Category: zerohedge

Everyone knows that without the German export-driven growth dynamo, the European economy would quickly wither and disappear into nothingness. Which is why today’s report that the German economy grew by just 0.4% last year, its worst performance since the global financial crisis in 2009, with strong domestic demand only partially offsetting the continued negative impact of the euro crisis, should be reason for significant concern to all especially since all the artificial, goalseeked GDP readings from the periphery are just that, and are completely meaningless in the grand scheme of things – should Germany’s growth falter, as it clearly has been over the past two years, may as well put the lights out.

For the past three years we have been hearing how Germany is about to turn the corner and its GDP will surge… any minute now. Instead what happened was that growth slowed to 0.7% in 2012 and the economy barely skirted a recession at the start of 2013. Luckily, soon thereafter Europe revised its GDP definition and all was well, if only for the time being. Still, excluding 2009, when the economy shrank by 5.1 percent, its biggest contraction of the post-war era, 2013 proved Germany’s weakest since 2003 when it was dubbed the “Sick Man of Europe”.

Reuters reminds us that the events of 2003 prompted then-chancellor Gerhard Schroeder to unveil far-reaching reforms of the welfare state, which are now being diluted by the new right-left coalition of Angela Merkel’s conservatives and the Social Democrats (SPD).  Investments took 0.1 percent off GDP last year as companies held off on investing due to uncertainty over the euro zone crisis. Foreign trade, which had underpinned growth for the previous three years, subtracted 0.3 percent. The fact import growth outpaced that of exports could tame criticism of Germany’s traditional reliance on exports and suggests it is contributing to recovery among its euro zone trading partners by buying up their products.

Prespun excuses aside, when it comes to Germany, it is all about exports. Recall that net trade accounts for nearly 40% of German GDP – the highest of any developed world economy!

And while the Euro means Germany is competitive within the Eurozone (since the dreaded DEM is no longer around), it still has to export outside the monetary union. Which is what seems to not be happening.

Reuters puts this print in the context of analyst expections: “The preliminary gross domestic product (GDP) estimate from the Federal Statistics Office, released on Wednesday, fell just short of the consensus forecast for a 0.5 percent expansion in a Reuters poll of 18 economists.” It adds the following color:

Germany faced international criticism earlier in 2013 for not doing enough to reduce its high trade surpluses. The U.S. administration reprimanded Germany in October in its semi-annual report to Congress for its economic imbalances.

 

Private and public consumption rose 0.9 and 1.1 percent respectively in 2013, helping domestic demand contribute 0.7 percent to GDP despite the drag from investments.

 

The private household savings rate dropped to its lowest level since 2001 as low interest rates and a robust labor market encouraged traditionally thrifty Germans to spend.

 

The public sector budget swung to a slight deficit of 0.1 percent after posting a surplus of 0.1 percent in 2012.

 

The BGA trade association has said it expects exports, the cornerstone of the Germany economy for decades, to grow by up to 3 percent in 2014.

Good luck: maybe this time will be different and “experts” will finally predict the future. Then again, as we – with the help of the IMF – have been showing, global trade is crashing thanks to global QE where one no longer needs to trade: instead one can simply print whatever “money” one needs…

The happy ending there is absolutely assured.

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

Everyone knows that without the German export-driven growth dynamo, the European economy would quickly wither and disappear into nothingness. Which is why today’s report that the German economy grew by just 0.4% last year, its worst performance since the global financial crisis in 2009, with strong domestic demand only partially offsetting the continued negative impact of the euro crisis, should be reason for significant concern to all especially since all the artificial, goalseeked GDP readings from the periphery are just that, and are completely meaningless in the grand scheme of things – should Germany’s growth falter, as it clearly has been over the past two years, may as well put the lights out.

For the past three years we have been hearing how Germany is about to turn the corner and its GDP will surge… any minute now. Instead what happened was that growth slowed to 0.7% in 2012 and the economy barely skirted a recession at the start of 2013. Luckily, soon thereafter Europe revised its GDP definition and all was well, if only for the time being. Still, excluding 2009, when the economy shrank by 5.1 percent, its biggest contraction of the post-war era, 2013 proved Germany’s weakest since 2003 when it was dubbed the “Sick Man of Europe”.

Reuters reminds us that the events of 2003 prompted then-chancellor Gerhard Schroeder to unveil far-reaching reforms of the welfare state, which are now being diluted by the new right-left coalition of Angela Merkel’s conservatives and the Social Democrats (SPD).  Investments took 0.1 percent off GDP last year as companies held off on investing due to uncertainty over the euro zone crisis. Foreign trade, which had underpinned growth for the previous three years, subtracted 0.3 percent. The fact import growth outpaced that of exports could tame criticism of Germany’s traditional reliance on exports and suggests it is contributing to recovery among its euro zone trading partners by buying up their products.

Prespun excuses aside, when it comes to Germany, it is all about exports. Recall that net trade accounts for nearly 40% of German GDP – the highest of any developed world economy!

And while the Euro means Germany is competitive within the Eurozone (since the dreaded DEM is no longer around), it still has to export outside the monetary union. Which is what seems to not be happening.

Reuters puts this print in the context of analyst expections: “The preliminary gross domestic product (GDP) estimate from the Federal Statistics Office, released on Wednesday, fell just short of the consensus forecast for a 0.5 percent expansion in a Reuters poll of 18 economists.” It adds the following color:

Germany faced international criticism earlier in 2013 for not doing enough to reduce its high trade surpluses. The U.S. administration reprimanded Germany in October in its semi-annual report to Congress for its economic imbalances.

