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Mykola Azurov, the prime minister of Ukraine, (and his cabinet) has resigned. The move comes as the government faced losing a no confidence vote and being stripped off their power. It seems the opposition (pro-Europe) are gaining momentum once again as the Ukraine also repealed the controversial anti-protest laws that created more tension last week. The Russians are not amused and have warned that they may reconsider the $15 billion bailout offer if the current government is removed. The Ukrainian Hryvnia is continuing its collapse on this news and has dropped towards record lows (though bonds are rallying).

 

 

The opposition is clearly gaining momentum…

Mykola Azarov, the prime minister of Ukraine, submitted his resignation on Tuesday hours before he risked being stripped of his powers in a vote of no confidence in Parliament. His offer to quit was the latest sign of the building momentum of the opposition in the ongoing crisis.

 

In another concession to the opposition, the pro-government political party in Parliament, the Party of Regions, voted together with the opposition to repeal most of the laws in a package of rules limiting free speech and assembly the lawmakers had passed just a week earlier.

 

…

 

One elderly woman in a kerchief giddily told the Ukrainian channel 5 television after Mr. Azarov’s resignation, “Thank God you heard us!”

But the Russians are not happy (via WSJ):

Russia may reconsider its $15 billion bailout offer to Ukraine if the current government is removed, a senior official said Tuesday, hours after Ukraine's prime minister offered his resignation in an effort to calm a growing protest movement. "There is no decision yet, but it is self-evident," that further distributions of the loan would be reviewed if the government of Mykola Azarov was to be dissolved, the official said speaking on condition of anonymity.

However, this is far from over…

Opposition leaders have so far called the president's concessions "too little too late," and appear to be in no mood to compromise with him as protesters have seized government buildings in the west and center of the country.

via Zero Hedge http://ift.tt/1ndFI1s Tyler Durden

And the hits just keep on coming: after the atrocious Durable Goods number, it was the turn of the Case Shiller housing data, which reported what many already knew – in November the 20 City Composite index (the Non-seasonally adjusted version which as the report’s authors acknowledge is the accurate one) posted its first monthly decline, dropping modestly from 165.9 to 165.8, or down 0.06%, since November of 2012. And while on an annual basis, the increase was still a solid 13.71%, up from October’s 13.61%, these backward looking numbers will quite soon turn sharply negative once the sharp bounce in 2013 – driven not by a housing recovery but by institutional all cash buyers and foreign money launderers seeking to park their cash in the US – get anniversaried.

Finally confirming that the upward momentum is indeed over was none other than that bustling metropolis – bankrupt Detroit – which would not see a downward monthly print come hell or polar vortex, until it finally did in November, when monthly prices dipped by a tiny 0.1%: the first drop since February 2013. Oh well, the housing non-recovery was fun while it lasted.

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

We can waste many words to explain today’s absolutely atrocious and recovery killing durable goods report (wait for it… wait for it… it’s the weather’s fault), or we can just show this once chart explaining all that has happened so far in the “recovery.”

Ok fine: here it is in word format:

• Durable goods which in November were said to have risen by 3.5%, were revised lower to 2.6% (we said there was something very fishy with the seasonally adjusted numbers last month). The December number, however, plunged by 4.3%, well below the expected 1.8%, and a paltry 0.1% increase Y/Y. Any time the Y/Y series is consistently negative, there is a recession. Of note: the durable goods orders for computers and electronics was at the lowest level since December 1993. We know… we know… Nobody orders computers when it is cold outside.
• Durable goods ex transports plunged 1.6%, on expectations of a 0.5% increase, and the November print also was revised lower from 1.2% to 0.1%.
  

The more important core CapEx numbers, which are always said to be just around the corner but never actually appear, were evern worse:

Cap Goods orders nondefense ex aircraft plunged from 4.5% to -1.3% on expectations of a 0.3% increase. This despite the November revision lower to 2.6%.

Cap goods shipments nondefense ex aircraft also tumbled from 2.3% to -0.2%, on expectations of  a 0.1% increase. November also was revised lower from 2.8% to 2.3%.

 

So much for Tapering into strength. And now we look forward to the Fed saying what it meant when it said “data dependent” was really “snow in the cold winter” data dependent…

via Zero Hedge http://ift.tt/1f98w5y Tyler Durden

We can waste many words to explain today’s absolutely atrocious and recovery killing durable goods report (wait for it… wait for it… it’s the weather’s fault), or we can just show this once chart explaining all that has happened so far in the “recovery.”

Ok fine: here it is in word format:

• Durable goods which in November were said to have risen by 3.5%, were revised lower to 2.6% (we said there was something very fishy with the seasonally adjusted numbers last month). The December number, however, plunged by 4.3%, well below the expected 1.8%, and a paltry 0.1% increase Y/Y. Any time the Y/Y series is consistently negative, there is a recession. Of note: the durable goods orders for computers and electronics was at the lowest level since December 1993. We know… we know… Nobody orders computers when it is cold outside.
• Durable goods ex transports plunged 1.6%, on expectations of a 0.5% increase, and the November print also was revised lower from 1.2% to 0.1%.
  

The more important core CapEx numbers, which are always said to be just around the corner but never actually appear, were evern worse:

Cap Goods orders nondefense ex aircraft plunged from 4.5% to -1.3% on expectations of a 0.3% increase. This despite the November revision lower to 2.6%.

Cap goods shipments nondefense ex aircraft also tumbled from 2.3% to -0.2%, on expectations of  a 0.1% increase. November also was revised lower from 2.8% to 2.3%.

