Tag: news

A few weeks ago it was revealed that the mystery person behind the latest bout of monetary (if not so much fiscal) insanity in Japan is none other than Paul Krugman, a fact which has since assured the fate of Japan as a failed state: the demographically imploding country now has at best a few years (if not less) before it implodes into a hyperinflationary supernova. And for a very graphic, and tragic, preview of Japan’s endgame – the direct result of following Keynesian and monetarist policies to a tee – we go to the AP, which looks at the village of Nagoro, located “deep in the rugged mountains of southern Japan once was home to hundreds of families” and finds that now, only 35 people remain, outnumbered three-to-one by scarecrows that Tsukimi Ayano crafted to help fill the days and replace neighbors who died or moved away. This and nothing more, is what all of Japan has to look forward to as it slowly (or very rapidly) fades away to nothing.

From AP:

At 65, Ayano is one of the younger residents of Nagoro. She moved back from Osaka to look after her 85-year-old father after decades away.

“They bring back memories,” Ayano said of the life-sized dolls crowded into corners of her farmhouse home, perched on fences and trees, huddled side-by-side at a produce stall, the bus stop, anywhere a living person might stop to take a rest.

“That old lady used to come and chat and drink tea. That old man used to love to drink sake and tell stories. It reminds me of the old times, when they were still alive and well,” she said.

Even more than its fading status as an export superpower, Japan’s dwindling population may be its biggest challenge. More than 10,000 towns and villages in Japan are depopulated, the homes and infrastructure crumbling as the countryside empties thanks to the falling birthrate and rapid aging.

In Japan’s northeast, the massive earthquake and tsunami that struck in March 2011, killing more than 18,000 people, merely hastened along the decline.

First the jobs go. Then the schools. Eventually, the electricity meters stop.

Neither Prime Minister Shinzo Abe’s ruling Liberal Democratic Party nor any of its rivals have figured out how to “revive localities,” an urgent issue that has perplexed Japanese leaders for decades.

But some communities are trying various strategies for attracting younger residents, slowing if not reversing their decline. In Kamiyama, another farming community closer to the regional capital of Tokushima, community organizers have mapped out a strategy for attracting artists and high-tech companies.

Nagoro is more typical of the thousands of communities that are turning into ghost towns or at best, open-air museums, frozen in time — a trend evident even in downtown Tokyo and in nearly or completely empty villages in the city’s suburbs.

The one-street town is mostly abandoned, its shops and homes permanently shuttered.

The closure of the local elementary school two years ago was the last straw. Ayano unlocks the door and guides visitors through spotless classrooms populated with scarecrow students and teachers.

When she returned to her hometown 13 years ago, Ayano tried farming. Thinking her radish seeds may have been eaten by crows, she decided to make some scarecrows. By now there are more 100 scattered around Nagoro and other towns in Shikoku.

Like handcarved Buddhist sculptures, each has its own whimsical expression. Some sleep, their eyelids permanently shut. Others cuddle toddler scarecrows, or man plows and hoes.

Ayano brings one along for company on her 90-minute drive to buy groceries in the nearest big town. But most remain behind, to be photographed and marveled at by tourists who detour through the winding mountain roads.

“If I hadn’t made these scarecrows, people would just drive right by,” said Ayano, who greets a steady stream of visitors who wander through the village.

The plight of Japan’s countryside partly a consequence of the country’s economic success. As the nation grew increasingly affluent after World War II, younger Japanese flooded into the cities to fill jobs in factories and service industries, leaving their elders to tend small farms.

Greater Tokyo, with more than 37 million people and Osaka-Kobe, with 11.5 million, account for nearly 40 percent of the country’s 127 million people, with another 10 million scattered in a handful of provincial capitals.

“There’s been this huge sucking sound as the countryside is emptied,” said Joel Cohen, a professor at Columbia University’s Laboratory of Populations.

Japan’s population began to decline in 2010 from a peak of 128 million. Without a drastic increase in the birthrate or a loosening of the staunch Japanese resistance to immigration, it is forecast to fall to about 108 million by 2050 and to 87 million by 2060.

By then, four in 10 Japanese will be over 65 years old.

The government has a target of preventing the population from falling below 100 million, but efforts to convince Japanese women to have more babies have yielded meager results. Young Japanese continue to drift from the countryside into big cities such as Tokyo, where the birthrate is a mere 1.13 children, thanks to long working hours, high costs and killer commutes.

The population of Miyoshi, which is the town closest to Nagoro, fell from 45,340 in 1985 to about 27,000 last year. A quarter of its population is over 75 years old. To entice residents to have more children, the town began offering free nursery care for third children, free diapers and formula to age 2 and free health care through junior high school.

“The way to stop this is to get people to have more babies,” said Kurokawa, whose own three children and seven grandchildren still live in the area. “Apart from that, we need for people to return here or move here. We need them all.”

But it’s not an easy sell, despite the fresh air and abundant space.

“You can’t just grab people by the necks like kittens and drag them here,” Kurokawa said. “They have to want to live here.”

To match potential occupants with empty homes, towns like Miyoshi are setting up “empty house banks.” Across Japan there are 8.2 million such “akiya,” or empty homes, more than a tenth of all residential buildings.

But getting residents of half-empty towns to accept newcomers can also be a challenge. In Kamiyama, to the east, the town still struggles to convince owners who are often relatives living in distant cities to open up abandoned homes for rent or renovation, said Shinya Ominami, chairman of a civic group that has led efforts to revive the town.

Kamiyama, a town of about 6,000, set up an “Artists in Residence” program in 1999. The installation of fiber optic cable enabled the town to begin marketing itself as a location for IT satellite offices with rents as low as 20,000 yen ($200) a month. Eleven companies have come so far.

In a briefing for potential investors and visiting officials from other areas, Ominami shows a slide of the town’s shopping street, dotted with houses that are empty, and then another with some of the buildings filled with new businesses — a bistro, a design studio, an IT incubation hub.

“In Kamiyama, 50,000 yen rent gets you a really luxurious property,” Ominami said. “Extremely high class.”

By drawing in younger new residents and encouraging businesses that cater to them, like an organic foods pizza parlor and a gelateria, the community can actually breathe new life into older, traditional industries like farming, he said.

