finance – Page 19067

Average Pay Of Goldman Banker Rises To $383,374 On Expectations Beat Despite Plunge In Order Flow

Yesterday Bank of America beat thanks to (among other things) ye olde “plunge in the effective tax rate” gimmick which let it beat EPS by two cents instead of missing by three. Today it was Goldman’s turn to “beat” lowered EPS expectations of $4.18, posting a substantial beat of $4.60. So did Goldman also fudge its tax rate? Not exactly: instead, what Goldman did was to reduce its compensation benefits from $2.4 billion to $2.2 billion, which meant the firm’s compensation margin declined from 35.2% to a tiny 24.9% of revenue. Had Goldman kept the comp margin flat it would have missed EPS by about 50 cents. However, unlike the other “banks” Goldman at least did post a notable beat in GAAP revenues (it was reluctant to use a non-GAAP top line, hear that Jamie?) as well, with Q4 sales rising from $6.7 billion in Q3 to $8.8 billion, on expectations of $7.8 billion. However, compared to a year ago, the top line was 5% lower, while Net Income of $4.60 was 21% lower than a year earlier.

The reason for the decline in revenue was the plunge in Equity and FICC Institutional Client Flow, both of which tumbled by 27% and 15% respectively year over year, as more and more institutions just say no to trading. Which mean that Goldman’s prop trading group had to pick up the slack and sure enough Investment and Lending, aka Prop, saw its revenue rise to $2.1 billion in the quarter, up 4.4% from a year ago and the third best quarter in post-Lehman history. Finally, Investment Banking revenues of $1.7 billion also posted a notable increase of 22.3% Y/Y as Goldman’s bankers rushed at the opportunity to advise on the surge in equity and debt offerings and occasional M&A deals.

Finally, even though Q4 comp benefits of $2.2 billion did decline from Q3, it was modestly higher than a year ago, which means that the average compensation per average Goldman banker rose modestly to $383,374. Remember, though: there is no such thing as an “average” Goldman banker.

via Zero Hedge http://ift.tt/19wCK4F Tyler Durden

Frontrunning: January 16

Charter, Comcast in renewed talks on Time Warner Cable bid (Reuters)
Bankers’ Stock Awards Jet Higher (WSJ)
Yahoo CEO Mayer Dismisses Operating Chief De Castro (BBG)
Amazon Employees Vote to Reject Union (Reuters)
Luxury in China loses luster as wealthy flee (Reuters)
UnitedHealth Profit Up on Stronger Enrollments (WSJ)
U.S. government failed to secure Obamacare site: experts (Reuters)
Spain Sells Bonds at Record-Low Yield as Rajoy Touts Rebound (BBG)
Newport Beach’s $100,000 Lifeguards Feel Pension Squeeze (BBG)
Bailed-Out Euro Nations Expect Painful Challenges to Remain (BBG)
Two Weeks Into Health Law’s Rollout, Few Problems, Few Patients (WSJ)
Currency Traders Told Bank of England of Fix Practices in 2012 (BBG)
Apollo to buy Owner of Chuck E. Cheese’s for $950 Million (WSJ)
Europe Car Sales Surge Most in Four Years on Lower Prices (BBG)
U.K. Home-Price Index Near 2002 High as Carney Sees Strength (BBG)

Overnight Media Digest

WSJ

* Yahoo Inc CEO Marissa Mayer is parting ways with her top executive, a setback in her effort to turn around the struggling Internet portal. Henrique de Castro, the chief operating officer poached from Google Inc in 2012, is departing this week.

* Former General Motors Co chief executive Dan Akerson said his successor, Mary Barra, faces tough challenges as she takes the helm as the first woman to lead a global automotive company.

* The National Labor Relations Board on Wednesday accused Wal-Mart Stores Inc of unlawfully retaliating against or threatening workers who took part in strikes and protests in more than a dozen states in the last two years.

* Apple Inc on Wednesday settled a complaint by the Federal Trade Commission alleging the technology giant didn’t do enough to prevent children from making purchases on mobile apps without their parents’ consent.

* AOL Inc has reached a deal to sell a majority stake in its Patch local news network to Hale Global, an investment firm specializing in turnaround situations.

* J.C. Penney Co is planning to close 33 underperforming stores and trim 2,000 positions, moves the department-store retailer said are necessary so it can focus on locations that can generate the strongest profits.

* Goldman Sachs Group Inc employees are sitting on more than $600 million in extra bonus money, for the past year alone, thanks to the bank’s surging stock price. The paper windfall is based on calculations of the rise in value of stock the employees were awarded in their pay packages.

* A federal judge on Wednesday upheld the legality of subsidies at the core of the federal health-care law, turning aside one of the principal remaining court challenges to the law.

Yahoo Inc Chief Operating Officer Henrique de Castro, the high-profile executive Chief Executive Officer Marissa Mayer brought in as part of her turn around strategy, will be leaving on Thursday after about a year on the job.

J C Penney Co Inc said on Wednesday it will close 33 underperforming stores across the United States and cut 2,000 jobs as part of the struggling retailer’s ongoing turnaround efforts.

Apple Inc will pay tens of millions of dollars as compensation to settle a longstanding complaint with the U.S. Federal Trade Commission that the technology company billed U.S. consumers whose children bought upgrades in apps and games on their iPhones and iPads without their parents’ consent.

General Motors Co said it would incur more than double the restructuring costs it has in recent years with the withdrawal of the Chevrolet brand in Europe and the impending closure of a plant in Germany.

Deutsche Bank, Germany’s biggest bank, has suspended several middle-ranking currency traders in an internal probe further intensifying an international investigation into the manipulation of foreign exchange markets, people close to the situation said.

AOL Inc is handing majority ownership of Patch, a network of local news websites, to New York investment firm and turn around specialist Hale Global, offloading an underperforming asset that has long been a hurdle for the Internet company in its turnround efforts.

NYT

* Lawmakers pressed the Federal Reserve to act more forcefully, and quickly, to limit banks’ involvement in the commodities business, which has been blamed for inflating prices on everyday items like electricity and canned beverages. The Federal Reserve had said on Tuesday it was considering some new rules and issued a request for public comment.

* After spiraling higher for much of the last decade, the value of federal contracts fell by $58 billion, or roughly 11 percent. It was the steepest decline – in percentage and nominal terms – in at least a decade, according to an analysis of federal contract data by The New York Times.

