Tag: finance

Learn How To Protect Your Savings From Bail-Ins and Deposit Confiscation(11 pages)

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Today’s AM fix was USD 1192.75, EUR 871.957 and GBP 729.466 per ounce.
Friday’s AM fix was USD 1,195.00, EUR 875.33 and GBP 731.69 per ounce.

Gold rose 0.85% and silver rose 0.74% on Friday. Gold made gains Friday but still finished the week 2.8% lower. Gold fell back below $1,200 an ounce today as technical selling and year end book squaring led to price falls.

Gold in U.S. Dollars, 1 Month – (Bloomberg)

Prices were slightly higher in Asian trading overnight as physical demand picked up in Asia and holdings of the SPDR Gold Trust rose 5.40 tonnes to 814.12 tonnes on Friday – the first inflow since November 5.

Gold in U.S. Dollars, 1 Year – (Bloomberg)

Volumes traded on the increasingly important Shanghai Gold Exchange (SGE) overnight on their benchmark 99.99% pure gold contract were a robust 14.83 tonnes. Chinese premiums edged up $2 – from $16 on Friday to $18 today.

Allegations that banks are rigging the gold and silver markets continue to gain credence and Bloomberg have published an article by Rosa Abrantes-Metz entitled‘How to Keep Banks From Rigging Gold Prices’ (see article including charts below).

Rosa Abrantes-Metz concludes that gold prices may be manipulated and gives evidence to support her assertion. Abrantes-Metz is adjunct associate professor at New York University’s Stern School of Business and a director in the antitrust, securities and financial regulation practices of Global Economics Group.

Falling gold prices despite robust physical demand this year, especially in China, have intensified allegations that gold prices are being manipulated lower. This is the contention of the Gold Anti-Trust Action Committee (GATA), influential blog Zero Hedge and others who contend that bullion banks and central banks may be intervening and surreptitiously manipulating gold prices lower in order to maintain faith in fiat currencies.

It is an important debate and one that has ramifications not just for the gold and silver market but for markets in general and for free market capitalism.

Rosa Abrantes-Metz, Director of Global Economics Group

Abrantes-Metz’s article shows how what was once dismissed as an outlandish “conspiracy theory” and the proponents of the theory laughed at as paranoid tin foil hat wearers, is now not considered quite so outlandish. This is especially the case, given the fact that banks have been found to be manipulating and rigging many markets and governments are openly active in currency and especially bond markets today.

As long ago as two years ago, the assistant editor of the Financial Times, Gillian Tett wrote in that paper that it would be “foolish” to “deride or ignore” the Gold Anti-Trust Action Committee (GATA) and their allegations regarding manipulation of the gold market.

Tett is an award-winning journalist and author and one of the most astute observants of markets and finance in the world today. Yet her article failed to lead to a wider debate and went down the ‘memory hole.’ As many positive gold facts, figures and developments have done in recent years.

Tett acknowledged that central banks intervene in and manipulate interest rates and her article explored whether central banks might also be manipulating gold prices.

“For my money, though, I think there are at least two reasons why it would be foolish simply to deride or ignore GATA, “ Tett concluded. She acknowledged that some of GATA’s points “have at least a grain of truth”.

Gillian Tett, Assistant Editor, Financial Times

“Even if you find it hard to believe that central bankers would be dastardly enough to create a plot – or competent enough to do what Gata claims – the fact is that global commodity markets are pretty murky, central banks are often opaque and western rhetoric about “free” markets is often hypocritical. Those issues merit far more debate, not just among journalists, but central bankers too.”

Abrantes-Metz article is in a similar vein and may signal the beginning of a real debate about the allegations made about gold price manipulation that have yet to be rebutted.

How to Keep Banks From Rigging Gold Prices by Rosa Abrantes-Metz

Authorities around the world are gradually piecing together a shocking picture of how banks have manipulated benchmarks that influence the price of everything from mortgage loans to foreign currencies.

Another area deserves their scrutiny: gold and silver.

In recent weeks, Bloomberg News and others have reported on concerns, among market participants and regulators, that the process for establishing the price of gold may lend itself to insider trading and other forms of unfair dealing. The available evidence strongly suggests manipulation and, given the structure of the market, possibly collusion.

The price-setting mechanism, known as the fixing, provides an easy vehicle for manipulation. Twice every business day in London, representatives of five banks and some select clients participate in a phone call in which offers to buy and sell gold are put forward. These calls determine the morning and afternoon gold fixings, which serve as the benchmark for trillions of dollars in transactions around the world. Silver fixings work similarly, with only three banks involved.

Such direct communication is conducive to collusive pricing, especially when the group of participating competitors is very small. We now know that collusion distorted both the Libor and Euribor interest-rate benchmarks, which involved many more participants. In those cases the coordination occurred through e-mails and instant messages. In the case of gold and silver, an organized live call allows for real-time signaling of the desired prices, obviating the need for additional contacts.

One needn’t look far for a motive. The participating banks all stand to gain both from using the privileged knowledge they glean during the fixing process and from influencing the fixing itself. Aside from trading in the spot markets for gold and silver, they may have significant derivatives positions tied to the benchmarks. The system isn’t set up to identify, let alone deter, such activity. It is the participating banks themselves that administer the gold and silver benchmarks.

So are prices being manipulated? Let’s take a look at the evidence. In his book “The Gold Cartel,” commodity analyst Dimitri Speck combines minute-by-minute data from most of 1993 through 2012 to show how gold prices move on an average day (see attached charts). He finds that the spot price of gold tends to drop sharply around the London evening fixing (10 a.m. New York time). A similar, if less pronounced, drop in price occurs around the
London morning fixing. The same daily declines can be seen in silver prices from 1998 through 2012.

For both commodities there were, on average, no comparable price changes at any other time of the day. These patterns are consistent with manipulation in both markets.