“People think of decline as something pathetic. That’s too vague. We need to think more clearly about this,” Ominami said. “Once we accept this is the reality, we can figure out how to cope with it.”

* * *

Some advice: don’t invite Paul Krugman to tell you “how to cope with reality” – it will only accelerate the all too surreal end.

In this Thursday, Nov. 6, 2014 photo, a teenager look alike scarecrow sits on a log pile in Nagoro, Tokushima Prefecture, southern Japan. This village deep in the rugged mountains of southern Japan once was home to hundreds of families. Now, only 35 people remain, outnumbered three-to-one by scarecrows that Tsukimi Ayano crafted to help fill the days and replace neighbors who died or moved away. (AP Photo/Elaine Kurtenbach)

 

In this Thursday, Nov. 6, 2014 photo, Tsukimi Ayano speaks as she stitches a scarecrow girl by her outdoor hearth at her home in the mountainous village of Nagoro, Tokushima Prefecture, southern Japan. This village deep in the rugged mountains of southern Japan once was home to hundreds of families. Now, only 35 people remain, outnumbered three-to-one by scarecrows that Ayano crafted to help fill the days and replace neighbors who died or moved away. At 65, Ayano is one of the younger residents of Nagoro. She moved back from Osaka to look after her 85-year-old father after decades away. “They bring back memories,” Ayano said of the life-sized dolls crowded into corners of her farmhouse home. (AP Photo/Elaine Kurtenbach)

 

In this Thursday, Nov. 6, 2014 photo, scarecrow passengers wait for a bus at a bus stop for scarecrows in Nagoro, Tokushima Prefecture, southern Japan. This village deep in the rugged mountains of southern Japan once was home to hundreds of families. Now, only 35 people remain, outnumbered three-to-one by scarecrows that Tsukimi Ayano crafted to help fill the days and replace neighbors who died or moved away. (AP Photo/Elaine Kurtenbach)

 

In this Friday, Nov. 7, 2014 photo, a pair of slippers sits ready to be worn outside an abandoned home in Kawamata in Tokushima Prefecture, southern Japan, one of many thousands of empty houses in rural Japan. Japan’s dwindling population is perhaps the country’s biggest challenge, with thousands of communities depopulated, empty homes and infrastructure crumbling as the countryside empties thanks to a low birthrate and rapid aging. (AP Photo/Elaine Kurtenbach)

 

In this Thursday, Nov. 6, 2014 photo, Tsukimi Ayano stitches a scarecrow girl by her outdoor hearth at her home in Nagoro, Tokushima Prefecture, southern Japan. This village deep in the rugged mountains once was home to hundreds of families. Now, only 35 people remain, outnumbered three-to-one by scarecrows that Ayano crafted to help fill the days and replace neighbors who died or moved away. At 65, Ayano is one of the younger residents of Nagoro. She moved back from Osaka to look after her 85-year-old father after decades away. “They bring back memories,” Ayano said of the life-sized dolls crowded into corners of her farmhouse home. (AP Photo/Elaine Kurtenbach)

 

In this Thursday, Nov. 6, 2014 photo, white smoke rises from an outdoor hearth at Tsukimi Ayano’s house sat by scarecrows she made in Nagoro, Tokushima Prefecture, southern Japan. This village deep in the rugged mountains of southern Japan once was home to hundreds of families. Now, only 35 people remain, outnumbered three-to-one by scarecrows that Ayano crafted to help fill the days and replace neighbors who died or moved away. At 65, Ayano is one of the younger residents of Nagoro. She moved back from Osaka to look after her 85-year-old father after decades away. “They bring back memories,” Ayano said of the life-sized dolls crowded into corners of her farmhouse home. (AP Photo/Elaine Kurtenbach)

 

In this Thursday, Nov. 6, 2014 photo, scarecrow teacher and students fill a classroom in the now deserted elementary school in Nagoro, Tokushima Prefecture, southern Japan. This village deep in the rugged mountains of southern Japan once was home to hundreds of families. Now, only 35 people remain, outnumbered three-to-one by scarecrows that Tsukimi Ayano crafted to help fill the days and replace neighbors who died or moved away. The closure of the local elementary school two years ago was the last straw. Ayano unlocks the door and guides visitors through spotless classrooms populated with scarecrow students and teachers. (AP Photo/Elaine Kurtenbach)

via Zero Hedge http://ift.tt/1qpoG5d Tyler Durden

• China’s Stocks Sink Most Since 2009 as Turnover Jumps to Record (BBG)
• Greek Stocks, Bonds Tumble (WSJ)
• China tightens LGFV funding screws (BBG)
• Crude Rebounds From Five-Year Low Amid Shale-Oil Spending Curbs (BBG)
• Sexual threats, other CIA methods detailed in Senate report (Reuters)
• U.S. Takes Security Precautions Overseas Ahead of CIA Report (WSJ)
• Light-Speed Treasury Trading Governed by Rules Dating to 1998 (BBG)
• Amazon warns U.S. FAA it could move more drone research abroad (Reuters)
• Delhi to ban all internet taxi firms after Uber rape claim (Reuters)
• Supreme Group Fined $389 Million for Overcharging Pentagon (WSJ)
• A farcical masterclass in “monetary policy” – Central Bank Could Drop ‘Considerable Time’ Phrasing in Policy Statement (WSJ)
• More than 150 arrested in California during police killing protests (Reuters)
• U.S. Tech Giants Battle Europe’s Sovereign States (WSJ)
• Islamic State in Syria beheads man for blasphemy (Reuters)
• Putin Plan to Ship Gas to Europe Via Turkey Seen as Unrealistic (BBG)
• Korean Air Vice President Forces Plane Back to Gate Over Macadamia Nuts (BBG)

 

Overnight Media Digest

WSJ

* Federal Reserve officials are seriously considering an important shift in tone at their policy meeting next week: dropping an assurance that short-term interest rates will stay near zero for a “considerable time” as they look more confidently toward rate increases around the middle of next year. (http://on.wsj.com/1vyzSZa)

* Many doctors evaluating medical devices for the Food and Drug Administration have links to device makers the agency doesn’t disclose. (http://on.wsj.com/1yxMhi2)

