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Saudi Arabia’s oil minister Ali Al-Naimi is due to speak at about 8:50am Houston time at the CERA oil market conference and oil prices are swinging around (now back below $33 – front-month – and in the red for the day) as the almost unprecedented moves intraday in black gold spike volatiltiy to near record highs. In order to help the algos figure out just what to do when Al-Naimi speaks, we breakdown his words (and the latter deeds) over the last few years with expectations that he will confirm his opposition to a crude production cut "at this time."

 

The intraday swings are almost unprecedented…

 

Smashing vol near record highs…

 

But as Saxobank notes,

“It is going to be interesting to see what he says as he steps into the lion’s den”

 

“The market is probably looking for some soothing comments from Naimi considering they have been talking about a production freeze and supporting prices at these levels — we could see some short-covering ahead of that”

Al-Naimi is likely to reaffirm discussions over a production freeze made with Russia, Qatar and Venezuela last week, explaining that a statement regarding the freeze is a first step, and Saudi Arabia will keep working to stabilize market – this would likely be seen as bullish (by the machines).

Here’s a primer on what he’s said publicly in the past and, where applicable, what happened next in terms of oil production policies of Saudi Arabia and/or OPEC:

Feb. 2016 output freeze deal “beginning of a process” that could be followed by “other steps” to stabilize, improve the market, he says in Doha

 

Dec. 2015: “We will listen and then decide” before meeting that saw output target abandoned

 

June 2015: Naimi is “100% satisfied,” accord. to Hayat

 

Nov. 2014: Oil mkt will “stabilize itself,” OPEC will take “unified position,” Naimi said before gathering that left target unch.

 

Dec. 2011: There is going to be a “great agreement” Naimi said. Ceiling was raised to 30m b/d, individual quotas abandoned, reflecting Saudi position

 

June 2011: Naimi declined to answer reporters’ questions before meeting at which other members blocked Saudi proposal to raise output

 

Dec. 2008: “There will be a cut in production of ~2m bbl,” Naimi told reporters before group reduced output target by 2.463m b/d

 

Oct. 2008: “Who said anything about a cut?,” Naimi said before OPEC meeting. “Prices will be determined by the market.” Group’s ceiling was subsequently cut by 1.5m b/d

 

Sept. 2007: Al-Naimi made no comment to reporters before meeting where Saudi proposal to raise output was opposed by other members. At the meeting itself, country proposed increasing the quota, a position that prevailed

 

Dec. 2006: “We need to do a little more work,” Naimi said before OPEC agreed 2nd output cut in 2 months.

 

Oct. 2006: “We are trying to bring back the market to its normal equilibrium and the price will take care of itself,” Naimi said on arrival at hotel for OPEC meeting

Trade accordingly.

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

Below is the latest KBRA research report on blockchain, the enabling technology behind the bitcoin payments system.  After spending several months talking to participants and organizations focused on this new approach to transferring value between individuals, we find no viable commercial business model in sight.  There are however, swarms of hungry consultants, aging derivatives mavens and private equity firms seeking to profit from the hype surrounding bitcoin and the blockchain technology. 

Think of bitcoin as a game akin to Monopoly, where the means of exchange, assets and counterparties are all known.  Trouble is, there is as yet no tangible business case that proves the utility of this scheme to investors much less financial institutions.  This fact has not prevented investors and banks from throwing a great deal of time and money at efforts to monetize the blockchain design.  But the elegance and simplicity of blockchain as illustrated in the bitcoin experience may also be the most daunting obstacle to broader adoption of peer-to-peer payments.  The full report with footnotes is awailable on www.kbra.com.

BTW, have a look at the great work being done by our colleagues in KBRA’s CMBS surveillance team as they identify the hot spots in the commercial real estate loan market affected by lower oil prices.  The lattest report, “KCP Special Report: Oil Exposed Loan Update,” is must reading if you follow this asset class.  Best, Chris

 

In Search of a Business Case: Does Blockchain Technology Benefit Investors?

Kroll Bond Rating Agency

February 22, 2016

In November 2008, someone writing under the name Satoshi Nakamoto – it is believed to be pseudonym – posted a research paper on an obscure cryptography listserve describing the design for a new digital currency called bitcoin.  Bitcoin was the latest in a series of new crypto currencies going back to the 1980s.  But unlike prior attempts, the bitcoin architecture experienced strong retail adoption.  

The bitcoin market is a closed system for sending and receiving payments using individually numbered “bitcoins” as the means of exchange.  The value of bitcoins expressed in traditional currencies fluctuates significantly with short-term supply and demand: thus, the ersatz currency may not yet qualify as a store of value. The total number of bitcoins available to the participants in the closed system grows at a predetermined rate and will reach a maximum of 21 million in 2140.  

The enabling logic behind the bitcoin system is known as the “blockchain,” a distributed network of users that allows the participants in the system to collectively validate each transaction. Think of the blockchain as the combination of cryptography and the peer-to-peer networking behind the Internet. Just as paper receipts allow a company accountant to create an official record of many employees’ transactions, the blockchain serves as a common reference that validates the master record of bitcoin transactions and distributes that record to each participant. When bitcoins change hands, each transaction is added to this single ledger or “blockchain” maintained collectively by and for all of the participants.    

Transactions are broadcast to the entire network, and users employ computers to decode and validate each transaction using cryptographic techniques. Bitcoin users who validate transactions are known as “miners.” The bitcoin market participants who focus on mining employ considerable resources to validate transactions and are incentivized to be the first to decode the algorithms because they earn a bounty, currently 50 bitcoins. The considerable computational power required to decrypt these transactions also provides a natural defense against hacking or fraud, since the blockchain adds a new transaction every ten minutes. 

Harvey (2016) argues that:

“Cryptography is about communication in the presence of an adversary. Cryptofinance is the efficient exchange of ownership, the verification of ownership, as well as the ability to algorithmically design conditional contracts, all with security, privacy, and minimal trust without using centralized institutions.”  

The bitcoin currency has received mixed reviews as a replacement for established currencies. Most recently, bitcoin has been under a cloud because of concerns about its use by terrorist and criminal organizations. However, a number of people and organizations have focused on the distributed blockchain technology separate from bitcoin as a potential means of clearing payments and even securities transactions more efficiently than current centralized systems. A number of financial institutions and private investors have devoted significant time and financial resources to looking at ways to monetize the blockchain technology.    