 

Private and public consumption rose 0.9 and 1.1 percent respectively in 2013, helping domestic demand contribute 0.7 percent to GDP despite the drag from investments.

 

The private household savings rate dropped to its lowest level since 2001 as low interest rates and a robust labor market encouraged traditionally thrifty Germans to spend.

 

The public sector budget swung to a slight deficit of 0.1 percent after posting a surplus of 0.1 percent in 2012.

 

The BGA trade association has said it expects exports, the cornerstone of the Germany economy for decades, to grow by up to 3 percent in 2014.

Good luck: maybe this time will be different and “experts” will finally predict the future. Then again, as we – with the help of the IMF – have been showing, global trade is crashing thanks to global QE where one no longer needs to trade: instead one can simply print whatever “money” one needs…

The happy ending there is absolutely assured.

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

While modestly better than expected, Import Prices fell 1.5% year-over-year, down from a 1.3% year-over-year drop for December. This is the sixth month in a row of year-over-year drops in import prices and perhaps even more notably, the last 20 months have seen only 2 months of year-over-year price gains as the Japanese deflation ogre spreads around the world.

 

 

Chart: Bloomberg

via Zero Hedge http://ift.tt/NK0CrZ Tyler Durden

The percentage of investors who describe themselves as “neutral” is at its highest in over 11 years as a modest 5% retracement in stocks has bulls running for the hills and individual investors extremely uncertain once again. As Bloomberg notes, “everyone is sitting in the middle of the canoe waiting for something to happen.” Will it be Birinyi’s 1,900 surge, Tom Lee’s 2,100 spike, or DeMark’s 1929 crash analog?

 

 

For the four weeks ended last week, survey respondents expecting little change in stock prices amounted to 59 percent of those calling for gains or losses. The figure, based on the market outlook for the next six months, was the highest since March 2003.

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/NK0BV8 Tyler Durden

The percentage of investors who describe themselves as “neutral” is at its highest in over 11 years as a modest 5% retracement in stocks has bulls running for the hills and individual investors extremely uncertain once again. As Bloomberg notes, “everyone is sitting in the middle of the canoe waiting for something to happen.” Will it be Birinyi’s 1,900 surge, Tom Lee’s 2,100 spike, or DeMark’s 1929 crash analog?

 

 

For the four weeks ended last week, survey respondents expecting little change in stock prices amounted to 59 percent of those calling for gains or losses. The figure, based on the market outlook for the next six months, was the highest since March 2003.

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/NK0BV8 Tyler Durden

Today’s AM fix was USD 1,308.50, EUR 955.60 and GBP 783.21 per ounce.
Yesterday’s AM fix was USD 1,290.25, EUR 943.65 and GBP 774.93 per ounce.   

Gold climbed $10.80 or 0.84% yesterday to $1,301.70/oz. Silver rose $0.31 or 1.54% at $20.51/oz.

This morning bullion for immediate delivery rose another 1.1% to $1,317.70 an ounce, the highest price since November 8, and traded as high as  $1,319.51/oz in London. It is the seventh straight day of gains – the longest stretch of gains since July 2011.

Gold in U.S. Dollars – (Bloomberg)

Gold is up 3.3% this week and headed for the biggest weekly advance since October as U.S. economic data was again worse than expected. This increased safe haven demand and the biggest exchange-traded product saw holdings rise to a two-month high.

Gold Prices/Fixes/Rates/Vols, February, 2014 – (Bloomberg)

Call options on gold, giving the buyer the right to buy June 2015 futures at $2,200 an ounce, surged 24% to a five-week high as prices climbed to a three-month high.

Gold in US Dollars, 2009 – February 2014 – (Bloomberg)

Gold has traded above the 100 day moving average since February 10, and is heading for a close above the 200 day moving average for the first time since February 2013.

A weekly close above the 200 day moving average and the psychological level of $1,300/oz will be very positive for gold and could lead to gold challenging the next level of resistance at $1,357/oz and $1,434/oz.

Gold is up 5.3% so far in February and 9.3% so far this year as concerns about emerging market markets, currencies, and the U.S. economy boosted safe haven demand.  Recent employment and sales data was poor. U.S. jobless claims reached 339,000 in the week ended February 8 and retail sales in the U.S. declined in January by the most in 10 months.

GOFO or Gold Forward Offered Rate (1989 – February 2014)

The fundamental outlook for gold remains encouraging as there continues to be robust physical demand for gold despite frequent sharp and sudden sell-offs in the paper futures market. Indeed, there are continuing stresses in the physical bullion market as seen in the Gold Forward Offered Rate (GOFO) rates. These are rates at which contributors, LBMA banks primarily, are prepared to lend gold on a swap against U.S. dollars.

 
Bloomberg Industries (January 2009 – February 2014)

Robust physical demand is also confirmed by the government mints and their coin and bar sales – many of whom had record sales in 2013. The U.S. Mint saw gold coin sales surge 63% to 91,500 ounces in January from 56,000 ounces in December. This was the highest monthly total since April, as sales continued to rebound from their August and September lows.

Chinese demand was quite weak in the last day or two but as ever with Chinese demand it is important to focus on the long term- the monthly and annual data, and fade out the daily noise.

After a massive, record year for Chinese gold demand in 2013, Chinese demand for gold in January was again staggering. SGE data shows that withdrawals from the Shanghai Gold Exchange vaults in January 2014 accounted for 247 tons. This is an increase of 43% compared to January 2013. It’s also more than monthly global mining production and an all-time record.

