Merrill

Merrill

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

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.

Frontrunning: January 17

  • NSA phone data control may come to end (AP)
  • China to rescue France: Peugeot Said to Weigh $1.4 Billion From Dongfeng, France (BBG)
  • China to rescue Davos: Davos Teaches China to Ski as New Rich Lured to Slopes (BBG)
  • Hollande’s Tryst and the End of Marriage (BBG)
  • Iran has $100 billion abroad, can draw $4.2 billion (Reuters)
  • Target Hackers Wrote Partly in Russian, Displayed High Skill, Report Finds (WSJ)
  • Nintendo Sees Loss on Dismal Wii U Sales (WSJ)
  • Goldman's low-cost Utah bet buoys its bottom-line (Reuters)
  • Royal Dutch Shell Issues Profit Warnin: Oil Major Hit by Higher Exploration Costs and Lower Oil and Gas Volumes (WSJ)
  • EU Weighs Ban on Proprietary Trading at Some Banks From 2018 (BBG) - so no holding of breaths?
  • Sacramento Kings to Accept Bitcoin (WSJ)

Futures Shake Off Weak Earnings, Levitate Higher: Global Market Summary

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).

Frontrunning: January 16

  • Charter, Comcast in renewed talks on Time Warner Cable bid (Reuters)
  • Bankers' Stock Awards Jet Higher (WSJ)
  • Yahoo CEO Mayer Dismisses Operating Chief De Castro (BBG)
  • Amazon Employees Vote to Reject Union (Reuters)
  • Luxury in China loses luster as wealthy flee (Reuters)
  • UnitedHealth Profit Up on Stronger Enrollments (WSJ)
  • U.S. government failed to secure Obamacare site: experts (Reuters)
  • Spain Sells Bonds at Record-Low Yield as Rajoy Touts Rebound (BBG)
  • Newport Beach’s $100,000 Lifeguards Feel Pension Squeeze (BBG)
  • Bailed-Out Euro Nations Expect Painful Challenges to Remain (BBG)

Frontrunning: January 14

  • 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)

Frontrunning: January 13

  • Full onslaught 1: New Jersey Gov. Chris Christie's Aides Pressed Hard for Endorsements (WSJ)
  • Full onslaught 2: Feds investigating Christie's use of Sandy relief funds (CNN)
  • Iran nuclear deal to take effect on January 20 (Reuters), Iran to get first $550 million of blocked $4.2 billion on February 1 (Reuters)
  • Sen. McCaskill didn’t want to be in same elevator with Hillary Clinton (Hill)
  • The banks win again: Basel Regulators Ease Leverage-Ratio Rule for Banks (BBG)
  • Ireland's Rebound Is European Blarney (NYT)
  • Democrats prove barrier for Obama in quest for trade deals (FT)
  • Federal Reserve Said to Probe Banks Over Forex Fixing (BBG)

Bank Of America Smiles On Its Junior Bankers, Tells Them To Take 4 Weekend Days Off

In a memo to employees today, Bank of America has made some 'improvements' to its recommendations for analysts and associates working hours...

*BOFA ANNOUNCES IMPROVEMENT IN WORKING CONDITIONS FOR JUNIORS
*BOFA SAYS JUNIOR BANKERS SHOULD TAKE 4 WEEKEND DAYS OFF A MONTH

This comes on the heels of the death of a 21-year old intern in August who "pulled eight all-nighters in two weeks" prior to his death. Next they will be demanding a rise in minimum wage...

China Overtakes US As World's Largest Trader (Except With Japan)

Overnight China reported disappointing export data, missing expectations of +5%. The gvoernment explained this on the basis that they were losing their competitive edge since the Yuan has strengthened to 20 year highs but perhaps most telling is that fact that, as the FT reports, China became the world's biggest trader in goods for the first time last year - overtaking the US for all of 2013. We suspect the powers that be are starting to get nervous as this comes soon after China's surge to become the world's largest oil importer marking a notable shift in the world's most powerful nations - as trade with the rest of Asia and increasing flows with the Middle East represent a shift in power away from the US.

Frontrunning: January 10

  • From the guy who said the market is not overvalued: Q&A with Fed’s Williams on Upbeat 2014 Outlook and What Keeps Him up at Night (Hilsenrath)
  • Obama Readies Revamp of NSA (WSJ)
  • Indian envoy leaves U.S. in deal to calm diplomatic row (Reuters)
  • China overtakes US as largest goods trader (FT)
  • Wall Street Predicts $50 Billion Bill to Settle U.S. Mortgage Suits (NYT)
  • Low-End Retailers Had a Rough Holiday: Family Dollar, Sears Struggle as Lower-Income Customers Remain Under Pressure (WSJ)
  • ECB charts familiar course as Japan, US and UK begin to diverge (FT)
  • Housing experts warn of hiccups as new U.S. mortgage rules go live (Reuters)
  • It's a HFT eat HFT world: Infinium ex-employees sue over $4.1m loss (FT)
  • Slowing China crude imports to challenge exporters (FT)