Advantages of Blockchain

Looking at the blockchain technology in isolation, there are a number of potential benefits to users. The blockchain is a distributed database where no third party is required to validate or settle transactions. The peer-to-peer network maintains an identical, time-stamped record of every transaction, which is stored in a semi-public, semi-private manner. The ultimate beneficial owner (UBO) is able to transfer values to other members of the network directly, without utilizing traditional banks, brokerage firms and the clearing system. The table below illustrates the current clearing system vs. a theoretical blockchain transaction.

Current Payments System

? Banks, Visa, Mastercard, are centralized and for-profit businesses which treat payments as confidential.

? Financial Institutions (FI) exercise monopoly control over payments system. All transactions originate with FIs and settle through clearinghouse, which sets basic rules. 

? Clearinghouse and members know/validate all transactions and counterparties (CPs).

? Choice of currency for transactions.

? Institutional system facilitates trades via use of “street name” for all transactions, not in name of UBO.

? All trades settled “net” of other clearing balances to reduce “float” and credit costs. ? Bitcoin, other electronic currencies operate on distributed peer?to?peer networks and create a common, public ownership ledger.

Hypothetical BlockChain Settlement

? No role for FIs or clearinghouse. All trades settled bilaterally and directly via members of the network.

? Members of blockchain validate ownership of assets after exchange.

? Identity of the UBO may not be transparent.

? The agreed means of exchange is subject to the rules of the blockchain, allowing for infinite extensibility.

? All assets are carried in the name of the UBO.

? No netting of transactions and, in theory, no float or intraday credit exposure.

Of note, bitcoin and the enabling blockchain technology explicitly and necessarily exclude governments and FIs from the closed, peer-to-peer system. Indeed, blockchain represents a very direct challenge to the governmental monopoly on money and payments that has existed in the U.S. since the Civil War and was institutionalized with the creation of the Federal Reserve System in 1913. Strangely, this fact has not prevented banks and other FIs from spending enormous amounts of time and money studying how to “exploit” blockchain technology. 

While there are a number of potential advantages to investors in using blockchain technology to effect financial transactions, actually changing the existing payments system is not a trivial challenge. First and foremost, the FIs which control the payments system have significant market power and political influence that is likely to work against change. More significant than the commercial and political interests behind the present day payments system, however, are the attributes of the blockchain system itself.

In a closed system such as bitcoin, the blockchain system for exchanging these tokens works reasonably well. The members of the network are known to all of the other members and the means of exchange – bitcoins – are limited in number and have unique IDs, preventing “double spending.” Adding additional types of exchange mediums – currencies – and the ability to deliver other types of assets, such as securities, via blockchain would seem to be imminently possible, but would also add considerable complexity and cost to the network.  

It is unclear, based on what we know today, whether the blockchain system, if expanded to accommodate multiple currencies and asset types, would have lower cost than the existing centralized clearing system controlled by FIs. Part of the challenge facing proponents of change is that many of the costs in the present day clearing system are not explicit and are embedded in the operations of the participants. It seems clear that blockchain has the potential to greatly reduce the cost of payments related to fraud and other types of unauthorized payments, such as payments made by minors. The real question seems to be whether more complex types of networks can develop that would provide the functionality and seeming efficiency of the blockchain and avoid some of the direct and indirect costs of the current payments and clearing system. 

Risk in the Payments System

Following the 2008 financial crisis, the financial industry increased focus on reducing risk, achieving greater transparency, and improving efficiency in order to establish a safer market environment. Specifically, both the EU and now the U.S. are attempting to move from three-day settlement for most financial transactions to two days or “T+2.”  Advocates of the blockchain technology claim that the blockchain would allow for same-day settlement of financial transactions or perhaps even multiple sales and settlements of a given asset in the same day. As yet, however, there is no empirical evidence to support such claims.

The fact that the blockchain scheme allows for the payment of a bounty to successful bitcoin miners who validate transactions illustrates that there is a cost involved in processing these exchanges. By no coincidence, a combination of cost and risk considerations are driving the global financial community to embrace T+2 clearing for securities transactions. Can the advocates of broader use of blockchain, at least beyond the very simple example of payments provided by bitcoin, construct a logic that will support the costs of validating cash and securities transactions? For example, would a hypothetical, blockchain-based shared clearing network include a tax on participants to bear the cost? 

It is no coincidence, KBRA believes, that the emergence of bitcoin and the blockchain are coming at a time of global financial turmoil and, at the same time, greatly heightened focus on risk by regulators. Most policy makers are familiar with the issues involving consumer use of payments systems, but the largely opaque world of institutional payments and settlements is also experiencing significant change. The cost pressures that are pushing the major financial markets to embrace T+2 as a minimum standard for securities settlement are also generating questions about the credit exposures in clearing and thus the attendant capital costs. FIs are now being required to measure and hold additional capital against liquidity and CP risks. The Depository Trust & Clearing Corp (DTCC), for example, has been compelled to increase capital as a result of its three clearing-agency subsidiaries being designated Systemically Important Financial Market Utilities.   

The post trade service provider DTCC currently requires participants in its affiliated networks to post USD $22 billion in deposits to backstop payment flows. Would blockchain eliminate the need for such performance balances? How would these payment flows move in a blockchain environment? We do not as yet have answers to these questions. However, DTCC, to its credit, has challenged the financial industry to adopt the blockchain technology. In a white paper, DTCC observed that although blockchain technology has potential and presents “a generational opportunity to reimagine the financial industry infrastructure,” it is still “immature, unproven, has inherent scale limitations in its current form and lacks underlying infrastructure to cleanly integrate it into the existing financial market environment.”  

KBRA has heard similar views expressed by a number of operations professionals who we contacted in the preparation of this report. All of the time and energy being expended by FIs to “leverage” the concept seems to be defensive in nature since, as yet, there seems no way to include FIs in the blockchain template. Or as Wired Magazine opined: “There’s no guarantee that the DTCC will take the blockchain idea to its logical extreme. After all, a truly distributed blockchain-based stock settlement system could eliminate the need for DTCC.”  

Conclusion

While a number of FIs and investors believe that blockchain will evolve into a more efficient medium for transferring value or ownership of assets, in fact the elegance and simplicity of blockchain as illustrated in the bitcoin experience may also be the most daunting obstacle to broader adoption. Like a face-to-face cash transaction between two people, the bitcoin system functions because the payment mechanism and the means of exchange are transparent and trusted, even if the participants are opaque. The cryptographic system behind blockchain has functioned reasonably well in terms of protecting the integrity of transactions from theft and fraud, but the lack of a sovereign sponsor behind the system probably dooms such distributed schemes to a secondary role in the marketplace.  

