• "Spreading the ideas of freedom loving people on matters regarding high finance, politics, constructionist Constitution, and mental masturbation of all types"

R.T.M. ~ Frontrunning ~ 3rd Ed., Vol.2 ~ Jan 18 - 22nd

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#1
Real-time news 01/17
http://seekingalpha.com/news/all

LT: 01/17 Outlook for Week of January 18
https://lunatictrader.wordpress.com/2016/01/17/outlook-for-week-of-january-18/

Weighing The Week Ahead: Can Earnings Season Provide A Floor For Stocks? 01/17
http://seekingalpha.com/article/381...an-earnings-season-provide-a-floor-for-stocks

Abnormal Returns - Sunday links: trading smaller
http://abnormalreturns.com/2016/01/17/sunday-links-trading-smaller/

TBP: 10 Sunday Reads 01/17
http://ritholtz.com/2016/01/sunday-reads-35/

Naked Capitalism: Links 01/17
http://www.nakedcapitalism.com/2016/01/links-11716.html
 

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#2
LONGWave - 12 09 15 - DECEMBER - Debt Storm Over Emerging Markets
GordonTLong


Published on Jan 17, 2016
Released to Subscribers December 9th, 2015
 

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#3
Look Out Below: The Junk Bond Market Is Imploding! | John Rubino
FinanceAndLiberty.com


Published on Jan 16, 2016
John writes, "For a while there, companies deemed to be highly risky were nonetheless able to borrow money for less than 6%. And borrow they did. Frackers, ultra-high-leverage retail chains and various other close-to-the-edge entities slurped up trillions from yield-starved investors who had forgotten about the other side of the risk/return equation.

That this hasn’t worked out so well is not much of a surprise. But the speed with which it has gone bad is still breathtaking. The following chart from Bloomberg illustrates just how fast an illogical market can be brought back to reality."

This video was posted with permission from http://FinancialSurvivalNetwork.com

FINANCE AND LIBERTY:
SUBSCRIBE (It's FREE!) for more ►http://bit.ly/Subscription-Link
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#4
Weekly Forex Review - 18th to the 22nd of January
Forex Reviews


Pairs and Markets Analysed this Week ( including looking at potential high probability opportunity zones, management points and targets ): EURUSD, GBPUSD, AUDUSD, USDJPY, USDCAD ( 4 Hour ), USDCHF, Silver, Gold, AUDNZD and EURCAD.

Thanks for watching and Happy Trading, if you watched this bio do not forget to comment, like and subscribe. Also comment "Happy Trading" below to let me know you read the bio as well.

I appreciate you all.
 

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#5
Nomi Prins-US at Center of Financial Black Hole
Greg Hunter


Published on Jan 17, 2016
Don’t think the U.S. is immune from trouble. The U.S. is at the center of the black financial hole. So, will the U.S. eventually implode with the rest of the world? Former top Wall Street banker and best-selling author, Nomi Prins says, “Yes, because the U.S. is a trading partner with these countries. We buy and sell products . . . and also, we have an extremely large financial system with tentacles throughout the world.”

When it comes to protecting yourself from calamity, Prins says, “Build a stockpile of cash . . . and look at investing in gold as a percentage of disposable investment income.”

Join Greg Hunter as he goes One-on-One with best-selling author of “All the Presidents’ Bankers.”

All links can be found at USAWatchdog.com:
 

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#7
Crisis of Realization
belangp


Published on Jan 17, 2016
A commentary on today's state of affairs in the world economy.
 

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#9
Equity Futures Rise After Oil Rebounds From 12 Year Lows; US Markets Closed


Submitted by Tyler Durden on 01/18/2016 07:51 -0500

In the aftermath of the latest Chinese near-panic intervention to keep its currency from an out of control collapse when as reported yesterday, the PBOC announced it would raise the RRR for offshore Yuan deposits, a move which would reduce the amount of the currency available in the market, squeezing supply further (and breaking Hong Kong HIBOR markets again in the process) and making it more difficult and expensive for speculators, the Chinese stock market went exactly nowhere, closing up 0.44% suggesting that when it comes to manipulating asset classes, China can do either stocks or FX (or soon corporate bonds once that particular - and most epic - bubble bursts), but not both at the same time.

So, with the US closed today for Martin Luther King Holiday (futures are open until 1pm ET before closing until 6pm), global risk tone has once again been set entirely by oil, which opened sharply lower at fresh 12 year lows on fears of an Iran oil glut, but has steadily rebounded on the latest OPEC comments, and at last check both WTI and Brent were mostly unchanged trading in the low $29's on muted volume.

A quick recap of the key oil market highlights: in a report just released by OPEC, the now defunct cartel hopes non-OPEC production will fall by 700,000b/d, even as Iran begins pumping an extra 500,000b/d while Saudi exports jumped by a whopping 355,000b/d to 7.719MM b/d in November from 7.364MM b/d in October.

The rest of the OPEC headlines:

  • OPEC PREDICTS OIL MARKET WILL BEGIN TO REBALANCE IN 2016
  • OPEC SEES NON-OPEC OIL SUPPLY FALLING BY 0.7M B/D IN 2016 AMID LOW PRICES
  • OPEC OUTPUT FELL 0.2M B/D TO 32.2M B/D IN DECEMBER
  • OPEC SEES DEMAND FOR ITS OIL RISING 1.7M B/D TO 31.6M B/D IN 2016
  • OPEC'S JANUARY REPORT INCLUDED DATA FOR REINSTATED MEMBER INDONESIA
With Asian markets mixed, European shares swung between gains and losses, while the yen weakened as China stepped up efforts to curb foreign speculation against its currency. Crude oil rose from a 12-year low after the Organization of Petroleum Exporting Countries forecast a decline in supplies from rival producers.

However, after weeks of relentless selling, there may be some respite if only a brief technical one: as the following chart from HindeSightletters.com shows, Brent is approaching the upper range of the recent 2-week selling channel, and a break around $30 could push Brent into the low to mid-30's.



Some other market levels as of this moment:

  • S&P Futs: 1881.5, +6.25
  • Dow Futs:15,970, +58
  • Dax: 9,519, -26
  • Stoxx 600 329.7, unch
  • Shanghai:2913.8, +0.44%
  • Nikkei: 16,955, -1.12%
  • 10 Year: 2.03%, unch
  • EURUSD: 1.0888,
  • USDJPY: 1277.78, +0.12%
  • Gold $1,091, +0.2%
Looking at the markets that are open today, we start with Asian stocks which traded mixed following Friday's negative close on Wall St. where continued weakness in energy prices dampened sentiment, although a mild rebound in oil saw the region come off worst levels. Nikkei 225 (-1.1%) underperformed after a relatively firm JPY weighed on Japanese exporters, while the ASX 200 (-0.7%) was dragged by the energy sector following the lifting of Iranian sanctions. The Shanghai Comp, (+0.4%) outperformed following an improvement in property price data, coupled with news that the CSRC will open up China's capital market to foreign investors this year, while the Hang Seng (-1.1 %) was led lower by financials after the PBoC announced new RRR rules for offshore banks on CNY deposits. Finally, 10yr JGBs traded higher amid inflows into safer assets following the continued weakness seen in Asian equities, while the BoJ also entered the market to purchase JPY 890BN in government debt.

Selling resumed in European equity markets following reports of the PBOC attempting to further suppress capital outflows. Oil once again takes centre stage, both benchmark futures trading firmly below the USD 30.00bbl handle, following the Iranian sanctions relief. However, panic in oil markets seems to have dissipated and oil has seen an uptick in recent trade despite Nomura analysts warning that we could see USD 25.00 bbl in today's session.

The Stoxx Europe 600 was little changed as of 12:15 p.m. London time, with banks declining on concern the quality of their assets may harm profits. Polish bonds fell after the country received its first-ever sovereign downgrade. . Brent crude futures climbed 1 percent to $29.23 a barrel. The Bank of America Merrill Lynch Market Risk Index, which tracks volatility in different assets worldwide, was at the highest since Oct. 1 on Friday.

In FX, the yen declined against all of its 16 major counterparts and the franc also weakened after China’s central bank helped calm investors’ nerves by strengthening the yuan fixing by the most in almost a month. As havens fell, higher-yielding currencies rebounded, with the Brazilian real outperforming all of its major peers and the Canadian dollar climbing for the first time this year.

Japan’s currency, the best performer among major counterparts this year, was down 0.4 percent at 117.40 per dollar, while the euro traded 0.2 percent lower at $1.0891 and the franc slid 0.3 percent. The Canadian dollar added 0.4 percent after earlier sliding to an almost 13-year low. Russia’s ruble depreciated 1.4 percent to 78.693 against the dollar.

The offshore yuan strengthened 0.4 percent, building on its biggest weekly gain since October. The cost of borrowing yuan on a weekly basis in Hong Kong rose, while overnight lending rates fell. The People’s Bank of China said it will impose reserve-requirement ratios on yuan deposited onshore by overseas financial institutions from Jan. 25, without saying what level would be used.

In commodities all eyes were on oil again, with Brent oil earlier extended its decline below $28 as international sanctions on Iran were lifted, paving the way for increased exports from the OPEC producer. Futures fell intraday to the lowest since November 2003, before rebounding as OPEC, which supplies about 40 percent of the world’s oil, predicted production outside its members would drop this year by 660,000 barrels a day, deepening the decline from its previous estimate by 270,000 barrels a day.

Nickel led most base metals higher in London on optimism that China will see an increase in demand and its economy will avoid a hard landing. The metal used to produce stainless steel rose as much as 2.6 percent to $8,615 a metric ton.

Bloomberg adds that Iran could get five times more from oil exports by year end and plans to add lmin bpd of oil sales in 2016.

US Event Calendar

  • Markets closed
DB's Jim Reid concludes the overnight wrap

Tomorrow's dump of Chinese data (Q4 GDP, industrial production, fixed asset investment and retail sales) could be an important moment for markets in the near-term but the decision to lift sanctions on Iran over the weekend has raised the spectre of even more oversupply in the Oil sector. This morning it's down -1.36% although it has pared much heavier early losses of as much as -4% (and falling below $29) at the open. Bourses in Asia are down but have also rallied back in line with the Oil moves following an initial plummet lower. The Nikkei is -0.67% after being nearly 3% down while the Hang Seng (-0.70%), and ASX (-0.70%) have also pared back much steeper losses while the Kospi is back to flat. Interestingly it’s China which is leading the way with Shanghai Comp (+1.11%) and CSI 300 (+1.14%) both up, again after a softer opening and perhaps reflecting the latest property price data which showed new home prices rose in 39 cities last month, having risen in 33 cities in November.

Meanwhile the offshore CNH is +0.5% stronger this morning following the news over the weekend that China is to raise offshore Yuan reserve requirements for banks in a bid to bring some stability to the currency and prevent excessive speculation. The onshore CNY is little moved.

The moves this morning follow ugly falls in Middle Eastern markets on Sunday with a number of equity indices hitting multi-year lows. Bourses in Saudi Arabia, Jordan, UAE and Kuwait declined anywhere from 4 to 7% with much of the focus on the Iran news. Over the weekend the nuclear related sanctions which had been placed on the country were lifted after Iran was seen as completing the steps which had to be fulfilled following the July agreement.

According to the WSJ, Iran’s nuclear activities are set to be severely constrained and will be subject to major oversight, however the lifting allows the nation to now step up its production of nuclear fuel. Much of the chatter is that Iran will increase production by 500k barrels a day as an immediate response, before lifting production even more down the line.

The prospect of this was blamed for the huge leg lower in Oil on Friday with WTI (-5.71%) and Brent (-6.28%) down below $30/bbl and $29/bbl respectively. Risk assets were hammered as a result. European equity markets were down anywhere from 2-3% while the S&P 500 (-2.16%) was down a similar amount but managed to pare heavier losses of more than 3%, while taking its YTD loss now to 8%. A lot of the pain is coming through in credit markets as well. Both CDX IG and Main widened 6bps on Friday. The eye watering move was in US HY energy however after spreads blew out 102bps to close at 1,640bps. With spreads at fresh all time wides, Friday’s move was the largest single day move wider on record based on our data while last week alone saw spreads move more than 230bps wider.

US earnings season is still yet to get going properly, but expect there to be a lot of focus on Schlumberger’s results on Thursday – the first of the big oil names to report. Bank results are the focus for the moment however after both Citigroup and Wells Fargo reported better than expected results on Friday (beating both revenue are earnings expectations) although analysts were quick to highlight some concerns in the details with Citigroup’s share price in particular down over 6%. One of the interesting takeaways from the banks so far has been exposure to and the impact from tumbling energy prices. As per the FT, Citigroup was said to have recorded a 32% rise in non-performing corporate loans in Q4 mainly related to its North American energy book. JP Morgan has said it will add another $750m of reserves should Oil stay at $30 (having boosted energy loan-loss reserves by $550m last year) while Wells Fargo reported net charges of $831m last period mainly related to oil (largest since Q1 2013).

Not helping sentiment on Friday too was the US economic data. Despite December headline retail sales coming in line with expectations at -0.1% mom there were notable misses for the ex auto (-0.1% mom vs. +0.2% expected), ex auto and gas (0.0% mom vs. +0.4% expected) and control group (-0.3% mom vs. +0.3% expected) components which as a result saw the Atlanta Fed downgrade their Q4 GDP forecast by two tenths to 0.6%. As well as that, industrial production last month also fell more than expected (-0.4% mom vs. -0.2% expected), while the Empire manufacturing print was the biggest downside surprise after tumbling over 13pts to -19.4 (vs. -4.0 expected) – the lowest since March 2009. It was unsurprising then to see manufacturing production also miss (-0.1% mom vs. 0.0% expected) while business inventories in November (-0.2% mom vs. -0.1% expected) were also soft. Elsewhere the December PPI reading printed in line at -0.2% mom while the lone beat came in the form of the preliminary University of Michigan consumer sentiment reading which rose 0.7pts to 93.3 (vs. 92.9 expected) with the expectations component in particular up strongly. That being said, one-year inflation expectations did however dip two-tenths to 2.4%.

Fedspeak on Friday highlighted the obvious concern in markets at the moment but offered little new information on the whole. San Francisco Fed President Williams opined that the main concerns to the US economy are international and that ‘China’s the wild card’, while also noting that it will be an ‘ongoing challenge’ for the Fed to get markets on the same page as policy makers. On this topic, NY Fed President Dudley said that ‘projections will adjust as incoming information changes the economic outlook’ and that ‘I would expect convergence over time’. Dudley did however warn that ‘should the economy unexpectedly weaken, then this fall in inflation expectations would become more concerning’.