 

So much for Tapering into strength. And now we look forward to the Fed saying what it meant when it said “data dependent” was really “snow in the cold winter” data dependent…

via Zero Hedge http://ift.tt/1f98w5y Tyler Durden

It seems the “dollar is a reserve currency for ever and ever” propaganda has not reached Africa, also known as Southern China as explained here two years ago, where moments ago the Central Bank of Nigeria issued the following surprise announcement:

• CENTRAL BANK OF NIGERIA TO SELL DOLLARS TO DIVERSIFY RESERVES
• NIGERIA CENTRAL BANK TO RAISE SHARE OF YUAN TO 7% FROM 2%
• NIGERIA CENTRAL BANK TO DIVERSIFY RESERVES INTO YUAN
• NIGERIA CENTRAL BANK CONSIDERING DIM SUM BOND: MOGHALU

But why would anyone buy Yuan when there are so many ever-more diluted dollars available? And now, let’s open it up for the most creative Nigerian email scam involving Chinese Yuan…

via Zero Hedge http://ift.tt/1ndFt6O Tyler Durden

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The Federal Reserve is the primary obstacle to reducing income/wealth inequality. Those who support the Fed are supporting a neofeudal arrangement that widens the income/wealth gap by its very existence.

The issue of income/wealth inequality is finally moving into the mainstream: which is to say, politicos of every ideological stripe now feel obliged to bleat platitudes and express cardboard "concern" for the plight of the non-millionaires with whom they personally have little contact.

I have addressed the complex causes of rising income/wealth inequality for years.Indeed, my book Why Things Are Falling Apart and What We Can Do About It is largely about this very issue.

Here is a selection of the dozens of entries I have written about rising income/wealth inequality.

Income Inequality in the U.S. (August 22, 2008)
Made in U.S.A.: Wealth Inequality (July 15, 2011)
Let's Pretend Financialization Hasn't Killed the Economy (March 8, 2012)
Income Disparity and Education (September 26, 2013)
Is America's Social Contract Broken? (July 17, 2013)
Rising Inequality and Poverty: Can They Be Fixed? (August 15, 2013)
How Cheap Credit Fuels Income/Wealth Inequality (May 30, 2013)
Why Is Debt the Source of Income Inequality and Serfdom? It's the Interest, Baby(November 27, 2013)

While many key drivers of declining income are structural and not "fixable" with conventional policies (globalization of labor and the "end of work" replacement of human labor by robots, automation and software, to name the two most important ones), the financial policies that create wealth/income inequality are made right here in the U.S.A. by the Federal Reserve.

We should start addressing wealth/income inequality by eliminating the primary source of wealth/income inequality in the U.S.: the Federal Reserve.

The Fed generates wealth/income inequality in three basic ways:

1. Zero-interest rates (ZIRP) and limitless liquidity creates cheap credit that enables the super-wealthy to buy rentier income streams that increase their wealth.

The closer one is to this gargantuan flood of "free money for cronies," the wealthier one can become by borrowing from the Fed for near-zero and buying assets that yield returns well above zero. If your speculative bet goes bad, the Fed will bail you out.

2. Zero-interest rates (ZIRP) and limitless liquidity feeds financialization, broadly speaking, the commoditization of debt and debt instruments. The process of commoditizing (securitizing) every loan or debt greatly increases the income and wealth of the financial sector and the state (government), which reaps higher taxes from skyrocketing financial profits, bubbles and rising asset values (love those higher property taxes, baby!).

There is no persuasive evidence that cheap credit enables legitimate wealth creation, while there is abundant evidence that cheap credit fuels speculation, credit bubbles and a variety of financier schemes and scams that create temporary phantom wealth for crony capitalists and impoverishes everyone who wasn't in on the scam.

The housing bubble was not just a credit bubble; it was a credit bubble enabled by the securitization/financialization of the primary household asset, the home.Those closest to the Fed-enabled flow of credit reaped the gains of this financialization (or were subsequently bailed out by the Fed after the bubble burst), while the households that believed the Fed's shuck-and-jive ("There is no bubble") suffered losses when the bubble popped.

This chart of income inequality depicts the correlation between the Fed's easy-money credit expansion and the extraordinary increase in income inequality.Please note the causal relation between income and wealth; though it is certainly possible to squander one's entire income, those households with large incomes tend to acquire financial wealth. Those with access to cheap credit are able to buy income-producing assets that add to their wealth.

Financialization is most readily manifested in the FIRE sectors: finance, insurance, real estate.

You can see the results of financialization in financial profits, which soared in the era of securitization, shadow banking, asset bubbles and loosened or ignored regulation:

Here's how cheap, abundant credit–supposedly the key engine of growth, according to the Federal Reserve–massively increases wealth inequality: the wealthy have much greater access to credit than the non-wealthy, and they use this vastly greater credit to buy productive assets that generate income streams that increase their income and wealth.

As their income and wealth increase, their debt loads decline.

The family home is supposed to be a store of wealth, but the financialization of housing and changing demographics have mooted that traditional assumption; the home may rise in yet another bubble or crash in another bubble bust. It is no longer a safe store of value, it is a debt-based gamble that is very easy to lose.

Credit has rendered even the upper-income middle class family debt-serfs, while credit has greatly increased the opportunities for the wealthy to buy rentier income streams. Credit used to purchase unproductive consumption creates debt-serfdom; credit used to buy rentier assets adds to wealth and income. Unfortunately the average household does not have access to the credit required to buy productive assets; only the wealthy possess that perquisite.

The Fed's Solution to Income Stagnation: Make Everyone a Speculator (January 24, 2014)

As a direct result of Fed policy, the rich get richer and everyone else gets poorer.

3. But that isn't the end of the destructive consequences of Fed policy: the Federal Reserve has also created a neofeudal society in which debt enslaves the masses and enriches the financial Elites.

Put another way, not all wealth is created equally. Compare Steve Jobs, who became a billionaire by developing and selling "insanely great" mass-market technologies that people willingly buy because it enhances their lives, with a crony-capitalist who reaps billions in profits from risky carry trades funded by the Fed's free-money-for-cronies policy or by selling phantom assets (mortgages, for example) to the Fed at a price far above market value.

