- Comcast Agrees to Buy Time Warner Cable for $45.2 Billion (BBG)
- Italian leadership squabble weighs as shares halt hot run (Reuters)
- Russia says Syria aid draft could open door to military action (Reuters)
- China trust assets rise 46% in 2013 (WSJ), China Trust Assets Surge to $1.8 Trillion Amid Default Risks (BBG)
- Australian Unemployment Jumps to 10-Year High (BBG)
- Tea Party Scorns Republicans as House Lifts Debt Ceiling (BBG)
- Peso plunge forces Argentine soya hoarding (FT)
- BNP Paribas Net Falls After $1.1 Billion U.S. Legal Charge (BBG)
- Hacking Joins Curriculum as Businesses Seek Cyber Skills (BBG)
- Android's 'Open' System Has Limits (WSJ)
- Blackstone-Fueled Single-Family Home Boom Lifts Chicago (BBG)
UPDATE: Trannies and Industrials are now red...
Gold has pressed up to almost $1,295 this morning - fresh 3-month highs - as silver and WTI crude also rise notably. The S&P 500 continues its inexorable USDJPY-inspired levitation (and is set for 1,900 by Monday morning at this rate) though remains negative year-to-date (for now) and a small roll-over in JPY is dragging stocks off their highs for now. US Treasuries are offered with the belly underperforming as 5Y reached 2-week highs at 1.56%.
After initially sending the all important USDJPY carry pair - and thus all risk assets - into rally mode, the initial euphoria over manipulated Chinese trade data (see China Trade Puzzle Revived as Hong Kong Data Diverge), has all but fizzled and at last check the USDJPY was sliding to its LOD, approaching 102 from the wrong side. That, and a statement by the ECB's Coeure that the ECB is "very seriously" considering a negative deposit rate (and that the OMT is ready to be used even though it obviously isn't following the latest brewhaha from the German top court) have so far defined the overnight session, the latter having sent the EUR sliding across all major pairs.
Are fish from the Pacific safe to eat? What about the elevated background radiation readings detected in Japan, and recently in California? Are these harmful levels? Should we be worried? And if so, what should be done about these potential health threats? What steps should we take to protect ourselves? Fukushima-related fears have been both overblown as well as heavily downplayed by parties on each side of the discussion. Much of this stems from ignorance of the underlying science. But some of it, sadly, seems to be purposefully misleading. Again, on both sides. To assess the true risks accurately, you need to know about the difference between radiation and contamination. The distinction is vital and, unfortunately, one of the most glossed-over and misused facets of the reporting on nuclear energy.
The potential for a golden age of gas comes along with a big “if” regarding environmental and social impact. The International Energy Agency (IEA) - the "global energy authority" - believes that this age of gas can be golden, and that unconventional gas can be produced in an environmentally acceptable way.
BOTTOM LINE: Fed Chair Yellen's prepared remarks for her semiannual monetary policy testimony before the House Financial Services Committee were brief and did not contain any major surprises. The testimony itself will begin at 10:00am.
A sneaky overnight levitation pushed the Spoos above 1800 thanks to a modest USDJPY run (as we had forecast) despite, or maybe due to, the lack of any newsflow, although today's first official Humphrey Hawkins conference by the new Fed chairman, Janet Yellen, before the House and followed by the first post-mortem to her testimony where several prominent hawks will speak and comprising of John B. Taylor, Mark A. Calabria, Abby M. McCloskey, and Donald Kohn, could promptly put an end to this modest euphoria. Also, keep in mind both today, and Thursday, when Yellens' testimoeny before the Senate takes place, are POMO-free days. So things may get exciting quick, especially since as Goldman's Jan Hatzius opined overnight, the third tapering - down to $55 billion per month - is on deck.
After Friday's surge fest on weaker than expected news - perhaps expecting a tapering of the taper despite everyone screaming from the rooftops the Fed will never adjust monetary policy based on snowfall levels - overnight the carry trade drifted lower and pulled the correlated US equity markets down with it. Why? Who knows - after Friday's choreographed performance it is once again clear there is no connection between newsflow, fundamentals and what various algos decide to do. So (lack of) reasons aside, following a mainly positive close in Asia which was simply catching up to the US exuberance from Friday, European equities have followed suit and traded higher from the get-go with the consumer goods sector leading the way after being boosted by Nestle and L'Oreal shares who were seen higher after reports that Nestle is looking at ways to reduce its USD 30bln stake in L'Oreal. The tech sector is also seeing outperformance following reports that Nokia and HTC have signed a patent and technology pact; all patent litigation between companies is dismissed. Elsewhere, the utilities sector is being put under pressure after reports that UK Energy Secretary Ed Davey urged industry watchdog Ofgem to examine the profits being made by the big six energy companies through supplying gas, saying that Centrica's British Gas arm is too profitable.