It’s extremely odd that the prices of gold and silver are still based on such an archaic and exclusive system. Whether or not authorities seek and find conclusive evidence of manipulation, they should learn the lesson of the London interbank offered rate and reform the gold and silver markets in a way that will deter such behavior. Both metals are highly liquid commodities, so their benchmark prices could easily be set by observing actual trades. To ensure reliability, the process should be overseen by an independent institution with the appropriate governance structure and minimal conflicts of interest.

The best way to restore confidence in financial benchmarks is to remove the means, motive and opportunity for abuse.

It is an important debate as increasingly governments and central banks are distorting financial markets through constant interventions which could lead to the financial system itself being impaired.

In the western world, we have seen interest rates cut close to zero, capital injections and bank bailouts, lending guarantees, saving and deposit guarantees, favouring certain banks and institutions over others, banning short selling and now the latest policy initiative is again bailing out banks but this time bailing in depositors inbail-ins.

At the same time competitive currency devaluations are taking place globally with central banks debasing currencies. We also see outright intervention in currency markets in order to lower the value of national and supranational currencies.

Japan is the glaring example of this and Switzerland’s ‘pegging’ of the Swiss franc was in the same vein. With governments surreptitiously and openly manipulating and debasing their currencies, it would seem logical that some governments might have an interest in not seeing gold and silver prices soar.

Surging gold prices are a vote of no confidence in fiat paper currencies and government and central banks stewardship of these currencies.

This is especially the case with the US dollar as the global reserve currency and all governments have an interest in maintaining faith in the dollar and in fiat currencies which is a possible motive for intervention in the gold and silver markets.

Learn How To Protect Your Savings From Bail-Ins and Deposit Confiscation(11 pages)

Check Out From Bail-Outs to Bail-Ins: Risks and Ramifications – Includes 60 Safest Banks In World (51 pages)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/w4sqpaY1IW8/story01.htm GoldCore

The ink on the final Volcker Rule has not dried yet, and already the TBTF armies of lawyers have found all the loopholes in the rule they need to continue prop trading as if nothing has changed. Enter Goldman Sachs which as the WSJ reported, is raising a new fund, to which it will contribute 20% in capital, which will make investments in commercial real estate-backed loans including office buildings, hotels, and shopping centers. “Goldman has raised more than $1 billion for the new fund, according to people briefed on the matter. The fund aims to boost that total to $2 billion, and Goldman expects to invest “up to 20% of total equity commitments,” according to September marketing documents reviewed by The Wall Street Journal.” Just how did Goldman get the green light to allocated up to $400 million for what is clearly a prop trading bet: “because regulators excluded many real-estate loans from the tough restrictions on investment funds, allowing Wall Street firms to continue making concentrated bets—sometimes risky ones—with their own capital.” In other words, when it comes to reflating the precious real estate bubble, anything goes.

The details from the WSJ:

Goldman also is making direct investments in real-estate assets, according to people familiar with the matter. Last year, it formed a partnership to purchase and upgrade a Chicago office building.

 

Both forays appear to navigate around new regulations mandated by the Volcker rule, a provision designed to limit how big banks risk their own capital in pursuit of profits from trading securities and investing in hedge funds and private equity.

 

“There’s no way you’re going to write enough rules to outlaw every conceivable type of risky investment a bank might make,” said Michael Mayo, an analyst with CLSA Americas. “There’s a balance between making sure banks don’t blow themselves up and allowing them to take enough risks to help facilitate economic growth.”

 

The new fund’s focus on real-estate loans, and its status under previous U.S. investment-company laws, leaves it outside the Volcker rule’s definition of hedge funds and private-equity funds, according to the rule and people familiar with Goldman’s fund. The rule did compel Goldman to change the fund’s name, removing the reference to “GS” that appears in a predecessor real-estate debt fund. Now it is called Broad Street Real Estate Credit Partners II, a nod to Goldman’s former headquarters at 85 Broad Street.

Of course, that is not the only Volcker loophole Goldman has found:

In September 2011, it joined forces with investors to buy a portfolio of distressed property loans from a unit of Popular Inc., BPOP +0.79% one of Puerto Rico’s largest banks, for about $173 million, or less than half the unpaid principal balance of the loans, according to Popular.

 

Goldman told investors in marketing documents in September that there is a big opportunity in real-estate lending, citing in fund documents an estimated $1.4 trillion of commercial-real-estate debt set to mature over the next five years. It said there are fewer real-estate lenders than in past years, and that remaining active lenders have a “lower risk tolerance.”

 

The firm also said loans in the first real-estate fund average $121 million, which the documents say are “in excess of competitors and provide a competitive advantage.”

 

As for Goldman’s direct real-estate investments, people familiar with the firm’s thinking said it held its direct debt and stock investments for a long enough time to avoid the label of “proprietary trading,” an activity the Volcker rule limits.

So… held to maturity prop trading? Worked miracles for Zions. But don’t worry: loans, unlike other securities, apparently don’t go down in value and thus can be exempted from all regulation.

Let’s hope this time Goldman times the commercial RE bubble well: the last time around things didn’t work out quite as expected:

Goldman jumped into property investing in the 1990s, buying up distressed loans during the savings-and-loan crisis. Its Whitehall real-estate fund group raised billions of dollars over the years and made splashy equity investments, such as buying Manhattan’s Rockefeller Center in 1996.

 

During the crisis, Whitehall wrote down big losses following top-of-the-market property deals like the Stratosphere, a Las Vegas casino.

 

In an investor letter this September, Whitehall said the equity value of its $4 billion fund that closed in 2007 had been marked down by 59%. That is Goldman’s estimated value of the fund, about 41 cents on the dollar, as reported to its investors.

