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Four pictures are worth four thousand words:

The St. Joseph Lighthouse on North Pier, Lake Michigan, on Jan. 6, 2014; Photographer: HotSpot/Landov

 

Ice builds up along Lake Michigan at North Avenue Beach as temperatures dipped well below zero in Chicago on Jan. 6, 2014; Photographer: Scott Olson/Getty Images

 

A pedestrian covers her face to keep warm in New York; Photographer: Jin Lee/Bloomberg

 

A man uses a snow blower to clear snow in New York on Jan. 3, 2014, Photographer: Jin Lee/Bloomberg

* * *

And now, some stories, via Bloomberg:

Yesterday’s low in Chicago reached a record for the date of minus 16 degrees Fahrenheit (minus 27 Celsius), beating the mark of minus 14 set in 1884 and 1988, according to the National Weather Service. Today, New York’s high will struggle to reach 10 degrees, a day after Central Park reached 50. As of 7 a.m., it was 5 degrees in New York and 13 in Boston.

“It is a pretty ferocious air mass coming down,” said Tom Kines, a meteorologist with AccuWeather Inc. in State College, Pennsylvania. “Across the upper Midwest it stayed below zero and will stay below zero and that air is coming eastward.”

The frigid weather strangled transportation routes around the country including interstate highways, airlines and rails. It also led to a surge in energy demand that pushed power in Texas to more than $5,000 a megawatt-hour for the first time and caused disruptions at oil refineries in Tennessee and Illinois.

The natural gas-weighted heating degree days value is expected to be 46.5 today, according to Commodity Weather Group LLC in Bethesda, Maryland, beating the century’s previous high of 45.1 set on Jan. 16, 2009. Natural gas-weighted heating degrees subtract the daily average temperatures in cities nationwide from 65, then weight the totals based on population and use of the fuel for heating.

* * *

The cold air blowing across the Great Lakes may bring 24 inches of snow to parts of western New York by tonight, according to the weather service. The region is expected to be whipped by wind chills of minus 30.

“The lake snow belts are going to get walloped,” said James Aman, a senior meteorologist with Earth Networks, Inc. in Germantown, Maryland.

* * *

Valero Corp.’s Memphis refinery in Tennessee had a system shutdown because of low temperatures in the area, according to a filing with the U.S. National Response Center. Exxon Mobil Corp. had some “problems” with unidentified process units at its Joliet, Illinois, refinery because of extreme cold weather, according to a separate filing. U.S. companies must notify the center if they release hazardous substances. Bloomberg couldn’t immediately verify the information.

Record lows for the date were set or tied across the northern tier of the country. The low of minus 13 in Fort Wayne, Indiana, beat the old mark of minus 12 set in 1970, according to the weather service. In Burlington, Iowa, the mercury fell to minus 14, which was also recorded in 1970.

The lowest temperature of the day was minus 40 in Brimson, Minnesota, according to the U.S. Weather Prediction Center in College Park, Maryland.

Among today’s forecast highs are 5 in Chicago, 17 in Washington and 26 in Atlanta.

* * *

While the heart of the cold is shifting east, it will still maintain its grip on the central U.S., Aman said. He said the weather will start to warm in a couple of days.

“By Wednesday morning a lot of your big cities will be in single digits and during the day Wednesday we start to come out of it,” Aman said. “Things will be much more tolerable by Wednesday afternoon and we see some continued warming by Thursday.”

Temperatures in New York are expected to bounce back to 39 by the end of the week, according to the weather service. On Jan. 13 it may reach 53, according to MDA Weather Services in Gaithersburg, Maryland. Chicago’s high may reach 39 by Jan. 12 and Washington 57 by Jan. 13, according to MDA.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/AsBCq7qOc5M/story01.htm Tyler Durden

• Yellen’s Record-Low Senate Support Reflects Fed’s Politicization (BBG)
• Euro-Zone Inflation Rate Falls in December, even further below ECB’s target (WSJ)
• Zambia politician charged for calling president a potato (AFP)
• Blame gold: India Savings Deposit Scam Collapse Leaves Thousands Penniless (BBG)
• Hedge Funds Raise Gold Wagers as Yamada Sees $1,000 (BBG)
• George Osborne limits cuts options with pensions promise (FT)
• Vietnam Raises Foreign Bank Ownership Caps to Aid System (BBG)
• But they said buy a year ago… Goldman to JPMorgan Say Sell Emerging Markets After Slide (BBG)
• SAC Trial Seen by Probe Convict as Latest Abusive Tactic (BBG)
• What euro crisis watchers should look for in 2014 (Munchau)
• Abe pledges to create virtuous economic cycle (Nikkei)
• Berkshire Stakes Name on Realty Business Buffett Barely Noticed (BBG)

 

Overnight Media Digest

WSJ

* The Senate on Monday confirmed Janet Yellen to head the Federal Reserve, setting her up to take office Feb. 1 as one of the most powerful economic policy makers in the world.

* The trading boom that helped reshape global investment banks over the past decade is sputtering, raising fears that one of Wall Street’s biggest profit engines is in peril.

* Ethiopia’s Chinese-built mobile-telecom network faces criticism that illustrates the broader troubles sometimes facing poorer nations that borrow heavily to invest in infrastructure.

* Puerto Rico is experiencing a historic exodus of residents fleeing the island’s battered economy and rampant crime. From 2000 to 2010, a net 288,000 people left for the U.S. mainland, the most since the 1950s.

* Restaurants and other customers are starting to fear the clout of the industry giant that would be created by a planned merger between the country’s two biggest food distributors – Sysco Corp and US Foods Inc.

* JPMorgan Chase officials won’t be penalized as part of a deal the U.S. bank is negotiating with the Justice Department over alleged failures to warn about Bernard Madoff’s massive fraud.

* AT&T formally opened the door for content companies like Google and Netflix to subsidize the cost of using their services on smartphones and tablets.

* The Swiss central bank said the drop in gold prices will saddle it with a $10 billion loss for 2013, forcing it to cancel dividends for the first time.

* Natural-gas prices surged to all-time highs on the East Coast on Monday as frigid weather approached, raising the prospect of higher prices nationwide in coming weeks.