Trust and credibility are ultimately the most important indicia of a currency’s acceptance, two qualities traditionally associated with government-sponsored, collective currency schemes. With the creation of the Fed a century ago, the U.S. transitioned from a largely private payments system to a government-sponsored scheme, in part because the economic stresses, periodic market panics and related political pressures of that era drove Congress to embrace a centralized and collective system. Even the House of Morgan could not withstand the financial demands of the currency markets in the years before WWI.

It may be that the blockchain could have utility, for example, in enabling complex financial transactions for a limited number of participants, but KBRA does not believe based upon what we see today that the blockchain is likely to supplant existing centralized payments and/or settlements systems any time soon. Ultimately the blockchain was created to replicate an exchange of cash between two individuals, not to enable global payments or securities transactions. And as noted above, the operational design of the peer-to-peer blockchain template makes no allowance for banks, other FIs or the DTCC.

“Nakamoto introduced the bitcoin blockchain as a solution to a specific engineering problem: to move money online in the same way cash is transacted in person without a trusted third party,” writes Saifedean Ammous of the Lebanese American University. “The blockchain was the solution to the electronic cash problem… It did not need investment, venture capital, conferences, or advertisement…. There are many simple technologies banks need to optimize and to improve to enhance their products. Instead, they are seduced by the siren song of futuristic buzzwords and searching for a problem to solve with a blockchain. But they won’t find anything.”   

via Zero Hedge http://ift.tt/1XKgFUO rcwhalen

It has been a bad year for most markets. It has also been a bad year for those entities who collect 2 and 20 to “hedge” against bad years for markets: hedge funds. Unfortunately, as we have said since 2009, most hedge funds tend do anything but actually “hedge” which is why as Goldman’s latest HF tracker reports, hedge funds have only modestly outperformed a weak S&P 500 YTD following their reduction in net long exposure to 45% at the start of 2016, the lowest level since 2012. Most are down for the year.

The reason for this underperformance is that the most popular positions continued to suffer as the reversal in momentum hurt highly concentrated hedge fund portfolios. The average fund holds 68% of long assets in its top 10 positions, most of which happen to be momentum driven. Perhaps instead of “hedge funds” they should be called “momentum funds”?

Some further observations from David Kostin:

Despite reduced risk-taking at the start of 2016, the momentum reversal in January hurt heavily concentrated hedge fund portfolios, prompting further de-risking and contributing to a vicious cycle that compounded the underperformance of the most popular hedge fund positions. Momentum (the continued outperformance of past leaders) was a powerful trend in 2015, rising roughly 50% from May until its sharp reversal in mid-January (see Exhibit 4). As momentum reversed, our Hedge Fund VIP list of the most popular hedge fund long positions also lagged. The basket (ticker: GSTHHVIP) has underperformed the S&P 500 by 386 bp YTD (-10% vs. -6%).

As a reminder, Goldman is now trying to make its Hedge Fund VIP basket into an ETF in an effort to make it easier for underwater HFs to offload exposure to retail investors as few other hedge funds, most of whom are already in the same positions, have any interest. Some more observations on said basket:

Our hedge fund VIP list (Bloomberg ticker: <GSTHHVIP>) consists of stocks in which fundamentally-driven hedge funds have a large position. We define stocks that “matter most” as the positions that appear most frequently among the top 10 holdings within hedge fund portfolios. For this analysis, we limit our universe to hedge funds with 10 to 200 distinct equity positions in an attempt to isolate fundamentally-driven investors from quantitative funds or funds that mirror private equity investments.

Here is the problem: while the basket of the 50 stocks that “matter most” outperformed the S&P 500 by more than 700 bp in 2013 (41% vs. 34%) and by 265 bp during 2014 (16.3% vs. 13.7%), it trailed the S&P 500 by 384 bp in 2015 (-2.5% vs. +1.4%) and is off to a rough start in 2016, lagging the market by nearly 400 bp YTD.

Here’s the problem: clustering has become endemic for hedge funds, who having run out of alpha-generating ideas have all rushed into the same positions, and nowhere is this more visible than in the hedge fund exposure to FANGs, which has been the key reason for disappointing hedge fund performance.

Equity long/short hedge funds were especially harmed by the momentum reversal given the widespread ownership of high-flying consumer-facing technology stocks. These momentum leaders included firms such as FANG (Facebook, Amazon, Netflix, and Alphabet/Google) that posted stellar returns in 2015 and rank as constituents of our VIP List. Because of the popularity and performance of these stocks, “FANG” rocketed from roughly 1.5% of hedge fund US equity assets at the start of 2015 to 3.5% at the start of 2016. More broadly, fund portfolio density reached the highest levels on record. With the average fund holding 68% of long assets in its top 10 positions, funds have become especially dependent on the performance of a few key stocks.

* * *

Which brings us to the topic of this post: how to outperform most hedge funds. The answer is simple, and two-fold. First, as we have said on many occasions in the past year, simply do the opposite of what hedge funds are doing. As the market rotated away from momentum and popular positions, the stocks least owned by hedge funds soared. Goldman’s Low Concentration Basket (GSTHHFSL) consists of the S&P 500 firms with the smallest share of market cap owned by hedge funds. This strategy has posted a mediocre historical performance record, outperforming the S&P 500 in 53% of quarters since 2001. This year, however, the basket has outperformed the S&P 500 by 541 bp (0% vs. -6%) and outperformed by nearly 9 pp during the past six months, equating to its strongest six-month return outside of 2008 and 2002.

Investors who believe hedge funds are wrong and will remain directionally wrong and who wish to own equity risk but remain relatively insulated from the volatility caused by changes in hedge fund positioning should find this basket attractive. New constituents include ORCL, CVX, and UPS.

 

Here is Goldman’s list of the 20 least concentrated equity holdings:

 

Of course there is a far simpler way to beat most hedge funds: just be long gold.

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

Back in August, we warned that things were about to get much worse for Standard Chartered, whose EM focus makes the bank especially vulnerable to the ongoing downturn in commodities and the generally poor outlook for the emerging world in an environment characterized by slowing global growth and a persistently strong USD.

At the time, the Standard had just reported a 44% decline in H1 profits but investors were pacified by a 50% “rebasing” of the dividend. “The underlying business looks to be headed downhill in a hurry,” we warned, noting that trouble among corporate and institutional clients contributed to a 158% increase in impairments.

