward guidance you do take away flexibility” and that “It’s a mistake to try and get too precise”. Apparently Fischer had tried providing signals to the market on becoming governor in 2005, but gave up after he realised it restricted the bank’s future actions. The WSJ also noted that Fischer had previously described QE as “dangerous” but “necessary”. Others had more dovish observations about Fischer, noting that as Bank of Israel governor he employed a Fed-style dual focus on employment and growth alongside price stability, whereas previous governors placed an emphasis on inflation.

Either way, the focus on Fischer’s criticism of forward guidance comes at a particularly awkward time given that Fed tapering may be just around the corner and indeed many are expecting the Fed to strengthen its forward guidance as a means of softening its impact. Some also fear that Fischer may act as an intellectual counterweight to a dovish Yellen given that he also comes with strong academic credentials. It was widely noted that Fischer was a professor of economics at MIT where he oversaw Bernanke’s and was also a  teacher to Mario Draghi.

So with about a week now until we get to the final FOMC for the year, it wasn’t surprising that we began to see market chatter on what course the Fed may take at its next meeting. There was renewed talk of the Fed weighing up cutting interest on excess reserves (Bloomberg) as a means of strengthening its commitment to low rates, and to divert attention away from any imminent slowdown in asset purchases. There were also re-runs of previous discussion that the Fed is testing a reverse-repo facility to give it better control of shortterm rates when it eventually needs to hike.

Coming back to the US budget, markets gained little comfort from the building bipartisan support for the Senate Budget Committee’s deal announced on Tuesday night. Indeed markets seemed to be more concerned that the lessened fiscal drag and possible bump to US growth next year will only serve to bring forward or accelerate the Fed taper. DB’s Joe Lavorgna wrote that the deal does not include an extension of federal unemployment benefits, and the failure to extend these benefits could have a meaningful impact on the unemployment rate. Joe notes that when federal benefits expire at the end of this month, perhaps a quarter of them will drop out of the official labour force. This would have the effect of lowering the unemployment rate by 0.3%, placing it only just above the Fed’s 6.5% rate hike threshold.

This morning the taper theme is weighing on Asian EM assets including a number of EMFX crosse
s such as USDINR (+0.67%) and USDMYR (+0.4%). Despite this, the EUR continues its strong run against the USD and is poised for its eighth consecutive gain. The AUDUSD spiked up shortly after the release of a stronger than expected Australian employment report (+21k vs +10k expected) but the gains were quickly reversed on the combination of the overnight USD strength and resetting of shorts. Asian equities are trading broadly lower with laggards being the Nikkei (-1.3%) and Jakarta Composite (- 1.2%). It’s been a heavy trading session for Asian credit and sovereign bonds which is unsurprising given the weak tone in EM fixed income yesterday.

In other headlines, the FT is suggesting that the ECB may force Eurozone banks to hold capital against sovereign bonds. In an FT interview, ECB Executive Board member Peter Praet indicated that the ECB, using its powers as banking regulator, could change the risk-free classification on sovereign bonds and could try and implement these changes alongside the AQR of European banks. Praet also suggested that this was part of the ECB’s reluctance to have ECB liquidity used to fund purchases of sovereign bonds, something which Draghi also mentioned in his last press conference. Elsewhere in Italy, PM Letta easily passed a confidence vote, as was widely expected.

Turning to the day ahead, the main focus will be on US retail sales where consensus estimates are centred around a headline gain of 0.6%. French/Italian CPI, Eurozone industrial production and initial jobless claims are the other data releases of note. The US House of Reps may vote on the US budget as early as today.


    



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

“Something Has Changed” In Overnight Trading As Futures No Longer Track EURJPY Ramps

It has been another session of overnight weakness, in which, to quote Deutsche Bank, “something has changed” as ES algos no longer track every tick of the EURJPY (or other JPY pair variants). Usually in such transition periods where the robots are not sure how to trade risk based on highly leveraged inputs, things go bump in the night, and they did just that with the E-Mini trading just off its overnight lows, despite a notable rise in the EURJPY from yesterday’s close. Keep a close eye on the now traditional pre-market ramp in the EURJPY – if unaccompanied by an increase in the E-mini, it may be time to quietly exit stage left.