That’s ok though: the very well connected hedge fund that is Goldman Sachs is insured by the FDIC. Probably thanks to all those Goldman ATMs strewn around the country…

< a href="http://da.feedsportal.com/r/184842095912/u/49/f/645423/c/34894/s/35233f13/a2.htm">

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/VYyQZ7oZOp8/story01.htm Tyler Durden

With still more than half the homeowners with a mortgage in the state of Nevada underwater on their mortage and a hoped for recovery in prices now petering out as ‘investors’ realize banks have completed foreclosures and are set to unload their huge inventories, fear is growing that Las Vegas (and for that matter Atlantic City) could be the next Detroit. However, as FoxNY reports, the nascent dreams of the good old days face an even bigger headwind – that of gambling regulation easements (online gambling for instance) and globalization which are impacting their biggest industries. Time will tell if these two cities will end up like Detroit.

 

Via FoxNY,

With the closure of the recent Atlantic Club Casino Hotel, rumors of the bankrupt Revel being sold to Hard Rock, more than half of the mortgages in Las Vegas under water, casinos opening up all around the country and online gambling legislation underway in various states, it seems as if the reasons for the very existence of Atlantic City and Las Vegas are in serious jeopardy.

 

…

 

However in the late 1980s, a landmark ruling considered Native-American reservations to be sovereign entities not bound by state law. It was the first potential threat to the iron grip Atlantic City and Vegas had on the gambling and entertainment industry.

 

…

 

Then Macau, formally a colony of Portugal, was handed back to the Chinese in 1999. The gambling industry there had been operated under a government-issued monopoly license by Stanley Ho’s Sociedade de Turismo e Diversões de Macau. The monopoly was ended in 2002 and several casino owners from Las Vegas attempted to enter the market.

 

Under the one country, two systems policy, the territory remained virtually unchanged aside from mega casinos popping up everywhere. All the rich ‘whales’ from the far east had no reason anymore to go to Las Vegas to spend their money.

 

…

 

Then came their biggest threat.

 

As revenue from dog and horse racing tracks around the United States dried up, government officials needed a way to bring back jobs and revitalize the surrounding communities. Slot machines in race tracks started in Iowa in 1994 but took off in 2004 when Pennsylvania introduced ‘Racinos’ in an effort to reduce property taxes for the state and to help depressed areas bounce back.

 

As of 2013, racinos are legal in ten states: Delaware, Louisiana, Maine, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, and West Virginia

 

…

 

From June 2012 to June 2013, Aqueduct matched a quarter of Atlantic City’s total gaming revenue from its dozen casinos: $729.2 million compared with A.C.’s $2.9 billion. It has taken an estimated 15 percent hit on New Jersey casino revenue and climbing.

 

…

 

The situation in Vegas isn’t much better. The Great Recession of the late 2000s hit Las Vegas hard. As the recession wore on, and as gambling received approval in various jurisdictions throughout the United States, folks realized they didn’t need to travel thousands of miles just to gamble.

 

…

 

More than half of all home owners with a mortgage in the entire state of Nevada owe more than their homes are worth.

 

…

 

But according to Bloomberg.com this so-called bubble is simply from banks completing their foreclosures and holding onto inventory.  The increased value of properties has been attracting various investors and speculators, which is helping fuel this latest rise in real estate prices. 

 

Experts say once banks start releasing the foreclosed homes into the market to start selling them, the prices may begin to get depressed again.

 

…

 

One local said “The reality is, people just won’t fly to the middle of a desert to play some slots, watch shows and sit down for some blackjack when they can drive right near their town or city, or play legally online.”

 

And now it looks like the feds may soon allow online gambling across the United States.

 

…

 

With this in mind, it seems the niche that Las Vegas and Atlantic City once offered as a gambling and entertainment hub is heading toward the dustbin of history.

 

Time will tell if these two cities will end up like Detroit. However, the fact that they are losing their biggest industries to major competition, much like Detroit did, with depressed housing, casinos bankrupting/closing and businesses fleeing, makes their fate seem eerily similar.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/tl6azN97aDo/story01.htm Tyler Durden

Moments ago the BEA reported the latest, November, data on Personal Income and Spending. For the second month in a row, Income, which rose a modest 0.2%, missed expectations which were at 0.5% for the month, even as Personal Spending rose by 0.5% – driven by a 2.2% increase in spending on Durable Goods even as spending on Nondurables was unchanged, in line with expectations. As a result, the US consumers dug even deeper into their meager savings, and in November the savings rate dropped once again, sliding from 4.5% to 4.2%, the lowest since January 2013, after hitting a high of 5.2% in September on “government shutdown uncertainty.”

But perhaps most important, is that Real Disposable Income rose by just 0.1% in November, following a -0.2% drop the prior month. As a result, and as the chart below shows, the annual growth in Real Disposable Income has once again resumed its downward trajectory, and at the current pace of declines, it will likely turn negative as soon as next month.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/bRKf-M7_-eY/story01.htm Tyler Durden

The following graphic from @Amazing_Maps struck us in its stunning comparison between Greater London and the Greater Tokyo Area superimposed over England.

With a population of around 36 million, making it by far the world’s most populous metropolitan area, it covers an area of approximately 13,500 km² (5,200 mi²), giving it a population density of 2,642 person/km² – which is more than twice the population density of Bangladesh.

The area has the largest metropolitan economy in the world, with a total GDP (nominal) of approximately US$1.9 trillion (¥165 trillion) in 2008.

And visually:

Souce: Amazing Maps

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

• Apple, China Mobile sign long-awaited deal to sell iPhones (Reuters)
• U.S. growth hopes help shares shrug off China money market jitters (Reuters)
• Rule Change on Health Insurance Rattles Industry (WSJ), Obamacare’s signup deadline on Monday has its exceptions (Reuters)
• Tale of Two Polish Mines Shows Biggest EU Producer’s Woes (BBG)
• Probes See U.K. Market Manipulation Reports Rise 43% (BBG)
• Shoppers Grab Sweeter Deals in Last-Minute Holiday Dash (BBG)
• Banks Mostly Avoid Providing Bitcoin Services (WSJ)
• Secret Handshakes Greet Frat Brothers on Wall Street (BBG)
• Businessmen and academics denied entry to Ukraine (FT)
• Quest to Track Nazi Loot Stirs Complex Emotions (WSJ)
• Tiffany Ordered to Pay Swatch $449 Million in Watch Case (BBG)

 

Overnight Media Digest

WSJ

* Monday is the final day for consumers to get health coverage that takes effect on Jan. 1, leaving thousands racing to sign up and insurers trying to figure out whether the law will work in the way they had hoped.