Just before we take a look at the week ahead, Portuguese sovereign bonds have been the notable underperformer YTD so far which is reflecting some of the concerns in the country’s banking system following the recent Novo Banco issue. 10y Portugal bond yields are +23bps wider this year so far which compares to moves tighter for both Italy (-2.7bps) and Spain (-1.4bps), while 10y Bunds are nearly 9bps lower so far this year. This has come after Portugal imposed steep losses for Novo Banco bondholders late last year after the Portuguese Central Bank moved 5 of the 52 senior Novo Banco bond issues to the bad bank carved out from failed lender Banco Espirito Santo. The Bank of Portugal has since said on Friday that it intends to resume a sell process of Novo Banco but the knock on effect has already seen peripheral banks come under a decent amount of pressure with nerves around Portuguese banks in particular. One to watch.

Onto this week’s calendar now. With US markets closed for Martin Luther King Day, today is an unsurprisingly quiet start to the week for data with nothing out in either Europe or the US. OPEC’s monthly report, due out around lunchtime should be worth keeping an eye on though. Tuesday morning is all about China where we will get the all important Q4 GDP print (6.9% expected) along with retail sales, industrial production and fixed asset investment data. During the European session we’ll get the final German CPI report for December along with the UK CPI/RPI/PPI reports and the German ZEW survey. Across the pond on Tuesday the only notable data is the NAHB housing market index print. Turning to Wednesday, German PPI and the UK employment report are the morning highlights. That’s before we turn to the main release of the week in the US with the December CPI print (headline 0.0% mom expected, core +0.2% mom expected). As well as this we will get the December housing starts and building permits data. The early data release on Thursday comes in France where we will get the latest confidence indicators in France. The final revisions to Euro area inflation for December follow this before the ECB meeting due around lunchtime. It’s pretty quiet in the US on Thursday with just initial jobless claims and the Philly Fed business outlook due. We close out the week on Friday with the January flash manufacturing PMI out of Japan in the Asia session. That’s before we get the flash manufacturing, services and composite readings for the Euro area, Germany and France along with UK retail sales data. The US finishes the week also with the flash manufacturing PMI reading, while the conference board leading index and existing home sales data wrap things up.

With the FOMC meeting around the corner there’s no Fedspeak scheduled this week so the focus will also be on the corporate earnings with 43 S&P 500 companies due to report including Bank of America, IBM, Morgan Stanley and UnitedHealth on Tuesday, Goldman Sachs on Wednesday, Verizon and Schlumberger on Thursday and finally GE on Friday.


http://www.zerohedge.com/news/2016-...r-oil-rebounds-12-year-lows-us-markets-closed
 

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#10

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#11
Shipping & Energy 01/18:

Sanctions lifted and back in business with oil markets expecting increased oversupply through Iran
http://forargyll.com/?p=104280

Rouhani hails "golden page" in Iran's history as sanctions lifted
http://www.arabianbusiness.com/rouh...-as-sanctions-lifted-618780.html#.VpzsfJX2bIU

Saudi shipper Bahri posts huge Q4 profit jump
https://www.zawya.com/story/Saudi_shipper_Bahri_posts_huge_Q4_profit_jump-TR20160117nD5N0ZO01OX3/

Oil Lifts Cargo Volume at Rotterdam Port in 2015
http://gcaptain.com/2016/01/15/oil-lifts-cargo-volume-at-rotterdam-port-in-2015/#.VpztOpX2bIU

Amazon expands logistics reach with move into ocean shipping
http://www.reuters.com/article/us-amazon-com-freight-idUSKCN0US2YW

More Than Half of U.S. LNG Seen Destined for Europe
http://gcaptain.com/2016/01/15/more-than-half-of-u-s-lng-seen-destined-for-europe/#.Vpzu1ZX2bIU

Wall Street Reacts To The Lifting Of Iran Oil Sanctions
http://www.zerohedge.com/news/2016-01-18/wall-street-reacts-lifting-iran-oil-sanctions

Crude Oil Price Trend Forecast 2016 - Video By Nadeem Walayat
http://www.marketoracle.co.uk/Article53718.html

Texas Oil And Gas Production Declining
http://seekingalpha.com/article/3815686-texas-oil-and-gas-production-declining

Peak Oil Review - Jan 18
http://www.resilience.org/stories/2016-01-18/peak-oil-review-jan-18-2016

30+ U.S. coal projects could be scrapped under moratorium
http://www.mining.com/842589-2/

When Will Petrobras’ Fire Sale Start?
http://oilprice.com/Energy/Crude-Oil/When-Will-Petrobras-Fire-Sale-Start.html

Changes afoot for U.S. coal industry
http://www.upi.com/Business_News/En...ges-afoot-for-US-coal-industry/1571452864113/

Mixed fortunes for top US west coast container ports in 2015
http://www.lloydslist.com/ll/sector/ports-and-logistics/article477471.ece
 

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#16
Shipping & Energy 01/18 cont'd:

Iran-Venezuela oil tanker deal hit by sanctions snags
http://af.reuters.com/article/energyOilNews/idAFL2N14Z0NF

Lloyd’s Register to Resume Iran Business
http://gcaptain.com/2016/01/18/lloyds-register-to-resume-iran-business/#.Vp1Ws5X2bIU

Chinese Shipyards See New Orders Fall by Almost Half in 2015
http://www.bloomberg.com/news/artic...ds-see-new-orders-fall-by-almost-half-in-2015

Oil Sold for -$0.50 per Barrel. A Negative Price!
http://oilprice.com/Energy/Oil-Prices/Oil-Sold-for-050-per-Barrel-A-Negative-Price.html

The World Just Lost One Of Its Biggest Oil Plays To Low Prices
http://oilprice.com/Energy/Crude-Oi...e-Of-Its-Biggest-Oil-Plays-To-Low-Prices.html
 

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#18
Welcome to the Jungle
By: Captain Hook
We humans come from the jungle, and to the jungle we will return. In fact, the way some people act today, one could conclude we never left. Because people are increasingly acting like animals these days, bringing back the need to think in terms of ‘survival of the fittest’, as modern societies disintegrate. Evidence of this trend is everywhere. You’ve got a global corporatist / statist state (neo-fascist) over-riding all sovereign interests raping (financially, liberties, etc.)
 

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#19
Equities Soar, Oil Back Over $30 On Hopes For More Stimulus Following Disturbing Chinese Data


Submitted by Tyler Durden on 01/19/2016 06:55 -0500



Only the most intellectually dishonest can claim that last night's Chinese economic data deluge was anything but miserable. As we showed last night, everything missed:

  • Industrial Production +5.9% (MISS vs +6.0% YoY expectations)
  • Retail Sales +11.1% (MISS vs +11.3% YoY expectations)
  • Fixed Asset Investment +10.0% (MISS vs +10.2% YoY expectations),
  • Q4 GDP growth +6.8% (MISS vs +6.9% YoY expectations).
Even as the real full year GDP of 6.9% was in line, it was still the lowest since 1990...



... while the nominal Q4 GDP was well below 6% when excluding the 0.9% deflator, suggesting unadjusted Chinese growth just had its worst quarter in the 21st century.

MarketNews' take confirmed as much: "a closer look under the hood shows a more troubling picture. Industrial output growth in December slid back to below 6% after a surprise acceleration in November, fixed-asset investment growth continued its slow grind lower, coming in at 10% for the Jan-Dec period, the weakest pace since 2000. The overhang of unsold real estate persists and although sales are improving in first-tier cities, the government's own data show that floor space under construction rose just 1.3% in 2015. While that's an improvement from a record low of -3.6% in the Jan-Aug y/y period, the lack of growth in investment will continue to be a significant drag on the economy this year given the sector's importance to other industries including steel, cement and household goods."



Official data on the source of funding for fixed-asset investment show that funds from the state budget rose 15.6% in 2015, slowing from 21.4% for the Jan-Nov 2015 period, and little higher than the 14.1% for full-year 2014, which indicates some moderation at the end of the year. Lending weakened further as a source of investment funding, dropping 5.8% for the full year, compared with a decline of 4.3% in the first 11 months. This doesn't bode well for a significant pickup in investment growth in 2016.



Real average disposable income growth weakened to 7.4% y/y last year from 8% in the previous year, hardly a boost for consumption. So there are few reasons to take heart from the headline 2015 GDP number even though it was in line with Premier Li Keqiang's target.

Other estimates of China's GDP were even worse, with Oxford Economics calculating only 6.3% growth in 2015 and 6.1% y/y in Q4, while Capital Economics estimated China grew only 4.5% in Q4.

So if bad news was bad news, both commodities (read oil) and US equity futures should be tumbling right now... but just the opposite is happening and in fact both Brent and WTI have already jumped over $30 this morning.

This happens even as the IEA said this morning that global oil markets could “drown in oversupply,” sending prices even lower as demand growth slows and Iran revives exports with the end of sanctions, according to the International Energy Agency.



The IEA trimmed 2016 estimates for global oil demand as China’s economic expansion weakens and raised forecasts for supplies outside the Organization of Petroleum Exporting Countries. While non-OPEC supply is set to drop 600,000 barrels a day in 2016, Iran’s comeback could fill that gap by the middle of the year. As a result, world markets may be left with a surplus of 1.5 million barrels a day in the first half.

So why are both commodities, global stocks and futures soaring?



Simple: the following Bloomberg headline summarizes it: "Brent Rallies More Than $1 as China GDP Spurs Stimulus Bets," and where Brent goes, so goes risk, and the S&P.

It wasn't just speculation: confirming that China is getting more actively involved in "risk management" was the following headline moments ago, showing that the PBOC injected over 400 billion yuan into Chinese banks so far this week.

  • CHINA PBOC: CNY82 BLN IN 1Y MLF; CNY328 BLN IN 3-MONTH MLF
  • CHINA PBOC INJECTS CNY410 BLN VIA MLF TO BANKS
And then, the National Team arrived: the Shanghai Composite Index rallied 3.2 percent, the most since November, with Reorient Financial Markets Ltd. saying government-led funds may have entered to bolster the market.

Which means one thing: bad news is good news again, if only for a few days or until the previously noted "oversold" bounce takes place. In fact the only underperforming asset today, for the second day in a row, were Italian banks and the FTSE MIB index in general, as a result of many financials being halted from trading after reports the ECB are looking to investigate banks non-performing loans.

Here is a quick snapshot of where global risk indexes could be found this morning.

  • S&P 500 futures up 1.7% to 1907
  • Stoxx 600 up 1.9% to 335
  • FTSE 100 up 1.7% to 5879
  • DAX up 1.8% to 9694
  • German 10Yr yield up 1bp to 0.55%
  • Italian 10Yr yield up less than 1bp to 1.57%
  • Spanish 10Yr yield down 2bps to 1.73%
  • MSCI Asia Pacific up 0.9% to 120
  • Nikkei 225 up 0.5% to 17048
  • Hang Seng up 2.1% to 19636
  • Shanghai Composite up 3.2% to 3008
  • US 10-yr yield up 2bps to 2.06%
  • Dollar Index up 0.21% to 99.17
  • WTI Crude futures up 1.3% to $29.80
  • Brent Futures up 3.9% to $29.65
  • Gold spot down 0.2% to $1,087
  • Silver spot up 0.7% to $14.05
Here is how the realization that China's terrible economic data is really great for risk assets, starting in Asia, where equity markets traded mostly higher in what was a volatile session following the release of key data from China which saw 2015 GDP at its slowest annual growth in 25 years. Shanghai Comp. (+3.2%), rose back above the 3,000 level after being initially weighed by the miss on GDP, Industrial Production and Retail Sales figures. However, sentiment then reversed as the weak data stoked expectations for further easing measures, while the PBoC also offered funds via medium term lending facilities in tenors of 3-months and 1-year, with the latter being offered for the 1st time in history. This comes after some turmoil seen yesterday, were the PBoC implemented a reserve requirement ratio to some banks involved in the CNH market.

Top Asian News

  • Yuan Bears Stick to Their Guns After PBOC Attacks on All Fronts: Rabobank sees drop to 7.6 in 2016, Natixis predicts 6.95.
  • Biggest Leveraged ETF Takes in $1.5 Billion as Japan Stocks Sink: Next Funds Nikkei 225 Leveraged Index ETF took in 177.4b this year.
  • SoftBank Plunges to Lowest Since Sprint Buy as Doubts Mount: Shares fell yesterday to lowest level since buying Sprint in 2013 amid mounting pessimism that billionaire Masayoshi Son can turn around the money-losing U.S. carrier.
  • Cnooc to Cut Spending, Output Amid Crude’s Plunge Below $30: Co. to decrease capex to “no more than” CNY60b ($9.1b) this year from a target of as much as CNY80b for 2015.
  • Ex-Goldman Macro Trader Lim Reopens $1.1 Billion Hedge Fund: Leland Lim’s Guard macro hedge fund returned 8.1% in 2015.
  • Mukesh Ambani’s Reliance Jio to Raise $2.2 Billion in Share Sale: Jio’s rights offering will involve issuing 15b shrs.
  • YouTube Access Restored in Pakistan After 3-Year Blackout: Site was forbidden to prevent people from watching a film branded as anti-Islam.
  • Chevron Signs Second China LNG Deal as Gorgon Output Nears: Co. plans to supply upto 500kt/y of LNG to unit of ENN Energy Holdings from Gorgon project.
European equities kicked off to a positive start, despite another set of disappointing data from China. Headline GDP (Q4 Y/Y 6.8% vs. Exp. 6.9% Prey. 6.9%) and Industrial production (Y/Y 5.9% vs. Exp. 6.0% Prey. 6.2%) figures missed on expectations . An uptick in sentiment has also been helped by the announcement PBoC have moved to provide funds via medium term lending facilities in tenors of 3-months and 1-year, with the latter being offered for the 1st time in history. The energy sector benefits from Brent and WTI futures trading firmly above the USD 29.00 level, and out performs its counterparts in Europe. The FTSE MIB remains the laggard for the second consecutive day, with many financials halted from trading, with reports the ECB are looking to investigate banks non-performing loans. The underperformance in Italian financials has also led to an uptick in Bunds, as investors seek a safe haven.

