Tag: finance

• Glass-Steagall Fans Plan New Assault If Volcker Rule Deemed Weak (BBG) … “if”? The banks control the legislators and regulators…
• Cellphone data spying: It’s not just the NSA (USA Today)
• Major tech companies push for limits on government surveillance (Reuters)
• Shanghai Warns Kids to Stay Indoors for Seventh Day on Smog (BBG)
• Protesters fell Lenin statue, tell Ukraine’s president ‘you’re next’ (Reuters)
• Everyone must be flying private these days: EADS to cut 5000-6000 jobs, close Paris HQ in restructuring (FT)
• Big Players Trade ‘Upstairs’ (WSJ)
• There’s no way to tell how many people who think they’ve signed up for health insurance through the U.S. exchange actually have (BBG)
• Slower China inflation reduces worries of tighter policy (Reuters)
• BIS Sounds Alarm Over Record Sales of Payment-in-Kind Junk Bonds (BBG)
• Singapore hit by rare outbreak of rioting, 27 arrested (Reuters)
• Japan’s GDP Growth Slows, Current Account in Red (WSJ)
• Bargains Beckon Funds to European Equities (BBG)
• Banks Listen In to Trader Talk (WSJ)

 

Overnight Media Digest

WSJ

* After a nearly yearlong effort to sell its gun business, Cerberus Capital Management LP is close to bringing on a minority investor and lender to the weapons maker to let some of its investors sell out, a person familiar with the matter said.

* General Motors Co is preparing a concerted attack on its most troubled international operations that would entail big output cuts at factories in South Korea and likely an end to production in Australia, said people familiar with the auto maker’s plans.

* Given Imaging Ltd, a maker of ingestible pills that take photos inside patients’ bodies, agreed to be acquired by Covidien PLC for $860 million.

* When employees of the new American Airlines Group Inc ring the Nasdaq Stock Market’s opening bell Monday from the carrier’s Texas headquarters, many of them will be cheering because they already know what their pay and benefits will be-unlike in most airline mergers. The new American has secured temporary labor agreements that spell out how the merged airline will quickly integrate key groups of workers from the former American Airlines and US Airways.

* Some of the world’s biggest advertising companies are predicting faster growth in ad spending in 2014 than occurred this year, although concerns about the U.S. and European economies weigh on some of their projections.

* Amazon.com Inc received a lot of news coverage for its sci-fi drone-delivery idea last week. But an immediate robotics effort under way in the Seattle retailer’s warehouses could save the company more than $900 million a year, according to an analyst.

* As enrollment picks up on the HealthCare.gov website, many people with modest incomes are encountering a troubling element of the federal health law: deductibles so steep they may not be able to afford the portion of medical expenses that insurance doesn’t cover.

* When Hertz Global Holdings Inc acquired car-rental rival Dollar Thrifty last year, the Federal Trade Commission sought to combat rising prices by forcing Hertz to sell off its Advantage Rent a Car brand, making it a new, independent competitor. But the arrangement has taken a sharp detour.

* A high-speed rail project linking the three Baltic states embodies the economic hopes the European Union has placed on the fast-train technology. It also exemplifies one of high-speed’s biggest hurdles: national borders.

* Russia is undertaking a series of long-delayed and politically sensitive economic overhauls aimed at boosting efficiency as the country struggles with the longest period of economic stagnation yet in Vladimir Putin’s 13-year reign, according to a top official.

* European Aeronautic Defence & Space Co, fresh from streamlining its Airbus unit and its own complex corporate structure, is moving down its to-do list and trimming its defense operations to fit shrunken growth prospects. Top EADS executives Monday will meet with labor representatives to unveil their restructuring plans, according to people familiar with the discussions.

 

FT

HSBC Holdings is considering the potential sale of a stake in its British retail and commercial banking business, according to three people familiar with the project.

Former Barclays Chief Executive Bob Diamond has secured the preliminary support of several big institutional investors for the $250 million London listing of a shell company, targeting the African financial sector.

U.S. private equity company Cerberus Capital Management is offering shareholders a way to sell their interest in Freedom Group, the maker of the gun used in the Newtown school shootings last year, after failing to deliver on its promise to dispose of the company.

IAG’s British Airways is taking legal action to try to prevent the trustees of one of its pension schemes from increasing payments to some of its retired workers.

Renault-Nissan is working towards striking an agreement with its German partner Daimler that will deepen the alliance between the carmakers during the first quarter of next year.

 

NYT

* Federal Reserve officials are in no hurry to retreat from their bond-buying campaign to stimulate the economy and are likely to postpone any cuts to the program until next year, according to public statements by Fed officials and interviews with some of them.

* Kevyn D. Orr, the man who must now revive Detroit, commutes each week from Maryland to a cavernous old office building here that seems to dare him to succeed: the former headquarters of a company, itself recently in bankruptcy, that once sold more than half of America’s cars – General Motors .

* Eight prominent technology companies, bruised by revelations of government spying on their customers’ data and scrambling to repair the damage to their reputations, are mounting a public campaign to urge President Obama and Congress to set new limits on government surveillance.

* Cellphone carriers last year answered at least 1.1 million requests from law enforcement agencies seeking information on caller locations, text messages and other data for use in investigations, according to repor
ts from the carriers.

* Last week, Bob Evans Farms announced that it had declined to make strategic changes recommended by one of its biggest investors. Now that investor, the hedge fund Sandell Asset Management, plans to turn up the heat on the restaurant operator.

* Comcast has hired JPMorgan Chase to advise it on a possible bid for Time Warner Cable, according to people briefed on the matter.

* China’s exports rose more than expected last month, government figures released Sunday showed, as resurgent demand from consumers in the United States and the European Union helped put the Asian manufacturing juggernaut on track for its biggest annual trade surplus since 2008.

* Greece’s Parliament early on Sunday approved a budget for 2014 which predicts a timid return to growth after six years of recession despite the reluctance of many government lawmakers to impose further cutbacks on a country reeling from economic hardship.

 

Canada

THE GLOBE AND MAIL

* Ontario’s Liberal government is leaning away from hiking the harmonized sales tax as a method of paying for transit expansion, reasoning that such a move would be too unpopular.

