Tag: news

Earlier this week we reported that at JPMorgan, the many will pay for the crimes of the few, after the bank revealed that compensation for most workers would be flat with 2012, and no raises were planned for the bank’s employees as a result of the massive, $20+ billion legal bill the bank has raked up in recent months as one after another market manipulation, fraud and malfeasance by current and former JPM workers has been revealed. One person, however, will be exempt from this blanket punishment: the firm’s CEO Jamie Dimon, of course. Because there is always a reason Jamie is richer than you…

From NYT:

A year after an embarrassing trading blowup led to millions of dollars being docked from Jamie Dimon’s paycheck, the chairman and chief executive of JPMorgan Chase is getting a raise.

 

JPMorgan’s board voted this week to increase Mr. Dimon’s annual compensation for 2013, hashing out the pay package after a series of meetings that turned heated at times, according to several executives briefed on the matter. The raise — the details were not made public on Thursday — follows a move by the board last year to slash Mr. Dimon’s compensation by half, to $11.5 million.

 

When it made that deep pay cut, the board was giving a stern rebuke over the fallout from the “London Whale” multibillion-dollar trading blunder. This week, directors, gathered in a conference room at the bank’s Park Avenue headquarters overlooking a snow-covered Central Park, discussed what message their next decision on the bank chieftain’s compensation would send.

 

The debate pitted a vocal minority of directors who wanted to keep his compensation largely flat, citing the approximately $20 billion in penalties JPMorgan has paid in the last year to federal authorities, against directors who argued that Mr. Dimon should be rewarded for his stewardship of the bank during such a difficult period. During the meetings, some board members left the conference room to pace up and down the 50th-floor corridor.

So what was the premise for the Dimon majority faction on the board to give him a raise?

“Mr. Dimon’s defenders point to his active role in negotiating a string of government settlements that helped JPMorgan move beyond some of its biggest legal problems. He has also solidified his support among board members, according to the people briefed on the matter, by acting as a chief negotiator as JPMorgan worked out a string of banner government settlements this year.”

Well, “active role in negotiating settlements” sure is a new way to describe lying before congress about tempests in teapots. But at this point we are all well beyond the laughing stage. As for JPM’s workers: we are confident they are delighted that while they get paid the same, their uberboss can afford one more fifth home.

via Zero Hedge http://ift.tt/KTQxXK Tyler Durden

The last time markets scrambled for protection against sovereign defaults was over European country collapse in the summer of 2012 around the time Mario Draghi introduced a non-existent measure to allow Europe’s nations to engage in zero reforms while their bond yields plunged. This time it is the emerging markets.

• Argentina +139bps at 2562.07bps, hit highest since Sept.
• Venezuela +81bps at 1398.19bps, highest since 2010
• Turkey +11.6bps at 276.7bps, highest since June 2012
• South Africa +10bps at 236bps, highest since Sept.

Of course, CDS aren’t telling us anything (capital-controlled) FX hasn’t already made quite clear.

Source: BBG

via Zero Hedge http://ift.tt/KPIV81 Tyler Durden

• Emerging market sell-off raises specter of contagion (Reuters)
• China Bank Regulator Said to Issue Alert on Coal Mine Loans (BBG)
• Argentina to Ease FX Controls After Peso Devaluation (BBG)
• Pimco’s Gross problem: who can succeed the ‘Bond King’? (Reuters)
• Ukraine protesters seize building, put up more barricades (Reuters)
• Mideast Turmoil Dominates Gathering of Business Elite (WSJ)
• Central Banks Withdraw Dollar Funding (WSJ) – oh really?
• Samsung warns of weak earnings growth this quarter (FT)
• Three explosions rock Cairo, killing 5 (USA Today)
• Vitol to Trafigura Chasing U.S. NGLs as Traders Cash In (BBG)
• EBay reliance on PayPal for growth lowers chances of spinoff (Reuters)
• Pentagon report faults F-35 on software, reliability (Reuters)

 

Overnight Media Digest

WSJ

* Carl Icahn says he’s prepared for a proxy fight to win two seats on the board of eBay Inc and push the company to calve off its PayPal unit.