This morning the taper theme is weighing on Asian EM assets including a number of EMFX crosses such as USDINR (+0.67%) and USDMYR (+0.4%). Despite this, the EUR continues its strong run against the USD and is poised for its eighth consecutive gain. The AUDUSD spiked up shortly after the release of a stronger than expected Australian employment report (+21k vs +10k expected) but the gains were quickly reversed on the combination of the overnight USD strength and resetting of shorts. Asian equities are trading broadly lower with laggards being the Nikkei (-1.3%) and Jakarta Composite (- 1.2%). It’s been a heavy trading session for Asian credit and sovereign bonds which is unsurprising given the weak tone in EM fixed income yesterday.

Stocks traded lower throughout the session, with consumer goods underperforming its peers and Peugeot shares trading lower by 10% in reaction to reports citing sources that the board has approved in principal EUR 3.5bln capital increase with Dongfeng and French government. Initial selling pressure on Bunds which largely stemmed from market participants reacting to reports citing ECB’s Praet who signalled that the ECB will try to force Eurozone banks to hold capital against sovereign bonds gradually ebbed and better buying by Asian, as well as European based real money accounts saw Bunds move into positive territory.

Looking at the rest of the US session, today we get the release of the weekly jobless data from the US and US retail sales.

Overnight bulletin summary from Bloomberg and RanSquawk

  • Stocks traded lower throughout the session following the negative sentiment from the US and Asia asFed taper concerns continue to linger.
  • ECB’s Praet signalled the ECB will try to force Eurozone banks to hold capital against sovereign bonds, in an attempt to stop weak lenders using its cash to hoover up the debts of crisis-hit countries.
  • Looking ahead for the session, today sees the release of the US weekly jobless data, retail sales as well as a 30y bond auction from the US.
  • Treasuries 7Y and longer gain before week’s debt auctions conclude with $13b 30Y bonds; yield 3.87% in WI trading after drawing 3.81% in November.
  • Yesterday’s $21b 10Y sale awarded at 2.824%, about 0.7bp above 1pm WI yield, first 10Y reopening to tail since July, biggest tail since Jan.; directs lowest since Aug. 2012
  • A U.S. budget accord is on track to win passage in Congress largely because its most important accomplishment is pushing off automatic spending cuts that neither party likes
  • New Zealand’s central bank stepped up its inflation-fighting rhetoric and signaled it will start raising rates in the first half of next year as the economy strengthens
  • The ECB will seek to combine its new powers as principal banking regulator with current role as currency issuer to strengthen requirements on sovereign bonds, which have traditionally been classed as risk free, ECB’s Peter Praet said in an interview with the FT
  • Japan’s Government Pension Investment Fund should decrease its allocation to JGBs and increase investments in other assets, Takatoshi Ito, chairman of a group advising lawmakers on pension allocations, said to a LDP committee  today
  • Stanley Fischer, said to be the leading candidate for the No. 2 job at the Fed, offers crisis-fighting experience and a dose of skepticism about efforts to shape expectations on the outlook for interest rates
  • The U.S. said it’s considering sanctions against Ukraine after riot police tried to clear thousands of anti-government activists off the streets of Kiev
  • Sovereign yields higher. EU peripheral spreads widen. Asian and European stocks, U.S. equity index futures fall. WTI crude gains, gold and copper fall

US event calendar

  • 8:30am: Retail Sales Advance, Nov., est. 0.6% (prior 0.4%)
  • Retail Sales Ex-Autos, Nov., est. 0.2% (prior 0.2%)
  • Retail Sales Ex-Autos and Gasoline, Nov., est. 0.3% (prior 0.3%)
  • 8:30am: Initial Jobless Claims, Dec. 7, est. 320k (prior 298k)
  • Continuing Claims, Nov. 29, est. 2.757m (prior 2.744m)
  • 8:30am: Import Price Index m/m, Nov., est. -0.7% (prior -0.7%)
  • Import Price Index y/y, Nov., est. -1.7% (prior -2%)
  • 9:45am: Bloomberg Consumer Comfort, Dec. 8 (prior -31.3)
  • 10:00am: Business Inventories, Oct., est. 0.3% (prior 0.6%) Central Banks
  • 3:00am: Draghi speaks in EU Parliament debate Supply
  • 11:00am: Fed to purchase $3b-$4b in 2019-2020 sector
  • 1:00pm: U.S. to sell $13b in 30Y bonds in reopening