Needless to say, the outlook for EM hasn’t brightened since then. On Tuesday, we got a look at the bank’s full year results and boy, oh boy were they bad. Standard posted an annual net loss for the first time in more than 25 years with pre-tax red ink totaling $1.5 billion.

Impairments skyrocketed by 87% to more than $4 billion primarily due (again) to the Corporate & Institutional Clients and Commercial Clients business. “We have reviewed the portfolio extensively through 2015 and have increased provisioning, largely to reflect lower commodity prices as well as further deterioration in India,” the bank said. 

NPLs jumped 70% to $12.8 billion and net interest income fell $4.1 billion from $4.65 billion the previous year.

But perhaps the biggest surprise was operating profit which, at just $800 million, was wildly below consensus which stood at around $1.4 billion going into the report. The bank missed on the top line as well, as revenues plunged 15%. Even the Tier 1 ratio – which banks can sometimes manage to improve even amid poor results, slipped to 12.6% from 13.1% at the end of September. Compliance spend jumped 40% to $1 billion.

CEO Bill Winters won’t get a bonus for 2015. The aggregate bonus pool was cut by nearly a quarter to $855 million. But don’t worry, Winters will be fine. He still “earned” $2.4 million last year.

Shares fell as much as 12% in early trading before recovering some ground.

“Our 2015 financial results were poor,” Winters, who took over in May and has embarked on a difficult journey to right the ship amid a troubling outlook for EM, said. “We expect the financial performance of the group to remain subdued during 2016.”

So do we. And so does the Street. “Net interest income weakness is particular cause for concern and may reflect balance sheet reduction from revamp,” Barclays said. “Softness in revenue and the surge in NPLs won’t ease concerns,” Keefe, Bruyette, & Woods added while RBC noted that revenue stabilization “seems elusive.” Here’s a bit from Deutsche Bank (which knows a thing or two about reporting abysmal results):

“The revenue performance is particularly worrying, given that we think this should drive long-term valuation of the franchise once impairments reduce. The results leave Standard Chartered with significant revenue improvement to achieve in order to hit 2018/2020 targets, and given the current environment it is unlikely to be an easy 2016. We had previously estimated implied revenues of US$17.4bn and US$18.6bn for 2018 and 2020 respectively. 2H15 annualised revenues were US$13.9bn – leaving significant revenue improvement required, whilst still cutting RWAs and costs. We expect negative consensus revisions today.

And here’s Citi:

C&I has reported a 2H15 pre-tax loss of -$2.0bn, an extremely poor result. Furthermore every line looks weak, with sizeable revenue attrition, little evidence of cost savings and huge impairments. 2H15 revenues of $3.5bn are -31% yoy, with 4Q15 revenues -44% yoy (-32% qoq), hit by de-risking, unfavourable FX translation and mark-to-market loan losses. 2H15 costs of $2.8bn (including $0.2bn relating to restructuring) are +5% yoy. 2H15 loan losses are 2.5x heavier yoy at $2.6bn (including $1.0bn relating to restructuring).

Perhaps CFO Andy Halford put it best: “As we look forward, stresses remain apparent in our markets, and the external headwinds are not improving.”

via Zero Hedge http://ift.tt/1PVfy1N Tyler Durden

• Risk rally fades as stocks, oil slip back into the red (Reuters)
• Syrian govt. accepts halt to ‘combat operations’ in line with U.S.-Russian plan (Reuters)
• Earliest Chinese Data Signal Slowdown Hasn’t Bottomed Out Yet (BBG)
• The Trickle of U.S. Oil Exports Is Already Shifting Global Power (BBG)
• Greek police remove migrants from Macedonian border as more land in Piraeus (Reuters)
• Clinton, Sanders race takes on angrier tone after Nevada (Reuters)
• London Whale’ Breaks Silence (WSJ)
• Once more, Vienna ranked world’s nicest city and Baghdad worst (Reuters)
• Why Oil Producers Will Be Over a Barrel for a Long Time Yet (WSJ)
• Hunt for foreign assets pits Japan Inc vs China  (Reuters)
• Uber Says Driver Suspected of Killing Six Had Clean Record and 4.7 Rating (BBG)
• British business bosses say exit from EU would hit economy and jobs (Reuters)
• Ticket to a Tax Audit: $1 Million (WSJ)
• BlackRock Warns Bond Traders They’re Underestimating the Fed (BBG)
• Suffering Miners Narrow Down (WSJ)
• Home Depot Profit Tops Estimates as Housing Gains Spur Sales (BBG)
• Robots Are Reading Trader Chats to Stop Next Wave of Bank Fines (BBG)
• Apple, FBI Wage War of Words (WSJ)

 

Overnight Media Digest

WSJ

– An internal review at Valeant Pharmaceuticals International Inc. has raised questions about its accounting practices that will likely prompt the restatement of past financial results. (http://on.wsj.com/21lWKxM)

– Last month, Apple Inc. Chief Executive Tim Cook and Federal Bureau of Investigation Director James Comey faced off in a meeting to discuss how Washington and Silicon Valley could work together to combat terrorism. (http://on.wsj.com/1oympoy)

– Google is shuttering its comparison-shopping site for auto insurance, credit cards and mortgages after one year. (http://on.wsj.com/1TwmoNz)

– The nomination of Robert M. Califf, President Barack Obama’s choice to head the Food and Drug Administration, cleared a key procedural hurdle in the Senate on Monday. (http://on.wsj.com/1TC3W7n)

 

FT

Sysco Corp, the largest U.S. food distributor, said it would buy London-based food distributor Brakes Group from Bain Capital Private Equity in a deal valued at about $3.1 billion to strengthen its presence in Europe.

British supermarket operator Sainsbury has been given more time to make a firm bid for Argos-owner Home Retail , after a possible higher rival offer from South African group Steinhoff International emerged on Friday. Home Retail said on Monday the Takeover Panel watchdog had extended Tuesday’s deadline for Sainsbury to formalise its takeover proposal to March 18, the same date as for Steinhoff to make a firm bid or walk away.

Top global miner BHP Billiton slashed its interim dividend by 75 percent on Tuesday, cutting it for the first time since 1988 following a collapse in prices for oil, iron ore, coal and other raw materials.