* Yahoo’s No. 2 executive, Henrique de Castro, has been fired by his boss, Marissa Mayer, a little more than a year after she wooed him away from Google to help her turn around the struggling Internet company.

* Citigroup plans to reissue all customer debit cards involved in the data breach at Target. Citi said its decision this week was not motivated by any new surge of fraud or by additional information on the breach but was a precautionary measure.

* The Carlyle Group has almost clinched a deal to buy Johnson & Johnson’s clinical testing arm for about $4.1 billion after several weeks of negotiations, a person briefed on the matter said on Wednesday.

* J.C. Penney Company said it would close 33 stores across the country and shed about 2,000 jobs. The company said in a statement that the closings and resulting job cuts would save about $65 million a year.

* The Federal Trade Commission said Apple Inc had agreed to better ensure parental approval of purchases from the company’s App Store. In addition, Apple will pay at least $32.5 million in refunds to customers whose children made purchases without adequate parental consent.

* The National Labor Relations Board, in a sweeping complaint, said that Walmart illegally disciplined and fired employees after strikes and protests for better pay.

* In the first unionization vote ever held at an Amazon facility in the United States, a small group of technical workers at the company’s warehouse in Middletown, Delaware, voted overwhelmingly against forming a union.

Canada

THE GLOBE AND MAIL

* Kinross Gold Corp, dogged by protests and controversy after dismissing nearly 300 workers at its Mauritania gold mine, insisted that the layoffs will help safeguard its future at one of its highest-cost operations.

* Ottawa and the provinces are inching toward a deal on the Canada Job Grant as provincial labor ministers plan to talk on Friday about the latest offer from the federal government.

Reports in the business section:

* Sears Canada Inc, controlled by Sears Holdings Corp, is cutting another 1,628 jobs after having reduced its workforce last year by almost the same number as the retailer tries to bolster its struggling operations.

NATIONAL POST

* Canada’s ambassador to the United States has raised the prospect of retaliation against “discriminatory” Buy American provisions that are included in a new spending bill in Congress.

* A teenager who was allowed to fly after trying to get a pipe bomb through security at Edmonton International Airport refused when the screeners tried to give the device back to him, the Edmonton Journal reported. Transport Minister Lisa Raitt slammed officials with the Canadian Air Transport Security Authority after it was learned that they allowed Skylar Murphy to board his flight and didn’t call the RCMP until four days later.

FINANCIAL POST

* Canada’s Privacy Commissioner says search engine giant Google Inc violated Canadian privacy statutes by using the sensitive information of Canadians’ in order to target users with health-related advertisements.

China

CHINA SECURITIES JOURNAL

– Tianhong Asset Management Co, controlled by China’s Alibaba, has overtaken China Asset Management Co as China’s biggest fund house by assets.

SHANGHAI SECURITIES NEWS

– LeTV, one of the biggest online video providers in China, launched its 70-inch “super TV” priced at 6999 yuan ($1,200) on Wednesday.

CHINA DAILY

– Health authorities say the number of confirmed cases of H7N9 bird flu cases continues to rise nationwide, with 20 new cases in the first two weeks of 2014.

– Chinese officials rejected Tokyo’s characterization of its aid to Africa and said Japan’s plan to increase aid won’t help the continent.

SHANGHAI DAILY

– Shanghai will implement a new colour-coded warning system for air pollution and will shut schools and order cars off the road in case of a recurrence of the severe smog that has plagued the city in recent months.

CHINA NATIONAL RADIO

– China Wafer Level CSP Co Ltd delayed its IPO, according to company announcement published on Wednesday.

PEOPLE’S DAILY

– The fundamental way to select qualified government official is to build a scientific and effective system, said a editorial in the paper that acts as the Party’s mouthpiece.

Britain

he Telegraph

MARK CARNEY REJECTS ED MILIBAND’S BANK SHAKE-UP PLAN

The Governor of the Bank of England has rejected Ed Miliband’s plans to shake up the UK banking industry. In a blow to the Opposition leader’s attempt to appear tough on big business, Mark Carney dismissed plans to break up the UK’s biggest banks and questioned whether caps on bonuses were the right to way control pay.

HECTOR SANTS LINED UP TO LEAD CHURCH OF ENGLAND TASKFORCE

Sir Hector Sants, who resigned from his role at Barclays just two months ago due to stress and exhaustion, is being lined up by the Archbishop of Canterbury with a view to drive payday lenders such as Wonga out of business and create a new way of thinking about finance.

The Guardian

BANK OF AMERICA PROFIT BEATS FORECAST AS MORTGAGE LOSSES EASE

Bank of America Corp, the No. 2 U.S. bank, reported a stronger-than-expected quarterly profit, driven by a steep fall in mortgage losses and provisions to cover bad loans.

EU MOVES TO CURB FOOD PRICE BETS BY TRADERS

The European Union has voted through rules to limit the ability of banks and hedge funds to bet on food prices. Arlene McCarthy, a Labour MEP for the north-west, said the new rules, known as Mifid, would “curb speculation and help decrease price volatility and inflation” which had a “devastating impact on poor and food dependent countries”.

The Times

FOREX INQUIRY GATHERS PACE AS U.S. INVESTIGATORS FLY IN

America has stepped up its investigation into the market-rigging scandal engulfing the banking sector by sending a team to London to question bankers over the alleged manipulation of foreign exchange benchmarks.

HOUSE PRICES ‘WILL RISE FOR TWO MORE YEARS’

The Bank of England expects house prices to rise by about 10 percent over the next two years before the market cools. Although the Bank does not publish its housing projections, Mark Carney, the Governor, revealed to MPs on the Treasury Select Committee that it expected prices to continue rising at their present pace until late next year, before moderating in 2016.

The Independent

BURBERRY SHARES JUMP 6 PCT AS BRITISH LUXURY RETAILER SEES STRONG GROWTH IN CHINA

Burberry shares jumped more than 6 percent as the 158 year old British luxury brand posted 14 percent rise in third quarter sales with Chinese sales growth back in double digits, allaying fears that the region is experiencing difficulties.