Market Re-Cap from RanSquawk

Stocks traded lower throughout the session, with consumer goods underperforming its peers and Peugeot shares trading lower by 10% in reaction to reports citing sources that the board has approved in principal EUR 3.5bln capital increase with Dongfeng and French government. Initial selling pressure on Bunds which largely stemmed from market participants reacting to reports citing ECB’s Praet who signalled that the ECB will try to force Eurozone banks to hold capital against sovereign bonds gradually ebbed and better buying by Asian, as well as European based real money accounts saw Bunds move into positive territory. Furthermore, in spite of the upticks seen in the Euribor fix which came in at 0.227% vs. yesterday’s previous fix of 0.267%, together with the fact that the EONIA fix rose to 0.144 from 0.131 the day before, the Euribor curve reversed much of that price action in reaction to the release of the latest ECB daily liquidity update which showed that excess liquidity in the system has increased. Elsewhere, Gilts have underperformed their EU counterparts, with prices weighed on by the supply and also  reaction to the BCC increasing its UK 2013 GDP forecast to 1.4% vs. 1.3% and also raising its 2014 GDP forecast to 2.7% vs. 2.2%. Looking ahead for the session, today sees the release of the weekly jobless data from the US and US retail sales.

Asian Headlines

Head of the GPIF reform panel Takatoshi Ito said the GPIF needs to decrease JGBs, increase other assets and should buy inflation linked bonds.

According to BofAML forecasts, the BoJ are to ease in February, buy more ETFs and boost average maturity of bonds it buys.

Japan Cabinet has approved JPY 5.46trln extra budget for 2013/2014 to fund economic stimulus, no need to sell additional new bonds. Japan Finance Minister Aso plans to approve FY14 budget at December 24th cabinet meeting.

EU & UK Headlines

SNB 3-Month Libor Target Rate (Dec-12) Q/Q unchanged at 0.00-0.25%, as expected; maintains EUR/CHF floor at 1.2000

The SNB expects economy to expand 1.5% to 2% in 2013, does not see inflation approaching 2% price stability threshold for entire forecast horizon. The SNB also sees 2013 CPI at -0.2% vs. Prev. -0.2%. and are prepared to take further steps if necessary, with the value of CHF still high.

ECB’s Praet signalled the ECB will try to force Eurozone banks to hold capital against sovereign bonds, in an attempt to stop weak lenders using its cash to hoover up the debts of crisis-hit countries.

Bondholders and large depositors in a failing European Bank face taking losses from the start of 2016, EU negotiators agreed on Wednesday, in a provisional deal on rules to spare taxpayers from further bailouts.

ECB’s Liikanen said capacity of monetary policy has not been exhausted and ECB are ‘ready and able to act’, whilst ECB’s Hansson said negative deposit rate probably option for ECB in more adverse cases with Deutsche Bank economist says an ECB negative deposit rates would be ‘extortion’.

Eurozone Industrial Production SA (Oct) M/M -1.1% vs Exp. 0.3% (Prev. -0.5%, Rev. -0.2%)

– Eurozone Industrial Production WDA (Oct) Y/Y 0.2% vs Exp. 1.1% (Prev. 1.1%, Rev. 0.2%)

This marked the biggest month on month contraction in output since Sept 2012 with declines across goods were broad based in the Euro Area, with energy appearing to lead the contraction.

Italy Premier Letta’s government wins confidence vote in the Senate as expected.

French CPI (Nov) M/M 0.0% vs Exp. 0.0% (Prev. -0.1%)

– French CPI (Nov) Y/Y 0.7% vs Exp. 0.7% (Prev. 0.6%).

The British Chambers of Commerce said that UK Business Sentiment is to fall 5.3% in 2013 and rise 5.7% in 2014. The BCC also increased its UK 2013 GDP forecast to 1.4% vs. 1.3%, raised its 2014 GDP forecast to 2.7% vs. 2.2%.