* Men’s Wearhouse Inc bumped up its offer to buy Jos. A. Bank Clothiers Inc to about $1.6 billion, the latest in a months-long acquisition battle between the rival men’s clothing retailers.

 

FT

Deutsche Bank faces fresh pressure from regulators to reform its corporate culture over the Libor scandal, after extracts from a report by Bafin, Germany’s financial regulator, was leaked to German media – suggesting that the bank had not done enough to restore its reputation.

General Electric Co said it would buy three businesses from Thermo Fisher Scientific Inc for $1.06 billion, a deal that will boost the industrial conglomerate’s life sciences division and take forward its ambition of moving into high-tech, high-profit-margin areas of the market.

Britain’s financial regulators, Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), have launched an investigation into problems at the Co-operative Bank , kicking off what threatens to be a difficult year for the lender as it tries to rebuild its reputation following scandals.

British car sales grew by more than 10 percent last year to hit a five-year high, as abundant cheap credit and improved consumer confidence made the country’s car market the most buoyant in Europe.

Benny Landa, a leading activist shareholder in Teva Pharmaceutical Industries, the world’s largest generic drugmaker, has lent his support for the proposed nomination of Erez Vigodman as its new chief executive officer.

Coated paper maker Verso Paper Corp said it would buy privately held rival NewPage Holdings Inc for about $1.4 billion, including debt, as the sector that’s been hit by falling demand and overcapacity continues to consolidate.

 

NYT

* The Senate confirmed Janet Yellen as the chairwoman of the Federal Reserve on Monday, marking the first time that a woman will lead the country’s central bank in its 100-year history.

* A wave of frigid weather forced airlines to cancel flights, stranding passengers from Fort Lauderdale, Florida, to Los Angeles. Compounding the issue were new regulations requiring more rest time for pilots beginning this year.

* National health spending grew slowly for the fourth consecutive year, increasing 3.7 percent in 2012 to $2.8 trillion, the federal government said Monday. But officials disagreed over whether the Affordable Care Act or lingering effects of the recession were primarily responsible for the trend.

* On Tuesday, jury selection will begin in Federal District Court in Lower Manhattan for the insider trading case against Mathew Martoma, a former trader at SAC Capital Advisors. The trial, which is expected to last nearly a month, will shed light on the role of the hedge fund owner — Steven Cohen.

* Glenn Hadden, head of global rates at Morgan Stanley , left on Monday after three years at the firm, according to a company memo. Hadden, one of the bank’s highest-paid executives, was asked to resign, according to a person briefed on the matter. Hadden was hired to revitalize Morgan Stanley’s business that trades government bonds and other instruments but the division racked up sizable losses.

* Metro-North Railroad’s president, Howard Permut, is stepping down, according to several sources with knowledge of the move, after a year marred by a train collision, a worker’s death and the first passenger fatalities in Metro-North’s three-decade history.

* AT&T on Monday announced a program called Sponsored Data, where businesses working with AT&T can pay for the data that is used to consume their content or services so that it does not show up on a customer’s phone bill. AT&T named three initial partners for the program – Aquto, an ad platform that provides marketers tools to use sponsored data, Kony Solutions, which helps businesses develop apps, and health care company UnitedHealth Group.

* Samsung Electronics introduced four new tablets aimed at professional users, including two 12.2-inch tablets – the Galaxy NotePRO and the TabPRO. These are much larger than Apple’s 9.7-inch iPad, Microsoft’s 10.6-inch Surface 2 and Amazon’s 8.9-inch Kindle Fire.

 

Canada

THE GLOBE AND MAIL

* Prime Minister Stephen Harper said his cabinet will balance economic and environmental interests as it makes a final decision on whether to approve Enbridge Corp’s proposed Northern Gateway $6-billion project to link the Alberta oil sands with Kitimat, British Columbia.

* Blackouts in storm-battered Newfoundland have reignited a debate over the provincial government’s handling of its aging energy infrastructure and its future reliance on the Muskrat Falls hydroelectric megaproject in Labrador.

Reports in the business section:

* Edward Hadden, one of the most prominent Canadians on Wall Street, left his position at investment bank Morgan Stanley . Hadden, 43, was the global head of interest-rate trading for the firm, which he joined in 2011.

NATIONAL POST

* A breakaway militant group looking to form a semi-autonomous state in eastern Libya has hired controversial Montreal-based lobbyist Ari Ben-Menashe to help it achieve international recognition, sell the region’s oil and obtain cash for military hardware and training.

* Former Toronto city councillor and businessman David Soknacki has officially registered to run for mayor this year, vowing to bring “higher standards” to the campaign and the job.

FINANCIAL POST

* Canadian oil and gas companies are gearing up to recruit actively this year after hiring in the sector fell below expectations in 2013.

Of 80 Canadian oil and gas employers surveyed by recruitment specialists Hays Canada, 23 percent saw a decrease in permanent headcount in 2013, as project cancellations and low commodity prices compelled many companies to go back to the drawing board and defer hiring plans.

 

China

CHINA SECURITIES JOURNAL

– China must encourage securities traders to take responsibility for their sales, even as the principle of caveat emptor is strengthened, to build protection for small investors, said Xiao Gang, chairman of the China Securities Regulatory Commission at a meeting held on Tuesday.

– China should use capital markets to increase the growth of public pension funds, said Qi Bin, director of the China Securities Regulatory Commission’s research centre recently.

CHINA DAILY

– The sudden death of Li Ming, founder and chairman of Beijing Galloping Horse Media Co Ltd, may hamper its business prospects and impede the impending initial public offering, said industry analysts of the private entertainment and media firm.

CHINA BUSINESS NEWS

– The China Banking Regulatory Commission will approve 3 to 5 pilot private banks this year, as part of its plans to further liberalize the financial markets, according to the regulator in a Tuesday meeting.

SHANGHAI DAILY

– China-located foreign banks plan to expand their advisory departments, as Chinese companies continue to expand abroad, said Ernst & Young on Tuesday.