* Investors dumped currencies in emerging markets, underscoring growing anxiety about the ability of developing nations to prop up their economies as they face uneven growth.

* The turmoil of the Middle East descended on this Swiss Alpine town of Davos, where Iranian, Israeli and American leaders laid out often competing visions of the region’s future during a conference for the world’s business elite.

* Some former securities brokers who lost their licenses have found a creative way to keep selling investments to their clients: by using insurance licenses.

* Hedge fund managers are roiling the clubby art market -seeking ‘distressed’ artists, paying record sums and dumping those who don’t pay off.

* The U.S. Food and Drug Administration took another action against India’s Ranbaxy Laboratories Ltd on Thursday, prohibiting it from making or selling drug ingredients from its Toansa, India, plant for the U.S. market.

* Google Inc has been working hard to change its profile as an ally of the Democratic Party, courting Republicans and building alliances with conservatives at a time when regulators and Congress are considering issues affecting its business interests.

* Microsoft Corp, in the midst of major change, said its fiscal second-quarter profit climbed 2.8 percent, bolstered by strong demand for the company’s new Xbox videogame console.

* Microsoft Corp’s foray into making smartphones was dealt a setback as Nokia Corp said sales of its Lumia Windows line posted a sales decline for the fourth quarter.

* International Business Machines Corp has agreed to sell its low-end server business to Chinese computer maker Lenovo Group Ltd after talks broke down last spring. Now the companies face a new challenge: convincing U.S. security agencies to bless the transaction.

* Facing competition from rivals offering smartphones with bigger screens, Apple Inc is planning larger displays on a pair of iPhones due for release this year, people familiar with the situation said.

* General Motors Co newly appointed Chief Executive Mary Barra said she intends to accelerate the auto maker’s ongoing push to expand profit margins in North America while increasing its global market share.

* Starbucks Corp reported slightly lower-than-expected revenue and same-store sales growth in its fiscal first quarter due, in part, to consumers’ shift to online shopping during the holidays.

* Under a new policy being formulated, Goldman Sachs Group Inc won’t allow communication over third-party instant-messaging services created by Bloomberg, Yahoo and others in a bid to protect proprietary information.

* The software behind the attack at Neiman Marcus Group lurked in the luxury retailer’s payment system undetected for months, scraping data from as many as 1.1 million accounts and ending its mission before it was discovered.

* The U.S. energy boom is curtailing the country’s demand for imported oil, and Mexico’s Pemex is being forced to look farther afield.

* Samsung Electronics Co forecast a weak first half after releasing fourth-quarter earnings that showed growth slowed sharply.

* Target Corp’s massive data breach piles another weight on Chief Executive Gregg Steinhafel, who is already under pressure to stem losses from the chain’s venture into Canada and to keep local-store shoppers from defecting to online rivals.

* Online lender Western Sky Financial LLC has agreed to pay a $1.5 million fine and refund interest payments to borrowers under an agreement reached with New York Attorney General Eric Schneiderman.

* Jana Partners LLC owns a big stake in Juniper Networks Inc making it the second major shareholder activist to invest in the networking-gear company recently.

* The Obama administration is set to complete a critical phase of its Keystone XL pipeline review next month, setting the stage for President Barack Obama to make a call on the politically charged decision in the thick of the midterm campaign season.

* The National Transportation Safety Board has issued recommendations to the Department of Transportation asking for a series of actions to address the risks of transporting crude by rail.

 

FT

Bank of England Governor Mark Carney said in an interview to the BBC on Thursday that there was no immediate need to raise interest rates, and that decisions over its unemployment threshold were a matter for the Monetary Policy Committee.

A Goldman Sachs official said about 25 London-listed initial public offerings are expected in the second half of 2014. Alasdair Warren, Goldman Sach’s head of financial sponsors coverage in Europe, said “the desire to increase exposure to equities is accelerating”.

Business Secretary Vince Cable will investigate Labour party’s allegations of unnecessary selling of personal accident insurance to workers by six recruitment firms, namely Blue Arrow, Staffline, Acorn, Taskmaster, Randstad and Meridian.

British department store chain House of Fraser is pushing ahead with a return to the stock market after talks about a sale to its French counterpart Galeries Lafayette ended, according to sources.

