Month: December 2014

With a disappointingly slow asset accumulation in the ABS and Covered Bond purchase schemes, Draghi better “get back to work” soon or the market (EURUSD down 17 handles on nothing but promises) will lose its patience. As we noted earlier, Weidmann’s hints suggest the oil-price-slowdown is providing cover for monetary policy and obscuring the ‘bad’ deflation. Crucially Draghi will need to stress the ‘need’ for action and the ‘unanimity’ of that decision to keep the algos buying…

 

Draghi is due to speak at 830ET…

 

Some of the headlines from Bloomberg:

• DRAGHI SAYS ASSET PURCHASES, TTLTROS TO HAVE SIZABLE IMPACT
• DRAGHI SAYS PURCHASES WILL LAST FOR AT LEAST TWO YEARS
• DRAGHI SAYS BALANCE SHEET SEEN MOVING TOWARD EARLY 2012 LEVELS
• DRAGHI SAYS MEASURES EASE POLICY STANCE, SUPPORT RATE GUIDANCE
• DRAGHI SAYS ECB UNANIMOUS IN COMMITMENT TO ACT AGAIN IF NEEDED
• DRAGHI SAYS LATEST DATA INDICATE LOWER INFLATION, GROWTH

But judging by the EURUSD reaction, this part of Draghi’s remarks was not what was desired:

• DRAGHI SAYS ECB TO REASSESS CURRENT STIMULUS NEXT QUARTER

And then this:

• DRAGHI SAYS ECB OFFICIALS UNANIMOUS ON MORE STIMULUS IF NEEDED

Just not on the format.

And then the now traditional slashing of economic expectations:

• ECB SEES 2014 GDP GROWTH OF 0.8% VS. 0.9%
• ECB SEES 2015 GDP GROWTH OF 1% VS. 1.6%
• ECB SEES 2016 GDP GROWTH OF 1.5% VS. 1.9%

Any other day this alone would have been enough to send equity futures soaring. So far today, that is not the case.

• ECB CUTS EURO-AREA INFLATION FORECASTS FOR 2014 THROUGH 2016

But wait, weren’t lower oil prices stimulative?

Here’s SaxoBank’s quick guide to all the bazookas Draghi has unleashed or promised to…

via Zero Hedge http://ift.tt/1BgUaOW Tyler Durden

After last week's jerk higher (now revised even higher to 314k), this week saw a modest 17k drop to 297k (magically back below the 300k Maginot Line) but still missed expectations. Obviously, initial claims still linger near 14 year lows but the smoother 4 week average rose around 5k to 299k. Continuing claims rose 39k and has hovered at these decade-long lows for 6 weeks now – though unadjusted Regular State (ex) employees claiming UI benefits jumped 125K from 2.065 million to 2.190 million.. It appears the trend of improvement has ended/stabilized.

 

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/12pq0tv Tyler Durden

Nothing to see here, move along…

 

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Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Add these factors up and we conclude there is no visible price limit on oil after supply falters.

Oil: One Last Head-Fake? (May 9, 2008)

via Zero Hedge http://ift.tt/1zombQz Tyler Durden

Earlier today Putin used his his annual speech to both houses of parliament, delivered in a chandeliered ceremonial hall of the Grand Kremlin Palace in Moscow, to give a pep talk to an economy that has been faltering in recent months as a result of, if not so much western sanctions which have hurt Europe more than Russia, then certainly tumbling oil prices. As Bloomberg notes, “the ruble is near a record low, the economy is headed for a recession and banks are pleading for state aid.” It was Putin’s task to try to persuade Russians today that panic isn’t the answer to their economic pain.

In his speech, Putin on one hand appealed to Russian patriotism. As reported by AP, he evoked religious imagery and defended the Kremlin’s aggressive foreign policy as necessary for his country’s sheer survival. Putin described Crimea as Russia’s spiritual ground, “our Temple Mount,” and added that national pride and sovereignty are “a necessary condition for survival” of Russia.

“If for many European countries, sovereignty and national pride are forgotten concepts and a luxury, then for the Russian Federation a true sovereignty is an absolutely necessary condition of its existence,” he told a full room of Cabinet ministers, lawmakers and community leaders. “I want to stress: either we will be sovereign, or we will dissolve in the world. And, of course, other nations must understand this as well.”

Putin also said that Russia is not going to get involved in an expensive arms race, adding that unspecified “unusual solutions” are at the nation’s disposal.

“No one will succeed in defeating Russia militarily,” he said. “They would have been delighted to let us go the way of Yugoslavia and the dismemberment of the Russian peoples, with all the tragic consequences. But it did not happen. We did not allow it to happen.”

Moscow-based analyst Maria Lipman said that despite bellicose statements toward the West in the beginning of his speech, Putin “also spoke about how we are by no means going to isolate ourselves, we are interested in constructive work even with Europeans and Americans.”