TAYLOR WIMPEY BOSS PETE REDFERN WARNS AGAINST ‘HELP TO BUY’ EXTENSION

Taylor Wimpey chief Pete Redfern has warned against any long-term extension to the Government’s Help to Buy scheme, currently fattening sales and profits across the housebuilding sector.

FLy On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:

Week of January 11 Jobless Claims will be reported at 8:30–Current consensus is 327K
Consumer Price Index for December will be reported at 8:30–Current consensus is 0.3%
Philadelphia Fed Survey for January will be reported at 10:00–Current consensus is 8.7
Housing Market Index for January will be reported at 10:00–Current consensus is 57.5

ANALYST RESEARCH

Upgrades

Big Lots (BIG) upgraded to Market Perform from Underperform at Raymond James
Casey’s (CASY) upgraded to Outperform from Market Perform at Raymond James
Emulex (ELX) upgraded to Buy from Neutral at BofA/Merrill
Esterline (ESL) upgraded to Buy from Neutral at UBS
Gartner (IT) upgraded to Buy from Neutral at Goldman
HP (HPQ) upgraded to Buy from Neutral at BofA/Merrill
Micron (MU) upgraded to Outperform from Market Perform at JMP Securities
NetSuite (N) upgraded to Outperform from Market Perform at FBR Capital
Nielsen (NLSN) upgraded to Buy from Neutral at Goldman
NuVasive (NUVA) upgraded to Neutral from Sell at Goldman
Tetra Tech (TTEK) upgraded to Buy from Hold at KeyBanc
Trinity Industries (TRN) upgraded to Buy from Hold at Stifel
VMware (VMW) upgraded to Buy from Neutral at Citigroup
Verint Systems (VRNT) upgraded to Outperform from Market Perform at FBR Capital
Western Digital (WDC) upgraded to Buy from Neutral at BofA/Merrill

Downgrades

AECOM Technology (ACM) downgraded to Hold from Buy at KeyBanc
Alcatel-Lucent (ALU) downgraded to Equal Weight from Overweight at Evercore
BRF Brasil Foods (BRFS) downgraded to Neutral from Buy at Goldman
CSX (CSX) downgraded to Hold from Buy at Stifel
Dominion (D) downgraded to Hold from Buy at Jefferies
Eaton Vance (EV) downgraded to Sell from Neutral at Citigroup
Equifax (EFX) downgraded to Neutral from Buy at Goldman
Family Dollar (FDO) downgraded to Underperform from Market Perform at Raymond James
Forum Energy (FET) downgraded to Neutral from Outperform at Credit Suisse
Generac (GNRC) downgraded to Perform from Outperform at Oppenheimer
Kroger (KR) downgraded to Neutral from Outperform at Credit Suisse
MRC Global (MRC) downgraded to Underperform from Buy at BofA/Merrill
McCormick (MKC) downgraded to Hold from Buy at Jefferies
McGraw Hill Financial (MHFI) downgraded to Neutral from Buy at Goldman
Norfolk Southern (NSC) downgraded to Hold from Buy at Stifel

Initiations

FireEye (FEYE) initiated with an Outperform at William Blair
Marlin Business (MRLN) coverage resumed with an Outperform at JMP Securities
Philip Morris (PM) initiated with a Neutral at Exane BNP Paribas
Proofpoint (PFPT) initiated with an Outperform at William Blair
SolarCity (SCTY) initiated with a Buy at Deutsche Bank
SunPower (SPWR) initiated with an Overweight at JPMorgan
Telecom Italia (TI) initiated with a Hold at Jefferies

HOT STOCKS

CEC Entertainment (CEC) agreed to be acquired by Apollo (APO) affiliate for $54 per share
J.C. Penney (JCP) to close 33 stores, cut 2,000 jobs, sees annual savings of $65M
Citigroup (C) sold $10.3B worth of mortgage servicing rights (FNMA)
AOL (AOL) to partner with Hale Global on JV to pursue $152B local media market
Lease Corporation, KKR Financial (KFN, KKR) announced $100M strategic investment in LCIH
Sarepta (SRPT) said eteplirsen demonstrates continued stability in walking test
Amarin (AMRN) announced FDA review division response on SPA request will be delayed

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
UnitedHealth (UNH), Huntington Bancshares (HBAN), BB&T (BBT), BlackRock (BLK), Boston Private Financial (BPFH)

Companies that missed consensus earnings expectations include:
Clarcor (CLC), MB Financial (MBFI), H.B. Fuller (FUL), El Paso Pipeline (EPB), Kinder Morgan (KMI), CSX (CSX)

Companies that matched consensus earnings expectations include:
BankMutual (BKMU)

NEWSPAPERS/WEBSITES

Charter (CHTR), Comcast (CMCSA) renew talks on Time Warner Cable (TWC) bid, Reuters reports
Actavis (ACT) CEO says quitting China business, Bloomberg reports
Marvell (MRVL) Technology: Not in buyout talks with KKR (KKR), Reuters reports
Citigroup (C) replacing debit cards in Target (TGT) breach, Reuters reports
eBay (EBAY) said to plan brand marketplace, WSJ reports
Microsoft (MSFT) CEO search includes Ericsson’s (ERIC) Vestberg, Bloomberg reports
Yahoo (YHOO) COO clashed with CEO Mayer, WSJ reports
Ford’s (F) aluminum efforts unsettles steelmakers, FT reports
Microsoft’s (MSFT) corporate email breached by Syrian hackers, Re/code reports
AT&T (T) cuts advertising ties with ‘American Idol’ (FOXA), Variety reports

SYNDICATE

Altisource Residential (RESI) 14.2M share Secondary priced at $34.00
American Capital Senior Floating (ACFS) 10M share IPO priced at $15.00
CorEnergy (CORR) 6.5M share Secondary priced at $6.50
GasLog (GLOG) to offer 8.4M shares of common stock, $30M private placement
JinkoSolar (JKS) 2.75M share Secondary priced at $35.25
Orchid Island Capital (ORC) files to sell 1.5M shares of common stock

via Zero Hedge http://ift.tt/1gPAO6w Tyler Durden

No Overnight Levitation In Quiet Markets – Full Recap

The positive momentum in equities slowed in Asian trading with losses seen on the Nikkei (-0.4%), and HSCEI , the SCHOMP unchanged and EM indices such as the Nifty (-
0.1%). In Australia, a disappointing December employment report saw a 23k fall in jobs for the month against consensus expectations of rise of 10k. The 10yr Australian government bond has rallied 5bp and the front end is outperforming as a number of investors expect the RBA to continue its easing bias over 2014. AUDUSD has sold off -1.1% to a three year low of 0.881. The ASX200 closed up 1.2% however, boosted by mining-giant Rio Tinto (+2%) who reported better than anticipated Q4 production. Amid recent fears of a Chinese growth deceleration, Rio Tinto reported record levels of production of iron-ore, coal and bauxite. In FX, USDJPY is finding further support in Asia, adding 0.1% to yesterday’s 0.38% gain to trade not too far from the 105 level. Which is also why the S&P futures are trading modestly lower: without a major breakout in the Yen carry, there can’t be a sustained ramp in the US stock market which is driven entirely by the value of the Yen, which in turn is a reflection of the expectations of future BOJ easing.

