Tag: finance

The Department of Labor states that there is no indication that the winter storm affected this week’s numbers (though they are likely to remain volatile through January) as jobless claims dropped from a ubiquitously revised-upwards 345k to 330k this week – the lowest level since the end of November. Continuing claims rose modestly back into the middle of the range of the last 4 months just like initial claims. The emergency claims data is lagged so we will not see the impact of congressional decisions on that until 2 weeks from now but its worth noting that the data we alreayd have shows 104,000 dropping off the rolls. California, Pennsylvania, and Michigan topped the initial claimants list with California worse than this time last year.

Initial claims stuck in a 4 month range…

 

but emergency benefits continue to see people fall off the rolls – down 104k for the week of 12/20/13…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/vdweq5oRhQY/story01.htm Tyler Durden

Despite record unemployment, record loan delinquencies, and record low loan creation, Mario Draghi and his merry European men decided now was not the time to cut rates to “help” the real economy. Of course, with peripheral bond and stock markets exploding higher why would he – Europe’s ‘problems’ are solved if the market is to be believed. Of course the ECB press conference will have its smattering of negative rate discussions, QE teases, and OMT confidence-inspiration but the multi-year highs in EUR will continue to hurt Europe’s exporters means he’ll have to try sometime to jawbone it down.

 

Draghi starts off on a less than cheerful, quite defaltionary, note:

• DRAGHI: EURO AREA MAY FACE PROLONGED PERIOD OF LOW INFLATION
• DRAGHI SAYS EURO AREA GROWTH RISKS REMAIN `ON THE DOWNSIDE
• DRAGHI SAYS POLICY TO REMAIN ACCOMMODATIVE AS LONG AS NEEDED
• DRAGHI SAYS UNDERLYING PRICE PRESSURES TO REMAIN SUBDUED
• DRAGHI SAYS MONETARY, CREDIT DYNAMICS REMAIN SUBDUED
• DRAGHI SAYS UNEMPLOYMENT REMAINS HIGH
• DRAGHI SEES DOWNSIDE RISKS TO ECONOMIC OUTLOOK
• DRAGHI SAYS BALANCE-SHEET ADJUSTMENTS WILL WEIGH ON ACTIVITY
• DRAGHI: COMMODITY PRICES, SLOW REFORMS ALSO DOWNSIDE RISKS

The EURUSD, after it was sent higher before the conference by momentum ignition algos, did not like these statements:

And some more upbeat assessments:

• DRAGHI SAYS POLICY STANCE TO SUPPORT GRADUAL ECONOMIC RECOVERY
• DRAGHI SAYS INFLATION WILL RISE GRADUALLY THEREAFTER
• DRAGHI SAYS HIGHER COMMODITY PRICES ARE UPSIDE INFLATION RISK
• DRAGHI SAYS RISKS TO INFLATION BROADLY BALANCED
• DRAGHI: INFLATION SEEN AROUND CURRENT LEVELS IN COMING MONTHS
• DRAGHI SAYS LATEST INFLATION DATA BROADLY AS EXPECTED
• DRAGHI SAYS REAL INCOMES BENEFIT FROM LOWER ENERGY PRICES
• DRAGHI SAYS HIGHER COMMODITY PRICES ARE UPSIDE INFLATION RISK

Better have something good in the Q&A or else Draghi may rapidly become Trichet.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/UOmIQgn19R4/story01.htm Tyler Durden

Despite record unemployment, record loan delinquencies, and record low loan creation, Mario Draghi and his merry European men decided now was not the time to cut rates to “help” the real economy. Of course, with peripheral bond and stock markets exploding higher why would he – Europe’s ‘problems’ are solved if the market is to be believed. Of course the ECB press conference will have its smattering of negative rate discussions, QE teases, and OMT confidence-inspiration but the multi-year highs in EUR will continue to hurt Europe’s exporters means he’ll have to try sometime to jawbone it down.

 

Draghi starts off on a less than cheerful, quite defaltionary, note:

• DRAGHI: EURO AREA MAY FACE PROLONGED PERIOD OF LOW INFLATION
• DRAGHI SAYS EURO AREA GROWTH RISKS REMAIN `ON THE DOWNSIDE
• DRAGHI SAYS POLICY TO REMAIN ACCOMMODATIVE AS LONG AS NEEDED
• DRAGHI SAYS UNDERLYING PRICE PRESSURES TO REMAIN SUBDUED
• DRAGHI SAYS MONETARY, CREDIT DYNAMICS REMAIN SUBDUED
• DRAGHI SAYS UNEMPLOYMENT REMAINS HIGH
• DRAGHI SEES DOWNSIDE RISKS TO ECONOMIC OUTLOOK
• DRAGHI SAYS BALANCE-SHEET ADJUSTMENTS WILL WEIGH ON ACTIVITY
• DRAGHI: COMMODITY PRICES, SLOW REFORMS ALSO DOWNSIDE RISKS

The EURUSD, after it was sent higher before the conference by momentum ignition algos, did not like these statements:

And some more upbeat assessments:

• DRAGHI SAYS POLICY STANCE TO SUPPORT GRADUAL ECONOMIC RECOVERY
• DRAGHI SAYS INFLATION WILL RISE GRADUALLY THEREAFTER
• DRAGHI SAYS HIGHER COMMODITY PRICES ARE UPSIDE INFLATION RISK
• DRAGHI SAYS RISKS TO INFLATION BROADLY BALANCED
• DRAGHI: INFLATION SEEN AROUND CURRENT LEVELS IN COMING MONTHS
• DRAGHI SAYS LATEST INFLATION DATA BROADLY AS EXPECTED
• DRAGHI SAYS REAL INCOMES BENEFIT FROM LOWER ENERGY PRICES
• DRAGHI SAYS HIGHER COMMODITY PRICES ARE UPSIDE INFLATION RISK

Better have something good in the Q&A or else Draghi may rapidly become Trichet.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/UOmIQgn19R4/story01.htm Tyler Durden

It looks like Time just hinted at who its man, er woman, of 2014 will be with its just released cover showcasing Janet Yellen “The Sixteen Trillion Dollar Woman” which wraps her first interview since being confirmed as Fed chair.