* Lenders are leery of dealing with virtual-currency companies because of concerns that the businesses could run afoul of anti-money-laundering laws or be involved in illegal activities.

* Tough restrictions, such as the Volcker rule, which prohibits banks from owning more than 3 percent of a hedge fund or private equity portfolio, excluded many real-estate loans, allowing Wall Street firms to continue making concentrated bets with their own capital.

* Money managers and analysts say they are beginning to think the Federal Reserve is succeeding in restoring economic growth. Some analysts now think the economy is on the mend, many money managers share the view that, while 2014 probably won’t match 2013, indexes probably will finish the year with gains. That helps explain why stocks surged last week despite the announcement of stimulus cuts.

* Gasoline futures are climbing in response to signs of unseasonably strong demand for the fuel. Prices surged 5.9 percent last week to a three-month high after the U.S. Energy

* Boeing Co’s largest union plans to hold a vote on a contract that would guarantee that the planned 777X jetliner would be assembled at unionized facilities in Washington state.

* The U.S. Transportation Department doesn’t plan to change regulations to better protect underground pipelines from riverbed erosion, a year after Congress ordered it to evaluate its policies in the wake of pipeline breaks that spilled hazardous liquids into waterways.

* As much as a third of all Internet sales gets returned, according to retail consultancy Kurt Salmon. And the tide of goods flowing back to retailers is rising. Shipper United Parcel Service Inc expects returns to jump 15 percent this season from last year, making them a significant and growing cost for retailers.

* YRC Worldwide Inc is close to raising funds to cover upcoming debt payments as the trucking company works to persuade employees to extend their labor contracts for five years, people familiar with the matter said.

* Investment firm Starboard Value LP which has taken a 5.6 percent stake in Darden Restaurants Inc thinks the company’s move to cast off Red Lobster falls short of what is needed to boost Darden’s shares.

* A growing number of Asian textile manufacturers setting up production in the U.S. Southeast to save money as salaries, energy and other costs rise at home. As costs continue to increase in China, textile manufacturers can ship yarn to manufacturers in Central America, which, unlike companies in China, can send finished clothes duty-free to the United States.

* Hedge-fund firm Paulson & Co sold its Washington Mutual Inc bank bonds last week following a lawsuit seeking billions of dollars from the thrift’s 2008 failure, according to people familiar with the move. The giant hedge fund, run by billionaire John Paulson, exited after JPMorgan Chase, which bought the banking operations of Washington Mutual, filed a suit last week against the Federal Deposit Insurance Corp.

 

FT

Apple struck a long-awaited distribution deal on Sunday night with China Mobile, a partnership worth billions of dollars in extra iPhone revenues that finally opens up the largest mobile market to the world’s most valuable technology company.
       
Companies that create data dossiers on consumers are tapping new technologies to unearth ever more intimate information despite intensifying regulatory scrutiny of the multibillion-dollar data broker industry.
   
Britain’s growing army of elderly shoppers is helping to breathe fresh life into the country’s battered high streets, with rising demand for hearing aids, mobility scooters and elasticated trousers sending retailers scuttling to open new stores to cope with growing demand.

Gold and chocolate covered strips of bacon, pastrami from New York’s famous Katz Deli and a subscription for monthly delivery of pickles are among the festive temptations being offered by a whole new generation of food start-ups in the United States.

The crisis in South Sudan, which has left hundreds dead, has started to hit global oil supplies, compounding the effects of production losses in Nigeria and Libya and putting upward pressure on prices.

 

NYT

* Apple Inc and China Mobile, the largest wireless network in the world, announced a deal to bring the iPhone to the Chinese carrier on Jan. 17. An agreement with China Mobile could, at least initially, give Apple a big lift into the vast Chinese market, analysts say, increasing its worldwide sales.

* A plan by the Tribune Company to separate eight newspapers, including The Los Angeles Times and The Chicago Tribune, from its more profitable digital and television businesses could threaten their survival, staff members, industry analysts and a congressman said last week.

* Tiffany & Company was ordered to pay Swatch Group about $449 million in compensation over a contractual dispute, the companies said Sunday. The dispute arose in 2011 when Swatch canceled its cooperation with Tiffany, saying the jeweler was in breach of contract because it was trying to “block and delay” a joint venture that both companies had entered in 2007.

* The police in Bangladesh charged the owners of a garment factory and 11 of their employees with
culpable homicide in the deaths of 112 workers in a fire last year that came to symbolize the appalling working conditions in the country’s dominant textile industry. The fire in Bangladesh, the No. 2 exporter of apparel after China, also revealed the poor controls that top retailers had throughout their supply chain.

* A former United States air base in neighboring Río Hato is set to reopen as an international airport, capable of handling direct flights from Canada and the United States. And the increased traffic is expected to bring more vacation home development in Farallón, best known for its white sandy beach, a rarity along Panama’s coast.

 

Canada

THE GLOBE AND MAIL

* A massive ice storm has plunged large parts of Toronto including the home of Mayor Rob Ford into darkness and crippled Southern Ontario’s transportation grid during one of the busiest travel times of the year, with the slippery aftermath threatening to keep hundreds of thousands without power until Christmas Day.

* Alberta Premier Alison Redford says that heading into 2014, she sees encouraging political signs in relation to approval of the Keystone XL pipeline in the United States, and North Americans are realizing that pipelines are a better means of shipping crude than rail.

* The Supreme Court of Canada effectively gutted Canada’s prostitution laws by finding this week that legislation against street soliciting, living on the avails and keeping a brothel was unconstitutional. The court gave Parliament one year to come up with a new legislative scheme before the old laws are unenforceable.