* Bahrain, Algeria and Iraq, countries with dubious human rights records or a history of violent internal conflict, have recently become new buyers of Canadian-made guns and ammunition, an analysis of federal government data shows.

* At least two more key Conservative MPs received gold-embossed business cards, contrary to long-standing government rules against fancy stationery. Tony Clement was given his gold cards shortly after being promoted to Treasury Board president in the May 2011 cabinet shuffle, following the election of a Conservative majority.

Reports in the business section:

* On its 4,000-km path across the country, TransCanada Corp’s Energy East’s pipeline would traverse the traditional territory of 180 different aboriginal communities, each of whom must be consulted and have their concerns accommodated as part of the company’s effort at winning project approval.

* Incoming Barrick Gold Corp Chairman John Thornton has friends in high places in China – including the country’s premier, central bank chief and anti-corruption czar, to name a few. Now Thornton’s job is to turn those connections into new business opportunities for the gold miner as it seeks to turn the corner on a string of costly setbacks.

* Winter has not been good to Transat AT Inc in recent years. Canada’s largest tour operator has lost money in the past four winter seasons. Among the reasons for the poor performance have been stiff competition from chief rival Sunwing Travel Group Inc, management’s overestimation of capacity requirements and failure to fully match appropriate fleet deployment to seasonal needs.

NATIONAL POST

* The quantum revolution Mike Lazaridis expects is grand enough. Inventing the mythical quantum computer, which the BlackBerry billionaire has set as the primary goal of his massive investment in the southern Ontario technology hub known as Quantum Valley, could create a trillion-dollar market that Canada stands to dominate. He says the question is when, not if. The scientists say years, not decades.

FINANCIAL POST

* Once again Canada’s big five banks have delivered a record performance, with total profit in the last fiscal year of $29.4-billion, up a healthy 5 percent from last year despite the weak economy, slower consumer lending and other headwinds.

* Despite predictions that the recent Black Friday sales push would be the most robust to date in this country, one post-mortem analysis found only 27 percent of Canadians partook of the deals on Nov. 29.

 

China

CHINA SECURITIES JOURNAL

– The China Banking Regulatory Commission (CBRC) plans to introduce bank insolvency regulations, said Yan Qingmin, the vice chairman of the CBRC at a forum recently. The country’s overall level of non-credit business operations needs to be improved, Yan added.

SHANGHAI SECURITIES NEWS

– China’s largest car leasing companies are starting to launch asset securitization products. Xinjiang Guanghui Leasing Services Limited issued “the yuan issue” of its specific asset management plan on Dec 5.

– On Dec. 6, China Life Insurance Co Ltd held the opening ceremony for the listing of its e-commerce subsidiary, the industry’s first e-commerce company.

PEOPLE’S DAILY

– China’s development is at an important period of strategic opportunity, but the nature of these opportunities is changing, said a commentary in the paper that acts as the party’s mouthpiece. The country is closer to a great rejuvenation than ever, but must focus on the challenges it faces, it said.

CHINA FINANCE INFORMATION WEBSITE

– The Tianjin government is spending 60 billion yuan ($9.87 billion) on a land-reclamation project for the purpose of building a site for China’s second free trade zone, according to insiders.

– Zambia has shut a mine owned by China Nonferrous Metals (8306.HK) at Chambishi Copper Mines due to “contempt of environmental law”

 

Britain

The Telegraph

BT SPORT AND BSKYB IN POLE POSITION FOR RIGHTS TO ELECTRIC RACING SERIES

Formula E, the world’s first electric single-seater motor racing series, is in talks with BT Sport and BSkyB about a British television rights deal.

INEOS PLANS TO SHARE OUT GRANGEMOUTH SITE

Ineos, the owner of Grangemouth, is planning to attract other companies to the Scottish industrial site in a bid to expand its customer base and share soaring energy and other utility costs.

AXE CARBON TAX TO KEEP LIGHTS ON AND CUT ENERGY BILLS, SAYS SCOTTISHPOWER CHIEF

Britain’s unilateral carbon tax should be scrapped before it causes blackouts, pushes up household bills and makes Britain uncompetitive, ScottishPower argues.

The Guardian

DONG ENERGY UPBEAT ABOUT OFFSHORE WIND POWER THANKS TO HIGHER SUBSIDY

Dong Energy, the company that claims to be the biggest developer of windfarms in the world, believes it is “game on” in the North Sea with nothing to hold back new investment.

The Times

WTO DEAL’S 1 BLN STG BOOST FOR BRITAIN

British business will receive 1 billion pounds ($1.64 billion) per year from the “historic” deal struck yesterday to end a 20-year impasse on global trade. Prime Minister David Cameron hailed the agreement as a “lifeline” for the world’s poorest people, as well as a boon for Britain’s exporters.

ED DAVEY’S WORDS FALL ON STONEY GROUND AT HINKLEY POINT

Ed Davey’s claim that British companies will win most of the work to build EDF’s 16 billion pound Hinkley Point nuclear reactor was on shaky ground last night after it emerged that his remarks contradicted a government report.

DE VERE SELL-OFF TO PUSH LOSSES TO 900 MLN STG FOR LLOYDS

Lloyds Banking Group is preparing to kick-start the sell-off of De Vere Group in a move that could push total write-offs on the taxpayer-supported bank’s backing of the hotel and leisure operator to almost 900 million pounds.

INSULATION SCHEME WILL HAVE LESS OBLIGATION

Energy companies and their successful lobbying efforts have come under fire from consumer groups after it emerged that even fewer households will have their homes insulated under an abbreviated government-backed scheme.

JOBS SAVED AT ASBESTOS FIRM

More than 1,000 jobs at Silverdell, an asbestos clean-up specialist, are to be secured by a rescue deal. Rcapital, a turnaround fund, stepped in as the troubled company’s bank prepared to pull the plug.