European Top News

  • Credit Agricole Confirms Plan to Sell Bank Stakes; Shares Surge: Co. confirmed it’s exploring sale of stakes in more than three dozen regional banks.
  • Paschi, UniCredit Among Banks Pressed for Loan Data by ECB: Banks among Italian lenders asked to submit data on their NPLs as ECB toughens scrutiny of region’s credit quality.
  • Adidas Says Henkel’s Rorsted to Succeed Hainer as CEO: Rorsted, 53, will join Adidas board on Aug. 1, take over as CEO 2 months later.
  • U.K. December Inflation Edges Up on Fuel Costs, Air Fares: Prices rose an annual 0.2%, most since Jan., following a 0.1% gain in Nov.
  • Norway’s Top Tech Fund Snaps Up Apple Again After Stock Rout: DNB Nordic Technology, which has beaten its peers 7 of 10 past years, according to data compiled by Bloomberg, bought a “little bit” in Apple last Tues. after exiting stake in spring 2015.
  • HBO Plans to Take On Netflix in Spain With Streaming Service: By end-2016, residents in Spain will have access to an HBO streaming service for first time.
  • Hollywood Studios Fight Back as EU Attacks Content Curbs: Studios including 20th Century Fox, Sky Plc are seeking to stave off possible EU fines as bloc’s antitrust chief considers curbs on where they sell content.
  • Priciest Stockholm Homes Slip Amid Signs Tipping Point Reached: After rising 17% over the past year, prices in central Stockholm fell 1% in 3 months through Dec.
In FX, the yen dropped 0.5 percent to 117.92 per dollar as investors unwound demand for the currency as a haven from turmoil in China. It has strengthened 2 percent this month.

South Africa’s rand led gains in the currencies of commodity producing nations, rising for first time in three days. It climbed 1.6 percent, leading a gauge of 20 emerging-market currencies 0.4 percent higher on Tuesday. Australia’s currency gained 1.1 percent. Russia’s ruble strengthened 1.3 percent to 78.31 against the dollar.

Turkey’s lira gained 0.4 percent before a central bank meeting. Two-year note yields were little changed at 11.11 percent. Policy markers will keep interest rates unchanged, according to the median estimate in Bloomberg surveys of economists.

The Hong Kong dollar slipped 0.1 percent to 7.8059 per dollar, the weakest since September 2011. The currency was near the mid-point of the HK$7.75-HK$7.85 trading range that’s existed for more than a decade.

In commodities, the Bloomberg Commodity Index rose 1.2 percent, after closing at the lowest level since at least 1991 on Friday. Brent crude climbed as much as 3.9 percent to $29.67 a barrel, paring its decline this year to 21 percent.

The International Energy Agency, adviser to 28 advanced economies, said Tuesday that global oil markets could “drown in oversupply,” sending prices even lower as demand growth slows and Iran revives exports.

Copper gained 1.4 percent as stock markets jumped in China, the world’s biggest metals consumer. Former Federal Reserve Chair Ben Bernanke said China was making “good progress” with financial reforms.

Corn climbed to the highest in almost four weeks as drought threatened to hurt African crops.

Looking at the day ahead, the lone release in the US is the NAHB housing market index print. Earnings wise the focus today looks set to be on the banks with Bank of America and Morgan Stanley reporting at the open, while IBM is due to report post the closing bell

Overnight Bulletin Summary From RanSquawk and Bloomberg

  • The steady risk mood in FX continues into todays session, lifting the correlated currencies but cautiously so as yet
  • European equities (Euro Stoxx 2.0%) kicked off to a positive start, despite another set of disappointing data from China, where GDP and IP missed expectations
  • Today's highlights include comments from BoE's Carney and ECB's Nowotny
  • Treasuries decline to open the week; 10Y yields holding near lowest since October after rallying as much as ~24bp since start of year amid equity rout, growth concerns.
  • The IMF cut its world growth outlook, as the commodities slump and political gridlock push Brazil deeper into recession, plunging oil prices hobble Mideast crude producers, and the rising dollar curbs U.S. prospects
  • Banca Monte dei Paschi di Siena SpA, UniCredit SpA and Banca Popolare dell’Emilia Romagna SC were among Italian lenders asked to submit data on their non-performing loans as the ECB toughens scrutiny of the region’s credit quality
  • Merkel’s is poised for a week of refugee politicking after mass sexual assaults on New Year’s Eve increased pressure on her to impose border restrictions, a demand championed by lawmakers in her party bloc who plan to hand her a letter of protest today
  • China’s industrial production, retail sales and fixed-asset investment all slowed in December, capping the weakest quarter of growth since the 2009 global recession, as the Communist leadership grapples with a transition to consumer- led expansion
  • Chinese stocks rallied as the weaker-than-estimated data fueled speculation of increased stimulus and industrial shares rallied on prospects of state-fund buying
  • For Chinese consumers, the benefit of oil’s crash stops at $40/bbl because the retail price of fuels such as gasoline won’t be cut in line with crude as long as it trades below that level, according to the country’s top economic planner
  • China’s securities regulator denied a Reuters report that its Chairman Xiao Gang offered to resign
  • Germany’s ZEW index of investor expectations fell to 10.2 in January (est 8) from 16.1 in December
  • Sovereign bond yields higher. Asian stocks and European stocks gain; equity-index futures advance. Crude oil and copper rally, gold falls
US Economic Calendar

  • 10:00am: NAHB Housing Market Index, Jan., est. 61 (prior 61)
  • TBA: Total Net TIC Flows, Nov. (prior $68.9b)
  • Net Long-term TIC Flows, Nov. (prior -$16.6b)
  • 11:30am: U.S. to sell $31b 3M bills, $26b 6M bills
Top Global News

  • China GDP Slows to Weakest Since 2009 on Manufacturing Slide: 4Q GDP grows 6.8% y/y vs est. 6.9%.
  • IEA Says Oil Rout Could Deepen as Market ‘Drowns’ in Oversupply: Global oil markets could “drown in oversupply,” sending prices even lower as demand growth slows with Iran ramping up exports after sanctions.
  • Benefits of Iran Sanctions Relief to Bypass Most U.S. Firms: Actions taken Saturday in Vienna leave in place number of U.S. restrictions on commercial dealings with Iran.
  • Suncor to Buy Canadian Oil Sands After Raising Offer by 12%: Co. raised its all-stock offer by 12% to C$4.2b ($2.9b), winning approval from management team that had rejected earlier approaches.
  • Woolworths, Lowe’s Exit Unprofitable Home-Improvements Unit: Cos. exiting their unprofitable Australian home-improvements venture after failed 6-year attempt to take on market leader Bunnings Ltd.
  • U.S. Court Backs Apple Motion in Patent Case Against Samsung: Court ordered Samsung to stop using software in the U.S. that helps mobile phones infringe on those patents.
  • General Motors Salvages Ride-Hailing Company Sidecar for Parts: Automaker acquired technology, most assets of ride- hailing pioneer Sidecar Technologies.
  • Facebook’s WhatsApp Drops Subscription Fee, Tests New B2C Tools: messaging service to drop annual $0.99 subscription fee; to test ways to monetize its nearly 1b customers by allowing businesses to communicate with users.
  • Amazon Veers Into Labor Law Fight Zone for Hurried Deliveries: Co.’s push into ultra-fast delivery has landed it in court with drivers claiming they’re being exploited.
  • Qualcomm Seeks JV Shortcut to Server Sales in China: Co. trying to break Intel’s dominance of chip sales for server computers, is forming a JV in China.
  • Bank of Montreal Enters Robo-Advising Ahead of Other Lenders: Co. starts signing up customers for its automated low-fee investment-advice platform this week.
  • Trump Says He’ll Get Apple to Manufacture Products in U.S.: “We’re gonna get Apple to start building their damn computers and things in this country instead of in other countries.”
  • Clinton, Sanders Fight for Title of Obama’s Heir in S.C.: Clinton tightened her embrace of Barack Obama on Sunday as Sanders tried to tie her to Wall Street in final debate before Feb. 1 Iowa caucus.
  • World’s Richest Down $305b as Markets Extend Global Rout: 400 richest people have lost $305b from their combined net worth this month. Richest 1% Now Wealthier Than the Rest of World: Oxfam
  • ‘Ride Along 2’ Topples ‘Star Wars’ in Holiday-Weekend Box Office: Film knocked latest “Star Wars” movie from top box office spot over Martin Luther King Jr. holiday weekend.
DB's Jim Reid completes the overnight wrap

There’s only one place to start this morning and that’s in China where there’s been some significant data to digest including the much anticipated growth numbers. Q4 GDP has printed at 6.8% yoy, below market expectations of 6.9% and down one-tenth from Q3. It is also the lowest print since Q1 2009 and at the bottom end of most economists’ estimates (16 of 43 surveyed expected 6.8% or below). That means GDP growth for full year 2015 was 6.9% (which was in line with consensus estimates) which the government will argue is in line with their estimate of ‘about 7%’. There’s no doubt that Q4 came in a bit softer than hoped however with the Q4 qoq print of 1.6% missing expectations by two tenths.

The monthly activity indicators were also generally disappointing. Industrial production slowed to 5.9% yoy (vs. 6.0% expected) last month, down from 6.2% in November. Fixed asset investment slowed to 10.0% yoy (vs. 10.2% expected) and a decline of two-tenths from the previous month. Finally retail sales grew 11.1% yoy in Dec (vs. 11.3% expected), also seen as disappointing having been 11.2% in November.

It’s hard to know what to make of the price action since the data. The Shanghai Comp had been trading with a mildly positive tone into the numbers (+0.7%) only to then wipe out all of those gains in the 30 minutes post the data. The interesting move has come since though with the index now up +2.54% post the midday break with little obvious news flow to drive the surge. It could be hope of fresh stimulus, intervention or just positioning. The CSI 300 (+2.68%) and Shenzhen (+2.89%) are up similar amounts while there’s been some wild moves for the Hang Seng also but that’s currently sitting with a +1.43% gain. Keep a close eye on moves into the close and after we go to print. Moves have been a bit more subdued for the Nikkei and Kospi, with both posting modest gains of close to half a percent. China sensitive currencies including the Aussie Dollar were also sharply lower post the data but have rallied back to trade higher on the day. Credit indices have gained meanwhile with the Asia iTraxx currently 4bps tighter. US equity futures are also pointing towards a reasonable start, trading with gains of close to 1% while Brent Oil is up nearly 2%.

Moving on. With US markets closed yesterday and investors in a bit of a wait and see mode for this morning’s China data there wasn’t a whole lot more newsflow over the past 24 hours. Despite volumes being lower than normal, it was still another broadly weaker day for risk assets in Europe however as Brent extended its move further below $29/bbl after falling -1.35% (although in fairness pared much larger moves lower during the Monday Asia session when it tumbled below $28) with the overall fallout from the lifting of the Iran sanctions over the weekend perhaps less severe than expected. Instead it was the weakness in European banks which had a more damaging effect yesterday (more on that shortly). The Stoxx 600 closed -0.36% by the end of play for its third consecutive down day and eighth in eleven sessions so far this year, with the YTD loss now creeping past 10%. Weakness was led by the peripheral bourses though with the Spanish IBEX closing -0.87% and the Italian FTSE MIB down a steep -2.65%. Credit indices finished slightly weaker also with Main (+1.5bps) and Crossover (+3.5bps) a touch wider, although the underperformance clearly coming from the financials with the sub-fins index yesterday closing +8bps wider.

As highlighted the big moves yesterday came in financials and specifically Italian banks. Monte dei Paschi (-14.76%), Banca Popolare (-8.73%) and UBI (-7.28%) saw the steepest drops following news that the ECB’s central oversight arm, the Single Supervisory Mechanism, is set to carry a deep dive on the banking system, scrutinizing non-performing loans and bad debts in particular. The moves yesterday were enough to see Italian market regulator Consob impose a short selling ban on Monte dei Paschi while unsurprisingly subordinated and junior debt in Italian lenders came under big pressure, with Monte’s 2020 sub notes yesterday declining 10pts post the news. On top of the Novo Banco issues, the recent news is bringing peripheral bank headlines and concerns about asset quality back to the forefront.

In terms of the rest of the price action yesterday, rates markets were fairly benign with little change in yields across most of the core sovereign markets, while Portugal (+3.2bps) continues to be the notable underperformer. The data calendar was quiet. UK house prices nudged up 0.5% mom this month while Italy reported a slightly narrower than expected trade surplus. Meanwhile the slightly calmer day for Oil, all things considered, help precious metals post some decent gains with Copper, Zinc and Nickel up 1%-2%.
Of some interest were the relatively contrasting comments from ECB officials meanwhile. The ECB’s Villeroy sounded more upbeat when commenting that the European recovery is on track and stimulus measures put in place by the ECB are bearing fruit. Governing Council member Rimsevics warned however that ‘I am concerned that people are a bit too relaxed’ about a slowdown in China and the knock on effect that this may have on Europe.

