Ireland

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• United States sending more troops and tanks to South Korea (Reuters)
• Eurozone unemployment sticks at record high (FT)
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Some better than expected economic news out of Europe, Greek 10 Year yields dropping to 7.65% or the lowest since May 2010, and futures are... red? Alas, such is life in a world in which the S&P500, aka the E-mini, is simply a derivative of the Yen funding currency pairs, where the USDJPY touched on 105 after a straight line diagonal move only to sell off in recent trading. Heading into the North American open, stocks in Europe are seen mixed, with peripheral stock indices outperforming, buoyed by the prospect of Portugal echoing yesterday’s Irish NTMA return to capital markets with its 10y bond syndication. As such, despite the cautious sentiment, financials led the move higher, with Italian banks gaining for 4th session as IT/GE 10y spread narrowed to its tightest level since early July 2011. Of note, FTSE-100 index underperformed its peers since the get-go, with retailers and tobacco names under pressure. In spite of opening higher by over 3%, Sainsbury's shares have since reversed and are seen lower by almost 2% after co. CFO said that he expects FY LFL sales to be just below 1% and expects Q4 to be similar to Q3. Elsewhere, tobacco names came under selling pressure following reports that China is planning a ban on smoking in public by year's end.

With record high unemployment at 12.3%, a banking system on life support, and a teetering-on-the-brink-of-recession GDP print; it only makes sense that on the heels of this morning's trip to the capital markets by Ireland, the other peripheral bond markets in Europe are well bid. But in context, at 99.6bps, Italian 2Y yields are now at all-time record lows - is everyone in the world front-running an ECB QE? EURUSD is back under 1.3600 and even Turkish 2Y notes tumble to a mere 10.02%.

Heading into the North American open, stocks in Europe are seen broadly higher, with peripheral EU stock indices outperforming after Ireland successfully returned to capital markets with its 10y syndication that attracted over EUR 10bln. Financials benefited the most from the consequent credit and bond yield spreads tightening, with smaller Italian and Spanish banks gaining around 4%. Following the successful placement, IR/GE 10y bond yield spread was seen at its tightest level since April 2010, while PO/GE 10y spread also tightened in reaction to premarket reports by Diario Economico citing sources that Portuguese govt and debt agency IGCP consider that the current level of yields already allows Portugal to go ahead with a bond sale. Looking elsewhere, the release of better than expected macroeconomic data from Germany, together with an in line Eurozone CPI, supported EUR which gradually moved into positive territory. In addition to that, smaller MRO allotment by the ECB resulted in bear steepening of the Euribor curve and also buoyed EONIA 1y1y rates. The Spanish and Italian markets are the best-performing larger bourses, Swedish the worst. The euro is stronger against the dollar. Japanese 10yr bond yields fall; Spanish yields decline. Commodities gain, with wheat, silver underperforming and Brent crude outperforming. U.S. trade balance data released later.

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• 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)

From this point on I start demonstrating to those who can't see the benefits of smart digital money over dumb fiat currencies. Now, you can short bitcoin and hedge against volaitlity using same tools the big boys use for USD/EUR/CNY, etc.

Forget "the 1%-ers", meet the 3%-ers. As US Treasuries sell-off and European bonds continues to surge, the 3% handle on government debt is becoming a crowded trade with the following six nations now yielding between 3 and 4%... US, UK, Ireland, Israel, and drum roll please... Italy and Spain!

The first trading session of previous years has always been a whopper for those betting on central planning and capital flows. In fact, if one adds up the S&P performance on the first trading day of each year going back to 2009 (i.e., 1/2/13: + 2.54%, 1/3/12: + 1.55%, 1/3/11: + 1.13%, 1/4/10: + 1.60%, and 1/2/09: + 3.16%), one gets a whopping 10% return just on that one trading session. Which is why the fact that futures are glowing read, if only for the moment, may be disturbing for index investors and all those others who put all their faith, not to mention money, in St. Janet. Today's red open is hardly being helped by the 10 Year which continues to drift lower with the yield now at 3.04%, even as the Spanish 10 Year yield just got a 3 handle as well. At this rate the two streams should cross some time in the next two months. Just what a higher yield in the US vs Spain would imply for fair and efficient markets, we leave up to readers to decide.

It is perhaps ironic that the creator of the AK-47 assault rifle, also known as the Kalashnikov named for its creator Mikhail Kalashnikov, and of which there are between 70 and 100 million in circulation making it the world's most popular weapon, has just passed away from what is essentially old age, at 94. "It is difficult and sad to realize that Mikhail Kalashnikov is no longer with us. We have lost one of the most talented, memorable and committed patriots of Russia, who served his country throughout his life,” said the statement from the press secretary of the Udmurtia administration Viktor Chulkov.

• 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.

During 2013, America continued to steadily march down a self-destructive path toward oblivion.  As a society, our debt levels are completely and totally out of control.  Our financial system has been transformed into the largest casino on the entire planet and our big banks are behaving even more recklessly than they did just before the last financial crisis.  We continue to see thousands of businesses and millions of jobs get shipped out of the United States, and the middle class is being absolutely eviscerated.  Due to the lack of decent jobs, poverty is absolutely exploding.  Government dependence is at an all-time high and crime is rising.  Evidence of social and moral decay is seemingly everywhere, and our government appears to be going insane.  If we are going to have any hope of solving these problems, the American people need to take a long, hard look in the mirror and finally admit how bad things have actually become.

Despite the best efforts of the search engines, the majority of the Internet is unsearchable with estimates of this “Unlit” Web as high as 90%. As ConvergEx's Nick Colas notes, some of this content (no one knows how much) is dark for a reason - hosting every form of criminal behavior known to man - but the rest from the increasing interest in anonymous Internet use in light of widely publicized government surveillance. Among the least well understood emerging themes in technology, Colas points out, is the “Dark Web”, adding that Oscar Wilde famously opined that “All human beings have three lives: public, private and secret.”  The existing structure of the Internet handles the first two very well.  The Dark Web is, apparently, for the third. The first innovation to move from “Dark” to “Lit” Web is bitcoin, but it certainly won’t be the last.

There are only a few UK and U.S. banks on the list of global safe banks. This should give pause for thought. Notice that many of the safest banks in the world are in Switzerland and Germany.

Ireland jumps out of the frying pan and into the fire, gets burnt and then climbs right back into that damn frying pan again...