Reports in the business section:

* In 2013, Canadians who were carrying record debt levels did not shift to frugality as analysts had predicted. Consumers kept on buying, led by record purchases of cars and trucks. The trend is expected to stretch into next year, giving the economy an unexpectedly strong foundation to build on.

NATIONAL POST

* An analysis of federal accounting records by Postmedia News shows that Prime Minister Stephen Harper’s government has offered taxpayers’ subsidies for green projects to money-making companies such as Shell Canada, Suncor Energy Inc, Husky Energy Inc and Enbridge Inc to pursue projects in biofuels production and wind energy as well as new technology to capture carbon pollution and bury it underground. Canadian taxpayers have given more than C$400 million ($374.6 million) to some large oil, gas and pipeline companies in recent years to support green projects.

* Edgar Bronfman, the Canadian-born billionaire and longtime president of the World Jewish Congress, which lobbied the Soviets to allow Jews to emigrate and helped spearhead the search for hidden Nazi loot, died on Saturday at the age of 84.

* The Supreme Court’s ruling on the Constitutional amending formula on whether or how the Senate can be reformed or abolished does not give Nunavut, Yukon or the Northwest Territories a voice on how to change the document that outlines the way Canada is governed.

FINANCIAL POST

* In Vancouver, a new firm, Zipments, which launched in early December, is offering people the chance to make money by making local deliveries on their way to work, or elsewhere. They are dropping off anything from gift baskets, to water bottles, to chocolates and they’re all part of the new, shared economy. Zipments is effectively a franchise of an existing U.S. operation, said Robert Safrata, its chief executive, who owns courier company Novex.

 

China

SECURITIES TIMES

– Chinese investors invested $5.89 billion in the U.S. property market in the first 10 months of this year, six times of the combined value of their investment in 2011 and 2012, according to the data published by the New York-based research institute, Rhodium Group.

CHINA BUSINESS NEWS

– The People’s Bank of China’s pro-tight liquidity stance in recent weeks is believed partly motivated by preventing the repetition of a tradition that government departments rush to spend at the end of a year, analysts said.

CHINA SECURITIES JOURNAL

– The central bank’s pro-tight liquidity stance that has caused a money market squeeze implies that China’s stock market will remain weak in the short term, analysts said.

– Data published by the China Securities Regulatory Commission shows 756 Chinese companies are now on a waiting list to launch stock initial public offerings (IPOs).

SHANGHAI SECURITIES NEWS

– China is expected to build 6 million cheap homes next year in a continuation of a policy to support low-income families, although the number will be slightly less than that of this year.

– The Shanghai Stock Exchange said an unexpected 2-percent fall in China’s main Shanghai Composite Index last Friday was mainly caused by adjustments of share portfolio by a handful of foreign institutional investors in the last few minutes of trading.

CHINA DAILY

– China is moving in the right direction by pledging to set up dedicated courts for intellectual property rights cases, that will help judges become more proficient in handling complex cases, Johannes Christian Wichard, deputy director-general of the World Intellectual Property Organisation, said.

PEOPLE’S DAILY

– China published a chronicle of late leader Mao Zedong during the years from 1949 to 1976 ahead of the 120th anniversary of his birthday on Thursday.

 

Britain

The Telegraph

LIVINGSTON VOWS 10,000 FIRMS TO GET EXPORT HELP

Lord Livingston has vowed to offer each of Britain’s 10,000 medium-sized companies “personal” advice on overseas expansion in an effort to boost exports to £1 trillion a year by 2020.

ONLINE CLOTHING SELLER N BROWN SEEKS 20 STORES TO BOOST GROWTH

The online and catalogue clothes retailer N Brown has appointed property agents to find locations for 20 shops, delivering a timely Christmas boost to Britain’s troubled high streets.

The Guardian

VINCE CABLE: INTEREST RATES MAY HAVE TO RISE TO COMBAT HOUSING BOOM

The business secretary, Vince Cable, has warned that interest rates may have to rise to constrain a “raging housing boom” in London and the south-east.

LATE CHRISTMAS SHOPPING HELPS JOHN LEWIS TO RECORD WEEKLY SALES

A late shopping surge helped John Lewis serve up record weekly sales, but many retailers have been forced to slash prices to entice in cash-constrained customers.

The Times

BARRISTERS SAY ‘NO’ AND PUT FRAUD TRIALS IN JEOPARDY

The future viability of complex and expensive fraud prosecutions has been thrown into doubt after it emerged that there are not enough barristers prepared to defend fraudsters.

WARNING LIGHT FLASHES OVER GREEN LEVIES

Manufacturers are launching a lobbying campaign to persuade the Chancellor to exempt them from green energy levies in the Budget. The steel companies’ trade body is warning that the coalition’s green levies will make industry unable to compete with lower-cost rivals overseas.

The Independent

RETAILERS PANIC AND SLASH PRICES AMID LOW SALES

Retailers have slashed their prices this weekend in the hope that shoppers will finally flood Britain’s high streets today after one of the slowest Christmases on record.