Looking at the day ahead, the calendar kicks up a gear today and we start this morning in Germany where we will receive the final read for December CPI. Shortly following this will be the December inflation dump out of the UK with the CPI/RPI/PPI docket. The final revision to Euro area CPI for December follows this (no change expected at +0.2% yoy at the headline and +0.9% yoy at the core) before we get the January ZEW survey reading out of Germany. In the US this afternoon the lone release is the NAHB housing market index print. Earnings wise the focus today looks set to be on the banks with Bank of America and Morgan Stanley reporting at the open, while IBM is due to report post the closing bell


http://www.zerohedge.com/news/2016-...re-stimulus-following-disturbing-chinese-data
 

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Frontrunning: January 19


Submitted by Tyler Durden on 01/19/2016 08:20 -0500

  • Spot the common thread: China's growth hits quarter-century low, raising hopes of more stimulus (Reuters)
  • And here: China stocks climb on hopes for new economic stimulus (Reuters)
  • Welcome to the Crisis Economy, Where Tumult Reigns (WSJ)
  • IEA Sees Risk of World Drowning in Oil (BBG)
  • IEA Sees Iran's Return Intensifying Battle for Europe Oil Market (BBG)
  • China 2015 power, steel output drop for first time in decades (Reuters)
  • Major snowstorm may threaten DC to NYC Friday into Saturday (Accuweather)
  • Oil Slump Hits Houston Home Market (WSJ)
  • A world divided: Elites descend on Swiss Alps amid rising inequality (Reuters)
  • Venezuela's PDVSA asks partners to pick up tab as oil prices sink (Reuters)
  • Johnson & Johnson to Cut 6% of Medical Device Jobs (WSJ)
  • Trump: I'll force Apple to make its 'damn computers and things' in US (ZDNet)
  • Clinton’s Presidency Odds Narrow as Bookmaker Frets Over Trump (BBG)
  • Rarely Patched Software Bugs in Home Routers Cripple Security (WSJ)
  • Outsider Kasper Rorsted Is Tapped to Lead Adidas (WSJ)
  • Iran's Khamenei welcomes sanctions lift, warns of U.S. 'deceit' (Reuters)
  • Republican Voters Say the Clock Is Ticking on Jeb Bush's Would-Be Comeback (BBG)
  • After U.S.-Iran Deals, Another Hurdle Looms: Syria (WSJ)


Overnight Media Digest

WSJ

- China recorded a pronounced deceleration in growth last year, affirming that a multi-year slowdown is biting the world's second-largest economy harder and shows little sign of abating. The growth rate, released by the government on Tuesday, moderated to 6.8 percent for the fourth quarter and 6.9 percent for 2015. (http://on.wsj.com/1Otqrac)

- Barclays PLC is drawing up plans to sell some of its 62 percent stake in Barclays Africa Group Ltd, the publicly traded entity that houses most of its African business, these people said. (http://on.wsj.com/1PlE6NZ)

- South Korea will sue the head of Volkswagen AG's Korean office over its failure to comply with an order to recall diesel vehicles equipped with emissions-cheating devices. The Ministry of Environment said Tuesday it will file a complaint with the Seoul Central Prosecutor's Office against Johannes Thammer, managing director of Audi Volkswagen Korea.(http://on.wsj.com/1WpyAPU)

- Adidas AG said Kasper Rorsted, currently chief executive at Henkel AG, a German maker of cleaning products, adhesives and beauty-care items, would become a board member at Adidas as of August, and CEO in October. (http://on.wsj.com/1U6PxgO)

- Malaysia's state-oil firm Petroliam Nasional Bhd, or Petronas, is planning to slash as much as 50 billion ringgit ($11.4 billion) in capital and operating expenditure over the next four years, according to an internal memo sent to staff by its chief financial officer. (http://on.wsj.com/1OCsgiZ)



FT

Facebook has said it would invest 1 million euros ($1.09 million) in European non-governmental organisations that are fighting online extremism, and would fund more research into hate speech.

WhatsApp and Instagram announced changes to their business model on Monday. WhatsApp said it has scrapped its subscription charges and that it would start to test tools that would allow users to communicate with businesses and organizations that they would want to hear from.

Prices of staples in Brazil has increased 61 percent compared to last year due to a poor harvest, according to figures this month.



NYT

- With international sanctions lifted, the Iranian government called on its oil industry to up production, a move that could add to a global glut of crude that has sent prices into a tailspin. (http://nyti.ms/1U8NjNV)

- Four months after announcing a grueling five-year plan for reducing the island's vast debt and reviving economic growth, Puerto Rico's top economic officials said they had been too optimistic and revised the plan for the worse. (http://nyti.ms/1U8Nx7D)

- The Chinese economy grew at a 6.8 percent pace in the fourth quarter, according to data released on Tuesday. It was the lowest quarterly expansion since the global financial crisis in 2009. (http://nyti.ms/1U8NBUW)

- The British bank Barclays Plc has completed the sale of a controlling stake in its trust business to an independent investor group led by the Nielsen and Sarikhani families for an undisclosed amount. (http://nyti.ms/1U8PiBU)

- National Australia Bank said on Monday that its British unit, Clydesdale Bank, could be valued at as much as 2.07 billion pounds, or about $3 billion, in an initial public offering next month as part of a spinoff. (http://nyti.ms/1U8Plh4)



Canada

THE GLOBE AND MAIL

** Federal Economic Development Minister Navdeep Bains says he hopes Iran's growing appetite to purchase hundreds of civilian aircraft on the world market translates into an opportunity for Canadian aerospace, but the Justin Trudeau government hasn't said when or how Ottawa might roll back economic sanctions on Tehran to make this possible. (http://bit.ly/1PnFNul)

** Two Chinese government soldiers were part of a hacking conspiracy allegedly carried out by a Chinese resident of Canada to steal secrets relating to components of F-35s and other American warplanes, according to court-filed documents. (http://bit.ly/1PnFNul)

** Canada has been excluded from a high-level meeting of "significant contributors' to the U.S.-led coalition called to discuss stepping up the fight to defeat Islamic State militants. The meeting of defense ministers from the United States, Britain, Germany, France, Italy, Australia and the Netherlands is set for Wednesday in Paris. (http://bit.ly/1ZJnuL0)

** A potential rate cut by the Bank of Canada this week risks undermining confidence in the Canadian dollar, some prominent Canadian economists have warned. Trading in overnight index swaps currently implies the probability of a rate cut at about 60 percent when the Bank of Canada releases its monetary policy report on Wednesday. (http://bit.ly/1nv6Yx7)

NATIONAL POST

** As oil prices continued to free fall last week, oilsands giants Suncor Energy Inc and Canadian Oil Sands Ltd were quietly ending an acrimonious hostile battle and working out the details of a C$6.6-billion ($4.56 billion)merger, announced on Monday. Both companies said their respective boards were recommending a merger and that Suncor would raise its ownership in Syncrude to 49 percent from 12 percent if the deal is finalized. (http://bit.ly/1P2oFyg)

** Justin Trudeau will try to reposition Canada as more than a petro-state this week when he meets some of the planet's top business leaders at the World Economic Forum in Switzerland. This comes on the backdrop of the Canadian dollar plummeting in lockstep with the price of oil that has fallen by nearly three-quarters. (http://bit.ly/1StupU9)

** The mother of Maude Carrier, one of the Canadians killed in a terror attack in Burkina Faso, has made a desperate plea for Prime Minister Justin Trudeau to keep up Canadian airstrikes against Islamic State. Carrier was one of six aid workers from Quebec killed on Friday when a group of Islamist terrorists stormed a luxury hotel and cafe in the capital city of Ouagadougou. In all, 28 people died. (http://bit.ly/1S1zfqi)



Britain

The Times

* National Australia Bank hopes to sell its British branches for as much as 2 billion pounds ($2.85 billion), despite concerns that recent market falls might have made floating the business more difficult than had been first thought. (http://thetim.es/1loUTHY)

* The steel industry, trade unions and opposition MPs have rounded on the government after Tata Steel confirmed 1,050 more redundancies, taking the job toll in the industry to more than 6,000 in the past six months. (http://thetim.es/1loV2LN)

The Guardian

* The appetite of western consumers for home furnishings has reached its peak according to Ikea, the world's largest furniture retailer. (http://bit.ly/1loV8mq)

* Asda is cutting about 200 jobs at its head office in Leeds after the supermarket endured a tough Christmas trading season. (http://bit.ly/1loVcTc)

The Telegraph

* The UK Government's ambition of doubling UK exports to 1 trillion pounds ($1.42 trillion) by 2020 is a "big stretch", admits Francis Maude, UK's minister of state of trade. (http://bit.ly/1ngi4pW)

* UK's economy would be in better shape if the Bank of England had slashed its rates into negative territory during the crisis, according to Gertjan Vlieghe, the newest member of the Bank's nine-strong committee of interest rate setters. (http://bit.ly/1lofnRf)

Sky News

* UK's Financial Reporting Council will decide this week whether to launch a formal inquiry into the auditing of HBOS , according to Sky News. (http://bit.ly/1loWgqe)

* Homebase owner Home Retail Group has confirmed it has reached a sale agreement with Australian retail giant Wesfarmers. (http://bit.ly/1P1wW5v)

The Independent

* MI5 has been named as Britain's most advanced and inclusive employer when it comes to ensuring the nurturing and development of its lesbian, gay, bisexual and transgender employees, according to a workplace equality index by Stonewall. (http://ind.pn/1P1x9pu)

* BT is creating 1,000 new customer service jobs in the UK as part of an 80 million pounds ($113.98 million) investment to boost performance and restore its reputation after being criticised for poor customer service. (http://ind.pn/1P1xfgL)

http://www.zerohedge.com/news/2016-01-19/frontrunning-january-19
 

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#24
Frontrunning: January 20


Submitted by Tyler Durden on 01/20/2016 07:38 -0500

  • Oil slump rocks markets again in equity rout (Reuters)
  • Global Stocks on Brink of Bear Market as Oil Slides; Ruble Drops (BBG)
  • Global Stocks Slide on Oil Rout (WSJ)
  • Emerging Markets Roiled as Stock Selloff Surpasses Asian Crisis (BBG)
  • Rising Debt in Emerging Markets Poses Global Threat (WSJ)
  • China shares slip as oil slides, outweighing stimulus hopes (Reuters)
  • Europe Stocks Fall to 13-Month Low as Results Stoke Growth Fears (BBG)
  • Former U.S. VP candidate Palin endorses Trump with a 'hallelujah' (Reuters)
  • Americans missing in Baghdad kidnapped by Iran-backed militia (Reuters)
  • Hong Kong Dollar Forwards Sink to Weakest Since '99 on Peg Bets (BBG)
  • Saudi Arabia and Iran Tussle Over Exports to China (WSJ)
  • A GoldMAN? What Kind of Man Spends Millions to Elect Ted Cruz? (BBG)
  • Militants kill at least 19 as they storm Pakistan university (Reuters)
  • Michigan Governor Seeks $28 Million in Emergency Funding for Flint (WSJ)
  • UBS's Weber Says China Has 'Plenty Ammunition Left' Amid Turmoil (BBG)
  • Some Bankrupt Oil and Gas Drillers Can't Give Their Assets Away (BBG)
  • VW's German Union Supports CEO's Efforts to Solve Diesel Crisis (BBG)
  • Billionaire green activist Steyer says not yet ready to back Clinton, open to Sanders (Reuters)


Overnight Media Digest



FT

The International Energy Agency said on Tuesday that the oil market "could drown in oversupply" from the rise in Iranian output which could threaten a further collapse in oil prices

United Nations labour agency, International Labour Organisation, forecasts that the number of unemployed people in emerging and developing countries will increase by 4.8 million in the next two years.

Facebook Chief Operating Officer Sheryl Sandberg speaking at the World Economic Forum in Davos, urged policymakers to avoid impeding "progress" by adopting laws that block technological improvements



NYT

- Nielsen plans to announce that it is working with Facebook to include conversations about TV programs on the social network in its measurement system. Now called "Social Content Ratings", the metric will also include TV-related chatter on Twitter. (http://nyti.ms/1OERSf0)

- A six-year trend of declining federal budget deficits will end this year, sooner than expected, the non-partisan Congressional Budget Office reported on Tuesday. (http://nyti.ms/1OERWLO)

- Practice Fusion, an electronic health records start-up, hired JPMorgan Chase & Co last year to explore an initial public offering in 2017. JPMorgan estimated that Practice Fusion could get a public market valuation of around $1.5 billion if it went public next year. (http://nyti.ms/1OESTDS)

- Microchip Technology Inc agreed to acquire a fellow chipmaker, the Atmel Corp, for about $3.6 billion, part of a wave of mergers and acquisitions within the semiconductor industry. (http://nyti.ms/1OESZLU)

- Netflix Inc announced it had topped expectations in adding a record 5.59 million total streaming members during the quarter, for a total 74.76 million across the globe. The success of the original series "Narcos" and "Marvel's Jessica Jones" helped to fuel growth. Netflix said it expected to add 6.1 million members during the current quarter. (http://nyti.ms/1n8VaA5)



Canada

THE GLOBE AND MAIL

** A dispute over unpaid charges claimed by a supplier has left thousands of Canadian customers of the NetTalk Internet phone service without the ability to receive calls except from fellow NetTalk subscribers. NetTalk.com Inc is a Florida-based company that began selling a Voice over Internet Protocol (VoIP) telephone service in Canada in 2013. (http://bit.ly/1QdIuBG)

** Canada's Defence Minister says the country's exclusion from a key U.S.-led meeting this week on the campaign against Islamic State is no big deal and that Ottawa isn't being cut out of key decision-making after the Trudeau Liberals announced plans to pull Canadian jets from the fight. (http://bit.ly/1ZACwxf)

** Quebec is facing the first signs of revolt over its planned long-gun registry, an unexpected breach in a province regarded as the staunchest defender of gun-control measures in Canada. Some provincial Members of the National Assembly have started expressing reservations about the registry, and an anti-registry petition has gathered more than 20,300 names online. (http://bit.ly/1RSGNgV)

** The country's largest newspaper chain, Postmedia Network Canada Corp, is merging once-competing newsrooms and cutting about 90 staff as it tries to cope with declining revenue and a heavy debt load. (http://bit.ly/1Zzi8wt)

NATIONAL POST

** Canada has lost credibility as an investment destination because of its inability to build export infrastructure, a recently retired senior executive at China's CNOOC Ltd , one of the country's top three oil and gas companies, said on Tuesday. (http://bit.ly/1JXOwXM)

** Canadian crude oil exports to the United States reached its highest level ever of 3.4 million barrels per day in the first week of January, according to preliminary data from the U.S. Energy Information Administration. (http://bit.ly/1OvWaaU)

** Despite recent market volatility and exposure to low oil and commodity prices, Bank of Nova Scotia has set double-digit growth targets in four Pacific Alliance countries: Mexico, Chile, Colombia, and Peru. (http://bit.ly/1NjRrVB)



Britain

The Times

Sheffield Forgemasters workers steel themselves for one-in-seven job cuts

Sheffield Forgemasters, Britain's premier specialist steel castings business, is set to cut about one in seven of its workforce. It is understood that Forgemasters, which makes specialist heavy duty steel fittings for the energy industry, will announce 100 redundancies among its 700 workers today. (http://thetim.es/1PfjFID)

VW boss faces criminal charges in South Korea

South Korea plans to file criminal charges against the head of Volkswagen AG in the country after judging that the carmaker's recall plan to fix emissions-cheating diesel cars was unacceptable. (http://thetim.es/1Pfk3qv)

Top KPMG partner quits after tax cheat charges

One of KPMG's top UK advisers has quit the accountancy group after being charged with offences relating to a film finance scheme that is alleged to have enabled its wealthy backers to avoid millions of pounds in tax. (http://thetim.es/1lsSuMG)

The Guardian

Renault recalls more than 15,000 diesel cars after emissions tests

Renault SA has recalled more than 15,000 diesel cars after an admission that its emissions filtering system does not work in all temperatures. The French carmaker denied any wrongdoing and said there was no "defeat device" of the kind Volkswagen used to cheat emissions tests, but acknowledged there was a difference between its test results and actual pollution. (http://bit.ly/1JWiwU8)

Unilever chief anticipates year of crises as stock markets falter

The chief executive of Unilever Plc, which makes Persil, PG Tips and Dove soap, has warned that the world could lurch from crisis to crisis this year as stock markets slump and Britain debates whether to leave the EU. (http://bit.ly/1T23qyi)

The Telegraph

Cairn Energy to challenge $1.6 bln India tax claim

Cairn Energy Plc has taken the first formal steps in a $1.6 bln tax dispute with the Indian government over its former Indian business unit. The retrospective tax claim was made by the Indian government last year. It demands that the UK-based oil explorer pay $1.6 bln plus interest and penalties arising from unpaid tax owed by Cairn's India operations in 2007. (http://bit.ly/1UadWlt)

BT Sport founder Howard Watson to oversee merger of telecom giant's tech with EE

Howard Watson has been named as BT Group Plc's new head of technology when the current boss moves to the firm's Openreach broadband infrastructure arm. Watson's first major task will be integrating BT's network with mobile firm EE, which the telecommunications giant bought for 12.5 mln pounds in a deal given official approval last week. (http://bit.ly/1JgA8df)

Sky News

Citymapper Charts Path To Unicorn Status

An app which helps users navigate their way around cities from London to Tokyo is finalising a fundraising that will plot a route to becoming one of the UK's most valuable technology start-ups. Citymapper is close to a deal to secure tens of millions of pounds from existing and new investors. (http://bit.ly/1T2xAl0)


http://www.zerohedge.com/news/2016-01-20/frontrunning-january-20
 

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#25
Markets In TurmOIL: Futures Plunge, Japan Enters Bear Market, Crude And Commodity Currencies Crash


Submitted by Tyler Durden on 01/20/2016 07:56 -0500


It all started early last night when the front month oil contract dipped below $28 giving a taste of what was to come. It was all downhill from there.



