Tag: news

Last month’s record-breaking surge in housing starts has rapidly reversed and fell 9.8% MoM – the biggest drop since April 2013. Despite a plethora of revisions, single unit housing starts tumbled to 610k – the lowest since July. However, permits were dismal (which is what we should be caring about if we are looking ahead at how the ‘recovery’ will play out). Building Permits dropped 3% MoM, far more than expected, missing by the largest gap since June. This was the 3rd biggest monthly drop in total starts since Lehman.

 

Permitss missed notably…

 

With Total Housing Starts dropping by the 3rd most since Lehamn…

via Zero Hedge http://ift.tt/1cA2Nmu Tyler Durden

Francis Scott Key was certainly not a visionary when he penned the famous words “the land of the free and the home of the brave”. But, we can certainly forgive him since it was back in 1814 and things were different maybe then. Two hundred years later, the 2014 Index of Economic Freedom has just been published by the Heritage Foundation think tank and its findings are far from glorious of the country that believes that it is a founding father of both democracy and freedom. We all know that the former went out of the window long ago and not just when the National security Agency finally admitted to eavesdropping on the world. The second went to the wind too decades ago and people are starting to realize it. The USA is no longer the land of the free and certainly not the home of the brave. The land of the foolish and the home of the corrupt, maybe! There’s a thought. Foolish because we have sat like lemmings, sheepled into believing that the wealthy were honest and the state was good; corrupt because everyone at the highest echelons is in on the act.

Thomas Jefferson once said: “ Our country is now taking so steady a course as to show by what road it will pass to destruction, to wit: by consolidation of power first, and then corruption, its necessary consequence”. How true was it back then and oh how telling is it of today’s society!

The USA

The USA is no longer at the top of the Index of Economic Freedom. It’s no longer in the top ten these days and for the first time ever it is in 12th place in the rankings. The biggest and the best economy in the world is no longer the freest. Since 2013, it has dropped a half point yet again and now stands at 75.5 points on the scale. Why?

• Simply because it has seen deteriorations in property rights, fiscal freedom and business freedom according to the think tank.
• Since 2006, the USA has systematically declined in the ratings and has lost since that dates 6 points on its score.
• The USA is now the only country in the world that has lost points for the past 7 years in a row in the world.
• According to the index the reason behind this is the fundamental rise in the size and status of the government: “Substantial expansion in the size and scope of government, including through new and costly regulations in areas like finance and health care, has contributed significantly to the erosion of U.S. economic freedom. The growth of government has been accompanied by increasing cronyism that has undermined the rule of law and perceptions of fairness.”

The USA is currently losing in the ratings on the index due to the fact that there has been an “expansive use of government regulatory agencies to manage economic activity, particularly in the financial, health care, and energy sectors”.

The order of the day is cronyism, corruption and embezzlement, it would seem.

Taxation is also been accused of reducing freedom in the country. The top individual tax rate has seen a rise to 39.6%. The top corporate tax rate is stuck at 35%. The total tax burden stands at 25.1% of gross domestic income.

Creating a new company has become more expensive and stricter. There have been more than 130 new regulations that have been applied to incorporating a business since 2009. Regulatory requirements have increased the cost of founding a company by up to $60 billion since the same date.

The countries in the top slots are as follows:

1. Hong Kong
2. Singapore
3. Australia
4. Switzerland
5. New Zealand
6. Canada
7. Chile
8. Mauritius
9. Ireland
10. Denmark

This isn’t the land of the free and it certainly isn’t the home of the brave these days. The USA is no longer the liberal, free-economics country that it once was. It’s now all about making the rich richer and the corrupt more corruptible. It has nothing to do with the freedom of making a living and becoming the self-made man that the country was built upon. At one time that wasn’t a myth; these days it’s just laughable. The only men that can make it these days are those that have already been boosted on the road to success by diverting, embezzling, swindling ad money-grabbing at the highest echelons of the state. Nothing wrong with making money. Nothing at all. But, there’s everything wrong with treading on the people down below while you clamber up to the top of the state, hoarding the millions, siphoning off the money that should be going elsewhere.

The USA: the land of the free and the home of the brave?

Heritage Foundation was founded in 1973; a think tank headquartered in Washington D.C.

Its statement of mission is to “formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense”.

Originally posted: USA:The Land of the Not-So-Free

via Zero Hedge http://ift.tt/1avA6dv Pivotfarm

Remember when Obama said he would have engaged in a dramatic overhaul of the NSA with or without Edwards Snowden? Funny as that statement may have been at the time (and recall that Comedians have psychotic personality traits, study finds), we will never know just what Obama would have done if… but we do know that at 11 am this morning, Obama will say he is ordering a transition that will significantly change the handling of what is known as the telephone “metadata” program from the way the NSA currently handles it. In other words, if you like your phone records, you can keep your phone records. It goes without saying that the number of people who believe anything the president says at this point is the same number or less than the dozen or so Chinese enthusiasts who waited in “line” to get a new China Mobile phone.

From Reuters:

Obama is balancing public anger at the disclosure of intrusion into Americans’ privacy with his commitment to retain policies he considers critical to protecting the United States.

 

Obama’s move is aimed at restoring Americans’ confidence in U.S. intelligence practices and caps months of reviews by the White House in the wake of damaging disclosures about U.S. surveillance tactics from former U.S. spy agency contractor Edward Snowden.

 

In a nod to privacy advocates, Obama will say he has decided that the government should not hold the bulk telephone metadata, a decision that could frustrate some intelligence officials. In addition, he will order that effectively immediately, “we will take steps to modify the program so that a judicial finding is required before we query the database,” said the senior official, who revealed details of the speech on condition of anonymity.

So… the NSA will promptly dismantle its Stazi-inspired “Stellar Wind” facility with all the big hard disks in Bluffdale, Utah, right? Right? That’s what we thought.

The fun continues:

Obama has asked Attorney General Eric Holder and the intelligence community to report back to him before the program comes up for reauthorization on March 28 on how to preserve the necessary capabilities of the program, without the government holding the metadata.

 

“At the same time, he will consult with the relevant committees in Congress to seek their views,” the official said.

 

While a presidential advisory panel had recommended that the bulk data be controlled by a third party such as the telephone companies, Obama will not offer a specific proposal for who should store the data in the future.

