Tag: news

via Zero Hedge http://ift.tt/1ok5wtB Pivotfarm

Not a week seems to pass without yet another “historic” winter storm assuring that virtually all winter economic data so far in 2014 can be ignored… if it is bad that is – if the data is good, it’s thanks to the “recovery” which however is not strong enough for the Fed to end its “unconventional” policy. The latest one – Pax. Weather.com’s description of what is about to be unleashed on Atlanta and the entire Eastern Seaboard is nothing short of a review of the movie The Day After Tomorrow: “Potentially “catastrophic” Winter Storm Pax began unfolding before dawn Wednesday in the Atlanta area as temperatures dropped below freezing and sleet and freezing rain began to fall.”

The National Weather Service’s warning was not exactly cheery: “Let’s just start by saying this winter storm may be of historic proportions for the area,” the agency said in a forecast analysis. “We’re looking at significant snowfall totals north and significant, crippling ice totals, especially along the Interstate 20 corridor.” Eli Jacks, a meteorologist with National Weather Service, said forecasters use words such as “catastrophic” sparingly. Not in this case.

“Sometimes we want to tell them, ‘Hey, listen, this warning is different. This is really extremely dangerous, and it doesn’t happen very often,'” Jacks said.

 

The service’s memo early Wednesday called the storm “an event of historical proportions.”

 

It continues: “Catastrophic … crippling … paralyzing … choose your adjective.”

So… not good?

#Ice storm Wed will be comparable to 1/23/2000 when over 300k lost power. http://t.co/LdtUCk3KQW Prepare now #gawx http://ift.tt/1j3bmvt

— NWS Atlanta (@NWSAtlanta) February 11, 2014

The forecast drew comparisons to an ice storm in the Atlanta area in 2000 that left more than 500,000 homes and businesses without power and an epic storm in 1973 that caused an estimated 200,000 outages for several days. In 2000, damage estimates topped $35 million.

Ice will make travel in central Georgia impossible, and downed tree limbs might cut power for days, the agency said. As many as 300,000 homes and businesses in the state will probably lose power, according to Tim Oram, the Meteorological Services Branch chief for the weather service’s southern region in Fort Worth, Texas.

 

“At this point, everything is lining up,” Oram said. “It’s from a once-in-every-10- to a once-in-every-20-years type of event. There’s pretty high confidence we’re going to see some pretty high accumulations of ice in the Georgia area.”

 

The worst of the ice will probably stretch from Atlanta to Columbia, South Carolina, and Fayetteville to Raleigh in North Carolina, according to Anderson. “It is going to be a bad situation down there,” he said.

Ok, maybe they are not exaggerating. Already, Georgia Power was reporting thousands of power outages around the state. And forecasters and officials said the number of outages would probably grow throughout the day.  Just before 5 a.m., the number of customers in the dark was 2,000. That number climbed to more than 10,000 by 7 a.m. Ice was already accumulating on roads and bridges. National Weather Service forecasters used unusual dire language in warnings and memos early Wednesday, and they said that while a foot of snow could fall in some parts of Georgia, “it is the ice that will have the catastrophic impacts.”

As a reminder, ice on the road in the South means instant paralysis:

Elected leaders and emergency management officials began warning people to stay off the roads, especially after 2 inches of snowfall caused an icy gridlock two weeks ago and left thousands stranded in vehicles overnight. It seemed many in the region around the state’s capital obliged as streets and highways were uncharacteristically unclogged Tuesday.

 

Georgia Gov. Nathan Deal and Atlanta Mayor Kasim Reed in a news conference at the Georgia Emergency Management Agency’s special operations center Tuesday evening implored people to get somewhere safe and stay there.

 

“The message I really want to share is, as of midnight tonight, wherever you are, you need to plan on staying there for a while,” Reed said. “The bottom line is that all of the information that we have right now suggests that we are facing an icing event that is very unusual for the metropolitan region and the state of Georgia.”

This also means the local aren’t taking any chances, and have already raided the local grocery stores. From (the ironically named) KPAX:

If you’re an Atlantan making a last-minute grocery run, here’s hoping you love corn and asparagus. Because that’s all that may be left on most shelves as residents stock up and hunker down for the ice storm.

 

Gone are the loaves of bread. The gallons of milk. The cans of beans and beer.

It won’t be just Atlanta though:

A potentially historic winter storm threatens to coat Georgia with ice, knocking out power and grounding thousands of planes, before bringing snow to Northeastern cities including Washington and New York.

 

New York may get 2-4 inches (5-10 centimeters) of snow tonight, and Washington as much as 4 inches, according to the National Weather Service at 3:51 a.m. New York time. Atlanta is forecast to receive half an inch of ice today.

 

“When the snow comes, it is going to come in fast and furious,” said Brett Anderson, a senior meteorologist at AccuWeather Inc. in State College, Pennsylvania. “The initial batch of snow that comes in before any changeover is going to be quite heavy.”

 

Closer to the coast, the storm will start as snow before changing to rain, Anderson said. While the rain may hold down snow accumulation, the rapid onset will still mean heavy snowfall for the cities along the Interstate 95 corridor from Washington to Boston.

 

The snow moving to the Northeast is expected to leave a “catastrophic” blanket of ice across the South, especially Georgia, the weather service said.

If readers are traveling by plane over the next 24 hours, our advice is: don’t.

Across the U.S., 1,576 flights were canceled yesterday, and 2,697 were scrubbed for today, said FlightAware, a Houston-based tracking service. About 5,500 homes and businesses from Arkansas to North Carolina were without power, utility websites show.

 

Governors in seven Southern states declared emergencies as the ice and snow moved eastward from Texas. The storm is expected to strengthen off the coast of North Carolina and drop heavy snow from Virginia to Maine.

 

The worst-hit areas may be the Interstate 81 corridor from western Virginia into central New York, as well as northern and western New England. Anderson said those areas may receive as much as 12 inches of snow, with some places getting 18 inches.

As a reminder, Atlanta was already hit late last month, when 2.5 inches of snow in Atlanta stranded almost 25,000 students at their schools or in buses and shut down the region’s highways, trapping thousands of motorists. “There were 1,254 accidents, 134 people injured and at least one death caused by the storm. Georgia Governor Nathan Deal issued a state of emergency for 45 counties on Feb. 10 and 43 more yesterday, urging residents to stay off the roads. Schools in the Atlanta area have been closed through today. President Barack Obama declared an emergency in northern Georgia, freeing up federal funds to deal with the aftermath of the storm. Governors in Louisiana, North Carolina, South Carolina, Alabama, Mississippi and Virginia also issued emergency declarations.”

Finally, we have all seen traders with hands on their faces. Here are…  weathermen with hands on their faces.

via Zero Hedge http://ift.tt/1ok5wtn Tyler Durden

Not a week seems to pass without yet another “historic” winter storm assuring that virtually all winter economic data so far in 2014 can be ignored… if it is bad that is – if the data is good, it’s thanks to the “recovery” which however is not strong enough for the Fed to end its “unconventional” policy. The latest one – Pax. Weather.com’s description of what is about to be unleashed on Atlanta and the entire Eastern Seaboard is nothing short of a review of the movie The Day After Tomorrow: “Potentially “catastrophic” Winter Storm Pax began unfolding before dawn Wednesday in the Atlanta area as temperatures dropped below freezing and sleet and freezing rain began to fall.”

The National Weather Service’s warning was not exactly cheery: “Let’s just start by saying this winter storm may be of historic proportions for the area,” the agency said in a forecast analysis. “We’re looking at significant snowfall totals north and significant, crippling ice totals, especially along the Interstate 20 corridor.” Eli Jacks, a meteorologist with National Weather Service, said forecasters use words such as “catastrophic” sparingly. Not in this case.

“Sometimes we want to tell them, ‘Hey, listen, this warning is different. This is really extremely dangerous, and it doesn’t happen very often,'” Jacks said.

 

The service’s memo early Wednesday called the storm “an event of historical proportions.”

 

It continues: “Catastrophic … crippling … paralyzing … choose your adjective.”

So… not good?