“This year, as in many fateful historical moments, our people clearly displayed national revival, firm resistance, and patriotism,” he said. “And the difficulties we encountered will create new opportunities for us, we are ready to accept any challenge of our time and be victorious.”

But while his romantic, emotional appeals were to be expected, what the financial community was focused on was his proposals to stabilize the economy. Among these were a three-year freeze on impromptu inspections and tax checks for companies with a clean record.

Putin also praised the work of the Central Bank, which moved to free float the ruble this year even though the currency hit a record low on Wednesday.

Lipman said that Putin was trying to reassure both the liberal and conservative camps in the government, but realizes his hands are tied by economic factors.

Perhaps the most notable announcement by Putin was that Russia would provide a “full amnesty” for holders of offshore funds, in a push to repatriate some of the $125 billion in capital that is said to have left the nation in 2015. To entice Russia billionaires to keep their cash in Russia Putin reminded everyone how hostile the west could be toward Russian money, using the Cyprus bail-in as an example. To wit:

I announce a full amnesty for capital returning to Russia, and i repeat, a full amnesty. What does that mean? Those people who fully legalize, fully bring back their capital to Russia, should be protected from being dragged to various law enforcement agencies, and from having to prove where they got their money from, and from being exposed to criminal investigations.

 

We need to reverse the history of capital flight from our country, we need to end this era…. We have already done a lot of work to improve our investment climate, and now we need to turn to implement that legislation.

Do Russians want to be “ripped-off abroad” once again when the next Cyprus takes place? Their best choice is to return to Russia, Putin added.

Finally, and perhaps most entertaining, was Putin, warning that the former KGB spy himself would go after FX manipulators who have succeeded in pushing the Ruble to record lows:

We know who these people are, and we have the means to rein them in. It’s time to use these instruments.

Considering the only big FX traders left are other, western, central banks, we wish Putin the best of luck, but please wait so can grab the popcorn before “using these instruments.”

via Zero Hedge http://ift.tt/1ypQ30t Tyler Durden

No surprises in the official ECB statement…

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.05%, 0.30% and -0.20% respectively.

 

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.

… However, the same will hardly be said about Draghi’s presser in 45 minutes.

via Zero Hedge http://ift.tt/11Z3dVJ Tyler Durden

While the ECB’s announcement is due out in minutes, the only thing the market is looking forward to is Draghi’s actual press conference due to take place in exactly one hour. It is here that the former Italian and Goldman banker is expected to take jawboning to new levels, even if – as is customary – he actually does nothing and considering the ECB’s balance sheet, which after all its private covered bond and ABS QE is growing at the “torrid” pace of some €4 billion per week, not even enough to offset the natural decline in the ECB’s balance sheet, his actions so far have achieved absolutely nothing the algos are starting to get impatient.

That said, in also keeping with traditiona, no analyst is actually willing to step out of line and forecast anything market-moving.

Here, courtesy of RanSquawk, is a summary of what Wall Street’s individual banks expect from Draghi in a few minutes.

• Host of tier 1 investment banks have recently revised their base case scenarios for an ECB QE programme from a ‘No/unlikely’ to a 1H 2015 timeframe
• Despite the likelihood of an ECB sovereign bond purchase programme in the near-term it is highly unlikely that this week’s meeting will see the unveiling of such stimulus
• Q&A session may garner particular focus given the recent slide in oil prices

European banks put forth their expectations for today’s ECB meeting, while JP Morgan see the FFR target at 0.75%-1.0% by December 2015

• Credit Suisse – Risks are skewed toward ECB under-delivering on investors’ expectations for sovereign QE given recent moves in EUR rates markets. However, they note two things that may move the market today. 1: Full commitment to start EBG purchases in coming weeks, with clear guidelines. 2: Any comments in press conference that shake investors’ expectations that sovereign QE in Q1 2015 is basically a done deal.
• UBS – Do not expect ECB to unveil any new policy measures or issue major new guidance, instead likely to maintain a wait-and-see attitude this week and also on Jan 22nd, before gearing up to a new stage of policy action March 2015.
• Goldman Sachs– Draghi to signal further possible measures are being discussed. ECB will announce a sovereign dent QE programme during the 1H of 2015.
• BNP – Expect announcement of a broadening of ECB asset purchases at today’s meeting to include sovereign bonds, in tandem with downward revisions to staff inflation and growth projections.
• RBC – Expect no change in policy with governing council waiting for TLTRO results on December 11th.
• JP Morgan – Fed should finally begin to lift rates next year, taking the FFR target to 0.75%-1.0% by December 2015.