Well if nobody else wants it, we are sure a consortium of Goldman and JPMorgan would be delighted to “host” this data… Finally, even more lies:

People familiar with the administration’s deliberations say Obama also is expected to agree to other reforms, such as greatly scaling back spying on foreign leaders and putting a public advocate on the secretive Foreign Intelligence Surveillance Court.

We LOLed too. Tune in at 11:00 am, or just around the time today’s $3 billion POMO ends, for much more live, televized humor.

via Zero Hedge http://ift.tt/1avA5WY Tyler Durden

Remember when Obama said he would have engaged in a dramatic overhaul of the NSA with or without Edwards Snowden? Funny as that statement may have been at the time (and recall that Comedians have psychotic personality traits, study finds), we will never know just what Obama would have done if… but we do know that at 11 am this morning, Obama will say he is ordering a transition that will significantly change the handling of what is known as the telephone “metadata” program from the way the NSA currently handles it. In other words, if you like your phone records, you can keep your phone records. It goes without saying that the number of people who believe anything the president says at this point is the same number or less than the dozen or so Chinese enthusiasts who waited in “line” to get a new China Mobile phone.

From Reuters:

Obama is balancing public anger at the disclosure of intrusion into Americans’ privacy with his commitment to retain policies he considers critical to protecting the United States.

 

Obama’s move is aimed at restoring Americans’ confidence in U.S. intelligence practices and caps months of reviews by the White House in the wake of damaging disclosures about U.S. surveillance tactics from former U.S. spy agency contractor Edward Snowden.

 

In a nod to privacy advocates, Obama will say he has decided that the government should not hold the bulk telephone metadata, a decision that could frustrate some intelligence officials. In addition, he will order that effectively immediately, “we will take steps to modify the program so that a judicial finding is required before we query the database,” said the senior official, who revealed details of the speech on condition of anonymity.

So… the NSA will promptly dismantle its Stazi-inspired “Stellar Wind” facility with all the big hard disks in Bluffdale, Utah, right? Right? That’s what we thought.

The fun continues:

Obama has asked Attorney General Eric Holder and the intelligence community to report back to him before the program comes up for reauthorization on March 28 on how to preserve the necessary capabilities of the program, without the government holding the metadata.

 

“At the same time, he will consult with the relevant committees in Congress to seek their views,” the official said.

 

While a presidential advisory panel had recommended that the bulk data be controlled by a third party such as the telephone companies, Obama will not offer a specific proposal for who should store the data in the future.

Well if nobody else wants it, we are sure a consortium of Goldman and JPMorgan would be delighted to “host” this data… Finally, even more lies:

People familiar with the administration’s deliberations say Obama also is expected to agree to other reforms, such as greatly scaling back spying on foreign leaders and putting a public advocate on the secretive Foreign Intelligence Surveillance Court.

We LOLed too. Tune in at 11:00 am, or just around the time today’s $3 billion POMO ends, for much more live, televized humor.

via Zero Hedge http://ift.tt/1avA5WY Tyler Durden

In an age with no earnings growth, the most important thing is the “story”, primarily applicable to early-stage tech stocks, where the only thing that matters is growth potential if not present or near-term revenues, and certainly not earnings. Unfortunately for some more mature companies like Apple, that have lost their innovative flair and creative genius (with the passing of Steve Jobs), they too have no choice but to revert to the “story” meme, such as the one that Apple’s recent and much delayed foray into China with the help of China Mobile, and its 750 million users, would result in a surge in revenue: after all just think of the millions of potential customers – so easy a 5 year old can visualize it. Unfortunately for Apple, even though its stock has gotten a recent boost as a result of the pick up in hopes of what China’s addressable market may mean for the company’s top line, the story is a bust.

The NYT reports that if judging by the initial response to Apple’s expansion into China, then this too latest Apple “rollout” is set to be a major flop. To wit:  ” Apple has been counting on a long-awaited agreement with China Mobile, the world’s largest cellular operator, to reverse its fortunes in China. If the muted reception Friday, when customers were finally able to buy iPhones from China Mobile, is any indication, the companies may have to work harder to whip up enthusiasm. Instead of the round-the-block lines that have greeted Apple product introductions in China and other countries in the past, only about a dozen customers showed up to buy iPhones at the opening of a store in Beijing — despite the presence of a special guest, the Apple chief executive, Timothy D. Cook.“

Why the dramatic cooling toward what was once the, pardon the pun, coolest brand around? Simple: Apple missed its window of opportunity.

Apple was once an iconic brand in China, where its phones have been sold for years by the second- and third-largest mobile operators, China Unicom and China Telecom. But it has lost ground to the market leader in smartphones, Samsung Electronics, and cut-price domestic rivals.

 

Its market share has fallen into the single digits.

A testament to how much the company is betting on its China expansion was Tim Cook’s trip to Beijing. Unfortunately not even his presence did anything to stir spirits and drum up any interest in Apple’s latest (NSA-endorsed) creation.

“Apple used to be the must-have, aspirational brand for all wealthy and middle-class Chinese consumers,” said Shaun Rein, the managing director of CMR, a market research firm, and the author of “The End of Cheap China.” “But over the last year, there has been a real deterioration of the Apple brand.”

 

Apple is just the latest of a number of American technology companies to fall on harder times in China. Google was once a leading search engine in China, but then lost ground to a local rival, Baidu. Motorola was once a power in mobile phones in China, but then lost ground to Nokia of Finland — which, in turn, yielded leadership to Apple, Samsung and others. More recently, Cisco Systems, the maker of telecommunications network equipment, said that sales in China had been hurt by disclosures of surveillance by the United States National Security Agency.

Well if you must blame Big Brother go for it. After all  there is a “story” to defend.

And then there is the whole pricing issue.

On Sina Weibo, a microblogging service, some users complained about the pricing of the iPhone 5S by China Mobile, saying they could get smuggled versions for less money.

 

“The model is the same,” one contributor wrote on Weibo. “I want the cheaper one.”

Even if enthusiasm picks up, the reality is that the bulk of the new user pick up will not be incremental growth but switchover from other networks:

in addition to the agreement with Apple, China Mobile has another big advantage over its two rivals — the fast new network it is building, using so-called 4G technology. China Unicom and China Telecom are still relying on the slower, previous generation technology.