#Ice storm Wed will be comparable to 1/23/2000 when over 300k lost power. http://t.co/LdtUCk3KQW Prepare now #gawx http://ift.tt/1j3bmvt

— NWS Atlanta (@NWSAtlanta) February 11, 2014

The forecast drew comparisons to an ice storm in the Atlanta area in 2000 that left more than 500,000 homes and businesses without power and an epic storm in 1973 that caused an estimated 200,000 outages for several days. In 2000, damage estimates topped $35 million.

Ice will make travel in central Georgia impossible, and downed tree limbs might cut power for days, the agency said. As many as 300,000 homes and businesses in the state will probably lose power, according to Tim Oram, the Meteorological Services Branch chief for the weather service’s southern region in Fort Worth, Texas.

 

“At this point, everything is lining up,” Oram said. “It’s from a once-in-every-10- to a once-in-every-20-years type of event. There’s pretty high confidence we’re going to see some pretty high accumulations of ice in the Georgia area.”

 

The worst of the ice will probably stretch from Atlanta to Columbia, South Carolina, and Fayetteville to Raleigh in North Carolina, according to Anderson. “It is going to be a bad situation down there,” he said.

Ok, maybe they are not exaggerating. Already, Georgia Power was reporting thousands of power outages around the state. And forecasters and officials said the number of outages would probably grow throughout the day.  Just before 5 a.m., the number of customers in the dark was 2,000. That number climbed to more than 10,000 by 7 a.m. Ice was already accumulating on roads and bridges. National Weather Service forecasters used unusual dire language in warnings and memos early Wednesday, and they said that while a foot of snow could fall in some parts of Georgia, “it is the ice that will have the catastrophic impacts.”

As a reminder, ice on the road in the South means instant paralysis:

Elected leaders and emergency management officials began warning people to stay off the roads, especially after 2 inches of snowfall caused an icy gridlock two weeks ago and left thousands stranded in vehicles overnight. It seemed many in the region around the state’s capital obliged as streets and highways were uncharacteristically unclogged Tuesday.

 

Georgia Gov. Nathan Deal and Atlanta Mayor Kasim Reed in a news conference at the Georgia Emergency Management Agency’s special operations center Tuesday evening implored people to get somewhere safe and stay there.

 

“The message I really want to share is, as of midnight tonight, wherever you are, you need to plan on staying there for a while,” Reed said. “The bottom line is that all of the information that we have right now suggests that we are facing an icing event that is very unusual for the metropolitan region and the state of Georgia.”

This also means the local aren’t taking any chances, and have already raided the local grocery stores. From (the ironically named) KPAX:

If you’re an Atlantan making a last-minute grocery run, here’s hoping you love corn and asparagus. Because that’s all that may be left on most shelves as residents stock up and hunker down for the ice storm.

 

Gone are the loaves of bread. The gallons of milk. The cans of beans and beer.

It won’t be just Atlanta though:

A potentially historic winter storm threatens to coat Georgia with ice, knocking out power and grounding thousands of planes, before bringing snow to Northeastern cities including Washington and New York.

 

New York may get 2-4 inches (5-10 centimeters) of snow tonight, and Washington as much as 4 inches, according to the National Weather Service at 3:51 a.m. New York time. Atlanta is forecast to receive half an inch of ice today.

 

“When the snow comes, it is going to come in fast and furious,” said Brett Anderson, a senior meteorologist at AccuWeather Inc. in State College, Pennsylvania. “The initial batch of snow that comes in before any changeover is going to be quite heavy.”

 

Closer to the coast, the storm will start as snow before changing to rain, Anderson said. While the rain may hold down snow accumulation, the rapid onset will still mean heavy snowfall for the cities along the Interstate 95 corridor from Washington to Boston.

 

The snow moving to the Northeast is expected to leave a “catastrophic” blanket of ice across the South, especially Georgia, the weather service said.

If readers are traveling by plane over the next 24 hours, our advice is: don’t.

Across the U.S., 1,576 flights were canceled yesterday, and 2,697 were scrubbed for today, said FlightAware, a Houston-based tracking service. About 5,500 homes and businesses from Arkansas to North Carolina were without power, utility websites show.

 

Governors in seven Southern states declared emergencies as the ice and snow moved eastward from Texas. The storm is expected to strengthen off the coast of North Carolina and drop heavy snow fr
om Virginia to Maine.

 

The worst-hit areas may be the Interstate 81 corridor from western Virginia into central New York, as well as northern and western New England. Anderson said those areas may receive as much as 12 inches of snow, with some places getting 18 inches.

As a reminder, Atlanta was already hit late last month, when 2.5 inches of snow in Atlanta stranded almost 25,000 students at their schools or in buses and shut down the region’s highways, trapping thousands of motorists. “There were 1,254 accidents, 134 people injured and at least one death caused by the storm. Georgia Governor Nathan Deal issued a state of emergency for 45 counties on Feb. 10 and 43 more yesterday, urging residents to stay off the roads. Schools in the Atlanta area have been closed through today. President Barack Obama declared an emergency in northern Georgia, freeing up federal funds to deal with the aftermath of the storm. Governors in Louisiana, North Carolina, South Carolina, Alabama, Mississippi and Virginia also issued emergency declarations.”

Finally, we have all seen traders with hands on their faces. Here are…  weathermen with hands on their faces.

via Zero Hedge http://ift.tt/1ok5wtn Tyler Durden

• Anti-Euro Party’s Le Pen Gains Supporters, French Poll Shows (BBG)
• Carney Renews BOE Low-Rate Pledge to Fight Slack in Economy (BBG)
• Bank of England hints at 2015 rate rise (Reuters)
• ECB bond-buying intact and ready after court decision-Coeure (Reuters)
• Oops: Thomson Reuters reports 50 percent drop in fourth quarter operating profit (Reuters)
• Canada scraps millionaire visa scheme, dumps 46,000 Chinese applications (SCMP)
• Scrap this then? Vancouver facing an influx of 45,000 more rich Chinese (SCMP)
• China’s January Exports Power Higher, Up 10.6% (WSJ) … and nobody believes the number
• Emerging-Market Shakeout Putting Reserves Into Focus (BBG)
• Wall Street’s most eligible banker Fleming waits for suitor (Reuters)
• Kazakh Devaluation Shows Currency War Stirring as Ruble Dips (BBG)
• Toyota to recall 1.9 mln Prius cars for software defect in hybrid system (Reuters)
• U.S. Defense Firms Target Exports (WSJ)
• Cameron Says Money No Object on Floods as Trip Canceled (BBG)
• Finland Drops Debt Target Amid Austerity Backlash (BBG)

 

Overnight Media Digest

WSJ

* The House on Tuesday approved a bill to extend the federal government’s borrowing authority with no strings attached, after Republican leaders dropped all policy demands to avoid a market-rattling confrontation.

* The Federal Reserve will keep winding down one of its highest-profile easy-money programs unless the economy takes a serious turn for the worse, Janet Yellen said in her inaugural public appearance since becoming the central bank’s first chairwoman.

* The two largest bitcoin-trading exchanges came under attack from hackers Tuesday, leaving customers unable to withdraw their money in the latest development to roil the fledgling virtual currency.

* Dow Chemical Co rejected investor Dan Loeb’s call for the company to split itself in two, saying it already examined the possibility and decided such a move wouldn’t be productive.

* The European Union’s executive body is raising pressure to reduce U.S. influence over the Internet’s architecture amid what it called weakened confidence in the network’s governance after revelations of U.S. surveillance.

* Newell Rubbermaid Inc’s Graco is recalling 3.77 million child seats because of defective belt harnesses that in some cases won’t unlatch and trap children in the seat.

* Food manufacturer TreeHouse Foods Inc said Tuesday it is suing Green Mountain Coffee Roasters Inc and Keurig Inc for anticompetitive acts intended to maintain a monopoly over the cups used in single-serve brewers.

* Cellphone tower contractors and the companies that hire them need to strictly comply with safety standards, the Occupational Safety and Health Administration said Tuesday, citing “an alarming increase” in preventable injuries and deaths.

* Puerto Rico stepped up preparations for a sale of as much as $3.5 billion in bonds, a test of the financially troubled island’s ability to access credit markets.

* A Food and Drug Administration advisory committee voted Tuesday that there isn’t enough evidence to say the anti-inflammatory painkiller naproxen is safer than other pain drugs when it comes to heart health.