via Zero Hedge http://ift.tt/1ypGXRp Tyler Durden

• Thanks Fed: Meet the high schooler who made $300K trading penny stocks under his desk (Verge)
• Protesters block NY streets after officer cleared in chokehold death (Reuters)
• U.S. Plans Probe of New York Police Chokehold Death (BBG)
• Sharpton Leads Civil-Rights Meeting on Chokehold Decision (BBG)
• Staten Island on Edge Over Grand Jury Decision In Death of Eric Garner (WSJ)
• Draghi Tests Speed Limit as ECB Awaits Stimulus Evidence (BBG)
• European Stocks Approach Seven-Year High Before Draghi Statement (BBG)
• Britain targets multinationals that try to dodge taxes (Reuters)
• Oil Trains Hide in Plain Sight (WSJ)
• Ruble Slides as Traders Press Russia to Act to Defend Currency (BBG)
• American possibly exposed to Ebola being transferred to Atlanta hospital (Reuters)
• World’s Richest Families Warned of Impact-Investing Hype (BBG)
• Al Qaeda’s Yemen branch issues video purporting to show U.S. captive (Reuters)
• Non-Nerds Would Rather Bomb Their SATs Than Look Uncool (BBG)
• Post-Election Bounce Potential For Japan’s Markets (BBG)

 

Overnight Media Digest

WSJ

* A hacking attack on Sony Pictures that disabled its internal systems and resulted in the leak of five films and a slew of sensitive data on pay and other personnel matters has set off upheaval at the big Hollywood studio. (http://on.wsj.com/1rYLtjK)

* Despite some high-profile accidents, finding the locations of oil-filled trains remains difficult, even in those states that don’t consider the information top secret, because there are no federal or state rules requiring public notice. (http://on.wsj.com/1I2lWRc)

* U.K. treasury chief George Osborne on Wednesday introduced a new 25 percent tax on foreign companies’ profits derived from economic activity in the U.K. – aiming to rein in what the government says is tax avoidance by multinationals shifting their tax burden to lower-tax regimes. (http://on.wsj.com/1vlq44B)

* Google Inc plans to boost the commissions it pays some outside firms to sell its workplace software, signaling a more serious challenge to Microsoft Corp’s dominance at larger companies, according to people familiar with the matter. (http://on.wsj.com/1zmmlb4)

* HBO could pay a price with at least one major pay-TV partner if its planned streaming-video service proves a hit with consumers, people familiar with the matter say. Under HBO’s current contract with DirecTV, the cable channel would run into problems if it signs up more than 450,000 subscribers nationally for the “over-the-top” online service, or 300,000 in any given local market. (http://on.wsj.com/1vOCjdJ)

* As competition in online payments heats up, investors are doubling down on Stripe. The payments startup said it raised $70 million in a new funding round valuing it at $3.57 billion, doubling its valuation in less than a year. Thrive Capital led the round, which also included previous backers Sequoia Capital, Founders Fund, Khosla Ventures and General Catalyst Partners. (http://on.wsj.com/12oknvE)

* United Continental Holdings Inc has imposed new restrictions on lithium-ion batteries carried in the cargo holds of its jets, the latest airline response to fire hazards posed by such bulk shipments. (http://on.wsj.com/1ySz9HK)

 

FT

* Paul Walsh, who was previously the chief executive of Diageo Plc, is being lined up to become the chairman of Formula One board and a meeting is being scheduled for early next week to discuss the matter.

* Britain plans to introduce a tax called Google Tax to target profits of multinational companies which arise from business activity in the UK that are “artificially shifted” abroad.

* Munich prosecutors are carrying out an investigation at Airbus’ defence unit over alleged corruption linked to contracts with Romania and Saudi Arabia, they said on Wednesday. Prosecutors searched offices on suspicion that bribes were paid to enable the company to obtain contracts worth 3 billion euros ($3.7 billion).

* The Russian central bank spent $700 million to help the rouble on Monday. This is its first intervention in support since the currency was allowed to float freely last month. After the data came out, the rouble continued its fall against the dollar after opening almost flat.

 

NYT

* Even as Japanese auto supplier Takata Corp continued to resist demands that it expand the recall of its airbags nationwide, Honda Motor Co Ltd told lawmakers on Wednesday that it would take that action on its own and use replacements from other suppliers if necessary. (http://nyti.ms/1zmeaLS)

* The Federal Reserve says that more than 30 percent of Americans report irregular incomes that sabotage efforts to budget and save. Unreliable work hours are cited most often. (http://nyti.ms/1vmzHoL)

* In a spellbinding letter to Jim Cramer, activist investor J. Carlo Cannell urged him to cut his pay 70 percent, resign from CNBC and direct his energy to “helping your fellow shareholders crawl back from Hades.” (http://nyti.ms/12oiEq5)

* Sony Pictures Entertainment and the FBI were seeking more information about an attack that crippled Sony’s computer systems – including whether North Korea, or perhaps a former employee, was responsible. (http://nyti.ms/1tPqrnD)

* An increasing number of borrowers are falling behind on their car payments, even as the total amount of outstanding debt reaches new heights, according to the latest report by Experian, the credit and research firm. In a presentation, Experian said the balance of loans that were 60 days delinquent increased 27 percent, to roughly $4 billion, in the third quarter from a year earlier. (http://nyti.ms/1w33xjK)

* A Supreme Court argument in a pregnancy discrimination case against United Parcel Services Inc had, for the most part, the arid quality of a logic problem, with the justices wrestling with an ambiguous federal law. But near the end of the hour-long argument, Justice Elena Kagan confronted a lawyer for UPS. (http://nyti.ms/1yRhgZ9)

 

China

CHINA SECURITIES JOURNAL

– China should allow asset-backed securitization (ABS) products to be issued on stock exchanges, said Yan Qingmin, vice president of China Banking Regulatory Commission (CBRC). So far ABS products can only be issued in China’s interbank market.