Sometimes, perhaps all too often; investors, traders, economists, and mainstream media anchors miss the forest and see only the trees (growing to the sky or crashing to the floor). To provide some context on the markets, we present the first of three posts of long-term chart series (and by long-term we mean more than a few decades of well-chosen trends) - stock, bond, gold, commodity, and US Dollar prices for the last 240 years...
Whether driven by real supply-demand issues, concerns over terrorism (sparked by the Sochi plane debacle), or hopes a renewed un-tapered QE on the basis of 2 piss-poor jobs reports in a row is unclear. What is clear is that WTI crude is having its best day in over 2 months - now at its highest in 2014, back above $100 a barrel and its most expensive in history for this time of year.
- Here is why AAPL bounced off $500: Apple Repurchases $14 Billion of Own Shares in Two Weeks (WSJ)
- German Court Refers OMT Decision to Europe's Top Court (WSJ)
- Inflation Fuels Crises in Two Latin Nations (WSJ)
- U.S. job growth seen snapping back from winter chill (Reuters)
- Google to own $750 million Lenovo stake after Motorola deal closes: HK exchange (Reuters)
- Frigid Winter Spells Trouble for U.S. Economy (BBG)
- Winter Games to open, Putin keen to prove doubters wrong (Reuters)
- Regulators Ready to Proceed on Bank Leverage Limit (WSJ)
- Abe Eyes Window for Biggest Military-Rule Change Since WWII (BBG)
It's that time again, when a largely random, statistically-sampled, weather-impacted, seasonally-adjusted, and finally goalseeked number, sets the mood in the market for the next month: we are talking of course about the "most important ever" once again non-farm payroll print, and to a lesser extent the unemployment rate which even the Fed has admitted is meaningless in a time when the participation rate is crashing (for the "philosophy" of why it is all the context that matters in reading the jobs report, see here). Adding to the confusion, or hilarity, or both, is that while everyone knows it snowed in December and January, Goldman now warns that... it may have been too hot! To wit: "We expect a weather-related boost to January payroll job growth because weather during the survey week itself - which we find is most relevant to a given month's payroll number - was unusually mild." In other words, if the number is abnormally good - don't assume more tapering, just blame it on the warm weather!
How long can economic growth continue in a finite world? In simplest terms, our problem is that we as a people are no longer getting richer. The reason we are getting poorer is because hidden parts of our economy are now absorbing more and more resources, leaving fewer resources to produce the goods and services we are used to buying. The promised collapse, from 1972's The Limits of Growth, is practically right around the corner, beginning in the next year or two. In fact, many aspects of the collapse appear already to be taking place, such as the 2008-2009 Great Recession and the collapse of the economies of smaller countries such as Greece and Spain. How could collapse be so close, with virtually no warning to the population?
Today the lingering problems of the "emerging" world and concerns about the Fed's tapering take a back seat to what the European Central Bank may do, which ranges from nothing, to a rate cut (which sends deposit rates negative), to outright, unsterilized QE - we will find out shortly: with 61 out of the 66 economists polled by Bloomberg looking for no rate changes from the ECB today it virtually assures a surprise . However, despite - or perhaps in spite of - various disappointing news overnight, most notably German factory orders which missed -0.5% on expectations of a +0.2% print, down from 2.4%, the USDJPY has been supported which as everyone knows by now, is all that matters, even if it was unable to push the Nikkei 225 higher for the second day in a row and the Japanese correction persists.
It's snowing in New York so the market must be down. Just kidding - everyone know the only thing that matters for the state of global risk is the level of USDJPY and it is this that nearly caused a bump in the night after pushing the Nikkei as low as 13,995, before the Japanese PPT intervened and rammed the carry trade higher, and thus the Japanese index higher by 1.23% before the close of Japan trading. However, since then the USDJPY has failed to levitate as it usually does overnight and at last check was fluctuating within dangerous territory of 101.000, below which there be tigers. The earlier report of European retail sales tumbling by 1.6% on expectations of a modest 0.6% drop from a downward revised 0.9% only confirmed that the last traces of last year's illusionary European recovery have long gone. Then again, it's all the cold weather's fault. In Europe, not in the US that is.