* Opower Inc, a company that contracts with utilities to help homeowners reduce energy use, has submitted a confidential filing for an initial public offering, according to two people familiar with the matter.

 

FT

Barclays Chief Executive Antony Jenkins faced an outpouring of criticism at his decision to boost bonuses by 10 percent even as Britain’s third largest bank announced falling profit and 12,000 job cuts.

Brevan Howard, one of the world’s biggest hedge fund managers, is shutting its $2 billion emerging market fund after slowing growth in developing economies dented the portfolio’s performance last year, according to sources.

Alibaba , China’s dominant e-commerce company that is gearing up for a public offering that could value it at about $140 billion, said on Tuesday that it would launch its first majority-owned e-commerce venture in the United States.

Sprint posted a fourth-quarter net loss of over $1 billion hit by the costs of its network upgrade, and stiff competition that has pushed the third-largest U.S. mobile operator to explore merger options with T-Mobile US.

Billionaire property investor Sam Zell has joined the effort to oust the board of the CommonWealth REIT, poised to lead a slate of alternative trustees, should CommonWealth investors vote to remove the current board.

 

NYT

* The House voted 221-201 after Speaker John A. Boehner gave up on a plan to link an increase in borrowing authority to legislation that would have reversed a cut to veteran retirement benefits.

* Janet Yellen, the new chairwoman of the Federal Reserve, told a House committee on Tuesday that she strongly supported and planned to continue the policies adopted under her predecessor, Ben S. Bernanke.

* Federal prosecutors in six states have filed actions against businesses that buy luxury cars at domestic dealerships and then send them to China.

* After 13 years, six scientific opinions and two legal challenges, an insect-resistant type of corn is on the verge of being approved by the European Union. It would be only the third genetically modified crop to be authorized for cultivation in the 28-nation bloc.

* Dow Chemical said on Tuesday that it saw no value in pursuing a significant breakup, dealing a setback to a hedge fund manager who encouraged the company to split its petrochemicals and specialty chemicals businesses.

* In its most aggressive move yet to take over Time Warner Cable, Charter Communications Inc is proposing a full slate of directors to its target’s board.

* Corvex Management has stepped up its fight against CommonWealth REIT, a real estate investment concern, by adding billionaire Samuel Zell to its slate of board nominees for the company.

* Levo League, an online career forum that aims to help young people, especially women, in the early stages of their careers, raised $7 million through a new round of angel investment.

 

Canada

THE GLOBE AND MAIL

* Chrysler Group LLC is seeking a contribution of at least $700 million from the federal and Ontario governments in high-stakes negotiations about the future of its Canadian operations.

* The Conservative government is inflaming a federal-provincial turf war over jobs with a 2014 budget that expands Ottawa’s training role, launching new programs aimed at getting Canadians into apprenticeships and skilled trades.

Reports in the business section:

* Under pressure from an activist shareholder, Cliffs Natural Resources Inc said on Tuesday that it would slash capital spending, forgo a planned expansion at a key Canadian mine and shut another mine in Canada, cutting about 500 jobs.

NATIONAL POST

* Canada’s Finance Minister Jim Flaherty set the table in Tuesday’s budget for a watershed round of collective bargaining in 2014 with plans to save at least $7.4 billion over six years by reducing the benefits of former and current public servants to bring compensation costs closer to those of the private sector.

* The badly-needed new equipment on the Canadian military’s shopping list may end up becoming a wish list over the next three years after Tuesday’s federal budget pushed $3.1 billion in planned capital spending into the future.

FINANCIAL POST

* Ottawa is giving automakers a $500-million boost, as car companies such as Chrysler Group LLC push for bigger incentives from both federal and provincial governments to continue with production facilities in Canada.

 

China

CHINA SECURITIES JOURNAL

– Yang Weimin, deputy director of the Central Financial Leading Group, the ruling Communist Party’s economic decision-making institution, says it is too early to predict how China’s economy will perform in 2014 despite the fall in the newly released PMI data.

– Sources said permission will be granted in the first half of this year for the establishment of the Tianjin Free Trade Zone.

SHANGHAI SECURITIES NEWS

– Bank of Communications Co said in a report that net profit growth for China’s listed banks is expected to fall to 8.31 percent and non-performing loans could rise to around 1.1 percent.

CHINA DAILY

– The central government will introduce a series of policies to implement a landmark anti-pollution plan that aims to reduce airborne particles, leveraging pricing, taxation and investment, said Zhai Qing, vice-minister of environmental protection.

– Historic talks between China and Taiwan in Nanjing are a promising new start that will deepen and enhance mutual goodwill, but it is naive to expect too much from the meeting, an editorial said.

PEOPLE’S DAILY

– The Chinese have never been so close to their goal of great national rejuvenation, but while 2014 is one of the most promising years for China it will also be one of its most challenging, an editorial said.

 

Britain

The Telegraph

BARCLAYS CULL TO CLEAR OUT SENIOR BANKERS Hundreds of senior Barclays investment bankers and managers face being made redundant this year, along with thousands of ordinary staff, as the lender looks to cut as many as 12,000 jobs.

VODAFONE’S 5.8 BLN STG ONO BID EXPECTED TO BE REJECTED

Vodafone’s 5.8 billion pound ($9.56 billion)bid for Ono will be rejected, it was expected this evening, following a meeting of the Spanish cable operator’s board.

HIKMA COMBINES CHAIRMAN AND CHIEF EXECUTIVE ROLE

Hikma Pharmaceuticals’ chief executive is to take on the additional role of chairman later this year. The FTSE-250 company said its chief executive Said Darwazah will assume the dual role in May, when his 83-year-old father, Samih Darwazah, steps down as chairman of the board.

The Guardian

BANK OF ENGLAND LAUNCHES INQUIRY INTO FOREX MANIPULATION CLAIMS

The Bank of England has launched an internal inquiry into allegations that its officials endorsed sharing of information between traders in the foreign exchange market, the central bank’s deputy governor told Members of Parliament.

WAITROSE, ALDI AND LIDL EAT FURTHER INTO MAJOR SUPERMARKETS’ MARKET SHARE

The UK’s grocery market saw growth slide to its slowest pace since 2005 as Morrisons, Asda and Tesco continue to take a battering from discounters and the upmarket grocer Waitrose. ()

NEW LOOK IPO PLANS ON ICE

Privately-owned retailer New Look is standing back from the rush to the stock market with no plans to seek a public listing until next autumn at the earliest.

THOMAS COOK SAYS COST-CUTTING PLAN AHEAD OF TARGET AFTER LATEST DISPOSAL

Holiday operator Thomas Cook said a 45 million pound asset sale on Tuesday helped it reach a target for disposals ahead of schedule as it reported a narrowing seasonal loss, giving it further confidence in its turnaround plan.

The Times

GOVERNMENT PLANNED FOR CO-OP TO BUY LLOYDS BRANCHES

The Government made it clear that it wanted Lloyds to sell hundreds of branches to the Co-operative Bank for political reasons in a deal that helped to push the mutual into ruin, a senior Bank of England official said today.

‘WALKIE SCORCHIE’ DEVELOPER LAND SECURITIES TO TURN DOWN THE HEAT

Months after the 37-storey tower, officially known as 20 Fenchurch Street, fried an egg and melted a Jaguar car and City workers’ shoes with the intensity of the glare from its south-facing glass façade, its developers, Land Securities , believe they have devised a solution.

The Independent

ANDREW BAILEY DENIES BANK OF ENGLAND KNEW OF FOREX MARKET MANIPULATION

The deputy governor of the Bank of England has been forced to deny that it condones market manipulation after it was dragged into an investigation over foreign exchange rate-fixing claims which he agreed could be “enormously damaging” to it.