– MeiDu Energy Corp has acquired oil fields in Texas, United States, for $141 million, the company said in a statement.

SECURITIES TIMES

– China plans to support companies that ease environmental pollution. A recently established 50 billion yuan National Environmental Fund will be used to assist in the implementation of this guidance.

CHINA DAILY

– Given the ignorance of and disregard for China’s constitution shown by public officials, state employees should take an oath to abide by the fundamental law, said an editorial in the official paper.

PEOPLE’S DAILY

– Over 90 percent of Chinese government websites have security issues. This means there are issues with cyber security in China, said the mouthpiece of the Chinese Communist Party, citing an assessment report by China Software Test Center.

Britain

The Times

BIG TOBACCO CHOKES ON OSBORNE’S LEVY PLANS

Big Tobacco faces paying millions of pounds more in taxes through the introduction of a U.S.-style levy designed to help pay for the impact of smoking, the British government has proposed. (http://thetim.es/1FPrmgk)

MULTINATIONAL ‘GOOGLE TAX’ PROVES OSBORNE’S AUTUMN STATEMENT TRUMP CARD

A new levy on tax-avoiding multinationals immediately dubbed the Google Tax was a surprise measure in a political Autumn Statement in which George Osborne called on voters to allow him “to finish the job” repairing the public finances. (http://thetim.es/1CF3ON2)

The Guardian

LADBROKES CHIEF TO STEP DOWN AFTER FIVE-YEAR TERM

Richard Glynn, the embattled chief executive of Ladbrokes , is to step down from the bookmaker after five years in charge. The move came as Ladbrokes tried to claim that Glynn had completed a five-year turnaround of the business. (http://bit.ly/1vN51vg)

NORTH SEA OIL COMPANIES TO BE HELPED WITH 450 MILLION POUNDS OF TAX BREAKS

The government has introduced 450 million pounds ($705.92 million) of tax breaks to help North Sea oil companies at a time of plunging prices, rising costs and steep output declines. George Osborne said he would cut a “supplementary charge” rate from 32 percent to 30 percent, extend other breaks from six to 10 years and provide a new allowance targeted on certain areas. (http://bit.ly/1rYfj8a)

The Telegraph

VODAFONE CHIEF DENIES BID FOR VIRGIN MEDIA OWNER LIBERTY GLOBAL

Vodafone Chief Executive Vittorio Colao has denied his plans for a colossal takeover of Liberty Global, the owner of Virgin Media, following mounting speculation that a move for the cable giant was in the works. (http://bit.ly/1CFkjbO)

SPACE APE, HAILED AS A RIVAL TO ANGRY BIRDS MAKER ROVIO, RAISES FURTHER 4.5 MILLION POUNDS

Space Ape Games raised 4.5 million pounds in follow-on funding from a consortium of investors including Northzone, an early backer in Spotify, the Facebook Inc investor Accel Partners, Initial Capital and Connect Ventures. (http://bit.ly/1ymsxS8)

Sky News

NPOWER BOSS: NEW BODY CAN HELP RESTORE TRUST

Paul Massara, the chief executive of npower, is calling for an independent body to scrutinise decisions by regulators and other stakeholders amid a period of rapid industry change. He said the move to create an organisation separate from Ofgem could be an important step towards rebuilding trust in the sector. (http://bit.ly/1FPyglx)

EX-DIAGEO BOSS WALSH IN FRAME FOR F1 CHAIR

Paul Walsh, the former chief executive of drinks giant Diageo Plc, has been approached about becoming the next chairman of Formula One (F1) motor racing. Walsh has been holding discussions about taking the role, with a board meeting of F1’s owner understood to be scheduled for early next week. (http://bit.ly/1CFHoeC)

 

Fly on The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of November 29 at 8:30–consensus 295K

ANALYST RESEARCH

Upgrades

CSX (CSX) upgraded to Buy from Neutral at Citigroup
Deutsche Bank ups Mobileye (MBLY) to Buy on recent pullback
Energy Transfer Partners (ETP) upgraded to Outperform from Neutral at RW Baird
Gentex (GNTX) upgraded to Buy from Hold at KeyBanc
Hudbay Minerals (HBM) upgraded to Buy from Neutral at UBS
Infinity Pharmaceuticals (INFI) upgraded to Outperform from Neutral at Credit Suisse
Mobileye (MBLY) upgraded to Buy from Hold at Deutsche Bank
Procter & Gamble (PG) upgraded to Outperform from Neutral at Credit Suisse
Regency Centers (REG) upgraded to Buy from Neutral at BofA/Merrill