– Most elevators checked for quality in Shanghai failed to pass safety tests, said the Shanghai Municipal Bureau of Quality and Technical Supervision. A total of 616 elevators were checked in six districts, with 393 needing overall fixing, 117 needing maintenance and 106 needing renovation.

PEOPLE’S DAILY

– The landing of China’s Jade Rabbit on the moon has successfully fulfilled an ancient nation’s thousand-year dream, said a commentary in the paper that acts as the Party’s mouthpiece. The landing highlights the country’s commitment to aerospace innovation, it said.

 

Britain

The Telegraph

JPMORGAN SET TO BE FINED $2 BLN FOR ALLEGEDLY IGNORING BERNARD MADOFF PONZI SCHEME

Regulators and federal prosecutors in the United States are preparing to fine JPMorgan Chase & Co about $2 billion, after it allegedly ignored signs of Bernie Madoff’s Ponzi scheme. The fine will take the investment bank’s penalties to $22.2 billion, more than a fifth of its revenues.

BRITISH CAR MARKET RECORDS BEST YEAR FOR SALES SINCE 2007, SAYS SMMT

A combination of cheap credit and improved consumer confidence saw households buy more than 2.26 million vehicles in the past 12 months, a rise of 10.5 percent on 2012.

The Guardian

REGULATORS LAUNCH INVESTIGATIONS INTO CO-OP BANK’S 1.5 BLN STG CAPITAL SHORTFALL

Former directors of the Co-operative Bank face fines and bans from the financial services industry after two more investigations – by the Prudential Regulation Authority and the Financial Conduct Authority – into the events leading up to its 1.5 billion pounds bailout were announced.

BUSINESSES WARN LENDING CURBS WILL HIT RECOVERY

Britain’s rapid recovery will be hampered in 2014 unless the government acts to encourage corporate lending, the British Chambers of Commerce warned.

The Times

ROUTE MAP WRITTEN AS YELLEN TAKES DRIVING SEAT

Janet Yellen was on Monday night confirmed by the U.S. Senate as the new head of the Federal Reserve, with the central bank’s immediate strategy already mapped out for her.

SERVICES GROWTH COMPLETES HAT-TRICK FOR ECONOMY

All three key sectors of the economy powered ahead at their fastest pace since 1998 in the three months to December, fuelling speculation that growth will have surged by almost 2 percent last year. The Markit/CIPS purchasing managers’ index of the manufacturing, construction and services sectors rose from 60.1 between July and September to 60.5 in the final quarter of 2013.

The Independent

GEORGE OSBORNE INSISTS BRITAIN MUST MAKE 25 BLN STG MORE WELFARE CUTS IN 2014

George Osborne was accused of targeting the poor and vulnerable and sparing the rich as he outlined 25 billion pounds of new spending cuts, with half of them coming from the welfare budget.

SOFTER EUROPEAN RING-FENCE RULES COULD HURT UK BANKS

European banking watchdogs could allow banks to evade tough rules designed to ensure that lending operations are ring fenced from “casino” investment banking. The new regulation would hit 30 of the continent’s biggest banks, including the big players in Britain.

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Arthur J. Gallagher (AJG) upgraded to Overweight from Equal Weight at Barclays
Becton Dickinson (BDX) upgraded to Neutral from Underperform at BofA/Merrill
Brandywine Realty (BDN) upgraded to Outperform from Market Perform at Raymond James
Brown & Brown (BRO) upgraded to Overweight from Equal Weight at Barclays
Capital One (COF) upgraded to Conviction Buy from Buy at Goldman
Continental Resources (CLR) upgraded to Buy from Neutral at BofA/Merrill
Covance (CVD) upgraded to Buy from Hold at Jefferies
Equity Lifestyle (ELS) upgraded to Outperform from Market Perform at Wells Fargo
Johnson & Johnson (JNJ) upgraded to Outperform from Sector Perform at RBC Capital
Logitech (LOGI) upgraded to Equal Weight from Underweight at Barclays
PacWest Bancorp (PACW) upgraded to Overweight from Equal Weight at Evercore
Pall Corp. (PLL) upgraded to Buy from Neutral at BofA/Merrill
Splunk (SPLK) upgraded to Buy from Neutral at UBS
St. Jude Medical (STJ) upgraded to Sector Perform from Underperform at RBC Capital
Sun Communities (SUI) upgraded to Outperform from Market Perform at Wells Fargo
SunTrust (STI) upgraded to Outperform from Market Perform at BMO Capital
UnitedHealth (UNH) upgraded to Buy from Hold at Deutsche Bank
Varian Medical (VAR) upgraded to Neutral from Sell at Citigroup
Workday (WDAY) upgraded to Buy from Neutral at UBS
Yum! Brands (YUM) upgraded to Top Pick from Outperform at RBC Capital

Downgrades

AEGON (AEG) downgraded to Neutral from Overweight at JPMorgan
Acadia Healthcare (ACHC) downgraded to Neutral from Buy at Citigroup
Baxter (BAX) downgraded to Sector Perform from Outperform at RBC Capital
CGG SA (CGG) downgraded to Neutral from Outperform at Exane BNP Paribas
CSR (CSRE) downgraded to Underweight from Equal Weight at Barclays
CVB Financial (CVBF) downgraded to Equal Weight from Overweight at Evercore
Campus Crest (CCG) downgraded to Market Perform from Outperform at Raymond James
Charles Schwab (SCHW) downgraded to Neutral from Buy at Citigroup
Check Point (CHKP) downgraded to Neutral from Buy at UBS
Chesapeake (CHK) downgraded to Neutral from Buy at BofA/Merrill
Chubb (CB) downgraded to Equal Weight from Overweight at Barclays
Cooper Companies (COO) downgraded to Sell from Neutral at Citigroup
Cross Country Healthcare (CCRN) downgraded to Neutral from Buy at Citigroup
CubeSmart (CUBE) downgraded to Market Perform from Outperform at Wells Fargo
Energizer (ENR) downgraded to Market Perform from Outperform at Wells Fargo
Gulfport Energy (GPOR) downgraded to Sector Perform from Outperform at RBC Capital
Humana (HUM) downgraded to Sell from Hold at Deutsche Bank
Michael Kors (KORS) downgraded to Neutral from Buy at Citigroup
MoneyGram (MGI) downgraded to Neutral from Overweight at Piper Jaffray
Netflix (NFLX) downgraded to Underweight from Equal Weight at Morgan Stanley
Omega Healthcare (OHI) downgraded to Underperform from Market Perform at Wells Fargo
Post Properties (PPS) downgraded to Outperform from Strong Buy at Raymond James
RenaissanceRe (RNR) downgraded to Equal Weight from Overweight at Barclays
STMicroelectronics (STM) downgraded to Underweight from Equal Weight at Barclays
Senior Housing (SNH) downgraded to Underperform from Market Perform at Wells Fargo
Sovran Self Storage (SSS) downgraded to Market Perform from Outperform at Wells Fargo
Spectranetics (SPNC) downgraded to Neutral from Buy at Citigroup
Spirit AeroSystems (SPR) downgraded to Neutral from Buy at BofA/Merrill
TD Ameritrade (AMTD) downgraded to Neutral from Buy at Citigroup
Textron (TXT) downgraded to Neutral from Buy at BofA/Merrill
Validus (VR) downgraded to Equal Weight from Overweight at Barclays
XPO Logistics (XPO) downgraded to Hold from Buy at Stifel