Highlights from the interview:

• Yellen on the American economy: “I think we’ll see stronger growth this year. Most of my colleagues on the Fed’s policy-making committee and I are hopeful that the first digit [of GDP growth] could be 3 rather than 2…. The recovery has been frustratingly slow, but we’re making progress in getting people back to work, and I anticipate that inflation will move back toward our longer-run goal of 2 percent.” On the housing market, which had a brief lull this fall: “I expect it to pick back up and I do expect a further recovery.”
• On the Fed’s QE program: “You know, a lot of people say this [asset buying] is just helping rich people. But it’s not true. Our policy is aimed at holding down long-term interest rates, which supports the recovery by encouraging spending. And part of the [economic stimulus] comes through higher house and stock prices, which causes people with homes and stocks to spend more, which causes jobs to be created throughout the economy and income to go up throughout the economy.”
• On banking reform: “I felt that the Fed had always been the agency that picked up the pieces when there was a financial crisis, and it was invented to do exactly that. But we never had as active a program to attempt to assess threats to financial stability as was called for…. I think Dodd-Frank is a good road map and lays out most of the steps that are necessary. But we may also need to take some further steps that have not been taken yet.”
• On her overall philosophy: “[The job] isn’t just about fighting inflation or monitoring the financial system. It’s about trying to help ordinary households get back on their feet and about creating a labor market where people can feel secure and work and get ahead.”
• On her career epiphany at Brown University: “I was interested in math, and I think very logically, and I remember sitting in that class and learning about how there were policy decisions that could have been taken during the Great Depression to alleviate all that human suffering – that was a real ‘ah-ha’ moment for me. I realized that public policy can, and should, address these problems.”
• TIME’s Rana Foroohar writes: “At the end of the day, Janet Yellen, the commander in chief of the everyday economy, will judge herself not by the views of Wall Street but by the health of Main Street…. A rising tide can lift all boats. That’s a phrase that’s been associated with conservatives in recent years, but it’s worth remembering that Kennedy said it first—and Yellen still believes it.”

Read the full interview here.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/_SY-yJD5fGs/story01.htm Tyler Durden

It looks like Time just hinted at who its man, er woman, of 2014 will be with its just released cover showcasing Janet Yellen “The Sixteen Trillion Dollar Woman” which wraps her first interview since being confirmed as Fed chair.

Highlights from the interview:

• Yellen on the American economy: “I think we’ll see stronger growth this year. Most of my colleagues on the Fed’s policy-making committee and I are hopeful that the first digit [of GDP growth] could be 3 rather than 2…. The recovery has been frustratingly slow, but we’re making progress in getting people back to work, and I anticipate that inflation will move back toward our longer-run goal of 2 percent.” On the housing market, which had a brief lull this fall: “I expect it to pick back up and I do expect a further recovery.”
• On the Fed’s QE program: “You know, a lot of people say this [asset buying] is just helping rich people. But it’s not true. Our policy is aimed at holding down long-term interest rates, which supports the recovery by encouraging spending. And part of the [economic stimulus] comes through higher house and stock prices, which causes people with homes and stocks to spend more, which causes jobs to be created throughout the economy and income to go up throughout the economy.”
• On banking reform: “I felt that the Fed had always been the agency that picked up the pieces when there was a financial crisis, and it was invented to do exactly that. But we never had as active a program to attempt to assess threats to financial stability as was called for…. I think Dodd-Frank is a good road map and lays out most of the steps that are necessary. But we may also need to take some further steps that have not been taken yet.”
• On her overall philosophy: “[The job] isn’t just about fighting inflation or monitoring the financial system. It’s about trying to help ordinary households get back on their feet and about creating a labor market where people can feel secure and work and get ahead.”
• On her career epiphany at Brown University: “I was interested in math, and I think very logically, and I remember sitting in that class and learning about how there were policy decisions that could have been taken during the Great Depression to alleviate all that human suffering – that was a real ‘ah-ha’ moment for me. I realized that public policy can, and should, address these problems.”
• TIME’s Rana Foroohar writes: “At the end of the day, Janet Yellen, the commander in chief of the everyday economy, will judge herself not by the views of Wall Street but by the health of Main Street…. A rising tide can lift all boats. That’s a phrase that’s been associated with conservatives in recent years, but it’s worth remembering that Kennedy said it first—and Yellen still believes it.”

Read the full interview here.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/_SY-yJD5fGs/story01.htm Tyler Durden

The nation may be slowly thawing from its deep freeze “polar vortex”, but that is no comfort for tens of thousands of Ohians, whose water supply has literally frozen in the past day after the valves at the Avon Lake Municipal Utility plant were planted in ice, dramatically lowering the supply of water. NBC reports that “tens of thousands of customers in several counties in Ohio are facing a dramatic water shortage after the intake valves at a key plant that draws water from Lake Erie apparently froze amid the wild winter weather.” As a result, the mayor of Avon had a modest proposal as a response to the caticestrophy: don’t flush your toilets. At least there is toilet paper, which is more than Venezuela, and its 480% returning in 2013 stock market can say.

From NBC:

Officials at Avon Lake Municipal Utilities west of Cleveland said Wednesday that the valves at the plant are caked in ice. Although they are still able to draw water, the rate is below typical demands — which means several surrounding cities could be hit by a veritable drought.

 

In a message on the city of Avon’s official website, officials called on residents to hold off on doing anything that uses a lot of water.

 

Avon Mayor Bryan Jensen sent out an emergency messages to locals asking them to hold off on laundry, baths and showers, according to Cleveland.com.

 

“We even ask people to refrain from flushing toilets as often as they used to until this can be resolved,” Jensen said.

 

The plant website said it provides water to over 200,000 people living in a 680-square-mile area made up of seven counties — including Lorain, Cuyahoga, Medina, Erie, Huron, Ashland and Wayne.

