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The US Is Closed, But Markets Elsewhere Are Open - Full Overnight Summary

Tyler Durden's picture




 

On MLK Day, we party like its 1991... in the Shanghai Composite that is. The main Chinese index slid another 14 points overnight to its lowest level since the June near-banking sector collapse fireworks, entering 1-handle territory once more, and making a mockery of all those who still don't get that since the Chinese stock market is so shallow, the only bubble in China is in its housing market which unlike the stock market is rising just shy of 20% annually.

But the reason why China's GDP missed even though it beat last night, when it posted 2013 GDP growth of 7.7%, higher than the 7.6% expected, is that as the Bloomberg chart below shows, it was the lowest nominal growth since the financial crisis.

And since overnight liquidity in China collapsed once again, the PBOC announced it had provided short-term liquidity to some big banks today, and that it would conduct a reverse repo tomorrow. Of course, with the January 31 Trust default just 11 days away, the Chinese liquidity tinderbox is locked and loaded especially with the Chinese New Year just around the corner.

In other news, European 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.

There is nothing on the US calendar today as the US is closed for holiday

Market level recap

  • S&P 500 futures little changed at 1833.7
  • Stoxx 600 down 0.1% to 335.5
  • US 10Yr yield down 0bps to 2.82%
  • German 10Yr yield down 0bps to 1.75%
  • MSCI Asia Pacific down 0.3% to 139.2
  • Gold spot up 0.1% to $1255.3/oz

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. (BBG)

* * *

We conclude with the overnight summary by DB's Jim Reid

Markets have started the week on the back foot, despite a brief rally following a better-than-expected Q4 GDP print in China. Indeed, Asian equities recorded a small pop following the GDP report, but the gains were shortlived as the general negativity on China’s growth trajectory continues to weigh on Asian markets. In terms of the data itself, China’s Q4 GDP (7.7% YoY) was slightly ahead of expectations of 7.6% but it was slower than Q3’s 7.8%. DB’s China economist Jun Ma maintains his view that economic growth will likely accelerate in 2014 on stronger external demand and the benefits from deregulation. The slight slowdown was also evident in China’s December industrial production (9.7% YoY vs 10% previous), fixed asset investment (19.6% YoY vs 19.9% previous) and retail sales (13.6% vs 13.7% previous) data which were all released overnight. Gains in Chinese growth assets were quickly pared and as we type the Shanghai Composite (-0.8%), HSCEI (-1.1%) and AUDUSD (-0.1%) are all trading weaker on the day. On a more positive note, the stocks of mining companies BHP (+0.29%) and Rio Tinto (+0.26%) are trading flat to slightly firmer and LME copper is up 0.1%. Across the region, equities are generally trading lower paced by the Nikkei (-0.5%) and the Hang Seng (-0.7%). Staying in China, the 7 day repo rate is another 50bp higher to a three month high of 9.0% with many investors continuing to focus on the Chinese shadow banking system following the looming restructuring of a $500m trust product that was sold to ICBC’s customers. The PBoC said late last week that it expects cash demand to increase substantially before the Lunar New Year on Jan 31st and it has asked banks to pare back the pace of lending in preparation for this.

Last week ended on a sour note as the S&P500 (-0.39%) faded into the close on the weight of a number of profit warnings and earnings disappointments. The big headline misses came from the likes of General Electric (-2.3%) and Intel (-2.6%) – the latter reporting disappointing earnings on the back of continuing weakness in traditional PC demand. Morgan Stanley (+4.4%) bucked the general trend by reporting a solid Q4, courtesy of strong performances in investment banking and capital markets. But overall the S&P500 has managed a fairly lacklustre Q4 reporting season thus far, with just 60% of the 50 companies that have reported managing to beat analyst estimates. The picture on the revenue side is about the same with 63% of companies beating expectations on the top line. Looking deeper at the earnings beats/misses so far, it’s clear that the financials sector has had a decent earnings season, with 13 financials beating EPS estimates and only 6 missing. On the other side of the ledger, the clear underperformer is consumer services, specifically retail where only 2 companies have met sales estimates but 6 have missed. Our oft-used earnings summary table for the S&P500 is included in today’s PDF. We’ll be updating this for both the S&P500 and Stoxx600 as we head deeper into the earnings season.