 

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Treasury budget for January at 2:00 pm ET–consensus -$10B

ANALYST RESEARCH

Upgrades

Itron (ITRI) upgraded to Buy from Hold at Needham
Pioneer Energy (PES) upgraded to Buy from Speculative Buy at Global Hunter
RBC Bearings (ROLL) upgraded to Buy from Neutral at BofA/Merrill
Smith & Nephew (SNN) upgraded to Buy from Hold at Deutsche Bank
Sprint (S) upgraded to Buy from Hold at Deutsche Bank
TriCo Bancshares (TCBK) upgraded to Strong Buy from Outperform at Raymond James
TripAdvisor (TRIP) upgraded to Outperform from Sector Perform at RBC Capital
Veeco (VECO) upgraded to Outperform from Neutral at Credit Suisse
Waste Connections (WCN) upgraded to Buy from Hold at BB&T
Zoetis (ZTS) upgraded to Outperform from Market Perform at William Blair

Downgrades

Aimco (AIV) downgraded to Hold from Buy at MLV & Co.
Amazon.com (AMZN) downgraded to Neutral from Buy at UBS
American Railcar (ARII) downgraded to Neutral from Buy at Longbow
Cadence (CADX) downgraded to Neutral from Outperform at Wedbush
China Lodging Group (HTHT) downgraded to Neutral from Buy at Goldman
Dean Foods (DF) downgraded to Hold from Buy at Stifel
Green Mountain (GMCR) downgraded to Neutral from Buy at Longbow
Huntsman (HUN) downgraded to Neutral from Buy at Citigroup
Intuit (INTU) downgraded to Underweight from Equal Weight at Evercore
Jive Software (JIVE) downgraded to Equal Weight from Overweight at Morgan Stanley
MYR Group (MYRG) downgraded to Hold from Buy at KeyBanc
Mallinckrodt (MNK) downgraded to Equal Weight from Overweight at Morgan Stanley
ReachLocal (RLOC) downgraded to Neutral from Overweight at JPMorgan
Royal Gold (RGLD) downgraded to Hold from Buy at MLV & Co.
Seadrill (SDRL) downgraded to Underperform from Market Perform at Wells Fargo
Senior Housing (SNH) downgraded to Sell from Neutral at UBS

Initiations

ACE Limited (ACE) initiated with a Neutral at Citigroup
AXIS Capital (AXS) initiated with a Sell at Citigroup
Allstate (ALL) initiated with a Neutral at Citigroup
America First Tax Exempt Investors (ATAX) initiated with an Outperform at Oppenheimer
Aon plc (AON) initiated with a Buy at Citigroup
Arthur J. Gallagher (AJG) initiated with a Neutral at Citigroup
ChannelAdvisor (ECOM) initiated with an Outperform at RW Baird
Chubb (CB) initiated with a Sell at Citigroup
ClubCorp (MYCC) initiated with a Market Perform at Wells Fargo
LifeVantage (LFVN) initiated with an In-Line at Imperial Capital
Marsh & McLennan (MMC) initiated with a Neutral at Citigroup
Oasis Petroleum (OAS) initiated with a Neutral at Citigroup
Progressive (PGR) initiated with a Neutral at Citigroup
Regeneron (REGN) re-initiated with a Buy at BofA/Merrill
RenaissanceRe (RNR) initiated with a Neutral at Citigroup
Travelers (TRV) initiated with a Sell at Citigroup
XL Group (XL) initiated with a Sell at Citigroup

HOT STOCKS

TreeHouse (THS) sued Green Mountain (GMCR) over cup monopoly
AMCOL (ACO) to merge with Imerys in $41 per share transaction valued at about $1.6B
Mosaic (MOS) said ‘potash prices seem to have found a bottom’
Dow Chemical (DOW) review found ‘significant’ break-up of company creates no productivity 
PHH Corp. (PHH) exploring alternatives for fleet, mortgage businesses
Black Diamond (BDE) exploring strategic alternatives for Gregory Mountain unit

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Euronet (EEFT), Charles River Labs (CRL), FireEye (FEYE), Control4 (CTRL), SS&C Technologies (SSNC), Seattle Genetics (SGEN), PHH Corp. (PHH), Pzena Investment (PZN), Fossil (FOSL), DaVita (DVA), Trimble Navigation (TRMB), Conversant (CNVR),  Diodes (DIOD), Guidance Software (GUID), Argo Group (AGII)

Companies that missed consensus earnings expectations include:
Talisman Energy (TLM), Energen (EGN), Tower Group (TWGP), JBT Corp.(JBT), Covanta (CVA), Willis Group (WSH), Cutera (CUTR), , Sangamo (SGMO), ViaSat (VSAT), Western Union (WU)

Companies that matched consensus earnings expectations include:
tw telecom (TWTC), Jive Software (JIVE), Cyan (CYNI), Calix (CALX), Kforce (KFRC), GigOptix (GIG), TripAdvisor (TRIP)

NEWSPAPERS/WEBSITES

Microsoft (MSFT) says it’s not censoring China searches, Reuters reports
Toyota (TM) recalling 1.9M Prius vehicles to fix software problem, Bloomberg reports
Softbank (SFTBF) CEO still after a U.S. acquisition, WSJ reports
Softbank (SFTBF) CEO says ‘no comment’ on rumors Sprint (S) is looking to buy T-Mobile (TMUS), Reuters reports
Twitter (TWTR) testing profile redesign, Mashable reports
Detroit automakers want to clear inventory without hurting pricing, WSJ reports
Ashland (ASH) receives bids for specialty chemicals company, Bloomberg reports
Boeing (BA) says a China assembly plant an option, Bloomberg reports
Coca-Cola (KO) Israel in monopoly violations investigation, Globes reports

SYNDICATE

Atmos Energy (ATO) 8M share Secondary priced at $44.00
Canadian Solar (CSIQ) 2.778M share Secondary priced at $36.00
Eagle Pharmaceuticals (EGRX) 3.35M share IPO priced at $15.00
Flexion (FLXN) 5M share IPO priced at $13.00
Graphic Packaging (GPK) files to sell 30M common shares for holders
Ironwood (IRWD) 13.7M share Secondary priced at $12.75
Ophthotech (OPHT) 2.29M share Secondary priced at $31.50
Paragon Shipping (PRGN) files to sell common stock
PennyMac (PMT) enters into $200M equity distribution agreement with JMP Securities
Talmer Bancorp  (TLMR) 15.555M share IPO priced at $13.00
Tecnoglass (TGLS) files to sell 31.26M ordinary shares for holders

via Zero Hedge http://ift.tt/1j36UNf Tyler Durden

After initially sending the all important USDJPY carry pair – and thus all risk assets – into rally mode, the initial euphoria over manipulated Chinese trade data (see China Trade Puzzle Revived as Hong Kong Data Diverge), has all but fizzled and at last check the USDJPY was sliding to its LOD, approaching 102 from the wrong side. That, and a statement by the ECB’s Coeure that the ECB is “very seriously” considering a negative deposit rate (and that the OMT is ready to be used even though it obviously isn’t following the latest brewhaha from the German top court) have so far defined the overnight session, the latter having sent the EUR sliding across all major pairs.

In Asia the latest Chinese trade numbers have helped set the tone for overnight session in spite of doubts about the robustness of the data. Following the recent spate of mixed Chinese data, the latest Customs report showed that January Chinese exports rose 10.6% Y/Y (vs expectations of 0.1% growth) and imports rose by 10.0% Y/Y (vs expectations of 4% growth). The data is especially surprising given that the traditional slowdown for Chinese New Year fell in January this year versus February last year. January’s rate of import growth was a seven month high, and the level of China’s imports of crude oil, iron ore and copper all rose to all-time highs for a January, according to Customs data – which is positive news for some of the resource-focused EMs. All this brought China’s monthly trade balance to +$32bn (vs consensus $23bn) although we always need to be wary of data seasonality during the Chinese New Year period.

Elsewhere, stocks traded higher since the get-go in Europe, supported by positive macroeconomic data from China and also better than expected earnings by SocGen and ING. As a result, financials led the move higher, with basic materials not too far behind. Renewed risk on sentiment, together with 10y EFSF bond syndication weighed on core EU fixed income products, with Gilts also under pressure after the BoE refrained from adjusting forward guidance. In its eagerly awaited QIR, the Bank kept the 7% unemployment threshold and pointed to high spare capacity, which the MPC seeks to gradually absorb. Much more aggressive steepening of the UK curve was avoided largely by the fact that the Bank said that it will continue to reinvest proceeds of maturing QE Gilt holdings at least until it start to raise rates, adding that it sees scope to keep 0.5% rate after jobless threshold hit. Nevertheless, failure to adjust knockout clauses supported GBP, which heading into the North American open is the clear outperformer vs. its peers. Going forward, market participants will get to digest the release of the latest DoE report, 10y note auction by the US Treasury and also earnings by Cisco.