First Chinese stocks ended the recent ramp higher, with the Shanghai Composite closing down 1% back under 3000, then Japan's rout accelerated with both the Nikkei (-3.7%) and the Topix Index sinking into bear markets, both falling more than 20% from their 2015 highs.



The rout then spilled over to Europe, where the Stoxx 600 is down 3% to the lowest level in 13 months, and finally making landfall in the US where the E-mini is down 1.8%, trading at 1840, meanwhile WTI is back under $28 while the USDJPY plunged to a one year low and barely rebounded despite an attempt at verbal intervention when an unknown Japanese government source said they are "closely watching currency movements", which lead to a 100 pip spike in the pair that was promptly faded.

In sum: the world is on the verge of a global bear market, exacerbated by an ongoing earnings deterioration which has sent the MSCI gauge of global equities to the brink of a bear market. But the biggest driver remains oil whose slump to a new 12-year low is ripping through markets. Just on Wednesday, Royal Dutch Shell Plc said profit may drop at least 42 percent in the fourth quarter. U.S. bonds now predict the slowest inflation since May 2009.

Commodity currencies were slammed with Russia’s ruble and Mexico’s peso falling to record lows, while bets mounted on an end to Hong Kong’s dollar peg.



Saudi Arabia also launched capital controls when it was reported overnight that it had ordered a halt to Riyal forward option trades.

Yields on 10-year Treasuries dropped below 2 percent and the yen jumped to a one-year high.

“It’s back to oil and that’s what is driving everything at the moment,” Barra Sheridan, a rates trader at Bank of Montreal in London told Bloomberg. “We can easily run more because it’s pure fear. I don’t know what we need to change this sentiment.”

Well a central bank intervention or two would help. For now, this is where the "running" has taken global assets as of moments ago:

  • S&P 500 futures down 1.8% to 1840
  • Stoxx 600 down 3% to 323
  • FTSE 100 down 2.9% to 5706
  • DAX down 3.1% to 9361
  • German 10Yr yield down 6bps to 0.49%
  • Italian 10Yr yield up 2bps to 1.57%
  • Spanish 10Yr yield down 2bps to 1.69%
  • MSCI Asia Pacific down 2.8% to 117
  • Nikkei 225 down 3.7% to 16416
  • Hang Seng down 3.8% to 18886
  • Shanghai Composite down 1% to 2977
  • US 10-yr yield down 9bps to 1.97%
  • Dollar Index down 0.12% to 98.87
  • WTI Crude futures down 2.8% to $27.65
  • Brent Futures down 2.2% to $28.12
  • Gold spot up 0.7% to $1,094
  • Silver spot up 0.5% to $14.10
A quick jog through the markets:

Asian equity markets traded with heavy losses after the continued weakness in energy prices, with WTI Mar`16 futures falling below USD 29/bb dampening sentiment across the region. Subsequently, the MSCI Asia-Pac reached 4 year lows, while the Nikkei 225 (-3.7%) fell into bear market territory after falling 20% from August highs and ASX 200 (-1.3%) was also dragged lower by the energy complex, while the latter was also weighed by losses in basic materials after the index's 3rd largest Co. by market cap BHP Billiton cut its FY iron ore guidance.

Elsewhere, the Shanghai Comp. (-1.0%) conformed to the region's negative tone and declined back below the 3000 level, while the Hang Seng (-3.8%) was pressured by losses in large casino and energy names with CNOOC also lowering its capex and production guidance. Finally, 10yr JGBs remained relatively flat, with trade mostly uneventful despite the risk-averse tone and BoJ entering the market to purchase JPY 1.27TN bonds.

Top Asian News

  • Hong Kong Dollar Forwards Sink to Weakest Since 1999 on Peg Bets: 3-mo. interbank lending rate climbs by most Since 2008.
  • Hedge Fund That Called Subprime Crisis Says Yuan Should Fall 50%: Mark Hart of Corriente Advisors is betting against yuan.
  • PBOC’s Ma Says New Tools Substitute for Bank Reserves Cuts: China’s central bank has added liquidity via market channels.
  • Bad-Debt Buyers See Good Times as Rajan Cleans Up India’s Banks: Edelweiss, JM predict record stressed-asset sales this quarter.
  • Saudi Arabia Said to Order Halt of Local Riyal Forward Options: Bets on devaluation reached highest in 2 decades this mo.
In Emerging Markets, the MSCI EM Index dropped the most in two weeks, sinking 2.8 percent to the lowest on a closing basis since May 2009. The gauge is down 12 percent this year, the worst start since records began in 1988. Hong Kong’s Hang Seng China Enterprises Index tumbled 4.2 percent as oil producers plummeted and a drop in the city’s dollar spurred concern over capital outflows. The Shanghai Composite Index slipped 1 percent.

Russia’s Micex Index slid 1.7 percent and the Bloomberg GCC 200 Index of equities in Gulf markets lost 3.2 percent. Saudi Arabia’s Tadawul All Share Index declined 4.5 percent and Dubai shares sank 4.6 percent. Egypt’s benchmark slid 4.5 percent. Russia’s ruble weakened as much as 2 percent to a record 80.1790 against the dollar. The Mexican peso fell to a record 18.4775 per dollar and is down 6.5 percent this year, making it Latin America’s worst performing major currency.

Saudi Arabian banks are under orders to stop selling currency products that allow investors to make cheap bets on a devaluation of the riyal, according to five people with knowledge of the matter. The Saudi Arabian Monetary Agency told banks not to sell options contracts on riyal forwards at a meeting in Riyadh on Jan 18., the people said, asking not to be identified as the information is private.

In Europe, risk averse sentiment continues to gather pace in European trade, with USD/JPY hitting 1y lows and Bunds back above 160.00 level, while stocks are also broadly lower. The FTSE-MIB (-3.0%) is underperforming amid the ongoing focus on banks NPLs. Banca Monte dei Paschi shares are once again suspended from trading, after a fall of 18% in Milan. The Stoxx Europe 600 Index tumbled 3 percent at 6:05 a.m. in New York, with all industry groups declining. Shell slid 5.3 percent and BHP Billiton Ltd. dragged commodity producers lower, falling 6.7 percent after trimming its full-year iron ore output forecast. Zurich Insurance Group AG declined 8.1 percent after forecasting a second straight quarterly loss for its biggest unit.

In terms of fixed income, heading into the ECB policy meeting Citi have noted the EUR curve is currently pricing in very little in terms of additional near-term easing.

Top European News

  • Aberdeen Is Loading Up on Stocks, Wants More If Rout Deepens: Scottish asset manager has increased its funds’ exposure equities by 0.5%-1%, says CIO Anne Richards.
  • U.K. Unemployment Falls to Decade Low as Labor Market Tightens: Metric unexpectedly fell to lowest in almost a decade; wage growth slowed less than forecast.
  • Zurich Plunges as General Insurance Faces Second Quarterly Loss: Oper. loss for division will probably be ~$100m in 4Q.
  • Shell Profit Plunges at Least 42% as Oil’s Slump Deepens: 4Q adj. profit ex-items likely to be in range $1.6b-$1.9b.
  • SocGen Said to Pull Back From U.S. Mortgage Bond Trading: Bank instructing traders of U.S. government-backed mortgage bonds to stop buying them: people familiar.
  • Trans-Atlantic Derivatives Fight Nears End as Capital Rules Loom: EU, U.S. regulators nearing deal on oversight of $553t global derivatives markets that would prevent increase in EU capital requirements from hitting banks this year.
  • Berlusconi’s EI Towers Said to Offer $1b for Inwit Stake: Unit made bid for stake in Telecom Italia’s wireless infrastructure unit of ~EU900m: people familiar.
  • Intesa CEO Rules Out Takeover of Monte Paschi, Italian Banks: CEO Carlo Messina says no pressure from govt to purchase Paschi.
In FX, the yen strengthened 1.3 percent to 116.09 per dollar, and touched 115.98, the strongest level since Jan. 16, 2015. The USD/JPY was back below 117.00 as Europe came in, and it was not long before we took out 116.50 (barriers). Next up was 116.00, which eventually gave way also, but comments from Japan officials that FX markets were being closely watched saw shorts turned sharply

Japan’s currency appreciated 0.9 percent to 127.19 per euro. The euro climbed 0.5 percent to $1.0957. The Australian dollar slid 0.9 percent to 68.45 U.S. cents, extending this year’s decline to 6.1 percent. The kiwi touched the weakest level since Sept. 30.

The Canadian dollar, which has fallen every day this year, slipped to the lowest since 2003 amid speculation the central bank will cut its benchmark interest rate to a level last seen during the 2009 financial crisis. Fresh lows in Oil saw USD/CAD hit through the Monday highs to 1.4689. The Bank of Canada decides on interest rates today, and private-sector economists are almost evenly divided on whether it will cut the policy rate to 0.25 percent.

In commodities, West Texas Intermediate crude lost as much as 4% to $27.32 a barrel before trading down 3.2%. Inventories probably increased by 2.75 million barrels last week, according to a Bloomberg survey before a report from the Energy Information Administration Thursday.

Industrial metals dropped on prospects for slower economic growth in China and sustained low oil prices. Copper fell as much as 1.1 percent. Gold rose as renewed losses in equities spurred demand for less risky assets, with Citigroup Inc. saying bullion’s rationale as a haven was now back in vogue and prices may be supported over the first quarter.

Top Global Headline News:

  • Bernanke Says Dollar’s 2-Year Rally Is Running Out of Steam: “Much of the appreciation in the dollar may have already happened -- we may not see much more”: former Fed chairman
  • IBM 2016 Profit Shows Struggle to Move Past Old Operations: 2016 profit forecast shows co. continues to struggle.
  • Carlyle, Symantec Agree to Lower Price for Veritas Deal: Cos. revise price for biggest announced U.S. leveraged buyout of 2015 amid strains in debt markets.
  • Netflix Investors Like What They See as Intl. Users Soar: Co. added 5.6m subscribers to its online streaming service in 4Q, including >4m from outside U.S.
  • McDonald’s Revamps U.S. Management to Remove 2 Zone Presidents: As part of turnaround plan, co. will eliminate 2 of 4 zone-president jobs from its U.S. management ranks.
  • Delta Will Rely on Partnerships to Expand Routes in Asia: Co. to exploit pacts with China Eastern Airlines, Jet Airways India to improve connectivity in Asia.
  • Apple Seeks to Open Stores in India as Mobile Growth Slows: Co. applied to open its own stores in India, a strategy that may help it better target a fast-growing market.
  • Merck to Submit Ebola Vaccine for Approval by End of 2017: Co. has signed an agreement with Gavi, world’s biggest funder of vaccines for developing countries.
  • Banks Face Losing $150b to Startups, Oliver Wyman Says: Insurers, banks may lose revenue to fintech startups.
Bulletin Headline Summary From Bloomberg and RanSquawk

  • Risk averse sentiment continues in European trade, with USD/JPY hitting 1y lows and Bunds back above 160.00 level, while stocks are in a sea of red
  • Plenty of movement in FX as the stock markets turn sour once again. US equity gave up gains last night, leading to renewed losses in Asia
  • Today's highlights include: US Housing Starts, Building Permits, CPI and the BoC Rate Decision
  • Treasuries rally overnight with 10Y yield touching 1.951%, lowest intraday level since April 27, as global equities and commodities continue to slide.
  • If it feels like rallies in U.S. stocks are getting shakier in 2016, they are. In the 11 trading sessions since New Year’s, the S&P 500 has fallen an average of 1.3% from its intraday high, more than double the decline last year
  • Saudi Arabia plans to hold a debt auction next week to raise as much as 20b riyals ($5.3b), the first indication it will continue tapping the local debt market to fund a budget gap, forecasted by the IMF to be 14% of GDP this year
  • Saudi Arabian Monetary Agency ordered lenders to halt sale of options contracts on riyal forwards amid mounting speculation the nation won’t be able to maintain the riyal’s peg to the dollar as revenue plunges
  • The ruble plunged to a record low as the collapse in crude weighs on the economy of the world’s biggest energy exporter and surpasses every other obstacle the nation has endured, including being treated as a near pariah state under sanctions
  • The four biggest U.S. banks -- Bank of America, Citigroup, JPMorgan and Wells Fargo -- have set aside at least $2.5b combined to cover souring energy loans and have said they’ll add to that if prices stay low
  • As the chattering chieftains of the global economy gather this week in Davos, Switzerland, they’re facing the darkest outlook since the financial crisis tipped the world into recession seven years ago
  • U.K. unemployment unexpectedly fell to the lowest in almost a decade and wage growth slowed less than economists forecast as the labor market continued to strengthen
  • Sovereign bond yields lower. Asian stocks and European stocks drop; equity-index futures falter. Crude oil and copper slide lower, gold rises
US Event Calendar

  • 7:00am: MBA Mortgage Applications, Jan. 15 (prior 21.3%)
  • 8:30am: Housing Starts, Dec., est. 1.2m (prior 1.173m)
    • Housing Starts m/m, Dec., est. 2.3% (prior 10.5%)
    • Building Permits, Dec., est. 1.2m (prior 1.289m, revised 1.282m)
    • Building Permits m/m, Dec., est. -6.4% (prior 11%, revised 10.4%)
  • 8:30am: CPI m/m, Dec., est. 0% (prior 0%)
    • CPI Ex Food and Energy m/m, Dec., est. 0.2% (prior 0.2%)
    • CPI y/y, Dec., est. 0.8% (prior 0.5%)
    • CPI Ex Food and Energy y/y, Dec. 2.1% (prior 2%)
    • CPI Index NSA, Dec., est. 236.672 (prior 237.336)
    • CPI Core Index SA, Dec., est. 244.494 (prior 244.135)
    • Real Avg Weekly Earnings y/y, Dec. (prior 1.6%)
  • 9:45am: Revisions to Chicago Business Barometer
Central Banks

  • 10:00am: Bank of Canada Overnight Lending Rate, est. 0.50% (prior 0.50%)
  • 11:15am: Bank of Canada’s Poloz hold news conference
DB's Jim Reid completes the overnight wrap

Despite US stocks closing off their lows yesterday, it was another day of fading momentum in markets. The post China GDP rally in Asia extended into the European session and helped risk assets in the US get off to a decent start, only for the focus to switch over to another leg lower for WTI. Prices at one stage actually staged a bit of rebound, trending up past the $30/bbl mark around midday only then to trend lower as the session went on, falling another $2 into the close to hover around the $28 level. A lot was made of the latest damming IEA report. The headline in particular was enough to knock sentiment after the agency said that the global market could ‘drown in oversupply’ while at the same time firing warning signs about the return of increased supply from Iran.