 

NYT

– The U.S. Food and Drug Administration is investigating whether a faulty blood-testing device may have compromised the results of a clinical trial that led to the approval of Johnson & Johnson’s manufactured anti-clotting drug Xarelto, that has been prescribed to millions of Americans since it arrived on the market in 2011.(http://nyti.ms/1XJrCpC)

– Elected officials of the Atlantic city lashed out at Gov. Chris Christie and other New Jersey officials on Monday, calling their plan to take more control of the city’s finances and the power to renegotiate contracts with the police and fire departments, fascist and hypocritical.(http://nyti.ms/1oyrJs3)

– The U.S. economy continued a strong rebound last year, with unemployment falling by half since the depths of the 2008 recession, wages growing and consumer confidence at its highest point in a dozen years, a White House report said on Monday.(nyti.ms/1oEdHFG)

– While the F.B.I. is pursuing a narrow focus on creating an alternative operating system for just one phone, Apple is arguing its side as broadly as possible by framing the government’s request as a larger discussion of privacy and civil liberties.(http://nyti.ms/1Q55AIZ)

 

Canada

THE GLOBE AND MAIL

** Canada’s securities commissions imposed C$250 million ($182.02 million) in fines and compensation orders against wrongdoers last year, more than doubling the previous year’s total as regulators moved more aggressively to try to deter criminals and assist fraud victims. (http://bit.ly/1p05wUe)

** The Canadian federal government is poised to give Alberta a badly-needed boost, about C$250 million in stabilization funding. Finance Minister Bill Morneau was expected to announce Tuesday that Ottawa will provide the funding under a rarely used program meant to help provinces hit by a sudden economic downturn. (http://bit.ly/1p05FXA)

NATIONAL POST

** Two market regulators have been urged to review whether enough information about Corus Entertainment Inc’s proposed C$2.65 billion acquisition of Shaw Media Inc has been publicly disclosed to allow minority shareholders to make an informed decision, according to letters filed with the Ontario Securities Commission and the Toronto Stock Exchange late Friday. (http://bit.ly/1p02PBZ)

** The Ontario Chamber of Commerce says the province’s businesses will need offset measures to help transition to the new Ontario Retirement Pension Plan. (http://bit.ly/1p05fR6)

** The Building and Land Development Association said there were 1,614 new homes bought in the Greater Toronto Area last month, 10 percent below the long-term average for the month and 22 per cent below results for January 2015. (http://bit.ly/1p05o70)

 

Britain

The Times

* Brexit puts jobs at risk, say 200 business chiefs

The bosses of more than a third of Britain’s 100 largest companies are calling for the country to stay in the European Union, providing a boost to David Cameron as he fights to put his referendum campaign back on track. (http://thetim.es/1mTQUUE)

* Treasury broke rules to make watchdog change its forecast

The Office for Budget Responsibility changed its economic outlook after interference from the Treasury in a breach of rules designed to protect the independence of the fiscal watchdog. (http://thetim.es/1QWvvlK)

The Guardian

* HSBC ‘taking too long to tackle financial crime’

HSBC Holdings Plc has admitted that an official monitor installed at the bank after a money-laundering scandal four years ago has raised “significant concerns” about the slow pace of change to its procedures to combat crime. (http://bit.ly/1QUgCRc)

* Brexit panic knocks pound to seven-year low

The pound tumbled to a seven-year low and the UK was warned its credit rating was at risk on Monday as the effect of Boris Johnson’s backing for the Brexit campaign was felt in financial markets. (http://bit.ly/1QcvzBG)

The Telegraph

BHP Billiton slashes dividend after slumping to $5.67 bln loss

Mining giant BHP Billiton has endured its toughest 12 months since its creation in 2001, according to figures released on Monday night. The Anglo-Australian miner slashed its dividend for the first time in 15 years – from 62 cents to 16 cents – after slumping to a net loss of $5.67bn in the six months to Dec. 31. (http://bit.ly/1T2BBYp)

* Hackers target BAE Systems 100 times a year

Defence group BAE Systems Plc faces “serious and persistent” cyber attacks twice a week from hackers trying to steal the defence giant’s secrets. The world’s third-biggest arms group has revealed its computer-based defences are tested more than 100 times a year by what it believes are foreign government-backed hackers. (http://bit.ly/1KFqP7m)

Sky News

* Polls show companies back the UK staying in Europe

Two polls by business groups have bolstered David Cameron’s case for staying in Europe after his EU reform deal split the Cabinet over the weekend. Surveys by the Institute of Directors and the manufacturers’ organisation EEF found a majority of firms backed staying in the single market. (http://bit.ly/1SODW8F)

* UK PM’s business advisers split on EU reform deal

Some of David Cameron’s closest business advisers are refusing to endorse the European Union reform deal struck in Brussels last week. At least half a dozen of the 20 members of the Prime Minister’s Business Advisory Group have declined to put their names to a letter being published on Tuesday which will argue that the UK’s exit from the EU would “put the economy at risk”. (http://bit.ly/1Orb9zn)

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

Unlike Monday’s global PMI deterioration (which sent markets around the globe soaring), there was little in terms of macroeconomic data overnight (German IFO earlier missed on expectations and business climate but beat on current assessment) so the “market made the news.” These came most from the USDJPY which has continued to fall, sliding to 111.85 overnight, and dragging the Nikkei to a -0.4% drop.

Japan’s currency strengthened against all of its 16 major peers and gold rose for the first time in three days after the People’s Bank of China reduced the reference rate by more than some analysts forecast. 

Many are now wondering what if anything the BOJ – a critical member of the “global central bank put” team – can do any more at this point to push the next leg higher in the USDJPY.

“It’s beginning to feel like the BOJ is completely stuck,” said Tetsuo Seshimo, a portfolio manager at Saison Asset Management Co. in Tokyo. “The yen had been trading at historically low levels that implied an endless amount of easing, but now doubts are emerging. It’s difficult to imagine any scenarios where the BOJ can take action.”

Elsehwere in Asia, China’s Shanghai Composite (-0.8%) retreated from a monthly high, as financials were pressured on outflow fears after the PBoC weakened the reference rate by the most since early January. Furthermore, now that the PBOC has limited tracking data on offshore or CNH intervention, it will be virtually impossible to quantify just how much intervention the PBOC has engaged in even after the fact, something which will certainly confuse traders and raise suspicions that China’s capital outflow problem is greater than even the worst case scenario.

Emerging-market stocks retreated from a six-week high. BHP Billiton Ltd. led commodity producers lower after making a larger-than-expected cut to its dividend. Crude fell and industrial metals declined, with zinc slipping back after entering a bull market on Monday.