* From Berlin to Madrid, from London to Paris, U.S. technology companies are in a pitched battle with Europe’s sovereign states. It is a clash that pits governments against the new tech titans, established industries against upstart challengers, and freewheeling American business culture against a more regulated European framework. (http://on.wsj.com/1udPUIy)

* The German tax code, which has helped build some of the world’s wealthiest business dynasties by generally exempting corporate succession from inheritance tax, is under threat in court on constitutional grounds. (http://on.wsj.com/1yxMBgI)

* Supreme Group BV, the former supplier of food and beverages to U.S. troops in Afghanistan, agreed to pay $389 million in fines and damages after admitting it overcharged the Pentagon for fresh food and bottled water. (http://on.wsj.com/1wu2RUY)

* The former director of operations at Bernard Madoff Securities Llc was sentenced to 10 years in prison Monday. (http://on.wsj.com/1A92vQC)

 

FT

* The U.S. Supreme Court on Monday rejected BP’s challenge to its multibillion dollar settlement agreement over the 2010 Gulf of Mexico oil spill, which the oil company complained has allowed unjustified payouts.

* Merck & Co Inc said it would buy Cubist Pharmaceuticals Inc for $8.4 billion plus assumption of debt, giving the major drugmaker an entry into the market for drugs that combat superbugs.

* Songbird Estates shareholder Madison International Realty has accepted Qatar Investment Authority and U.S. investor Brookfield Property Partners 350 pence per share offer for the British property company.

* The U.S. government on Monday sued Deutsche Bank AG , seeking to recoup more than $190 million from the German bank over alleged tax fraud more than 14 years ago.

* UK MPs who are part of the public accounts committee have accused PricewaterhouseCoopers of “selling tax avoidance on an industrial scale”. Shire Plc was also on their radar in the course of a two-hour grilling. Both PwC and Shire denied the accusations.

 

NYT

* Microsoft Corp co-founder Bill Gates, Yahoo Inc co-founder Jerry Yang, Twitter Inc co-founder Evan Williams and others have invested $25 million in Change.org, the petitions website, to help it expand. Others in the group include prominent business leaders like the billionaire Richard Branson, eBay Inc co-founder Pierre Omidyar and LinkedIn Corp co-founder Reid Hoffman(http://nyti.ms/12H2oAK)

* Federal prosecutors in Manhattan on Monday sued Deutsche Bank AG, claiming that it owes the United States government about $190 million in unpaid taxes, penalties and interest. Prosecutors contend the tax liability stems from a transaction that Deutsche Bank undertook 14 years ago. (http://nyti.ms/161shNY)

* Novo Banco, the “good” bank created after the bailout of the Portuguese lender Banco Espirito Santo SA, said on Monday that it had agreed to sell its investment banking business to Haitong Securities of China. (http://nyti.ms/1GcoW9K)

* Teneo, a corporate advisory firm with an unusually broad array of businesses, has secured backing from the big private equity firm BC Partners, the company plans to disclose this week. (http://nyti.ms/1yuMd7H)

* Vice Media and 20th Century Fox have decided to make movies together, creating a film label focused on low-budget cinema that is “wild, weird, high-concept, left-field, crazy artistic, authentic and visceral.” (http://nyti.ms/1w9Y9bA)

 

China

CHINA SECURITIES JOURNAL

– China Securities Regulatory Commission (CSRC) is making efforts to support the development of regional equity markets among ethnic minorities, its chairman Xiao Gang said.

SHANGHAI SECURITIES NEWS

– Two exchange traded funds (ETFs) will be launched under the Shanghai-Hong Kong stock connector scheme for the first time on Tuesday.

CHINA DAILY

– Foreign equipment makers are stepping up localisation efforts in the face of rising competition and sluggish demand, according to industry sources.

 

Britain

The Times

FORMER ASDA BOSS HELPS SET UP DISCOUNT FASHION CHAIN

A former Asda boss has joined forces with a group of retail veterans to launch a discount fashion chain. The children’s and ladieswear group, named Project 50, plans to open 50 stores with 20 million pounds ($31.31 million) of funding from Christo Wiese, the South African billionaire. (http://thetim.es/1wUv1YS)

STAFF QUIT FOR A FEW PENCE MORE, SAYS JEWELLERY BOSS

The UK boss of Pandora has lamented a lack of loyalty among British shopworkers by complaining that sales staff at his jewellery stores are willing to ditch their employer for just a few extra pence per hour. (http://thetim.es/1D0MfHi)

The Guardian

AMAZON WORKERS AT GERMAN WAREHOUSE GO ON STRIKE

Workers at an Amazon.com’s warehouse in Germany have gone on strike in a long-running dispute over pay and conditions. The trade union Verdi said it had called the strike at a distribution centre in Bad Hersfeld because Amazon had increased order volume and pressure on workers in the runup to Christmas. (http://bit.ly/1s4zk2w)

UK BANKING SYSTEM MAY DOUBLE IN SIZE BY 2050, SAYS BANK OF ENGLAND

Britain’s exposure to its banks, already the largest in the G20 group of leading nations, is set to double in the next 35 years. The size of the UK banking system might roughly double from its current size to over 950 percent of GDP by 2050, the Bank of England said.(http://bit.ly/1wUxlz2)

The Telegraph

PWC DENIES “MASS MARKETING” TAX AVOIDANCE SCHEMES

PwC has denied “mass marketing” tax avoidance schemes to companies after being accused of helping firms avoid bills to the Treasury on an “industrial” scale. Kevin Nicholson, the accountant’s head of tax for the UK, told MPs that the measures used by multinationals to manage taxes had been approved by Parliament. (http://bit.ly/1D0HHAQ)

THREE DIRECTORS TO LEAVE FCA

Three top officials Clive Adamson, Zitah McMillan and Victoria Raffe will leave the Financial Conduct Authority as part of a restructuring the watchdog said would create a “sharper focus”, ahead of a report expected to criticise certain individuals at the regulator. (http://bit.ly/1z0zxTG)