Downgrades

Anglo American (AAUKY) downgraded to Underperform from Buy at BofA/Merrill
BHP Billiton (BHP) downgraded to Neutral from Buy at BofA/Merrill
BIND Therapeutics (BIND) downgraded to Neutral from Outperform at Credit Suisse
BRF S.A. (BRFS) downgraded to Neutral from Buy at Goldman
DISH (DISH) downgraded to Underweight from Equal Weight at Barclays
Enerplus (ERF) downgraded to Sector Performer from Outperformer at CIBC
Kindred Biosciences (KIN) downgraded to Market Perform from Outperform at Leerink
Nevsun Resources (NSU) downgraded to Neutral from Buy at UBS
Public Storage (PSA) downgraded to Underweight from Hold at KeyBanc
Rio Tinto (RIO) downgraded to Underperform from Buy at BofA/Merrill
Thor Industries (THO) downgraded to Market Perform from Outperform at BMO Capital
Tupperware Brands (TUP) downgraded to Underperform from Market Perform at BMO Capital
Vermilion Energy (VET) downgraded to Sector Performer from Outperformer at CIBC
Wal-Mart (WMT) downgraded to Neutral from Buy at UBS

Initiations

Avis Budget (CAR) initiated with an Outperform at Credit Suisse
BlackRock (BLK) initiated with an Equal Weight at Barclays
Blackstone (BX) initiated with an Overweight at Barclays
Carlyle Group (CG) initiated with an Equal Weight at Barclays
Franklin Resources (BEN) initiated with an Equal Weight at Barclays
Garrison Capital (GARS) initiated with a Market Perform at JMP Securities
Hain Celestial (HAIN) initiated with a Perform at Oppenheimer
Intercept (ICPT) initiated with an Outperform at RW Baird
Invesco (IVZ) initiated with an Overweight at Barclays
KKR (KKR) initiated with an Overweight at Barclays
Legg Mason (LM) initiated with an Equal Weight at Barclays
Oaktree Capital (OAK) initiated with an Equal Weight at Barclays
T. Rowe Price (TROW) initiated with an Equal Weight at Barclays

COMPANY NEWS

Acacia Research (ACTG) subsidiary announces settlement agreement with Chase Paymentech
Allegiant Travel (ALGT) declares special dividend of $2.50 per share
American Realty (ARCP) to receive $60M settlement from RCS Capital
Archer Daniels (ADM) plans to boost dividend payout ratio to 30%-40% from 20%-25%
Array BioPharma (ARRY) to regain worldwide rights to Binimetinib
Best Buy (BBY) to sell Five Star business in China
Cache (CACH) received inquiry for potential sale, to review strategic alternatives
Costco (COST) reports Nov. SSS up 5%
Disney (DIS) increases annual dividend 34% to $1.15 per share
Enbridge (ENB) increases quarterly dividend 33% to 46.5c per share
Enbridge (ENB) raises dividend payout policy to 75%-85% of adjusted earnings
Facebook (FB) and ESET announce partnership to fight malware
Franklin Resources (BEN) announces special cash dividend of 50c per share
Franklin Resources (BEN) raises quarterly dividend to 15c from 12c per share
Hanwha SolarOne (HSOL) signs 20 MW module supply contract in China
ICA Fluor (FLR) to build $1.3B coker plant in Mexico
Kforce (KFRC) increases dividend 10% to 11c
Kindred Biosciences (KIN) to discontinue AtoKin study
NextEra Energy (NEE), Hawaiian Electric to combine in merger valued at $4.3B
Oncolytics Biotech’s (ONCY) Reolysin shows positive preclinical results
Saga Communications (SGA) announces special cash dividend of $1.20 per share
Starboard Value raises stake in Integrated Silicon (ISSI) to 7.8% from 7.2%
UTi Worldwide (UTIW) says no current talks with DSVý A/S
Unilever (UN) to make Spreads business standalone unit
Verizon (VZ), Cox reach agreement to restore Fox 25 to FiOS TV

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Culp (CFI), Synopsys (SNPS), Verint Systems (VRNT), Avago (AVGO), PVH Corp. (PVH), Guess (GES), SeaChange (SEAC), New York & Co. (NWY), Tilly’s (TLYS)

Companies that missed consensus earnings expectations include:
American Software (AMSWA)

Companies that matched consensus earnings expectations include:
Descartes Systems (DSGX), Aeropostale (ARO)

Sears (SHLD) reports Q3 EPS ($5.15), one estimate ($3.31)
SeaChange (SEAC) lowers FY15 EPs view (44c)-(36c) from (12c)-2c
PVH Corp. (PVH) lowers FY14 EPS view to  $7.25-$7.30 from $7.30-$7.40
Guess (GES) lowers FY15 EPS view to $1.00-$1.10 from $1.05-$1.20
Guess (GES) sees Q4 EPS 53c-63c, consensus 69c
Aeropostale (ARO) sees Q4 EPS (37c)-(44c), consensus (36c)