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

ARIAD (ARIA) upgraded to Outperform from Market Perform at William Blair
Five Below (FIVE) upgraded to Outperform from Neutral at Credit Suisse
Fortinet (FTNT) upgraded to Outperform from Neutral at RW Baird
Heartland Express (HTLD) upgraded to Buy from Hold at BB&T
LivePerson (LPSN) upgraded to Buy from Hold at Benchmark Co.
Sarepta (SRPT) upgraded to Neutral from Underweigh
t at Piper Jaffray
Skullcandy (SKUL) upgraded to Buy from Neutral at Roth Capital
Teekay Offshore Partners (TOO) upgraded to Overweight from Neutral at JPMorgan
United Therapeutics (UTHR) upgraded to Neutral from Underweight at JPMorgan
Xilinx (XLNX) upgraded to Buy from Hold at Drexel Hamilton

Downgrades

Coleman Cable (CCIX) downgraded to Hold from Buy at BB&T
Micron (MU) downgraded to Underperform from Neutral at BofA/Merrill
Navios Maritime Partners (NMM) downgraded to Neutral from Overweight at JPMorgan

Initiations

CONSOL Energy (CNX) reinstated with a Neutral at Goldman
Darling (DAR) reinstated with an Outperform at BMO Capital
Extended Stay America (STAY) initiated with a Buy at BofA/Merrill
Extended Stay America (STAY) initiated with a Hold at Stifel
Extended Stay America (STAY) initiated with a Neutral at Citigroup
Extended Stay America (STAY) initiated with a Neutral at Goldman
Extended Stay America (STAY) initiated with a Neutral at RW Baird
Extended Stay America (STAY) initiated with an Overweight at JPMorgan
NASDAQ (NDAQ) initiated with a Neutral at JPMorgan
OGE Energy (OGE) initiated with a Hold at KeyBanc
Plains All American (PAA) initiated with a Buy at Wunderlich
Plains GP Holdings (PAGP) initiated with a Buy at Wunderlich
Salesforce.com (CRM) initiated with an Outperform at BMO Capital
US Ecology (ECOL) initiated with an Outperform at Raymond James

HOT STOCKS 

Apple (AAPL), China Mobile (CHL) announced multi-year iPhone agreement
Engility Holdings (EGL) to acquire Dynamics Research (DRCO) for $11.50 per share in cash
Archer Daniels (ADM) reached Foreign Corrupt Practices Act settlement with DOJ, SEC
CIT Group (CIT) to pay $60M to settle with Tyco (TYC)
Tiffany (TIF) lowered FY14 outlook after Dutch court ruled in favor of Swatch Group (SWGAY), to take charge of $295M-$305M in Q4
CIT Group (CIT) to pay $60M to settle with Tyco (TYC)
Tribune (TRBAA), Time Warner Cable (TWC) announced new retransmission consent agreement
Arden Group (ARDNA) to be acquired by TPG for $126.50 per share in cash
CMS Bancorp (CMSB) announced termination of merger with Customers Bancorp (CUBI)

NEWSPAPERS/WEBSITES

• Behind the uptick in e-commerce is a little known secret: As much as a third of all Internet sales gets returned, and the tide of goods flowing back to retailers is rising. UPS (UPS) expects returns to jump 15% this season from last year, making them a significant and growing cost for retailers (LINTA, BBY, GPS, JWN, AMZN), the Wall Street Journal reports
• Today is the final day for consumers to get new health coverage that takes effect when the new year arrives, leaving thousands of people racing to sign up in time—and health insurers (CNC, UNH, WLP, CI, HUM) trying to figure out whether the federal health law will work in the way they had hoped, the Wall Street Journal reports
• GM’s (GM) European unit Opel is cautiously optimistic that sales will grow enough in 2014 to avoid a further round of cost cutting, CEO Karl-Thomas Neumann told newspaper Sueddeutsche Zeitung, Reuters reports
• Unionized workers at Boeing (BA) will vote on January 3 on the company’s latest proposed contract, according to the International Association of Machinists and Aerospace Workers last night, Reuters reports
• Fiat (FIATY) CEO Sergio Marchionne privately restarted negotiations with a UAW medical trust to buy the remaining shares of Chrysler Group LLC, sources say, Bloomberg reports
• Las Vegas Sands (LVS) billionaire Sheldon Adelson said he is considering building individual integrated resorts in major European cities, 10 days after abandoning a plan to construct a $30B mega-resort in Spain, Bloomberg reports

BARRON’S

Nike (NKE) facing near-term earnings headwinds
American Tower (AMT) could rise over 20%
Ambac Financial (AMBC) could rise 50% in a year
PVH Corp. (PVH) could see higher profits
A. M. Castle (CAS) could recover to $16.00 in the next year
Apache (APA) could rise over $100
A Discovery (DISCA) bid for Scripps (SNI) could draw takeover interest (VIAB, FOXA, DIS)

SYNDICATE

Facebook (FB) 70M share Secondary priced at $55.05
CollabRx (CLRX) files to sell $10M in common stock, preferred stock purchase rights

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/gpN-Yxw0xxo/story01.htm Tyler Durden

Anyone who had the pleasure of trading the long bond March future ZB H4 just before 1:40 am Eastern witnessed one of the more abnormal fat fingers seen in recent months, one that did not involve equities but instead was all bond…. long bond, which soared from 130 to over 135, after a large clip was traded on what was apparently an erroneous buy order put through during very illiquid trading. Then again, with no trades busted by the CME (yet), maybe it was intentional.

They saw this:

 

And, zoomed in, this.

It is unclear who or why executed the fat finger: we expect to learn more today, although we do know that a move like this during regular trading hours would have had an unprecedented and very adverse impact on not only bonds, but absolutely all risk-chasing asset classes. Let’s just hope it’s not a test, and certainly not a harbinger of what’s in store for bond traders now that HFT algos have firmly moved into the asset class and where “price action” is determined solely by what someone else’s “price” does.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/aYCO197lNuE/story01.htm Tyler Durden

Another day, another low volume overnight meltup to record highs in equity futures. Stocks traded higher in Europe this morning, with tech stocks outperforming following reports that Apple has finally secured a deal to bring the iPhone to China Mobile, which has more than 750 million subscribers. As a result, the likes of ARM Holdings and STMicro traded with gains of over 2% and Apple’s German listing traded up  around 2.5%. At the same time, French CAC index under performed its peers, with Technip among the worst performing stocks after being removed from Goldman’s Sustained Focus List. Addtionally, over the weekend, the ECB’s Praet said that the ECB is ready to intervene if credit contracts – and since Euro credit is contracting at a record pace, we wonder what he is waiting for. This happened as Fitch affirmed France at AA+, outlook stable. Looking elsewhere, thin trading conditions resulted in an aggressive spike higher in CME US 30y futures this morning after a large clip was traded, which consequently saw the exchange adjust prices lower, but did not bust any trades.