Sky News

RBS DESERTS DUBAI OVER 6.7 BLN POUNDS REFINANCING PLAN

Royal Bank of Scotland is resisting plans for a restructuring of one of Dubai’s largest conglomerates, underlining the UK lender’s rapid retrenchment from an ill-fated global expansion. It raised concerns at a meeting of Dubai World’s creditors in London last week, indicating that it is unhappy with a plan to extend a 6.7 billion pounds loan due for repayment in 2018 by a further four years. (http://bit.ly/160djI2)

GOCOMPARE FOUNDER NETS 44 MLN POUNDS IN ESURE DEAL

Hayley Parsons will step down as chief executive of the price comparison site as a result of the 95 million pounds deal with Esure Group Plc to buy the half of GoCompare.com Holdings Ltd it does not already own. The sale values the entrepreneur’s remaining 23 percent stake in the business at almost 44 million pounds. (http://bit.ly/1D0S9rY)

The Independent

PLAYSTATION NETWORK DOWN: ‘LIZARD SQUAD’ CLAIM RESPONSIBILITY FOR HACK AND SAY MORE TO COME

The PlayStation Network was taken down by hackers this morning, the second large hack to hit Sony Corp in recent weeks and another attack by a group that has promised to keep assaulting games networks until Christmas. Lizard Squad, which was also involved in a hack of Xbox Live last week, claimed responsibility for the attack. (http://ind.pn/1se4grD)

UK FIRMS VIE FOR SHARE OF 170 BLN POUNDS IN ALGERIA DEALS

Pharmaceutical giant AstraZeneca Plc and oil services group Petrofac Ltd are among a raft of British companies poised to sign contracts worth up to 2 billion pounds with Algeria this week as the countries look to cement trade links and fight terrorism. (http://ind.pn/12Glo2r)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
NFIB small business optimism index for November at 7:30–consensus 96.5
JOLTS job openings for October at 10:00–consensus 4.79M
Wholesale trade inventories for October at 10:00–consensus up 0.2%

ANALYST RESEARCH

Upgrades

American Eagle (AEO) upgraded to Outperform from Perform at Oppenheimer
LHC Group (LHCG) upgraded to Outperform from Underperform at Credit Suisse
Lincoln Electric (LECO) upgraded to Buy from Neutral at Longbow
lululemon (LULU) upgraded to Outperform from Market Perform at Wells Fargo
Volcano (VOLC) upgraded to Buy from Hold at Needham

Downgrades

Baytex Energy (BTE) downgraded to Market Perform from Outperform at BMO Capital
Dover (DOV) downgraded to Sell from Hold at Deutsche Bank
DreamWorks Animation (DWA) downgraded to Sell from Hold at Topeka
GlaxoSmithKline (GSK) downgraded to Underperform from Neutral at BofA/Merrill
Louisiana-Pacific (LPX) downgraded to Neutral from Buy at Longbow
Nabors Industries (NBR) downgraded to Hold from Buy at Jefferies
Oceaneering (OII) downgraded to Hold from Buy at Jefferies
SEI Investments (SEIC) downgraded to Market Perform from Outperform at Keefe Bruyette
Schlumberger (SLB) downgraded to Hold from Buy at Jefferies
Shire (SHPG) downgraded to Neutral from Buy at BofA/Merrill
Spirit Airlines (SAVE) downgraded to Market Perform from Outperform at Raymond James
Supervalu (SVU) downgraded to Perform from Outperform at Oppenheimer
Turkcell (TKC) downgraded to Hold from Buy at Deutsche Bank
Verizon (VZ) downgraded to Neutral from Outperform at RW Baird
Walgreen (WAG) downgraded to Neutral from Buy at Mizuho

Initiations

ACE Limited (ACE) initiated with a Neutral at JPMorgan
Allstate (ALL) initiated with an Overweight at JPMorgan
Aon plc (AON) initiated with an Overweight at JPMorgan
Aptose Biosciences (APTO) initiated with an Outperform at Oppenheimer
Arch Capital (ACGL) initiated with an Overweight at JPMorgan
Arthur J. Gallagher (AJG) initiated with an Underweight at JPMorgan
Chubb (CB) initiated with an Underweight at JPMorgan
Cisco (CSCO) initiated with an Outperform at Wedbush
Dominion Diamond (DDC) initiated with a Buy at Citigroup
Everest Re (RE) initiated with a Neutral at JPMorgan
FibroGen (FGEN) initiated with a Buy at Citigroup
FibroGen (FGEN) initiated with a Buy at Goldman
FibroGen (FGEN) initiated with a Buy at Stifel
FibroGen (FGEN) initiated with an Outperform at RBC Capital
Fiesta Restaurant (FRGI) initiated with a Buy at Sterne Agee
Fifth Third Bancorp (FITB) initiated with a Buy at Guggenheim
Huntington Bancshares (HBAN) initiated with a Neutral at Guggenheim
Juniper (JNPR) initiated with a Neutral at Wedbush
Kate Spade (KATE) initiated with an Equal Weight at Stephens
KeyCorp (KEY) initiated with a Buy at Guggenheim
Landmark Infrastructure (LMRK) initiated with an Outperform at RBC Capital
Landmark Infrastructure (LMRK) initiated with an Outperform at RW Baird
Marsh & McLennan (MMC) initiated with an Overweight at JPMorgan
Michael Kors (KORS) initiated with an Overweight at Stephens
NXP Semiconductors (NXPI) initiated with an Outperform at Oppenheimer
Navios Maritime Midstream (NAP) initiated with a Buy at Citigroup
NeuroDerm (NDRM) initiated with a Buy at Jefferies
NeuroDerm (NDRM) initiated with a Buy at Roth Capital
New York & Co. (NWY) initiated with a Buy at Wunderlich
PMC-Sierra (PMCS) initiated with an Outperform at Northland
PartnerRe (PRE) initiated with a Neutral at JPMorgan
Progressive (PGR) initiated with a Neutral at JPMorgan
RenaissanceRe (RNR) initiated with an Overweight at JPMorgan
Sonus (SONS) initiated with an Outperform at Wedbush
The Joint (JYNT) initiated with a Buy at Roth Capital
Travelers (TRV) initiated with a Neutral at JPMorgan
Willis Group (WSH) initiated with an Underweight at JPMorgan
XL Group (XL) initiated with an Underweight at JPMorgan