Briefly recapping the weekend news flow, the ECB has reportedly given selected Euroarea banks three weeks to submit details of their trading books and risk models as part of the central bank’s upcoming asset quality review. Banks have until January 31st to provide data on trading book portfolios, applying common definitions used in regulatory and accounting standards where possible (Reuters)

Also in Europe, after the US markets closed on Friday, Ireland was upgraded by Moody’s back to investment grade (Baa3 from Ba1) with the rating agency noting the dual tailwinds of an improving fiscal outlook and the government’s exit from the EU/IMF programme as the rationale for the upgrade. In Asia, the latest home price data from the Chinese government showed that average new home prices in 70 major Chinese cities climbed 0.4% in December on the month, easing from November's +0.5% and seeing the fourth straight slowdown since August's 0.8% gain. Average nationwide new home prices are up 10% YoY. Elsewhere in Asia, the Bank of Japan is said to be planning to raise credit lines for low interest loans to entities that are showing increasing financial support to industries such as the environment, medicine and welfare (Nikkei).

Previewing the week ahead, the coming week will be a little more quiet than usual with a holiday-shortened week in the US and a relatively light economic data calendar. But there are still a number of important data releases ahead of the month-end FOMC on January 29-30th. The main US economic data releases this week will all come on Thursday with the release of initial jobless claims, the Markit flash PMI and existing home sales. This week’s jobless claims also coincide with the survey period for January payrolls. The 3rd week of US reporting season will see 69 S&P 500 companies reporting, accounting for 17% of index market cap, including Microsoft, P&G, IBM, Verizon and McDonald’s. The US Treasury will auction $15bn of 10yr TIPs on Thursday. US equity and bond markets will be shut today for the Martin Luther King Day long weekend.

In Europe, the highlights on the data docket include Tuesday’s German ZEW Survey and Thursday’s flash PMIs for the EZ/France/Germany. In the UK, watch for the unemployment which will be released on Wednesday, where expectations are for unemployment to fall to 7.3%, edging closer to the BoE’s 7% forward rate threshold. The latest BoE minutes are released on Wednesday. The World Economic Forum meets in Davos, Switzerland starting Wednesday with the IMF due to release its latest world economic outlook a day ahead of that.

In Japan, the BoJ monetary policy meeting is scheduled on Wednesday where the central bank will provide its three year economic outlook. In China, the HSBC flash manufacturing PMI is on Thursday where consensus is expecting a further slowdown to 50.3 (from 50.5 in December).

 

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Mon, 01/20/2014 - 08:30 | 4347749 jubber
jubber's picture

" The US is Closed..."

 

but the S&P is up 5 overnight...?   magic

Mon, 01/20/2014 - 08:48 | 4347763 TeamDepends
TeamDepends's picture

Call it the I have a dream bump.

Mon, 01/20/2014 - 09:13 | 4347789 Sudden Debt
Sudden Debt's picture

the older you get, the better you'll understand the concept of premature ejaculation.

Mon, 01/20/2014 - 08:31 | 4347751 Oh regional Indian
Oh regional Indian's picture

Haaah, looks like we are getting goosed (52 week highs for Info Tech shares. Totally shameless.....

I think it is in prep for a huge upcoming fall in the nxt weeek or so...so they can make more on the shorts on the way down...

Same with the rupee, being kept rangebound (low) against the dollar, so the same IT companies can continue to keep the sham alive a little longer....

ori

Indian guitar, your's truly, MLK listening....

http://www.youtube.com/watch?v=NoCmvFqI8b4

;-)

Mon, 01/20/2014 - 08:42 | 4347757 Global Hunter
Global Hunter's picture

I have never heard guitar played in that style before it sounded like a sitar (?) style.  unless I've heard it and not recognized that it was a guitar, very cool man, very good!

 

Mon, 01/20/2014 - 09:49 | 4347857 Oh regional Indian
Oh regional Indian's picture

Grazzi GH. and that is what I do, play guitar (natural) like a sitar (genetic music).

:-)

ori

Mon, 01/20/2014 - 08:47 | 4347760 GetZeeGold
GetZeeGold's picture

 

 

MLK listening....

 

Hopefully he's not watching.....his boy being put behind bars for corruption. He had a dream....but I doubt it involved that.

 

I really hope he doesn't see what the first black President is up to....you have to think it would really break his heart.

Mon, 01/20/2014 - 09:40 | 4347838 Oh regional Indian
Oh regional Indian's picture

What the heck...

http://www.youtube.com/watch?v=b0KlmyTrf5s

shorter, electric...

Mon, 01/20/2014 - 08:51 | 4347766 Sudden Debt
Sudden Debt's picture

You can suck as much as you want but there's a limit to how big it can get...