US Headlines

Goldman Sachs on Former Bank of Israel’s Fischer (the front-runner for the Fed Vice-Chair position) says that with respect to monetary policy at the zero lower bound, he has generally spoken favorably about quantitative easing but has expressed more skepticism about forward guidance. Nonetheless, we think forward guidance will continue to be a key item in the Fed’s toolkit.

Equities

Stocks traded lower throughout the session following the negative sentiment from the US and Asia after Fed taper concerns continue to linger. In terms of sector specific news, consumer goods are underperforming its peers and Peugeot shares trading lower by 10% in reaction to reports citing sources that the board has approved in principal EUR 3.5bln capital increase with Dongfeng and French government. The underperforming stock this morning in European trade has been Wood Group, following their pre-market release, whilst Ziggo shares are seen up with gains of around 7% following reports that Liberty Global are said to prepare renewed takeover bid for the Co.

FX

Market talk of real names selling EUR/GBP has seen weakness across the board in EUR and strength in GBP as volumes continue to remain light. Furthermore, JPY weakness is being observed despite a lower close in Asia as there is talk of hedge fund buying in EUR/JPY. Furthermore, EUR/CHF proved to be relatively unreactive to the decision by the SNB in early trade as it fell in line with expectations. Whilst overnight despite AUD seeing brief strength after Employment Change for November exceeded expecations, the gains in were quickly pared due to a revision lower to the previous reading.

The lower than expected Swedish inflation and higher than expected unemployment has prompted Nordea and Handelsbanken to revise their interest rate expectations to a cut on December 17th.

Commodities

The RBI said it will infuse an additional INR 10,000 crore into the system on Friday to ease the tight liquidity situation, ahead of commencement of advance tax payments.

China November copper output 654,000 tons and lead production 386,000 tons. according to Statistics Bureau data.

China are to raise fuel prices, raise gasoline price by CNY 60/ton, raise diesel price by CNY 60/ton and raise fuel prices by tomorrow, according to Chem99.com.

 

DB’s Jim Reid concludes the overnight recap

The taper continues to dominate trading and thoughts at the moment. Indeed with less than two weeks to go until Xmas markets are on edge ahead of next week’s ‘in-the-balance’ FOMC meeting. As we discussed yesterday, news of a possible imminent US budget deal must surely increase the probability of a taper even if they are still below 50%. As such the deal creates a source of market volatility even if it should in theory be a welcome development. The S&P 500 fell 1.13% in its worst day in more than a month and equities finished the day at the lows. Taper nervousness was evident in EM currencies particularly MXN (-1.3%) and BRL (- 1.5%) which underperformed against the USD. The UST curve steepened while 10yr yields added 5bp to take it back above 2.85%. So after a brief bounce following Friday’s payrolls, we’ve now had two days of consolidation which have taken equities and 10yr yields back to their pre-payrolls levels.

In the second half of the US trading session, Israeli television reported that former Bank of Israel governor Stanley Fischer is the leading candidate for the job of Fed Vice Chair. The potential appointment of Fischer is reportedly backed by Obama and Yellen. The reports did not cite a source but were quick to point out that Fischer has previously criticised forward rate guidance. This probably exacerbated the selloff that we saw late yesterday. Most commentators pointed to a September article from the WSJ where Fischer was quoted as saying that “If you give too much forward guidance you do take away flexibility” and that “It’s a mistake to try and get too precise”. Apparently Fischer had tried providing signals to the market on becoming governor in 2005, but gave up after he realised it restricted the bank’s future actions. The WSJ also noted that Fischer had previously described QE as “dangerous” but “necessary”. Others had more dovish observations about Fischer, noting that as Bank of Israel governor he employed a Fed-style dual focus on employment and growth alongside price stability, whereas previous governors placed an emphasis on inflation.

Either way, the focus on Fischer’s criticism of forward guidance comes at a particularly awkward time given that Fed tapering may be just around the corner and indeed many are expecting the Fed to strengthen its forward guidance as a means of softening its impact. Some also fear that Fischer may act as an intellectual counterweight to a dovish Yellen given that he also comes with strong academic credentials. It was widely noted that Fischer was a professor of economics at MIT where he oversaw Bernanke’s and was also a  teacher to Mario Draghi.