Cambridge Satchel Company, which makes leather bags and has 10 stores across the UK, raised $21 million from private equity group Index Ventures.

 

NYT

* In her first extended public comments since taking over General Motors Co, Mary T. Barra vowed to quicken the company’s comeback from bankruptcy with improved products, better brands and consistently profitable operations around the world.

* Whistle-blower lawsuits claim Health Management Associates Inc tried to inflate its Medicare and Medicaid payments by admitting more patients.

* The theft of consumer data from luxury retailer Neiman Marcus Group LLC appears to have involved 1.1 million credit and debit cards.

* Coca-Cola and other corporations are starting to see global warming as an economically disruptive force affecting commodity costs and supply chains.

* Attorney General Eric H. Holder Jr. said that lawful marijuana businesses should have access to the American banking system and that the government would soon offer rules to help them gain it.

* Senator Edward J. Markey asked regulators to look into Herbalife Ltd, the company that has been in the cross hairs of hedge fund manager William A. Ackman.

* Sidney Gilman, the prosecution’s top witness in Mathew Martoma’s insider trial, said F.B.I. agents told him that the government’s true target was Steven A. Cohen, SAC’s billionaire founder.

* William S Simon, chief executive of Walmart for the United States, said on Thursday at the United States Conference of Mayors that the company was providing a $10 million fund to promote manufacturing in a public push to sell more American-made products.

* A year after an embarrassing trading blowup led to millions of dollars being docked from Jamie Dimon’s paycheck, the chairman and chief executive of JPMorgan Chase is getting a raise.

 

Canada

THE GLOBE AND MAIL

* Canadian Prime Minister Stephen Harper arrived at a massive refugee camp in Jordan just a day after enjoying the comforts of a presidential palace. Harper, on the final day of his visit to Israel and Jordan, was touring the Za’atari refugee camp in Jordan, just 12 kilometres from the Syrian border.

* A horrific fire that ripped through a seniors’ home in rural Quebec has left a tiny community reeling from what is feared to be the worst tragedy of its kind in decades. The blaze broke out in the bitter-cold early hours of Thursday in L’Isle-Verte, a Lower St. Lawrence village 230 kilometres downriver from Quebec City. Wind gusts spread it quickly through the 52-unit home. At least five people were killed and as many as 30 are unaccounted for.

Reports in the business section:

* Corporate Canada is beginning to feel the effects of a plunging Canadian dollar, with some businesses raising prices – or making plans to do so – to account for the higher cost of U.S. goods.

* Barrick Gold Corp warned it plans to cut gold reserves, take another impairment charge on its troubled Pascua Lama mine and produce less precious metal this year.

NATIONAL POST

* The first case of a deadly pig virus that has killed millions of baby pigs in the U.S. has been confirmed in Canada, but authorities say there is no risk to human health or food safety. However, there are fears that it could drive up the price of pork.

* When a coalition of Arab nations convinced UNESCO to abruptly quash an exhibition on Jewish history in the Middle East this month, it was Canadian diplomats who led the campaign to have the decision overturned, the Simon Wiesenthal Center revealed this week.

FINANCIAL POST

* The Canadian dollar has been a target of debate, and much angst, since it was last above parity with the U.S. currency 11 months ago. Ever since, the Bank of Canada has been under the gun to bring it even closer to Earth to help fire up the economy.

* The deputy chairman at Rogers Communications Inc , Edward Rogers, warned that opening up the telecommunications market fully to foreign ownership could leave Canada as nothing more than a “branch plant” when it comes to investment in innovation and rural coverage.

 

China

SHANGHAI SECURITIES NEWS

– China’s retail sales are expected to grow around 13 percent this year, according to Fang Aiqing, vice-head of the commerce ministry.

– China’s state assets watchdog has urged state-owned companies to step up the fight against corruption.

China Securities Journal

– U.S. luxury electric car maker Tesla plans to set up a network of power charging stations in China.

CHINA BUSINESS NEWS

– China’s top five state-owned banks have all set their deposit rates to the maximum allowed by regulators to compete for deposits, according to unidentified sources.

