So far today has been a replica of yesterday, with the crude rout continuing and pushing WTI under $45, but largely ignored by the FX carry pairs, and thus equity futures, which have seen some positive momentum from overnight trade data out of China where exports jumped 9.7% beating the 6% expectation, while imports fell 2.4% compared to a projected 6.2% decline as the trade surplus narrowed from November’s record $54.4 billion. For the full year, however, Chinese trade grew at just 3.4%, missing the government’s target of 7.5% growth for the third year in a row as the government quick to blame the slowing global economy. In any event, the USDJPY is well off the overnight lows which means the EuroStoxx is up some 0.8% which, just like yesterday, the E-mini is up some 9 points and rising. It remains to be seen if, just like yesterday, US equities will crash at a precipitous pace after the open, once algos realize that nothing at all has changed.
There was one world leader who was out of step with the rest of political elite during yesterday's theatrical procession of world leaders for French unity and for press freedom (even as the bulk of them engage in prosecution of freedom of speech across their own nations): Israel's prime minister Benjamin Netanyahu. In fact, as Reuters reports, he managed to "ruffle a few feathers while taking part in the "Charlie Hebdo" rally in Paris on Sunday" because this was an event his office initially said he would not be attending following a specific request form French president Hollande not to come to Paris, but ultimately ended up participating in much to the Chagrin of the French president.
Today's chart of the day comes courtesy of Reuters Jamie McGeever, and it shows that based on a BofA analysis, US stocks have never in history been more expensive relative to the rest of the world, surpassing both the dot com bubble and the housing bubble.
- Earnings Pessimism Jumps as Oil Threatens S&P 500 Growth (BBG)
- It’s Amateur Hour in the Booming Chinese Stock Market (BBG)
- France mobilizes 10,000 troops at home after Paris shootings (Reuters)
- European Stocks Gain With S&P 500 Futures While Oil Drops (BBG)
- Nasdaq Looks to Operate Dark Pools for Banks (WSJ)
- This Guy Called Bonds in ’14. You Listening This Time? (BBG)
- Paris attacks boost support for Dutch anti-Islam populist Wilders (Reuters)
- OPEC price war in Asia intensifies as oil falls below $50 (Reuters)
Every couple of years the same identical European drill repeats itself: 1) Greece makes loud noises as it approaches an election, 2) Europe says it couldn't care what the outcome is and that Greece should stay in the Euro but if it exits it won't be a disaster, 3) the ECB reminds everyone of the lie that it is not preparing for Plan B (it is) despite holding on to over €100 billion in "credibility-crushing" Greek bonds, 4) panicking Greek banks say the deposit outflow situation is completely under control (adding that "The Bank of Greece along with the European Central Bank are monitoring closely the developments and intervene whenever this is necessary," which is code word for far more familiar, five-letter word), and meanwhile 5) all non-Greek banks quietly start preparing for the worst case scenario. So far this time around, we had everything but step "5". We do now.
Arson Attack On German Newspaper After Printing Charlie Hebdo Cartoons; Thousands Take To Streets In France - Live WebcastSubmitted by Tyler Durden on 01/11/2015 07:10 -0500
A day when over 700,000 people are said to have taken part in marches across France in Paris, Orleans, Nice, Pau, Toulouse and Nantes, following three days of deadly attacks in the Paris area to commemorate the victims' memories, there was another attack which may be tied to the Charlie Hebdo tragedy, this time by unknown assailants who launched an incendiary device on the building of German newspaper Hamburger Morgenpost shortly after 2am local time when nobody was in the building, and which, as Bloomberg reports, had in recent days reproduced the cartoons published by Charlie Hebdo.
"This is why Putin is Public Enemy Number 1. It’s because he’s blocking the US pivot to Asia, strengthening anti-Washington coalitions, sabotaging US foreign policy objectives in the Middle East, creating institutions that rival the IMF and World Bank, transacting massive energy deals with critical US allies, increasing membership in an integrated, single-market Eurasian Economic Union, and attacking the structural foundation upon which the entire US empire rests, the dollar." Up to now, of course, Russia, Iran and Venezuela have taken the biggest hit from low oil prices; but what the Obama administration should be worried about is the second-order effects that will eventually show up...