Stocks in Europe traded lower this morning, with basic materials outperforming following trading update by Rio Tinto, but the focus was on aggressive AUD weakness which was observed overnight following the publication of the latest jobs report. Broad based selling pressure saw AUD/USD fall to its lowest level since August 2010 and in turn depressed investor appetite for precious metals, with spot gold and silver trading lower as a result.

Nevertheless, despite softer metal prices, other UK listed miners opened in the green and given the heavy weighting that commodity names have in the FTSE-100 index ensured that the index outperformed its EU peers.

Looking elsewhere, the Spanish Treasury sold EUR 5.91bln worth of bonds vs. Exp. EUR 4.5-5.5bln and despite softer bidding, as evidenced by lower b/c and large tails, saw SP/GE 10y bond yield tighten. At the same time, touted profit taking following the recent tightening bias, together with somewhat cautious sentiment saw peripheral EU
spreads widen.

Today’s economic calendar looks relatively full, starting with a number of global CPI reports including the final inflation prints for Germany and the Euroarea which will be followed by the US CPI. Bloomberg consensus for the US print is +0.3% MoM in the headline (vs 0.0% previous) and +0.1% MoM in the core (vs 0.2% previous). Investors will be keen to see whether the Philly Fed manufacturing survey today confirms the strong manufacturing momentum of yesterday’s Empire Fed. The rest of the US data includes initial jobless claims and the NAHB homebuilder sentiment index – the former will be particularly interesting in light of the recent NFP miss. Chairman Bernanke speaks on “The Fed Yesterday, Today and Tomorrow” at an event hosted by the Brookings Institution. Other speakers at the event include the San Francisco Fed’s John Williams, Former deputy BoE governor Paul Tucker and Harvard University’s Kenneth Rogoff. The earnings season rolls on with quarterly updates from Goldman Sachs (pre-market), Citigroup, Intel and AMEX.

US Event Calendar and expectations

8:30am: CPI m/m, Dec., est. 0.3% (prior 0.0%); CPI Ex Food and Energy m/m, Dec., est. 0.1% (prior 0.2%)
8:30am: Initial Jobless Claims, Jan. 11, est. 328k (prior 330k); Continuing Claims, Jan. 4, 2.850m (prior 2.865m)
10:00am: Philadelphia Fed Business Outlook, Jan., est. 8.6 (prior 7, revised 6.4)
10:00am: NAHB Housing Market Index, Jan., est. 58 (prior 58) Central Banks
9:00am: Fed’s Williams speaks in Washington
11:10am: Fed’s Bernanke speaks in Washington Supply
11:00am: Fed to purchase $1b-$1.5b in 2036-2043 sector

Overnight Headline Bulletin from Bloomberg and RanSquawk

Basic materials has been the outperforming sector following an update from Rio Tinto despite European stocks trading lower this morning
AUD has been the underperforming currency in FX markets throughout the session following a disappointing jobs report
Fixed income markets have seen a tightening of the SP/GE spread after the Spanish treasury sold more than the indicative range for their bond auction
Treasuries steady after yesterday’s decline on stronger than forecast Empire Manufacturing and core PPI and amid continued strong IG issuance; $45b has priced this week after $20.825b yesterday.
Dealers from Royal Bank of Scotland Group Plc to UBS AG that gutted their credit units after the 2008 financial crisis are now hiring to trade junk debt, seeking to tap into the biggest fixed-income gains during the past year
China’s benchmark money-market rate rose by the most this month as the central bank refrained from adding funds even as dealers expect tax payments and pre-holiday demand to reduce the supply of cash
Australian employers unexpectedly cut jobs in December, capping the worst year of full-time losses since 1992, sending the Aussie to the lowest in more than three years and reviving prospects for interest-rate reductions
Bank of England officials discussed trading practices around key forex benchmarks with senior currency dealers 18 months before regulators opened formal investigations into alleged rate-rigging
The ECB favors requiring banks to show their capital won’t fall below 6% of their assets when it puts them through a simulated recession later this year, said two euro-area officials with knowledge of the matter
The House passed a $1.1t bipartisan spending bill to finance the U.S. government through Sept. 30
Egypt’s overhauled constitution was approved by at least 90% of voters, according to unofficial results of a referendum seen as a litmus test of the military-backed government’s declared plan to restore democracy
Sovereign yields mostly lower; EU peripheral spreads widen. Nikkei -0.4%; Shanghai little changed. European equity markets and U.S. equity-index futures decline. WTI crude higher, copper and gold lower

Asian Headlines

Fitch says Japan’s debt-to-GDP ratio won’t stabilize until 2020 and says the nation’s external deficit highlights fiscal risks. (BBG)

China’s Ministry of Commerce said that export and import growth may be volatile in Q1, that it is cautiously optimistic about trade outlook this year and that it may be difficult for China’s 2014 trade growth to exceed 2013 growth. (BBG)

EU & UK Headlines

Spanish bond auction results: sells EUR 5.91bln vs. Exp. EUR 4.5-5.5bln. (BBG/RTRS)

– Sells EUR 2.66bln in 2.10% 2017 Bonos, b/c 2.2 (Prev. 3.62) and avg. yield 1.595% (Prev. 2.182%), tail 2.5bp (Prev. 2.1bp tail) – record low yield.