And in other polar vortex news, the Niagara Falls has frozen.

 

The polar vortex which affected large swathes of the US is expected to calm off this weekend (Picture: REUTERS/Aaron Harris)

 

The Rainbow Bridge connects the US side of Niagara Falls to the Canadian side (Picture: REUTERS/Aaron Harris)

 

Over 20million people visit Niagara each year (Picture: REUTERS/Aaron Harris)

 

Ice chunks flow over the Niagara into its gorge (Picture: REUTERS/Aaron Harris)

 

Visitors brave the cold to take a look at the beautiful sight (Picture: REUTERS/Aaron Harris)

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/YS8MSdNVSkA/story01.htm Tyler Durden

The nation may be slowly thawing from its deep freeze “polar vortex”, but that is no comfort for tens of thousands of Ohians, whose water supply has literally frozen in the past day after the valves at the Avon Lake Municipal Utility plant were planted in ice, dramatically lowering the supply of water. NBC reports that “tens of thousands of customers in several counties in Ohio are facing a dramatic water shortage after the intake valves at a key plant that draws water from Lake Erie apparently froze amid the wild winter weather.” As a result, the mayor of Avon had a modest proposal as a response to the caticestrophy: don’t flush your toilets. At least there is toilet paper, which is more than Venezuela, and its 480% returning in 2013 stock market can say.

From NBC:

Officials at Avon Lake Municipal Utilities west of Cleveland said Wednesday that the valves at the plant are caked in ice. Although they are still able to draw water, the rate is below typical demands — which means several surrounding cities could be hit by a veritable drought.

 

In a message on the city of Avon’s official website, officials called on residents to hold off on doing anything that uses a lot of water.

 

Avon Mayor Bryan Jensen sent out an emergency messages to locals asking them to hold off on laundry, baths and showers, according to Cleveland.com.

 

“We even ask people to refrain from flushing toilets as often as they used to until this can be resolved,” Jensen said.

 

The plant website said it provides water to over 200,000 people living in a 680-square-mile area made up of seven counties — including Lorain, Cuyahoga, Medina, Erie, Huron, Ashland and Wayne.

And in other polar vortex news, the Niagara Falls has frozen.

 

The polar vortex which affected large swathes of the US is expected to calm off this weekend (Picture: REUTERS/Aaron Harris)

 

The Rainbow Bridge connects the US side of Niagara Falls to the Canadian side (Picture: REUTERS/Aaron Harris)

 

Over 20million people visit Niagara each year (Picture: REUTERS/Aaron Harris)

 

Ice chunks flow over the Niagara into its gorge (Picture: REUTERS/Aaron Harris)

 

Visitors brave the cold to take a look at the beautiful sight (Picture: REUTERS/Aaron Harris)

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/YS8MSdNVSkA/story01.htm Tyler Durden

As was broadly expected, and contrary to November’s surprising announcement, the ECB kept its rates unchanged.

9 January 2014 – Monetary policy decisions

 

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.25%, 0.75% and 0.00% respectively.

 

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

No response in the EURUSD. In 45 minutes Mario Draghi will explain just how he plans on reviving Europe’s moribund and record low loan creation.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1FlkKq9u4hc/story01.htm Tyler Durden

• Carney Guidance Threshold Strained as BOE Holds Policy (BBG)
• Does one laugh or cry: China Tells Banks to Improve Disclosures in Shadow-Lending Fight (BBG)
• Big Business Doubles Down on GOP Civil War With Tea Party (BBG)
• ?CIA sued for records on possible role in Nelson Mandela arrest (RT)
• Bridge Scandal Destroys Christie’s ‘Nice Jerk’ Image (BBG)
• Borrowers Hit Social-Media Hurdles (WSJ)
• U.S. Leverage in Iraq Tested As Fears of Civil War Mount (WSJ)
• Austerity drive cuts into Chinese inflation (FT)
• Dish Pulling Its Bid for LightSquared (WSJ)
• BlackRock agrees to end analyst surveys (Reuters)
• Germany defends economic policies after US criticism (FT)
• Bank of Korea Holds Rate Even as Yen Clouds Export Outlook (BBG)
• Credit Suisse sticks with money-losing U.S. brokerage (Reuters)
• BofA Fired Trader to Avoid Paying Bonus, Lawyer Says (BBG)
• Eurozone risks trying on mood of confidence (FT)
• Hong Kong Warns Against Outdoor Activity as Pollution Rises (BBG)

 

Overnight Media Digest

WSJ

* The criminal trial of Jesse Litvak, a former Jefferies LLC trader in federal court, next month could have a big impact on a wide-ranging probe into whether banks cheated mortgage-bond clients in the years after the financial crisis, legal experts said.

* The chief executives of Apple Inc and Samsung Electronics Co will meet to try to reach a settlement before the next round of patent litigation begins later this year in California, according to a court filing late Wednesday.

* IBM is creating a business unit for its Watson supercomputer and starting a $100 million venture-capital fund to spur more apps built on the technology.

* BlackRock Inc agreed to terminate a survey program that New York Attorney General Eric Schneiderman alleged enabled the asset-management firm to obtain market-moving information about companies from research analysts ahead of investors. The company also agreed to pay for the costs of the attorney general’s investigation, but did not pay a fine or penalty.

* Dish Network Corp is pulling its bid for LightSquared Inc, the telecommunications company in bankruptcy that has wireless spectrum Dish has been coveting, according to people familiar with the matter.

* Japanese health regulators called for a criminal investigation of Novartis AG for advertisements touting the benefits of the company’s most popular medicine based on altered research.

* E*Trade Financial Corp’s online trading system shut down on Wednesday, frustrating customers and raising fresh questions about the security of electronic marketplaces.

* World Wrestling Entertainment Inc will launch the WWE Network, a subscription-only, online video channel that will air round-the-clock programming. Starting Feb. 24, the network will feature new programs and matches, an on-demand service and a six-decades-deep library for $9.99 a month. It will also include events previously available on pay-per-view TV, such as wrestling’s version of the Super Bowl, WrestleMania.