Turning to the day ahead, in Europe we get an update on Euroarea industrial production and Draghi will be making a speech in Brussels entitled “Progress through Crisis”. But the spotlight will be on the BoE’s quarterly inflation report and how Carney will augment the bank’s forward guidance. DB’s UK economist George Buckley expects the Bank to move to unspecified time-dependent guidance from its current specific state dependent policy guidance. Again, theres not too much US data on the horizon today so the focus will be on a couple of speeches from the Fed’s Bullard and Lacker.

Headline bulletin from Bloomberg and RanSquawk

• Treasuries fall for a second day, 10Y yield rises toward 100-DMA at 2.742%; quarterly refunding continues today with $24b 10Ys, WI bid 2.765% after drawing 3.009% at last sale.
• Yesterday’s 3Y auction stopped through, aided by selloff into 1pm bidding deadline; 42% indirect award was highest, primary dealer award lowest since August 201l
• China’s trade growth unexpectedly accelerated in January, with exports +10.6% and imports +10%, defying signs the world’s second-largest economy will slow while fueling speculation that fake shipments are resurfacing
• Bank of England Governor Mark Carney renewed his pledge to keep interest rates at a record low in a new “phase” of forward guidance to combat persisting slack in the British economy
• 28 Republicans, including Speaker Boehner and many in his leadership team, joined with Democrats to pass a suspension of the debt ceiling until March 15, 2015
• Health insurers told to pay $150 billion in taxes over a decade to help fund Obamacare are now shifting at least part of that cost back to taxpayers
• A potentially historic winter storm threatens to coat Georgia with ice, knocking out power and grounding thousands of planes, before bringing snow to Northeastern cities including Washington and New York
• Sovereign yields higher. EU peripheral spreads tighten. Asian, European stocks, U.S. stock-index futures gain. WTI crude and copper higher, gold falls
• GBP supported by BoE’s decision to keep 7% unemployment knock-out threshold, with Carney saying that the Bank sees scope to keep 0.5% rate after jobless threshold hit.
• EUR is under broad-based pressure after ECB’s Coeure said the ECB is considering a negative deposit rate very seriously.
• Late yesterday, the House of Rep. voted to suspend the US debt limit until Mar’15, the vote now goes to the Senate where they are expected to vote as soon as today.

US Event Calendar

• 7:00am: MBA Mortgage Applications, Feb. 7 (prior 0.4%)
• 8:45am: Fed’s Bullard speaks in New York
• 10am: New York Fed issues small business credit survey
• 10:30am: ECB’s Draghi speaks in Brussels Supply
• 11:00am: POMO – Fed to buy $1b-$1.25b in 2036-2043 sector
• 1:00pm: U.S. to sell $24b 10Y notes
• 2:00pm: Monthly Budget Statement, Jan., est. -$10b (prior +$2.9b)

Asian Headlines

Nikkei 225 settled up 0.56%, supported by better than expected data from China and also in reaction to Fed’s Yellen testimony where the head of the bank preached policy continuity. As a result, JPY swaps curve bear-steepened up to 10y and bear-flattened in the longer-dated section of the curve. In Japan specific news, BoJ’s Kiuchi said more easing may do more harm than good. (Nikkei)

Chinese Trade Balance (USD) (Jan) M/M 31.86bln vs. Exp. 23.45bln (Prev. 25.64bln)
– Chinese Exports (Jan) M/M 10.6% vs. Exp. 0.1% (Prev. 4.3%)
– Chinese Imports (Jan) M/M 10.0% vs. Exp. 4.0% (Prev. 8.3%)

EU & UK Headlines

BoE see scope to keep 0.5% rate after jobless threshold hit, keeps 7% unemployment threshold. (BBG/ RTRS/DJN)

Any increases in BoE rate should be limited and the MPC will seek to absorb all spare capacity. The governor also said that the Bank will not be giving time contingent guidance.

Also of note, BoE’s Bean said that the Bank wants to start tightening policy before slack is completely eliminated.

Italy’s centre-left PD coalition leadership are due to discuss Italian PM Letta’s latest reform proposals, but expectations are rising that the PM would fail to win his party’s support and be forced to resign. (FT) The reports follow a continued power-struggle between PM Letta and the PD head Matteo Renzi. ECB’s Coeure says the ECB is considering a negative deposit rate very seriously. (RTRS)

US Headlines

The House of Representatives voted to suspend the US debt limit until March 2015, giving a victory to Democrats who said the ceiling could be lifted without conditions. The measure passed 221-201. (C-Span) The vote now goes to the Senate where they are expected to vote as soon as today.

Equities

Despite broad based gain by major EU equity indices, the FTSE-100 index underperformed its peers, as a number of blue-chip names such as Shell and BP traded ex-dividend. In terms of notable movers, WM Morrison shares surged higher at the open as market participants reacted to press reports citing sources which indicated that the founding family of the company are reported to have contacted private-equity funds such as CVC Capital Partners and Carlyle Group to weigh their interest in taking the retailer private.

FX

GBP/USD advanced to its highest level since 30th January after the BoE kept the unemployment knock-out threshold unchanged at 7%, with the governor adding that the Bank sees scope to keep 0.5% rate after jobless threshold hit.

At the same time, EUR came under broad based selling pressure and CHF depreciated vs. EUR and the USD (lost around 50pips in the process) after ECB’s Coeure said that the ECB is considering a negative deposit rate very seriously.

Looking elsewhere, despite the risk on sentiment, USD/JPY traded lower, weighed on by a weaker USD and also lower trending EUR/JPY cross which accelerated the price action following Carney inspired GBP gains.

Commodities

China’s crude oil imports rose 11.9% in January from a year earlier to a record 6.63mbpd, as companies restocked ahead of the Lunar New Year holiday despite tepid demand growth. (BBG)

Technical analysis by Citi and RBC sees gold prices extending their current 2014 rebound and reaching USD 1,400 on a 100-day average. With patterns signalling prices will rally 8.5% by the end of March according to Citi. (BBG)

DB’s Jim Reid concludes the overnight summary:

There’s no stressing the market at the moment as the three main macro events of the last few days have all ended the same way – in a large market rally. First we had a less dovish Draghi than expected (S&P 500+1.24%), then a weak payroll report (S&P 500+1.33%) and now a Yellen testimony that to most people appeared on message (S&P 500 +1.11%). All three could have been spun a different way market wise so the rally seems to have been independent of these event’s contents but more to do with positioning going into them.

Nevertheless, risk assets have been on a roll during the past week, and it seems that memories of January’s wobbles are quickly fading. Indeed, if we look at the major equity indices the S&P500 is only about 1.5% away from being flat on the year after being down by more than 5.5% at one stage in late January. The Stoxx600 is now back to being up (+0.4%) on the year. Outside of equities, the major credit indices are slowly grinding their way back to the tights posted at the start of the year. The US CDX IG index and European iTraxx are just a few bps away (2bp to 3bp) from their 2014 starting points. Meanwhile the higher beta European Crossover is now 7bp tighter than at the start of the year. So broadly speaking, DM equity and credit markets have mostly reversed January’s sell-off, but EM continues to lag with the MSCI EM equity index still down 5.8% YTD while the CDX EM credit index is almost 50bp wider over the same period.