 

But this is a mixed blessing for Apple, because analysts say some China Mobile iPhone sales will come from customers switching from China Unicom or China Telecom. As a result, estimates of iPhone sales by China Mobile, which have ranged from less than 10 million annually to more than 30 million, might overstate the overall benefit to Apple.

 

Over all, including the effect of customers switching from rival networks, Mr. Zhang said he expected Apple to sell about one million more phones a month in China as a result of the deal, on top of the roughly three million it has been selling.

In conclusion, “An Apple spokeswoman, Carolyn Wu, said the company did not plan to report first-day sales figures.” One can see why.

via Zero Hedge http://ift.tt/1b1IKB4 Tyler Durden

In an age with no earnings growth, the most important thing is the “story”, primarily applicable to early-stage tech stocks, where the only thing that matters is growth potential if not present or near-term revenues, and certainly not earnings. Unfortunately for some more mature companies like Apple, that have lost their innovative flair and creative genius (with the passing of Steve Jobs), they too have no choice but to revert to the “story” meme, such as the one that Apple’s recent and much delayed foray into China with the help of China Mobile, and its 750 million users, would result in a surge in revenue: after all just think of the millions of potential customers – so easy a 5 year old can visualize it. Unfortunately for Apple, even though its stock has gotten a recent boost as a result of the pick up in hopes of what China’s addressable market may mean for the company’s top line, the story is a bust.

The NYT reports that if judging by the initial response to Apple’s expansion into China, then this too latest Apple “rollout” is set to be a major flop. To wit:  ” Apple has been counting on a long-awaited agreement with China Mobile, the world’s largest cellular operator, to reverse its fortunes in China. If the muted reception Friday, when customers were finally able to buy iPhones from China Mobile, is any indication, the companies may have to work harder to whip up enthusiasm. Instead of the round-the-block lines that have greeted Apple product introductions in China and other countries in the past, only about a dozen customers showed up to buy iPhones at the opening of a store in Beijing — despite the presence of a special guest, the Apple chief executive, Timothy D. Cook.“

Why the dramatic cooling toward what was once the, pardon the pun, coolest brand around? Simple: Apple missed its window of opportunity.

Apple was once an iconic brand in China, where its phones have been sold for years by the second- and third-largest mobile operators, China Unicom and China Telecom. But it has lost ground to the market leader in smartphones, Samsung Electronics, and cut-price domestic rivals.

 

Its market share has fallen into the single digits.

A testament to how much the company is betting on its China expansion was Tim Cook’s trip to Beijing. Unfortunately not even his presence did anything to stir spirits and drum up any interest in Apple’s latest (NSA-endorsed) creation.

“Apple used to be the must-have, aspirational brand for all wealthy and middle-class Chinese consumers,” said Shaun Rein, the managing director of CMR, a market research firm, and the author of “The End of Cheap China.” “But over the last year, there has been a real deterioration of the Apple brand.”

 

Apple is just the latest of a number of American technology companies to fall on harder times in China. Google was once a leading search engine in China, but then lost ground to a local rival, Baidu. Motorola was once a power in mobile phones in China, but then lost ground to Nokia of Finland — which, in turn, yielded leadership to Apple, Samsung and others. More recently, Cisco Systems, the maker of telecommunications network equipment, said that sales in China had been hurt by disclosures of surveillance by the United States National Security Agency.

Well if you must blame Big Brother go for it. After all  there is a “story” to defend.

And then there is the whole pricing issue.

On Sina Weibo, a microblogging service, some users complained about the pricing of the iPhone 5S by China Mobile, saying they could get smuggled versions for less money.

 

“The model is the same,” one contributor wrote on Weibo. “I want the cheaper one.”

Even if enthusiasm picks up, the reality is that the bulk of the new user pick up will not be incremental growth but switchover from other networks:

in addition to the agreement with Apple, China Mobile has another big advantage over its two rivals — the fast new network it is building, using so-called 4G technology. China Unicom and China Telecom are still relying on the slower, previous generation technology.

 

But this is a mixed blessing for Apple, because analysts say some China Mobile iPhone sales will come from customers switching from China Unicom or China Telecom. As a result, estimates of iPhone sales by China Mobile, which have ranged from less than 10 million annually to more than 30 million, might overstate the overall benefit to Apple.

 

Over all, including the effect of customers switching from rival networks, Mr. Zhang said he expected Apple to sell about one million more phones a month in China as a result of the deal, on top of the roughly three million it has been selling.

In conclusion, “An Apple spokeswoman, Carolyn Wu, said the company did not plan to report first-day sales figures.” One can see why.

via Zero Hedge http://ift.tt/1b1IKB4 Tyler Durden

• NSA phone data control may come to end (AP)
• China to rescue France: Peugeot Said to Weigh $1.4 Billion From Dongfeng, France (BBG)
• China to rescue Davos: Davos Teaches China to Ski as New Rich Lured to Slopes (BBG)
• Hollande’s Tryst and the End of Marriage (BBG)
• Iran has $100 billion abroad, can draw $4.2 billion (Reuters)
• Target Hackers Wrote Partly in Russian, Displayed High Skill, Report Finds (WSJ)
• Nintendo Sees Loss on Dismal Wii U Sales (WSJ)
• Goldman’s low-cost Utah bet buoys its bottom-line (Reuters)
• Royal Dutch Shell Issues Profit Warnin: Oil Major Hit by Higher Exploration Costs and Lower Oil and Gas Volumes (WSJ)
• EU Weighs Ban on Proprietary Trading at Some Banks From 2018 (BBG) – so no holding of breaths?
• Sacramento Kings to Accept Bitcoin (WSJ)
• In London, ‘Guardians’ Live in Empty Office Buildings (WSJ)
• Fiat Heir Elkann Reshapes Family Legacy With Chrysler (BBG)
• Macau Casino Magnate Lui Passes Li as Asia’s Richest Man  (BBG)
• Boeing Faulted by Norwegian Air on 787 Short Circuit (BBG)

 

Overnight Media Digest

WSJ

* Vice President Joe Biden has resumed a push to withdraw virtually all U.S. troops from Afghanistan at year end, arguing for a far-smaller presence than many military officers would like to see, said officials briefed on the discussions.