– Sells EUR 1.44bln in 5.15% 2028 Obligaciones, b/c 1.99 (Prev. 2.7) and avg. yield 4.199% (Prev. 4.192%%), tail 2.4bp (Prev. 0.6bp tail)

– Sells EUR 1.81bln in 5.90% 2026 Obligaciones, b/c 1.41 (Prev. 2.4) and avg. yield 3.977% (Prev. 4.469%), tail 3.5bp (Prev. 1.1bp tail)

Eurozone CPI (Dec F) Y/Y 0.8% vs Exp. 0.8% (Prev. 0.8%)
– Eurozone CPI (Dec) M/M 0.3% vs Exp. 0.3% (Prev. -0.1%)
– Eurozone CPI Core (Dec F) Y/Y 0.7% vs Exp. 0.7% (Prev. 0.7%)

ECB’s Weidmann says buying government bonds risks blurring line between monetary and fiscal policy. He also said that low interest rates can give impulse to economy, dont just have negative rates and that he sees German economic upswing continuing this year and next. (BBG/RTRS)

UK RICS House Price Balance (Dec) 56% vs. Exp. 60% (Prev. 58%) – Expectations hit a 14-year high. (BBG)

RICS global director King said unless we see a marked increase in the number of homes coming up for sale we could well be looking at price rises becoming unsustainable in some areas.

US Headlines

RealtyTrac reported that foreclosure activity in the US declined 26% in the year 2013, and was the lowest annual total since 2007. (www.realtytrac.com)

China’s Treasury holdings rose USD 12.2bln to a record USD 1.32bln in November, according to Treasury data which also showed US net long-term portfolio securities outflow of USD 29.3bln in November. (BBG)

Equities

Basic materials related stocks outperformed on the sector breakdown, after Rio Tinto reported record levels of iron ore production for Q4 as it boosted production at its mines in the Pilbara region in Western Australia.

As a result, given the heavy weighting that commodity names have in the FTSE-100 index meant that the index outperformed its EU peers, with the likes of Glencore, BHP Billiton and Anglo American, all trading with gains of over 2%.

Going forward, market participants will get to digest earnings by Citi, GS, Intel and American Express.

AUD fell sharply across the board overnight following the release of the latest jobs report which showed that the country suffered its lowest annual jobs growth in 17 years. At the same time, the report revealed that the participation rate fell to 64.6% in December, the lowest level since 2006. Looking elsewhere, EUR/AUD and GBP/AUD, both rose sharply and above its 21DMA lines to its higher since 2nd Jan.

Also of note, Brazil Central Bank raised its benchmark lending rate 50bps to 10.50% vs. Exp. 10.25% (Prev. 10.00%) (BBG)

Commodities

Iran expects agreement with OPEC on oil quotas according to Zarif. (BBG)

Operations are normal at Libya’s Sharara field as protesters are satisfied with the government’s response to their demands. (BBG)

A consensus of analysts expects the US EIA on Thursday will estimate a record withdrawal from natural gas storage between 300Bcf and 304Bcf for the reporting week that ended Friday. (Platts)

Rio Tinto reported record levels of iron ore production for Q4 as it boosted production at its mines in the Pilbara region in Western Australia. Co. announced Q4 attributable iron ore output of 55.5mln tons vs. Exp. 55.7mln tons and 2013 global iron ore output at 266mln tons while global iron ore shipments for 2013 were 259mln tons on 100% basis. (BBG)

* * *

We conclude with the usual roundup from DB’s Jim Reid

Aside from the PPI report (and ahead of today’s US CPI), there was a fair bit of talk yesterday about the path of inflation. The Fed’s Beige Book, which was compiled by the Boston Fed, noted that “upward movements in wages were cited by 8 out of the 12 districts”. DB’s Joe Lavorgna points out that although the increases were described as “small to moderate”, this is up substantially from the three districts that reported wage increases in the last report and could have a bearing on the outlook for income growth and inflation. DB’s George Saravelos argued that with UK and US unemployment rates approaching central bank forward thresholds, it will be more difficult to anchor expectations and the focus will shift to wages as an indicator of the state of the labour market. George thinks that the more permanent the decline in the participation rate in the US for instance, the faster and quicker wage growth will revert. Meanwhile, the Chicago Fed’s Charles Evans and IMF’s Christine Largarde had different perspectives on inflation yesterday with both warning about the dangers of disinflation, and Lagarde going as far as saying that deflation was a serious threat to economic growth. Evans assured that the Fed would be in no hurry to raise rates, even if unemployment fell below thresholds, given that inflation pressures remain very low. He also mentioned that without the lift of rising prices, debt becomes more burdensome than expected and the economy slows. He forecast inflation to rise only gradually, approaching 1.5% by the end of next year. The IMF’s Christine Lagarde warned of the “rising risk of inflation” which “could prove disastrous for the recovery” in a speech at the National Press Club in Washington. 10yr US breakeven yields added 2bp yesterday, and have now increased by 15bp over the last month or so.

Yesterday proved to be another strong day for banks on both sides of the Atlantic. European bank stocks recorded a small pop (+2.6%), handily outperforming the broader Stoxx600 (+0.99%), on reports that the ECB’s upcoming stress tests will not require banks to mark-to-market sovereign exposures in hold-to-maturity portfolios. A number of peripheral European banks such as Banca Popolare di Milano (+5.1%), BBVA (+4.0%) and Banco Popolare (+4.2%) topped the list of outperformers – and they were helped by another solid session for periphery European bond yields which continued to tighten to bunds. Moving Stateside, Bank of America’s solid Q4 earnings beat provided the catalyst for US banks (+1.99%). A number of analysts pointed out that the result was boosted by large reserve releases, but it’s fair to say that both interest and capital markets revenues were quite strong while expenses were fairly flat. Divisionally, Bank of America’s earnings had a similar theme to that of JP Morgan’s results on Tuesday: BofA’s investment banking (+34% q/q) and FICC (+2% q/q) divisions performed well while equities (-3% q/q) tracked backwards on sequential basis. Bank of America’s stock jumped 2.3%, and the positive sentiment allowed the bank to price a jumbo $6.1bn senior unsecured bond deal yesterday. The two biggest tranches of the deal, the $2bn 30yr bond and the $2.5bn 10yr bond priced at T+120bp and T+125bp respectively, both at the bottom end of guidance. Indeed, it was busy day for bank bond issuance with deals launched or priced by Credit Agricole, Rabobank and Unicredit, amongst others.