Clearly, there is a distinction between those two fortunes: one created value, employment for thousands of people, and tremendous technological leverage for millions of ordinary people. The other enriched a handful of financiers. This financial wealth could not be conjured into existence and skimmed by Elites without the Federal Reserve.

This Fed-enabled financial wealth destroys democracy and free markets when it buys the machinery of governance. To the best of my knowledge, Jobs spent little of his time or wealth lobbying Big Government for favors, special laws eliminating competitors with regulatory hurdles, etc.

Compare that to the millions spent by the "too big to fail" banking industry to buy Congressional approval of their cartel's grip on the nation's throat: Buying Off Washington To Kill Financial "Reform".

Much of the debate about wealth inequality focuses on whether the super-wealthy are "paying their fair share" of the nation's taxes. If we refer to the point above, we see that as long as the super-wealthy can buy the machinery of governance, then they will never allow themselves to be taxed like regular tax donkeys.

Unfortunately, only the top 1/10th of 1% can "afford" this kind of Fed-funded "democracy." As of 2007, the bottom 80% of American households held a mere 7% of these financial assets, while the top 1% held 42.7%, the top 5% holds 72% and the top 10% held fully 83%.

The income of the top 5% soared during Fed-enabled credit bubbles:

Since all these distortions originate from the Fed, the only solution is to abolish the Fed. Those who have absorbed the ceaseless propaganda believe that an economy needs a central bank to create money and manage interest rates.

This is simply wrong. The U.S. Treasury (a branch of government actually described by the Constitution, unlike the Fed) could print money just as it borrows money. Should a liquidity crisis squeeze rates higher, the Treasury has the means to create liquidity and make it available to the legitimate financial system.

All the Fed's regulatory powers were power-grabbed from legitimate government agencies defined by the Constitution.

The Federal Reserve is the primary engine of income/wealth inequality in the U.S. Eliminate "free money for cronies," bailouts of the "too big to fail" banks that own the Fed, manipulation of markets, the purchase of impaired private assets at high prices, and all the other tools of financialization the Fed wields to enforce its grip on the nation's throat–in other words, abolish the Fed–and the neofeudal structure that feeds inequality will vanish along with the feudal lords that enforced it.

We don't need to "fix" things as much as remove the obstacles that are blocking the way forward. The Federal Reserve is the primary obstacle to reducing income/wealth inequality. Those who support the Fed are supporting a neofeudal arrangement that widens the income/wealth gap by its very existence.

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

Early this morning, at JPM’s 33 story high London Headquarters located at 25 Bank Street in Canary Wharf, a 39 year-old man jumped to his death after falling onto a 9th floor roof. The police, who were called to the scene at 8:02 this morning, said they are not treating the death as suspicious and no arrests have been made, suggesting the death was indeed a suicide.  London Ambulance Service and London Air Ambulance attended but they could not save the man. 

Bloomberg quotes Jennifer Zuccarelli, a spokeswoman for JPMorgan in London who said that “We are reviewing a very sad incident at 25 Bank Street this morning.”  The building and the surrounding area is “currently secure,” she said.

From Bloomberg:

The 11-year-old skyscraper is 33 stories high, according to building-data provider Emporis. It was formerly the European headquarters of Lehman Brothers Holdings Inc., which filed for the largest bankruptcy in U.S. history in 2008.

 

The bank declined to identify the deceased person or say whether they worked for JPMorgan. The police are waiting for “formal identification,” they said in an e-mailed statement.

London24, which also notes that this is the second high profile banking death within just a few days after Deutsche bank announced its former executive William Broeksmit 58, was found dead in his home on Sunday, caught some tweets describing the incident:

Sad. Someone jumped/fell at #JPMorgan #CanaryWharf @8am. A sorry view from my desk opposite. Still nobody approaching the body, very odd.

— Andrew Lawrence (@YellowAL) January 28, 2014

Is this just the first of many banker suicides, if indeed this was a suicide?

via Zero Hedge http://ift.tt/1f98pH0 Tyler Durden

• Emerging markets pray for Wall Street tumble (Reuters)
• Yellen Faces Test Bernanke Failed: Ease Bubbles (BBG)
• Samsung sets new smartphone sales record in fourth quarter, widens lead over Apple (Reuters)
• China’s Foreign-Reserves Investment Chief Said to Depart Agency (BBG)
• China’s Rescue of Troubled Trust May Stoke Risk-Taking (BBG)
• Ukraine PM Azarov offers to resign ‘to help end conflict’ (Reuters) … And Russia says may reconsider aid if this happens
• But… but… it was all gold’s fault: India Unexpectedly Raises Rate as Rupee Risks Inflation Goal (BBG)
• Former Belgian king ‘boycotting’ public events after complaining £760,000 is not enough to live on (Telegraph)
• Greek disposable income tumbles 8% in Q3 (Kathimerini)
• A Suspect Emerges in Stock-Trade Hiccups: Regulation NMS (WSJ)
• Obama to Raise Minimum Wage for Contractors to $10.10 (BBG)
• Government Reaches Deal With Tech Firms on Data Requests (WSJ)

 

Overnight Media Digest

WSJ

* The Obama administration agreed Monday to let technology companies make more information public about how often the government monitors Internet use, a move that aims to ease public distrust and corporate complaints about snooping.

* Attempts to send convoys of food and medicine to thousands of people under siege in a rebel-held area of Homs failed Monday, lowering hopes about the regime’s commitment to confidence-building measures coming out of peace talks in Geneva.

* Apple reported selling fewer iPhones than projected at year-end and said revenue in the current quarter might decline. The results highlighted new dynamics and intensifying competition in the smartphone market. Apple continues to target the market for high-end phones, even as demand accelerates for lower-cost models, particularly in emerging markets. But Apple is resisting the urge to release a truly low-cost phone that could crimp profitability.