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Alon USA Energy (ALJ) upgraded to Buy from Hold at Deutsche Bank
American Eagle (AEO) upgraded to Buy from Neutral at B. Riley
BRE Properties (BRE) upgraded to Market Perform from Underperform at BMO Capital
CRH Plc. (CRH) upgraded to Neutral from Sell at Citigroup
Cabot Oil & Gas (COG) upgraded to Buy from Hold at Deutsche Bank
Delek US (DK) upgraded to Buy from Hold at Deutsche Bank
KCG Holdings (KCG) upgraded to Overweight from Equal Weight at Evercore
Kraft Foods (KRFT) upgraded to Overweight from Equal Weight at Morgan Stanley
Manitowoc (MTW) upgraded to Buy from Neutral at Longbow
Mohawk (MHK) upgraded to Outperform from Neutral at Credit Suisse
Phillips 66 (PSX) upgraded to Buy from Hold at Deutsche Bank
PolyOne (POL) upgraded to Outperform from Market Perform at Wells Fargo
Portland General Electric (POR) upgraded to Overweight from Equal Weight at Barclays
Protective Life (PL) upgraded to Overweight from Equal Weight at Evercore
Valero Energy (VLO) upgraded to Buy from Hold at Deutsche Bank

Downgrades

Camden Property (CPT) downgraded to Underperform from Outperform at BMO Capital
Continental Resources (CLR) downgraded to Hold from Buy at Deutsche Bank
Danone (DANOY) downgraded to Underperform from Neutral at Exane BNP Paribas
Dean Foods (DF) downgraded to Equal Weight from Overweight at Morgan Stanley
Given Imaging (GIVN) downgraded to Hold from Buy at Cantor
Home Properties (HME) downgraded to Underperform from Market Perform at BMO Capital
Noble Energy (NBL) downgraded to Hold from Buy at Deutsche Bank
Ply Gem (PGEM) downgraded to Neutral from Outperform at Credit Suisse
Stock Building Supply (STCK) downgraded to Neutral from Buy at Citigroup

Initiations

American Airlines (AAL) initiated with a Buy at CRT Capital
American Airlines (AAL) initiated with a Buy at Deutsche Bank
Atlantic Coast Financial (ACFC) initiated with an Outperform at FBR Capital
Brixmor (BRX) initiated with a Buy at SunTrust
Brixmor (BRX) initiated with a Neutral at Citigroup
Brixmor (BRX) initiated with an Outperform at RBC Capital
Brixmor (BRX) initiated with an Outperform at Wells Fargo
Brixmor (BRX) initiated with an Overweight at JPMorgan
Chegg (CHGG) initiated with a Buy at Jefferies
Chegg (CHGG) initiated with an Overweight at Piper Jaffray
Dynagas LNG (DLNG) initiated with a Hold at Deutsche Bank
Dynagas LNG (DLNG) initiated with an Equal Weight at Morgan Stanley
Dynagas LNG (DLNG) initiated with an Outperform at Credit Suisse
Dynagas LNG (DLNG) initiated with an Overweight at Barclays
Eros International (EROS) initiated with a Buy at Jefferies
Fibrocell Science (FCSC) initiated with an Overweight at Barclays
Tandem Diabetes (TNDM) initiated with an Overweight at Piper Jaffray
Universal Electronics (UEIC) initiated with an Overweight at Piper Jaffray
XPO Logistics (XPO) initiated with an Outperform at Credit Suisse

HOT STOCKS 

Alibaba to invest $364M in Haier to boost China logistics (YHOO)
WhiteWave Foods (WWAV) agreed to acquire Earthbound Farm for $600M
Equal Energy (EQU) agreed to be acquired by PetroFlow Energy for $5.43 per share
Quanta Services (PWR) sold equity ownership in Howard Energy for $221M
Phillips 66 (PSX) sees 2014 capital expenditures 40% higher than 2013 capital target
Spherix (SPEX) subsidiary filed lawsuit against AT&T (T) for alleged patent infringement
Verizon (VZ) to buy CDN provider EdgeCast Networks for over $350M, TechCrunch reports

NEWSPAPERS/WEBSITES

• Some of the world’s biggest investors (TROW) are changing the way they trade in U.S. markets in response to what they say are rising risks for institutions of their size, including conducting more “upstairs trades,” in which deals are executed among big institutions, bypassing the broader market, the Wall Street Journal reports
• Major advertising companies (WPPGY, PUBGY, IPG) predict faster growth in ad spending in 2014 than this year, although concerns about the U.S. and European economies weigh on some of their projections, the Wall Street Journal reports
• U.S. Supreme Court Justice Ruth Bader Ginsburg on Saturday night denied a last-ditch effort by a group of consumers and travel agents to stop the merger of American Airlines (AAMRQ) and US Airways (LCC), Reuters reports
• European aerospace company EADS (EADSY) plans to cut between 5,000 and 6,000 jobs and sell its Parisian headquarters as part of a restructuring program it will detail later today, according to Le Figaro newspaper, Reuters reports
• Dealer revenue from negotiating interest-rate swap transactions is poised to drop about 45% as new rules boost trading costs, pressures that may prompt banks to participate less in the $633T over-the-counter derivatives market, Tabb Group LLC estimates, Bloomberg reports
• American mutual funds are scouring Europe for bargains, snapping up Dutch oil drillers, French drugmakers and Swiss food producers on speculation the region’s rally is just beginning as the U.S. bull market ages. While investors speculate the Fed will cut stimulus in March, they are betting the European Central Bank will keep economic measures for longer, Bloomberg reports

BARRON’S

Barron’s listed its 10 favorite stocks for 2014: Barrick Gold (ABX), Canadian Natural (CNQ), Citigroup (C), Deere (DE), General Motors (GM), Intel (INTC), MetLife (MET), Nestle (NSRGY), Simon Property (SPG), US Airways (LCC). The new US Airways, American Airlines symbol will be AAL
Allergan (AGN) shares could rise 15%-20%
Coach (COH) shares could rise 25% in two years
Astoria (AF), Brookline (BRKL), Northfield (NFBK) could be takeover targets
Quarterly results may bring 3-D printing stock correction (DDD, XONE, VJET, SYSS)
Ulta Salon (ULTA) still unattractive after selloff

SYNDICATE

Ocera Therapeutics (OCRX) files to sell 4.73M shares for holders
SeaWorld (SEAS) to repurchase 1.5M shares from Blackstone Group LP

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/jRsfXT8Azac/story01.htm Tyler Durden

Everywhere you look these days, central planning just can’t stop reaping failure after failure. First it was Japan’s Q3 GDP rising just 1.1%, well below the 1.9% in the previous quarter and the 1.6% expected, while the Japanese current account posted its first decline since of €128 billion (on expectations of a JPY149 billion increase) since January. What’s worse, according to Asahi, Abe’s approval rating tumbled to 46% in the current week, down from the low 60s as soon as early 2013, while a former BOJ member and current head of Japan rates and currency research, Tohru Sasaki, said that the high flying days of the USDJPY (and plunging of the JPY respectively) is over, and the USDJPY is likely to slide back to 100 because the BOJ would not be able to expand monetary easing by enough to repeat this year’s “success.” He definitely uses that last word rather loosely.