 

FT

U.S. drugmaker Forest Laboratories Inc is planning more acquisitions after it agreed to buy specialty pharmaceutical maker Aptalis from private equity firm TPG Capital for $2.9 billion.

French food group Danone said it would cut its supply contract with dairy exporter Fonterra and sue the New Zealand firm following a false alert last year that triggered the recall of its infant-milk products in eight countries, including China.

After the loss of his group’s investment in music company EMI Group Ltd, British financier Guy Hands doubled his staff wages in 2013 in an effort to keep his private equity team at Terra Firma Capital Partners intact, according to financial statements filed at Companies House.

France’s Havas appointed Yannick Bollore, the 33-year-old son of top shareholder Vincent Bollore, as chief executive of the world’s sixth-biggest advertising agency, signalling the family’s growing role on France’s corporate stage.

British grocer J Sainsbury reported its slowest growth in nine years over the crucial Christmas trading period and cut its sales growth forecast, raising a red flag over the supermarket sector.

Eurotunnel is set to announce a agreement with British telecoms groups EE and Vodafone to allow the use of mobile phones and tablets during the journey through the world’s longest undersea tunnel, according to people familiar with the plans.

 

NYT

* BlackRock Inc, the world’s largest asset management company, agreed to end its practice of surveying Wall Street analysts to get clues about their views on companies before those changes are publicly issued.

* The Federal Reserve’s decision in December to taper its bond-buying campaign reflected increased confidence in the economy and continued uneasiness about the stimulus effort, according to an official account of the December meeting.

* IBM announced a separate business division for Watson, its combination of powerful data-processing capabilities and software, and $1 billion as investment for it. The new division will have 2,500 employees, including programmers, researchers and experts, and will be located near the East Village in New York City.

* T-Mobile US Inc said it would cover the termination fees for individuals as well as up to five lines per family for consumers who leave their carrier. Customers can receive up to $650 in credit after trading in their phone.

* Macy’s Inc reported solid holiday sales and announced several cost-cutting measures, including plans to lay off 2,500 employees. Macy’s also said it would close stores in certain locations early this spring – in Irondequoit, New York, for example, and Murray, Utah – while opening Macy’s and Bloomingdale’s stores in other areas.

* Barnes & Noble named Michael Huseby, the head of its digital division, as its new chief executive, a job that has been vacant since William Lynch abruptly resigned from the company in July.

* Luntz Global’s founder Frank Luntz is selling a majority of his stake in the marketing consultancy firm to advertising company MDC Partners. The Financial terms of the deal were not disclosed.

 

Canada

THE GLOBE AND MAIL

* The December ice storm that left hundreds of thousands of Toronto residents without power cost the city about C$106 million ($98 million), according to a report from the city staff.

Reports in the business section:

* A fiery derailment in New Brunswick on Tuesday night was the third time a crude-laden train caught fire in recent weeks in Canada. Three of the tank cars that derailed were loaded at a terminal in southwestern Manitoba, Canadian National Railway Co said.

NATIONAL POST

* Vivian Bercovici, appointed Canada’s new ambassador to Israel on Wednesday, is a lawyer and outspoken commentator on Middle East issues who has criticized Palestinian leaders for their “intransigence” and “ideological commitment” to Israel’s destruction.

* Canada’s two most-read medical journals contain up to five times as much pharmaceutical advertising as major journals in other countries, according to a study that urged the publications – the Canadian Medical Association Journal and Canadian Family Physician – to avoid drug-company promotion entirely.

FINANCIAL POST

* Western Canada Select, a key Canadian oil blend, is trading at its highest level in five months as export jams clear, new refinery demand comes online and frigid weather contributes to production snafus in northern Alberta. This is adding to optimism that more profitable days are ahead for Canada’s oil industry.

* A group of prominent Quebecers is urging the Parti Québécois government to move ahead with oil development as concern builds over the province’s financial predicament. The “Manifesto to benefit collectively from our oil” comes at a time when economists at the Royal Bank of Canada warn that Quebec’s economy may be entering a period of slow growth, challenged by deteriorating working-age population numbers and the highest debt-to-GDP ratio of all the provinces.

 

China

CHINA SECURITIES JOURNAL

– A new round of policy innovations to enhance trade in service will come out soon, aiming to support the listing and bond issuing of qualified Chinese outsourcing companies, according to people familiar with the matter.

SECURITIES TIMES

– China’s state council, or cabinet, announced at an executive meeting on Wednesday that basic pension payments will rise by 10 percent effective Jan. 1, 2014.

CHINA DAILY

– China had the highest number of outbound tourists and amount of overseas spending in the world last year. Ninety-seven million Chinese traveled abroad in 2013, a 17 percent rise compared with the year before, according to the China National Tourism Administration.

SHANGHAI DAILY

– China’s president Xi Jinping has called for the Communist Party to have a greater role in guiding the country’s political and legal affairs, urging a balance between “vitality and order”, on a central political and legal work meeting held over the past two days.

– China should have longer holidays, according to a report issued by the Chinese Academy of Social Science, which suggested adding two to six days of public holidays and extending Spring Festival holiday and restoring the May Day holiday to a week.

PEOPLE’S DAILY

– We should uphold the Communist Party’s leadership in China’s political and legal affairs, said a commentary in the paper that acts as the Party’s mouthpiece. The Party’s policy and the country’s law all reflect mind of the people, it said.

 

Britain

 

The Telegraph

PREMIER LEAGUE AIMS TO PIT BSKYB AGAINST BT IN EARLY TV RIGHTS SALE

 BT Group Plc and BSkyB may have to engage in a new multi-billion-pound battle for pay-TV supremacy as early as this year, because the Premier League wants to bring forward the next auction of football broadcasting rights by up to six months.