* The Securities and Exchange Commission recently released documents related to its probe into the near-collapse of American International Group – with hundreds of redactions to keep information secret.

* Bank branch closures in the United States last year hit the highest level on record so far, a sign that sweeping technological advances in mobile and electronic banking are paying off for lenders but leaving some customers behind.

* Turkey’s central bank, beset by political instability, tumbling confidence and one of the world’s fastest falling currencies, will convene an emergency meeting Tuesday.

* Sergio Ermotti, chief executive of UBS, has a message for the many critics of the Swiss bank and the entire industry: Back off. Ermotti said he is growing frustrated with what he sees as some regulators, politicians, shareholders, clients, journalists and rival banks holding UBS to a higher standard than they hold themselves.

* Global derivatives trade group International Swaps and Derivatives Association Inc (ISDA) on Monday disclosed sweeping changes to calculations of a key interest-rate benchmark, part of a plan that will diminish the role played by traders in the process by moving to an automated rate-setting system.

* Workers at Ranbaxy’s drug plant in Toansa in the northwestern Indian state of Punjab repeatedly fudged test results to make it appear that raw materials and active pharmaceutical ingredients met required standards, according to FDA inspectors.

 

FT

ADS, a trade organisation for UK aerospace, defence, security and space industries, called for more tax relief for the sector, and warned that UK’s exit from the European Union could erode the country’s 17 percent share of the aerospace market.

The Lloyds Banking Group has told the Financial Conduct Authority that a technological glitch, which caused the banking group subsidiaries’ ATM and debit to stop working for three hours on Sunday, was a “one-off” and payment backlogs were being looked into, an insider at FCA told the Financial Times.

Spain’s Santander bank, which is making a big push in the United States, has appointed Sheila Bair, who was head of the Federal Deposit Insurance Corporation from 2006 to 2011, as an independent director.

The large number of initial public offerings scheduled for 2014 could overstretch existing resources of fund managers, who may be forced to sell their underlying holdings in other companies to tap into new investments, according to small cap fund managers.

About 5,000 workers across Ford’s six UK factories ballot for a strike as they look at receiving some security against job cuts in Britain. The company said discussions over the dispute are “live and open”.

 

NYT

 

* The Obama administration will allow Internet
companies to talk more specifically about when they are forced to turn
over customer data to the government, the Justice Department said.

* Marathon Asset Management is starting a new $350 million fund dedicated to distressed debt in Europe.

*
Martin Marietta Materials has agreed to acquire Texas Industries in an
all stock deal worth more than $2 billion, according to people familiar
with the matter. In the deal, Martin Marietta will exchange seven-tenths
of one of its shares, worth about $72, for each Texas Industries share.
A deal is expected to be announced shortly.

* JPMorgan
Chase appears to have settled a dispute with Frank Bisignano, a former
close confidant of its chairman, Jamie Dimon, the latest reminder that
the inner circle that helped the bank weather the financial crisis is no
more.

* Narayana Kocherlakota, president of the
Minneapolis Fed, said the central bank should increase its efforts to
stimulate the economy – a view he conceded had not gained much traction
with his colleagues.

* Apple’s blockbuster phone sales
helped the company post a profit of $13.1 billion on revenue of $57.6
billion. The company set record for iPhones sold in the quarter at 51
million devices.

* Tiger Global Management, the New
York-based hedge fund, will invest nearly $520 million in Brazilian
online retailer B2W Companhia Digital, the company said, a sign that it
continues to see promise in Brazil’s vibrant Internet sector.

*
United Technologies is considering Sikorsky, the maker of the Black
Hawk helicopter, as a candidate for a tax-free spinoff or potentially a
sale to a rival.

* One of the most prominent players in
the Bitcoin universe, Charles Shrem, was arrested on Sunday, accused of
conspiring to facilitate drug transactions on the now-defunct online
bazaar Silk Road.

* More class-action lawsuits were
filed against public companies in 2013 than in the previous year, but
the filers were seeking billions less in damages than they have on
average.

 

 

Canada

THE GLOBE AND MAIL

* Police across Canada have been searching the workplaces and homes of prostitutes to find victims of human trafficking. But some sex workers say the initiative, which comes a month after the Supreme Court struck down Canada’s major prostitution laws, is simply an intimidation tactic meant to harass members of their profession in the absence of the ability to lay charges.

* At 9:10 a.m. on Jan. 27, two Russian cosmonauts drifted out of the International Space Station orbiting Earth for a space walk to install two high-tech cameras owned by a Canadian startup. The cameras cost $17 million and are capable of beaming down images and high-definition video from the Russian part of the ISS to UrtheCast, a small Vancouver company that struck a deal with the Russian space agency.

Reports in the business section:

* Two high-ranking Bombardier Commercial Aircraft vice-presidents have departed in a major shakeup in the company’s sales network amid slow sales of the new C Series plane and other aircraft. Raphael Haddad, vice-president of sales for the Middle East and Africa, and Steve Aliment, vice-president of sales for Europe, have left the company.

* Just when Air Canada has put its threatening pension deficit behind it, the sudden fall of the Canadian dollar has thrown the airline another curve ball.

NATIONAL POST

* British Columbia’s top court has upheld a decision to revoke almost a decade of medicare coverage for an immigrant couple, confirming in a rare judgment that provinces have every right to deny health funding to people who spend too much time living abroad.

* Prime Minister Stephen Harper expressed concern Monday that Ukraine is backsliding toward its communist past under the Soviet Union, a clear dig at Russia as it prepares to host next month’s Winter Olympics.

FINANCIAL POST

* BCE Inc is under fire again for its collection and use of wireless customers’ data for marketing purposes as two public interest groups have now filed a complaint with Canada’s telecom regulator over the practice.