COMPANY NEWS

Boeing (BA) said it forecasts strong demand for new commercial airplanes in 2015, resulting in about $124B in deliveries across the industry.
Amazon (AMZN) unveiled ‘Make an Offer’ for customers to negotiate lower prices
Deutsche Bank (DB) sued by U.S. over alleged scheme to avoid income taxes
Talisman Energy (TLM) confirmed being approached by parties, including Repsol (REPYY), with regards to various transactions
Cubist (CBST) CEO said Cubicin patent ruling will not affect Merck (MRK) transaction (HSP)
Verizon (VZ) said that it expects Q4 impacts of promotional offers will pressure wireless EBITDA and EPS
Spirit Airlines (SAVE) said preliminary November traffic increased 15.7% and forecast compression in fare structure for close-in booking

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
UTi Worldwide (UTIW), HD Supply (HDS), Argan (AGX), Diamond Foods (DMND)

Companies that missed consensus earnings expectations include:
ABM Industries (ABM), Medley Capital (MCC), Phototronics (PLAB), Pep Boys (PBY), Good Times Restaurants (GTIM), H&R Block (HRB)

NEWSPAPERS/WEBSITES

Sony (SNE) hacker releases additional private data, issues threat, Re/code reports
Amazon.com (AMZN) testing faster deliveries through bikes, drones, WSJ reports
Amazon (AMZN) warns of moving more drone research abroad, WSJ reports
Cubist (CBST) loses bid to stop Hospira’s (HSP) generic Cubicin after 2016, Bloomberg reports
Lone Star joins Springleaf (LEAF) as bidder for Citigroup (C) OneMain unit, Bloomberg reports
Merck (MRK) acquisition of Cubist (CBST) could be a ‘winner,’ Barron’s says

via Zero Hedge http://ift.tt/1s8jDr4 Tyler Durden

It wasn’t just China’s long overdue crash last night. In addition to the Shanghai Composite suffering its biggest plunge since August 2009, there has been a sharp slide in the USDJPY which has broken its uptrend to +? (and hyperinflation), and around the time Chinese gamblers were panicking, the FX pair tumbled under 120, although since then the 120 tractor beam has been activated. Elsewhere, the Athens stock exchange is also crashing by over 10% this morning on the heels of news that the Greek government has accelerated the process to elect the next president and possibly, a rerun of the drama from the summer of 2012 when the Eurozone was hanging by a thread when Tsipras almost won the presidential vote and killed the world’s most artificial and insolvent monetary union. And finally, the crude plunge appears to have finally caught up with ground zero, with ADX General Index in Abu Dhabi plunging 3.5%, also poised for the biggest drop since 2009. In fact the only thing that isn’t crashing (at least not this moment), is Brent, which did drop to new 5 year lows earlier under $66, but has since staged a feeble rebound.

So… another record high in the fully decoupled from the rest of the world (as well as reality and reationality) S&P500 any minute now?

Some more details on the overnight action from RanSquawk

European equities trade in the red across the board following on from both their US and Asia-Pacific counterparts. Yesterday, saw a negative close on Wall Street, with the slide in WTI prices placing a further squeeze on energy names. This sentiment filtered through to the Asian session, however, the main focus overnight was on Chinese equities. The Shanghai Comp. (-5.4%) saw its biggest 1 day loss since August 2009, with the move lower led by a surge in money-market rates after the Chinese Securities Depository and Clearing Corp raised the threshold for collateral it would accept for repurchase operations. The PBOC tried to stabilise this by intervening in FX markets, setting a stronger CNY fix. However, USD/CNY actually saw its largest intra-day rise since 2008. It is worth bearing in mind that this slide in Chinese equities comes after the recent rally, which has seen the Shanghai Comp. surge circa 30% over the past month to a 4yr high, while US and European equities trade in close proximity to record highs.

This negative sentiment filtered through to the European session with all indices red across the board, with energy and basic material names the laggard sectors. On a stock specific basis, the notable underperformer in Europe is Tesco (-11%) after issuing yet another profit warning, which has subsequently weighed on other UK supermarket names. Furthermore, the FTSE has also been placed under pressure due to its heavy composition of commodity-related names. Fixed income products have benefitted from the softness seen in stocks, with Bunds continuing to extend on their recent gains, as the flight to quality has benefitted core European products. However, the Greek spread continues to widen to the German benchmark amid political uncertainty and potential snap elections, which has also weighed on the Greek stock index (-6.5%), with financials in the index down as much as 8%.

In terms of the day ahead, we kick this morning off with October trade reports out of both Germany and France and follow this up with both industrial and manufacturing production out of the UK. Later today we’ve got further employment data out of the US to look forward to with the JOLTS job opening print for October. Although we note that this data is somewhat lagging compared to other recent indicators, the print is still important given it forms part of the Fed Chair Yellen’s dashboard of economic indicators. Elsewhere in the US this afternoon we get the NFIB small business optimism reading along with the October wholesale inventories and the IBD/TIPP economic optimism print.