Initiations

ANI Pharmaceuticals (ANIP) initiated with a Buy at Roth Capital
AcelRx (ACRX) initiated with an Outperform at RBC Capital
Actavis (ACT) initiated with an Outperform at RBC Capital
Akorn (AKRX) initiated with an Outperform at RBC Capital
Allergan (AGN) initiated with an Outperform at RBC Capital
Cheniere Energy Partners (CQH) initiated with an Outperform at Credit Suisse
Cheniere Energy Partners (CQH) initiated with an Outperform at RBC Capital
Cheniere Energy Partners (CQP) initiated with a Neutral at Goldman
Cheniere Energy Partners (CQP) initiated with an Outperform at Credit Suisse
Cheniere Energy (LNG) initiated with a Buy at Goldman
General Growth (GGP) initiated with an Outperform at Oppenheimer
Highwoods Properties (HIW) initiated with an Outperform at Oppenheimer
Impax (IPXL) initiated with a Sector Perform at RBC Capital
Liberty Property (LRY) initiated with an Outperform at Oppenheimer
Manitowoc (MTW) initiated with a Hold at Jefferies
Mylan (MYL) initiated with an Outperform at RBC Capital
Nimble Storage (NMBL) initiated with a Neutral at Goldman
Perrigo (PRGO) initiated with a Top Pick at RBC Capital
Physicians Realty Trust (DOC) initiated with an Outperform at Oppenheimer
Piedmont Office Realty (PDM) initiated with a Perform at Oppenheimer
Realty Income (O) initiated with an Outperform at Oppenheimer
Sagent Pharmaceuticals (SGNT) initiated with an Underperform at RBC Capital
Taubman Centers (TCO) initiated with a Perform at Oppenheimer
Terex (TEX) initiated with a Hold at Jefferies
Teva (TEVA) initiated with a Sector Perform at RBC Capital

HOT STOCKS

Convergys (CVG) to acquire Stream Global Services for $820M in cash
U.S. Bancorp (USB) to buy over 100 Chicago-area Charter One branches owned by Royal Bank of Scotland (RBS), Crain’s reports
AT&T (T), Ericsson (ERIC) announced deal for in-vehicle technology
Excel Trust (EXL) announced Moody’s assigned it an investment grade rating of (P)Baa3 with a stable outlook
Denny’s (DENN) signed development agreement to open 30 restaurants in Middle East

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
IHS Inc. (IHS)

Companies that matched consensus earnings expectations include:
Synergy Resources (SYRG), Sonic (SONC)

NEWSPAPERS/WEBSITES

• The trading boom that helped reshape global investment banks over the past decade is sputtering, raising fears that one of Wall Street’s biggest profit engines is in peril. Executives have warned that lackluster markets could lead to year-over-year declines in fixed-income, commodities and currency trading revenue when banks begin reporting Q4 results, the Wall Street Journal reports
• While 2013 was a tough one for the coal industry, it isn’t going away. Coal remains the biggest source of fuel for generating electricity (BTU, ACI, ANR, CLD) in the U.S. and coal exports are growing fast. Overall, U.S. coal production is projected to remain relatively constant over the next three decades, the Wall Street Journal reports
• Some Boeing (BA) machinists plan to push for a recount or even a new vote on their latest labor contract with the aircraft maker, possibly extending a long-running drama over which state will get to work on Boeing’s new 777X jet, Reuters reports
• Consumer advocate and Sirius (SIRI) shareholder Ralph Nader says Liberty Media (LMCA) Chairman Malone’s offer to buy out the remaining stake in satellite radio company Sirius XM was “ludicrous” and called for activist investor Carl Icahn to take notice, Reuters reports
• Wall Street’s biggest banks–from Goldman Sachs (GS) to JP Morgan (JPM) to Morgan Stanley (MS)–say the slump in emerging-market assets that left equities trailing advanced-nation shares by the most since 1998 last year will prove more than a fleeting sell-off, Bloomberg reports
• BYD Co., the Chinese automaker backed by Berkshire Hathaway (BRK.A), says Chinese cars are poised to begin hitting U.S. showrooms at the end of next year, Bloomberg reports

SYNDICATE

Centene (CNC) files to sell 2.43M shares of common stock for holders
Kennedy Wilson (KW) files to sell 8M common shares
New York Mortgage (NYMT) files to sell 10M common shares
PBF Energy (PBF) files to sell 15M common shares for holders
Parkway Properties (PKY) files to sell 10.5M common shares
Receptos (RCPT) files to sell 2.75M shares of common stock
Rouse Properties (RSE) files to sell 7M shares of common stock
Virtusa (VRTU) files to sell 2.3M common shares

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

Today’s AM fix was USD 1,237.50, EUR 907.92 and GBP 754.44 per ounce.
Yesterday’s AM fix was USD 1,238.00, EUR 909.56 and GBP 756.54 per ounce.