 

China

SHANGHAI SECURITIES NEWS

– The government’s tight liquidity stance in 2013 that decreased cash supply to China’s banking system contributed to the slowest annual asset and liability growth in Chinese banks in a decade last year.

– Chinese premier Li Keqiang advocated the use of new energy cars during a trip to Chinese automaker BYD Co Ltd in the central Chinese city of Xi’an, as a means to tackle China’s severe pollution problem.

– New rules of the Shanghai and Shenzhen stock exchanges that set daily limits for new listings and order suspension at limits, adopted this year to curb rampant speculation in new listings, have caused many newcomers to trade only a few minutes on their debut day. That reflects defects in the new regulations.

CHINA SECURITIES JOURNAL

– The latest reform by the People’s Bank of China to offer cash to smaller banks via the Short-term Lending Facility (SLF) mechanisms has enabled the central bank to adjust liquidity supply in the banking system with precision, a commentary by this major Chinese financial newspaper said.

– Analysts once again propose China’s stock market to adopt a T+0 system, or the same-day trading system, to help activate sluggish trading in large-capitalised blue chips.

PEOPLE’S DAILY

– An editorial by this mouthpiece of the ruling Communist Party of China criticised that some government meetings have been too extravagant. The party is launching a sweeping clampdown on official corruption.

CHINA DAILY

– Chinese authorities in the northern-central Chinese city of Xinzhou have taken a man into custody after he posted rumours about H7N9 bird flu on local social media.

– Fu Weimin, the former director and Party chief of the forestry administration of Dongfang, was removed from his post after he took more than 260,000 yuan ($43,000) in cash gifts at his mother’s funeral, China National Radio reported. Fu hosted feasts for guests over six days in January.

SHANGHAI DAILY

– An H7N9 bird flu epidemic in China is “unlikely” during the country’s week-long Spring Festival holiday in late January and early February, according to the director of the Chinese National Influenza Center. The bid flu virus has killed 19 people in China this year.

– Authorities in Shanghai have jailed four people for using waste oil for cooking, the Changning District People’s Court ruled on Monday. China has struggled with food safety issues from chemical-tainted milk to fake donkey meat.

SECURITIES TIMES

– Seven companies will list on the Shenzhen Stock Exchange on Wednesday, bringing the total number debuting in the mainland bourses in the first three days of this week to 24.

 

Britain

The Telegraph

OFWAT STEMS FLOW OF RETURNS TO WATER INVESTORS Water companies could have to cut dividend payouts to shareholders, analysts said on Monday, after regulator Ofwat said they should they accept a lower rate of return on investment than they had sought for the next five years. The plans could result in lower household bills, although Ofwat declined to estimate the scale of the impact on customers.

FORMER HBOS BANKER’S FIRM COULD NET 45 MILLION POUNDS FROM MCCOLL’S FLOAT

A private equity firm run by a former HBOS banker could net roughly 45 million pounds from the flotation of convenience store business McColl’s Retail Group. Cavendish Square Partners owns 20 percent of McColl’s and has signalled its intention to sell shares in the company as part of an IPO that was officially unveiled to the stock market on Monday.

The Guardian

GROWTH FIGURE LIKELY TO BOLSTER RECOVERY HOPES

Britain’s recovery is expected to have held up over the final months of 2013, helping the economy to clock up its strongest annual growth for six years. While there is still much ground to cover to get back to pre-crisis levels of output, most economists expect official data on Tuesday to confirm that last year ended on a relatively strong note.

FORD WORKERS BALLOTED ON STRIKE ACTION

Thousands of Ford workers are being balloted for strike action in a row over job security and pensions. Members of the Unite and GMB unions will vote on whether to launch a campaign of industrial action aimed at safeguarding jobs after recent cuts led to Ford ending 100 years of vehicle production at its plant in Southampton.

The Times

BRITAIN “CAN GET BETTER VALUE OUT OF THE EU”

Britain should send more civil servants and regulators to spend time inside the European Union machine in order to wield more influence over laws the UK does not like, according to the most powerful British Parliamentarian in Brussels and chair of the European Parliament’s Economic and Monetary Affairs Committee, Sharon Bowles.

SIGNIFICANT JUMP IN MINIMUM WAGE IS AFFORDABLE, CLAIMS BUSINESS LEADER

Business can afford an inflation-busting increase in the minimum wage, according to Sir Mike Rake, the President of the CBI. His intervention makes him the most senior business figure so far to support calls for a real improvement in earnings for the lowest-paid.

Sky News

ZOOPLA STEPS UP 1.3 BILLION POUNDS FLOAT PLAN

The online property group which abandoned a sponsorship deal recently is accelerating plans for a flotation valuing it at well over 1 billion pounds. Sky News has learnt that Zoopla, which is terminating its association with the Premier League club West Bromwich Albion at the end of the season, has appointed Jefferies, the investment bank, to work on a stock market listing.

PENSIONS TOP-UP PLAN WOULD INCREASE PAYOUT

People in or nearing retirement are to be given the chance to use their savings to top up their state pension. The new scheme will allow eligible pensioners to pay in lump sums from as little 900 pounds. In return they will see an increase in their state pension by as much as 25 pounds a week.