NEWSPAPERS/WEBSITES

DirecTV (DTV) contract with HBO has clauses for streaming, WSJ reports
Google (GOOG) to challenge Microsoft (MSFT) in workplace software, WSJ reports
Intel (INTC) to spend $1.6B to upgrade China factory, Reuters says
Proposed U.K. tax hike would hit tech companies, NY Times says
TASER (TASR) looks expensive, Barron’s says

SYNDICATE

Advanced Drainage (WMS) 10M share Secondary priced at $21.25
Agree Realty (ADC) files to sell 2.1M shares of common stock
Lexicon (LXRX) files to sell 4.7M shares for holders
Supernus (SUPN) files $112.8M mixed securities shelf, 12.8M shares for holders

via Zero Hedge http://ift.tt/1ypGVcv Tyler Durden

Today we’ll learn more about whether Mr Draghi becomes Super Mario in the near future as the widely anticipated ECB meeting is now only a few hours away. We will do another summary preview of market expectations shortly, but in a nutshell, nobody really expects Draghi to announce anything today although the jawboning is expected to reach unseen levels. The reason is that Germany is still staunchly against outright public QE, and Draghi probably wants to avoid an outright legal confrontation. As DB notes, assuming no new policy moves, the success of today’s meeting will probably depend on the degree to which Draghi indicates the need for more action soon and the degree to which that feeling is unanimous within the council. Over the past weekend Weidmann’s comment about falling oil prices representing a form of stimulus highlights that this consensus is still proving difficult to build. It might need a couple more months of low growth and inflation, revised staff forecasts and a stubbornly slow balance sheet accumulation to cement action.

As if hypnotized by Draghi’s perpetual inability to actually do anything (as opposed to say), a massive barrier of selling has emerged at the 120 level in the USDJPY. It will surely be taken out later today in a major stop hunt, which will in turn push US futures, whether bought by central banks or not, to new record highs, while the Japanese currency ploughs on to SocGen’s point of no return, first at 123 then at 145, and then at #Div/0. Another question has emreged on European bonds: if and when Draghi does finally implement sovereign QE, will that be the signal to sell everything? Judging by the reaction in the US fixed income market, bonds have sold the news in each of the previous 3 QE episodes. Why should Europe be any different?

European equities have lacked direction and remain marginally higher ahead of today’s ECB & BoE rate decision with both central banks expected not to take any action. On a sector basis, consumer discretionary is the best performer, however energy stocks have been lagging as the FTSE 100 marginally underperforms given its large gearing toward resource based firms. In stock specific news, Ryanair opened the session significantly higher trading as high as 8.5% after raising their FY profit forecast with easyJet higher by 2.4% in sympathy with the move.

In Fixed income, Bunds have traded sideways and remained relatively unchanged as this morning’s session which has been directionless aided by the lack of pertinent macro news ahead of the ECB press conference. Elsewhere, the Spanish Tresoro sold a total of EUR 3.5bln as the Spanish 10y printed a record low yield at 1.840%; the French Tresor selling combined 4bln in 2023, 2025 and 2027 bonds as expected. Ahead of the ECB conference, analysts at Credit Suisse say risks are skewed toward ECB under-delivering on investors’ expectations for sovereign QE given recent moves in EUR rates market.

In China, equity markets are extending their gains to 3 year highs with the strong performance overnight being largely driven by large caps and brokers. The CSI 300, Shanghai Composite and Shenzhen Composite are up +2.9%, +2.3% and +1.6% overnight to be up +31%, +34% and +39% YTD. Money market rates were lower in China overnight whilst expectations of a RRR cut seems to be building up. In terms of year to date performance in Asian equities, China has closed the gap sharply and is not that far off from the Modi-driven rally in India and would say those two markets are broadly on par now. Whilst on this our Asian economists now expect China to decelerate from 7.3% in 2014 to 6.9%yoy in 2015H1, dragged by weak property investment. Contingent on supportive policy actions, they see risks to the outlook as balanced. Lagged effects of monetary policy easing, together with more expansionary fiscal policy, will pull up GDP growth to 7.2% in 2015H2. In India, data show an economy still treading sideways, but sharply rising consumer and business sentiment bodes well for the cycle. An investment recovery and re-acceleration in consumption seem likely in the coming year.

In summary, today’s key drivers and changes: ECB, Bank of England meetings today. Ruble erased gains; Putin gives annual speech. U.K. house price growth slowed last month. The Dutch and French markets are the best-performing larger bourses, Swedish the worst. The euro is little changed against the dollar. German 10yr bond yields rise; Spanish yields increase. Commodities gain, with natural gas, wheat underperforming and nickel outperforming. U.S. jobless claims due later.