(link.reuters.com/baj85v)

ARM CHIEF SIMON SEGARS EXPECTS LOW-COST SMARTPHONES TO DRIVE SALES

 ARM Holdings’ chief executive has said the emergence of low-cost smartphones and Apple’s move into China will drive sales at the British microchip designer. Speaking at the Consumer Electronics Show in Las Vegas on Wednesday, Simon Segars said that as the price of mobile phones falls, billions of people are going to be able to upgrade to newer models.

(link.reuters.com/caj85v)

  The Guardian

HOUSE PRICES RISE 7.5 PCT OVER YEAR DESPITE DECEMBER DIP

House prices went up 7.5 percent over 2013 – despite a dip in December, according to the country’s biggest lender. Halifax, which bases it monthly index on mortgages it has agreed, had predicted movement of -2 percent to 2 percent over the course of 2013, but a stronger than anticipated recovery in the wider economy, combined with government stimulus including the Help to Buy scheme, led to stronger growth.

(link.reuters.com/daj85v)

MOTHERCARE SHARES PLUNGE 30 PCT ON CHRISTMAS TRADING PROFIT WARNING

Mothercare Plc shares plunged 30 percent on Wednesday after the mums and baby store admitted Christmas trading had been hit by heavy discounting and poor toy sales.

(link.reuters.com/faj85v)

The Times

‘DIDDYAGEO’ MARRIAGE IS SOAKED IN TEQUILA

Drinks giant Diageo Plc and the celebrity rapper turned business tycoon Sean “Diddy” Combs have joined forces to acquire DeLeón, an “ultra-premium” tequila brand, in an effort to replicate their success with the company’s fast-growing Cîroc vodka.

(link.reuters.com/gaj85v)

SAINSBURY’S AHEAD, BUT ONLY JUST

J Sainsbury, the only one of Britain’s big four supermarkets to defy the challenging grocery market in recent months, has cut its sales forecast for the year after a late burst of shoppers on the eve of Christmas failed to compensate for a weak autumn.

(link.reuters.com/haj85v)

The Independent

LOANS TO BUSINESSES SET TO RISE AS DEMAND FOR CREDIT INCREASES, SAYS BANK OF ENGLAND

Banks are finally turning on the credit taps to Britain’s businesses after a “significant” surge in loans in the final quarter of last year, the Bank of England said on Wednesday. Its latest credit conditions survey said the overall availability of loans had “increased significantly” for both small and large businesses and that lenders were anticipating a further increase early this year.

(link.reuters.com/jaj85v)

EUROZONE UNEMPLOYMENT RATE REMAINS STABLE AT 12.1 PCT

Eurozone unemployment was stable in November, prompting some analysts to suggest that the region’s problems might be beginning to abate. Although the jobless number rose 4,000 in the month, that followed a large fall in October and left the total rate at 12.1 percent for the eighth consecutive month, according to Eurostat.

 

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Aetna (AET) upgraded to Outperform from Neutral at Credit Suisse
Albemarle (ALB) upgraded to Buy from Neutral at BofA/Merrill
AstraZeneca (AZN) upgraded to Hold from Underperform at Jefferies
Autodesk (ADSK) upgraded to Overweight from Equal Weight at Evercore
Avery Dennison (AVY) upgraded to Outperform from Neutral at RW Baird
City National (CYN) upgraded to Neutral from Underperform at BofA/Merrill
Commerce Bancshares (CBSH) upgraded to Neutral from Underperform at BofA/Merrill
Dominion (D) upgraded to Buy from Neutral at UBS
DuPont (DD) upgraded to Buy from Neutral at BofA/Merrill
HCP Inc. (HCP) upgraded to Buy from Hold at Jefferies
J.C. Penney (JCP) upgraded to Overweight from Neutral at Piper Jaffray
Johnson & Johnson (JNJ) upgraded to Buy from Hold at Jefferies
Knight Transportation (KNX) upgraded to Buy from Neutral at Citigroup
McDonald’s (MCD) upgraded to Overweight from Equal Weight at Morgan Stanley
Medical Properties Trust (MPW) upgraded to Buy from Hold at Jefferies
Public Storage (PSA) upgraded to Buy from Hold at Jefferies
Riverbed (RVBD) upgraded to Hold from Sell at Deutsche Bank
Riverbed (RVBD) upgraded to Hold from Underperform at Jefferies
SunTrust (STI) upgraded to Neutral from Underperform at BofA/Merrill
TriState Capital (TSC) upgraded to Outperform from Neutral at RW Baird
Valspar (VAL) upgraded to Outperform from Neutral at RW Baird

Downgrades

ADA-ES (ADES) downgraded to Neutral from Outperform at RW Baird
ARM Holdings (ARMH) downgraded to Hold from Buy at Deutsche Bank
ASUR Airports (ASR) downgraded to Sell from Neutral at Citigroup
Agrium (AGU) downgraded to Neutral from Buy at BofA/Merrill
Alcatel-Lucent (ALU) downgraded to Hold from Buy at Deutsche Bank
Allegiant Travel (ALGT) downgraded to Hold from Buy at Deutsche Bank
Alpha Natural (ANR) downgraded to Market Perform from Outperform at Cowen
American Equity (AEL) downgraded to Market Perform from Outperform at FBR Capital
Bed Bath & Beyond (BBBY) downgraded to Neutral from Outperform at Credit Suisse
Buffalo Wild Wings (BWLD) downgraded to Underweight from Overweight at Morgan Stanley
Denbury Resources (DNR) downgraded to Neutral from Buy at SunTrust
EnerNOC (ENOC) downgraded to Neutral from Overweight at JPMorgan
First Niagara (FNFG) downgraded to Underperform from Buy at BofA/Merrill
Global Payments (GPN) downgraded to Market Perform from Outperform at Wells Fargo
Highwoods Properties (HIW) downgraded to Hold from Buy at Jefferies
MeadWestvaco (MWV) downgraded to Neutral from Outperform at RW Baird
Mondelez (MDLZ) downgraded to Neutral from Outperform at Credit Suisse
NVIDIA (NVDA) downgraded to Hold from Buy at Canaccord
Novartis (NVS) downgraded to Hold from Buy at Jefferies
OCI Partners (OCIP) downgraded to Neutral from Buy at BofA/Merrill
Patterson Companies (PDCO) downgraded to Hold from Buy at Stifel
STMicroelectronics (STM) downgraded to Sell from Hold at Deutsche Bank
SkyWest (SKYW) downgraded to Hold from Buy at Deutsche Bank
Spirent Communications (SPMYY) downgraded to Hold from Buy at Jefferies
Sprint (S) downgraded to Hold from Buy at Deutsche Bank
Teck Resources (TCK) downgraded to Market Perform from Outperform at Cowen
United Natural Foods (UNFI) downgraded to Neutral from Overweight at Piper Jaffray
Walter Energy (WLT) downgraded to Market Perform from Outperform at Cowen
Yum! Brands (YUM) downgraded to Equal Weight from Overweight at Morgan Stanley