Just 13 short months ago - two months before then President Yanukovich was ousted - Russia lent Ukraine $3 billion (by buying their Eurobonds). As Reuters reports, the terms of that loan included a condition that Ukraine's total state debt should not exceed 60% of its GDP. As of last month, based on Moody's estimates, Ukraine has violated that condition with a debt-to-GDP of 72% (and will likely rise to 85% of GDP in 2015).. and so, according to Russian finance minister Anton Siluanov, "Russia has the right to demand early return of this loan." With European aid 'contingent on major reforms' and possibly taking up to 1 year, this leaves the good old IMF (i.e. the US and European taxpayer) to bridge Ukraine's 'gap' and ironically bailout Russia.
Two months ago we reported that former Soviet leader Mikhail Gorbachev has warned that tensions between Russia and the West over the Ukraine crisis have put the world "on the brink of a new Cold War." That warning has now escalated as the 1990 Nobel Peace Prize winner told Der Spiegel news magazine, according to excerpts released on Friday, that tensions between Russia and European powers over the Ukraine crisis could result in a major conflict or even nuclear war, adding that "a war of this kind would unavoidably lead to a nuclear war."
Update: the hostage-takers are dead. However, according to Reuters at least four hostages at the Kosher supermarket have been killed according to Reuters, citing a police source. Additionally, and take this with a grain of salt, CNN adds that the female suspect in the Paris grocery siege escapes.
Even as the Charlie Hebdo shooting suspects, who have holed up in the town of Dommartin with a hostage in tow, are engaged in what is likely a final showdown with the police, a second hostage situation appears to have developed in a Kosher grocery in eastern Paris, where according to preliminary reports the shooter from the Montrouge policewoman killing yesterday, has taken several hostages. According to AFP, Fresh shooting broke out in eastern Paris on Friday, with reports that an armed man had taken a hostage at a kosher grocery store. "The gunman was suspected of being the same man who killed a policewoman in southern Paris on Thursday, who is thought to have links to the assailants who stormed." AFP just added that at least 5 hostage are involved in the parallel hostage situation.
- Police Surround Paris Terror Suspects Near CDG Airport (BBG)
- ECB Said to Study Bond-Purchase Models Up to 500 Billion Euros (BBG)
- How OPEC Weaponized the Price of Oil Against U.S. Drillers (BBG)
- German Industrial Production Falls Amid Plunge in Energy Output (BBG)
- Car Loans See Rise In Missed Payments (WSJ)
- Jim O'Neill threatens he will replace BRICs with ICs (BBG)
- Oil heads for seventh weekly loss as supply glut drags (Reuters)
- Armed man takes hostage in kosher grocery in Paris (AFP)
- Janus Chairman Didn’t Know Details of Gross’s Investment (WSJ)
- Kaisa Bondholders Dream of White Knight as Default Becomes Real (BBG)
While the trading world, or at least the kneejerk reaction algos, is focused on today's US nonfarm payrolls due out in just 2 hours (consensus expects 240K, with unemployment declining from 5.8% to 5.7%) the key event overnight came out of China, (where inflation printed at just 1.5% while PPI has imploded from -1.8% in September to -2.2% in October to -2.7% in November to a whopping -3.3% in December because as per BofA "soft domestic demand over-capacity issue have kept inflation pressures low") and Europe, after a Bloomberg report that as recently as Wednesday, ECB staff "presented policy makers with models for buying as much as 500 billion euros ($591 billion) of investment-grade assets... options included buying only AAA-rated debt or bonds rated at least BBB-, the euro-area central bank official said. Governors took no decision on the design or implementation of any package after the presentation." In other words less than two weeks before the fateful ECB meeting and Mario Draghi not only still hasn't decided on which of three public QE version he will adopt, but the ECB has reverted back to a private QE plan. Not surprisingly the EURUSD jumped back over 1.18 on the news (and USDJPY and stock markets dropped) on the news that Europe still is completely unsure how to proceed with QE despite the endless jawboning.
The attacks pose threats to our already under attack freedoms - freedom of the press, freedom of privacy, freedom of religion, freedom of conscience, freedom of speech, expression and thought. Unless as a race we change direction - the prospect for greater instability in the form of terrorism and war in the near future is very high ...
Schools in Chicago, Boston and other large cities closed on Thursday as sub-zero temperatures and bitter winds gripped central and eastern United States for a third day and, as Reuters reports, meteorologists warned there was little relief in sight. A stunning 83.8% of America was freezing this morning (and 12.9% below zero) as an Arctic air blast from Canada hit the U.S. Midwest, Mid-Atlantic and Northeast, with many parts around minus 10 Fahrenheit (minus 23 Celsius), the National Weather Service said.