European strocks were weighted down by the previously reported first cut in BHP Billiton’s dividend in 15 years and a surprise loss posted by Standard Chartered Plc confirming that the global slowdown and tumbling prices for metals and oil are weighing on earnings. Britain’s referendum on its membership in the European Union is also raising currency-market risks across the continent, with the cost of options protecting against losses on the euro jumping.

Crude has generally drifted lower today although expect more headline-driven squeezes on headlines out of Houston where Saudi oil minister Ali al-Naimi will deliver the welcome and ministerial address to open day 2 of the IHS CERAWeek conference. In other oil data we also have API weekly inventory data today, with builds expected both nationally and at Cushing delivery hub in EIA data tomorrow.

But the biggest question on all traders’ minds will be whether the bear market short squeeze that sent the S&P higher by 130 points in 6 days, is finally over – with most global market rolling over and with US equity futures unable to find their  solid early morning footing, it may finally be time to cash out of the bear market rally which so many predicted, and which GSBank yesterday may have top-ticked with perfection.

Where markets stand now:

• S&P 500 futures down 0.1% to 1933
• Stoxx 600 down 0.3% to 330.9
• FTSE 100 down 0.5% to 6008
• DAX down 0.7% to 9506
• German 10Yr yield up less than 1bp to 0.18%
• Italian 10Yr yield up 2bps to 1.54%
• Spanish 10Yr yieldunchanged at 1.65%
• S&P GSCI Index down 1% to 297.7
• MSCI Asia Pacific down less than 0.1% to 121
• Nikkei 225 down 0.4% to 16052
• Hang Seng down 0.3% to 19415
• Shanghai Composite down 0.8% to 2903
• S&P/ASX 200 down 0.4% to 4980
• US 10-yr yield up 2bps to 1.78%
• Dollar Index down 0.01% to 97.37
• WTI Crude futures down 0.6% to $33.22
• Brent Futures down 1.8% to $34.05
• Gold spot up 0.9% to $1,219
• Silver spot up 0.3% to $15.23

Global Top news

• United Technologies Says Obstacles Scuttled Honeywell Talks: Walked away from preliminary talks about a merger due in part to concerns that a deal wouldn’t win approval from antitrust authorities; Honeywell said to have offered $108 a share last wk
• Valeant Says It Will Restate Earnings After Board Review: Philidor accounting review showed $58m in rev. recognized in 2014 should have been booked in subsequent periods; sees change reducing 2014 GAAP EPS by ~10c, increasing 2015 GAAP EPS by ~9c
• German Business Sentiment Falls as Turmoil and China Sow Concern: The IFO institute’s business climate index dropped to 105.7 in Feb. from 107.3 in Jan., median est. decline to 106.8
• Boeing CEO Muilenburg Named Chairman as McNerney Exits Board: CEO Dennis Muilenburg was named chairman, succeeding former CEO Jim McNerney, who is stepping down as a director
• Bill Gates Sides With Government in Apple Clash, FT Says: Gates has sided with the U.S. govt. in a dispute over Apple’s refusal to break into a terrorist’s iPhone, breaking ranks with the industry in a face-off with law enforcement, FT reported
• Fitbit Forecasts Miss Estimates on Global Rollout of New Devices: Sees 1Q adj. EPS breakeven to 2c vs est. 23c; sees 1Q rev. $420.0m-$440.0m, est. $484.6m
• Brookfield, Qube Consider Joining Forces in Bid for Asciano: Groups led by Brookfield Asset and Qube Holdings are considering joining forces to buy Asciano, 2 groups discussing joint offer of A$9.28 per share in cash
• J&J Must Pay $72 Million Over Talc Tied to Woman’s Cancer: Company faces about 1,200 more suits over talc products
• Goldman Sachs, HSBC Back Cameron Push to Keep Britain in the EU: 36 FTSE companies sign letter that backs remaining in bloc
• OPEC Doesn’t Know How It Can ‘Live Together’ With Shale Oil: Production freeze will be re-evaluated after 3-4 months
• Drug Spending Slowed in 2015 After Discounts, CVS Health Says: Drug costs for its plans grew 5% in 2015 vs 11.8% in 2014
• Syrian Cease-Fire to Begin Feb. 27, U.S. and Russia Announce

Looking at regional markets, we start in Asia equities failed to take the impetus from Wall Street gains, with sentiment in the region dampened on a reversal in energy and caution regarding China. ASX 200 (-0.4%) and Nikkei 225 (-0.4%) pared early gains as appetite for risk deteriorated amid a pull-back in energy, with the latter also pressured by JPY appreciation. Chinese markets underperformed with the Shanghai Comp (-0.8%) retreating from a monthly high, as financials were pressured on outflow fears after the PBoC weakened the reference rate by the most since early January, where continued similar action by the PBoC triggered widespread uncertainty and a global stock slump. 10yr JGBs initially tracked the gains in UST’s, with the dampened risk-off sentiment supporting safe-havens, while today’s 40yr auction saw increased demand as participants search for positive yields. However, heading into the European open gains were pared amid a sell-off in USTs. PBoC set the CNY mid-point at 6.5273 vs. last close. 6.5230 (Prey. mid-point 6.5165); this represents the biggest weakening of the reference rate by the PBoC in 6 weeks. (RTRS)

Asian top news

• Honda Shakes Up Ranks as Recalls Persist After CEO Switch: Chairman and eight other top Honda executives are retiring
• Top Macro Hedge Fund Sees Monetary Easing as Boon for Stocks: PruLev Global says more central bank easings may boost developed market indexes
• Noble Group Warns of Loss After Additional $1.2 Billion Charges: About half of $1.2 billion charge taken on long- term contracts
• Earliest Chinese Data Signal Slowdown Hasn’t Bottomed Out Yet: Private gauges of manufacturing and services fell to new lows, a reading of business confidence slipped, and interest in small and medium sized businesses deteriorated, the readings show.
• China Reform Said to Near Joining $43 Billion Syngenta Purchase: State-run fund in discussions to join ChemChina’s record deal
• Singapore Lawyers Warn of 1998-Like Pain as Debt Defaults Spread: ‘A while before any significant recovery’ Rajah & Tann Singapore says
• Kuroda Hints at Shift in Thinking on Monetary Policy’s Power: Unprecedented stimulus program failed to achieve Bank of Japan’s inflation target
• China’s New Securities Chief Said to Urge Strict Supervision: Liu Shiyu said to request checks on market manipulation after replacing Xiao Gang as CSRC chairman

European equities kicked off the session in a similar manner to Asian equities, opening with losses and being weighed on by the energy and material sectors although with much of the losses being pared throughout the morning (Euro Stoxx: -0.2%). The day has so far seen some retracement from much of yesterday’s moves, with risk off sentiment dictating play today. In terms of stock specific news, two of the most notable earnings of the day were particularly downbeat, with BHP Billiton (-3.0%) and Standard Chartered (-4.0%) both among the worst performers in Europe. 