So with about a week now until we get to the final FOMC for the year, it wasn’t surprising that we began to see market chatter on what course the Fed may take at its next meeting. There was renewed talk of the Fed weighing up cutting interest on excess reserves (Bloomberg) as a means of strengthening its commitment to low rates, and to divert attention away from any imminent slowdown in asset purchases. There were also re-runs of previous discussion that the Fed is testing a reverse-repo facility to give it better control of shortterm rates when it eventually needs to hike.

Coming back to the US budget, markets gained little comfort from the building bipartisan support for the Senate Budget Committee’s deal announced on Tuesday night. Indeed markets seemed to be more concerned that the lessened fiscal drag and possible bump to US growth next year will only serve to bring forward or accelerate the Fed taper. DB’s Joe Lavorgna wrote that the deal does not include an extension of federal unemployment benefits, and the failure to extend these benefits could have a meaningful impact on the unemployment rate. Joe notes that when federal benefits expire at the end of this month, perhaps a quarter of them will drop out of the official labour force. This would have the effect of lowering the unemployment rate by 0.3%, placing it only just above the Fed’s 6.5% rate hike threshold.

This morning the taper theme is weighing on Asian EM assets including a number of EMFX crosses such as USDINR (+0.67%) and USDMYR (+0.4%). Despite this, the EUR continues its strong run against the USD and is poised for its eighth consecutive gain. The AUDUSD spiked up shortly after the release of a stronger than expected Australian employment report (+21k vs +10k expected) but the gains were quickly reversed on the combination of the overnight USD strength and resetting of shorts. Asian equities are trading broadly lower with laggards being the Nikkei (-1.3%) and Jakarta Composite (- 1.2%). It’s been a heavy trading session for Asian credit and sovereign bonds which is unsurprising given the weak tone in EM fixed income yesterday.

In other headlines, the FT is suggesting that the ECB may force Eurozone banks to hold capital against sovereign bonds. In an FT interview, ECB Executive Board member Peter Praet indicated that the ECB, using its powers as banking regulator, could change the risk-free classification on sovereign bonds and could try and implement these changes alongside the AQR of European banks. Praet also suggested that this was part of the ECB’s reluctance to have ECB liquidity used to fund purchases of sovereign bonds, something which Draghi also mentioned in his last press conference. Elsewhere in Italy, PM Letta easily passed a confidence vote, as was widely expected.

Turning to the day ahead, the main focus will be on US retail sales where consensus estimates are centred around a headline gain of 0.6%. French/Italian CPI, Eurozone industrial production and initial jobless claims are the other data releases of note. The US House of Reps may vote on the US budget as early as today.


    



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

Andrew Napolitano on the Vast NSA Conspiracy

Six months
ago, Edward Snowden, a former employee of an National Security
Agency vendor, risked his life and liberty to inform us of a
governmental conspiracy to violate our right to privacy, a right
guaranteed by the Fourth Amendment. This is more than just a
constitutional violation, warns Andrew Napolitano, it is a
violation of the natural right to be left alone.

View this article.

from Hit & Run http://reason.com/blog/2013/12/12/andrew-napolitano-on-the-vast-nsa-conspi
via IFTTT

Goldman's Q&A On Stanley Fischer As The Next Fed Vice Chairman

Since the bank that decides what happens at the NY Fed, and by implication, at the broader Federal Reserve system, is none other than Goldman Sachs, it would be informative to read what none other than Goldman thinks of Ben Bernanke’s thesis advisor Stanley Fischer, formerly head of the Bank of Israel, as the next vice chairman – as he is now actively rumored to become shortly. Conveniently, here is just such a Q&A from Goldman’s Jan Hatzius – the man who feeds Bill Dudley all his economic and monetary insights over lobster sandwiches at the Pound and Pence.

Q&A on Stanley Fischer

  • Stanley Fischer?formerly governor of the Bank of Israel and first deputy managing director of the IMF?appears very likely to be nominated for the position of Fed Vice Chairman, according to multiple media reports.
  • Fischer is a highly respected academic macroeconomist and policymaker, and would undoubtedly have a substantial amount of influence on the FOMC. When head of the Bank of Israel, he oversaw an aggressive monetary policy response to the crisis which included purchases of longer-term securities.
  • With respect to monetary policy at the zero lower bound, he has generally spoken favorably about quantitative easing but has expressed more skepticism about forward guidance. Nonetheless, we think forward guidance will continue to be a key item in the Fed’s toolkit.