On the topic of earnings, we’ll briefly review the first week of the US reporting season which has seen about 31 S&P500 companies report thus far. Of these companies, about 20 (or roughly two-thirds) have beaten the Street’s consensus revenue estimates and a similar number have beaten the Street’s earnings estimates. The interesting thing to note is that the worst sector for revenue and earnings misses has been the retail sector which has accounted for about half of the earnings disappointments thus far. It’s still clearly early days but this is a trend worth noting following a number of recent profit downgrades and earnings misses from retailers and consumer-discretionary stocks.

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Nigel Farage Booms “Europe Is Now Run By Big Banks, Big Business, And Big Bureaucrats”

With Greek Prime Minister Antonis Samaras settling into his role as EU President, UKIP’s Nigel Farage stunned the “Goldman Sachs puppet” with a 150-second tirade of truthiness he has likely never experienced. Farage sacrastically remarks how Greeks “will be dancing in the streets” at Samaras’ ‘successful’ negotiation on MiFiD reminding him that “60% of youth are unemployed and the neo-nazi party are on the march.” Europe is now run by “big business, big banks, and big bureaucrats,” Farage goes on, suggesting the smarmy-looking Samaras should “rename his party from New Democracy to No Democracy.” People do not want a United State of Europe, the outspoken UKIP leader explains, they want a “Europe of sovereign states,” and concludes ominously, “the European elections will be a watershed.”

…And you come here Mr Samaras and you tell us that you represent the sovereign will of the Greek people? Well, I’m sorry, but you’re not in charge of Greece, and I suggest you rename and rebrand your party – it’s called ‘New Democracy’, I suggest you call it ‘No Democracy’.

Because Greece is now under foreign control. You can’t make any decisions, you’ve been bailed out, and you’ve surrendered democracy, the thing your country invented in the first place.

And you can’t admit that joining the euro was a mistake – of course Mr Papandreou did that didn’t he, he even said there should be a referendum in Greece and within 48 hours, the unholy trinity (troika) that now run this European Union had him removed and replaced by a ex-Goldman Sachs employee puppet.

We are run now by big business, big banks and in the shape of Mr Barroso, big bureaucrats…

Ouch!!

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Nigel Farage Booms "Europe Is Now Run By Big Banks, Big Business, And Big Bureaucrats"

…And you come here Mr Samaras and you tell us that you represent the sovereign will of the Greek people? Well, I’m sorry, but you’re not in charge of Greece, and I suggest you rename and rebrand your party – it’s called ‘New Democracy’, I suggest you call it ‘No Democracy’.

Because Greece is now under foreign control. You can’t make any decisions, you’ve been bailed out, and you’ve surrendered democracy, the thing your country invented in the first place.

And you can’t admit that joining the euro was a mistake – of course Mr Papandreou did that didn’t he, he even said there should be a referendum in Greece and within 48 hours, the unholy trinity (troika) that now run this European Union had him removed and replaced by a ex-Goldman Sachs employee puppet.

We are run now by big business, big banks and in the shape of Mr Barroso, big bureaucrats…

Ouch!!

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Guest Post: America Is Plunging Into Kafka's Nightmare

Submitted by Brandon Smith of Alt-Market blog,

There is a certain level of dishonesty in the common study of history. We look back at the tyrannies of the past, the monstrous governments, the devastating wars and the unimaginable crimes, and we wonder how it could have been possible. How could the people of that particular generation let such atrocities come to pass? Why didn’t they do something? Why didn’t they protest? Why didn’t they fight back?

We wonder all of this as we absorb the lists of dates, names and actions in books written by other men who memorized other lists of dates, names and actions. We are taught to study and wonder without ever actually applying the lessons of the past to the developments of today. We are conditioned to assert our own narrow spin on yesterday, instead of placing ourselves in the shoes of our ancestors or recognizing that their struggles remain our struggles. The modern method of viewing history detaches us from it, making it seem distant, alien or surreal.

Perhaps many societies fail to prepare or act in the face of tyranny because they had forgotten their own histories, making the demise of their culture appear so schizophrenic they would not believe what their eyes were telling them.

Often, the only way to grasp the more complete truth of the present is to examine it through the lens of the absurd. Sadly, our Nation, our culture and most of the world around us have become so backward, ugly, feeble and twisted that the only adequate comparison is to the nightmares of surrealists.

When I examine recent U.S. legislation, the exposure of classified documents, and the openly admitted criminality of political leadership, I am consistently reminded of Franz Kafka’s The Trial.

Kafka was a self-styled socialist back in the days when socialism was thought to be the next revolutionary movement for the downtrodden masses. It was, of course, controlled opposition created by global elitists attempting to exploit the natural rebellious tendencies of the general public within a false paradigm — using the masses to achieve greater power for a select few, while making the people think that they had won. It is ironic that Kafka would write The Trial, one of the greatest condemnations of totalitarian surveillance society, while at the same time supporting the socialist political vehicle that would eventually be used to implement unrelenting bureaucratic despotism.

The Trial is commonly labeled a “surrealist” piece of fiction, but I wonder now if it was actually far more literal than the academics of the past actually gave it credit for. The problem is that most of America, and much of the Western world, has forgotten what it is like to experience true danger and true suffering. We read about it now and watch movies about it like it’s entertainment, but few people have the slightest inkling how to deal with the real thing. We don’t even know how to recognize it. Because of this, Americans tend to pay more attention to fictional representations of tyranny rather than legitimate tyranny taking place right under their noses.

With that sad fact in mind, watch this clip from Orson Welles’ cinematic version of The Trial. See if you recognize your own world in this work of “fantasy”:

The main character of The Trial, Josef K., finds his apartment invaded by police in the early hours of the morning. Josef responds with anger but also fear, attempting to defend his character without actually understanding the nature of the police visit. The police answer his questions with more accusatory questions, only later warning him that he is being watched and that he is under arrest. The police do not, however, take him immediately into custody; nor do they ever tell him what his crime was. It is implied, in fact, that Josef is not allowed to know what he is being charged with.