In Asia the latest Chinese trade numbers have helped set the tone for overnight session in spite of doubts about the robustness of the data. Following the recent spate of mixed Chinese data, the latest Customs report showed that January Chinese exports rose 10.6% Y/Y (vs expectations of 0.1% growth) and imports rose by 10.0% Y/Y (vs expectations of 4% growth). The data is especially surprising given that the traditional slowdown for Chinese New Year fell in January this year versus February last year. January’s rate of import growth was a seven month high, and the level of China’s imports of crude oil, iron ore and copper all rose to all-time highs for a January, according to Customs data – which is positive news for some of the resource-focused EMs. All this brought China’s monthly trade balance to +$32bn (vs consensus $23bn) although we always need to be wary of data seasonality during the Chinese New Year period. Bloomberg is also carrying the story as one where false invoicing might be artificially boosting the numbers. The AUDUSD added 30pips to trade back above 0.905 following the trade numbers and equities on the ASX200 (+1.1%) and Nikkei (+0.8%) are better bid, led by cyclicals. Copper is 0.6% firmer and gold (-0.4%) has given back some of its outperformance over the past fortnight. There was a relatively muted reaction in other asset classes. 10yr Australian government bonds sold off by 2bp following the data and US 10yr yields are unchanged at around 2.72%. As we type, the South China Morning Post is reporting that another Chinese investment product is in danger of defaulting. The product, which raised 289 million yuan from clients of China Construction Bank (CCB) was created by Jilin Province Trust and backed by a loan to a coal company, Shanxi Lianmeng Energy (SCMP).

Back to the main event of yesterday, Yellen’s first testimony as Fed Chair didn’t contain too many surprises, despite what the price action in treasuries (+6bp), equities and gold (+1.3%) indicate. Most of the market moves came immediately after the prepared remarks were released to the public and there was relatively little reaction to the remainder of Yellen’s near six-hour testimony. Yellen highlighted that she planned to continue the policies adopted under her predecessor namely by continuing the QE taper in measured steps. The Fed Chair said that it would take a “notable change” in the outlook for this to be paused. In a nod to the doves, she mentioned that the labour market recovery was “far from complete” and that as a result the Fed would remain extraordinarily accommodative. Yellen mentioned two labor market trends—the share of people who have been unemployed for more than six months and the high percentage of people who are working part-time but want full-time employment—as factors effectively mitigating the improvement in the unemployment rate. The issue of the recent US weather came up briefly in the Q&A where Yellen conceded that she was surprised at the payrolls slowdown in Dec-Jan. In terms of forward guidance, Yellen said that crossing policy thresholds would not prompt an automatic rate hike but would indicate whether it would be appropriate to consider whether the broader economic outlook justified a change in policy. She did state the Fed is “watching closely the recent volatility in global financial markets. Our sense is that at this stage these developments do not pose a substantial risk to the US economic outlook.”

Elsewhere on Capitol Hill, the House of Representatives managed to pass a bill late yesterday to suspend the debt limit until March next year. The bill was passed with a vote of 221 to 201 with 193 Democrats voting “yes”, versus just 28 Republicans who did the same. Despite the low GOP “yes” vote, Politico described a hardening realisation within the House and Senate GOP caucuses that “three years of partisan brinkmanship over the budget….fighting over the debt in a crisis-like atmosphere is a political loser”. The bill now goes to the Democrat-controlled Senate for approval where Harry Reid said the chamber will act to pass the measure as soon as possible.

Before we preview the day ahead, DB’s Gilles Moec and Mark Wall have published further commentary on the recent German Constitutional Court’s ruling on the OMT. In their view, the German Constitutional Court (GCC) (i) made it clear it regards OMT as exceeding the competences granted to the ECB by the European Treaty and that (ii) would not consider itself bound by a positive ruling of the European Court of Justice. Despite this the referral in their opinion does not have any immediate market consequences. However, Gilles and Mark think that it alters substantially the level of insurance we could expect from the ECB against any return of sovereign turmoil.

Turning to the day ahead, in Europe we get an update on Euroarea industrial production and Draghi will be making a speech in Brussels entitled “Progress through Crisis”. But the spotlight will be on the BoE’s quarterly inflation report and how Carney will augment the bank’s forward guidance. DB’s UK economist George Buckley expects the Bank to move to unspecified time-dependent guidance from its current specific state dependent policy guidance. Again, theres not too much US data on the horizon today so the focus will be on a couple of speeches from the Fed’s Bullard and Lacker.

via Zero Hedge http://ift.tt/1g6wAbP Tyler Durden

After initially sending the all important USDJPY carry pair – and thus all risk assets – into rally mode, the initial euphoria over manipulated Chinese trade data (see China Trade Puzzle Revived as Hong Kong Data Diverge), has all but fizzled and at last check the USDJPY was sliding to its LOD, approaching 102 from the wrong side. That, and a statement by the ECB’s Coeure that the ECB is “very seriously” considering a negative deposit rate (and that the OMT is ready to be used even though it obviously isn’t following the latest brewhaha from the German top court) have so far defined the overnight session, the latter having sent the EUR sliding across all major pairs.

In Asia the latest Chinese trade numbers have helped set the tone for overnight session in spite of doubts about the robustness of the data. Following the recent spate of mixed Chinese data, the latest Customs report showed that January Chinese exports rose 10.6% Y/Y (vs expectations of 0.1% growth) and imports rose by 10.0% Y/Y (vs expectations of 4% growth). The data is especially surprising given that the traditional slowdown for Chinese New Year fell in January this year versus February last year. January’s rate of import growth was a seven month high, and the level of China’s imports of crude oil, iron ore and copper all rose to all-time highs for a January, according to Customs data – which is positive news for some of the resource-focused EMs. All this brought China’s monthly trade balance to +$32bn (vs consensus $23bn) although we always need to be wary of data seasonality during the Chinese New Year period.

Elsewhere, stocks traded higher since the get-go in Europe, supported by positive macroeconomic data from China and also better than expected earnings by SocGen and ING. As a result, financials led the move higher, with basic materials not too far behind. Renewed risk on sentiment, together with 10y EFSF bond syndication weighed on core EU fixed income products, with Gilts also under pressure after the BoE refrained from adjusting forward guidance. In its eagerly awaited QIR, the Bank kept the 7% unemployment threshold and pointed to high spare capacity, which the MPC seeks to gradually absorb. Much more aggressive steepening of the UK curve was avoided largely by the fact that the Bank said that it will continue to reinvest proceeds of maturing QE Gilt holdings at least until it start to raise rates, adding that it sees scope to keep 0.5% rate after jobless threshold hit. Nevertheless, failure to adjust knockout clauses supported GBP, which heading into the North American open is the clear outperformer vs. its peers. Going forward, market participants will get to digest the release of the latest DoE report, 10y note auction by the US Treasury and also earnings by Cisco.

Turning to the day ahead, in Europe we get an update on Euroarea industrial production and Draghi will be making a speech in Brussels entitled “Progress through Crisis”. But the spotlight will be on the BoE’s quarterly inflation report and how Carney will augment the bank’s forward guidance. DB’s UK economist George Buckley expects the Bank to move to unspecified time-dependent guidance from its current specific state dependent policy guidance. Again, theres not too much US data on the horizon today so the focus will be on a couple of speeches from the Fed’s Bullard and Lacker.

Headline bulletin from Bloomberg and RanSquawk

• Treasuries fall for a second day, 10Y yield rises toward 100-DMA at 2.742%; quarterly refunding continues today with $24b 10Ys, WI bid 2.765% after drawing 3.009% at last sale.
• Yesterday’s 3Y auction stopped through, aided by selloff into 1pm bidding deadline; 42% indirect award was highest, primary dealer award lowest since August 201l
• China’s trade growth unexpectedly accelerated in January, with exports +10.6% and imports +10%, defying signs the world’s second-largest economy will slow while fueling speculation that fake shipments are resurfacing
• Bank of England Governor Mark Carney renewed his pledge to keep interest rates at a record low in a new “phase” of forward guidance to combat persisting slack in the British economy
• 28 Republicans, including Speaker Boehner and many in his leadership team, joined with Democrats to pass a suspension of the debt ceiling until March 15, 2015
• Health insurers told to pay $150 billion in taxes over a decade to help fund Obamacare are now shifting at least part of that cost back to taxpayers
• A potentially historic winter storm threatens to coat Georgia with ice, knocking out power and grounding thousands of planes, before bringing snow to Northeastern cities including Washington and New York
• Sovereign yields higher. EU peripheral spreads tighten. Asian, European stocks, U.S. stock-index futures gain. WTI crude and copper higher, gold falls
• GBP supported by BoE’s decision to keep 7% unemployment knock-out threshold, with Carney saying that the Bank sees scope to keep 0.5% rate after jobless threshold hit.
• EUR is under broad-based pressure after ECB’s Coeure said the ECB is considering a negative deposit rate very seriously.
• Late yesterday, the House of Rep. voted to suspend the US debt limit until Mar’15, the vote now goes to the Senate where they are expected to vote as soon as today.