Stanley Fischer appears very likely to be nominated for the position of Fed Vice Chairman, according to multiple media reports. According to some accounts, Fischer has already been offered the job by the President and has accepted it, although a formal announcement is not expected immediately.

Q. How does Fischer broadly think about the economy?

Fischer is a highly respected academic macroeconomist. He is credited with helping to lay the foundations of New Keynesian macroeconomics, which sought to place traditional Keynesian theory on a stronger microeconomic foundation. Subscribing to this school of thought, we believe that Fischer’s general view of the world is similar to that of Bernanke and Yellen, with a significant role for active fiscal and (more importantly) monetary policy. In fact, Fischer was Bernanke’s dissertation adviser in graduate school, and Bernanke recently referred to him as a “role model and frequent adviser.” As a result, we see little daylight between Fischer and the current core FOMC leadership with respect to their basic paradigm for thinking about the economy.

Q. How would his appointment affect the dynamics on the Committee?

Fisher is widely seen as a policy heavyweight, having not only run the Bank of Israel, but also served as the chief economist at the World Bank and First Deputy Managing Director (the number two position) at the IMF. Both his academic standing and policy experience suggest that Fischer’s views will be very influential on the Committee.

Q. What are the key points from his tenure as head of the Bank of Israel?

Under his tenure, the Bank of Israel aggressively cut its policy rate from 4.25% to 0.5% in the wake of the financial crisis. Starting in February of 2009, the Bank of Israel joined the Fed in undertaking purchases of longer-dated securities, indicating a willingness to adopt unorthodox monetary policy measures. The stated intention was to “extend the effectiveness of monetary policy onto longer interest rate maturities.” However, later in 2009 the Bank of Israel began hiking its policy rate, in advance of all major global central banks. We do not see this as necessarily indicating a “hawkish” policy bias on the part of Fischer, but rather a reaction to the fact that economic developments in Israel were substantially different from those prevailing in the G4 economies. The Bank of Israel did not adopt explicit calendar- or outcome-based forward guidance under his leadership.

Q. What are his views on balance sheet policy?

Fischer generally holds a favorable view on the effectiveness of balance sheet policy. As noted, the Bank of Israel began a program of longer-dated securities purchases under his watch. He also stated in a November speech at the IMF that one of the key lessons from the financial crisis, in his view, was that monetary policy is not impotent once the zero lower bound on short-term interest rates has been hit. He specifically highlighted the efficacy of the Fed’s QE?which he said was supported by a substantial amount of academic work?and did not explicitly mention forward guidance on the path of short-term interest rates.

Q. What does he think about forward guidance?

In contrast to his statements on QE, he has recently expressed a more skeptical view of forward guidance. Specifically, he noted in September that “if you give too much forward guidance you do take away flexibility,” that “we don’t know what we’ll be doing a year from now. It’s a mistake to try and get too precise,” and that “you can’t expect the Fed to spell out what it’s going to do…because it doesn’t know.” These statements contrast with Yellen’s strong endorsement of forward guidance. In that sense, Fischer’s statements do pose at least some risk to our expectation that the FOMC will ultimately enhance its forward guidance by reducing the unemployment threshold to 6.0%. That said, such a limited number of statements are unlikely to capture all of the nuances of Fischer’s thinking on the topic. One can also argue that his criticisms apply mostly to calendar-based guidance and less to outcome-based guidance, which only requires the Fed to “spell out what it’s going to do” in a more conditional sense. In any case, we have little doubt that Yellen and Fischer would see eye to eye on the need to prevent a large tightening of financial conditions anytime soon, so the slightly greater uncertainty that might result from his nomination is mainly about tactics, not strategy.

Q. What is the likelihood of confirmation?

If nominated, we think Fischer would very likely be confirmed. In the unlikely event that his confirmation faced substantial opposition from Republicans, the recent change to Senate rules requiring only a simple majority to break a filibuster on confirmation votes ensures that he could be confirmed with only Democratic votes.