This episode in The Trial has been played out in the real world over and over again, from the Soviet Cheka, to Adolf Hitler’s SS and Brownshirts, to Benito Mussolini’s Organization for Vigilance and Repression of Anti-Fascism (OVRA), to the German Stasi, to Mao Zedong’s Central Security Bureau, etc. In the United States, the culture of surveillance and intrusion has (for now) taken a more subtle approach through the use of technology. We do not yet have agents physically rummaging through all our homes and asking for our papers (though we are not far away from this). Rather, we have the National Security Agency, which rummages through our electronic communications while using our own computer cameras and cellphones to watch us, listen to us and track us. All of this, mind you, is done on a massive scale without warrant.

We have the Authorization for Use of Military Force and the National Defense Authorization Act, which give the President the centralized authority to detain and even kill those Americans designated as “enemy combatants” without trial, without due process and without public oversight.

Our government now uses secret evidence to charge citizens with crimes they are not allowed to discuss with the public on the argument that to do so would “threaten national security.” That’s right; the government can arrest you or assassinate you based on evidence they never have to disclose to you, your family, your lawyer or the citizenry.

In the U.S. today, the kind of establishment terror Kafka imagined is indeed a reality. We are not on the verge of a total surveillance state, we are there. It exists. And if we do not accept that this is our social condition, there may be no historians tomorrow to look back on our era and wonder: “Why didn’t they do something? Why didn’t they fight back?”

The revelations brought by Edward Snowden on the NSA and its PRISM mass surveillance program are still only partially understood by the public. Even many self-proclaimed “cypherpunks” and “techno-warriors” don’t really grasp the pervasiveness of the all-seeing NSA eye. Recent documents leaked to German news source Der Spiegel by Snowden reveal an Internet almost completely dominated by the NSA, where even total encryption would be a mere temporary stopgap, according to tech researcher and journalist Jacob Appelbaum. The TAO group, sanctioned by the NSA, has been using technologies for years that startle even the most avid tech experts. To make matters worse, many of the intrusive mechanisms have been implemented — likely with the direct aid of American software and computer companies.

With NSA access to the backbone or core of the Internet, there is no digital privacy anywhere. The cypherpunks lost the war for the Web a long time ago, and they don’t seem to know it yet.

Beyond the undeniable prevalence of government surveillance, what would our American Kafkaesque experience be like without kangaroo courts designed to defend the criminal establishment instead of the victimized population? The latest Federal court decision on the NSA’s methods is that they are perfectly legal and “necessary” to protect Americans from national security threats. If you are a student of Constitutional law, this decision truly boggles the mind.

One of the most powerful incidents in The Trial is Josef’s speech to his court of accusers. In this moment, Josef argues with concrete logic and impassioned reason. His position is supported with beautifully
crafted merit and truth. But what he does not realize is that the court he is trying to convince does not exist to discover the truth. The court is a sideshow, a piece of elaborate theater. The participants are there to make Josef, and the society at large, feel as though justice has been given a fair chance. Josef’s pleas are met with fake cheers, scripted jeers and even engineered distractions. Finally, he comes to understand that the system’s purpose is to destroy him. Everything else is an illusion.

The Web cannot be made free or private from within; our courts cannot be made fair and just from within; neither political party can be forced to represent the common man from within; and our government cannot be made honest or transparent from within. To play games of activism within establishment dominated systems is to play make-believe within a surrealist nightmare; a piece of “Alice in Wonderland” political quackery. Like the audience at Josef’s trial, the elites simply laugh at such activists, or feign applause, while continuing forever with the same corruption and the criminal status quo.

America has long presented itself as the ultimate alternative to the torturous mechanisms of oligarchs; and a long time ago, it was certainly a noble effort. However, our heritage of liberty — the faint memory of it — is all that’s left today. There is a contingent of men and women in our country, millions of us, that steward over this memory and seek to make whole once again, but the road ahead is long, with struggles beyond all reckoning.

Some people may ask how this could have occurred. How did we become the monster we were supposed to fight against? What happened to the good side and the bad side? Have they become exactly the same?

Those of us who have looked beyond the standardized veil of history know that this is not by accident. Those of us who decipher the surreal know that there is a method to the madness and an ultimate goal. To explain further, I leave you with another piece of fiction, a clip from the British TV series “The Prisoner.” While not written by Kafka, it was definitely inspired by him. It carries a message I would have liked to have warned him about concerning the disturbing path of duality, the mask with multiple faces that tyranny uses to subvert and enslave…

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Guest Post: America Is Plunging Into Kafka’s Nightmare

Submitted by Brandon Smith of Alt-Market blog,

With that sad fact in mind, watch this clip from Orson Welles’ cinematic version of The Trial. See if you recognize your own world in this work of “fantasy”:

With NSA access to the backbone or core of the Internet, there is no digital privacy anywhere. The cypherpunks lost the war for the Web a long time ago, and they don’t seem to know it yet.

One of the most powerful incidents in The Trial is Josef’s speech to his court of accusers. In this moment, Josef argues with concrete logic and impassioned reason. His position is supported with beautifully crafted merit and truth. But what he does not realize is that the court he is trying to convince does not exist to discover the truth. The court is a sideshow, a piece of elaborate theater. The participants are there to make Josef, and the society at large, feel as though justice has been given a fair chance. Josef’s pleas are met with fake cheers, scripted jeers and even engineered distractions. Finally, he comes to understand that the system’s purpose is to destroy him. Everything else is an illusion.

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B.O.H.I.C.A. NSA

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Mapping Li(e)borgate – Presenting The Octopus In The Libor-Rigging Scandal

The Libor manipulation scandal has, as WSJ reports, ensnared at least 17 financial institutions and 22 individuals in a wide-ranging investigation spanning 11 countries and four continents. So far, it has netted at least $5 billion in penalties, with more on the way. The Wall Street Journal has taken the most complete list of allegedly involved parties and mapped an extensive web of 298 reported connections that reveals the depth of the alleged conspiracy from the ‘alleged’ ringleader Tom Hayes and involving practically ever major bank in the world.

Full Interactive “Spider-Web” here.

The alleged ringleader… Tom Hayes…

Former UBS and Citigroup trader, criminally charged with fraud in U.S. and U.K. Pleaded not guilty to U.K. charges; hasn’t entered a plea to U.S. charges. Told WSJ that “this goes much much higher than me.” The institutions and individuals in the web allegedly worked with him to manipulate rates or previously employed him when he was allegedly manipulating rates, according to the U.S. Justice Department, U.K. Serious Fraud Office and people familiar with the investigation.