Market Wrap

• S&P 500 futures up 0% to 2073.6
• Stoxx 600 up 0.2% to 350.1
• US 10Yr yield down 0bps to 2.28%
• German 10Yr yield up 2bps to 0.76%
• MSCI Asia Pacific up 0.6% to 140.5
• Gold spot down 0.4% to $1202.4/oz

Bulletin Headline Summary from RanSquawk and Bloomberg

• With the lack of any tier 1 data or speakers, markets have lacked any firm direction ahead of the BoE at 1200GMT/0600CST & ECB at 1245GMT/0645CST and the ECB press conference at 1330GMT/0730CST
• Treasuries steady before BOE and ECB decisions on interest rates, with Draghi press conference scheduled for 8:30am ET; Nov. nonfarm payrolls tomorrow, est. +230k with unemployment rate holding at 5.8%.
• 2Y yield has risen more than 10bps from Monday’s low, including 4bps increase Tuesday after Fed vice-chair Stanley Fischer said policy makers were getting closer to dropping “considerable time” language from its statement
• After pledging last month to raise inflation “as fast as possible,” Draghi is looking for consensus on what further action the ECB can take amid German disquiet over bond- buying and a wait-and-see approach by his own vice president
• ECB should follow U.S. example and accelerate bond purchases to stimulate economic recovery, la Repubblica reports, citing interview with Fed’s Fischer
• Saudi Arabia will probably deepen discounts for crude supplies to Asia after leading OPEC to maintain the group’s output target amid a global battle for market share
• Putin pledged to punish speculators attacking the ruble with “harsh” measures in a defiant speech that reached into Russian history to defend his annexation of Crimea and compared his international opponents with Adolf Hitler
• U.S. health-care costs grew 3.6%  to $2.9t in 2013, the smallest increase in more than 50 years and one that probably won’t be matched soon as spending accelerates to meet the needs of millions gaining insurance under Obamacare
• Obama exceeded his constitutional authority with an executive order allowing as many as 4m undocumented people to stay in the U.S. temporarily, a coalition of U.S. states claimed in the first lawsuit filed over the immigration action
• In American health-care worker who may have been exposed to the Ebola virus in West Africa is headed to a U.S. hospital for evaluation and possible treatment
• Sovereign yields mostly higher. Asian, European stocks, U.S. equity-index futures gain. Brent crude rises, gold and copper falls

US Event Calendar

• 7:30am: Challenger Job Cuts y/y, Nov. (prior 11.9%)
• 8:30am: Initial Jobless Claims, Nov. 29 est. 295k (prior 313k); Continuing Claims, Nov. 22, est. 2.318k (prior 2.316m)
• 9:45am: Bloomberg Consumer Comfort, Nov. 30 (prior 40.7)

Central Banks

• 7:00am: Bank of England seen maintaining 0.5% bank rate
• 7:45am: ECB seen maintaining 0.05% main refinancing rate
• 8:30am: ECB’s Draghi holds news conference
• 8:30am: Fed’s Mester speaks in Washington
• 12:30pm: Fed’s Brainard speaks in Washington Supply

FX

In the FX market, EUR/USD initially fell below the 1.2300 handle before staging a recovery to trade back above Aug. 2012 lows, a move primarily attributed to the pullback from multiyear highs observed in the USD-index. Elsewhere, USD/JPY remains in close proximity to the 120.00 level to the upside, which is a large size option expiry (2.1bln) for today’s 10am NY cut (1500GMT). Moreover, the RUB has weakened this morning following a public address from Russian President Putin who appeared to blame the West for the situation in Ukraine. Overnight, the AUD/USD traded slightly weaker, ignoring stronger retail sales as more banks look for more cuts from the RBA.

COMMODITIES

The metals complex shows divergence among spot gold and silver following Russian President Putin’s somewhat aggressive statements blaming the West for the ongoing problems in Ukraine. Furthermore, Platinum trades higher by around 1% helped by the slight strength of the RUB as Russia is the second largest producer of the metal. In precious metal related news, earlier reports emerged that China are said to consider loosening restrictions on gold imports, according to Bloomberg. The energy complex has been relatively quiet with the USD broadly flat with direction on the session to be dictated by the open of the NYMEX pit.

DB’s Jim Reid concludes the overnight recap

Today we’ll learn more about whether Mr Draghi becomes Super Mario in the near future as the widely anticipated ECB meeting is now only a few hours away. DB’s Mark Wall is not expecting anything concrete to be delivered with no new commitments to asset purchasing or tweaks to the tLTRO terms. He thinks that the council remains in wait and see mode until the impact of the current ABS/covered purchase programmes and take up from the Dec 11th tLTRO2 are known. Mark’s team continue to believe that a broad based asset purchase scheme (including Government bonds) will be announced by the end of Q1 but unlikely before. Assuming no new policy moves, the success of today’s meeting will probably depend on the degree to which Draghi indicates the need for more action soon and the degree to which that feeling is unanimous within the council. Over the past weekend Weidmann’s comment about falling oil prices representing a form of stimulus highlights that this consensus is still proving difficult to build. It might need a couple more months of low growth and inflation, revised staff forecasts and a stubbornly slow balance sheet accumulation to cement action.