Bloomberg Industries (2011 – December 2013)

Gold is hemorrhaging out of the western banking system and flowing east to China and also to the increasingly important Asian precious metals hub in Singapore.Storage in Singapore is extremely attractive to the very risk averse, gold owning public. In just three weeks, we already have more bullion stored in Singapore than in Zurich and Hong Kong combined. Our research regarding storing gold in Singapore is the most widely downloaded and read research we have ever produced.

COMEX Gold and Silver Inventories (1999 – Feb 2014)

The flow of gold from west to east can also be seen in the COMEX gold inventory data which remains near multi year lows.

We are confident this trend will continue in the coming weeks, given the fragility of the western economies and banking systems. Indeed, it may lead to a COMEX default and a scramble to acquire physical gold amid surging prices.

Increasingly, gold investors are seeking the safest way to own gold and are avoiding paper gold and gold stored with banks in favour of fully segregated and fully allocated physical coins and bars, in their name, in safer jurisdictions.

Bloomberg Industries

Continuing rumblings of bail-ins and the risk of punitive taxes, levies and even confiscation of assets is contributing to the flow of gold from west to east. As is the ultra loose monetary policies of western central banks who continue to punish savers.

This week brought confirmation, if it were needed that loose monetary policies are set to continue. Doves Carney at the Bank of England and Draghi at the ECB have been joined by Yellen taking over at the Fed.

In her testimony to Congress, Yellen confirmed that she is set to be remain dovish and will continue with QE in the billions per month and maintain interest rates near zero. Yellen said the markets should expect the central bank to continue to follow the ultra low-interest-rate path laid out by her predecessor. She failed to outline the exit strategy of how and when the U.S. might be able to wean itself off the drug that is cheap money and debt monetisation.

It is important to note that while the U.S. money supply did not increase much in the final year of Bernanke’s stewardship of the Fed, it has accelerated as he leaves and Yellen takes over. Money supply in the form of M2 has surged in January and February and has doubled in pace so far this year.

Global Money Supply (M2) of U.S., EU, UK, Japan and China (1999- Feb 2014)

Despite the recent taper and a recent slight improvement in the U.S. annual trade and budget deficits, the U.S. financial position remains appalling as seen in the national debt. Then, there is also the small matter of the unfunded liabilities in the U.S. of between $100 trillion and $200 trillion.

Conclusion
The technicals of gold are increasingly aligned with the bullish fundamentals. Gold’s momentum and it’s holding above the 100 day moving average and now moving above the 200 day moving average are bullish indicators. As is the recent close above resistance at $1,294/oz. 

This is aligned with the still positive fundamental backdrop of significant macroeconomic, systemic, geo-political and monetary risk which is leading to significant demand for physical bullion globally.

Gold is good value at these levels. However, those considering accumulating gold should not assume that the correction is over as it may not be. There is still the potential of falls to test support at $1,180/oz and more range bound trading.

However, if the very positive demand and supply fundamentals are allowed to assert themselves then we should see gold enter a new bull market. Buyers are advised to dollar cost average into position to protect from further corrections and pullbacks and to always own physical bullion and have full title to it.

Find out why Singapore is now one of the safest places in the world to store gold in our latest gold guide – Essential Guide To Storing Gold In Singapore

via Zero Hedge http://ift.tt/1eVA425 GoldCore

Recall what we said first thing this week when we remarked the latest surge in Chinese physical gold buying: “As we have said before: keep an eye on the “gold holdings” of the GLD and other US paper gold ETFs, whose drop in holdings for now has offset Chinese accumulation on the margin. Once GLD gold holdings solidly resume their climb higher, that will be the key upward gold price inflection point.” Perhaps it is a testament to the power of paper of physical gold (if only for now), that while yes, we were correct, and gold is now indeed soaring, having finally broken above its 200 DMA as we reported yesterday, all it took was the predicted rebound in gold ETP holdings which have finally ended their liquidation cycle.

 

As Bloomberg reports “Assets in the SPDR Gold Trust expanded 1.2 percent to 806.35 metric tons, the highest since Dec. 20. The biggest ETP backed by gold, which shrank 41 percent last year, is up 1.2 percent this week, headed for a third weekly advance.“

Sure enough, gold is now surging, and is back to levels last seen in November of 2013.

Of course, should the paper accumulation accelerate from here, with physical inventory vastly depleted thanks to relentless Chinese buying, the reflexive cycle may result in a dramatically rapid move higher from current levels as gold finally returns on its path ever higher.

 

As Silver also breaks above the crucial $21 level…

via Zero Hedge http://ift.tt/MRrO78 Tyler Durden

• Euro-Area Growth Eases Pressure on Draghi for Stimulus (BBG)
• Germany Beats Growth Estimates With France Amid Recovery (BBG)
• Argentina revises ‘bogus’ inflation figures (FT)
• Wells Fargo edges back into subprime as U.S. mortgage market thaws (Reuters)
• China Banks’ Bad Loans Reach Highest Since Financial Crisis (BBG)
• Time Warner Cable Deal to Test Comcast CEO’s Washington Clout (WSJ)
• Risky Loans in Europe Banks’ Dark Corners to Be Exposed  (BBG) – yeah, right… sure
• Gold Extends Climb Above $1,300 as Investors Boost SPDR Holdings (BBG)
• SEC Takes Steps to Stem Courtroom Defeats (WSJ)
• Treading softly, Thai riot police reclaim Bangkok protest sitea (Reuters)
• Topix Index Tumbles as Yen Rises, Consumer Lenders Slide (BBG)
• Taliban Take Toll on Pakistan’s Biggest City (WSJ)
• Chinese Join Winklevosses in L.A. Luxury Home Hedges (BBG)
• World’s Biggest Sovereign Fund Needs to Add Risk (BBG)

 

Overnight Media Digest

WSJ

* Now that Comcast Corp has sealed a deal to buy Time Warner Cable Inc for $45.2 billion in stock, its top executives face a new challenge: clearing formidable regulatory hurdles. The government review is likely to be lengthy and could touch on everything from cable prices to the way web traffic is prioritized.