Elsewhere, fixed income has seen a choppy session so far, with Bunds largely shrugging off the miss on expectation in German IFO German IFO Business Climate (105.7 vs. Exp. 106.8). Of note, as European participants arrived at their desks this morning, softness was seen in US 10yr T-notes due to two large sellers, one of 30k contracts and one of 5k contracts.

European top news

• BHP Cuts Dividend for First Time in 15 Years on Profit Drop: Cuts interim div. to 16c/shr from 62c y/y, payout had been forecast to drop to 31c; 1H underlying profit fell to $412m at its continuing operations from $4.9b yr earlier
• Standard Chartered Plunges on Surprise Annual Loss, Revenue Miss: 2015 pretax loss $1.5b, down from profit of $4.2b y/y; FY adj. pretax $834m, missed ests. of $1.37b; loan impairments almost double to $4b, highest ever
• Swiss Re Quarterly Profit Beats Estimates; Names New CEO: Christian Mumenthaler will take over as CEO as of July 1; 4Q net income $938m; est. $916m
• InterContinental to Pay Out $1.5b After Hotel Sales: Special div. will be paid in 2Q, takes funds returns since 2003 to $12b
• U.K. Bank Rules Won’t Revert to Pre-Crisis Days on ‘Brexit:’ Prudential Regulation Authority’s Andrew Bailey says there won’t be a “bonfire of regulations”
• Danone Forecasts Profitability to Improve on Yogurt Turnaround: 2015 LFL sales to rise 3% to 5% with “solid” margin advancement
• JPMorgan’s ‘London Whale’ Surfaces to Say ’12 Loss Not His Fault: Bruno Iksil comments on losses in former unit in letter

In FX, the USD/JPY has stolen the limelight with another move through 112.00 although in more orderly trade this time around, with some reluctance seen to push too aggressively towards the recent 110.99 lows. A busy morning for EUR/USD though, with some early calls that parity is still a view firmly held. Alongside a soft business climate index in the German IFO survey, we saw a push on 1.1000, with some large buy orders filled through the figure, though more seen through to 1.0950. Tight trade seen elsewhere, with AUD digging despite some fresh, but modest weakness in stocks. EUR/CHF now pushing lower also, dipping below 1.0950 to reflect the heavy risk and EUR tones. Oil prices steady, but coming off better levels — as with the related currencies.

In commodities, WTI and Brent futures fell throughout the European session with the commodities seeing continued volatility as participants wait to see what, if any, deal can be agreed regarding a freeze in global production. Additionally, participants will be keeping a keen eye out for the latest API crude inventory report.

The Bloomberg Commodities Index fell as much as 0.6 percent, weighed down by weaker oil and base metals prices. Oil traded near $33 a barrel after the International Energy Agency said a global surplus will persist into next year and limit any chance of a short-term price rebound. While supply and demand will be aligned next year, large accumulated stockpiles will slow the pace of recovery in prices, the IEA said in its medium-term report. April futures in New York slid 2.3 percent to $32.63.

Zinc retreated 1.2 percent to $1,759 a metric ton on the London Metal Exchange, falling from its highest close in four months. Copper, lead and nickel fell at least 0.5 percent. Gold led precious metals higher, gaining 0.9 percent to $1,219.03 an ounce as investor holdings in exchange-traded funds jump to the highest in almost a year.

On the US calendar attention will be focused on the February consumer confidence print where the consensus is for a near 1pt decline to 97.2. We’ll also get more housing market data with January existing home sales and the December S&P/Case-Shiller house price index, while the February Richmond Fed manufacturing activity index print is also expected. There’s nothing in the way of Fedspeak today however it’ll be worth keeping an eye on the BoE where Governor Carney is due to speak to lawmakers this morning (10am GMT) on the outlook for the UK economy and monetary policy. The ECB’s Nouy is also due to speak this afternoon at a DB conference I’ll be attending.

Bulletin Headline Summary from Bloomberg and RanSquawk

• European equities take the impetus from the weak lead in Asian bourses amid weakness in energy and material names, while BHP Billiton and Standard Chartered are among the worst performers on the back of poor earnings.
• EUR takes a hit following soft German IFO readings alongside bearish calls from the likes of BNP Paribas and Deutsche Bank citing ECB action next month.
• Looking ahead, highlights include US S&P/Case Shiller index, Existing Home Sales as well as comments from Fed’s Kashkari, Fischer and BoE’s Haldane
• Treasuries lower with global equity markets and oil; week’s U.S. auctions begin today with $26b 2Y notes, WI yield 0.775%, compares with 0.86% awarded in Jan., lowest 2Y auction stop since November.
• The yen gained and gold climbed after China cut the yuan’s fixing by the most in six weeks, spurring demand for havens. European stocks and emerging markets fell while oil declined with copper
• Britain’s referendum on its membership in the European Union isn’t just a threat to the pound. It’s raising currency- market risks across the continent
• Mark Carney said the Bank of England isn’t making a judgment on the consequences of Britain’s referendum on its European Union membership
• Chief executive officers from HSBC Holdings Plc to Goldman Sachs International were among the business leaders to endorse Prime Minister David Cameron’s campaign to keep Britain in the European Union
• German business confidence fell for a third month in a sign that companies in Europe’s largest economy are growing more concerned as slowing global growth roils financial markets
• BlackRock Inc., the world’s biggest money manager, is warning bond investors they’re not prepared for the Federal Reserve to raise interest rates
• Microsoft co-founder Bill Gates has sided with the U.S. government in a dispute over Apple’s refusal to break into a terrorist’s iPhone, breaking ranks with the industry in a face-off with law enforcement, the Financial Times reported
• The U.S. and Russia announced that a partial cease-fire in Syria will start Feb. 27, reviving hopes for a solution to a five-year war that’s killed 260,000 people and created a refugee crisis straining Europe’s borders
• $18.75b IG corporates priced yesterday (YTD volume $244.25b) and no HY priced (YTD volume $11.125b)
• Sovereign 10Y bond yields mostly steady; European, Asian markets drop; U.S. equity- index futures lower. Crude oil and copper fall, gold rises