In terms of trading, given that I’m confident broad based QE is coming I don’t think setting up for disappointment today is a particularly fruitful policy. It might work for a short while but given the illiquidty, especially in assets like credit, one would have to be confident of a big move wider in the short-term or a view that the ECB will never quite be able to pull the trigger. We think we’ll get a few small hints today and the trigger in Q1. As such we continue to be bullish European credit.

Away from Europe and the ECB, the recent Fed speak on balance has been viewed to be more hawkish than what the market was prepared for. Indeed earlier this week we heard from both Dudley and Fischer who seemed keen to emphasise that that normalisation of short term rates is just a matter of time. Yesterday Philly Fed’s Plosser noted that US recovery is well advanced and that means “we should no longer be conducting monetary policy as if we were still in the midst of a financial crisis or in the depths of a recession”. He added that “Keeping the funds rate target near zero when inflation is close to our goal
and the economy is near full employment is both unprecedented and risky”.

Speaking on financial market stability and in her first public address since joining the Fed, Governor Lael Brainard also said that Fed should be prudent and circumspect in using monetary policy to combat financial stability risks because of its broad effects on the economy. Treasuries bear flattened modestly overnight in reaction to these comments with the 2yr closing 2bp higher at 0.55% with the 10yr falling 1bp to 2.28%. The June 2016 Fed Funds implied rate is 8.5bp higher this week.

In terms of other markets equities were higher on both sides of the Atlantic. The S&P 500 (+0.38%) and Dow (+0.18%) made new highs whilst the Stoxx600 was more than half a percent higher on the day. Brent was lower once more to close just below US$70/bbl whilst WTI was slightly higher on an unexpected decline in US crude inventory. Energy stocks added another 1% to be up for a third day in a row. Its hard to say if we are forming a bottom here but it does seem that the correlation between crude oil and energy stocks have somewhat faded in recent days.

Switching to Asia, Japan’s upcoming election and the ongoing rally in Chinese equities are the two notable market themes for now. On Japan local polls are pointing towards a landslide victory for PM Shinzo Abe’s ruling LDP in the Dec 14th parliamentary elections. Local polls by four news outlets all showed that LDP was set to win around 300 seats in the 475-seat lower house. A convincing victory should strengthen the government’s mandate for Abenomics and increases the prospect of PM Abe staying in office through 2018. Indeed in a scenario where LDP wins 295 or more seats our Japanese macro strategist thinks equities could rise sharply and JPY will weaken more with temporary upward pressure on JGB yields due to further currency depreciation.

In China, equity markets are extending their gains to 3 year highs with the strong performance overnight being largely driven by large caps and brokers. The CSI 300, Shanghai Composite and Shenzhen Composite are up +2.9%, +2.3% and +1.6% overnight to be up +31%, +34% and +39% YTD. Money market rates were lower in China overnight whilst expectations of a RRR cut seems to be building up. In terms of year to date performance in Asian equities, China has closed the gap sharply and is not that far off from the Modi-driven rally in India and would say those two markets are broadly on par now. Whilst on this our Asian economists now expect China to decelerate from 7.3% in 2014 to 6.9%yoy in 2015H1, dragged by weak property investment. Contingent on supportive policy actions, they see risks to the outlook as balanced. Lagged effects of monetary policy easing, together with more expansionary fiscal policy, will pull up GDP growth to 7.2% in 2015H2. In India, data show an economy still treading sideways, but sharply rising consumer and business sentiment bodes well for the cycle. An investment recovery and re-acceleration in consumption seem likely in the coming year.

Away from Asia, the Russian Ruble bounced off its record lows yesterday on reports of central bank intervention. Russia’s central bank yesterday said that it spent US$700m of its FX reserves to support the currency on Monday which also marks its first intervention since fully free floating the Ruble on Nov 10. The currency hit another fresh low against the Dollar of 54.87 yesterday morning before recovering to close at around 53.2. The Ruble is still the worst performer in the EM world this year though after having lost around 38% of its value against the US Dollar. Its a similar story in the EM credit space with Russia 5Y CDS being the standout laggard amongst peers. Russia CDS is around 120bp wider this year which compares with the c.35-40bps YTD spread tightening in Indonesia, Hungary, Thailand and Turkey.

Moving onto today, we have more Fed speak to look forward to with Fisher (on the Texas economy and monetary policy), Mester (opening remarks at a Financial Stability conference) and Brainard (keynote address on Financial stability) lined up for today. Weekly jobless claims will be the only notable release ahead of tomorrow’s NFP. All eyes will be on ECB today as previewed above although we also have the BoE’s policy meeting although consensus is not looking for any major changes there.

via Zero Hedge http://ift.tt/1ypGXB1 Tyler Durden