* Americans cut spending last month on a broad swath of retail goods including cars, furniture and clothing, raising fresh doubts about the economy’s ability to gain speed this year.

* BNP Paribas SA France’s largest listed bank, is in talks to settle U.S. investigations of money laundering and sanctions violations in countries including Iran and Cuba, according to people familiar with negotiations.

* China’s inflation remained tepid in January, but economists said that the country’s central bank still has little room to ease monetary policy as concerns over growing debt overshadow slowing economic growth.

* Brookstone Inc, known for its wide array of consumer gadgets such as massage chairs and travel electronics, is contemplating a possible bankruptcy-protection filing in the coming weeks as talks advance with potential buyers, people familiar with the matter said.

* PepsiCo Inc is throwing a bone to investors after deciding it will keep trying to turn around slumping soft-drink sales instead of taking more drastic action, such as splitting up.

* Avon Products Inc said it might need to pay as much as $132 million to settle a federal bribery probe, significantly increasing its estimates for the cost of resolving the yearslong investigation into its past conduct in China and other countries.

* Boeing Co is planning new marketing tactics to extend sales of its leading long-range jet for several more years until a new version is ready, the company’s top salesman said.

* South Korea has addressed U.S. concerns about letting a Chinese telecommunications company develop the country’s advanced wireless network by agreeing to route sensitive U.S. and South Korean communications over separate networks, U.S. officials said.

* Cabela’s Inc, an outdoor-gear retailer, cited a slide in sales of guns and ammunition when it reported Thursday a decline in fourth-quarter sales, excluding newly opened or closed stores.

 

NYT

* Comcast Corp’s proposed acquisition of Time Warner Cable Inc comes at a moment of seismic change in the television industry, with consumers increasingly cutting their cable cords and instead streaming their favorite shows via the Internet.

* The Ivanpah solar power plant stretches over more than five square miles of the Mojave Desert with an ability to energize 140,000 homes. The plant, the first electric generator of its kind, could also be the last. Since the project began, the price of rival technologies has plummeted, incentives have begun to disappear and the appetite among investors for mammoth solar farms has waned.

* Paris-based BNP Paribas’s fourth-quarter profit fell 76 percent as it set aside $1.1 billion to settle charges it violated economic sanctions.

* Big banks operating in London are adhering to the European Union’s rules on banking bonuses by revamping the way they pay top employees so they still receive the extra money.

* The Bridgestone Corp became the latest automotive supplier to plead guilty to charges of conspiring to fix the prices of parts sold to automakers here and abroad, the justice department said on Thursday. The world’s largest producer of tires and rubber also agreed to pay a $425 million criminal fine.

* A 120-car Norfolk Southern train carrying heavy Canadian crude oil derailed and spilled in western Pennsylvania on Thursday, adding to a string of recent accidents that have prompted calls for stronger safety standards.

* General Motors Co is recalling about 619,000 small cars in the United States because either a heavy key ring or a “jarring event” such as running off the road could cause the ignition to shut off and possibly prevent the air bags from deploying in a crash, the automaker said.

* People for the Ethical Treatment of Animals has scored again in its fight against the use of primates in advertising, as Volkswagen of America agreed to abide by a no-primates policy and withdrew a video clip from online platforms that had served as a teaser for the company’s commercial during Super Bowl XLVIII on Feb. 2.

* Apple Inc in a report on Thursday said its hardware factories did not use any tantalum, a metal commonly used in electronics, from areas engaged in warfare.

* PepsiCo Inc said on Thursday that it had decided not to spin off its North American beverage business, effectively rejecting a push by the activist investor Nelson Peltz.

* Fortress Investment Group Llc, the first publicly listed hedge fund in the United States, has bought back its 12 percent stake from Nomura Holdings, one of its principal investors for $363.4 million.

* A growing number of primary care doctors and specialists in private practice are becoming employees of hospitals, though experts caution that the change may not yield better or cheaper care for patients.

 

Canada

THE GLOBE AND MAIL

* More than 40 First Nations or aboriginal groups in Canada have applied to participate in National Energy Board hearings into Kinder Morgan Energy Partners’ proposed twinning of the Trans Mountain pipeline. The applications, say First Nation representatives, is a signal of how Canada has changed since the pipeline was first built across British Columbia 61 years ago.

* Under one of the roughest winters in the Upper Midwest region, the Great Lakes had become almost completely covered with ice. The last time they came this close was in 1994, when 94 percent of the lakes’ surface was frozen.

Reports in the business section:

* Bombardier Inc raised its C Series cost estimate by more than $1 billion and forecast weaker profit margins this year, prompting concerns about the company’s finances as it struggles with development delays and uncertain demand for aircraft.

NATIONAL POST

* Quebec’s national assembly is set to begin final adoption next week of a law that will legalize euthanasia in the province, making it the first jurisdiction in North America to allow physicians to deliberately end patients’ lives. Meanwhile, the province’s College of Physicians is already envisaging a day when some of the bill’s restrictions on euthanasia will need to be loosened.

* Fertility specialists are calling for minimum qualifications for doctors offering assisted baby-making procedures like in-vitro fertilization, saying some people are being treated by doctors who don’t have the proper training to perform the procedures.