    



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

Goldman’s Q&A On Stanley Fischer As The Next Fed Vice Chairman

Since the bank that decides what happens at the NY Fed, and by implication, at the broader Federal Reserve system, is none other than Goldman Sachs, it would be informative to read what none other than Goldman thinks of Ben Bernanke’s thesis advisor Stanley Fischer, formerly head of the Bank of Israel, as the next vice chairman – as he is now actively rumored to become shortly. Conveniently, here is just such a Q&A from Goldman’s Jan Hatzius – the man who feeds Bill Dudley all his economic and monetary insights over lobster sandwiches at the Pound and Pence.

Q&A on Stanley Fischer

  • Stanley Fischer?formerly governor of the Bank of Israel and first deputy managing director of the IMF?appears very likely to be nominated for the position of Fed Vice Chairman, according to multiple media reports.
  • Fischer is a highly respected academic macroeconomist and policymaker, and would undoubtedly have a substantial amount of influence on the FOMC. When head of the Bank of Israel, he oversaw an aggressive monetary policy response to the crisis which included purchases of longer-term securities.
  • With respect to monetary policy at the zero lower bound, he has generally spoken favorably about quantitative easing but has expressed more skepticism about forward guidance. Nonetheless, we think forward guidance will continue to be a key item in the Fed’s toolkit.

Stanley Fischer appears very likely to be nominated for the position of Fed Vice Chairman, according to multiple media reports. According to some accounts, Fischer has already been offered the job by the President and has accepted it, although a formal announcement is not expected immediately.

Q. How does Fischer broadly think about the economy?

Fischer is a highly respected academic macroeconomist. He is credited with helping to lay the foundations of New Keynesian macroeconomics, which sought to place traditional Keynesian theory on a stronger microeconomic foundation. Subscribing to this school of thought, we believe that Fischer’s general view of the world is similar to that of Bernanke and Yellen, with a significant role for active fiscal and (more importantly) monetary policy. In fact, Fischer was Bernanke’s dissertation adviser in graduate school, and Bernanke recently referred to him as a “role model and frequent adviser.” As a result, we see little daylight between Fischer and the current core FOMC leadership with respect to their basic paradigm for thinking about the economy.

Q. How would his appointment affect the dynamics on the Committee?

Fisher is widely seen as a policy heavyweight, having not only run the Bank of Israel, but also served as the chief economist at the World Bank and First Deputy Managing Director (the number two position) at the IMF. Both his academic standing and policy experience suggest that Fischer’s views will be very influential on the Committee.

Q. What are the key points from his tenure as head of the Bank of Israel?

Under his tenure, the Bank of Israel aggressively cut its policy rate from 4.25% to 0.5% in the wake of the financial crisis. Starting in February of 2009, the Bank of Israel joined the Fed in undertaking purchases of longer-dated securities, indicating a willingness to adopt unorthodox monetary policy measures. The stated intention was to “extend the effectiveness of monetary policy onto longer interest rate maturities.” However, later in 2009 the Bank of Israel began hiking its policy rate, in advance of all major global central banks. We do not see this as necessarily indicating a “hawkish” policy bias on the part of Fischer, but rather a reaction to the fact that economic developments in Israel were substantially different from those prevailing in the G4 economies. The Bank of Israel did not adopt explicit calendar- or outcome-based forward guidance under his leadership.

Q. What are his views on balance sheet policy?

Fischer generally holds a favorable view on the effectiveness of balance sheet policy. As noted, the Bank of Israel began a program of longer-dated securities purchases under his watch. He also stated in a November speech at the IMF that one of the key lessons from the financial crisis, in his view, was that monetary policy is not impotent once the zero lower bound on short-term interest rates has been hit. He specifically highlighted the efficacy of the Fed’s QE?which he said was supported by a substantial amount of academic work?and did not explicitly mention forward guidance on the path of short-term interest rates.