Initiations

ADA-ES (ADES) initiated with a Buy at Brean Capital
CVS Caremark (CVS) initiated with an Outperform at Leerink
Cytec Industries (CYT) initiated with a Hold at Stifel
Cytec Industries (CYT) initiated with a Hold at Stifel
Haynes (HAYN) initiated with a Neutral at Credit Suisse
Rex Energy (REXX) initiated with an Outperform at Northland Securities
Spirit Realty (SRC) initiated with a Buy at Deutsche Bank
Twitter (TWTR) initiated with an Underperform at Cowen
Woodward (WWD) initiated with a Buy at Stifel
XOMA (XOMA) initiated with a Buy at Jefferies

HOT STOCKS

McKesson (MCK) made final offer for Celesio (CAKFY), increased price to EUR 23.50 per share
Macy’s (M) to cut about 2,500 employees, close five stores in the early spring. Estimated  savings of about $100M per year, beginning in 2014.
Macy’s (M) sees FY14 EPS $4.40 to $4.50, consensus $4.32
GlaxoSmithKline (GSK) gained accelerated FDA approval for combination use of Mekinist, Tafinlar
SYNNEX (SNX) entered strategic relationship with Google (GOOG)
WWE (WWE) to launch WWE Network on February 24
Extra Space Storage (EXR) acquired self storage portfolio of 17 assets in Virginia for $200M
Bath & Beyond (BBBY) sees approximately 30 store openings in FY14 across all concepts.

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
VOXX International (VOXX), Global Payments (GPN), WD-40 (WDFC)

Companies that missed consensus earnings expectations include:
Texas Industries (TXI), Bed Bath & Beyond (BBBY), EXFO Inc. (EXFO), Ruby Tuesday (RT)

NEWSPAPERS/WEBSITES

• Dish to pull LightSquared bid, WSJ reports
• Novartis (NVS) facing criminal investigation in Japan over drug advertising, FT reports
• Regulators consider Volcker exemption for smaller banks’ CDOs, Bloomberg reports
• Lenders use social media to check borrowers’ creditworthiness, WSJ reports
• IBM (IBM) to create new $1B Watson business unit, FT reports
• UBS (UBS) may spin off investment bank, Bloomberg reports
• Credit Suisse (CS) bets on a turnaround for money-losing U.S. brokerage, Reuters reports
• BlackRock (BLK), NY attorney general agreement ends analyst surveys, Reuters reports
• Apple (AAPL), Samsung (SSNLF) CEOs to attend mediation in U.S. patent fight, Reuters reports
• Explosion reported at Amgen (AMGN), SFGate.com reports
• Qihoo 360 (QIHU) denies Alibaba interested in investing, China Daily reports

SYNDICATE

Aeterna Zentaris (AEZS) files to sell common shares and warrants
Blackstone Mortgage (BXMT) files to sell 8.5M shares of common stock
GW Pharmaceuticals (GWPH) 2.441M share Secondary priced at $36.00
Intellicheck (IDN) 7.78M share Secondary priced at 45c
Receptos (RCPT) 3.32M share Secondary priced at $30.75
Virtusa (VRTU) 2.3M share Secondary priced at $34.50

ACTIVIST/PASSIVE FILINGS

S.A.V.E. Partners calls on USA Technologies (USAT) to explore sale

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The overnight session began on a dour mood, with both the Shanghai Composite and Nikkei sliding (the former once again just barely above 2,000,  latter once again dropping below 16,000), even though Chinese CPI came below expectations suggesting the PBOC has some more room to ease and not rush into liquidity extraction (which just happens to blow out repo rates like clockwork), while in Japan BOJ board member Shirai implied the Japanese QE can be extended and expanded as needed. Apparently he didn’t get the Fed’s memo that the cost of QE finally outweight the benefits. Leading the gains are Chinese A-shares (Shanghai Comp +0.2%) helped by another relatively benign December CPI print (2.5% YoY vs 3.0% previous and 2.7% expected). Chinese PPI fell for the 22nd straight month (-1.4%, in line with consensus and November). The BOK kept rates on hold as expected which is helping the KRW retrace earlier weakness but the BOK governor warned that the weakening yen was increasingly affecting Korean exporters.

Europe had a weak start although shortly after 3 am Eastern staged a dramatic turnaround supported by a bounce in the EUR (and ES driving EURJPY) leading to broadly higher stocks, supported by solid demand for Portuguese 5y bond syndication, as well as oversubscribed debt auctions by the Spanish Treasury which sold above the targeted amount and consequently saw SP/GE 10y spread fall to its tightest level since April 2011. At the same time, having been propped up by touted redemption flows ahead of Spanish and French bond auctions, absorption of supply shortly after 1000GMT resulted in an immediate selling pressure on Bunds. Helping lift spirits was a rumored $1 billion trade order in September S&P futures, as well as chatter by the Greek PM that the country was like Portugal and Ireland, prepared to get back into the bond markets.

Looking elsewhere, in spite of the USD index trading lower, USD/JPY remained bid and was supported by upward traction by EUR/JPY, which itself was driven by unwind of dovish positioning ahead of the monetary policy announcement by the ECB at 1245GMT. At the same time, broad based EUR strength which buoyed EUR/GBP cross
ensured that GBP/USD failed to benefit from a softer USD and traded steady this morning.