 

Britain

The Telegraph

MARK CARNEY: NO NEED FOR AN IMMEDIATE RATE RISE

Bank of England Governor Mark Carney has pledged there will be no “immediate” increase in interest rates as unemployment nudges closer to the 7 percent threshold in an apparent softening of his forward guidance policy.

BANKERS IN DRIVE TO BOOST SME LOAN APPLICATIONS

If all businesses that required finance went ahead with their applications, based on the current approval rates, there would be a significant economic uplift, said the BBA.

“Businesses are more likely to get finance than they think,” said BBA chief executive Anthony Browne.

The Guardian

OUTGOING LLOYDS CHAIRMAN TO HEAD UK ACCOUNTING REGULATOR

The retiring chairman of state-backed Lloyds, Sir Win Bischoff, has been named as the next head of Britain’s accounting regulator, days after being drawn into controversy over the bank’s handling of the proposed sale of more than 600 branches to the Co-op.

INTEREST RATE RISE WOULD UNDERMINE RECOVERY, WARNS MPC MEMBER

A leading Bank of England policymaker, Paul Fisher, a member of the central bank’s monetary policy committee, warned on Thursday that a rise in interest rates risked undermining the recovery and the cost of credit should remain low until living standards begin to rise.

The Times

FALLON SET TO HAND OVER THE DEEDS TO THE LAND REGISTRY

Land Registry, which holds the titles to most of the land in England and Wales could be sold or part-privatised in the latest move by the Government to raise billions from state assets. Michael Fallon, the Business Minister, laid out the options for the Land Registry yesterday as he kick-started a consultation on the 150-year-old organisation.

TEMPERATURES SOAR AS ‘CONCERNED’ SSE PREDICTS PROFITS RISE

SSE has been accused of hypocrisy after claiming that bill-payers are “at the heart of the debate” about energy, while it is forecasting a near-9 per cent rise in profits. On Thursday, the company forecast pre-tax profits for the year to the end of March of more than 1.5 billion pounds, an 8.8 per cent rise on the previous year’s profit of 1.4 billion pounds, and will boost the dividend by 3 per cent.

Sky News

HIGH STREET CHAIN BATHSTORE GROOMED FOR SALE

Sky News understands that Endless, the investment fund that acquired Bathstore in May 2012, has decided to explore a sale of the company, which operates more than 150 shops across the country. Rothschild, the investment bank, has been appointed to sound out interest from potential buyers.

ENERGY BOSS ATTACKS PRICE COMPARISON WEBSITES

The boss of Co-operative Energy has accused price comparison websites of misleading customers and pushing up energy bills. Group General Manager Ramsay Dunning has called on the likes of uSwitch, MoneySupermarket.com and Energy Helpline to disclose how much they charged in commission each time a business or household moves supplier.

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include weekly export sales of various commodities, due at 8:30 am ET.

ANALYST RESEARCH
 

Upgrades

Alumina (AWC) upgraded to Neutral from Underperform at BofA/Merrill
Angie’s List (ANGI) upgraded to Buy from Neutral at B. Riley
BancorpSouth (BXS) upgraded to Buy from Hold at Wunderlich
Harman (HAR) upgraded to Overweight from Equal Weight at Barclays
Jacobs Engineering (JEC) upgraded to Buy from Hold at Jefferies
Juniper (JNPR) upgraded to Outperform from Market Perform at William Blair
Juniper (JNPR) upgraded to Overweight from Equal Weight at Barclays
Nokia (NOK) upgraded to Buy from Hold at Societe Generale
SVB Financial (SIVB) upgraded to Overweight from Equal Weight at Evercore

Downgrades

Arctic Cat (ACAT) downgraded to Market Perform from Outperform at Raymond James
Autoliv (ALV) downgraded to Underweight from Equal Weight at Barclays
Citigroup (C) downgraded to Neutral from Overweight at Atlantic Equities
Cleveland BioLabs (CBLI) downgraded to Hold from Buy at Cantor
Cleveland BioLabs (CBLI) downgraded to Perform from Outperform at Oppenheimer
Coach (COH) downgraded to Hold from Buy at Cantor
Fairchild Semiconductor (FCS) downgraded to Underperform from Neutral at BofA/Merrill
FireEye (FEYE) downgraded to Equal Weight from Overweight at Barclays
Mellanox (MLNX) downgraded to Underweight from Equal Weight at Barclays
TRW Automotive (TRW) downgraded to Equal Weight from Overweight at Barclays
Walter Energy (WLT) downgraded to Market Perform from Outperform at Wells Fargo