FINANCIAL POST

* The Canadian low-cost carrier, WestJet Airlines Ltd plans to unveil the details of a new in-flight entertainment system on Friday that aims to wirelessly stream stored content and live TV as well as provide WiFi connectivity to its guests.

* The Quebec government is taking control of oil exploration on remote Anticosti, striking joint venture deals with all oil and gas companies holding permits on the island in exchange for funding their drilling programs.

 

China

CHINA SECURITIES JOURNAL

– Hundreds of companies waiting for IPOs are preparing annual reports and other documents for an official submission to the securities regulator, sources said.

CHINA BUSINESS NEWS

– China Telecom Corp Ltd said it will start 4G service from Friday, the second Chinese telecom operator to provide the service after China Mobile Ltd.

SHANGHAI SECURITIES NEWS

– China Orient Asset Management Corp, a state-owned asset manager specialising in bad debt, plans to list by the end of 2015 if the company’s reform plan is approved in the first half of this year, its president said.

– Competition among China’s state-owned companies is intensifying in the country’s capital market as they step up efforts to lure investors amid the ongoing ownership reform in the sector.

CHINA DAILY

– China welcomes U.S. Secretary of State John Kerry’s visit to Beijing but his visit would not result in substantially boosting ties between the two countries unless he takes the “correct” approach to the sovereignty dispute in East and South China Seas, said an editorial.

PEOPLE’S DAILY

– China should set freedom, equality, justice and rule of the law as the common value to provide constant momentum for the market economy and create moral integrity in society, the paper said in an editorial.

Britain

The Guardian

LLOYDS BANKING GROUP CHIEF ANTONIO HORTA-OSORIO GETS 1.7 MLN STG BONUS

Lloyds Banking Group has awarded Chief Executive Antonio Horta-Osorio a 1.7 million pound ($2.83 million) bonus after declaring itself “a normal bank” five years after its bailout.

ROLLS-ROYCE WARNS DEFENCE CUTS TO TAKE TOLL ON 2014 REVENUES AND PROFITS

Rolls-Royce has become the latest major UK company to warn on profits as the industrial group called an end to a decade of revenue growth and wiped more than 3 billion pounds off its share price.

SHELL TO SELL THREE NORTH SEA OIL ASSETS

Shell is to sell off three oil and gas producing assets in the North Sea as the new chief executive’s divestment gathers pace. The disposal of the Anasuria, Nelson and Sean platforms and production systems come at a sensitive political time when other energy bosses have signalled that the forthcoming referendum on Scottish independence is undermining the investment climate.

The Times

EX-BOSS OF LLOYDS FACES LOSING BONUS OVER INSURANCE SCANDAL

The former chief executive of Lloyds Banking Group, Eric Daniels, is facing the confiscation of a past bonus over the escalating insurance mis-selling bill, which sent the bank to an after-tax loss of 802 million pounds last year.

HOMESERVE FINED 30.6 MLN STG FOR YEARS OF MIS-SELLING

The board of directors of HomeServe’s British division consistently failed to address regulatory and compliance problems in the run-up to its damaging mis-selling scandal, the City regulator said yesterday as it handed the insurer a record fine.

NUCLEAR OVERHAUL WARMS EDF PROFITS

EDF Energy’s UK profits have been charged after the French company spent heavily to improve the performance of its eight nuclear power stations in Britain.

The Independent

Tate & Lyle profit warning prompts Chinese takeover speculation

Shares in Tate & Lyle crashed 16 percent in early trading after the sweetener-maker warned on profits, triggering City speculation of a potential Chinese takeover bid.

FCA STUDY WILL TACKLE THE ANNUITIES ‘MINEFIELD’

The annuities market is not working for consumers, Britain’s Financial Conduct Authority has concluded after an extensive review.

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Import and Export Prices at 8:30 a.m. ET
Industrial Production at 9:15 a.m. ET
Consumer Sentiment at 9:55 a.m. ET

ANALYST RESEARCH

Upgrades

Cabot (CBT) upgraded to Overweight from Neutral at JPMorgan
Comerica (CMA) upgraded to Buy from Neutral at Citigroup
Corrections Corp. (CXW) upgraded to Buy from Fair Value at CRT Capital
Discover (DFS) upgraded to Buy from Hold at Jefferies
Discovery (DISCA) upgraded to Buy from Neutral at Guggenheim
EastGroup Properties (EGP) upgraded to Buy from Hold at Stifel
Grainger (GWW) upgraded to Outperform from Neutral at RW Baird
Home Bancshares (HOMB) upgraded to Buy from Hold at Wunderlich
Huntsman (HUN) upgraded to Neutral from Reduce at SunTrust
Lloyds Banking (LYG) upgraded to Overweight from Neutral at JPMorgan
LogMeln (LOGM) upgraded to Buy from Hold at Needham
PetroQuest (PQ) upgraded to Outperform from Market Perform at FBR Capital
Progressive Waste (BIN) upgraded to Strong Buy from Outperform at Raymond James
Rolls-Royce (RYCEY) upgraded to Hold from Sell at Societe Generale
Societe Generale (SCGLY) upgraded to Buy from Neutral at UBS
Starwood Hotels (HOT) upgraded to Buy from Neutral at UBS
Stratasys (SSYS) upgraded to Market Perform from Underperform at William Blair
TreeHouse Foods (THS) upgraded to Neutral from Underperform at Credit Suisse
Zions Bancorp (ZION) upgraded to Neutral from Sell at Goldman