Turning to the day ahead, we got the French (missed) and UK (beat) November trade reports and German industrial production (1.9%, exp. 1.5%) up first. This will be followed by the BoE’s rate announcement which was just reported as unchanged. The ECB follows shortly thereafter at 7:45 am Eastern with Draghi’s press conference 45 minutes after that. The US data docket consists mostly of jobless claims. The day will then end with the closely-watched Alcoa’s quarterly earnings which marks the unofficial start to US Q4 earnings season. Consensus is for Alcoa to report net income of $60.5m on revenues of $5.3bn, but as always there will be as much focus on the company’s demand outlook as there is on the company’s historical results.

US Event docket

• US sells $13bn 30y bonds, re-open (7:00)
• Initial Claims report (8.30)
• POMO: $0.60 – $0.90 billion in the 11/15/2024 – 02/15/2031 bucket (11:00)

Overnight news bulletin from Bloomberg and RanSquawk

• Despite opening lower, European stocks are now seen higher following firm demand for Portugal’s 5y bond syndication with price guidance narrowing from MS+340bps to 330bps.
• Peripheral bond spreads tighter with the SP/GE 10y spread at its tightest level since April 2011 following over-subscribed Spanish bond auctions.
• Despite the USD index trading lower, USD/JPY remains bid and supported by upward traction by EUR/JPY.
• Treasuries steady, 30Y bond yields fall by 1bp before week’s auctions end with $13b sale of the maturity; market focus on tomorrow’s jobs report (est. 195k, unemployment holding at 7.0%) as some firms raise forecasts after yesterday’s stronger than forecast ADP.
• 30Y bonds yield 3.894% in WI trading; drew 3.90% in Dec. 10Y notes sold yesterday drew 3.009%, highest since May 2011
• U.S./Germany 10Y spread at -108.9bps, widest since 2006, before ECB rate decision, Draghi press conference; will probably hold policy steady. For preview, click here
• German industrial production rose 1.9% in Nov., first increase in three months, from -1.2% in Oct; Euro-area economic confidence rose to 100 in Dec., higher than forecast
• Bank of England announces rate decision and asset purchase target at 7:00am ET; est. 0.50% (no change) and GBP375b (no change)
• China’s producer price index fell 1.4% in Dec., the 22nd straight drop, while CPI trailed estimates at 2.5%
• Obama will call for tighter limits on U.S. spying on foreign leaders in response to a global uproar over government surveillance, according to an administration official familiar with the proposal
• U.S. Senate Majority Leader Harry Reid said he’s open to offsetting the cost of reviving long-term unemployment benefits if Republicans agree to keep the aid for a year
• Sovereign yields mostly higher; EU peripheral spreads widen. Nikkei falls 1.5%, leading most Asian stock markets lower; Shanghai Composite falls 0.8%. European stocks  gain U.S. equity-index futures rise.  WTI crude and gold gain, copper slides

Asian Headlines

Chinese CPI (Dec) Y/Y 2.5% vs. Exp. 2.7% (Prev. 3.0%)
Chinese PPI (Dec) Y/Y -1.4% vs. Exp. -1.3% (Prev. -1.4%)
Chinese CPI (2013) Y/Y 3.0%; PPI -1.9%

BoJ board member Shirai said it is possible to aim for 2% inflation at a slower pace than 2-year time frame and that currently there is a lot of uncertainty surrounding the time frame for the BoJ’s inflation target.

EU & UK Headlines

Today’s session has seen solid demand for the Portuguese 5y bond syndication, as well as auction from Spain and France with Spain selling above the indicative range, which has seen then the SP/GE 10y spread at its tightest level since April 2011. Also of note, Greek PM Samaras said that his government is weighing the possibility of a return to bond markets this year.

German Industrial Production SA (Nov) 1.9% vs Exp. 1.5% (Prev. -1.2%)
German Industrial Production WDA (Nov) 3.5% vs Exp. 3.0% (Prev. 1.0%. Rev. 1.1%)

Eurozone Business Climate Indicator (Dec) M/M 0.27 vs Exp. 0.22 (Prev. 0.18, Rev. 0.31)
– Eurozone Services Confidence (Dec) M/M 0.2 vs Exp. -0.5 (Prev. -0.8, Rev. -0.9)
– Eurozone Economic Confidence (Dec) M/M 100.0 vs Exp. 99.1 (Prev. 98.5, Rev. 98.4)
– Eurozone Industrial Confidence (Dec) M/M -3.4 vs Exp. -3.0 (Prev. -3.9)
– Eurozone Consumer Confidence (Dec F) M/M -13.6 vs Exp. -13.6 (Prev. -13.6)

UK Visible Trade Balance GBP/Mln (Nov) M/M -9439 vs Exp. -9425 (Prev. -9732, Rev. -9651); Narrowest deficit since June
– UK Trade Balance Non EU GBP/Mln (Nov) M/M -3023 vs Exp. -3500 (Prev. -3254, Rev. -3114)
– UK Trade Balance (Nov) M/M -3238 vs Exp. -2300 (Prev. -2619, Rev. -3496); Narrowest deficit since August

French Trade Balance (Nov) M/M -5680mln vs Exp. -4600mln (Prev. -4697mln, Rev. -4826mln)
– With France’s Trade Minister saying that the trade balance was ‘not good’ due to lower aeronautical deliveries.

US Headlines

Newsflow remains light in the US following yesterday’s FOMC minutes, with participants now looking ahead to tomorrow’s Nonfarm Payrolls release.

Equities

Despite the recovery by major European equity indices, the move higher was led by health care related stocks, as market participants remained somewhat cautious ahead of announcements by the ECB and BoE. Of note, retailers in the UK are seen sharply lower following disappointing trading updates by Morrisons, Tesco and M&S premarket. Looking ahead, it is worth noting that Alcoa are due to report after-market today and kick-off earnings season in the US.