Initiations

CBS (CBS) initiated with a Buy at Topeka
ChannelAdvisor (ECOM) initiated with a Market Perform at BMO Capital
Chipotle (CMG) initiated with an Outperform at Oppenheimer
Commercial Metals (CMC) initiated with a Neutral at Credit Suisse
Corrections Corp. (CXW) initiated with a Fair Value at CRT Capital
Demandware (DWRE) initiated with a Market Perform at BMO Capital
Diana Shipping (DSX) initiated with an Equal Weight at Evercore
Discovery Communications (DISCK) initiated with a Buy at Topeka
Discovery (DISCA) initiated with a Buy at Topeka
Disney (DIS) initiated with a Hold at Topeka
Geo Group (GEO) initiated with a Buy at CRT Capital
Jive Software (JIVE) initiated with a Market Perform at BMO Capital
Navios Maritime Partners (NMM) initiated with an Equal Weight at Evercore
NetSuite (N) initiated with a Market Perform at BMO Capital
Pandora (P) initiated with an Outperform at Oppenheimer
Safe Bulkers (SB) initiated with an Overweight at Evercore
Scorpio Bulkers (SALT) initiated with an Overweight at Evercore
Tangoe (TNGO) initiated with an Outperform at BMO Capital
Tempur Sealy (TPX) initiated with a Buy at BofA/Merrill
Time Warner Cable (TWC) initiated with a Hold at Topeka
Viacom (VIAB) initiated with a Hold at Topeka
Viasystems (VIAS) initiated with a Buy at Canaccord

HOT STOCKS

Qualcomm (QCOM) acquired patent portfolio from Hewlett-Packard (HPQ)
McKesson (MCK) to acquire Celesio for EUR 23.50 per share
Microsoft (MSFT) expects Nokia (NOK) deal to close this quarter
GlaxoSmithKline (GSK) received positive CHMP opinion for diabetes drug
Juniper (JNPR) CEO says to announce new operational plan within weeks
Williams (WMB) expects to boost FY dividend by 20% in 2014, 2015
Stanley Black & Decker (SWK) committed to returning $1.5B-$2B to stakeholders over two years

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Covidien (COV), Stanley Black & Decker (SWK), Western Alliance (WAL), Celanese (CE), Compuware (CPWR), KLA-Tencor (KLAC), E-Trade (ETFC), Dolby (DLB), ShoreTel (SHOR), Leggett & Platt (LEG), Juniper (JNPR), Intuitive Surgical (ISRG), Discover (DFS), Microsoft (MSFT), Starbucks (SBUX)

Companies that missed consensus earnings expectations include:
Matthews (MATW), ResMed (RMD), Delta Apparel (DLA), Synaptics (SYNA), Digi International (DGII), International Game (IGT),  TESSCO (TESS)

Companies that matched consensus earnings expectations include:
Cathay General (CATY), Applied Micro Circuits (AMCC), Open Text (OTEX), Hexcel (HXL), Covisint (COVS)

NEWSPAPERS/WEBSITES

CNN (TWX) says some social media accounts compromised, Bloomberg reports
FBI to retailers: More credit card breaches (TGT) will happen, Reuters reports
Boeing (BA): Dreamliner reliability improving but not satisfactory, Reuters reports
Boeing (BA), General Dynamics (GD) reach $400M settlement with U.S. Navy, Reuters reports
T. Rowe Price (TROW) encourages Time Warner Cable (TWC) to talk to Charter (CHTR), FT reports
Liberty Global (LBTYA), Ziggo talks continue, WSJ reports
Goldman (GS) to limit traders’ use of chat services, WSJ reports
Chrysler (FIATY) plans to expand global Jeep sales, Detroit News reports