* Best Buy Co on Thursday became the latest retailer to chime in with weak holiday results. Like other chains, the electronics retailer blamed the race to offer the deepest discounts, a game of brinkmanship that hurt profit margins and held back revenue.

* President Barack Obama, in a highly anticipated speech that follows a six-month review of U.S. spying programs, is expected to extend privacy protections to non-U.S. citizens and announce measures to continuously evaluate sensitive surveillance, particularly involving foreign leaders, people familiar with the plan say.

* The holiday data breach at Target Corp appeared to be part of a broad and highly sophisticated international hacking campaign against multiple retailers, according to a report prepared by federal and private investigators that was sent to financial-services companies and retailers.

* Congress has turned to a new chapter in its long-running battle over the federal budget, as the Senate Thursday approved and sent to the White House a monumental spending bill that keeps the government running through September.

* Regulators took another swing at tamping down the riskiness of big U.S. banks, proposing new requirements for boards and executives and laying the groundwork for swifter enforcement for missteps. In guidelines proposed Thursday, the Office of the Comptroller of the Currency detailed risk-management standards for firms with more than $50 billion in assets, putting the onus on board members to ensure the rules are followed and requiring banks have independent audit and risk-management officers who can go straight to the board with concerns.

* The Justice Department hasn’t charged employees at two-thirds of nearly 400 companies that have settled criminal investigations or been convicted of crimes in recent years, according to newly analyzed data.

* A federal bankruptcy judge on Thursday delivered a major blow to the only completed deal to cut a portion of the city of Detroit’s estimated $18 billion in long-term debt. Judge Steven Rhodes rejected a proposed $165 million settlement of so-called interest-rate swap agreements that the city used to help fund its pensions, calling the pact financially imprudent.

* Sprint Corp has received proposals from at least two banks on how it could finance a takeover of smaller rival T-Mobile US Inc giving it confidence that a deal could be funded, people familiar with the matter said.

 

FT

Citigroup Inc, the third-largest U.S. bank by assets, posted quarterly results lower than analysts’ expectations on Thursday, as lackluster mortgage banking and fixed-income trading weighed on overall revenue.

Goldman Sachs Group Inc reported a 21 percent drop in quarterly net income on Thursday with its worst year for fixed income trading since 2005.

Buyout firm Carlyle Group agreed to buy Johnson & Johnson’s ortho clinical diagnostics unit for $4.15 billion on Thursday, joining the host of companies making acquisitions as the new year gets under way.

Best Buy Co shares tumbled about 30 percent on Thursday after the world’s largest consumer electronics chain reported disappointing holiday sales, hurt by heavy discounting by its rivals.

Intel Corp’s profits narrowly missed expectations in the fourth quarter, sending its shares down almost 3 percent after-hours with the slide in global PC sales showing signs of slowing.

Big U.S. banks would have to follow tougher standards for risk management and face quicker punishment under new rules proposed by The Office of the Comptroller of the Currency (OCC) on Thursday to help avoid a repeat of the 2007-2009 financial crisis.

 

NYT

* Most banks are not disclosing the overall size of their litigation reserves, which is crucial for assessing their ability to deal with the barrage of litigation that has been raining down on Wall Street banks.

* The Senate on Thursday gave final approval to a $1.1 trillion spending bill for the current fiscal year, leaving behind what might have been the Obama administration’s best chance to overhaul the International Monetary Fund and meet its obligations to the world’s other economic powers. Congressional Republicans did not budge from their refusal to cede some control of the fund to China, India, Brazil and other emerging economic powers.

* A federal judge on Thursday rejected a deal that Detroit had negotiated to help it move forward in bankruptcy, but said the city could borrow $120 million it says it urgently needs to provide services to its residents. He ruled that Detroit could not proceed with a plan to pay $165 million to two big banks to extricate itself from some long-term financial contracts that have been costing the bankrupt city tens of millions of dollars a year.

* The announcement on Wednesday that Yahoo CEO Marissa Mayer had tossed out her top lieutenant, Henrique de Castro, was her first public acknowledgment that turning around Yahoo would be far more difficult than has sometimes been suggested by the media attention she has received.

* The computer network at Neiman Marcus was penetrated by hackers as far back as July, and the breach was not fully contained until Sunday, according to people briefed on the investigation.

* Target, the discount retailer, which has long focused on large stores in suburban markets, completed a lease last week on its smallest store yet, a 20,000-square-foot location in Minneapolis, a test store for a new format called TargetExpress. The new format would allow the company to open more locations in dense urban markets, like New York.

* The European Union is tempering its ambitions and considering turning mandatory targets for renewable energy into just goals in light of a deep and lasting economic slowdown, persistently high prices for renewable energy sources and years of inconclusive international negotiations.

 

Canada

THE GLOBE AND MAIL

* Thomas Mulcair, the leader of the New Democrat party that is the official opposition but has been mired in third place in public opinion polls for many months, is embarking on a tour of Ontario and Western Canada to talk to Canadians about “affordability”.

* Reopening a subject that divided it 21 years ago, the Supreme Court of Canada has agreed to take another look at the right to an assisted suicide.

Unlike the situation in 1993, when the Supreme Court rejected the right to assisted suicide 5-4, the issue has become prominent on the political stage, with several provincial leaders urging that it be taken up.

Reports in the business section:

* Advertising groups are taking steps to address concerns raised by Canada’s privacy watchdog, fearing a backlash that could have a negative impact on the lucrative world of targeted online advertising.

The Office of the Privacy Commissioner of Canada said on Wednesday it found that Google Inc had violated privacy laws by targeting ads based on a person’s medical condition revealed in his online searches for devices to help with the condition.

NATIONAL POST

* Liberal leader Justin Trudeau disclosed on Thursday that he wrongly claimed $840 in MP travel and living expenses incurred while he was actually working as a paid public speaker.

He called them administrative errors and said he repaid the money as soon as he was made aware of the problem.

* Several Prince Edward Island rinks that were convinced to make the expensive conversion to wind power, but never saw the promised savings, are now trying to get rid of the trouble-plagued turbines and win compensation for their troubles.