Gold climbed $2.40 or 0.19% yesterday, closing at $1,238.80/oz. Silver rose $0.01 or 0.05% closing at $20.17/oz. Platinum climbed $4.26, or 0.3%, to $1,413.00/oz and palladium rose $9.50 or 1.3%, to $734.25/oz.

Gold in U.S. Dollars, 3 Day – (Bloomberg)

Gold has continued to recover from yesterday’s latest peculiar ‘flash crash’ when gold futures plunged more than $30 at 15:14 a.m. GMT on Monday, before regaining nearly all of that drop within the same minute. Gold remains just under a three week high in London and appears to be consolidating after the 2.9% gains year to date.

Gold futures sharp $30 drop or 2.5% in seconds, from $1,247 to below $1,215, on 4,200 contracts triggered yet another trading halt – this time of ten seconds. The trade occurred fourteen minutes after economic data was released on U.S. factory orders and ISM services index data.     

Gold in U.S. Dollars,  30 Days – (Bloomberg)

The flash crash had the hallmarks of price manipulation.  It is nearly impossible to tell and the sell off could have been a fat finger trade or a large fund or bank liquidating a gold position.

However, given the degree of market manipulation that banks have been found guilty of in recent months (Libor, foreign exchange etc), manipulation is a real possibility. In order to protect investors and the integrity of markets, regulators internationally should again investigate the gold futures market where such manipulation appears to be taking place nearly on a weekly basis now.

This week’s key drivers of the gold market may be the U.S. FOMC minutes released on Wednesday and the December jobs data out on Friday.

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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PeD_6PjRCSg/story01.htm GoldCore

Markets may be open but the prevailing topic of conversation everywhere across the US will be the weather on what is said to be the coldest day in 20 years. So for those walking in and eager to catch up on what they may have missed overnight, here is a brief summary of key events.

Heading into the North American open, stocks in Europe are seen broadly higher, with peripheral EU stock indices outperforming after Ireland successfully returned to capital markets with its 10y syndication that attracted over EUR 10bln. Financials benefited the most from the consequent credit and bond yield spreads tightening, with smaller Italian and Spanish banks gaining around 4%. Following the successful placement, IR/GE 10y bond yield spread was seen at its tightest level since April 2010, while PO/GE 10y spread also tightened in reaction to premarket reports by Diario Economico citing sources that Portuguese govt and debt agency IGCP consider that the current level of yields already allows Portugal to go ahead with a bond sale. Looking elsewhere, the release of better than expected macroeconomic data from Germany, together with an in line Eurozone CPI, supported EUR which gradually moved into positive territory. In addition to that, smaller MRO allotment by the ECB resulted in bear steepening of the Euribor curve and also buoyed EONIA 1y1y rates. The Spanish and Italian markets are the best-performing larger bourses, Swedish the worst. The euro is stronger against the dollar. Japanese 10yr bond yields fall; Spanish yields decline. Commodities gain, with wheat, silver underperforming and Brent crude outperforming. U.S. trade balance data released later.

On today’s US even docket, market participants will get to digest the release of the
latest US Trade Balance data expected at a $40 billion deficit, weekly API report and also the US
Treasury will sell USD 30bln in 3y note. Fed presidents Rosengren and Williams will speak later today as well. Finally, today’s POMO will be a sizable $2.25 – $3.00 billion of bond purchases in the 02/15/2021 – 11/15/2023 bucket.

• S&P 500 futures up 0.4% to 1827.7
• Stoxx 600 up 0.5% to 328.5
• US 10Yr yield up 0bps to 2.96%
• German 10Yr yield down 1bps to 1.9%
• MSCI Asia Pacific down 0.5% to 138.6
• Gold spot up 0.2% to $1239.9/oz

Overnight news bulletin from Bloomberg and RanSquawk:

• European stocks higher and peripheral bond yield spreads are tighter after Ireland successfully returned to capital markets with their 10y syndication which attracted EUR 14bln in bids
• Better than expected data from Germany and an in line Eurozone CPI data prompted market participants to unwind dovish EU positions ahead of this week’s ECB policy meeting
• Treasuries steady, 10Y yield holding below 3% before week’s $64b auctions begin with $30b 3Y notes; yield 0.806% in WI trading; stopout yield at that level would be highest since Sept.
• Janet Yellen’s confirmation as chairman of the Federal Reserve with the least Senate support on record shows that the central bank still faces intense political scrutiny six years after the financial crisis
• German unemployment declined for the first time in five months in Dec. while business confidence as measured by the Ifo institute rose to the highest in 20 months
• China’s Cabinet imposed new controls on the multi-trillion-dollar shadow-banking industry with an order that targets off-the-books loans and shores up enforcement of current rules, three people familiar with the matter said
• Wall Street’s biggest banks say the slump in EM assets that left equities trailing advanced-nation shares by the most since 1998 last year will prove more than a fleeting selloff
• The frigid cold that set records across the Midwest, stopping trains and planes and driving up energy use, may deliver the coldest day across the U.S. in almost 20 years by a measure of heating demand
• Sovereign yields decline; EU peripheral spreads tighten. Nikkei falls 0.7%, Shanghai little changed. European stocks gain, U.S. equity-index futures higher.  WTI crude and gold higher, copper steady

EU & UK Headlines

Eurozone CPI Estimate (Dec) Y/Y 0.8% vs. Exp. 0.8% (Prev. 0.9%)
Eurozone Core CPI (Dec A) Y/Y 0.7% vs. Exp. 0.8% (Prev. 0.9%)

German Unemployment Change (000’s) (Dec) M/M -15K vs. Exp. -1K (Prev. 10K, Rev. 9K); first decline in five months
German Unemployment Rate (Dec) M/M 6.9% vs. Exp. 6.9% (Prev. 6.9%)

German Retail Sales (Nov) Y/Y 1.6% (Prev. -0.2%, Rev. -0.1%)
German Retail Sales (Nov) M/M 1.5% (Prev. -0.8%, Rev. -0.8%)

Goldman Sachs upbeat on the UK economic recovery but says BOE will not tighten this year. Goldman Sachs says that the UK recovery will be sustained in 2014, productivity growth picks up, inflation remains contained, rates stay on hold for this year but expect unemployment to fall to the BoE’s 7% threshold in mid-2014. They think the MPC will not begin to raise interest rates until mid-2015.