After initially bouncing 1% at the open, the S&P 500 dipped as low as -0.82% as unsurprisingly the weakness in the energy sector which we are becoming accustomed to dragged the index lower. A late rally into the close (another trend we’ve noticed of late) did help the index close with a modest +0.05% gain however. Prior to this we had seen European bourses rebound with the Stoxx 600 (+1.31%) up strongly. European credit markets had a better session also (Crossover -14bps) while US credit indices finished little changed but again after a bit of a roundabout day of price action which saw CDX IG in particular trade in a 5bp range. In rates markets US 10y yields finished the session up 2bps at 2.057%, again in a volatile session following a 7bp range.

Onto the latest in Asia this morning. Any hope that the late momentum in the US session last night might continue has evaporated with steep losses across the bulk of the region as WTI plunges down below $28/bbl (currently $27.60). The significant fall has come for the Hang Seng (-3.74%) while there’s also been a steep drop for Hong Kong stocks listed in China (HS-China Enterprises index), down nearly 5% and at a six-year low. The weakness for Hong Kong stocks coming as the HKD has fallen to the weakest level in eight years. Meanwhile the Nikkei (-2.89%), Shanghai Comp (-1.37%), Kospi (-3.12%) and ASX (-1.35%) are also down sharply. There’s little relief in credit markets either where iTraxx indices in Asia and Australia are currently 6bps and 7bps wider respectively. US equity index futures are off 1.5% while Treasury yields are close to breaking below 2%.

Yesterday DB’s Chief China Economist, Zhiwei Zhang, dug deeper into the details of the GDP data. From a production perspective the slowdown in 2015 came primarily in the secondary sector (which accounts for around 40% of GDP). Secondary sector growth slowed from 7.3% in 2014 to 6.1% last year, while the primary sector (which accounts for 10% of GDP) was modestly lower at 3.9% from 4.1%. Tertiary sector growth actually picked up, from 7.8% from 8.3%. With regards to expenditure, Zhiwei highlights that investment was the clear drag reflecting a fall in real estate investment growth primarily, while consumption actually held up relatively well. Looking ahead, the current signals from leading indicators are generally mixed. Growth of property sales are slowing, while new housing starts are improving. Following the data, Zhiwei has downgraded his Q1 2016 GDP forecast from 7.0% to 6.8%, but maintains his baseline forecast for 2016 growth of 6.7%.

Moving on. In terms of the economic data the only release out of the US yesterday came in the form of the NAHB homebuilder survey which printed at 60 for this month (vs. 61 expected) and unchanged relative to the downwardly revised December level. In Europe there were no surprises to come out of the final December CPI prints for Germany (-0.1% mom and +0.3% yoy at the headline) or the Euro area (+0.2% mom headline, +0.9% yoy core). Interestingly there was a big tick up in the German ZEW current situations survey for January however, with the reading up 4.7pts to 59.7 (vs. 53.1 expected) and to the highest level since September. Saying that, the expectations survey did however decline nearly 6pts to 10.2 (vs. 8.0 expected).

Meanwhile in the UK we saw CPI during December come in a smidgen ahead of expectations at +0.1% mom for the month (vs. 0.0% expected). The headline YoY rate was nudged up to +0.2% while the core nudged up two-tenths to +1.4% yoy. This was put to one side however as the bigger news came in the form of some dovish commentary from BoE Governor Carney. The Governor highlighted concerns over global growth, UK growth slowing,and the impact of the recent sharp leg lower in oil meaning inflation ‘will likely remain very low for longer’. As such Carney tempered any hopes of a near term hike, saying that ‘the year has turned, and, in my view, the decision proved straightforward – now is not yet the time to raise interest rates’. Remember that Carney had previously said last summer that the decision on timing should come ‘into sharper relief’ around the turn of this year.

Elsewhere, the ECB bank lending survey covering Q4 2015 highlighted that changes in credit standards and loan demand continue to support a recovery in loan growth. Encouragingly, credit standards on loans to enterprises were said to have eased further last month and those on housing loans were now said to have returned to a net easing. Banks were also said to have reported a further strengthening of their capital positions and a reduction of risk-weighted assets mainly related to riskier loans during the second half of last year.
From the macro to the micro, yesterday saw a couple more US banks report with both BofA and Morgan Stanley coming in ahead of expectations for both earnings and revenue estimates. Cost cutting was a big theme for both, however attention was directed to the former where, much like the theme we’ve seen so far, BofA was said to have set aside $500m in reserves related to energy losses, with overall exposure said to be around $21bn (albeit a small percentage of total loans). As it stands currently, 42 S&P 500 companies have reported their latest results in this earnings cycle. The theme has been much like prior reporting periods with 76% beating earnings estimates but just 52% beating revenue estimates. Interestingly, all 12 financials stocks have beaten revenue estimations. Clearly though the overriding focus there has been on balance sheet exposure to oil as we’ve highlighted.

Before we take a look at the day ahead, yesterday also saw the IMF trim their global growth forecast for the third time in less than twelve months. The fund now expects global growth of 3.4% this year, which is down from the earlier 3.6% estimate. 2017 growth was cut to 3.6%, a cut of two-tenths also. While its forecast for growth in China was left unchanged at 6.3% this year, the fund did slash its forecast in Brazil to a 3.5% contraction (downgraded by 2.5pp). Russia is expected to contract by 1%.

There’s a busier day of data ahead of us to look forward to today. Kick starting the session in Europe this morning will be the latest PPI print out of Germany before we then get the latest labour market data docket for the UK including unemployment and weekly earnings. The highlight of this afternoon’s session in the US will of course be the December CPI print. Current expectations are running at 0.0% mom for the headline and +0.2% for the core, which are expected to lift the YoY rates for both to +0.8% and +2.1% respectively. Housing starts and building permits data are also due in the US this afternoon. The corporate earnings highlight today is Goldman Sachs, due to report at the open.


http://www.zerohedge.com/news/2016-...ters-bear-market-crude-and-commodity-currenci
 

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#28
Gold and Silver Market Morning: Jan-20-2016
By: Julian D. W. Phillips, Gold/Silver Forecaster - Global Watch
The New York gold price closed Tuesday at $1,087.20 down $2. In Asia on Wednesday, it was lifted to over $1,094 before London opened and then was set by the LBMA at $1,093.20 up from $1,087.00 with the dollar index lower at 99.03 down from 99.21 on Tuesday. The euro was up at $1.0906 from $1.0867 against the dollar. The gold price in the euro was set at €1,002.38 up from €1,000.28. Ahead of New York’s opening, the gold price was trading at $1,095.15 and in the euro at €1,004.17.
 

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#29
John Williams-Dollar Takes Significant Hit
Greg Hunter


Published on Jan 19, 2016
Economist John Williams says that the Fed is still dealing with the fallout of the 2008 financial meltdown. Williams says, “They are still fighting the instabilities of 2008 that has not played itself out. When it does, they are going to be flooding the system with liquidity. It’s either that or they let the system fail. They decided in 2008 not to let the system fail. As they flood the system with liquidity, you will see weakness in the dollar. You will see a return of inflation domestically. You will see all sorts of other factors rallying such as traditional inflation hedges of gold and silver. If the dollar takes a significant hit, which I expect it will, that also will put upside pressure on oil prices. They did virtually nothing and did not address the things that led to the panic . . . now the economy is turning down anew.”

Join Greg Hunter as he goes one on one with economist John Williams, founder of ShadowStats.com.

All links can be found on USAWatchdog.com: http://usawatchdog.com/new-recession-...
 

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#30
On the brink: Decision-makers flock to Davos to save global economy
RT


Published on Jan 20, 2016
The world's wealthy movers and shakers have gathered in the ski-resort of Davos, as plunging oil prices and turbulent markets, fuel fears of a new economic meltdown.
 

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#31
Dow plunges more than 500 points to lowest levels since 2014 as crude oil prices slide
  • As of 12.50pm, the Dow was down 528 points, or 3.3 per cent, to 15,486
  • Standard & Poor's 500 index fell 61 points, or 3.2 per cent, to 1,820
  • Nasdaq composite index sank 140 points, or 3.1 per cent, to 4,337
  • Price of US crude fell below $27 a barrel - the lowest price since May 2003


Read more: http://www.dailymail.co.uk/news/article-3408549/Global-stocks-tumble-oil-price-continues-slump.html#ixzz3xoYnHf64
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#34
The Terminal Decline Of The Middle Class & Money Velocity


Submitted by Tyler Durden on 01/20/2016 15:25 -0500


Submitted by Charles Hugh-Smith of OfTwoMinds blog,

This has three extremely negative consequences.

In response to a recent post on the structural decline in the velocity of money, correspondent Mike Fasano described a key dynamic in both the decline of money velocity and the middle class.



"There is another reason for falling velocity. People like me who have saved all their lives realize that they their savings (no matter how much) will never throw off enough money to allow retirement, unless I live off principal. This is especially so since one can reasonably expect social security to phased out, indexed out or dropped altogether. Accordingly, I realize that when I get to the point when I can no longer work, I'll be living off capital and not interest. This is an incentive to keep working and not to spend."

Thank you, Mike, for highlighting the devastating long-term impact of the Federal Reserve's zero-interest rate policy (ZIRP): with the real (i.e. adjusted for inflation) return on savings near zero (or even negative, for those who have to pay soaring rents, healthcare insurance premiums, college tuition, etc.), those saving for retirement are losing the Red Queen's Race: no matter how much they save, the income will be too paltry to support retirement.

This has three extremely negative consequences. Those seeking a return above zero are forced to put their savings at risk in boom-and-bust markets that tend to reward only those who get into the bubble expansion early and exit early.

These boom-and-bust markets tend to savage the assets of the middle class when they blow up, but do little to rebuild these assets in the bubble expansion phase, as prudent investors who were burned in the previous bubble bust shun risk assets.

The second negative consequence is the structural pressure on spending as those saving for retirement must sacrifice current spending to pile up capital to spend during retirement. No wonder the velocity of money is in free-fall--everyone hoping to retire on more than cat food has to set aside more of their earnings because they cannot count on any future earnings on capital.

The third consequence is the destruction of middle class retirement. When a $500,000 nestegg earns a miserable $15,000 a year (3% annual yield), saving enough to generate a middle class income in retirement is beyond the reach of what's left of the middle class.


http://www.zerohedge.com/news/2016-01-20/terminal-decline-middle-class-money-velocity
 

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#35
Gold Seeker Closing Report: Gold and Silver Gain About 1%
By: Chris Mullen, Gold-Seeker.com
Gold gained $21.76 to $1108.96 by early afternoon in New York before it drifted back lower into the close, but it still ended with a gain of 1.29%. Silver rose to as high as $14.194 and ended with a gain of 0.86%.
 

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#36

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#37
We Are On The Precipice | David Morgan
FinanceAndLiberty.com


Published on Jan 21, 2016
Full description and comments at: http://www.peakprosperity.com/podcast...

Precious metals guru David Morgan returns to address the great threat to the global financial/monetary system from derivative risk. He sees the world at an unprecedented moment in history where the interconnected nature of the global economy makes all players vulnerable to the mind-boggling volume of outstanding derivatives, which makes the sum of all world equity + debt look tiny in comparison.