FINANCIAL POST

* Brian Ferguson, the chief executive of Cenovus Energy Inc , said his company is looking to reach out to a broader audience to counter popular but false perceptions about oil sands, a type of unconventional petroleum deposit.

Like Neil Young, the rock star who opposed the oil sands and began his vitriolic Honor The Treaty tour in Toronto, Ferguson and Russ Girling of TransCanada Corp brought their message to Canada’s largest city at an event on Wednesday.

* The cost of Bombardier Inc’s CSeries program is expected to mount after the manufacturer announced another delay for the delivery date of its transcontinental jet, saying it will now enter service in late 2015.

 

China

SHANGHAI SECURITIES NEWS

– “China’s naked officials”, those who stay in mainland China while their spouses and children reside abroad, shall not be promoted, according to the country’s new regulation on cadre selection.

– Liu Xinhua, vice chairman of China Securities Regulatory Commission, said on Thursday that the CSRC will not tolerate any illegal internet-related securities activities.

– Wang Xiaochu, chairman of China Telecom, said in an annual conference on Thursday that the company forecast 100 million terminal devices to be sold in 2014, including 36 million 4G devices.

NATIONAL BUSINESS DAILY

– China’s eastern city of Suzhou has submitted to the State Council, or China’s cabinet, a proposal to set up a free trade zone, competing with dozens of regions like Tianjin and Guangdong. Shanghai has recently set up China’s first free trade zone.

PEOPLE’S DAILY

– Safe production is a life-and-death matter and shall be given extra importance as the Spring Festival, or the “accident season”, is coming, said a commentary in a paper that acts as the Party’s mouthpiece.

 

Britain

The Telegraph

BANKS MUST SELL ‘SIGNIFICANT’ NUMBER OF BRANCHES, SAYS ED MILIBAND

Ed Miliband will promise to create at least two new challenger lenders by forcing Britain’s biggest high street banks to sell a “significant” number of branches. The Labour leader claims that, if elected, one of his first acts would be to order the Competition and Markets Authority to produce a report on how to cap the market share of the big banks and encourage new competitors. Miliband’s keynote speech at the University of London has been widely leaked in advance, but details released on Thursday made clear the scale and speed of his proposed reforms.

HSBC FACES 70 BLN STG CAPITAL HOLE, WARN HONG KONG ANALYSTS

HSBC could have overstated its assets by more than 50 billion pounds and ultimately need a capital injection of close to 70 billion pounds before the end of this decade, according to an incendiary report published by a Hong Kong-based research firm.

The Guardian

ARGOS AND DIXONS TRIUMPH DURING CHRISTMAS SALES AS ONLINE RETAIL BOOMS

Argos and Dixons have emerged as winners from the Christmas battle of Britain’s retailers, as booming online orders drove sales. Sales at Argos stores open a year or more rose 3.8 percent to 1.8 billion pounds in the trading period covering Christmas while equivalent sales at Dixons in the UK and Ireland jumped 5 percent.

GOLDMAN SACHS PAYS EMPLOYEES AVERAGE OF $383,000 AFTER PROFITS RISE 5 PCT

Goldman Sachs Group Inc paid its bankers an average of $383,000 in 2013, after profits for the year rose by 5 percent to $8 billion. Putting a fresh focus on the debate over bankers’ pay, Goldman’s 32,900 global employees will be told the size of their individual bonuses on Thursday.

The Times

FINANCIAL ADVISERS LOSE THEIR TICKETS TO LUXURY

Overseas junkets, luxury hotel jollies masquerading as “training weekends” and invitations to top sporting events are to be outlawed amid a crackdown on inducements offered by insurers and fund managers to financial advisers.

GROWTH IN CYCLING KEEPS HALFORDS IN GOOD HEALTH

Halfords Group Plc hailed an “excellent” Christmas as festive sales of children’s bicycles kept its recovery firmly on track. The car parts and bicycle retailer, which in November announced a return to profit growth, said like-for-like retail sales rose 5.9 percent over the 15 weeks to January 10 – driven by a 20 percent rise across its cycle ranges.

The Independent

MIKE ASHLEY SWAPS DEBENHAMS SHARE STAKE FOR OPTIONS IN ‘BAFFLING’ MOVE

Newcastle United owner Mike Ashley’s Sports Direct investment in Debenhams took another twist on Thursday as it sold its 4.6 percent share stake in the struggling department stores chain but took a complex financial option, which could see it buy an even larger stake at a cheaper price.

REBALANCING THE ECONOMY WILL TAKE YEARS, WARNS VINCE CABLE

Business secretary Vince Cable has admitted the government’s industrial strategy to rebalance the economy away from its dependence on financial services might need more than a decade to “take root”.

 

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Housing Starts and Permits for December will be reported at 8:30–Current consensus is 985K for starts and 1.02M for permits
Industrial Production for November will be reported at 9:15–Current consensus is 0.3% for the month
Consumer Sentiment for January will be reported at 9:55–Current consensus is 83.5

ANALYST RESEARCH

Upgrades

Allergan (AGN) upgraded to Buy from Neutral at SunTrust
American Express (AXP) upgraded to Positive from Neutral at Susquehanna
Forest Labs (FRX) upgraded to Outperform from Neutral at Credit Suisse
ITT Educational (ESI) upgraded to Buy from Neutral at BofA/Merrill
Maxwell (MXWL) upgraded to Overweight from Neutral at Piper Jaffray
Pioneer Natural (PXD) upgraded to Buy from Hold at Stifel
Seaspan (SSW) upgraded to Hold from Sell at Stifel
Statoil (STO) upgraded to Buy from Hold at Deutsche Bank
Total (TOT) upgraded to Buy from Neutral at Citigroup