Bank lending to euro-area businesses will grow by 1.6% in 2014 but will be dampened by the ECB’s Asset Quality Review, according to Ernst & Young.

The British Chambers of Commerce reported strong growth and rising confidence in Q4 of 2013, suggesting the country’s economic recovery will pick up speed, with the UK Q4 services employment and export balances hitting record highs.

The ECB alloted EUR 112.458bln in 7-Day MRO, 92 bidders
– The ECB last allotted EUR 168.662bln in 9-day MRO to 181 bidders.

According to Diario Economico citing sources, Portuguese govt and debt agency IGCP consider that the current level of yields already allows Portugal to go ahead with a bond sale.

• 14 out of 19 Stoxx 600 sectors rise; bank, real estate outperform, personal & household, tech underperform
• 57% of Stoxx 600 members gain, 41.5% decline
• German Dec. unemployment -15k vs -1k est.
• U.K. Dec. new car registrations +23.8%
• Top Stoxx 600 gainers: Banco Espirito Santo SA  +7.7%, Vestas Wind Systems A/S  +5.9%, Banco Popular Espanol SA +5.3%, Banca Popolare di Milano Scarl  +5.1%, Banca Popolare dell’Emilia Rom  +5%, Bankinter SA  +4.4%, Telekom Austria AG  +4.4%, CaixaBank SA  +4.2%, Credit Agricole SA  +4%, Banco Bilbao Vizcaya Argentari  +3.8%
• Top Stoxx 600 decliners: Swedish Match AB -5.3%, Eurazeo SA -3.6%, Software AG -2.8%, Swatch Group AG/The -2.7%, BBA Aviation PLC -2.7%, Solvay SA -2.6%, Komercni Banka AS -2.5%, Chr Hansen Holding A/S -2.3%, Metro AG -2.4%, STMicroelectronics NV -2.3%

Asian Headlines

China will draft a comprehensive plan with detailed rules for foreign exchange reform this year, according to the PBoC deputy governor.

• Asian stocks fall  with the Kospi outperforming and the Nikkei underperforming.
• MSCI Asia Pacific down 0.5% to 138.6
• Nikkei 225 down 0.6%, Hang Seng up 0.1%, Kospi up 0.3%, Shanghai Composite up 0.1%, ASX down 0.1%, Sensex down 0.5%
• 2 out of 10 sectors rise with telcos, consumer outperforming and materials, utilities underperforming
• Gainers: Li & Fung Ltd  +9.6%, SK Networks Co Ltd  +7.4%, Celltrion Inc  +6.9%, PTT PCL  +6.4%, Airports of Thailand PCL  +6.3%, Epistar Corp  +6.1%, Hyundai Mipo Dockyard +5.8%, Hyundai Merchant Marine Co Ltd  +5.7%, Galaxy Entertainment Group Ltd  +5.7%
• Decliners: Sinopec Shanghai Petrochemical -6.3%, Adaro Energy Tbk PT -5.4%, CITIC Securities Co Ltd -5%, Fortescue Metals Group Ltd -4.7%, Energy Development Corp -4.3%, Guangzhou Automobile Group Co -4.2%, Tsumura & Co -4.1%, Adani Enterprises Ltd -4%, MS&AD Insurance Group Holdings -3.9%, Indo Tambangraya Megah Tbk PT -3.8%

US Headlines

Fed’s Janet Yellen was confirmed by the US Senate by 56-26 votes to become the next US Fed chairperson, alongside expectations.

Temperatures in eastern states are forecast to be the coldest since the mid-1990s. In New York they are set to drop to minus 14C from a high of 13C on Monday, as the effects of the chill extend as far south as Florida

Equities

European stocks are trading higher with financials benefiting the most from the consequent credit and bond yield spreads tightening, with smaller Italian and Spanish banks gaining around 4%. In terms of stock specific news Vestas is among the best performing stocks in Europe after late yesterday the company upgraded free cash flow (FCF) views for 2013 to approx. EUR 1bln vs. EUR 500- 700mln. Whilst Swedish Match shares are the worst performing stock in Europe after after analysts at Citi downgraded the co. to sell.

FX

The release of better than expected macroeconomic data from Germany, together with an inline Eurozone inflation data saw EUR/USD comes off overnight lows and move into positive territory. The momentum gained further traction after the ECB allotted smaller than expected amount in its regular MRO ops, which also lifted EONIA 1y1y rates. Consequent USD weakness which saw the USD index move to unchanged on the session also ensured that in spite of absence of any positive news flows, GBP/USD moved into positive territory.

Deutsche Bank forecasts USD/JPY at 115.00 by end-2014, at 120.00 by end-2015 and predicts the BoJ will expand QE in April to include purchases of JPY 6trl in ETFs.

Commodities

According to analysts, the severe cold weather sweeping across the central United States is threatening to curtail some oil production, if only briefly, as it disrupts traffic, strands wells and interrupts drilling and fracking operations.

Chinese imports of copper and iron ore likely fell in December from the month before due to a cash crunch and as growth momentum slowed.

Holdings in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, held at 794.62 tons yesterday, the lowest level since 2009, according to data on the fund’s website. A total of 552.6 tons was withdrawn last year.

UBS sees gold demand of 1.49mln oz this week due to the rebalancing of the DJ-UBS Commodity Index

* * *

We conclude with the event recap from DB’s Jim Reid

It seems that markets are also struggling to climb this year as well. Most major DM equity markets saw their 3rd successive day of losses yesterday with EM equities broadly at 4-month lows after a weak start to 2014. Is it a delayed reaction to the fear of the removal of the QE staircase, is it the weaker data in China so far this week or is it just a bit of consolidation after an epic run? Given that I’ve only been back at work for a few minutes in 2014 I’ll give that some thought before I answer.