In this podcast, Chris and David also discuss the upcoming Solutions Conference in Las Vegas on February 22, where they will both be featured presenters. Those looking for more information about attending that conference can find it by clicking here (http://www.solutionsconference.us/)

This video was posted with permission from http://PeakProsperity.com

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#38
Frontrunning: January 22


Submitted by Tyler Durden on 01/22/2016 07:32 -0500


  • Stocks, oil soar as Draghi the dove tames global bears (Reuters)
  • Massive snowstorm poised to wallop U.S. East Coast (Reuters)
  • Oil Rises in Biggest Rally Since August Amid Volatility Surge (BBG)
  • Nikkei spikes more than 900 points after rebounds overseas (Japan Times)
  • China's Working-Age Population Sees Biggest-Ever Decline (WSJ)
  • Oil Is `Trade of the Year' for Citigroup After Iran Export Surge (BBG)
  • U.S. Payment of $1.7 Billion to Iran Raises Questions of Ransom (WSJ)
  • Boeing to cut 747-8 production in half as demand slows (Reuters)
  • Draghi Sees Major Central Banks Pursuing Divergent Monetary Policies 'For a While' (WSJ)
  • U.S. Is Hiding Treasury Bond Data That's Suddenly Become Crucial (BBG)
  • Investors sour on Abenomics as global gloom deepens (Reuters)
  • Google Paid Apple $1 Billion to Keep Search Bar on IPhone (BBG)
  • How Wall Street Finds New Ways to Sell Old, Opaque Products to Retail Investors (BBG)
  • Oil Plunge Imperils Iraq's Fight With Islamic State, Abadi Says (BBG)
  • Nine Dragons' profit slump on weak yuan spells trouble for Chinese firms (Reuters)
  • U.K. Retail Sales Plunge as Mild Weather Curbs Spending (BBG)
  • Fed's Unexpected Partner to Manage Rates: Foreign Central Banks (BBG)
  • U.S. weighs making Hawaii missile test site operational (Reuters)
  • Starbucks Blames Paris Terror Attacks for Hurting Sales (BBG)
  • Argentina's Macri hopes for creditor deal early in 2016 (Reuters)
  • Fewer orders at Apple suppliers could signal first iPhone sales decline (Reuters)
  • Podemos Ready to Back Socialist-Led Government for Spain (BBG)


Overnight Media Digest

WSJ

- In a bid to expand its portfolio of cloud-based computing services, International Business Machines Corp has acquired Ustream Inc, a seller of video streaming services, in a deal valued at $130 million. (http://on.wsj.com/1PkzfTu)

- American Express Co Chief Executive Kenneth Chenault pledged to overhaul the company after the card issuer posted a 38 percent decline in fourth-quarter earnings and provided a bleak outlook for next year. As part of the changes, AmEx said it would cut $1 billion in costs by the end of 2017, acknowledging that efforts to propel revenue growth weren't paying off. (http://on.wsj.com/1Uf5y4m)

- Digital Asset Holdings LLC, a startup trying to develop mainstream uses for blockchain technology and led by star banker Blythe Masters, has raised more than $50 million from 13 investors including JPMorgan Chase & Co, Citigroup Inc, BNP Paribas SA, CME Group Inc and Accenture PLC, the company said. (http://on.wsj.com/1VcI9k5)

- Boeing Co said it plans to halve production rates of its 747-8 plane later this year; latest step in the decline of the iconic jumbo jet and a fresh signal of persistent weakness in the global air-freight market. (http://on.wsj.com/1UeYN2r)

- The dismal energy environment slammed Union Pacific Corp in the fourth quarter, causing the railroad's earnings to fall 22 percent from a year ago and the company to miss Wall Street expectations. The company sustained steep declines in shipments of such higher-margin businesses as coal, crude oil and fracking sand plus a sharp drop in its fuel surcharge revenue, causing profit to fall to $1.12 billion, or $1.31 per share. (http://on.wsj.com/1Ku2bAT)



FT

Khalid al-Falih, chairman of state oil company Saudi Aramco, said that the collapse in oil prices to $30 is "irrational" and he expects the market to recover in 2016.

Boeing said on Thursday that it would halve the production of its 747 jumbo jet to six a year from September.

A spokesman for European commissioner Margrethe Vestager confirmed that she held a "private meeting" with Apple's chief executive, Tim Cook, weeks before she is set to rule on a landmark case that could force the California-based technology company to pay billions in underpaid taxes to Ireland.



NYT

- Decline of oil prices over the past two years failed to deliver the usual economic benefits. As oil prices have fallen to levels not seen since 2003; sagging below $27 a barrel on Wednesday before rebounding to about $30 on Thursday- many experts now say they do not expect lower prices to bolster the domestic economy significantly in 2016. (http://nyti.ms/1K0CIUS)

- As Charter Communications Inc seeks approval for its $67.1 billion takeover of Time Warner Cable Inc and Bright House Networks, critics point that the combined company would have both the power and incentive to inhibit the future of streaming video. If approved, the proposed merger would create a powerful new force in the country's broadband market. (http://nyti.ms/1K0CMUG)

- JPMorgan Chase & Co paid Jamie Dimon, its chairman and chief executive, 35 percent more in 2015 than the previous year's compensation package, which was only narrowly approved by shareholders. (http://nyti.ms/1K0CRra)

- A federal appeals panel on Thursday rejected an effort by 27 states and dozens of corporations and industry groups to block the administration's signature regulation on emissions from coal-fired power plants. (http://nyti.ms/1K0CWeB)

- The heated battle between Airbnb, the popular room-sharing app, and the hotel industry is playing out in city halls across the country, including those in New York and Los Angeles, which have either passed or are considering restrictions on the service. (http://nyti.ms/1K0DgKs)



Canada

THE GLOBE AND MAIL

** Canadian Pacific Railway Ltd says it would cut 1,000 jobs and C$400 million in spending this year as it grapples with declining freight volumes in a sluggish economy. The job losses are expected by the middle of this year. (http://bit.ly/1WAdOgF)

** The federal government is looking to speed up promised reforms to employment insurance with legislation early in the new session, as job losses mount in Alberta and Saskatchewan due to the fall in commodity prices. (http://bit.ly/1lByDuD)

** Alberta Premier Rachel Notley is set to meet with her Ontario counterpart, Kathleen Wynne, on Friday as the Western province seeks to build support for the proposed Energy East pipeline after it drew heat from Montreal-area mayors on Thursday. (http://bit.ly/1nd9EPq)

** An iconic downtown Toronto waterfront hotel is going on the market, with a price tag expected to set a record for a sale of a Canadian hotel. The Westin Harbour Castle could fetch C$350 million to C$400 million. (http://bit.ly/20iCexk)

NATIONAL POST

** TransCanada Corp is pursuing more modest developments in the U.S. Gulf Coast to make inroads in the oil refinery complex. The company's $600 million Houston Lateral pipeline and tank terminal is set to come on stream by the second quarter of the year, connecting the existing Keystone pipeline system to refineries in Houston. (http://bit.ly/1Tc3Cv1)

** The husband of one of the Canadian victims of last week's terror attack in Burkina Faso said he hung up on Prime Minister Justin Trudeau when he called to offer his condolences. (http://bit.ly/1Pmzqh2)



Britain

The Times

Barclays drops gold as 1,000 go

Barclays Plc is to give up trading in gold and other precious metals in a series of cutbacks at its investment bank where more than 1,000 staff will lose their jobs. (http://thetim.es/1OABOgL)

The Guardian

VW rejects call to compensate European drivers over emissions scandal

Volkswagen AG has dismissed a call from the EU's industry chief to pay compensation to European drivers who bought cars with emissions test-cheating software. Elzbieta Bienkowska, the European commissioner for industry, urged the German carmaker to pay compensation to 8.5 million European drivers who had bought cars fitted with defeat devices when she met VW's chief executive, Matthias Muller, in Brussels on Thursday. (http://bit.ly/1SzZOnX)

Publisher Pearson to cut 4,000 jobs

Education book publisher Pearson Plc said it would cut 4,000 jobs, or 10 percent of its workforce, and undergo a restructuring to tackle problems with its business in the US, Brazil and South Africa. (http://bit.ly/1PHPnIY)

JPMorgan backs campaign to keep Britain in the EU

JPMorgan Chase & Co, the biggest bank in the United States, has hinted it could quit the United Kingdom if Britain votes to leave the European Union. The warning came as a number of U.S. investment banks lined up to offer financial support to the In campaign. The bank's chief executive, Jamie Dimon, said "Britain's been a great home for financial companies and (EU membership) has benefited London quite a bit. We'd like to stay there, but if we can't, we can't." (http://bit.ly/1nq7exD)

The Telegraph

Virgin Media to cut 900 jobs over the next two years

Virgin Media will cut 900 jobs from its British workforce over the next two years, it announced today. The telecoms firm, which was bought by American tycoon John Malone's Liberty Global in 2013 for 15 billion pounds, said it was reorganising its business to focus on network expansion, but did not say where the redundancies would fall. (http://bit.ly/1nbrjXQ)

Sky signs exclusivity deal with Twin Peaks maker Showtime

Sky Plc has sought to fortify its pay-TV business by signing up the US cable channel Showtime, the maker of The Affair and the forthcoming Twin Peaks revival, to a lengthy exclusivity deal. (http://bit.ly/1PlJbfl)

Sky News

HSBC Seeks Rice Advice As HQ Decision Looms

The former U.S. Secretary of State Condoleezza Rice has been drafted in to advise HSBC Holdings Plc on the future location of its headquarters even as the bank's board has ruled out a move across the Atlantic. (http://bit.ly/1QokX35)

Brantano UK Collapses With 2,000 Jobs At Risk

The value shoe retailer Brantano UK has gone into administration leaving 2,000 jobs at risk, just three months after it was bought by a specialist retail investor. (http://bit.ly/23h9UxO)


http://www.zerohedge.com/news/2016-01-22/frontrunning-january-22
 

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#39
Global Stocks Surge, Oil Soars As Hopes For Central Bank Stimulus Return


Submitted by Tyler Durden on 01/22/2016 06:53 -0500


In retrospect it appears Tom DeMark was spot on with his Wednesday prediction, made just as the Dow Jones was down some 500 points that that very day was "an interim low" to be followed by a 5-8% rebound (at which point the selling would resume). In fact, those trading Japanese stocks saw virtually the entire predicted rebound take place in just one day as the Nikkei soared by almost 6% overnight, or nearly 1000 points, the biggest jump in 4 months, while risk everywhere else around the globe has likewise exploded higher, as crude has stormed back over $31/barrel.

In other words, overnight we have seen a tremendous relief rally from historically oversold conditions in which AAII bulls hit a 10 year low: largely as most predicted, despite (actually thanks to) even more negative global macro economic data.



There was just one problem: recall what DeMark said about the market forming a bottom:



Markets bottom when the last seller has sold and markets top when the last buyer has bought. We are looking for a bottom that's a secondary bottom where you make one bottom, you rally, make a lower low and the internals of the market show that there's strength and at the same time when we make that low there's a low of negative news: we don't want to see positive news from the government; we don't want to see positive news from central banks. That interferes with the rhythm of the market.

So what drove the overnight surge? Here is a sample of "explanatory" headlines from Bloomberg:

  • Stocks Rebound on Stimulus Speculation
  • Oil Rallies in Biggest 2-Day Surge Since August on Stimulus Bets
  • Yen Investors Homeward Bound as BOJ Stimulus Seen Boosting Bonds
To be sure, it all started with Draghi's latest jawboning of risk higher, which sent oil surging above $28, pushing up all risk assets with it, on expectations that March is the date when the ECB will boost its QE, memories of the December slaughter long forgotten.





In case it is still unclear, Bloomberg lays it out: "The turnaround in sentiment came amid signs central banks may be prepared to act after $7.8 trillion was erased from the value of global equities this year on China’s slowdown and oil’s crash. Diminished inflation expectations and a strengthening yen are seen as increasing pressure on the Bank of Japan to enlarge stimulus at its meeting next week. China will keep intervening in its equity market to “look after” investors and has no intention of further devaluing the yuan, Vice President Li Yuanchao said."

And just in case, here is another explainer: "There is hope of more stimulus in March and potential for even more stimulus in Japan and China, so if we get concrete positive economic news the rebound could last into next week,” said John Plassard, senior equity- sales trader at Mirabaud Securities. “I told my clients to fasten their seatbelts and wait for better news, and this is finally happening."

In other words, more of the same that brought the market to the same unsustainable level from which we just had a crash big enough to validate half a recession. No wonder even JPM says to sell all rallies.

For now, however, enjoy the bear-market rally in which stocks rose around the world, extending Thursday’s rebound from a 2 1/2-year low. Oil surged with emerging-market currencies, while haven assets retreated. European shares headed for the best week in two months, the euro approached a two-week low and Spanish and Italian bonds rallied after European Central Bank President Mario Draghi indicated he may bolster economic support as soon as March. Crude was poised for its steepest two-day rally in five months and the Russian ruble rebounded from a record low. Asian stocks climbed the most since September on speculation Japan and China may also take steps to calm markets.

“It’s a classic oversold bounce after Draghi’s comments yesterday and the noise on Japanese stimulus overnight, the question is where do we go from here,” said Veronika Pechlaner, who helps oversee $10 billion at Ashburton Investments, part of FirstRand Group. “It’s become harder and harder for stimulus to really support the economic fundamentals so it doesn’t mean a medium- and long-term change, but at least we have a bit more stable trading environment for a couple of days.”

Summarizing where we stand:

  • S&P 500 futures up 1.4% to 1887
  • Stoxx 600 up 2.5% to 337
  • FTSE 100 up 2.1% to 5893
  • DAX up 1.8% to 9747
  • German 10Yr yield up 4bps to 0.49%
  • Italian 10Yr yield down 4bps to 1.52%
  • Spanish 10Yr yield down 5bps to 1.67%
  • MSCI Asia Pacific up 3.7% to 119
  • Nikkei 225 up 5.9% to 16959
  • Hang Seng up 2.9% to 19081
  • Shanghai Composite up 1.3% to 2917
  • S&P/ASX 200 up 1.1% to 4916
  • US 10-yr yield up 4bps to 2.07%
  • Dollar Index up 0.18% to 99.24
  • WTI Crude futures up 4.6% to $30.90
  • Brent Futures up 5.5% to $30.86
  • Gold spot down 0.4% to $1,097
  • Silver spot up 0.3% to $14.14
And just like that, we have gone from epic gloom and doom and a 560 Dow Jones plunge to sheer euphoria in about 48 hours.

* * *

Looking closer at regional markets, we start in Asia where equity markets traded mostly higher following the positive close on Wall St. in the wake of ECB President Draghi's dovish comments, while a rebound in the energy complex and hopes of BoJ easing also bolstering sentiment. Nikkei 225 (+5.9%) outperformed as the weaker JPY supported exporters, while reports that the BoJ is said to be considering further easing saw the index advance by nearly 1000 points. Elsewhere, the ASX 200 (+1.1%) was led higher by gains in energy and large mining names, while the Shanghai Comp (+1.3%) was also led by the crude recovery, despite underperforming after Shanghai margin debt fell for the 15th consecutive day which is the longest streak of declines on record. Finally 10yr JGBs traded flat initially tracked the losses in USTs, but then pared with the BoJ also in the market for JPY 1.26tr1 of government debt.

BoJ is said to be considering further easing amid economic uncertainty, with the central bank said to be mulling measures to address the impact of the slump in oil prices on its price target and is likely to extend the time frame to reach the price-goal, according to a senior official.