SYNDICATE

American Midstream Partners (AMID) 3.4M share Secondary priced at $26.75
Ashford Hospitality Prime (AHP) 8M share Secondary priced at $16.50
Atossa Genetics  (ATOS) files to sell common stock and warrants, no amount given
Care.com (CRCM) 5.35M share IPO priced at $17.00
Derma Sciences (DSCI) files to sell common stock
E2open (EOPN) 4.661M share Secondary priced at $25.0030
Independence Realty Trust (IRT) 7M share Secondary priced at $8.30
Kips Bay Medical (KIPS) 5.25M share Secondary priced at $.70
NanoString (NSTG) 2.88M share Secondary priced at $18.50
Progenics (PGNX) files $150M mixed securities shelf
Rice Energy (RICE) 44M share IPO priced at $21.00
Tonix Pharmaceuticals (TNXP) files to sell common stock
XenoPort (XNPT) 10M share Secondary priced at $6.00

via Zero Hedge http://ift.tt/M3qpe7 Tyler Durden

Following yesterday’s early morning surge when gold jumped $30 from the low $1230, on news that India may relax its gold capital controls, today’s sharp spike follow through is more a function of ongoing emerging market currency devaluation and overall risk-offness hitting equities around the globe. And with Bitcoin going nowhere even as both Turkey and Argentina continue to turmoil, it means there is only one good old faithful fiat-alternative – the barbarous relic. Sure enough, at last check, gold was trading north of $1270, back to levels last seen in November, and one sovereign default away from soaring a few hundred fiat equivalents higher. And since all hopes now rest on more BOJ easing (or else watch out below), and more of the same pent up inflation, we may have seen recent lows in gold for quite some time, especially with Gartman once again openly “hating” gold.

Intraday:

2-day move:

via Zero Hedge http://ift.tt/1mPN2jH Tyler Durden

It’s Risk Off time.

It all started early in the session when China’s banking regulator ordered regional offices to increase scrutiny of credit risks in coal-mining industry, signaling not only government concern about possible defaults but the implication that possible defaults especially in the much-discussed Trust product which may default as soon as a week from today. This caused a hiccup in the USDJPY which until that point was being pushed higher by Japanese banks hoping to reverse recent losses by adding to their losing long positions.  But then things got really out of control, and the USDJPY plunged by some 150 pips in the matter of hours, plunging as low as 102, driven by unfavourable interest rate differential flows amid heightened concerns over EM nations, in particular TRY and ARS which also supported bid tone in USTs. This also saw spot TRY rate print fresh record high, while 5y Turkish CDS rate advanced to its highest level since June 2012, while at the same time Argentina announced it would life currency controls and dollar purchases in the aftermath of the ARS devaluation by 13%. 

And since everything tracks the JPY carry pair as we have been showing for the past year, futures once again plunged overnight, for now held by 1810 support, Treasurys are bid throughout, with the same treasury yields that have “no where to go but up” sliding to 2.71% from 2.87% at the beginning of the week, while gold is finally spiking as the realization that absolutely nothing has been fixed, that apparently nobody got the taper is priced in memo, and that soon the Fed will have to untaper, begins to spread. Are the central planners finally starting to lose control?

More details from RanSquawk

Heading into the North American open, stocks in Europe are seen lower across the board, as concerns over EM markets continued to weigh heavily on investor sentiment. As a result, Argentina exposed BBVA shares fell 4% after Argentinian central bank devalued the ARS the most in 12 years as the central bank scaled back its intervention in a bid to preserve international reserves that have fallen to a seven-year low, which in turn saw the Spanish IBEX-35 underperform its peers.

Negative sentiment, together with touted month-end related flows has supported flows into fixed income assets, with UK Gilts also better bid in spite of the bear steepening of the short-sterling curve in reaction to press reports by FT which wrote that Carney has signalled scrapping of forward guidance target. This in turn ensured that despite the flight to quality, with GBP initially outperformed its peers, however, a retracement of these gains amid a stronger EUR following higher than expected LTRO repayment has seen GBP/USD trade lower.