 

Fly on the Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Durable Goods Orders for December will be reported at 8:30–consensus up 1.6%
Case-Shiller 20-city home price index for October reported at 9:00–consensus up 13.7% from prior year
Consumer Confidence for January will be reported at 10:00–consensus 79.0

ANALYST RESEARCH

Upgrades

ArcelorMittal (MT) upgraded to Outperform from Sector Perform at RBC Capital
Cambrex (CBM) upgraded to Overweight from Equal Weight at First Analysis
CorEnergy (CORR) upgraded to Buy from Neutral at BofA/Merrill
Fortinet (FTNT) upgraded to Outperform from Market Perform at JMP Securities
Maxim Integrated (MXIM) upgraded to Overweight from Equal Weight at Barclays
Sally Beauty (SBH) upgraded to Buy from Neutral at Sterne Agee
Sally Beauty (SBH) upgraded to Buy from Neutral at Sterne Agee
Sanmina (SANM) upgraded to Buy from Hold at Needham
Sanmina (SANM) upgraded to Market Perform from Underperform at Raymond James
Southwest (LUV) upgraded to Outperform from In-Line at Imperial Capital
Texas Capital (TCBI) upgraded to Buy from Neutral at SunTrust

Downgrades

Apple (AAPL) downgraded to Outperform from Strong Buy at Raymond James
Apple (AAPL) downgraded to Perform from Outperform at Oppenheimer
BioCryst (BCRX) downgraded to Underperform from Neutral at BofA/Merrill
Chef’s Warehouse (CHEF) downgraded to Hold from Buy at BB&T
Delek US (DK) downgraded to Neutral from Outperform at Credit Suisse
NVR (NVR) downgraded to Neutral from Positive at Susquehanna
OFS Capital (OFS) downgraded to Underweight from Equal Weight at Barclays
Penn National (PENN) downgraded to Underperform from Buy at BofA/Merrill
Phillips 66 (PSX) downgraded to Neutral from Outperform at Credit Suisse
Synaptics (SYNA) downgraded to Perform from Outperform at Oppenheimer
Tile Shop (TTS) downgraded to Neutral from Outperform at RW Baird
Western Refining (WNR) downgraded to Neutral from Outperform at Credit Suisse

Initiations

Anadarko (APC) initiated with a Market Perform at Cowen
Control4 (CTRL) initiated with an Outperform at Imperial Capital
Devon Energy (DVN) initiated with an Outperform at Cowen
EOG Resources (EOG) initiated with an Outperform at Cowen
Enanta Pharmaceuticals (ENTA) initiated with an Outperform at RW Baird
FireEye (FEYE) initiated with a Hold at Topeka
International Flavors (IFF) initiated with a Buy at Deutsche Bank
Medivation (MDVN) initiated with a Buy at CRT Capital
Noble Energy (NBL) initiated with an Outperform at Cowen
ORBComm (ORBC) initiated with a Buy at Canaccord
Omnicom (OMC) initiated with an Overweight at Barclays
Parkway Properties (PKY) initiated with an Overweight at Barclays
Pioneer Natural (PXD) initiated with a Market Perform at Cowen
Uralkali (URALL) initiated with a Buy at Societe Generale

HOT STOCKS

DOJ reached agreement with tech companies (FB, AAPL, MSFT, GOOG, LNKD, YHOO) on data requests
Casablanca Capital urged Cliffs Natural (CLF) to spin off international assets, Cliffs Natural ‘welcomes communications’ with Casablanca
General Electric (GE) CEO disclosed 40K share purchase at $25.04
Kansas City Southern (KSU) raised dividend to 28c per share from 21.5c per share
Ashland (ASH) expects 800-1,000 employees to leave in 2014 in restructuring plan
DuPont (DD) announced $5B share repurchase program
Check Point (CHKP) expanded share repurchase program by $1B
ITT Educational (ESI) disclosed receipt of subpoenas and/or civil investigative demands

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Danaher (DHR), DuPont (DD), Radware (RDWR), Check Point (CHKP), MicroStrategy (MSTR), U.S. Steel (X), Ashland (ASH), Apple (AAPL), Swift Transport (SWFT), Rambus (RMBS),  Covenant Transportation (CVTI), Plantronics (PLT), J & J Snack Foods (JJSF)

Companies that missed consensus earnings expectations include:
CIT Group (CIT), Air Products (APD), Polaris Industries (PII), STMicroelectronics (STM), STMicroelectronics (STM), Rent-A-Center (RCII), Park National (PRK), Zions Bancorp (ZION), Graco (GGG), Seagate (STX)

Companies that matched consensus earnings expectations include:
Steel Dynamics (STLD), Olin Corp. (OLN), PLX Technology (PLXT)

NEWSPAPERS/WEBSITES

• Centerview hired by Time Warner Cable (TWC) to advise on Charter (CHTR) bid, FT reports
• Martin Marietta (MLM) to acquire Texas Industries (TXI) for $72 per share, NY Times reports Intel (INTC) may be considering an exit from smartphone market, DigiTimes reports
• Google (GOOG) adds designer frames in hopes of sharpening Glass, AP reports
• Facebook (FB) hiring editors for news app, Re/code reports
• PE firms (APO, CG) compete for Illinois Tool Works’ (ITW) packaging unit, WSJ reports
• Rio Tinto (RIO) in talks to sell Quebec aluminum plant, Reuters reports
• Credit Suisse (CS) plans $500M CLO of about $500M, Bloomberg reports
• Nintendo (NTDOY) to announce new strategy, NY Times reports
• Ethanol firms (ADM, GPRE)) look to increase exports, WSJ reports
• U.S. Steel (X) wins Supreme Court labor dispute, Reuters reports  

SYNDICATE

America First (ATAX) files to sell 7M shares representing limited partner interests
Centene (CNC) 800K share Spot Secondary priced at $59.80
Constellium (CSTM) files to sell 37.56M shares for holders
Prothena (PRTA) files to sell 2.77M ordinary shares for holders
XPO Logistics (XPO) files to sell 15M shares of common stock

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

 

The Big O will give us the SOTU pep talk tonight. Obama will pound on the theme of income inequality in America. A Wordle of the SOTUS will look like:

 

 

The President will be using language that misses the mark. The issue at hand is not just Income Equality, it's Wealth AND Income Inequality. The problem that Obama faces is that America does not tax wealth, it only taxes income. So until America gets around to a tax on wealth, the Prez is stuck with increasing income taxes (reducing deductions) for high income folks in his attempt at leveling the playing field.

