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).
Like in the bubble days of 2007: the big numbers, the deal exuberance, the craziness, the hoopla
- House Unveils $1.01 Trillion Measure to Fund Government (BBG)
- Credit Suisse Tells Junior Bankers to Take Saturdays Off (BBG)
- Spot the odd word out: ECB Sees Bad-Debt Rules as Threat to Credible Bank Review (BBG)
- Insert laugh track here: Spain GDP grows at fastest pace in almost six years (FT)
- Scandinavian Debt Crisis Waiting to Happen Puzzles Krugman (BBG)
- Fed Said to Release Plan to Limit Banks’ Commodities Activities (BBG)
- Thai Protesters Extend Blockade After Rejecting Poll Talks (BBG)
- China provinces set lower growth goals for 2014 (BBG)
With no major macro news on today's docket, it is a day of continuing reflection of Friday's abysmal jobs report, which for now has hammered the USDJPY carry first and foremost, a pair which is now down 170 pips from the 105 level seen on Friday, which in turn is putting pressure on global equities. As DB summarizes, everyone "knows" that Friday's US December employment report had a sizeable weather impact but no-one can quite grasp how much or why it didn't show up in other reports. Given that parts of the US were colder than Mars last week one would have to think a few people might have struggled to get to work this month too. So we could be in for another difficult to decipher report at the start of February. Will the Fed look through the distortions? It’s fair to say that equities just about saw the report as good news (S&P 500 +0.23%) probably due to it increasing the possibility in a pause in tapering at the end of the month. However if the equity market was content the bond market was ecstatic with 10 year USTs rallying 11bps. The price action suggests the market was looking for a pretty strong print.
Japanese consumer sentiment tumbled once again in the last quarter of 2013. The BoJ survey - released quarterly - showed the second consecutive drop in both current conditions and the outlook. This is the largest two-quarter collapse in the outlook for the Japanese consumer since 2007 as it appears the initial exuberance of Abenomics is collapsing as fast as Abe's approval ratings. We fear, perhaps, this loss of belief (which can surely only set back his hopes for firms to raise wages) is merely stoking his nationalist militarist persuasion - as indicated by his move last night.
With "keg-standing bros" and "easy women" having been tempted already (unsuccessfully from what we know) to participate in the government's 'affordable' care act, Politico reports the Obama administration today unveiled its plans for an Olympic-size ad blitz during the winter games next month. No comments yet on which images will be used (it's too soon for any Schumacher references) but we suggest 'skeleton' will provide the right 'stimulation' to get insured.
I tried to create a “Kudos List” as well but really couldn’t.
The economist Herbert Stein once said that if something can't go on forever, it will stop. The pattern of the last few decades, in which higher education costs grew much faster than incomes, with the difference made up by borrowing, can't go on forever... There is no point in trying to preserve the old regime as "working your way through college" is now impossible. For an 18-year-old, investing such a six-figure sum in an education without a payoff makes no more sense than buying a Ferrari on credit.
Obamacare officially went live at midnight. This means that 2.1 million Americans will be given a chance to exercise their new plans at hospitals and clinics across the country. And then the real glitches will begin. We reported two weeks ago that navigating the healthcare.gov labyrinth successfully and "signing up" for Obamacare is one thing; actually activating coverage by making a payment is something totally different. We added that "if people don’t pay by Dec. 31, insurers may end up stuck with a disproportionate number of sicker and costlier customers." It is this "shock" realization that one's Obamacare plan is not active until after the healthcare service has been rendered, that may hit as many as 50% of all enrollees, which means that of the 2+ million Americans who believe they have coverage, up to 1 million is about to be served with a bill which they can't afford.
Over the past two weeks, Trust Preferred (or TruPS) CDOs have gained prominent attention as a result of being the first, and so far only, security that the recently implemented and largely watered-down, Volcker Rule has frowned upon, and leading various regional banks, such as Zions, to liquidate the offending asset while booking substantial losses. But... what are TruPS CDOs, and just how big (or small) of an issue is a potential wholesale liquidation in the market? Courtesy of the Philly Fed we now have the extended answer.
- Millions of Tons of Metals Stashed in Shadow Warehouses (WSJ)
- Moguls Rent South Dakota Addresses to Dodge Taxes Forever (BBG)
- Fastest Japan Inflation Since ’08 Stokes Wage Pressure (BBG)
- Thai crisis deepens as army chief hints at intervention (Reuters)
- Anti-Assad Lebanese ex-minister killed in Beirut bomb (Reuters)
- Foreigners Unload Turkey Bonds as Probe Tarnishes Erdogan Growth (BBG)
- Small ISS Change Shakes Up Boards: Tweak to Influential Shareholder Adviser's Recommendations Has Directors Rethinking Proposals (WSJ)
- Japan’s Nishimura Calls for Quick Corporate Tax Cut to Under 30% (BBG)
- Japan's Abe bets U.S. alliance, ratings can weather shrine visit (Reuters)
When it comes to key players in a global fungible monetary system, a far more important decision-maker than the US government is the FDIC-insured hedge fund that controls all central banks: Goldman Sachs. Which is why it is certainly notable that moments ago none other than Goldman effectively downgraded Russia's sovereign risk by announcing it is "shifting from constructive to neutral view on Russian sovereign risk." With the legacy rating agencies now largely moot and irrelevant, what the big banks say suddenly has so much more import. But when the biggest - and most connected - bank of them all, outright lobs a very loud shot across the Gazpromia Russian bow, even Putin listens.
• the risk of runs and asset fire sales in repurchase (repo) markets;
• excessive credit risk-taking and weaker underwriting standards;
• exposure to duration risk in the event of a sudden, unanticipated rise in interest rates;
• exposure to shocks from greater risk-taking when volatility is low;
• the risk of impaired trading liquidity;
• spillovers to and from emerging markets;
• operational risk from automated trading systems, including high-frequency trading; and
• unresolved risks associated with uncertainty about the U.S. fiscal outlook.