Downgrades

ATK (ATK) downgraded to Market Perform from Outperform at Cowen
Aeropostale (ARO) downgraded to Market Perform from Outperform at BMO Capital
Agnico-Eagle (AEM) downgraded to Hold from Buy at Canaccord
Agnico-Eagle (AEM) downgraded to Neutral from Buy at UBS
Cadence (CADX) downgraded to Neutral from Buy at Guggenheim
CafePress (PRSS) downgraded to Hold from Buy at Cantor
Cenovus Energy (CVE) downgraded to Hold from Buy at Canaccord
ClearBridge American (CBA) downgraded to Neutral from Buy at BofA/Merrill
DISH (DISH) downgraded to Neutral from Buy at Citigroup
Ducommun (DCO) downgraded to Hold from Buy at Canaccord
EQT Midstream Partners (EQM) downgraded to Neutral from Outperform at Credit Suisse
Foster Wheeler (FWLT) downgraded to Hold from Buy at BB&T
Foster Wheeler (FWLT) downgraded to Neutral from Outperform at Macquarie
Manchester United (MANU) downgraded to Market Perform from Outperform at Raymond James
Munich Re (MURGY) downgraded to Sell from Hold at Societe Generale
Targa Resources (TRGP) downgraded to Market Perform from Outperform at Wells Fargo
Tractor Supply (TSCO) downgraded to Perform from Outperform at Oppenheimer

Initiations

Allscripts (MDRX) initiated with an Outperform at RBC Capital
Cerner (CERN) initiated with an Outperform at RBC Capital
Computer Programs (CPSI) initiated with an Outperform at RBC Capital
Cumulus Media (CMLS) initiated with an Outperform at RBC Capital
Hanover Insurance (THG) initiated with a Buy at Guggenheim
Hibbett Sports (HIBB) initiated with a Hold at Deutsche Bank
MedAssets (MDAS) initiated with a Sector Perform at RBC Capital
Quality Systems (QSII) initiated with a Sector Perform at RBC Capital
RSP Permian (RSPP) initiated with an Outperform at RBC Capital
WebMD (WBMD) initiated with a Top Pick at RBC Capital
athenahealth (ATHN) initiated with a Sector Perform at RBC Capital
eHealth (EHTH) initiated with an Outperform at RBC Capital

COMPANY NEWS

Jos. A. Bank (JOSB) to acquire Everest Holdings, parent of Eddie Bauer, for $825M
Weight Watchers (WTW) shares fell 20% after Q4 profit missed expectations, sharply cut  fiscal 2014 earnings outlook
Occidental Petroleum (OXY) sold Hugoton Field assets for $1.4B
AIG (AIG) raised quarterly dividend 25%, authorized additional $1B share repurchase
Scripps Networks (SNI) announced additional $1B repurchase plan
S&P lowered to ‘BBB-‘ from ‘BBB’ its long-term corporate credit ratings on Sony Corp. (SNE)
Yahoo (YHOO) acquired Distill
Microsoft (MSFT) said sold 2.27M Xbox games in January

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Cliffs Natural (CLF), J2 Global (JCOM), Cloud Peak (CLD), Cognex (CGNX), Cray (CRAY), Kona Grill (KONA), Radiant Logistics (RLGT), Ingram Micro (IM), Limelight Networks (LLNW), Agilent (A), Brocade (BRCD), Bankrate (RATE), AIG (AIG)

Companies that missed consensus earnings expectations include:
Ensign Group (ENSG), Silvercorp Metals (SVM), CafePress (PRSS), Mercer (MERC), Trulia (TRLA), Newpark Resources (NR), GNC Holdings (GNC), Weight Watchers (WTW), ArthroCare (ARTC), Regal Entertainment (RGC)

Companies that matched consensus earnings expectations include:
Equifax (EFX), Ellie Mae (ELLI), Masimo (MASI), VCA Antech (WOOF)

NEWSPAPERS/WEBSITES

Charter (CHTR) likely to look at other suitors, unlikely to counterbid for Time Warner Cable (TWC), WSJ reports
Procter & Gamble (PG) considering current and former executives as candidates for CEO job, Reuters reports
Murphy Oil (MUR) may sell about $3B of Asian assets, Reuters reports
AIG (AIG) to cut 3% of global workforce, Bloomberg reports
Wells Fargo (WFC) moves back into the subprime home market, Reuters reports
Goodyear Tire (GT), Sumitomo look to dissolve 15-year partnership, Nikkei reports
GlaxoSmithKline (GSK) interested in Arena (ARNA), Daily Mail reports
Tesla (TSLA) Model S catches fire in Toronto garage, Business Insider reports
Malone’s (LBTYA) cable moves slow with Comcast (CMCSA), Time Warner Cable (TWC) deal, Bloomberg reports
Facebook (FB) privacy settlement up against opposition, AP reports

SYNDICATE

Celsion (CLSN) files to sell 194,986 shares for holder
Colfax (CFX) 8M share Secondary priced at $68.75
Inogen (INGN) 4.412M share IPO priced at $16.00
Navios Acquisition (NNA) files to sell 12M shares of common stock
Wright Medical (WMGI) files to sell 590K shares of common stock for holders

via Zero Hedge http://ift.tt/NJM37Y Tyler Durden

So far the overnight session has been a replica of yesterday, with the all important carry trade once again fizzling overnight during Japan trading hours, and dipping as low at 101.60 before staging a modest rebound to the 101.8 level. We expect the “invisible” 102.000 USDJPY tractor beam to be again engaged shortly and provide market support and/or levitate stocks higher as the now standard selling in Japan, buying in the US trade pattern repeats. On the other hand, US equity futures appear to have decoupled from the pure carry trade, and instead latched on to USD weakness and EUR strength following European Q4 GDP data, which came at 0.3% on expectations of 0.2%, up from 0.1%. Considering the constant adjustments to the European definition of GDP, at this point Mongolia would have been able to demonstrate growth if it was in Europe (but apparently not Greece which once again missed GDP expectations with Q4 GDP of -2.6% vs Exp. -2.0%). Expect ES and USDJPY to recouple shortly, as they always do – the only question if the recoupling will take place lower or higher.