Bulletin Headline Summary from Bloomberg and RanSquawk

• European equities trade in negative territory after a heavy sell-off in China overnight (-5.4%) resulting from a spike higher in money-market rates and collateral tightening for repurchase agreements.
• The USD-index has erased Hilsenrath-inspired gains, with the softness in stocks prompting a safe-haven bid into JPY and CHF with JPY further underpinned by an unwind of carry trade positions.
• Looking ahead, today sees the release of US wholesale inventories, API inventories, with ECB’s Makuch, Praet and Constancio all due on the speaker slate.
• Treasuries steady before week’s $59b auctions begin with $25b 3Y notes. WI yield 1.095% after drawing 0.998% in Nov.; would be highest stop since April 2011.
• Fed officials are discussing the future of their vow to hold rates low for a “considerable time,” ahead of a meeting next week where they will weigh that pledge against signs of economic strength
• China’s clearing agency said yesterday it won’t allow bonds rated below AAA or sold by issuers graded lower than AA to be used as collateral for short-term loans obtained through repo
• The new rules sparked a retreat in lower-rated bonds of local government financing vehicles and contributed to the biggest tumble in Shanghai shares since 2009 as noteholders reassessed the appeal of owning such debt
• China’s leaders gathered for an annual meeting to map their economic plans for next year under the theme of “new normal,” a phrase adopted by President Xi Jinping to reflect a push to manage slower expansion
• China’s residential building boom is petering out, with the effects seen from slumping steel and cement prices, to electricity use, rail-freight traffic and retail sales
• Oil prices will stay at about $65 a barrel for at least half a year until OPEC changes its collective production or world economic growth revives, said the head of Kuwait Petroleum Corp
• Because energy accounts for as much as half the cost to produce food and metals, all sorts of commodities will keep dropping, according to SocGen and Citi
• ECB plans to limit duration of emergency liquidity aid (ELA) to banks to six months, Handelsblatt reports, citing unidentified central bank staff
• U.K. manufacturing output unexpectedly fell for the first time in five months in October, declining 0.7% after 0.6% gain in October; median est. in Bloomberg survey was for 0.2% increase 
• Greek stocks and bonds slumped after Prime Minister Samaras opted to bring forward the process of choosing a new head of state, risking parliamentary elections in Europe’s most indebted state as early as January
• Sovereign yields mostly higher. Asian stocks lower, Shanghai falls 5.4%. European stocks and U.S. equity-index futures decline. Brent crude and gold higher, copper falls

US Event Calendar

• 7:30am: NFIB Small Business Optimism, Nov., est. 96 (prior 96.1)
• 10:00am: JOLTs Job Openings, Oct. (prior 4.735m)
• 10:00am: Wholesale Inventories, Oct., est. 0.1% (prior 0.3%); Wholesale Sales, Oct. (prior 0.2%)
• 10:00am: IBD/TIPP Economic Optimism, Dec., est. 47 (prior 46.4)

FX

The USD-index was initially seen higher overnight following the latest piece from WSJ’s Hilsenrath which suggested the Fed may drop the “considerable time” phrasing sooner rather than later”. However, the gains for the index were trimmed and subsequently reversed into losses, with the flight-to-quality alongside the slide in stocks benefitting JPY and CHF. Gains for JPY were further boosted by profit-taking in USD/JPY and an unwind of carry trade positions. Elsewhere, despite trading lower overnight, AUD has mounted a modest recovery vs. USD as energy prices pare some of yesterday’s heavy losses, while the latest production data from the UK provided a modest downtick for GBP.

COMMODITIES

Energy prices have posted a modest recovery of yesterday’s heavy losses which saw WTI settle down over 4% at the NYMEX pit close, which marked its lowest settlement price since July 2009, ahead of today’s API inventory report. Precious metals prices have also posted a modest recovery and trade in positive territory alongside the softness in the USD-index. However, iron ore prices were once again weighed on, this time as a result of JPMorgan cutting its 2015 iron ore price forecast by 24% to USD 67/ton, cut 2016 forecast by 23% to USD 65/ton. On a geopolitical front, Ukrainian Military has suspended combat in Eastern Ukraine and is ready to ‘observe a day of silence’, while Russia’s Lavrov says a `contact group` on the Ukraine to meet in coming days to discuss implementation of ceasefire plan in Eastern Ukraine.

* * *

DB concludes the overnight event recap

There’s still plenty to play for in 2014 and yesterday we got another date for the diary as Greece’s Presidential election process was accelerated to start next Wednesday December 17th with the results likely known on December 29th. Our expert George Saravelos thinks that if the vote is successful the Troika and government should be able to find common ground once this political risk is over but its all coming to a head slightly sooner than anticipated. The failure to elect a President by the existing parliament would lead to a national general election within 3-4 weeks, with the current SYRIZA opposition party leading in the polls (according to various opinion polls). So very large electoral uncertainty and the lack of an official financing backstop ensures a meaningful period of uncertainty ahead for Greece. In rounds 1 and 2 (Dec 17th and 22nd) the Government requires 200 out of 300 MPs which is extremely unlikely. In the final round (Dec 29th) they require 180 votes. George believes that the probability of an early election is 60/40. This risk has fallen a little of late as some swing voters have leaned towards the Government but this is becoming quite a binary event into year-end with the process starting on the same day as the Fed have their all important meeting. In itself this may not be a huge global macro story but it could indirectly lead to the first non mainstream party being elected after a few near misses in recent years. How they behave if they get elected may give us some clues about the end game in Europe. Would SYRIZA be successful in pushing for further debt restructuring and a different policy approach or will the negotiations with the EU force them to toe the existing line due to the consequences of not doing so? An interesting period ahead.

So the voting kicks off on FOMC day and talking of the Fed, they will surely be scratching their head at the fact the 10 year Treasuries is back to 2.26% only one trading day after the positive shock from payrolls. We traded at 2.25% just before Friday’s blockbuster report only to then hit intraday highs of around 2.34% yesterday before rallying hard into the close. It was a particularly data-light day in the US so some dovish notes from Atlanta Fed’s Lockhart (who will be a FOMC voting member next year) appeared to provide some direction. Specifically, Lockhart commented that ‘inflation is the one key element that does not seem to be consistent with what we are seeing in terms of growth and what we are seeing in the labour market’ and also that ‘if inflation goes completely sideways or begins to indicate a decline, disinflation, then I think it will raise some concerns’. The largely centrist figure went on to say that the Fed should be in no rush to drop the ‘considerable time’ language if it conveyed an imminent lift-off decision, although re-iterated his projection of a ‘midyear lift-off’. On that note, WSJ’s Hilsenrath reminded us that Fed officials are seriously debating dropping the ‚considerable time? language at the upcoming meeting but no decision has yet been made apparently.