Asia hasn’t provided much inspiration for markets in the New Year with underperformance in both equities and credit relative to their European and US counterparts. As discussed above, part of the reason has been the concerns over a Chinese deceleration following the recent official and private sector PMIs. DM Asia has also been dragged lower by the recent aversion to EM with a number of EM bourses such as the Shanghai Composite and Thai SE indices are sitting at multi-month lows. Risk appetite is a little firmer overnight after major stock indices pared opening losses, but the moves have been fairly tentative with many happy to take a wait-and-see approach ahead of the week’s major risk events such as the FOMC minutes (tomorrow), the ECB (Thursday) and US payrolls (Friday). A Q4 earnings estimate provided by Samsung Electronics hasn’t helped overnight sentiment (Q4 operating profit of KRW8.3tn vs KRW10tn expected) but Samsung Electronic’s stock and the KOSPI have recovered from the opening lows. Samsung also posted its first earnings decline in nine quarters while additionally missing revenue forecasts (KRW59tn vs KRW62tn). This has stoked fears that global consumer demand may be waning, but the appreciating Korean Won may have also dragged on earnings. As we type, the Hang Seng (+0.1%) and KOSPI (+0.3%) are trading up but the Nikkei (-0.5%) continues to lag.

Amidst the gloom surrounding EM at the moment, our EM debt strategists point out that 2014 could be the first year that we see negative net issuance since 2008 (new issuance less debt redemptions). They argue that principal repayments are set to double in 2014 from the previous year, a flow-through from a large spike in issuance volumes in 2003-05, whose average maturity was close to 10 years. These result in a more than 40% increase in total redemptions in 2014 (USD 91bn) from the last five-year average. Given the large increase in repayments and an expectation of almost unchanged issuance volume from 2013 to 2014 (USD91bn in 2013 vs. USD92bn expected in 2014), the 2014 net issuance could be slightly negative. In addition, the total interest payments of USD50bn in 2014 will also be the highest annual interest payments by EM hard currency debt issuers historically. This technical factor may help to offset the retail fund outflows which continue to pose a downside risk in 2014. 2013 saw the largest outflows from EMD funds seen since 2008, according to EPFR (-11% AUM for EM hard currency funds for the whole year).

A bright spot so far this year has been fixed income with Government bonds and credit generally performing well. The uninspiring data flow in the first few days of 2014 have kept a lid on US treasury yields and yesterday’s nonmanufacturing ISM (53.0 vs 53.9 previous and 54.7 estimated) was simply a continuation of that theme. The weaker-than-expected data helped 10yr yields rally 4bp to 2.958%, and they remain around this level as we type. The decline in the headline ISM was predominantly due to a deterioration in the new orders component (49.4 vs. 56.4 previous) but the employment sub-index rose (55.8 vs. 52.5 previous). DB’s Joe Lavorgna writes that the deterioration in the new orders component is troubling—because it tends to be a leading indicator of general business conditions. It fell to a post-recession low yesterday. However, since this series includes many weather-sensitive sectors, such as construction, retail, transportation, recreation/entertainment and agriculture, the drop in new orders may have been exacerbated by inclement weather in December. US factory orders rose 1.8% MoM in November (vs 1.7% expected) which partly offset the disappointment over the ISM.

Taking a quick look at some of the other headlines, the US Senate officially approved Janet Yellen to become the first female chair of the Federal Reserve. Yellen was approved in a 56-26 vote. News wires are suggesting that some who had opposed her confirmation were unable to get to DC for the vote because of winter-storm flight delays (Financial Times), but that would not have made a difference as Yellen only needed a simple majority (51 votes of support). According to the Financial Times, Bernanke was appointed to another term in 2010 by a smaller margin than any predecessor (70 Yes vs 30 No) so the last two appointments show the political divide in the US at the moment. Talking of which, the other development making headlines in DC is the outcome of negotiations to extend long-term unemployment benefits. The Senate is expected to hold a procedural vote today on a 3-month extension of the program. Democrats are believed to have 56 votes in favour which is just short of the procedural hurdle. In the House, Republican leaders have said they would only consider another extension if its cost — about $25-billion a year — is made up through spending cuts elsewhere. A number of forecasters, including DB’s US economist, have predicted that the expiration of these benefits could reduce the labour participation rate, and ultimately reduce the unemployment rate.

Looking ahead, with the ECB governing council meeting later this week, there will be a lot of focus on the December Euroarea CPI report due this morning. The headline October and November CPI readings were +0.7% YoY and 0.9% YoY respectively, the former being the lowest headline reading since 2009. The consensus expectation for today is a similarly low +0.8% YoY in the headline and the core.

Looking at the rest of the day ahead, aside from the Euroarea CPI we also have the German unemployment report for December and the US trade report for November. The Fedspeak docket includes Rosengren and Williams who will speak at 1:30pm and 7pm London time respectively. The US treasury will also auction 3 year notes.

Good luck to all our US readers coping with mad swings in the temperature. Apparently NYC saw a balmy 50 degrees F yesterday which will be replaced by 10 degrees F today. If you’re reading this under a duvet in Manhattan I’d probably stay there (please note this isn’t the official house view!). As a contrast, my local town Guildford has spent much of the last 2 and a half weeks constantly battling extreme flooding. Is it just freak seasonal weather or global warming? Again after an hour back with my thinking cap on in 2014 I’ll defer that question until my brain cells have engaged – don’t hold your breath.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ywR7yESQsaQ/story01.htm Tyler Durden

foreward by JS Kim, Managing Director of SmartKnowledgeU

Here is a recent correspondence from our friend Lars Schall, an independent financial journalist, and the German Central Bank, the Deutsche Bundesbank, regarding the exact whereabouts and specifications of Germany’s national gold reserve. From the correspondence below, it appears that the US Central Bank had already leased out Germany’s gold reserves in prior years and no longer has it, as the gold bars the US Central Bankers returned to Germany last year were clearly not the same ones that Germany originally deposited with them. The questions Mr. Schall’s revelations now beg is (1) if the Banque de France and the Bank of England have Germany’s original gold as well; and (2) if the various Central Bankers are deliberately returning Germany’s gold on a painfully slow timeline because they have already leased out Germany’s gold into the open market in prior years, no longer hold it, and must
therefore scrape together Germany’s gold from the open market now.