Continuing to praise the success of central planners everywhere, China’s trade balance soared from a revised $31.1 billion to $33.8 billion, which was the largest trade surplus since early 2009, which happened even as November CPI of 3.0% declined both from and the 3.2% October print, and below the 3.1% expected on supposedly lower than expected food inflation . So much for China’s reform spurring internal demand and shifting away from mercantilism. Then again, the above assume Chinese trade data is reported accurately which by now everyone understands it isn’t, and even Bank of America this morning ominously reminds us that “exports data were greatly over-reported between end-2012 and April 2013.” We are well aware.

Finally a quick look at central planning in Europe indicates more of the same, with Greek Nov. CPI declining once again, dropping from -2.0% to -2.8% on expectations of a modest bounce to -1.8%. This happened even as Greek Q3 GDP printed at -3.0%. One can’t wait to see just what data Greece will have to manipulate to post its first positive GDP print in 2014 as it has been promising constantly for the past year. Finally, confirming that a soaring Euro is actually disastrous for the economic dynamo in the heart of Europe (much to the ECB’s confusion), Germany reported Industrial Production which declined for the second month in a row, and after sliding -0.7% in September, dropped another 1.2% in October on expectations of a 0.7% increase. Just growth, hope and prosperity all around.

Finally, in the US there is little on the central-planning calendar, although a lot of central planners do speak ahead of the Fed’s blackout period which starts tomorrow with Lacker (12:30), Bullard (13:05), and Fisher (14:15) all taking the good Fed cop, bad Fed cop routing to the next level. And yes, no central-planning day could be complete without not one but two POMOs, which today we have, the first being $1.5 billion and the second around $3.3 billion.

In light of all this data it is shocking the centrally-planned futures aren’t limit up.

Market Re-Cap

Even though there is a distinct lack of risk events this week, the traditionally observed Santa Claus rally has failed to materialise and instead stocks traded mixed in Europe this morning, with French based CAC underperforming its peer where Danone shares came under pressure after analysts at Exane downgraded co. rating to underperform from neutral. Also of note, London listed Tullow Oil weighed on the FTSE-100 index which traded flat for much of the session so far after the exploration group said that the Tultule-1 wildcat well in the South Omo block, onshore Ethiopia, will be plugged and abandoned as a dry hole. Looking elsewhere, EUR/USD and GBP/USD traded higher, supported by a weaker USD (USD index traded at its lowest level since late October), together with touted macro names buying EUR/JPY and GBP/JPY, which itself were also beneficiaries amid broad based JPY weakness. Going forward, although there are no major macroeconomic releases set for the second half of the session, the NY Fed will conduct two POMO ops today.

Asian Headlines

Chinese Trade Balance (USD) (Nov) M/M 33.80bln vs. Exp. 21.20bln (Prev. 31.10bln, Rev. 31.11bln) – Largest surplus since early 2009.
Exports (Nov) Y/Y 12.7% vs. Exp. 7.0% (Prev. 5.6%)
Imports (Nov) Y/Y 5.3% vs. Exp. 7.0% (Prev. 7.6%)
CPI (Nov) Y/Y 3.0% vs. Exp. 3.1% (Prev. 3.2%)
PPI (Nov) Y/Y -1.4% vs. Exp. -1.5% (Prev. -1.5%)

China’s central bank on Sunday published a guideline on deposit certificates in the interbank market, another step towards fully floating interest rates.

BoJ’s Kuroda said the BoJ will continue easing until 2% inflation is stable, said inflation expectations are rising on a whole, and sees improvements in economy and markets since easing began.

Japanese GDP SA (Q3 F) Q/Q 0.3% vs. Exp. 0.4% (Prev. 0.5%)
GDP Annualized SA (Q3 F) Q/Q 1.1% vs. Exp. 1.6% (Prev. 1.9%)
BoP Current Account Balance (JPY)(Oct) M/M -127.9bln vs. Exp. 148.9bln (Prev. 587.3bln)

Trade Balance BoP Basis (Oct)(JPY) M/M -1091.9bln vs. Exp. -1005.5bln (-874.8bln)

EU & UK Headlines

ECB’s Weidmann (hawk) says the ECB has the tools to counter a possible excessive slowdown in inflation and would act if necessary.

ECB’s Mersch has called summer’s call for negative real rates ‘fatalistic’, inflation and deflation risks are evenly balanced and rates to be at, below current level for prolonged time.

Greece’s Parliament early Sunday approved the 2014 budget, backing spending cuts that the government says would help it meet deficit targets but that have been criticized by its international creditors for not going far enough. In related news, according to an EU Commission source, Greece deal before January 2014 is unrealistic.

Eurozone Sentix Investor Confidence (Dec) M/M 8.0 vs. Exp. 10.0 (Prev. 9.3)

German Industrial Production SA (Oct) M/M -1.2% vs. Exp. 0.7% (Prev. -0.9%, Rev. -0.7%)
German Industrial Production WDA (Oct) Y/Y 1.0% vs. Exp. 3.1% (Prev. 1.0%, Rev. 0.6%)

German Trade Balance (Oct) M/M 17.9bln vs Exp. 18.3bln (Prev. 20.4bln, Rev. 20.3bln)
– German Exports SA (Oct) M/M 0.2% vs Exp. -0.5% (Prev. 1.7%, Rev. 1.6%).
– German Imports SA (Oct) M/M 2.9% vs Exp. 1.1% (Prev. -1.9%).