Mon, 01/20/2014 - 09:05 | 4347780 AccreditedEYE
AccreditedEYE's picture

Ok, here's the deal..(before some clown actually listens to the ominous tone and burns some capital at a short stab). When an event become SO well known, when even the NY Times is writing about it, George Soros is saying "doesn't look good" and on, and on... This means managers are already or have put hedges on and ready for it. The end of January will not be a bang of red ink. This is how they keep fooling you into handing them more of your money (if you short) Be smart and don't get sucked in.

Mon, 01/20/2014 - 09:12 | 4347787 thatthingcanfly
thatthingcanfly's picture

MLK. What a joke. The man plagiarized virtually every document he every wrote - including his doctoral thesis. He had a communist KGB informant in his circle of advisors - Levison was his name, I think. JFK told him to get rid of the guy, because JFK wanted to support the civil rights movement more, but couldn't because the commie influence made it politically untenable. King refused. He was nearly kicked out of the Southern Baptist civil rights organizers because of his flagrant womanizing. (The night he was shot in Memphis, he had just stepped out of his apartment where he had a tryst with one of his favorite mistresses.) He even fornicated with underage girls.

Makes me ill to think we have a "holiday" for that monster's birthday. There is nothing in his legacy to celebrate.

 

Mon, 01/20/2014 - 09:32 | 4347820 putaipan
putaipan's picture

yeah well, he was evidently a strong enough force for good that the tptb decided to kill him-

Dr. Martin Luther King’s family and personal friend/attorney, William F. Pepper, won a civil trial that found US government agencies guilty in the wrongful death of Martin Luther King. The 1999 trial, King Family versus Jowers and Other Unknown Co-Conspirators, is the only trial ever conducted on the assassination of Dr. King. The King Center fully documents the case, with full trial transcrip

as regards his flagrentcies- let his widow give you a homework assignment for this holiday you don't want to be observing:

Coretta Scott King: “We have done what we can to reveal the truth, and we now urge you as members of the media, and we call upon elected officials, and other persons of influence to do what they can to share the revelation of this case to the widest possible audience.” – King Family Press Conference, Dec. 9, 1999.

as for plagerizing. the above was lifted from GW's blog. a good place to start.

Mon, 01/20/2014 - 11:18 | 4348110 thatthingcanfly
thatthingcanfly's picture

His widow's opinion is irrelevant. Why he was killed and who-dun-it is also irrelevant. MLK's CHARACTER, as demonstrated by his behavior, is what a rational man should anaylze when determining whether or not MLK should be canonized.

This horrible man should have been relegated to the dustbin of history. And please stop calling him a "Dr." He didn't earn it; he cheated, plagiarizing some passages of his thesis from the previous man's work so completely that he copied grammatical errors and punctuation mistakes!

Who is GW (I'm assuming this is a reference to our first President, who most certainly did not have a blog.)?

Mon, 01/20/2014 - 17:48 | 4349219 putaipan
putaipan's picture

and franklin liked a good orgy, and jefferson diddled slaves ... how a 'bout a poppy bush day for you?

Tue, 01/21/2014 - 11:36 | 4351576 thatthingcanfly
thatthingcanfly's picture

Go find your logic professor and kick him in the jimmy.

Then read through this.

https://en.wikipedia.org/wiki/List_of_fallacies

Take your time.

Mon, 01/20/2014 - 09:15 | 4347793 new game
new game's picture

since i dont know

i will miss the show

since i got smart

i sat like an old fart

and today i will stay 

far, far away from the fray

 

Mon, 01/20/2014 - 09:18 | 4347798 GetZeeGold
GetZeeGold's picture

 

 

Well....starting now anyway.

 

It's now official.

Mon, 01/20/2014 - 09:22 | 4347807 new game
new game's picture

admission to the game;cash-buy low, sell high.

whatcha selling...

Mon, 01/20/2014 - 09:24 | 4347813 GetZeeGold
GetZeeGold's picture

 

 

Nothing.....it's forbodden to sell today.

 

Meet me around back.....I'll hook you up.

Mon, 01/20/2014 - 10:51 | 4348020 ms8172
ms8172's picture

A great day to print a lot of Benjamin's!!!

Mon, 01/20/2014 - 13:08 | 4348406 PrecipiceWatching
PrecipiceWatching's picture

The US is "closed" today, huh?

Well the dwindling number of us working in the REAL economy, the private sector, had to roll out of bed to CONTINUE to support the insatiable demands of the arrogant, vastly unappreciative, Free Shit Army.

Dominated by those generational parasites who "could be" MLK's sons and daughters.

Mon, 01/20/2014 - 13:09 | 4348409 Obama_4_Dictator
Obama_4_Dictator's picture

Fuuny how the commdities have stayed somewhat even with no major price drops or fluctuations.....

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