The demand for Treasuries was probably also fuelled by what was a notably weaker day for risk assets yesterday. The S&P 500 came off its record highs to close -0.73% at the end of play whilst credit markets also softened with CDX IG +2bps and HY energy bonds generally off a couple of points. The day saw another big leg lower in Oil markets with both WTI (-4.24%) and Brent (-4.17%) closing at $63.05/bbl and $66.19/bbl, respectively. Both oil grades closed at their five year lows and are extending those declines in trading this morning. There were a few negative reports which may have added pressure on oil. Saudi Arabia last week reportedly (Bloomberg) sold crude into Asia at the deepest discount in at least 14 years whilst the head of Kuwait Petroleum Corp was on the wires saying that Oil prices will stay at about US$65/bbl for at least half a year until OPEC changes its collective production or world growth revives. Interestingly Kuwait yesterday also announced that it plans to spend about $7bn to develop heavy oil fields despite where oil prices are now which serves as a contrast to what its US peers are doing. Indeed ConocoPhillips is planning to cut its 2015 capex spending plans by 20% relative to what it did this year. Specifically the company plans to slow its activity in US shale exploration. Back to market moves, Energy stocks (-3.9%) led the sector declines in the S&P 500 yesterday by closing lower for its third consecutive day. Large cap names such as Exxon Mobil, Chevron and ConocoPhillips closed -2.26%, -3.67%, and -4.16%, respectively.

Turning our attention to this side of the Atlantic, there was something of a rally in both core and peripheral government bonds yesterday following comments by the ECB’s Nowotny. Looking at the price action, 10y benchmark yields in Germany (-7bps) and France (-6bps) tightened to 0.713% and 0.970% respectively whilst looking across the peripheral space, there were notable gains for Spain (-4.8bps), Portugal (-2.9bps) and Italy (-3.4bps) to 1.785%, 2.719% and 1.943% respectively – all fresh record lows. Indeed the latter has hit a record low despite a move on Friday after the market close by S&P to cut its sovereign rating to BBB- (stable) from BBB. Coming back to the comments from Nowotny yesterday, sentiment was somewhat lowered after the ECB member was quoted as saying that ‘we see a massive weakening in the eurozone economy’ as well as expressing concerns that inflation would fall further in 2015. On the subject of QE however, and in stark contrast the Bundesbank Chief’s Weidmann recently, Nowotny appeared to be more on board with the idea of public QE, specifically saying that it was ‘widely formulated’ that the central bank was considering all assets and instead saying that ‘of course we’re thinking specifically about government bonds’. Wrapping up the market moves, the Stoxx 600 closed -0.67% – not aided by a decline in the energy component although in reality all sectors finished the day in the red. Finally German industrial production came in at a modest miss, the +0.2% mom figure below market consensus of +0.4%.

Away from the declines in energy stocks, EM currencies are one other such asset class feeling the force of a plummeting oil price as well as a stronger Dollar. An article in the FT pointed out that an index measuring a variety of emerging market currencies has dropped to its lowest level since 2000. The falls appear to be wide-ranging, with the likes of oil-sensitive producers like Russia and Nigeria in particular suffering from the slump in prices and hitting all time lows whilst oil consuming countries including Turkey and South Africa are also suffering from a depreciating currency. Just staying on this topic of FX markets, there was news yesterday that Mexico’s central bank is planning a currency intervention following a drop in the Peso to a two year low at 14.39/$ – slumping around 10% over the last six months (Reuters). The central bank have stated that policy makers will auction $200m on days when the Peso weakens at least 1.5% from the previous close – mirroring similar support put in place in November 2011.

Refreshing our screens this morning Asian equity markets are mostly trading lower with the exception of China. China interest rate swaps rose to a 3 month high on news that the regulator has stopped accepting new applications for repo for lower graded credits spurring expectation of lower demand for these issues. The volatility has forced one of the top-tier issuers (State Grid Corp of China) to delay its planned bond sale. This weakness has also prompted demand for China 5y CDS which widened by about 2bps overnight. Malaysia is also bit of an underperformer as its CDS moved 6bp wider with the oil exporter suffering from the further declines in crude. Back to equities, the Hang Seng, Nikkei and KOSPI are all down -1.12%, -0.87% and -0.30% as we type. Staying within the region we also have the AUD moving sharply lower overnight. The Aussie is now trading at around 82.3 cents against the USD down from around 83.2 at the end of last week as RBA rate cut expectations continue to build.

In terms of the day ahead, we kick this morning off with October trade reports out of both Germany and France and follow this up with both industrial and manufacturing production out of the UK. Later this afternoon we’ve got further employment data out of the US to look forward to with the JOLTS job opening print for October. Although we note that this data is somewhat lagging compared to other recent indicators, the print is still important given it forms part of the Fed Chair Yellen’s dashboard of economic indicators. Elsewhere in the US this afternoon we get the NFIB small business optimism reading along with the October wholesale inventories and the IBD/TIPP economic optimism print.

via Zero Hedge http://ift.tt/1Iu69L8 Tyler Durden

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CIA Dope Calypso

In nineteen hundred forty-nine
China was won by Mao Tse-tung
Chiang Kai Shek’s army ran away
They were waiting there in Thailand yesterday

Supported by the CIA
Pushing junk down Thailand way

First they stole from the Meo Tribes
Up in the hills they started taking bribes
Then they sent their soldiers up to Shan
Collecting opium to send to The Man

Pushing junk in Bangkok yesterday
Supported by the CIA

Brought their jam on mule trains down
To Chiang Mai that’s a railroad town
Sold it next to the police chief’s brain
He took it to town on the choochoo train
Trafficking dope to Bangkok all day
Supported by the CIA

The policeman’s name was Mr. Phao
He peddled dope grand scale and how
Chief of border customs paid
By Central Intelligence’s U.S. aid

The whole operation, Newspapers say
Supported by the CIA

He got so sloppy and peddled so loose
He busted himself and cooked his own goose
Took the reward for the opium load
Seizing his own haul which same he resold

Big time pusher for a decade turned grey
Working for the CIA

Touby Lyfong he worked for the French
A big fat man liked to dine & wench
Prince of the Meos he grew black mud
Till opium flowed through the land like a flood

Communists came and chased the French away
So Touby took a job with the CIA

The whole operation fell in to chaos
Till U.S. intelligence came in to Laos

Mary Azarian/Matt Wuerker

I’ll tell you no lie I’m a true American
Our big pusher there was Phoumi Nosavan

All them Princes in a power play
But Phoumi was the man for the CIA

And his best friend General Vang Pao
Ran the Meo army like a sacred cow
Helicopter smugglers filled Long Cheng’s bars
In Xieng Quang province on the Plain of Jars

It started in secret they were fighting yesterday
Clandestine secret army of the CIA

All through the Sixties the dope flew free
Thru Tan Son Nhut Saigon to Marshall Ky
Air America followed through
Transporting comfiture for President Thieu

All these Dealers were decades and yesterday
The Indochinese mob of the U.S. CIA

Operation Haylift Offisir Wm Colby
Saw Marshall Ky fly opium Mr. Mustard told me
Indochina desk he was Chief of Dirty Tricks
“Hitch-hiking” with dope pushers was how he got his fix

Subsidizing the traffickers to drive the Reds away
Till Colby was the head of the CIA

Allen Ginsberg-January 1972

 

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They are worried that folks will get angry and violent when they read the purported findings of the report and therefore it is unconscionable to release it.