Downgrades

Best Buy (BBY) downgraded to Neutral from Buy at Goldman
Best Buy (BBY) downgraded to Neutral from Buy at UBS
Capital Product (CPLP) downgraded to Hold from Buy at Stifel
Clarcor (CLC) downgraded to Neutral from Outperform at RW Baird
Columbia Sportswear (COLM) downgraded to Neutral from Neutral at Macquarie
Foster Wheeler (FWLT) downgraded to Neutral from Buy at UBS
GrafTech (GTI) downgraded to Hold from Buy at Jefferies
Harmonic (HLIT) downgraded to Underperform from Market Perform at Raymond James
Main Street (MAIN) downgraded to Market Perform from Outperform at Raymond James
Navios Maritime Partners (NMM) downgraded to Hold from Buy at Stifel
Nu Skin (NUS) downgraded to Neutral from Buy at BofA/Merrill
People’s United (PBCT) downgraded to Underperform from Market Perform at FBR Capital
QR Energy (QRE) downgraded to Hold from Buy at MLV & Co.
ResMed (RMD) downgraded to Neutral from Outperform at Macquarie
Rocket Fuel (FUEL) downgraded to Market Perform from Outperform at BMO Capital
STMicroelectronics (STM) downgraded to Neutral from Outperform at Exane BNP Paribas
Silver Spring Network (SSNI) downgraded to Neutral from Outperform at RW Baird
Strayer (STRA) downgraded to Underperform from Neutral at BofA/Merrill

Initiations

DCP Midstream (DPM) initiated with a Hold at Wunderlich
Dillard’s (DDS) initiated with a Buy at BofA/Merrill
Magellan Midstream (MMP) initiated with a Buy at Wunderlich
Nike (NKE) initiated with a Neutral at Macquarie
ONEOK (OKE) initiated with an Outperform at Oppenheimer
Paramount Gold & Silver (PZG) initiated with a Buy at Roth Capital
Sinclair Broadcast (SBGI) initiated with an Outperform at RBC Capital
Twitter (TWTR) initiated with a Buy at Stifel
Under Armour (UA) initiated with a Neutral at Macquarie
VF Corp. (VFC) initiated with an Outperform at Macquarie

HOT STOCKS

Bombardier (BDRBF) consortium won contract in Queensland valued at $4.1B
Shell (RDS.A) sees Q4 figures ‘significantly lower than recent levels of profitability’
Florida AG said reviewing Sysco (SYY), U.S. Foods deal, Reuters reports
SLM Corp. (SLM) sees FY14 private education loan originations of $4B
IntercontinentalExchange (ICE) announced IBA to become new administrator of Libor
Google (GOOG) working on smart contact lens
Microsoft’s (MSFT) Hryb said company sold 908,000 Xbox One consoles in the U.S. in December
Elizabeth Arden (REDN) withdrew FY14 guidance

Companies that beat consensus earnings expectations last night and today include:
SunTrust (STI), Schlumberger (SLB), Bank of the Ozarks (OZRK), Skyworks (SWKS), BancFirst (BANF), Bank of Kentucky (BKYF)

Companies that missed consensus earnings expectations include:
SLM Corp. (SLM)), Silver Spring Network (SSNI), American Express (AXP), People’s United (PBCT), Capital One (COF), Intel (INTC)

Companies that matched consensus earnings expectations include:
Associated Banc-Corp (ASBC)

NEWSPAPERS/WEBSITES

• Report says Target (TGT) breach could be part of broader scam, AP reports
• Response to China Mobile (CHL) iPhone (AAPL) launch ‘muted,’ NY Times reports
• Yahoo (YHOO) editor-in-chief Singh departs, Re/code reports
• Yahoo’s (YHOO) pitch to Madison Avenue falls short, WSJ reports
• Sprint (S) gets bank proposals on financing T-Mobile (TMUS) bid, WSJ reports  
• Norwegian Air blames Boeing (BA) for 787 short-circuit, Bloomberg reports
• IBM (IBM) expanding cloud services worldwide, Reuters reports
• Tyco (TYC) has shortlist of private equity firms for Caps unit, WSJ reports
• Twitter (TWTR) near deal with payments startup, Re/code reports
• Deutsche Telekom (DTEGY) denied it’s rushing to unload T-Mobile (TMUS) onto Sprint (S), BGR reports

SYNDICATE

CHC Group (HELI) 31M share IPO priced at $10.00
Cvent (CVT) 5.28M share Secondary priced at $35.50
EP Energy (EPE) 35.2M share IPO priced at $20.00
FuelCell (FCEL) files automatic common stock shelf
ORBComm (ORBC) files to sell 5.5M common shares
Orchid Island Capital (ORC) 1.8M share Secondary priced at $12.50
RSP Permian (RSPP) 20M share IPO priced at $19.50

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

Weak results from Intel, American Express and Capital One, not to mention Goldman and Citi? No problem: there’s is overnight USDJPY levitation for that, which has pushed S&P futures firmly into the green after early overnight weakness: because while the components of the market may have such trivial indicators as multiples and earnings, the USDJPY to which the Emini is tethered has unlimited upside. And now that the market is back into “good news is good, bad news is better” mode, today’s avalanche of macro data which includes December housing starts and building permits, industrial production, UofMichigan consumer confidence and JOLTs job openings, not to mention the up to $3 billion POMO, should make sure the week closes off in style: after all can’t have the tapped out consumer enter the weekend looking at a red number on their E-trade account: they might just not spend as much (money they don’t have).

In terms of markets, stocks recovered from a lower open and gradually edged into positive territory, with the DAX index outperforming where ThyssenKrupp shares advanced by over 4% after their CFO said that there are no concrete plans to increase capital and also confirmed outlook for EBIT target. At the same time, in spite of consensus beating retail sales data from the UK, the FTSE-100 index underperformed its EU peers, weighed on by Royal Dutch Shell which issued an unexpected profit warning and consequently sent share tumbling at the open. As a result, in spite of higher oil prices, oil & gas was the only sector to trade in the red. Looking elsewhere, GBP surged across the board following the release of much better than expected UK retail sales numbers, which the ONS said was driven by smaller stores where annual sales grew more than three times faster than in bigger stores. At the same time, UK rates curve steepened, with Gilts moving into negative territory as a result. Going forward, market participants will get to digest earnings release by MS and GE, as well as Housing Starts and Building Permits from the US.

Looking elsewhere, GBP surged across the board following the release of much better than expected UK retail sales numbers, which the ONS said was driven by smaller stores where annual sales grew more than three times faster than in bigger stores. At the same time, UK rates curve steepened, with Gilts moving into negative territory as a result. Going forward, market participants will get to digest earnings release by MS and GE, as well as Housing Starts and Building Permits from the US.