To be sure, there is plenty of income disparity in the USA. The question is how much, and what has changed over time. I looked at data on all EARNED income over the past 23 years. The info come from the Social Security Administration (AKA Treasury/IRS). The link to this data, a few graphs of the results:

 

How many people make it to the 1% club every year? I was surprised that the number has not changed all that much over a 1/4 decade. The number of folks who made the financial limelight has varied by only 400k. It's worth noting however, that 2012 produced the largest number of 'fat cats' ever.

 

 

What income level did it take to be in the 1% club?

 

 

How many total dollars have the 1% taken in each year? In 2012 the 1% raked in 1.05 Trillion. Four times what they made in 1990.

 

 

What was the 1%ers total income as a percent of GDP? It's increased quite a bit over time, and it's the highest ever today.

 

 

What is the 1%'s income as compared to total earned income? (A better way to look at this). This comparison shows a trend that should be a bit scary to those earning the big bucks. As of 2012 it was 17% of all income. 1% make 17%. That's pretty far out of whack.

 

 

The numbers from SSA confirm that a small percentage of workers take home a huge percent of the pie. So what's Obama going to propose tonight? He can yack about a bunch of things that might make a small difference, but if he really wants to move the needle on inequality, he has to raise taxes on the 1%. The problem that O faces is that he's already tapped this well. Tax rates on the 1% are now at the highest level in a long time:

 

 

One of the 1%ers, Tom Perkins, a heavy hitter with Kleiner Perkins Caufield & Byers. (VC – of course) , manged to get an OpEd letter at the WSJ. Tommy likened the rising sentiment against the 'haves' to a Nazi atrocity.

Kristallnacht was unthinkable in 1930; is its descendent “progressive” radicalism unthinkable now?

 

Looking good Tommy! Not….

 

Mr. Perkins needs to get a grip. If he feels threatened today, he's going to be crapping in his pants tomorrow. Obama will be gunning for his pocketbook. And tonight, when O does call for higher taxes on the rich, half of the congressmen will stand and applaud.

 

 

via Zero Hedge http://ift.tt/1ndF97T Bruce Krasting

The depressed tone overnight following AAPL’s disappointing earnings mysteriously evaporated just ahead of the European open, when around 2 am Eastern the all important USDJPY began an dramatic ramp, (with ES following just behind) which saw it rise from the Monday closing level of 102.600 all the way to 103.250, in what appears to have been a new frame-setting stop hunt ahead of a variety of news including the start of the January – Bernanke’s last – FOMC meeting.

One of the potential triggers for the move may have been the RBI’s unexpected hike in the repurchase rate  to 8.00% with an unchanged  7.75% consensus, which was its second consecutive INR-boosting “surprise.” Among the amusing comments by RBI’s Rajan, justifying the ongoing (loising) fight with inflation, was that India’s consumer numbers are weak because of inflation. But… isn’t that the Keynesian cargo cult’s wet dream?

Moving to Turkey, where Turkey Central Bank governor Erdem Basci had an epic 2 hour long headline-generating fest ahead of the bank’s midnight announcement which everyone is so keenly looking forward to as it will either delay the EM moment of reckoning, or it won’t, and expectations are for everything from a 150 to 500 bps rate hike, up to and including capital controls. Among some of the things he noted was that tonight’s extraordinary meeting of the monetary policy committee targets taking necessary steps on price stability, and that the central bank won’t refrain from permanent tightening if needed. He added that tightening using liquidity policy above what’s necessary can have a beneficial impact in times of high uncertainty and that Turkey’s central bank will discuss moving to a policy based on a single main rate at tonight’s extraordinary meeting: normalization via return to 1-week repo rate as the policy rate will be discussed, Basci said and stated that Turkey central bank sees less need for fx sales to support the lira ahead, and Basci says fx sales are more effective when supported by interest rates. Finally here is an example of Turkish forward guidance: “Turkey may see unexpected positive developments in the second half.” Sounds about right for a central banker.

That said, good luck to Turkey whose economy is now set to grind to a halt as liquidity dries to a trickle, rates soar and its markets will probably not do much better. Especially since any measures the central bank engages in will be ultimately futile.

Anyway, keep an eye on the headlines at 5 pm Eastern when the TCB is expected to make its announcement.

Summarizing the market so far with Ran Squawk

Heading into the North American open, stocks in Europe are seen broadly higher, amid the alleviation of concerns surrounding EM nations after the RBI unexpectedly raised rates, while the PBOC injected CNY 150bln, which all comes ahead of the extraordinary monetary policy meeting by the Turkish central bank. As a result, JPY and CHF weakened, with USD/JPY advancing above the 55DMA line amid touted HF buying, while the out of favour EM currencies such as ZAR and TRY remained bid ahead of the policy announcement by the Turkish central bank scheduled for 2200GMT. Financials led the move higher, with Spanish banks outperforming after analysts at  Credit Suisse raised Banco Popular Espanol and CaixaBank to outperform from neutral. Looking elsewhere, consequent USD strength ensured that in spite of an in line UK GDP report, GBP/USD traded lower, as did EUR/USD which edged back below the 50DMA line. Going forward, attention will turn to earnings by Pfizer, AT&T, Ford and Yahoo. In terms of macroeconomic releases, focus will be on the latest Durables report, US Consumer Confidence and the weekly API data.