And the first mover advantage… Barclays

Barclays in June 2012 became the first bank to settle Libor-rigging allegations, setting off a political storm in the U.K. Top executives resigned. Reached roughly $450 million settlement with U.S. and U.K. authorities in June 2012. Admitted wrongdoing. The institutions in the web allegedly worked with Barclays to manipulate rates, according to people familiar with the investigation. The individuals are former Barclays employees involved in the alleged manipulation or nonemployees who allegedly worked with Barclays employees to manipulate rates, these people said.

And The Biggest fines… UBS

UBS, where Mr. Hayes was a Tokyo-based trader, paid $1.5 billion to settle allegations that it conspired with rival banks to rig Libor and other rates. Reached roughly $1.5 billion settlement with U.S., U.K. and Swiss authorities in authorities. Admitted wrongdoing. The institutions in the web are suspected of having worked with UBS to manipulate rates, according to people familiar with the investigation. The individuals are former UBS employees or allegedly worked with UBS employees, these people said.

Source: WSJ

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Now Sold At CostCo, For The Low, Low Price Of Only $15,999.99

It hasn’t been a good year for discount retailers which rely on the broke US consumer to grow, such as Walmart, Target and Costco, the latter of which in the past has seemingly tried everything it could in the commodity business, even going as far as selling bundled provisions for the apocalypse. Alas, so far it has been unable to boost its margins, and since it is not Amazon where failure is rewarded, or else Jeff Bezos just hypnotizes everyone with his latest money-losing contraption (but, but it has such a great growth rate), it is time Costco tried something different to boost margins. Something really different. Such as selling a Superbowl lower level package for two for the low, low price of $15,999.99.

Indeed: once upon a time getting tickets to the Superbowl was a private affair and usually involved knowing a hedge fund manager, the real life equivalent of Walter White, the owner of Tickermaster, or having participated in at least 10 porn movies… in the New Normal one can simply purchase Superbowl tickets at your nearest discount retailer’s website.

From CostCo:

So what does nearly half of the median US annual wage get you?

Super Bowl Game Package

Metlife Stadium

East Rutherford, NJ

January 30, 2014 through February 3, 2014

The vibrant energy and excitement of New York City awaits you with this incredible four night package, including 2 tickets to football’s ultimate championship game that will be played at Metlife Stadium in Rutherford, NJ. Your Super Bowl game package is complete with your 2 game tickets and accommodations at the Westin Hotel, New York – Times Square, tickets to the Taste of the NFL (one of the premier events of the weekend), roundtrip transportation from the hotel to all the game day activity including an exclusive pregame party aboard a privately chartered yacht (Hornblower Hybrid) featuring guest speaker Archie Manning while cruising the harbor and seeing the sights of the city as they can only be seen on the waterways.

For inquiries regarding the Super Bowl Game Package, please email events@sportevents.com or call toll free (888) 699-4040. Customer service hours are Monday through Friday, 9 am to 5 pm EST (calls after hours including weekends are routed to an answering service to leave a message)

Super Bowl Lower-Level Package for Two includes:
Accommodations:

Five (5) days and four (4) nights accommodations for two at the Westin Hotel in Times Square
January 30, 2014 – February 3, 2014
Souvenir gift bag
Sports Events staff members are on-site at hotel locations and all program events, to assist members (Thursday-Sunday)

Game Tickets:

Two (2) Lower-Level Corner tickets to the game
Sunday, February 2, 2014
MetLife Stadium – East Rutherford, NJ

The Taste of the NFL is a non-profit organization dedicated to raise awareness to fight hunger, and support food banks around the county by rallying the country’s best chefs and the NFL’s greatest to support hunger relief. Sample fine cuisine, meet and mingle with renowned chefs and NFL greats and participate in a silent auction with unique sports memorabilia and other exciting items.

Two (2) tickets – Saturday, February 1, 2014
Starts at 7:00pm at Brooklyn Cruise Terminal Pier 12
Attire- business or cocktail dress is suggested, but not required
The entertainment begins at approximately 10:00pm – after the food service and silent auction conclude for more information visit: http://ift.tt/Yc26KQ
NFL’s wine and food event featuring 35 of the country’s best chefs (including one from each of the 32 NFL markets) are paired with a current or alumni player from each NFL team
Participating Chefs visit: http://ift.tt/1kD1BIP
Participating Players visit: http://ift.tt/1aq43st

Pre-game party includes:

Two (2) tickets – Sunday, February 2, 2014
Hornblower Hybrid Cruise- privately chartered yacht
Tour the harbor and sights of NYC from the water and dock in New Jersey (3) hours
Time – 11:45am–12:15pm board; 12:15pm-3:00pm event (cruise); 3:00pm-3:30 disembark vessel
Featured guest speaker, Archie Manning, NFL great and father of two Super Bowl Quarterbacks
Open full premium bars (21+ to consume alcohol, ID check on admission)
Hors d’oeuvres and entrées featuring NYC favorites
Pre-game coverage showed via on board televisions
Personal appearances by NFL Alumni

Game day transportation:

Round-trip transportation on game day – Sunday, February 2, 2014
Ride via motor coaches
Provided from hotel to pregame party, from the pregame party to the stadium, and from the stadium back to hotel following the conclusion of the game (60 mins from game end), buses will bring guests back to their hotel locations

Terms & Conditions:

Airfare or travel is not included in the package price
Airport Transfer to and from hotel not included
Transportation to and from the Taste of the NFL not included
The Purchaser and guest are responsible for any expenses not listed herein

Shipping Process:

A Sports Events representative will contact member via phone or email to verify member order within 24 hours
Confirm guest names to list on hotel room reservation and preferred bed type (King or double)
Member’s will then receive an email confirmation (including basic program agenda & hotel confirmation number) for the event package
Super Bowl tickets, members will pick them up from the on-site Sport Events hospitality desk located in the designated hotel location during the program from 9am – 4pm Thursday – Saturday

* * *

So how long until every other discount retailer offers comparable packages, and in the process commoditizes the Super Bowl to the point where none of the 1% will want to come within 100 miles of a venue where tickets can be bought by the peasantry at a place like WalMart, Family Dollar or your generic, friendly neighborhood 99 cent store?

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