Q. What does he think about forward guidance?

In contrast to his statements on QE, he has recently expressed a more skeptical view of forward guidance. Specifically, he noted in September that “if you give too much forward guidance you do take away flexibility,” that “we don’t know what we’ll be doing a year from now. It’s a mistake to try and get too precise,” and that “you can’t expect the Fed to spell out what it’s going to do…because it doesn’t know.” These statements contrast with Yellen’s strong endorsement of forward guidance. In that sense, Fischer’s statements do pose at least some risk to our expectation that the FOMC will ultimately enhance its forward guidance by reducing the unemployment threshold to 6.0%. That said, such a limited number of statements are unlikely to capture all of the nuances of Fischer’s thinking on the topic. One can also argue that his criticisms apply mostly to calendar-based guidance and less to outcome-based guidance, which only requires the Fed to “spell out what it’s going to do” in a more conditional sense. In any case, we have little doubt that Yellen and Fischer would see eye to eye on the need to prevent a large tightening of financial conditions anytime soon, so the slightly greater uncertainty that might result from his nomination is mainly about tactics, not strategy.

Q. What is the likelihood of confirmation?

If nominated, we think Fischer would very likely be confirmed. In the unlikely event that his confirmation faced substantial opposition from Republicans, the recent change to Senate rules requiring only a simple majority to break a filibuster on confirmation votes ensures that he could be confirmed with only Democratic votes.


    



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

Brickbat: What You Can't See

A French court has
ordered Google, Yahoo and Microsoft not to list 16 video-streaming
sites in anysearch results.
It also ordered several ISPs to block customers from accessing
those sites. The court said the sites violate French intellectual
copyright laws.

from Hit & Run http://reason.com/blog/2013/12/12/brickbat-what-you-cant-see
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Brickbat: What You Can’t See

A French court has
ordered Google, Yahoo and Microsoft not to list 16 video-streaming
sites in anysearch results.
It also ordered several ISPs to block customers from accessing
those sites. The court said the sites violate French intellectual
copyright laws.

from Hit & Run http://reason.com/blog/2013/12/12/brickbat-what-you-cant-see
via IFTTT

Barbara Branden, RIP

Barbara Branden, the first biographer of Ayn Rand with her
penetrating and humanizing
The Passion of Ayn Rand
(1986), has died at age 84.

Branden and her then-husband Nathaniel Branden were Rand’s
closest associates and friends during the years she finished
writing Atlas Shrugged and the years when the Nathaniel
Branden Institute began teaching the principles of Rand’s
Objectivism in lecture form to a wider world.

Branden’s understanding of Rand arose from her own very personal
intertwining with Rand’s life–one that came to a sad end around
the time Nathaniel told Rand he could no longer continue an affair
with her (one conducted with the knowledge of Barbara and Rand’s
husband Frank O’Connor).

Despite this strange personal entanglement, Branden still set
the standard and provided the basic context and shape of the story
of Rand that later books have approached from different angles, yet
never fundamentally contradicting or exceeding Branden’s
brilliantly crafted and, yes, passionate story of a woman who was,
as befit her philosophy, both body and mind, with all the
difficulties inherent in that condition.

Branden was a living and bracing example of how one needn’t
either blindly worship or ignore the humanity of Ayn Rand to admire
and promote her philosophy. While the very existence of a book
telling a true story of Rand the woman created great controversy
and division in the Objectivist world in the 1980s, as generations
arise who never met the woman herself, such controversies will fade
to historical ephemera. But the monument of understanding and
appreciation Branden crafted with such skill and care will
remain.

Branden remained through all her personal contretemps with Rand
an enthusiastic appreciator, and spreader, of Rand’s best message
to the world, which Branden summed up brilliantly and affectingly
in her book as this: “In Ayn’s presence, and in her work, one felt
that command: a command to function at one’s best, to be the most
that one could be, to drive oneself constantly harder, never to
disappoint one’s highest ideals.”

In her biography she painted a full and compelling picture of
the woman, and the ideas, that inspired that passion.

On a personal level, Barbara was unfailingly kind and helpful to
me above and beyond the call of interview subject duty while I was
researching my book
Radicals for Capitalism
and remained a friend of
Reason magazine and the Reason Foundation til the end.

Her friend Jim Peron
provides an obituary at

Huffington Post
.

from Hit & Run http://reason.com/blog/2013/12/12/barbara-branden-rip
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