US Event docket

• 8:30am: Housing Starts, Dec., est. 990k (prior 1.091m); Housing Starts m/m, Dec., est. -9.3% (prior 22.7%); Building Permits, Dec., est. 1.012m (prior 1.007m, revised 1.017m); Building Permits m/m, Dec., est. -0.5% (prior -3.1%, revised -2.1%)
• 9:15am: Industrial Production m/m, Dec., est. 0.3% (prior 1.1%); Capacity Utilization, Dec., est. 79.1% (prior 79%)
• 9:55am: University of Michigan Confidence, Jan. preliminary, est. 83.5 (prior 82.5)
• 10:00am: JOLTs Job Openings, Nov., est. 3.930m (prior 3.925m)
• 11:00am: Fed to purchase $2.25b-$3b in 2021-2023 sector

Overnight headline bulletin from RanSquawk and Bloomberg

• The DAX is the outperforming index in the European session after being supported by ThyssenKrupp after their CFO said they have no concrete plans to increase capital and confirmed outlook for EBIT target. Elsewhere, The FTSE is the underperformer following Royal Dutch Shell’s unexpected profit warning.
• GBP saw broad-based strength in the European session after a better than expected retail sales figure from the UK, driven by smaller stores sales.
• Treasuries steady, 10Y notes headed for third consecutive weekly gain after yield rose to highest since 2011 in late Dec. in wake of Fed’s decision to taper bond purchases; 5Y and 7Y yields slightly higher on the week.
• U.K. retail sales rose 2.6% in Dec., more than economists forecast, led by a surge at department stores and smaller shops during the key Christmas season
• The largest banks in the European Union would face a “narrowly” defined ban on proprietary trading from 2018 under draft plans by Michel Barnier, the EU’s financial services chief
• Passage of a $1.1t bill to finance the U.S. government through Sept. 30 clears the way for lawmakers to focus on the next potential fiscal showdown: Raising the federal  debt ceiling
• Enrollment in Obamacare health plans for small businesses is off to a slow start, leaving in doubt whether the U.S. program can attract enough customers to satisfy insurers
• Obama will put off decisions on the most controversial aspects of the U.S. government’s data-collection programs, including those faulted by phone and Internet companies that say customers are losing faith that their privacy is protected
• Cash demand will “substantially increase” as Chinese lunar new year holiday approaches, according to a statement on People’s Bank of China’s website after a credit work meeting
• JPY will weaken to 115 in 2014 and 10Y JGB yields will approach 1% as the Bank of Japan weighs more stimulus to offset a sales tax increase, according to a former BOJ board member
• Sovereign yields lower; EU peripheral spreads narrow. Asian equity markets mostly lower; European equity markets and U.S. equity-index futures gain. WTI crude higher, copper and gold little changed

Asian Headlines

The PBoC said it sees increased positive signals in the economy and that it will maintain appropriate liquidity and credit and social financing growth. (RTRS) PBOC’s Weibo says Jan. lending is rising fast and the PBOC have asked banks to tame pace of lending and adjust banking liquidity at proper time. (BBG)

EU & UK Headlines

UK Retail Sales Ex Auto (Dec) M/M 2.8% vs Exp. 0.3% (Prev. 0.4%, Rev. 0.2%)
UK Retail Sales Ex Auto (Dec) Y/Y 6.1% vs Exp. 3.2% (Prev. 2.3%, Rev. 2.1%)
UK Retail Sales Incl. Auto (Dec) M/M 2.6% vs Exp. 0.3% (Prev. 0.3%, Rev. 0.1%) – Joint highest on record
UK Retail Sales Incl. Auto (Dec) Y/Y 5.3% vs Exp. 2.5% (Prev. 2.0%, Rev. 1.8%) – Highest since October 2004

– The ONS says the rise in sales was driven by smaller stores where annual sales grew more than three times faster than in bigger stores.
Eurozone Construction Output (Nov) M/M -0.6% vs Prev. -1.2% (Rev. -1.1%)
Eurozone Construction Output (Nov) Y/Y -1.7% vs Prev. -2.4% (Rev. -2.3%)

Fitch affirmed Netherlands at AAA; outlook negative. S&P revised Portugal sovereign credit outlook to negative from credit watch negative; rating maintained at BB, affirmed Malta at BBB+; outlook stable and affirmed Slovenia ratings at A-; outlook stable. (BBG)

BofA Merrill Lynch have upgraded its Q4 GDP forecast for the Eurozone to 0.3% Q/Q from 0.1% Q/Q, and its 2014 GDP forecast to 1% from 0.8%. (BofA)

RBC sees the first UK rate rise in November 2015 vs August 2016 previously and says the BOE may lower unemployment threshold to 6.5%. (BBG)

UK Chancellor Osborne has called for an above inflation rise in the minimum wage from GBP 6.31 to its pre-recession value of GBP 7.00 per hour.

French Finance Minister Moscovici is aiming for GDP growth of more than 1% in 2014 and has repeated 2014 GDP growth forecast of 0.9%. (BBG)

A new accounting standard adopted by the EU from September may reduce Italy’s debt-to-GDP ratio – the second highest in the region after Greece, by as much as 2 percentage points, according to an official at Italy’s statistics agency ISTAT.

US Headlines

US Senate voted 72-62 to send the USD 1.1trl government spending bill, which would fund the US government through September 30th, to President Obama to sign. (BBG)

Equities

Heading into the North American open stocks in Europe are seen broadly higher, with the DAX index in Germany outperforming its peers where ThyssenKrupp shares surged by over 4% after their CFO said that there are no concrete plans to increase capital and also confirmed outlook for EBIT target. At the same time, oil & gas related stocks failed to benefit from higher oil prices and the sector underperformed its EU peers since the get-go, weighed on by Royal Dutch Shell which issued an unexpected profit warning. Of note, given that today also marks expiration of various equity option contracts may result in erratic, albeit short-lived price action around expiration times.

FX

GBP/USD rallied over 100pips and moved above its 21DMA line following the release of much better than expected UK retail sales numbers, which the ONS said was driven by smaller stores where annual sales grew more than three times faster than in bigger stores. Broad based GBP strength saw GBP/JPY also move above its 21DMA line, with the consequent JPY weakness also ensuring that USD/JPY was able to move into positive territory.