FX

Looming risk events (BoE and ECB monetary policy announcements) failed to support the USD this morning and instead the price action was driven by an unwind of dovish EUR positions amid positive sentiment stemming from solid demand for Portuguese 5y bond syndication. As a result, broad based EUR strength saw EUR/USD trend higher throughout the morning session, with EUR/JPY also bid which ensured that in spite of a softer USD, USD/JPY remained in positive territory.

Analysts at Goldman Sachs said they see first Polish rate increase in Q4 2014 ‘at earliest’ adding that the Polish central bank will increase interest rates by 25bps this year and by further 75bps in 2015.

Commodities

Libya’s crude production has risen to 546,000 bpd as output from Sharara field accelerates.

The first crude has started to flow through Iraqi Kurdistan’s new pipeline across Turkey and the first independent exports are expected to begin at the end of the month, according to the Kurdistan Regional Government.

Negotiations between Iran and six world powers on implementing a landmark November deal to freeze parts of Tehran’s nuclear program in exchange for easing some sanctions have run into problems over the issue of centrifuge research, according to diplomats.

Bank of America have lowered their Gold forecast by 11% to USD 1150/oz and lowered their Silver forecast by 21% to USD 18.38/oz.

HSBC sees gold recovering modestly in H2 of this year.

* * *

We conclude with Jim Reid’s overnight recap, as usual

Yesterday we remarked how parts of the US were colder than the South Pole earlier this week. Well actually it transpires that there were a few places colder than even Mars!! Talking of the planets always reminds me of a DB note published back in 2008 entitled “The ECB is from Mars and the Fed is from Venus”. With the FOMC minutes released last night and the ECB meeting today the differences between the two remain stark even if likely to be less extreme in 2014 than in 2013. Although the Fed suggested in the minutes that the committee saw reduced benefits of asset purchases there was nothing to suggest anything other than a measured slow withdraw of QE. Indeed if the Fed reduced bond buying by 10bn in the month after each 2014 meeting the Fed’s balance sheet would still swell by $320bn in 2014 (putting aside coupons, maturities and reinvestment) after 2013 where it increased by $1.1 Tn. To put things in perspective the ECB allowed its balance sheet to roll off by around €740bn in 2013. With inflation this low and the Euro still strong can they really afford for this to be repeated in 2014?

For now though there is likely to be no fresh change in emphasis with the general expectation that the ECB will once again hold fire today. DB’s Gilles Moec and Marco Stringa believe the ECB seems to be comfortable with its current stance: they have managed to convince the market that they could do more, with their “array of instruments”. At the same time, they need a “smoking gun” to get them into action and the trickle of data released since the December meeting does not provide them with one yet. Our economists also note that Draghi was unusually straightforward in his comments in his interview with the Spiegel published on 30 December: When he was asked whether interest rates should fall further, he answered “at the moment, we see no need for immediate action” and, after commenting repeatedly on the “progress” made in the Euro area he pointed to the fact that in the Euro area inflation expectations remain well anchored around the ECB’s target. Our rates strategist Abhishek Singhania also points out the ECB will take comfort that although EUR rates have sold-off along with the move in US rates, the move has been smaller (especially at the front-end) compared to the move leading up to the July ECB meeting (when the ECB to introduced its forward guidance language). This is despite the fact that Euro-area activity data as reflected via the PMIs has improved over this period. Additionally, the ECB will take comfort from the fact that Eurozone GDP weighted bond yields have actually declined despite the rise in core bond yields due to the sharp rally in peripheral bond yields.  So if the ECB does indeed get forced into more aggressive action in 2014, the status quo looks likely in the near-term.

Coming back to yesterday, the S&P500 (-0.02%) closed pretty much where it was just prior to the release of the FOMC minutes, though there was a small wobble as that there was broad based agreement to gradually wind up QE towards the end of 2014 but that there was emphasis that QE had no preset course and was data dependent. This was probably no surprise to most, considering the comments from Bernanke last month. There wasn’t substantive talk on changing formal thresholds with respect to forward guidance or cutting IOER. There was a small upgrade in the forecast for GDP growth and in the forecast value of the dollar. Perhaps the most interesting excerpt of the minutes was the discussion on financial stability where several members commented on the rise in forward price-earnings ratio of small cap stocks, the rise in margin credit, increase in leveraged loans and the decline in quality of such loans. A participant seemed to suggest that the importance of financial stability considerations in the Committee’s deliberations would likely increase over time as progress is made toward the Committee’s objectives, and one said that such considerations should even be
incorporated into forward guidance for the federal funds rate and asset purchases.

Outside of equities the market reaction to the minutes was also fairly muted. 10yr UST yields ticked down by 2bp (up 5bp on the day and closing just shy of the 3.0% mark) but we did see the 2s/10s curve flatten substantially post-minutes after front-end USD rates substantially underperformed. There was a larger reaction to the ADP report which came in 38k above consensus estimates of 200k. Our US economists point out that it was the highest print since November 2012 and there was further good news in that the November 2013 print was revised higher (+229k vs. +215k). This leaves our economists predicting a top-of-the-street +250k forecast for Friday’s payrolls – with most of the street’s forecasts over the last 24 hours being revised up to the 200k to 230k range.

Speaking of US data surprises, the recent run of positive economic data has resulted in the Citi Economic Surprise index hitting a near two-year high yesterday. While that result is fairly impressive in itself, its important to highlight that the index has formed a peak at the start of each of the last three years, before hitting a rough patch in the middle of the year.

Elsewhere EURUSD fell 0.3% with most of the decline following the ADP beat, and despite another round of positive European data including Euroarea retail sales (1.4% vs 0.4% expected) and German factory orders (2.1% vs 1.5% expected) which both beat consensus. In fixed income, the Euroarea sovereign and corporate new issuance pipeline was in full swing yesterday, with Portugal announcing a tap of their 2019s following the recent Irish 10yr syndication. Bailed-out Spanish bank Bankia is also reported to be making a post-bailout comeback to the EUR senior unsecured bond market.

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