Asian Headlines

Touted profit taking ahead of the Chinese New Year, together with renewed concerns over EM markets and consequent short-covering of positions saw the JPY swap curve aggressively bull flatten overnight. While JGBs are expected to be supported next week by BoJ conducting JGB purchasing ops, comments by the President of the GPIF, who said that the fund will not buy more Japanese government bonds and that there is limited room for JGB prices to increase may weigh on sentiment. (BBG)

BoJ’s Kuroda says Japanese economy is on track; after sales tax hike and economy will continue to grow around 1.5%. (RTRS)

EU & UK Headlines

Fitch affirmed Germany at AAA; outlook stable and said that Germany’s general government debt to GDP ratio started to fall. (BBG) Elsewhere, Fitch affirmed Luxembourg at AAA; outlook stable, S&P affirmed Estonia at AA-; outlook stable. Markets now await the judgement on the UK and French sovereigns at Moody’s by the end of the day.

ECB’s Visco has said ECB could consider asset purchases if needed and EUR does not face deflation threat. (BBG) Visco added that the ECB could cut interest rates if needed.

BoE’s Weale says lowering unemployment threshold would not achieve forward guidance core aim of greater certainty. (East Anglian Daily Times)

UniCredit now sees first BoE rate hike in Q4 of 2014 vs Prev. Q1 of 2015. (BBG)

ECB says one week USD liquidity-providing operations will continue to be conduced at least until 31 July 2014. With the BoE set to phase out USD liquidity-providing operations. (BBG)

UK BBA Loans for House Purchase (Dec) M/M 46,521 vs Exp. 47,300 (Prev. 45,044, Rev. 45394) – highest since September 2007

Barclays preliminary pan-Euro agg month-end extensions: +0.12y. Barclays preliminary Sterling month-end extensions:+0.19y

US Headlines

JPMorgan’s Lee says decline in S&P 500, while disappointing is not yet sufficient to alter positive stance on equities in 2014. With equities supported by strengthening US consumer, pent up demand for durables investment spending and improved global growth. (BBG)

Equities

Concerns over stability in EM markets, which resulted in further pressure on TRY this morning, together with negative broker recommendation by analysts at MS saw Aberdeen Asset Management shares come under significant selling pressure. On the other hand, Celesio shares outperformed and traded higher by over 5% after Mckesson said that it is to offer EUR 23.50 per share in a voluntary public takeover offer, and McKesson to get about 75% of company in pact with Haniel and Elliott.

Commodities

SPDR gold holdings down 0.68% to 790.46 tonnes from 795.85 tonnes. (RTRS)

Iran is exaggerating its crude oil export figures and won’t be allowed to sell more than 1mln bpd over the next six months according to US officials involved in managing sanctions against the country. (BBG)

China targets 2014 crude oil production increase of 0.5% to 208mln tonnes according to energy administration. (Energy Administration)

China are to cut diesel price by CNY 125/ton and cut fuel prices from tomorrow. (NRDC)

* * *

We conclude with Jim Reid’s usual overnight recap

The jury is still out on whether yesterday’s selloff was caused by the US data, poor corporate earnings or the Chinese PMI. Whatever the reason, the real damage was in done in EM where the rumblings from Turkey, Argentina and Venezuela cumulated in another very weak day for EM sovereigns. Even with the fall in the USD and rally in UST yields (-9bp to 2.78%), there was little to cheer in EM sovereign credit as the dual worries of inflation and potential BoP issues provided a common thread yesterday. All this provides a fairly nervous lead-in to next week’s FOMC where the consensus appears to be that another $10bn in tapering will result.

To put yesterday’s EM performance in perspective, the CDX EM and JPM EMBI credit indices widened by more than 15bp apiece in the worst one-day performance since the turbulent summer of 2013. Starting with Argentina, the peso suffered its biggest one-day fall in more than a decade (-13%) after the country’s central bank decided to pull its support for the currency in order to preserve its FX reserves which had fallen by almost a third over the past year.