 

Below is Mr. Schall’s inquiry to the Deutsche Bundesbank:

 

December 26, 2013

Dear Ladies and Gentlemen:

I am an independent financial journalist. In connection with the transfer of 37 tons of Bundesbank gold from New York to Germany, I came across the news that the bars were a melted before the transfer. May I kindly ask you for the following information:

Why were the bars melted at all? And why couldn’t that wait until the bars arrived in Frankfurt?

Kind regards,

Lars Schall
 

Below is the Bundesbank’s curious reply that is riddled with a lack of transparency:

January 3, 2014

Dear Mr. Schall:

Thank you for your enquiry.

At a press conference on the topic of Germany’s gold reserves on 16 January 2013, Executive Board member Carl-Ludwig Thiele presented the Deutsche Bundesbank’s new storage concept. In addition to the relocation of gold bars, this concept includes, amongst other things, measures to ensure that the specifications of the London Good Delivery (LGD) standard are met. You can find these specifications on Page 17 of the
following presentation:

http://www.bundesbank.de/Redaktion/DE/Downloads/Presse/Publikationen/201…

Storage plan (new)
                 2012          2020
Frankfurt    31% ………… 50%
New York   45% ………… 37%
London      13% ………… 13%
Paris          11% …………  0%

Planned relocations:

– Phased relocation of 300 tonnes of gold from New York to Frankfurt.
– Phased relocation of 374 tonnes of gold from Paris to Frankfurt.
– Achieve LGD standard, where this is not already the case.

You can find the specifications for the London Good Delivery (LGD) standard at the following address:
http://www.lbma.org.uk/pages/index.cfm?page_id=27

In cases where these specifications were not already met, the Bundesbank had these original gold bars melted down and recast in order to meet this standard. This was achieved without any difficulties. Please understand that in order to ensure the security of the gold transports and our employees, the Bundesbank is unable to provide you with any further information.

Yours sincerely,

DEUTSCHE BUNDESBANK
Communication
Wilhelm-Epstein-Strasse 14
60431 Frankfurt am Main
Tel.: +49 69 9566×3511 or 3512

 

And below are questions raised by Peter Boehringer, president of German Precious Metal Society and co-initiator of the Repatriate our Gold campaign, to the opacity and oddities of the Bundesbank’s response:

Why does the Bundesbank continue to avoid transparency regarding Germany’s gold holdings?

 

Why not just come up with easy-to-deliver facts instead of repeated rhetoric about an alleged remelting of gold bars in the United States that even people with some knowledge of the gold industry and some common sense fail to understand?

 

There is no reason why the
original gold bars acquired in the 1950s and 1960s (if they ever existed at all, which has never been proven, as by publication of bar lists or photos) had to be melted down and recast into LGD-compliant bars in New York as opposed to Frankfurt. Nor is there reason why all this had to be done in obscurity without any published report of the recasting.

 

The public is still waiting for answers to crucial questions like these:

 

– What kind of gold bars were melted? Original material from the 1950s and ’60s?
– How can the Bundesbank hint in its press release that some of the old bars already met the LGD specifications when those specifications were not defined and made a standard for central bank bars until 1979?
–
Why has the Bundesbank not published a bar number list of the old bars?
How can there be security concerns about bars that no longer exist?
Why has the Bundesbank not published a bar number list of the newly cast
bars?
– Who exactly melted the bars? Where exactly was this melting performed? Is there a smelter at the Federal Reserve Bank of New York?
– Who witnessed the melting and recasting of the bars?
– Are there any reports on this in writing with a valid signature? By whom?
– And especially: Why was it deemed necessary to perform this action in the United States as opposed to Frankfurt or nearby Hanau, where there are some of the best facilities in the world for metal probing, melting, and recasting? Had these actions been performed in Germany in a fully transparent manner, it would have been so easy for the Bundesbank to dismiss all questions from “paranoid gold conspiracy theorists.”

 

The Bundesbank is just the custodian of Germany’s national gold, which is worth more than $125 billion. The Bundesbank owes the public full transparency in all these gold matters. That is, physical audits,
independently verified storage reports, and a publication of the full bar lists of all its gold in all national or international vaults. Despite having now had the excellent opportunity of this partial repatriation, the Bundesbank has again failed to produce any proof or indication that at least 37 tonnes (out of 1,500 tonnes of German gold at the New York Fed) still existed through 2013 in their original 1950s-’60s bar form. Instead, Germany is now owner of almost 3,000 LGD-compliant standard bars, which proves nothing and dismisses no allegations of decade-long manipulation of the gold price.

 

It is still possible and even probable that the old German bars were lent into the market long ago or that they have multiple owners or are backing multiple gold exchange-traded fund derivatives. Of course the same holds for our remaining 120,000 bars at the New York Fed. The “repatriation” of a mere 1.5 percent of Germany’s foreign gold holdings and the supposed melting and recasting of the original gold bars do not prove the continue
d existence of Germany’s remaining gold holdings supposedly vaulted at the New York Fed. The Bundesbank has missed a great opportunity to bring transparency to Germany’s gold reserves. What a pity. And at its current speed the Bundesbank will require 60 years to accomplish the repatriation mission forced upon it by an impatient public. What a shame.

 

The initiators of the Repatriate Our Gold campaign  are considering legal action based on freedom-of-information law against the Bundesbank and possibly also against its auditors, who have certified the Bundesbank’s balance sheet without having adequately considered the risks associated with a non-transparent gold hoard, which is the only asset of substance on the Bundesbank’s books. (Ninety percent of those assets are mere paper claims, many of dubious quality, like “Target 2? claims.)

 

Our objective remains to achieve the publication of all gold bar lists and full transparency involving Germany’s gold. The German people are entitled to have all information about their golden property. And the American people have a right to know as well. After all, it is the U.S. Federal Reserve System and the U.S. Treasury Department that have been obscuring their gold holdings and foreign gold holdings since the last proper audit in 1953.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/R8lrgsKVPhI/story01.htm smartknowledgeu