German Current Account Balance (Oct) M/M 19.1bln vs Exp. 17.1bln (Prev. 19.7bln, Rev. 20.0bln)

Bank of France Business Sentiment (Nov) M/M 101 vs Exp. 98 (Prev. 99, Rev. 100) – French GDP expanded 0.5% in Q4, Bank of France estimates.

US Headlines

WSJ Fed watcher Hilsenrath says that Federal Reserve officials are closer to winding down their controversial USD 85bln-a-month bond-purchase program, possibly as early as December, in the wake of Friday’s encouraging jobs report.

Fed’s Evans (voter, dove) said is confident bond purchases will end before hitting 6.5% unemployment threshold. Evans said will have open mind on tapering at coming meeting, but still not convinced time to taper as needs to see more data on jobs and inflation.

Equities

Stocks traded mixed in Europe, with French based CAC index underperforming its peer where Danone shares came under pressure after analysts at Exane downgraded co. rating to underperform from neutral. Elsewhere, weekend press reports that HSBC is looking to partially IPO its UK retail/comm
ercial bank were denied, though heading into the North American cross co. shares are seen marginally lower. Same goes for Standard Chartered, with CNBC reporting mid-way through the session that the bank has denied reports that it could consider a rights issue to shore up balance sheet.

Barclays overweight Europe, EM stocks and underweight US.

FX

Broad based JPY weakness, combined with touted macro names buying EUR/JPY and GBP/JPY meant that in spite of firmer JPY spot rate, both EUR/USD and GBP/USD traded higher this morning. Still, should the upside price action continue by GBP/USD, there is talk of offers from Asian accounts at 1.6420. Looking elsewhere, M&A related flow may pick up pace and have a more pronounced impact on CAD and GBP related cross amid reports citing sources that Glencore Xstrata has revived its interest in bidding for the Canadian iron-ore operations that Rio Tinto Group is seeking to sell.

Commodities

Citi commodity strategists have made changes to their oil price forecasts for 2014 and 2015 lowering their Brent forecast to USD 97.5bbl and USD 92.5bbl respectively. This move primarily reflects an improving supply picture through 2014 and lower geopolitical risks.

Barclays says geopolitical risk in oil is still high amid Iran thaw, with risks of a price spike some time in 2014 being higher than that of a move lower.

Iran are said to increase their gas exports to Iraq to USD 17bln per year as reported by IRNA, citing the head of the Iran Gas-Export Co.

According to CFTC, hedge funds are the least bullish on gold since 2007. The net-long position in gold fell 16% to 26,774 futures and options in the week ending December the 3rd. Short bets rose 6.2% to 79,631. Net-bullish wagers across 18 U.S. traded commodities climbed to a four week high.

* * *

DB’s Jim Reid concludes the overnight recap

Given Friday’s payrolls beat (more below) the market probability of the FOMC tapering next week went in the opposite direction to England’s chances as markets seem set for a fascinating pre-Xmas run in. According to Bloomberg, 34% of economists surveyed after payrolls expect the Fed to begin tapering at the Dec 17th-18th meeting, which is an increase of 17 percentage points from a November 8th survey. On the other hand, 40% of the 35 economists think that tapering will begin in March, which is 13ppt lower than the previous survey. So there has definitely been a shift in opinion towards a December taper, but March still appears to be the favourite consensus call for now.

In terms of the payrolls report itself, November nonfarm payrolls rose by 203k (or 18k higher than consensus), which is effectively in line with the +200k print in October. Back revisions to the prior two months totaled +8k, after which the running 3 month average is now 193k. November private sector job gains were +196k which is higher than the +180k expected by the market. The unemployment rate fell by a larger-than-expected amount in November (7.0% vs. 7.3% previously), as unemployment in the household survey fell by 365k. The fall in unemployment came despite an increase in labour force participation which partly recovered from last month’s government shutdown-related distortion (63.0% vs. 62.8% previously). Outside of the job gains, the nonfarm workweek increased a tenth to 34.5 hours. Average hourly earnings rose +0.2% vs. +0.1% previously. One thing pulling back the chances of a taper next week was the YoY core PCE rate which reversed course, dropping from 1.2 to 1.1%, relative to a Fed goal of 2.0%. Indeed this is an important part of why DB’s Peter Hooper thinks they don’t taper in December.

Following Friday’s employment report it will be an interesting 24 hours of Fed speak coming up with Lacker, Bullard and Fischer all scheduled to discuss their updated thoughts. Today’s Fed speak line up is also relatively interesting because we have one dove, one in the centre and one hawk speaking. This will also be the final time we will hear from Fed officials before they go into a “blackout” period on Tuesday ahead of next week’s FOMC.

Onto markets and the positive effects of last Friday’s payrolls and better Chinese data over the weekend and today have combined to create a firm start to the week for markets. Chinese exports rose 12.7% yoy in November, up from 5.6% yoy in October and much higher than the consensus estimate of 6.5%. On the other side of the ledger, November imports rose 5.3% yoy, which is slower than last month’s 7.6% increase. However, DB’s Jun Ma points out that the seasonal adjusted November import growth accelerated to 9.3% yoy, up from 2.7% yoy in October. The trade surplus rose to USD33.8bn in November which is the highest monthly trade surplus since early 2009. This morning’s Chinese inflation data for November was fairly benign with consumer prices rising 3.0% YoY in November (vs 3.1% expected, 3.2% previous) and PPI falling 1.4% YoY (-1.5% expected).

Asian equities have opened stronger, and credit spreads are rallying overnight. The Nikkei (+2.2%) is leading the region’s gains and India’s SENSEX (+1.6%) has hit a new record. News that Thailand’s PM Yingluck has dissolved parliament and called for fresh elections in response to recent anti-government protests has led to underperformance in Thailand’s SET index (-0.15%). Asian credit spreads are trading tighter – there is also a firm bid for Indonesian government bonds following the strong performance of EM credit post-payrolls on Friday when the CDX EM index rallied by 8bp in its best performance in two weeks. Indonesian sovereign CDS is about 15bp tighter this morning. USDJPY is stable at 103, after gaining more than 1% on Friday off the back of US payrolls. 10yr UST yields are stable at 2.85%, or unchanged from where they finished on Friday. The strength in risk markets post the US data seems to have been explained by the argument that either the whisper number was higher than consensus or that the numbers don’t merit aggressive tapering over the coming months even if they do decide to go for December.