Our EM strategists point out that unfortunately neither the Central Bank nor Treasury is doing much to contain the pass-through to inflation by tightening policy. Thus, more volatility is almost guaranteed in the short term and the stability will only be established once the peso is weak enough – probably at a level one Peso or two away from yesterday’s closing. In Turkey, the Central Bank intervened directly in the FX market yesterday for the first time in just over two years, by selling USD3bn in support of the lira. Our EM team’s bottom line here is that the CBT does not have enough reserves to credibly mount a sustained defense of the lira by selling FX. Net reserves do not fully cover short-term external debt and provides only about two months of import cover, and are also not enough to cover the risk-weighted measure of potential drains on reserves developed by the IMF. In Brazil, the lower than expected IBGE inflation reading (0.67% M/M vs 0.79% consensus) was a welcome development, but this didn’t stop the IBOVESPA from losing 2% while Brazil CDS and bond yields closed about 5bp higher on the day.

Turning to the Asia, equity markets are experiencing another pullback today as worries in EM weigh on risk sentiment across the region. The Nikkei is trading 2.2% lower as it drifts further away from the 16,000 mark and as yesterday’s 1.2% drop in dollar-yen drags on Japanese exporters. Chinese A-shares are the only major market trading in positive territory today (Shanghai Comp +0.8%) but it appears to be driven by one or two sectors – namely tech stocks – after it was reported that PC giant Lenovo (+2.25%) may acquire IBM’s low-end server business. A sharp fall in Chinese money market rates is also providing a tailwind for Chinese equities. Overnight it was reported that China’s banking regulator had issued an alert on credit risks in the country’s coal sector (Bloomberg). This comes after Chinese bank ICBC’s chairman reiterated yesterday that it won’t be bailing out investors in a troubled $500m wealth management product that matures in one week’s time. In Asian sovereign credit, the spreads on higher beta names such as Indonesia (+8bp) and the Philippines (+5bp) are being marked wider while the benchmark Asia IG index is 5bp higher.

Taking a brief look at the data flow yesterday, the selloff appeared to gather momentum with the release of some uninspiring US data. December existing home sales (4.87M vs 4.93M) were modestly below expectations, but the details of the report suggests weather may have impacted sales in the month. Indeed, weakness was concentrated in two regions of country particularly prone to adverse winter weather, namely the Northeast (-1.5% vs. -3.0%) and the Midwest (-4.3% vs. -4.9%), while the South (+3.0% vs. -4.4%) and the West (+4.8% vs. -11.1%) both registered modest gains. Our US economists point out that since last July, existing home sales have declined -9.7% – the lack of supply on the market being one of the reasons for the decline. The US Markit PMI fell to 53.7, well below the 55.0 Bloomberg consensus estimate. Initial jobless claims for the week of January 18 increased +1k to 326k after the prior week was revised down -1k to 325k. This leaves our economists calling for +200k for January’s payrolls. Euro-zone flash PMIs increased by 1.1 to 53.2 (vs 52.4 expected), the highest reading since June 2011, which provided a brief reason for markets to rally. The stronger Euro PMI was led by firm manufacturing readings in France (48.8 vs 47.5 expected) and Germany (56.3vs 54.6 expected). On the earnings front, there was disappointment with Lockheed Martin’s (-3.93%) earnings despite a strong earnings beat and management predicting that US defence spending will be soon bottoming out.

Starbucks was also cause for worry after Dec quarter same store sales growth rose 5%, which was less than the consensus estimate of 5.9%. In other headlines, the BoE’s Mark Carney gave a series of television interviews yesterday on the sidelines of the World Economic Forum downplaying the idea of rate rises were around the corner given the fall in the jobless rate to 7.1%. Carney joined his BoE colleagues McCafferty and Fisher in saying that the 7% threshold was merely a marker to then “begin to think about” raising rates. The FT was more forthcoming in its interpretation, saying that Carney was potentially signaling that he was scrapping forward guidance as he was against “unnecessarily focusing on one indicator”. We may get more detail on Carney’s thoughts later today when he speaks at the WEF in Davos.

Turning to the day ahead, the week draws to a close with very little on both the earnings and data calendar. Mark Carney will be speaking today at the World Economic Forum at around midday London time. The WEF annual meeting concludes tomorrow. Canada provides an update on December inflation and there will be some focus on the current account numbers from Brazil.

via Zero Hedge http://ift.tt/1mPN23h Tyler Durden

via Zero Hedge http://ift.tt/1l4Myrw Reggie Middleton

via Zero Hedge http://ift.tt/1l4Myrw Reggie Middleton