Heading into the North American open, stocks in Europe are seen broadly higher, supported by basic materials and industrial sectors, following earnings by ThyssenKrupp and Anglo American, as well as higher precious metal prices. At the same time, the release of better than expected GDP reports from France, Germany and Netherlands also supported demand for riskier assets, which in turn pressured USD index (-0.25%). As a result, EUR/USD and GBP/USD traded higher this morning, with GBP/USD advancing to its highest level since May’2011. Overall, trade volumes remained light, with Bunds gradually recovering initial downward price action to near unchanged level. Going forward, market participants will get to digest the release of the latest Import Price Index, U. Michigan Confidence survey and comments by ECB’s Costa and Weidmann.

Looking at the day ahead, there are a number of important data releases on the calendar. In Europe, preliminary Euroarea GDP figures are released today and consensus is expecting growth to tick up to 0.2% QoQ SA for the Euroarea, led by Germany at 0.3%. Europe will also be watching the political developments in Italy with keen interest. Indian wholesale inflation data is due as we type. The focus in the US will be on industrial production and the preliminary University of Michigan confidence report. Results from Anglo American are also due shortly after we go to print.

Headline bulletin from Bloomberg and RanSquawk

• Sentiment supported by the release of better than expected German, French and EU-wide GDP reports.
• After moving above the key USD 1,300 level yesterday and the 200DMA level overnight, spot gold remained bid in European trade and advanced to its highest level since November.
• Treasuries steady, 10Y notes headed for second consecutive weekly loss after U.S. sold $70b of debt, Yellen in first appearance before Congress indicated Fed tapering remains in place despite two weak payrolls reports.
• The euro-area economy expanded more than forecast in the final quarter of 2013, led by Germany and France, easing pressure on the European Central Bank to take action next month to counter low inflation and spur growth
• China’s inflation stayed subdued in January while factory- gate prices extended the longest drop since the 1990s, in a sign of moderating demand in the world’s second- largest economy
• Chinese banks’ bad loans increased for the ninth straight quarter to the highest level since the 2008 financial crisis, highlighting pressures on asset quality and profit growth as the world’s second-largest economy slows
• Matteo Renzi is on the verge of becoming Italy’s youngest prime minister after his putsch against Enrico Letta succeeded  as the ruling Democratic Party turned against the incumbent
• Sovereign yields mostly lower. EU peripheral spreads tighten. Asian stocks mixed, Nikkei -1.5% while Shanghai +0.83%. European stocks gain, U.S. stock-index futures mixed. WTI crude lower, copper and gold

US event calendar

• 8:30am: Benchmark revisions of Producer Price Index; 8:30am: Import Price Index m/m, Jan., est. -0.1% (prior 0.0%)
  • Import Price Index y/y, Jan., est. -1.8% (prior -1.3%)
• 9:15am: Industrial Production m/m, Jan., est. 0.2% (prior 0.3%)
• Capacity Utilization, Jan., est. 79.3% (prior 79.2%)
• Manufacturing (SIC) Production, Jan., est. 0.1% (prior 0.4%)
• 9:55am: UofMich. Confidence, Feb. preliminary, est. 80.2 (prior 81.2)
• 11:00am: Fed to buy $1b-$1.25b in 2036-2043 sector

Asian Headlines

Chinese CPI (Jan) Y/Y 2.5% vs. Exp. 2.4% (Prev. 2.5%) – The gain in CPI was primarily due to rising prices of vegetables, fruits and dairy products, whilst producer prices slowed due to the impact on production from the China New Year holiday.

– PPI (Jan) Y/Y -1.6% vs. Exp. -1.6% (Prev. -1.4%). (BBG)

EU & UK Headlines

Eurozone GDP SA (Q4 A) Q/Q 0.3% vs. Exp. 0.2% (Prev. 0.1%) (BBG/RTRS)
– German GDP SA (Q4 P) Q/Q 0.4% vs. Exp. 0.3% (Prev. 0.3%)
– French GDP (Q4 P) Q/Q 0.3% vs. Exp. 0.2% (Prev. -0.1%, Rev. 0.0%)
– Dutch GDP (Q4 P) Q/Q 0.7% vs. Exp. 0.3% (Prev. 0.2%)

UK home prices rose to a record level in January as spill-over effects from London and first-time buyers boosted sales, according to Acadata. (BBG)

Italian PM Letta to go to the Italian President office at 4pm local time to resign. (ANSA) This is in-line with expectations as it was reported yesterday that the PM would be resigning today, the added detail here is the exact timing of the meeting with the President.

Equities

Better than expected earnings by ThyssenKrupp and Anglo American, together with higher precious metal prices meant that industrials and basic materials outperformed on the sector breakdown. Telecommunications sector underperformed, with London listed Vodafone trading lower after analysts at UBS said that new entrant may pose threat to Vodafone India after Reliance Jio won spectrum in four major Indian metro areas.

FX

The release of better than expected GDP reports by France, Germany and the Netherlands supported EUR in early trade, which failed to hold onto its best levels amid broad based GBP strength which benefited from the ongoing M&A related flow (Vodafone/Verizon) and advanced to its highest level since May 2011. At the same time, AUD/USD benefited from a weaker USD and also higher precious metals prices, after spot gold rose to its highest level since November and above the key 200DMA technical level.