Coming back to China, DB’s Jun Ma has published his latest China 2014 outlook. Our economists expect GDP growth to continue its recovery towards 8.6% in 2014, after accelerating to 7.8-7.9% yoy in 2H 2013 from 7.5% in Q2. They see five major drivers for the recovery in 2014: 1) reduced overcapacity; 2) deregulation in sectors with massive under-capacity; 3) effectiveness of the government’s efforts to “reactivate money stock”; 4) rising external demand; and 5) a pro-cyclical fiscal policy. Risks to his 2014 growth outlook include: 1) weaker- than-expected external demand recovery; 2) faster-than-expected property price inflation in China, which may result in harsher policy reactions from the government; and 3) unexpected shocks that lead to higher inflation, which may prompt earlier-thanexpected policy tightening.

On a related topic, our EM strategists have published a piece on Sovereign Credit in 2014. They believe that while EM assets are likely to face continued headwinds in 2014, the dramatic negative shift in the wider perception of EM debt cannot be repeated in 2014 given the return of EM risk premium. With continued taper risk, they recommend a neutral overall exposure. However, as rate uncertainty recedes after the initial taper shock and Fed continues with its dovish guidance as we foresee, they believe EM sovereign spreads have potential of some moderate tightening, offsetting the rise in US yields and offering about 6% return in 2014. The team recommends an overweight exposure to Colombia, Russia, Poland, and Hungary, underweight exposure to Brazil, Indonesia, and Ukraine.

Previewing the week ahead, as we mentioned previously we have the last bit of Fed speak today before the Fed goes into a self imposed silence. The US data flow is relatively light which is typical of a post-payrolls week but it’s worth noting wholesale inventories on Tuesday
and retail sales on Thursday. Importantly US House and senate negotiators are supposed to come to an agreement on a budget before the December 13th deadline. A lot of optimism has been expressed thus far from members of congress, and there are reports that a budget deal will be unveiled this week.

In Europe, a two day Eurogroup/ECOFIN finance ministers’ meeting begins today – discussion of a Single Resolution Mechanism for banks is a top item on the agenda. The BoE’s Carney will be speaking at the Economic Club of New York today, and Draghi will be speaking at a conference in Rome on Tuesday. Looking at the data docket, German trade and industrial production data are scheduled for today. French, UK and Italian industrial production and UK trade data are the major data releases on Tuesday. Eurozone’s industrial production, France and Italy’s CPI are due on Thursday. In China, industrial production, new bank loans and retail sales (Tuesday) are the main point of focus.

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

As fear and nationalism rise in Japan (and Abe’s grip on the people founders amid falling approval ratings and underperforming economic indicators such as GDP tonight), so another party has joined the debacle in the East China Sea. As NHK World reports, South Korea has officially announced that it will expand its air defense identification zone, making it partially overlap those of Japan and China. The game of chicken over small islands (and submerged rocks!) in the middle of nowhere continues…

 

 

 

The ‘triangle’ of doom in the East China Sea…

 

As NHK World notes,

South Korea has officially announced that it will expand its air defense identification zone, making it partially overlap those of Japan and China.

 

South Korea’s Defense Ministry said on Sunday that the expansion will go into effect on December 15th.

 

The move comes after China established its air defense zone over a wide area of the East China Sea last month.

 

The zone includes the Senkaku Islands, which are controlled by Japan and claimed by China and Taiwan.

 

Seoul has been demanding that Beijing redraw the zone because it partially overlaps the one set by South Korea and includes a submerged rock called Ieodo claimed by both nations. The Chinese call the rock Suyan.

 

The South Korean Defense Ministry said the expanded zone will also cover 2 small islands whose airspace partially overlaps Japan’s defense zone.

 

The ministry said it briefed Japan, the United States and China on the matter beforehand and the 3 countries suggested that the expansion is in line with international rules and is not an excessive measure.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ifV0Fk6RZKQ/story01.htm Tyler Durden

As fear and nationalism rise in Japan (and Abe’s grip on the people founders amid falling approval ratings and underperforming economic indicators such as GDP tonight), so another party has joined the debacle in the East China Sea. As NHK World reports, South Korea has officially announced that it will expand its air defense identification zone, making it partially overlap those of Japan and China. The game of chicken over small islands (and submerged rocks!) in the middle of nowhere continues…

 

 

 

The ‘triangle’ of doom in the East China Sea…

 

As NHK World notes,

South Korea has officially announced that it will expand its air defense identification zone, making it partially overlap those of Japan and China.

 

South Korea’s Defense Ministry said on Sunday that the expansion will go into effect on December 15th.

 

The move comes after China established its air defense zone over a wide area of the East China Sea last month.

 

The zone includes the Senkaku Islands, which are controlled by Japan and claimed by China and Taiwan.

 

Seoul has been demanding that Beijing redraw the zone because it partially overlaps the one set by South Korea and includes a submerged rock called Ieodo claimed by both nations. The Chinese call the rock Suyan.

 

The South Korean Defense Ministry said the expanded zone will also cover 2 small islands whose airspace partially overlaps Japan’s defense zone.

 

The ministry said it briefed Japan, the United States and China on the matter beforehand and the 3 countries suggested that the expansion is in line with international rules and is not an excessive measure.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ifV0Fk6RZKQ/story01.htm Tyler Durden

Just out from the NYT’s Fed watcher Appelbaum:

Fed’s Plan to Taper Stimulus Effort Not Expected Until Next Year

 

Federal Reserve officials are in no hurry to retreat from their bond-buying campaign to stimulate the economy and are likely to postpone any cuts to the program until next year, according to public statements by Fed officials and interviews with some of them.

 

Job growth has strengthened in recent months, and Fed officials expect continued improvement in the coming year. The Fed’s chairman, Ben S. Bernanke, predicted in June that the Fed would taper its purchases by the end of this year, and officials say they still could announce such a cut next week, when the Fed’s policy-making committee is scheduled to hold its final meeting of the year.