US Event Calendar

• 7:00am: MBA Mortgage Applications, Feb. 7 (prior 0.4%)
• 8:45am: Fed’s Bullard speaks in New York
• 10am: New York Fed issues small business credit survey
• 10:30am: ECB’s Draghi speaks in Brussels Supply
• 11:00am: POMO – Fed to buy $1b-$1.25b in 2036-2043 sector
• 1:00pm: U.S. to sell $24b 10Y notes
• 2:00pm: Monthly Budget Statement, Jan., est. -$10b (prior +$2.9b)

Asian Headlines

Nikkei 225 settled up 0.56%, supported by better than expected data from China and also in reaction to Fed’s Yellen testimony where the head of the bank preached policy continuity. As a result, JPY swaps curve bear-steepened up to 10y and bear-flattened in the longer-dated section of the curve. In Japan specific news, BoJ’s Kiuchi said more easing may do more harm than good. (Nikkei)

Chinese Trade Balance (USD) (Jan) M/M 31.86bln vs. Exp. 23.45bln (Prev. 25.64bln)
– Chinese Exports (Jan) M/M 10.6% vs. Exp. 0.1% (Prev. 4.3%)
– Chinese Imports (Jan) M/M 10.0% vs. Exp. 4.0% (Prev. 8.3%)

EU & UK Headlines

BoE see scope to keep 0.5% rate after jobless threshold hit, keeps 7% unemployment threshold. (BBG/ RTRS/DJN)

Any increases in BoE rate should be limited and the MPC will seek to absorb all spare capacity. The governor also said that the Bank will not be giving time contingent guidance.

Also of note, BoE’s Bean said that the Bank wants to start tightening policy before slack is completely eliminated.

Italy’s centre-left PD coalition leadership are due to discuss Italian PM Letta’s latest reform proposals, but expectations are rising that the PM would fail to win his party’s support and be forced to resign. (FT) The reports follow a continued power-struggle between PM Letta and the PD head Matteo Renzi. ECB’s Coeure says the ECB is considering a negative deposit rate very seriously. (RTRS)

US Headlines

The House of Representatives voted to suspend the US debt limit until March 2015, giving a victory to Democrats who said the ceiling could be lifted without conditions. The measure passed 221-201. (C-Span) The vote now goes to the Senate where they are expected to vote as soon as today.

Equities

Despite broad based gain by major EU equity indices, the FTSE-100 index underperformed its peers, as a number of blue-chip names such as Shell and BP traded ex-dividend. In terms of notabl
e movers, WM Morrison shares surged higher at the open as market participants reacted to press reports citing sources which indicated that the founding family of the company are reported to have contacted private-equity funds such as CVC Capital Partners and Carlyle Group to weigh their interest in taking the retailer private.

FX

GBP/USD advanced to its highest level since 30th January after the BoE kept the unemployment knock-out threshold unchanged at 7%, with the governor adding that the Bank sees scope to keep 0.5% rate after jobless threshold hit.

At the same time, EUR came under broad based selling pressure and CHF depreciated vs. EUR and the USD (lost around 50pips in the process) after ECB’s Coeure said that the ECB is considering a negative deposit rate very seriously.

Looking elsewhere, despite the risk on sentiment, USD/JPY traded lower, weighed on by a weaker USD and also lower trending EUR/JPY cross which accelerated the price action following Carney inspired GBP gains.

Commodities

China’s crude oil imports rose 11.9% in January from a year earlier to a record 6.63mbpd, as companies restocked ahead of the Lunar New Year holiday despite tepid demand growth. (BBG)

Technical analysis by Citi and RBC sees gold prices extending their current 2014 rebound and reaching USD 1,400 on a 100-day average. With patterns signalling prices will rally 8.5% by the end of March according to Citi. (BBG)

DB’s Jim Reid concludes the overnight summary:

There’s no stressing the market at the moment as the three main macro events of the last few days have all ended the same way – in a large market rally. First we had a less dovish Draghi than expected (S&P 500+1.24%), then a weak payroll report (S&P 500+1.33%) and now a Yellen testimony that to most people appeared on message (S&P 500 +1.11%). All three could have been spun a different way market wise so the rally seems to have been independent of these event’s contents but more to do with positioning going into them.

Nevertheless, risk assets have been on a roll during the past week, and it seems that memories of January’s wobbles are quickly fading. Indeed, if we look at the major equity indices the S&P500 is only about 1.5% away from being flat on the year after being down by more than 5.5% at one stage in late January. The Stoxx600 is now back to being up (+0.4%) on the year. Outside of equities, the major credit indices are slowly grinding their way back to the tights posted at the start of the year. The US CDX IG index and European iTraxx are just a few bps away (2bp to 3bp) from their 2014 starting points. Meanwhile the higher beta European Crossover is now 7bp tighter than at the start of the year. So broadly speaking, DM equity and credit markets have mostly reversed January’s sell-off, but EM continues to lag with the MSCI EM equity index still down 5.8% YTD while the CDX EM credit index is almost 50bp wider over the same period.

In Asia the latest Chinese trade numbers have helped set the tone for overnight session in spite of doubts about the robustness of the data. Following the recent spate of mixed Chinese data, the latest Customs report showed that January Chinese exports rose 10.6% Y/Y (vs expectations of 0.1% growth) and imports rose by 10.0% Y/Y (vs expectations of 4% growth). The data is especially surprising given that the traditional slowdown for Chinese New Year fell in January this year versus February last year. January’s rate of import growth was a seven month high, and the level of China’s imports of crude oil, iron ore and copper all rose to all-time highs for a January, according to Customs data – which is positive news for some of the resource-focused EMs. All this brought China’s monthly trade balance to +$32bn (vs consensus $23bn) although we always need to be wary of data seasonality during the Chinese New Year period. Bloomberg is also carrying the story as one where false invoicing might be artificially boosting the numbers. The AUDUSD added 30pips to trade back above 0.905 following the trade numbers and equities on the ASX200 (+1.1%) and Nikkei (+0.8%) are better bid, led by cyclicals. Copper is 0.6% firmer and gold (-0.4%) has given back some of its outperformance over the past fortnight. There was a relatively muted reaction in other asset classes. 10yr Australian government bonds sold off by 2bp following the data and US 10yr yields are unchanged at around 2.72%. As we type, the South China Morning Post is reporting that another Chinese investment product is in danger of defaulting. The product, which raised 289 million yuan from clients of China Construction Bank (CCB) was created by Jilin Province Trust and backed by a loan to a coal company, Shanxi Lianmeng Energy (SCMP).

Back to the main event of yesterday, Yellen’s first testimony as Fed Chair didn’t contain too many surprises, despite what the price action in treasuries (+6bp), equities and gold (+1.3%) indicate. Most of the market moves came immediately after the prepared remarks were released to the public and there was relatively little reaction to the remainder of Yellen’s near six-hour testimony. Yellen highlighted that she planned to continue the policies adopted under her predecessor namely by continuing the QE taper in measured steps. The Fed Chair said that it would take a “notable change” in the outlook for this to be paused. In a nod to the doves, she mentioned that the labour market recovery was “far from complete” and that as a result the Fed would remain extraordinarily accommodative. Yellen mentioned two labor market trends—the share of people who have been unemployed for more than six months and the high percentage of people who are working part-time but want full-time employment—as factors effectively mitigating the improvement in the unemployment rate. The issue of the recent US weather came up briefly in the Q&A where Yellen conceded that she was surprised at the payrolls slowdown in Dec-Jan. In terms of forward guidance, Yellen said that crossing policy thresholds would not prompt an automatic rate hike but would indicate whether it would be appropriate to consider whether the broader economic outlook justified a change in policy. She did state the Fed is “watching closely the recent volatility in global financial markets. Our sense is that at this stage these developments do not pose a substantial risk to the US economic outlook.”