Overnight headline news bulletin from Bloombeg and RanSquawk

• Stocks traded higher in Europe this morning, with tech stocks outperforming following reports that Apple has finally secured a deal to bring the iPhone to China Mobile.
• Thin trading conditions resulted in an aggressive spike higher in CME US 30y futures this morning after a large clip was traded.
• Going forward, market participants will get to digest the release of the latest U. Michigan Confidence survey, but the price action is expected to remain somewhat muted give the looming holidays.
• Treasury yields rise, led by 5Y and 7Y maturities, as bear-flattening spurred by Fed taper continues; trading likely to be quiet this week with early close tomorrow, Christmas holiday Wednesday.
• Japan unveiled a record budget for the next fiscal year, as Prime Minister Abe boosts spending on social security, defense and public works while trying to contain the growth of the world’s biggest debt burden
• China’s benchmark money-market rate climbed for a seventh day and interest-rate swaps increased as banks hoarded cash to meet year-end regulatory requirements
• The yuan advanced to its strongest level in 20 years as the People’s Bank of China raised the currency’s reference rate by the most in two weeks
• Central bankers from around the world will meet next month to discuss whether to scale back their plans for a debt limit that banks say will force them to rein in lending
• The deadline to enroll in Obamacare health plans that begin Jan. 1 is today for most of the U.S., a cutoff that remains firm even as the Obama administration has urged insurers to allow retroactive sign-ups into next month
• Apple Inc., ending six years of negotiations, struck a deal to sell the iPhone through China Mobile Ltd., giving both companies a means to fight declining share in the market of 1.2 billion wireless subscribers
• Sovereign yields mostly higher. EU peripheral spreads tighten. Asian stocks steady to higher. European stocks and U.S. equity index futures gain. WTI crude and gold fall, copper little changed

Asian Headlines

Chinese propaganda officials have ordered financial journalists and some media outlets to tone down their coverage of a liquidity crunch in the interbank market, in a sign of how worried Beijing is that the turmoil will continue when markets reopen today.

EU & UK Headlines

ECB’s Praet said the ECB are ready to intervene if credit contracts.

German Import Price Index (Nov) M/M 0.1% vs. Exp. -0.1% (Prev. -0.7%)
German Import Price Index (Nov) Y/Y -2.9% vs. Exp. -3.1% (Prev. -3.0%)

Italian Consumer Confidence Index (Dec) M/M 96.2 vs Exp. 98.7 (Prev. 98.3, Rev. 98.2)

At 1400GMT there is the budget law confidence vote in the Italian Senate after the Italian government won a confidence vote on the budget law in the lower house on Friday.

Money market rates are continuing to edge higher and the short-sterling curve bear-steepened in what was an extension of the trend seen late last week, after both UK Unemployment and UK GDP came in better than expected. Following this the Sunday Times wrote: “The BoE could face pressure to change its forward guidance policy as early as March due to a faster than expected fall in unemployment”.

Barclays pan-Euro agg month-end extensions: +0.03y

Barclays Sterling month-end extensions:+0.06y

US Headlines

IMF’s Lagarde said tapering shows confidence in the economic outlook and the IMF may raise its expectations for US growth next year.

At 0737 there was a spike in the CME US 30y futures. This was not as a result of fundamental news flow but a large clip hitting stops in thin holiday volumes. Later the CME said that all trades in ZBH4 above 131-12 will be adjusted to 131-12, UBH4 above 140-17 will be adjusted to 140-17.

Equities

Following on From Apple signing a deal with China Mobile over bring the iPhone to China, the tech sector is leading the way in Europe with the likes of ARM Holdings, STMicroelectronics and Dialog Semiconductors all trading in positive territory. The DAX is the outperforming index this morning, being supported by it’s blue-chip names . Whilst the IBEX 35 is the underperformer after Repsol going ex-div and the CAC is being weighed upon by Technip who were removed from Goldman’s Sustained Focus List.

FX

FX markets are relatively rangebound amid the light volumes as markets head into the festive period with little in the way of macroeconomic releases or economic commentary to act as a guide for price action.

Overnight, minor USD weakness did lead to some gains in GBP/USD and EUR/USD. However, this move has been pared in European trade. Elsewhere overnight, AUD did see some strength which saw AUD/NZD attempt to climb back above the 1.0900 level. However, this move failed to bear fruition.

Commodities

WTI and Brent crude futures are trading lower as Iraq crude oil output was reported to have risen to 3.42mln bpd vs. 3.1mln bpd for November. However OPEC ministers met at the weekend and stated that they wont need to cut production in 2014 because growth in demand can absorb any additional crude from Iran or Libya.

Gold continues to head south after stops were tripped on the break of USD 1200. Last week’s low seen at USD 1187.13 and then end-June lows at USD 1180.50.

SocGen sees gold falling to USD 1,050 an ounce in 2016

The Iranian Deputy Foreign Minister Abbas Araghchi said Iran will agree on a specific uranium enrichment percentage in the final round of negotiations over its nuclear program.

Workers voted to end a strike over pay at Total’s Donges refinery in western France on Sunday, though industrial action continued at three other plants.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5nu-RJ-oB5M/story01.htm Tyler Durden

Submitted by Nick Cunningham via OilPrice.com,

A new report from UBS finds that renewable energy and energy storage are together presenting a “perfect storm” for big utilities. The declining cost of solar, energy efficiency, and electric vehicle technologies threaten to upend centralized electricity generation, putting the utility business model in jeopardy. Grid parity has already been achieved in certain parts of the world where conventional electricity rates are high and renewable resources are plentiful.