Commodities

Impala (world’s largest platinum producer) said there is an increasing likelihood of a long platinum strike and it is making plans for strike that could last until May. (BBG)

ABN AMRO said the gold advance may be set to reverse and will decline on stronger US data and USD. (BBG)

BNP Paribas recommends selling Dec 2014-Dec 2015 WTI spreads and sees weakness in WTI crude at front of price curve. (BBG)

A Libyan military commander on Friday called for the suspension of the interim parliament and the formation of a presidential committee to govern until new elections are held. (RTRS)

* * *

In conclusion, here is Jim Reid’s summary of overnight events

Given today’s release date of the deeply Machiavellian political drama of House of Cards, it seems somewhat apt that Italy will today see the Italian PM Letta resigning having been effectively ousted in a power struggle with party leader and mayor of Florence Matteo Renzi. It’s very House of Cards. I read yesterday that if Renzi does take over it will be Italy’s 9th PM since 1992 with only two of them elected directly into the job. Its also true that Italy has had over 60 Governments since 1945 so events over the last few days are not unusual. It makes me wonder why in an era of House of Cards, The West Wing and Borgen, that Italian TV doesn’t have a big budget political drama. Maybe this would be a case of fiction being less interesting than reality.

For DB’s interpretation of the news Marco Stringa published a note overnight suggesting that we’re now embarking on a riskier political strategy that decreases the likelihood of muddle-through and increases binary outcomes. It seems Renzi will aim at a multi-year horizon for his government (he mentioned 2018) in order to reap the benefits of economic reforms. However, his likely ambitious objectives will have to be delivered with (i) the current inefficient institutional framework, (ii) a fragile majority and (iii) a fragmented parliament. Renzi’s implied assumption is that changing the PM and the cabinet will suffice. It is a risky strategy.  The market impact of this is minimal for now but its something that has the ability to cause shocks in the future so its worth keeping abreast of. We should also note that Moody’s is due to provide an update on the Italian sovereign today. Moody’s has a Baa2 rating with a negative outlook.

Elsewhere, markets are continuing to grapple with yet another US data disappointment in the form of yesterday’s January retail sales numbers. Though the Nikkei is down 1.53% today, partly due to USDJPY (-0.4%) slipping below 102, the 20 point gain in S&P500 futures yesterday post-retail sales has underpinned gains across Asian risk assets this morning. Gains are being led by the Hang Seng (+0.4%) and ASX200 (+0.9%) but Chinese banks (-0.5%) are underperforming after the banking regulator said that sector NPLs rose in 4Q2013 to highest level since Sept 2008. Asian corporate bonds are trading several basis points tighter and its difficult to find an Asian 10yr government bond trading weaker today. The only major data release during the overnight session was Chinese CPI for January (2.5% YoY vs 2.4% expected and 2.5% prior) which continued to indicate that inflation is largely benign at the moment. Producer prices fell 1.6% YoY which was in line with consensus and is the 22nd consecutive negative PPI reading. Returning to the US retail sales report, the big question was whether the weather again dragged the data lower. As we’ve noted in the EMR in recent weeks, there’s certainly been some anecdotal commentary from companies such as McDonald’s, Ford and General Motors that sales have been impacted by the effect of January’s polar vortex. For the record, January retail sales came in at -0.4% MoM in the headline and there were negative revisions to prior month’s data. Ex auto retail sales (0% vs +0.1% expected) and ex auto & gas (-0.2% vs +0.1% expected) also came in below expectations and they also featured downward revisions to prior month’s data. The further breakdowns offered some doubts to the weather theory as some pointed out that the weather did not explain why online sales decreased by 0.6%, or why there were strong gains in building material sales.

Either way the numbers prompted a round of GDP downward revisions across the Street. According to a WSJ’s monthly survey of economists, the weather is expected to trim 0.3 percentage point from growth this quarter. Indeed, it seems US economic optimism has taken a back seat in recent weeks with the Bloomberg Economic Surprise falling to an 8-month low and gold up 5% for the month-todate. Outside of retail numbers, US jobless claims were also a touch disappointing, rising by 8k last week to 339k (vs 330k expected). DB’s Joe Lavorgna notes that given this is the survey week for February payrolls, and winter storm Pax is currently wreaking havoc across the eastern seaboard, the fear is that it will be at least another month before policymakers will be able to get “clean data” with which to gauge the health of the labor market and the underlying pace of economic activity.

Equities marked a low shortly after the release the data, and from there the Stoxx600 (-0.16%) climbed back up to the morning highs while the S&P500 (+0.58% on the day) climbed more than 1% from its opening level. Equities were further buoyed by a US$45bn buyout offer of Time Warner Cable by Comcast Corp which gave rise to hopes of the return of jumbo deal-making. The combination of a weaker dollar (Dollar index -0.44%) and a 3bp rally in UST yields helped drive a better session across EM. The MSCI EM equity index recovered about 0.5% from the lows and EM FX majors such as the BRL rallied 1.3% for its best one-day gain in more than a month. Strength in the BRL came despite Brazil releasing soft retail sales numbers of its own (Dec -0.2% vs +0.3% expected).

Looking at the day ahead, there are a number of important data releases on the calendar. In Europe, preliminary Euroarea GDP figures are released today and consensus is expecting growth to tick up to 0.2% QoQ SA for the Euroarea, led by Germany at 0.3%. Europe will also be watching the political developments in Italy with keen interest. Indian wholesale inflation data is due as we type. The focus in the US will be on industrial production and the preliminary University of Michigan confidence report. Results from Anglo American are also due shortly after we go to print.

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