Elsewhere on Capitol Hill, the House of Representatives managed to pass a bill late yesterday to suspend the debt limit until March next year. The bill was passed with a vote of 221 to 201 with 193 Democrats voting “yes”, versus just 28 Republicans who did the same. Despite the low GOP “yes” vote, Politico described a hardening realisation within the House and Senate GOP caucuses that “three years of partisan brinkmanship over the budget….fighting over the debt in a crisis-like atmosphere is a political loser”. The bill now goes to the Democrat-controlled Senate for approval where Harry Reid said the chamber will act to pass the measure as soon as possible.

Before we preview the day ahead, DB’s Gilles Moec and Mark Wall have published further commentary on the recent German Constitutional Court’s ruling on the OMT. In their view, the German Constitutional Court (GCC) (i) made it clear it regards OMT as exceeding the competences granted to the ECB by the European Treaty and that (ii) would not consider itself bound by a positive ruling of the European Court of Justice. Despite this the referral in their opinion does not have any immediate market consequences. However, Gilles and Mark think that it alters substantially the level of insurance we could expect from the ECB against any return of sovereign turmoil.

Turning to the day ahead, in Europe we get an update on Euroarea industrial production and Draghi will be making a speech in Brussels entitled “Progress through Crisis”. But the spotlight will be o
n the BoE’s quarterly inflation report and how Carney will augment the bank’s forward guidance. DB’s UK economist George Buckley expects the Bank to move to unspecified time-dependent guidance from its current specific state dependent policy guidance. Again, theres not too much US data on the horizon today so the focus will be on a couple of speeches from the Fed’s Bullard and Lacker.

via Zero Hedge http://ift.tt/1g6wAbP Tyler Durden

Everyone knows that all of the economic growth has gone to the 1%:

Wrong!

The 1% have gotten chump change compared to the .1% … who, in turn, have gotten peanuts compared to the .01%

(Graphs courtesy of World Top Incomes Database, using data compiled by economists Facundo Alvaredo, Tony Atkinson, Thomas Piketty and Emmanuel Saez.)

See this for more on inequality.

via Zero Hedge http://ift.tt/1kADJVm George Washington

Submitted by Laurence M. Vance via the Ludwig von Mises Institute,

This selection is from chapter 7 of Laurence Vance’s War, Empire, and the Military: Essays on the Follies of War and U.S. Foreign Policy, now available in the Mises Store.

The WikiLeaks revelations have shined a light on the dark nature of U.S. foreign policy, including, as Eric Margolis recently described it: “Washington’s heavy-handed treatment of friends and foes alike, its bullying, use of diplomats as junior-grade spies, narrow-minded views, and snide remarks about world leaders.”

As much as I, an American, hate to say it, U.S. foreign policy is actually much worse. It is aggressive, reckless, belligerent, and meddling. It sanctions the destabilization and overthrow of governments, the assassination of leaders, the destruction of industry and infrastructure, the backing of military coups, death squads, and drug traffickers, and imperialism under the guise of humanitarianism. It supports corrupt and tyrannical governments and brutal sanctions and embargoes. It results in discord, strife, hatred, and terrorism toward the United States.

The question, then, is simply this: Can U.S. foreign policy be fixed? Although I am not very optimistic that it will be, I am more than confident that it can be.

I propose a four-pronged solution from the following perspectives: Founding Fathers, military, congressional, libertarian. In brief, to fix its foreign policy the United States should implement a Jeffersonian foreign policy, adopt Major General Smedley Butler’s Amendment for Peace, follow the advice of Congressman Ron Paul, and do it all within the libertarian framework of philosopher Murray Rothbard.

Thomas Jefferson, our first secretary of state and third president, favored a foreign policy of “peace, commerce, and honest friendship with all nations — entangling alliances with none.” This policy was basically followed until the Spanish-American War of 1898. Here is the simple but profound wisdom of Jefferson:

“No one nation has a right to sit in judgment over another.”

 

“We wish not to meddle with the internal affairs of any country, nor with the general affairs of Europe.”

 

“I am for free commerce with all nations, political connection with none, and little or no diplomatic establishment.”

 

“We have produced proofs, from the most enlightened and approved writers on the subject, that a neutral nation must, in all things relating to the war, observe an exact impartiality towards the parties.”

No judgment, no meddling, no political connection, and no partiality: this is a Jeffersonian foreign policy.

U.S. Marine Corps Major General Smedley Butler was the most decorated Marine in U.S. history. After leaving the military, he authored the classic work War Is a Racket. Butler proposed an Amendment for Peace to provide an “absolute guarantee to the women of America that their loved ones never would be sent overseas to be needlessly shot down in European or Asiatic or African wars that are no concern of our people.” Here are its three planks:

1. The removal of members of the land armed forces from within the continental limits of the United States and the Panama Canal Zone for any cause whatsoever is hereby prohibited.

2. The vessels of the United States Navy, or of the other branches of the armed services, are hereby prohibited from steaming, for any reason whatsoever except on an errand of mercy, more than five hundred miles from our coast.

3. Aircraft of the Army, Navy and Marine Corps is hereby prohibited from flying, for any reason whatsoever, more than seven hundred and fifty miles beyond the coast of the United States.

Butler also reasoned that because of “our geographical position, it is all but impossible for any foreign power to muster, transport and land sufficient troops on our shores for a successful invasion.” In this he was echoing Jefferson, who recognized that geography was one of the great advantages of the United States: “At such a distance from Europe and with such an ocean between us, we hope to meddle little in its quarrels or combinations. Its peace and its commerce are what we shall court.”

And then there is our modern Jeffersonian in Congress, Rep. Ron Paul, the only consistent voice in Congress from either party for a foreign policy of peace and nonintervention. In a speech on the House floor several months before the invasion of Iraq, Ron Paul made the case for a foreign policy of peace through commerce and nonintervention:

A proper foreign policy of non-intervention is built on friendship with other nations, free trade, and open travel, maximizing the exchanges of goods and services and ideas.

 

We should avoid entangling alliances and stop meddling in the internal affairs of other nations — no matter how many special interests demand otherwise. The entangling alliances that we should avoid include the complex alliances in the UN, the IMF, the World Bank, and the WTO.

 

The basic moral principle underpinning a non-interventionist foreign policy is that of rejecting the initiation of force against others. It is based on non-violence and friendship unless attacked, self-determination, and self-defense while avoiding confrontation, even when we disagree with the way other countries run their affairs. It simply means that we should mind our own business and not be influenced by special interests that have an ax to grind or benefits to gain by controlling our foreign policy. Manipulating our country into conflicts that are none of our business and unrelated to national security provides no benefits to us, while exposing us to great risks financially and militarily.

For the libertarian framework necessary to ensure a foreign policy of peace and nonintervention, we can turn to libertarian political philosopher and theoretician Murray Rothbard:

The primary plank of a libertarian foreign policy program for America must be to call upon the United States to abandon its policy of global interventionism: to withdraw immediately and completely, militarily and politically, from Asia, Europe, Latin America, the Middle East, from everywhere. The cry among American libertarians should be for the United States to withdraw now, in every way that involves the U.S. government. The United States should dismantle its bases, withdraw its troops, stop its incessant political meddling, and abolish the CIA. It should also end all foreign aid — which is simply a device to coerce the American taxpayer into subsidizing American exports and favored foreign States, all in the name of “helping the starving peoples of the world.” In short, the United States government should withdraw totally to within its own boundaries and maintain a policy of strict political “isolation” or neutrality everywhere.

The U.S. global empire with its 1,000 foreign military bases and half a million troops and mercenary contractors in three-fourths of the world’s countries must be dismantled. This along with the empire’s spies, covert operations, foreign aid, gargantuan military budgets, abuse and misuse of the military, prison camps, torture, extraordinary renditions, assassinations, nation building, spreading democracy at the point of a gun, jingoism, regime changes, military alliances, security guarantees, and meddling in the affairs of other countries.

U.S. foreign policy can be fixed. The United States would never tolerate another country building a string of bases around North America, stationing thousands of its troops on our soil, enforcing a no-fly zone over American territory, or sending their fleets to patrol off our coasts. How much longer will other countries tolerate these actions by the United States? We have already experienced blowback from the Muslim world for our foreign policy. And how much longer can the United States afford to maintain its empire?

It is time for the world’s policeman, fireman, security guard, social worker, and busybody to announce its retirement.

via Zero Hedge http://ift.tt/1iNpCc6 Tyler Durden