US Event Calendar

• 8:30am: Fed’s Fischer speaks in Houston
• 9:00am: S&P/Case-Shiller US HPI m/m, Dec. (prior 0.87%)
  • S&P/CaseShiller 20-City Index NSA, Dec., est. 183.07 (prior 182.86)
  • S&P/CS 20 City m/m SA, Dec., est. 0.85% (prior 0.94%)
  • S&P/CS Composite-20 y/y, Dec., est. 5.8% (prior 5.83%)
  • S&P/Case-Shiller US HPI NSA, Dec. (prior 175.71)
  • S&P/Case-Shiller US HPI y/y, Dec. (prior 5.35%)
• 10:00am: Consumer Confidence Index, Feb., est. 97.2 (prior 98.1)
• 10:00am: Richmond Fed Mfg Index, Feb., est. 2 (prior 2)
• 10:00am: Existing Home Sales, Jan., est. 5.32m (prior 5.46m); Existing Home Sales m/m, Jan., est. -2.5% (prior 14.7%)
• 1:00pm: U.S. to sell $26b 2Y notes

 

DB’s Jim Reid completes the overnight wrap

While Sterling had a day to forget yesterday, it was EM and commodity sensitive currencies which ranked among the day’s best performers after Oil and industrial metals climbed sharply higher. Indeed it was the Russian Ruble (+2.27%), Brazilian Real (+1.98%), Colombian Peso (+1.40%), South African Rand (+1.37%), Chilean Peso (+1.28%) and Australian Dollar (+1.11%) which benefited, as Oil surged higher with the new WTI April contract finishing up +5.17% on the day at $33.39/bbl (we should highlight that this contract had closed at $31.75/bbl on Friday, while the old March contract which expired yesterday rallied 6.2% to $31.48/bbl). The focus appeared to be on some supportive commentary out of the IEA, with the agency forecasting for US shale-oil production to fall by 600k barrels a day in 2016 and 200k barrels a day in 2017 and also suggesting that oil prices should come under upward pressure from next year. It’s worth reminding that we’ve seen a number of temporary bounces like this so far this year and in reality Oil has been in a late $20s to mid $30s range since early January. That said, overall sentiment feels improved and that’s helping risk assets.

That was evidenced yesterday where we saw equity markets globally kick the week off on the front foot. In Europe a rally for commodity sensitive names helped the Stoxx 600 close up +1.67% while the peripherals were more impressive with the IBEX and FTSE MIB +2.35% and +3.52% respectively. That helped the S&P 500 get off to a strong start with the index holding onto gains impressively as the session wore on, eventually finishing +1.45%. Along with that move for Oil, Aluminium (+1.61%), Copper (+1.58%) and Zinc (+2.09%) were all up sharply too while Iron Ore rallied over 6% to close above $50/tn for the first time since October. The VIX finished over 5% lower and closed below 20 for the first time in three weeks, while credit markets had a strong day too with CDX IG and Main both finishing 5bps tighter. A sign of the better sentiment was also reflected in another strong day for primary issuance with nearly $19bn said to have priced in US IG alone which according to Bloomberg is the biggest start to a week since May last year.

Glancing at our screens this morning, after bourses in Asia had initially moved higher reflecting those gains on Wall Street last night, the rally has faded as markets head into the midday break. Not helping is a retreat for Oil with WTI down 1.5% while the news that the PBoC has weakened the CNY fix by the most (0.17%) since January 7th seems also to be weighing on sentiment. Bourses in China are leading the weakness with the Shanghai Comp and CSI 300 -1.26% and -1.27% respectively. Elsewhere the Nikkei (-0.31%), Hang Seng (-0.54%), Kospi (-0.28%) and ASX (-0.47%) are also down after initially opening up stronger. US equity market index futures are also pointing to a softer start, while Gold (+0.95%) and the Yen (+0.53%) are the ones benefiting from the weaker tone.

Moving on. Along with the better day for risk yesterday, European rates markets were a tad stronger too reflecting what was a fairly softish set of European PMI’s. The flash February Euro area composite was down 0.9pts and more than expected this month to 52.7 (vs. 53.3 expected), the second consecutive monthly decline and lowest in 13 months. This was primarily driven by the manufacturing print which fell 1.3pts to 51.0 (vs. 52.0 expected), although services was also slightly lower (-0.6pts to 53.0; 53.4 expected). Regionally it was the weakness in Germany which stood out with the manufacturing print down 2.1pts to 50.2 (vs. 51.9 expected), marking a 15-month low. The French composite also dipped below 50 following a drag from the services reading. Our European Economists highlighted in a note yesterday that the flash PMI’s suggest a sharp monthly fall (1.4pts) on average in the composite PMI of Italy, Spain and Ireland. They also note that the composite PMI for the Euro area is now consistent with +0.3% qoq growth and in line with their slightly lower outlook for H1 2016, but also raises the risk of a more material slowdown. Clearly the data also adds more fuel to the fire for the ECB to deliver next month.

Meanwhile, over in the US yesterday there was similar softness in the flash manufacturing PMI there, which declined 1.4pts to 51.0 (vs. 52.4 expected) and the lowest since October 2012. That said there was better news to come out of the Chicago Fed manufacturing activity index which was up over half a point to 0.28 (vs. -0.05 expected) in January.

Looking at the day ahead now, the focus shortly after we go to print this morning will be on Germany where the final revision to Q4 GDP is due (no change expected at +0.3% qoq). Shortly after this we’ll get a number of confidence indicator readings out of France before we return to Germany again with the IFO survey data for February. Interest in the US this afternoon is likely to be centered on the February consumer confidence print where the consensus is for a near 1pt decline to 97.2. We’ll also get more housing market data with January existing home sales and the December S&P/Case-Shiller house price index, while the February Richmond Fed manufacturing activity index print is also expected. There’s nothing in the way of Fedspeak today however it’ll be worth keeping an eye on the BoE where Governor Carney is due to speak to lawmakers this morning (10am GMT) on the outlook for the UK economy and monetary policy. The ECB’s Nouy is also due to speak this afternoon at a DB conference I’ll be attending.

via Zero Hedge http://ift.tt/1WG39QY Tyler Durden