Overnight bulletin headlines from Bloomberg:

• Treasuries decline as 2Y/5Y/7Y auction cycle begins today, with inaugural FRN sale tomorrow; yields also higher as FOMC expected to announce additional tapering tomorrow, offsetting demand created by ongoing retreat from emerging market currencies and stocks.
• The U.K. economy expanded 0.7% in 4Q, ending the best year since 2007 amid growth in every industry except construction
• China’s eleventh-hour rescue of wealthy investors in a high-yield trust threatens to drive more money into the nation’s $6t shadow-banking industry, undermining regulators’ efforts to deter excessive risk-taking
• While Obama will say in tonight’s State of the Union address that he’s prepared to act without Congress to advance parts of his agenda, there is little he can do on the biggest issues for U.S. companies without agreement from legislators
• Obama to use executive authority to impose minimum $10.10 wage for those working on new federal contracts for services, White House says in e-mail
• Ukraine’s prime minister offered his resignation to help bring about an end to more than two months of street protests as parliament revoked anti-rally laws that sparked deadly riots last week
• Reserve Bank of India unexpectedly boosts benchmark repo rate by 25bps to 7%; only 3 of 45 economists surveyed by Bloomberg predicted an increase
• When Argentina decided last week to ease limits on dollar purchases, it became the latest emerging-market nation to acknowledge that capital controls usually fail in masking an economy’s flaws
• A 39-year-old man died after falling from JPM’s London headquarters, the city’s Metropolitan Police said.
• Sovereign yields mostly higher; EU peripheral yields decline, peripheral spreads narrow. Asian equity markets mostly lower; European markets, S&P 500 futures gain. WTI crude, copper higher; gold falls

US economic docket:

• 8:30am: Durable Goods Orders, Dec., est. 1.8% (prior 3.5%, revised 3.4%); Durables Ex-transportation, Dec., est. 0.5% (prior 1.2%); Capital Goods Orders  Non-defense, Ex-aircraft, Dec., est. 0.3% (prior 4.5%, revised 4.1%); Capital Goods Shipments Non-defense, Ex-aircraft, Dec., est. 0.1% (prior 2.8%, revised 2.7%)
• 9:00am: S&P/Case Shiller Home Price Index m/m, Nov., est. 0.8% (prior 1.05%) S&P/CS y/y, Nov., est. 13.8% (prior 13.61%); S&P/CS Home Price Index NSA, Nov., est. 165.72 (prior 165.91)
• 10:00am: Consumer Confidence Index, Jan., est. 78 (prior 78.1)
• 10:00am: Richmond Fed Manufacturing Index, Jan., est. 13 (prior 13)
• 11:30am: U.S. to sell 4W bills
• 1:00pm: U.S. to sell $32b 2Y notes
• 11:00am: Fed to purchase $2.25b-$3b in 2021-2023 sector

Asian Headlines

PBOC injected CNY 150bln to the interbank market as it seeks to preserve necessary amount of liquidity and avoid potential credit crunch over the Chinese New Year holiday period.

INR strengthened overnight after the RBI raised the Repurchase Rate to 8.00% vs. Exp. 7.75% (Prev. 7.75%). The RBI has now surprised markets for the 2nd consecutive time and unexpectedly hiked rates.

EU & UK Headlines

UK GDP (Q4 A) Q/Q 0.7% vs. Exp. 0.7% (Prev. 0.8%)
– UK GDP (Q4 A) Y/Y 2.8% vs Exp. 2.8% (Prev. 1.9%), highest since Q1 2008
– UK preliminary 2013 GDP 1.9% vs 2012 0.3%, highest since 2007
Solid demand for the Finnish 10y syndication, together with the resurgence in risk appetite saw Bunds trend lower for much of the session. So much so that even larger than avg. month-end extensions failed to support prices.

Standard & Poor’s said the Eurozone has made little progress in weaking links between sovereigns and vulnerable banks in their jurisdictions. Analysts also said that the Eurozone will continue with it’s slow recovery in 2014, which high-frequency indicators appear to confirm this. (DJN)

Barclays preliminary pan-Euro agg month-end extensions: +0.14y (12m avg. +0.07y)
Barclays preliminary Sterling month-end extensions:+0.19y

US Headlines

In his State of the Union address, Obama will also call on Congress to pass a bill that would increase the federal minimum wage for all workers to USD 10.10 an hour from USD 7.25 and index that to inflation going forward. (RTRS)

Barclays preliminary US Tsys month-end extensions:+0.06y (12m avg. +0.07y)

Equities

Stocks traded higher in Europe this morning, with financials leading the move higher as market participants remained hopeful that EM central banks will be able to prevent further capital outflow, with credit and bond yield spreads also seen tighter this morning. Spanish listed banks outperformed its peers following positive broker recommendation by analysts at Credit Suisse. Better than expected earnings by Siemens also supported industrials in Europe, with the sector among the best performing in Europe.At the same time, tech sector underperformed since the get-go, as market participants in Europe reacted to less than impressive earnings by Apple after the closing bell on Wall Street yesterday (of note German listing is seen down 6.6%).

FX

USD/JPY traded higher, supported by touted HF buying, as market participants used the actions overnight by the RBI and the PBOC as an opportunity to enter carry trades ahead of the much anticipated extraordinary monetary policy meeting by the Turkish central bank later today. Of note, analysts at JPMorgan suggested that Turkey needs to raise O/N  rate 300BPS to achieve any meaningful effect. Nevertheless, EM currencies such as ZAR, TRY and INR remained bid overnight and during the London morning session.

Commodities

Goldman Sachs says spare refining capacity has led to greater product market flexibility, leaving oil markets benign this year even with inventories limited. (BBG)

Opponents to the Keystone pipeline are attempting to halt the progress of the pipeline by saying that trains cannot move all the oil out of Canada. (BBG)

According to analysts from Bernstein, Co.’s oil and gas output estimate has been revised up from 11.5mln boepd to 12.4mln boepd for 2014. (BBG)

Mexico reduced its gold reserves in December, whilst Ukraine, Turkey, Kazakhstan, Belarus and Azerbaijan increased gold reserves, according to IMF data. (BBG)

South African platinum producers have built a two-month stockpile to beat the current pay strikes occurring at the country’s mines. (BBG)

via Zero Hedge http://ift.tt/1ndF0Bu Tyler Durden