Frontrunning: January 9

  • Carney Guidance Threshold Strained as BOE Holds Policy (BBG)
  • Does one laugh or cry: China Tells Banks to Improve Disclosures in Shadow-Lending Fight (BBG)
  • Big Business Doubles Down on GOP Civil War With Tea Party (BBG)
  • CIA sued for records on possible role in Nelson Mandela arrest (RT)
  • Bridge Scandal Destroys Christie's 'Nice Jerk' Image (BBG)
  • Borrowers Hit Social-Media Hurdles (WSJ)
  • U.S. Leverage in Iraq Tested As Fears of Civil War Mount (WSJ)
  • Austerity drive cuts into Chinese inflation (FT)
  • Dish Pulling Its Bid for LightSquared (WSJ)
  • BlackRock agrees to end analyst surveys (Reuters)
  • Germany defends economic policies after US criticism (FT)
  • Bank of Korea Holds Rate Even as Yen Clouds Export Outlook (BBG)

23 Reasons To Be Bullish On Gold

It's been one of the worst years for gold in a generation. A flood of outflows from gold ETFs, endless tax increases on gold imports in India, and the mirage (albeit a convincing one in the eyes of many) of a supposedly improving economy in the US have all contributed to the constant hammering gold took in 2013. Perhaps worse has been the onslaught of negative press our favorite metal has suffered. It's felt overwhelming at times and has pushed even some die-hard goldbugs to question their beliefs... not a bad thing, by the way. To us, a lot of it felt like piling on, especially as the negative rhetoric ratcheted up. This is why it's important to balance the one-sided message typically heard in the mainstream media with other views. Here are some of those contrarian voices, all of which have put their money where their mouth is...

Frontrunning: January 8

  • Here comes JPM's next multibillion legal reserve: Federal Probe Targets Banks Over Bonds (WSJ)
  • Mulally Bows Out of Microsoft CEO Race, Staying at Ford (BBG)
  • United States sending more troops and tanks to South Korea (Reuters)
  • Eurozone unemployment sticks at record high (FT)
  • China-Japan 'Voldemort' attacks up ante in propaganda war (Reuters)
  • Alternative Lenders Peddle Pricey Commercial Loans (WSJ)
  • John McAfee: glad Intel dropping name from security software (Reuters)
  • Jobless Benefits Bill Stays Alive Amid Talks on Offsets (BBG)
  • Chicago Colder Than South Pole as Frigid Air Clamps Down (BBG)
  • Former Miss Venezuela shot dead in attempted robbery (Reuters)

Frontrunning: January 7

  • Yellen’s Record-Low Senate Support Reflects Fed’s Politicization (BBG)
  • Euro-Zone Inflation Rate Falls in December, even further below ECB's target (WSJ)
  • Zambia politician charged for calling president a potato (AFP)
  • Blame gold: India Savings Deposit Scam Collapse Leaves Thousands Penniless (BBG)
  • Hedge Funds Raise Gold Wagers as Yamada Sees $1,000 (BBG)
  • George Osborne limits cuts options with pensions promise (FT)
  • Vietnam Raises Foreign Bank Ownership Caps to Aid System (BBG)
  • But they said buy a year ago... Goldman to JPMorgan Say Sell Emerging Markets After Slide (BBG)
  • SAC Trial Seen by Probe Convict as Latest Abusive Tactic (BBG)

Forbes Reveals Its "Top 30 Under 30" In Finance

With Trader Monthly magazine having, ironically, gone out business long ago, all those traders whose egos demanded that their insider trading connections put them at least in one of the iconic "Top X under X" league tables, pardon, rankings, had to bide their time in expectation of one day when their prowess to frontrun others or move markets with repeated calls to 555-7617 (with or without references to Anacott Steel) would be appreciated by such sterling Wall Street "experts" as Anthony Scaramucci. Well, for this year's crop of some 30 traders under 30, the day has arrived. And while Forbes may not be Trader Monthly, the amusement, the hubris and the behind the scenes dealing to appear in such a list, sure are still the same...

Frontrunning: January 6

  •  'Life-threatening' cold bites Midwest, heads east (Reuters)
  • Gold Analysts Get Most Bullish in a Year After Rout (BBG)
  • Asian Stocks Fall Most in Three Weeks on China Services (BBG)
  • Angela Merkel in skiing accident, cancels visits (Reuters)
  • High-Speed Traders Form Trade Group to Press Case (WSJ)
  • Toyota and Honda post record China sales (FT)
  • China Shadow Banking Risks Exposed by Local Debt Audit (BBG)
  • J.P. Morgan to Pay Over $2 Billion to U.S. in Penalties in Madoff Case (WSJ)
  • Corruption trial of Trenton, N.J., mayor starts Monday (Reuters)
  • Car Makers at Consumer Electronics Show Tout Ways to Plug Autos Into the Web (WSJ)