 

But influential Fed officials see little harm in postponing the decision, particularly compared with the risks of pulling back too soon…

At the same time, out from the WSJ’s Hilsenrath:

Fed Closes In On Winding Down Bond Purchasing

 

Federal Reserve officials are closer to winding down their controversial $85 billion-a-month bond-purchase program, possibly as early as December, in the wake of Friday’s encouraging jobs report.

 

Fed Chairman Ben Bernanke will have to build consensus among officials about how soon to pull back on a program that has been the center of market attention for months and whose effectiveness isn’t wholly clear. Many are getting more comfortable with starting a delicate process of winding the program down, though disagreements about timing and strategy could emerge, according to public comments and interviews with officials.

 

The Fed’s next policy meeting is Dec. 17-18 and a pullback, or tapering, is on the table, though some might want to wait until January or even later to see signs the recent strength in economic growth and hiring will be sustained. On Tuesday, officials go into a “blackout” period in which they stop speaking publicly and begin behind-the-scenes negotiations about what to do at the policy gathering.

 

One important consideration: Are investors prepared for a move? Talk of pulling back earlier this year jarred stock and credit markets. On Friday they seemed to take the prospect of a pullback in stride.

Who is right? Are both right? Are both wrong? According to some, especially those who manage other people’s money, and are paid only if the multiple expansion myth continues, any news will be good news, and all bad news is priced in.

Scott Minerd, global chief investment officer for Guggenheim Partners LLC, said, “It doesn’t matter” whether the Fed makes a decision on tapering this month or in 2014. “It’s priced in,” he said.

Sure, nothing matters, and the Taper – that tiny reduction in flow by $10 billion from $85 billion to $75 billion – was priced in in May also, until the Emerging Market nearly suffered a cardiac attack and the US bond market imploded…

Then again, does anyone even care? Far more relevant is what is the Fed’s price target for the Monday and year end close.

Also, how sad is it that this is what financial journalism has devolved to: when will the economist PhD overlords decree to (minimally) reduce their central-planning of the US economy and capital markets (and yes, Stalin must be spinning in his grave…)?

All completely meaningless questions to distract the population from the fact that while the markets rise to ever higher record highs, the social fabric in the US and globally stretches ever thinner…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/7cyOtjkKuGE/story01.htm Tyler Durden

Just out from the NYT’s Fed watcher Appelbaum:

Fed’s Plan to Taper Stimulus Effort Not Expected Until Next Year

 

Federal Reserve officials are in no hurry to retreat from their bond-buying campaign to stimulate the economy and are likely to postpone any cuts to the program until next year, according to public statements by Fed officials and interviews with some of them.

 

Job growth has strengthened in recent months, and Fed officials expect continued improvement in the coming year. The Fed’s chairman, Ben S. Bernanke, predicted in June that the Fed would taper its purchases by the end of this year, and officials say they still could announce such a cut next week, when the Fed’s policy-making committee is scheduled to hold its final meeting of the year.

 

But influential Fed officials see little harm in postponing the decision, particularly compared with the risks of pulling back too soon…

At the same time, out from the WSJ’s Hilsenrath:

Fed Closes In On Winding Down Bond Purchasing

 

Federal Reserve officials are closer to winding down their controversial $85 billion-a-month bond-purchase program, possibly as early as December, in the wake of Friday’s encouraging jobs report.

 

Fed Chairman Ben Bernanke will have to build consensus among officials about how soon to pull back on a program that has been the center of market attention for months and whose effectiveness isn’t wholly clear. Many are getting more comfortable with starting a delicate process of winding the program down, though disagreements about timing and strategy could emerge, according to public comments and interviews with officials.

 

The Fed’s next policy meeting is Dec. 17-18 and a pullback, or tapering, is on the table, though some might want to wait until January or even later to see signs the recent strength in economic growth and hiring will be sustained. On Tuesday, officials go into a “blackout” period in which they stop speaking publicly and begin behind-the-scenes negotiations about what to do at the policy gathering.

 

One important consideration: Are investors prepared for a move? Talk of pulling back earlier this year jarred stock and credit markets. On Friday they seemed to take the prospect of a pullback in stride.

Who is right? Are both right? Are both wrong? According to some, especially those who manage other people’s money, and are paid only if the multiple expansion myth continues, any news will be good news, and all bad news is priced in.

Scott Minerd, global chief investment officer for Guggenheim Partners LLC, said, “It doesn’t matter” whether the Fed makes a decision on tapering this month or in 2014. “It’s priced in,” he said.

Sure, nothing matters, and the Taper – that tiny reduction in flow by $10 billion from $85 billion to $75 billion – was priced in in May also, until the Emerging Market nearly suffered a cardiac attack and the US bond market imploded…

Then again, does anyone even care? Far more relevant is what is the Fed’s price target for the Monday and year end close.

Also, how sad is it that this is what financial journalism has devolved to: when will the economist PhD overlords decree to (minimally) reduce their central-planning of the US economy and capital markets (and yes, Stalin must be spinning in his grave…)?

All completely meaningless questions to distract the population from the fact that while the markets rise to ever higher record highs, the social fabric in the US and globally stretches ever thinner…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/7cyOtjkKuGE/story01.htm Tyler Durden

Moments ago news hit the tape that during a televised speech in Bangkok, Thai Prime Minister has proposed a decree to dissolve parliament and call new elections. This is likely in response to the plans of government protesters, who had planned to march on Government House this morning to pressure Yingluck to step down and hold fresh elections.

BREAKING: Thai Prime Minister Yingluck Shinawatra dissolves Parliament, calls for elections.

— The Associated Press (@AP) December 9, 2013

Additionally, as VOA reports, a caretaker parliament will be appointed with limited powers.

PM Yingluck: For now caretaker cabinet with limited power. #Thailand

— Steve Herman (@W7VOA) December 9, 2013

The immediate result is that the Thai Baht gains 0.1% to 32.115 against the USD, after being down as much as 0.5% earlier. However, this kneejerk reaction may not last. As VOA also reports…

Ms. Yingluck remaining as interim PM unlikely to mollify anti-gov’t marchers. #Thailand

— Steve Herman (@W7VOA) December 9, 2013

Whether or not this development will be seen as bullish for the EURJPY formerly known as the S&P500, is of course a rhetorical question: if it is a flashing red headline, it is always bullish for stocks.