French President Hollande has said the EUR rate is particularly high. (BBG)

Deutsche Bank sees Turkish GDP growth at 2.8% in 2014. (BBG)

Commodities

Commerzbank sees gold rising to USD 1,400 by end of year, as well as a revival of commodity investment demand in 2014 and forecasts copper to average USD 7,600 in 2014. (BBG)

Morgan Stanley have said that gold prices look likely to remain under pressure this year with rising US interest rates and we remain firmly of the view that far greater upside lies with the platinum group metals and palladium in particular. (DJN)

South Africa’s National Union of Mineworkers accepts Northam platinum wage offer according to Tantsi and the platinum strike has been called off’. (BBG/Twitter)

Morgan Stanley say Brent to average USD 103/bbl in 2014 on higher supply. Brent crude is to peak in Q1, fall in Q2 on refinery maintenance, according to a Co. report.

* * *

In conclusion here is the tradional wrap up from DB’s Jim Reid

It seems markets are as confused as the weather at the moment and with the first month of the year well into its second half now, consistent trends are struggling to emerge. European (and especially peripheral) equities are hanging onto gains but fixed income seems to be one of the more solid performers of 2014 so far. Even there  we’ve seen a bit of weakness in credit this week after a strong start.

Yesterday was a day of contrasts as strong macro data (in the form of the Philly Fed and jobless claims) stood in contrast to weaker micro data in the form of earnings results and downgrades. At the closing bell, the two factors ended up largely cancelling each other out with the S&P500 (-0.13%). closing only 2 points lower on the day. This was enough however to send the market back into the red for 2014.

Asian equities are also in the red for 2014 and it’s been another fairly weak day in the region as equity markets in China (-1.0%) and Korea (-0.7%) trade lower. The Shanghai Composite (-1.0%) is threatening to slip back below the 2000 mark and there is focus on the Chinese interbank market on reports in the Financial Times and Reuters that ICBC the largest bank in China (and the world) is refusing to use its own money to repay investors in an off-balance sheet “wealth management product”. The $500m product, which matures at the end of this month and which is optimistically called “2010 China Credit / Credit Equals Gold #1 Collective Trust Product”, used the funds it raised from investors in 2010 to fund a loan to an unlisted coal company which now faces solvency issues. The trust offered investors a 10% yield, compared to the benchmark deposit rate of 3%. Onshore interbank rates have spiked upwards (7 day repo +150bp to 5.81%) – but we should highlight that we are re-entering the typically volatile pre-Chinese New Year period when bank funding rates tend to spike. We’ll know for sure what happens when this particular product matures on Jan 31st – which is also the date of Chinese New Year when the onshore demand for bank liquidity is the highest. Certainly one to watch.

US treasury yields have spent the last week bouncing between 2.80% and 2.90% with recent economic data failing provide any clear directional trend after the post payroll rally. Bernanke gave what was billed as his final speech as Fed Chairman before he steps down in less than two weeks, and it appeared that he used the occasion to mount a staunch defence of Fed policy. Perhaps the key excerpt was when Bernanke said that he doesn’t think financial stability concerns should detract from the need for monetary policy accommodation, which the Fed is providing. Bernanke did concede though that the risk that QE could prompt financial instability is the only risk that he
finds credible. He dismissed concerns that inflation was a significant risk, pointing to yesterday’s US headline CPI print of +1.5% YoY (in line with consensus). The core CPI print remained unchanged from November (+1.7% YoY) which is a level that it has been at for the last four months. The tame inflation picture was evident across the pond, with both the German (1.2% YoY) and Euroarea (0.8% YoY) showing little sign of an uptick. On a positive note, the Philly Fed survey beat expectations (9.4 vs 8.7) but there was a small downward revision to the previous month’s data (6.4 vs 7.0 originally). The NAHB homebuilder sentiment index dropped two points (56 vs 58) – slightly disappointing consensus calling for an unchanged number.

On the micro side, the news was a bit more subdued and none more so than in the US retail (-0.65%) and banking (-0.65%) sectors which both underperformed the broader S&P500 (-0.13%). As we’ve been noting this week, there have been a number of disappointments from the US retail and consumer-discretionary sectors and this theme again popped up yesterday with a warning from consumer-electronics retailer BestBuy that holiday sales in the nine-weeks ended Jan 4th fell 0.9%. Investors punished the company’s stock, which ended the day down 29%. This came two days after another electronics retailer GameStop fell 20% after cutting its forecasts. Staying on the retail theme, department store operator JC Penny (-1.6%) announced that it will be closing 33 stores and eliminating 2000 jobs in a bid to turnaround the company’s fortunes (JCP has not posted a profit for nine consecutive quarters).

Turning to the banks, after its recent outperformance versus the broader indices, there was little cheer in the financial space thanks to a high profile miss from Citigroup, whose stock sold off 4.4%, and American Express (- 0.53%) who also missed expectations. Looking at the Citigroup result in more detail, the big disappointment came from both equities trading (-24% q/q) and FICC trading (-15% q/q), which provided a reminder to Q3 last year when the Financial Times warned that Citi had the largest exposure to emerging markets of any US bank. Goldman managed to beat Q4 analyst estimates (EPS 5.13 vs 4.18 exp, revenues $8.7bn vs $7.7bn exp), off the back of strong growth in investment banking (+47% q/q), FICC (+46% q/q) but its stock (-2%) also sold off yesterday. Even those financials who were not reporting, such as HSBC (- 1.04%) had a tough day, with headlines in Bloomberg and the UK Telegraph suggesting the bank faced a multi-billion dollar capital shortfall. At a broader earnings level, it was a mixed day all round with only eight out of the 14 S&P500 companies that reported earnings beating/meeting analyst estimates.

Today’s US data docket is extensive courtesy of a number of data releases which have been pushed forward ahead of next Monday’s Martin Luther King Day holiday.  December housing starts and building permits data will be released today and our economists expect weather-related factors to impact the former, but permits data should be largely immune. Today’s December industrial production may also be weather affected. In the UK, December retail sales will be the main focus. Back in the US, the preliminary UofMichigan consumer confidence and JOLTs job openings round out the week’s data releases. General Electric, Morgan Stanley and BofNY Mellon report earnings today.

 

via Zero Hedge http://ift.tt/1dX4HP1 Tyler Durden