And that dear friends, is the modern principle of American transparency in a nutshell.

WB7 

via Zero Hedge http://ift.tt/1sf4i2u williambanzai7

Those who have been following the ridiculous moves in the Shanghai Composite in recent months, knew it was only a matter of time before yet another major stock market (one which recently surpassed the Nikkei for the second largest spot in the world) crashed violently, further eroding faith in the centrall-planned “price discovery” process. The only question was when.

Following our report last night about China’s change in collateral rules, in which we noted that none other than the PBOC was now eager to pop the equity bubble following the PBOC simultaneously fixing the CNY significantly stronger (implicit tightening) and enforced considerably stricter collateral rules on short-term loans/repos – a move which according to estimates from Shenyin Wanguo Securities, would disqualify some 1.25 trillion yuan in corporate bonds as repo collateral, or 60% of all outstanding corporate bonds listed on China’s two stock exchanges – we were not surprised to see the tumble in the market-traded Yuan (which crashed the most in 6 years), and the surge in interest rate swaps, coupled by the plunge in corporate bonds. The only thing that puzzled us was why, after the correct kneejerk reaction lower in the Shcomp, did stocks proceed to surge even higher.

That said, we summarized it as follows:

• The PBOC has aggressively taken action to reduce leverage in stock and bond market speculation
• The PBOC has tightened monetary policy – raising FX and cutting collateral availability
• The PBOC has created a major squeeze in USDCNY – stalling carry trades

We concluded as follows: “We will see what kind of fallout this creates but for now stocks are holding up as FX and bond markets are turmoiling.“

* * *

We didn’t have long to wait, because literally a few short hours after we wrote that sentence, this happened:

• CHINA’S SHANGHAI COMPOSITE INDEX DROPS 5% AMID RECORD TRADING

Because the higher they rise the quicker and more violently they plunge.  Here are the details via Bloomberg:

Benchmark index falls as much as 6.2%, most since Aug. 31, 2009, on record volume.

• Value of shares changing hands on Shanghai and Shenzhen stock exchanges reaches 1.18t yuan at 2:51pm, highest on record
• Shanghai Composite earlier rose as much as 2.4%
• Index set to snap five-day 13% win streak
• CSI 300 -4.8%; HSCEI -4.5% in H.K. trading
• CSI 300 snaps record win streak, dropping for 1st time in 13 sessions
• Shanghai margin trading, short-sell balance rose yday to 601.7b yuan

Ironically, and as has been the case throughout the western world, the crash in stocks promptly led to a capital reallocation, and all the earlier moves in other asset classes were quickly reversed as panicked speculators rushed out of stocks into everything else that had been sold off earlier:

• Yield on 4.13% govt bond due Sept 2024 reverses rise, falling 12 bps to 3.730%
• 1-yr IRS drops 4 bps to 3.3400%, reversing earlier rise by as much as 29 bps; 5-yr contracts down 6 bps to 3.5400% after rising by as much as 30 bps
• 7-day repo rate rises 9 bps to 3.5719%
• Yuan falls 0.21% to 6.1855 per dollar after earlier dropping by as much as 0.55%, most since Dec. 2008; PBOC sets reference rate 0.08% higher at 6.1231

That said, it is likely to get much worse before it gets better as the government will now be running and popping bubble after bubble until it extinguishes all the excess liquidity:

• China Securities Depository and Clearing Corp.’s announcement yesterday will significantly reduce source of funds for securities firms and funds as these institutions usually pledge bonds for funding in exchange (bond repurchase) market, ANZ says in note; overall liquidity conditions could be tightened as many financial institutions will have to lower leverage ratio

The liquidity crunch may have already taken place, with the FT reporting that Industrial and Commercial Bank of China, China Construction Bank, Bank of China have raised rates on time deposits to 20% above benchmark over past week. Why else would they be doing this if not to entice depositors to park their cash at just these banks. And how long before everyone else follows, and what happens to inflation then and the biggest bubble of all: housing, which as we have been reporting since the beginning of the year, is teetering on the verge of total collapse?

Here is a more detailed narrative of the Chinese crash from the WSJ:

China’s stocks, currency and corporate bonds suffered their largest tumbles in years Tuesday after Beijing took fresh steps to rein in growing risks in the country’s debt-laden financial system.

 

The selloff started in the bond market, as traders rushed to sell and raise cash after a regulator banned investors from using low-grade corporate debt as collateral to borrow cash. The turmoil then spread to the yuan, which recorded its biggest two-day tumble ever. Later, the benchmark Shanghai index slumped 5.4% to record its biggest fall since 2009.

 

The sudden moves serve as a reminder to global investors about the country’s shaky finances, just as China opens up its capital markets more to overseas cash. Policy makers gathering in Beijing this week for a key summit are signaling to the investing public that they should prepare for a lengthy period of slower economic growth after years of amassing debt to fuel high growth levels.

 

The slump in the stock market was especially stark, though not entirely unexpected, after it had surged recently to become the world’s top performing index. Retail investors had fueled the rally, returning to stocks after once-popular investments, including high-yielding wealth management products and gold, turned sour.

 

“I was actually doing a presentation in my office during the last ten minutes of trading, when my boss asked to me to stop and asked everyone to look at stock prices. Then I saw the incredible fall of the Shanghai index and my stocks that have turned from black to red in just a few hours,” said Wu Yunfeng, a Shanghai-based retail investor.

And so another Meep Meep learns his lesson. If only this time it was for more than 15 minutes…

via Zero Hedge http://ift.tt/1wbiqh4 Tyler Durden