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

Submitted by Jim Quinn of The Burning Platform blog,

The American people are coming to the realization that everything Ron Paul has stood for in the last 40 years is true. He has been proven right regarding the Federal Reserve, the Military Industrial Complex, and the Warfare/Welfare Surveillance State. The American people have grown weary of inflation, wars of choice and being spied upon. Ron Paul’s consistently right message is finally making headway. He is a true American patriot.

 

America's Place In The World…

 

We Are All Non-Interventionists Now!

We are witnessing the triumph of Ron Paulism in the United States. The corporate media will avoid reporting it. They try their best to ignore Ron Paul’s 30 plus year intellectual march through our institutions.

But the facts in Pew Research’s 50 year survey of US views of “America’s place in the world” do not lie: This year the highest percentage of Americans ever — 53 percent — agree with the statement that “the US should mind its own business internationally and let other countries get along the best they can on their own.” (See illustration below)

 

This means that despite the Mephistophelian temptations of the neoconservatives, offering war, interventionism, “responsibility to protect,” and humanitarian bombs, Americans are behind Ron Paul and the peacemakers — more than ever.

There is no major political figure in the United States who has more clearly identified himself with the cause of non-interventionism both at home and abroad.

When the Georgia/Russia war broke out in 2008, arch-neocon Senator John McCain incomprehensibly said that “we are all Georgians now.” He meant that we should go to war with Russia to back up a Georgian provocation. His slogan is laughable now, particularly as the facts have come out about the war.

But we can say this with all the facts to back us up: “We are (mostly) non-interventionists now!” We are in the growing majority, but still we have to fight the powers-that-be to get our message heard. The censorship and propaganda against our message is strong. The war machine does not give up easily.

Please continue to support the Ron Paul Institute’s efforts to advance Ron Paul’s important work. Read our website, share the articles, follow us on Facebook and Twitter, and if you can please financially support our efforts. Ron Paul is winning. Let’s help him!

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5dqGM4TlpZ0/story01.htm Tyler Durden

Submitted by Jim Quinn of The Burning Platform blog,

The American people are coming to the realization that everything Ron Paul has stood for in the last 40 years is true. He has been proven right regarding the Federal Reserve, the Military Industrial Complex, and the Warfare/Welfare Surveillance State. The American people have grown weary of inflation, wars of choice and being spied upon. Ron Paul’s consistently right message is finally making headway. He is a true American patriot.

 

America's Place In The World…

 

We Are All Non-Interventionists Now!

We are witnessing the triumph of Ron Paulism in the United States. The corporate media will avoid reporting it. They try their best to ignore Ron Paul’s 30 plus year intellectual march through our institutions.

But the facts in Pew Research’s 50 year survey of US views of “America’s place in the world” do not lie: This year the highest percentage of Americans ever — 53 percent — agree with the statement that “the US should mind its own business internationally and let other countries get along the best they can on their own.” (See illustration below)

 

This means that despite the Mephistophelian temptations of the neoconservatives, offering war, interventionism, “responsibility to protect,” and humanitarian bombs, Americans are behind Ron Paul and the peacemakers — more than ever.

There is no major political figure in the United States who has more clearly identified himself with the cause of non-interventionism both at home and abroad.

When the Georgia/Russia war broke out in 2008, arch-neocon Senator John McCain incomprehensibly said that “we are all Georgians now.” He meant that we should go to war with Russia to back up a Georgian provocation. His slogan is laughable now, particularly as the facts have come out about the war.

But we can say this with all the facts to back us up: “We are (mostly) non-interventionists now!” We are in the growing majority, but still we have to fight the powers-that-be to get our message heard. The censorship and propaganda against our message is strong. The war machine does not give up easily.

Please continue to support the Ron Paul Institute’s efforts to advance Ron Paul’s important work. Read our website, share the articles, follow us on Facebook and Twitter, and if you can please financially support our efforts. Ron Paul is winning. Let’s help him!

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5dqGM4TlpZ0/story01.htm Tyler Durden

While some may think trading these manipulated capital markets has become a leading cause of death over the past year, that is not the case. At least not yet. Instead, the leading causes of early death are shown on the chart below compiled by Wired. It maps “the global cost of early mortality – some 1.7 billion years of potential human life forefited annually – sorted by cause of death.”

Not surprisingly, Wired notes that heart disease and stroke cause more than a quarter of all deaths. But since they hit mainly older people, the cost in years of life lost is relatively small. Curiously, one of the biggest net contributors to premature loss of life is Malaria, which is one of the biggest killers of children across the developing world. Also surprising: while not large (yet) in absolute terms, natural disasters are by far the fastest-growing contributor to the death toll.

The good news: the big yellow block representing infectious diseases and birth problems, is showing a rapid decline. Which means that “we’re making progress; deaths from disorders that could be avoided with basic medications, clean water and neo-natal care, are on the decline.”

Some additional perspectives are provided from the below two interactive maps by the Institute for Health Metrics and Evaluation, analyzing Disability Adjusted Life-Years (DALY) impact from various noted causes. A quick primer:

The disability-adjusted life year (DALY) is a measure of overall disease burden, expressed as the number of years lost due to ill-health, disability or early death.

 

Originally developed by Harvard University for the World Bank in 1990, the World Health Organization subsequently adopted the method in 1996 as part of the Ad hoc Committee on Health Research “Investing in Health Research & Development” report. The DALY is becoming increasingly common in the field of public health and health impact assessment (HIA). It “extends the concept of potential years of life lost due to premature death…to include equivalent years of ‘healthy’ life lost by virtue of being in states of poor health or disability.” In so doing, mortality and morbidity are combined into a single, common metric.

An interactive treemap of all causes:

 

A different perspective, this time broken down by risk factors. The far and ahead leader: “dietary risks”, which makes sense for a nation which every day roll sever further into record obesity land.

 

The best news: clicking too fast on the SPY heatmap in order to benefit from Bernanke’s “Wealth Effect” is still not a leading cause of premature death.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/8AM3Ml8mlc4/story01.htm Tyler Durden