Renewable energy is beginning to cut into the bottom line for U.S. utilities. The average price for solar PV modules declined by 80% between 2008 and 2012. Net metering policies and innovative financing schemes like SolarCity’s leasing model are making distributed generation – where consumers generate power on-site – much more financially viable. This leads to a utility “death spiral,” in which utilities begin to lose customers, forcing them to jack up rates to cover lost revenue, which in turn pushes more people away. As of 2011, about three-quarters of U.S. utilities had a BBB credit rating or worse, indicating a striking lack of confidence in their financial future. In 2000, less than 40% of utilities earned such an abysmal grade.

This concept is not new, but UBS’ report suggests the trend is picking up steam, particularly in developed markets with flat electricity demand including parts of the United States, Europe, and Australia. Data from the Energy Information Administration (EIA) shows that electricity sales have declined in four of the last five years in the U.S. While some of the drop off is attributable to the financial crisis and subsequent recession, energy efficiency and distributed generation are playing a key role. According to the EIA, “[g]rowing installed capacity of behind-the-meter sources of generation (largely from rooftop solar) is displacing some electricity sales that would otherwise occur.”

The latest UBS report finds that not only is solar PV eating into the utilities’ customer base, but it is also shaving off peak demand. Solar generates the most output during mid-afternoons, when demand is at its highest. With variable costs for renewables essentially nil, they beat out more expensive fossil fuel units. The result is leading to curtailed generation from big power plants along with lower peak electricity prices – a nightmare for utilities.

The unfolding transition to cleaner energy will force utilities to respond in a few ways. Some are fighting incentives that promote clean energy, as seen in the brutal fight in Arizona over its net metering policy. Another approach is for utilities to get into the clean energy game, which many have been doing for some time. The latest example came on December 16 when Warren Buffet’s MidAmerican Energy placed a $1 billion order for wind turbines in Iowa, as “a hedge for our customers going forward in an era of reduced coal generation,” according to MidAmerican’s CEO Bill Fehrman.

Yet another approach is to scale back generation and embrace the bold new world of distributed generation. In Germany, several utilities have announced power plant closures and are considering transitioning into a model where they offer energy “services,” such as trading and advice to customers, according to The Economist. Germany may be a harbinger of the future – in June 2013 prices actually went negative because of so much green power on the grid at one time. Germany’s two biggest utilities, E.On and RWE, have both seen their net income drop by one-third since 2010.

Earlier this year NRG CEO David Crane warned about the looming decline of the Big Utility, arguing that distributed generation poses a “mortal threat to the existing utility system.” More telling was a January 2013 report from the Edison Electric Institute, a trade group for utilities, which concluded that distributed generation presents a “game changer” – strong words from an organization with an interest in preserving the confidence of investors. Add to the pile the latest UBS report, which concludes that utilities will not be able to survive in their current form.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/JASSIwU8bMY/story01.htm Tyler Durden

Submitted by Nick Cunningham via OilPrice.com,

A new report from UBS finds that renewable energy and energy storage are together presenting a “perfect storm” for big utilities. The declining cost of solar, energy efficiency, and electric vehicle technologies threaten to upend centralized electricity generation, putting the utility business model in jeopardy. Grid parity has already been achieved in certain parts of the world where conventional electricity rates are high and renewable resources are plentiful.

Renewable energy is beginning to cut into the bottom line for U.S. utilities. The average price for solar PV modules declined by 80% between 2008 and 2012. Net metering policies and innovative financing schemes like SolarCity’s leasing model are making distributed generation – where consumers generate power on-site – much more financially viable. This leads to a utility “death spiral,” in which utilities begin to lose customers, forcing them to jack up rates to cover lost revenue, which in turn pushes more people away. As of 2011, about three-quarters of U.S. utilities had a BBB credit rating or worse, indicating a striking lack of confidence in their financial future. In 2000, less than 40% of utilities earned such an abysmal grade.

This concept is not new, but UBS’ report suggests the trend is picking up steam, particularly in developed markets with flat electricity demand including parts of the United States, Europe, and Australia. Data from the Energy Information Administration (EIA) shows that electricity sales have declined in four of the last five years in the U.S. While some of the drop off is attributable to the financial crisis and subsequent recession, energy efficiency and distributed generation are playing a key role. According to the EIA, “[g]rowing installed capacity of behind-the-meter sources of generation (largely from rooftop solar) is displacing some electricity sales that would otherwise occur.”

The latest UBS report finds that not only is solar PV eating into the utilities’ customer base, but it is also shaving off peak demand. Solar generates the most output during mid-afternoons, when demand is at its highest. With variable costs for renewables essentially nil, they beat out more expensive fossil fuel units. The result is leading to curtailed generation from big power plants along with lower peak electricity prices – a nightmare for utilities.

The unfolding transition to cleaner energy will force utilities to respond in a few ways. Some are fighting incentives that promote clean energy, as seen in the brutal fight in Arizona over its net metering policy. Another approach is for utilities to get into the clean energy game, which many have been doing for some time. The latest example came on December 16 when Warren Buffet’s MidAmerican Energy placed a $1 billion order for wind turbines in Iowa, as “a hedge for our customers going forward in an era of reduced coal generation,” according to MidAmerican’s CEO Bill Fehrman.

Yet another approach is to scale back generation and embrace the bold new world of distributed generation. In Germany, several utilities have announced power plant closures and are considering transitioning into a model where they offer energy “services,” such as trading and advice to customers, according to The Economist. Germany may be a harbinger of the future – in June 2013 prices actually went negative because of so much green power on the grid at one time. Germany’s two biggest utilities, E.On and RWE, have both seen their net income drop by one-third since 2010.

Earlier this year NRG CEO David Crane warned about the looming decline of the Big Utility, arguing that distributed generation poses a “mortal threat to the existing utility system.” More telling was a January 2013 report from the Edison Electric Institute, a trade group for utilities, which concluded that distributed generation presents a “game changer” – strong words from an organization with an interest in preserving the confidence of investors. Add to the pile the latest UBS report, which concludes that utilities will not be able to survive in their current form.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/JASSIwU8bMY/story01.htm Tyler Durden