Top Asian News:

  • PBOC Said to Tell Lenders to Cancel Repos With Excessive Rates: Some banks are said to have been set rate caps for such loans.
  • Soros Says China Hard Landing Will Deepen the Rout in Stocks: He’s betting against Asian currencies, buying Treasuries.
  • SoftBank’s Slide Leaves It Worth Less Than Stake in Alibaba: 4-day stock slide triggered by rising pessimism about Sprint’s ability to pay down debt.
  • China Vice President Vows to ‘Look After’ Stock Market Investors: Leaders will make market dynamic while boosting regulation.
  • Japanese Stocks Jump Most in Four Months Amid Stimulus Signals: Nikkei-225 closed up 5.9%, most since Sept. 9.
  • Islamic State Threat Reaches India Before Hollande Visits: Police arrest four for plotting attack at Hindu holy site.
In Europe, risk on appetite is in full swing in Europe, following a positive close in Asia after energy held onto, and built upon gains before European participants came to their desks. Comments yesterday from ECB's Draghi that the March meeting is live in terms of policy decisions, has continued to bolster equity markets this morning. Peripheral bond yield spreads are also tighter in early trade, as Draghi's comments linger in participants ears. Comments from the ECB's survey of professional forecasters today seems to justify Draghi's comments —they downgraded the 2016 inflation forecast to 0.7% from 1.0%.

The Stoxx Europe 600 Index rose 2.6 percent at 10:53 a.m. in London. The index is heading for a 2.3 percent weekly advance -- its biggest such gain since November -- after rising the most in a month yesterday following Draghi’s indication that monetary policy will be reviewed as early as March. He reiterated his stance in Davos on Friday.

Banca Monte dei Paschi di Siena SpA surged 12 percent after saying it’s bringing forward the board meeting on its results to reassure markets. Chairman Massimo Tononi separately told Il Sole 24 Ore that the lender has no plans for a capital increase, while not ruling out the possibility of being helped by the Italian government’s plan for a bad bank.

Top European News

  • Draghi Says ECB Has ‘Plenty of Instruments’ to Revive Inflation: ECB president concerned about outlook for euro- area inflation; is determined to reach his price-stability mandate. Euro Area Hit by Market Volatility as ECB Mulls March Action
  • SAP Raises 2017 Forecasts as Cloud Business Growth Quickens: Co. raised the top end of its forecast for 2017 sales by 7% to as much as EU23.5b.
  • U.K. Retail Sales Plunge as Mild Weather Curbs Clothes Spending: volume of sales including fuel fell 1%, biggest drop since September 2014.
  • ABN Amro, Rabobank Say They Meet ECB Capital Requirements: ABN Amro required to hold CET1 capital level of 10.25% in 2016; Rabobank says it’s required to maintain CET1 ratio of 9.5%.
  • Goldman Makes U-Turn on Euro Forecast After 6 Weeks: Analysts revived their bearish call for currency to drop to 95c in next 12 months.
In FX, EUR/USD looks to be on the mend after yesterday's ECB press conference set up March as a potential month of further accommodative action. The Negative manufacturing and services data from the Eurozone this morning, showing growth in both of these sectors at 11 month lows, has been brushed aside.

Russia’s ruble jumped 3.2 percent, trimming this month’s slide to 8 percent. That’s the worst performance among 31 major currencies worldwide. Malaysia’s ringgit jumped 1.9 percent and South Korea’s won climbed 1.1 percent on Friday. A gauge of exchange rates for 20 developing nations rose 0.6 percent.

Hong Kong’s dollar gained the most in 12 years, rising as much as 0.4 percent, before trading 0.3 percent stronger to 7.7916 against the dollar. The currency, which sank to an eight-year of HK$7.8295 on Wednesday, erased the week’s loss and returned to the strong side of its HK$7.75-HK$7.85 trading range.

The yen was set for its biggest weekly drop in more than two months. The currency was down 0.4 percent, extending its weekly decline to 1 percent. The euro fell 0.3 percent against the dollar. Monetary easing tends to debase the value of currencies.

In commodities, WTI and Brent have been continuing their bullish moves during the European session, in in the wake of gains in the US/Asia sessions . Gold has weakened in early EU trade after risk on sentiment continued after ECB's Draghi's comments yesterday pushed equities higher. Industrial metals are higher across the board on the back of increased risk appetite.

Brent crude rose as much as 6.3 percent to $31.10 a barrel on the ICE
Futures Europe exchange, before trading at $30.83. Prices headed for an
11 percent two-day advance, the biggest since the end of August. In New
York, West Texas Intermediate crude climbed 4.6 percent to $30.89. U.S.
natural gas headed for a weekly gain as a snow storm approached the
eastern U.S. Futures for February rose 1.9 percent this week and were
little changed on Friday at $2.130 per million British thermal units.

Looking at the day ahead, this morning in Europe will be all about the January flash PMI indicators where we get manufacturing, services and composite readings for Germany, France and the Euro area. Also due out this morning will be the December retail sales and public sector net borrowing data for the UK. Across the pond this afternoon in the US the early print will be the Chicago Fed national activity index reading for last month, before we then get the flash January manufacturing PMI, December's existing home sales data as well as perhaps the most significant data this afternoon - the conference board’s leading indicators. First thing this morning we should also hear from ECB President Draghi again, speaking in Davos at the World Economic Forum, while Governing Council member Weidmann is also scheduled to speak later this morning. So there could be conflicting signals here. On the earnings front just 6 S&P 500 companies are due to report with General Electric being the highlight.



Bulletin Headline Summary frrom RanSquawk and Bloomberg

  • Comments yesterday from ECB's Draghi that the March meeting is live in terms of policy decisions, has continued to bolster equity markets this morning (Euro Stoxx +2.6%)
  • With oil comfortably back above USD 30.0, CAD continues its recovery to record a 5 cent retracement (through 1.4200) from multi year highs seen this week, USDRUB dipped back under 80.00 after yesterday's sharp hit to 86.00
  • Highlights today include: US Manufacturing PM! and existing home sales, comments from ECB's Nowotny and Coeure as well as BoE's Cunliffe and Forbes
  • Treasuries lower in overnight trading as oil rises and world equity markets rally on hopes of more central bank interventions to help financial markets.
  • Over the seven weeks until the March 10 gathering, ECB officials are likely to try to guide investors to avoid a repeat of last month’s meeting, when fresh stimulus fell short of predictions stoked at the previous decision
  • Fallout from slumping commodities and China’s slowdown has investors increasingly predicting that the Federal Reserve will slow its campaign to raise interest rates and that the ECB and BOJ will soon deploy more stimulus
  • The Federal Reserve’s efforts to ensure its interest rate increase filters through to the broader U.S. economy have found an unexpected counterparty: foreign central banks
  • Violent swings in global markets fretting over the Chinese economy are being exacerbated by tougher capital rules imposed on the world’s biggest banks, according to former Barclays Plc CEO Bob Diamond and Goldman Sachs President Gary Cohn
  • A secret -- just how much of America’s debt does Saudi Arabia own? -- unanswered since the 1970s under an unusual blackout by the U.S. Treasury has come to the fore as Saudi Arabia is pressured by plunging oil prices and costly wars
  • Goldman Sachs revived its bearish call for the Euro to drop to $0.95 in the next 12 months on Thursday, less than two months after changing its 2016 year-end call for the euro to $1
  • U.K. retail sales plunged 1% m/m in December, the most in more than a year, as mild weather damped clothing demand and early discounting boosted spending the previous month
  • A dangerous winter storm will bring snow by the foot to the U.S. mid-Atlantic, including Washington, threatening at least 50 million people in its path while canceling thousands of flights and closing schools and government offices
  • Sovereign 10Y bond yields mostly wider. Asian and European stocks rally; U.S. equity-index futures rise. Crude oil, copper and gold higher
US Event Calendar:

  • 8:30am: Chicago Fed Nat Activity Index, Dec., est. -0.15 (prior -0.3)
  • 9:45am: Markit US Manufacturing PMI, Jan. P, est. 51 (prior 51.2)
  • 10:00am: Existing Home Sales, Dec., est. 5.2m (prior 4.76m)
  • Existing Home Sales m/m, Dec., est. 9.2% (prior -10.5%)
  • 10:00am: Leading Economic Indicators, Dec., est. -0.2% (prior 0.4%)
Top Global News

  • Paralyzing Storm Threatens U.S. East as Washington in Bull’s-Eye: Washington, Baltimore more than a foot of snow by Saturday; New York may get buried in 6-10 inches.
  • Goldman Says Investors Overreacting to China Creates Problems: Investors tend to overstate China’s impact on world, according to new report.
  • Sprint to Report Earnings a Week Earlier Amid Investor Worries: Co. expected to post first full year of subscriber gains in 8 years on Jan. 26.
  • Starbucks Blames Paris Attacks for Hurting European Sales: “dramatic decline” in consumer, tourist activity in W. Europe following Nov. Paris attacks.
  • Google’s Android Revenue Put at $31b by Oracle Lawyer: Analysis of Google’s tightly held financial information was disclosed Jan. 14 by an Oracle attorney.
  • Google Paid Apple $1b to Keep Search Bar on IPhone: Apple received $1b from its rival in 2014, according to transcript of court proceedings from Oracle’s copyright lawsuit against Google.
  • AmEx’s Chenault Braces for ’New Reality’ as Profit Declines 38%: CEO outlined plan to cut costs by $1b by end-2017, including further restructuring.
  • SunEdison to Hand Solar Farms Right Back to the Previous Owners: Co. outlined Wednesday details of 4 Hawaii, Utah assets involved in handover.
  • Commodity Rout Spurs Moody’s to Review Dozens of Ratings: 69 U.S. E&P cos., as well as 11 mining cos., put under review for downgrade.
  • Junk Bond Market Braces for What Could Be a $117b Logjam: Securities maturing in 10 years or more could be cut to junk by end-2017, say UBS strategists.
  • Dimon’s Pay Jumps to $27m, Mostly Tied to Performance: Bankin creased CEO’s pay 35%, tying most of package to future performance.
DB's Jim Reid concludes the overnight wrap

The last time the market flirted with Mr Draghi's seductive sound bites it eventually got jilted at the easing aisle. However there was a hint of giving him a second chance yesterday with a fairly positive market reaction to pretty firm signaling that the ECB will ease again in March. Although the meeting is 7 weeks away could yesterday mark the start of another plate spinning cycle from the central banks? The market chatter is now looking towards Kuroda to signal more action when the BoJ meet this time next week. Will Yellen also signal a more cautious and dovish stance at the FOMC next Wednesday? We continue to think central bank money printing globally remains in the early stages. Such policies could go on for several years yet even if there are periodic pauses. Ultimately we continue to think monetary policy will finance fiscal spending but that will take a recession to focus policy makers’ minds. For now with inflation so low it would be strange if central banks didn't do more in the face of such market turmoil, low inflation and elevated risk factors. It won't be a major growth stimulant but any extra liquidity provided will have to go somewhere so it's too early to say the central bank era of elevating asset prices is over even if it's becoming more difficult to get the same response.

Notwithstanding another choppy session, European risk assets got the much needed ECB-stimulus boost yesterday with European equity markets finishing broadly 2% higher, although Italian equities (which have been hard hit of late) stood out after the FTSE MIB finished with a +4.20% gain. Draghi downplayed recent concerns over Italian banks which undoubtedly helped. Elsewhere the S&P 500 was up over +1.5% by the end of the European close, dragging US 10y Treasury yields back up above 2%, but hopes for a big bounce-back faded as the session wore on with the S&P 500 being pared back to close up just +0.52%. This came despite a much better day for Oil with the new WTI contract at one stage trading back up above $30/bbl. It closed just below that by the close of play ($29.53/bbl) but was still up +4.16% on the day.

The loss of momentum late in the US session hasn’t deterred bourses in Asia this morning however where we’ve seen strong gains across the region. The Nikkei (+5.65%), Hang Seng (+2.49%), Kospi (+1.94%) and ASX (+1.07%) are all up with markets in Japan in particular seemingly buoyed by a report in the Nikkei newspaper this morning suggesting that the BoJ is seriously mulling an expansion of its current QE programme. This seems to have offset a slightly lower than expected flash manufacturing PMI for Japan (52.4 vs. 52.8 expected). Markets in China had been trading with modest losses but the Shanghai Comp and CSI 300 are back in positive territory at +0.52% and +0.48% respectively, the lag perhaps reflecting the latest MNI business indicator print for China which fell to 52.3 from 52.7 in December. Meanwhile Oil has extended gains in early trading and is rallying hard as we go to print (+3%) while Asia and Australia credit indices are 2bps and 4bps tighter respectively.

In terms of Draghi’s comments yesterday then, the ECB President highlighted that officials will review and possibly reconsider its policy stance at the next meeting. Importantly he made reference to the fact that while ‘the measures we decided in December were entirely appropriate at that time’, ‘since then these circumstances have changed’. In a strong signal of defiance Draghi said that ‘we are not surrendering in front of these global factors’ - namely plummeting oil prices and the slowdown in China. Draghi added that ‘we are adapting our instruments to the changing conditions’ and that ‘the credibility of the ECB would be harmed if we weren’t ready to revise the monetary-policy stance’ while also adamantly stating that the ECB has the ‘power, the willingness, the determination to act, and the fact that there are no limits to our action’.

The signal was also strong enough for our European economists to revise their call to an easing at the March meeting. The question instead becomes how and their baseline expectation is for a 10bp cut in the deposit rate and a change to the asset purchase programme. Absent a major euro crisis, they see the latter going no further than a front-loading of purchases, i.e. a temporary acceleration in the pace of QE and may be less than this if the global risks recede by March.

The market was clearly disappointed with the outcome in December after expectations had been set so high. So with seven weeks to go, expect a lot of focus and close scrutiny around all of Draghi’s comments and other ECB policy makers now. Given the possibility of a second chance, it’s hard to imagine Draghi letting expectations climb as high as they did last time round without being convinced of action.

In terms of the remainder of the price action yesterday, the rally for European risk assets didn’t end with equity markets as credit indices put in a strong performance too as Crossover and Main tightened 21bps and 5bps respectively. The Euro initially plunged over a 1% but actually rallied back later in the evening to finish more or less unchanged around the 1.09 mark. Meanwhile those gains for Oil yesterday came despite another bounce in US inventories last week according to the latest EIA data, although the increase was less than that reported by the API on Wednesday and so was seemingly a rare reason to help justify a leg up in prices.

Speaking of Oil, yesterday saw Schlumberger release its latest quarterly report, the first of the big US oil names to do so. The company reported a $1bn loss for the quarter alone which was actually less than expected although revenues missed relative to consensus. The bigger news however was that the company is to cut another 10,000 jobs, bringing total job cuts in the last twelve months to 30,000 in the face of plummeting energy prices. The positive announcement of a share buyback did however lend some support to the share price in post-market trading. Of the 18 S&P 500 names to release earnings yesterday just seven beat revenue expectations (below the overall trend this quarter) but 14 beat earnings expectations (in line with the overall trend).

Wrapping up, US economic data yesterday was a tad mixed. The January Philly Fed business outlook print came in at a slightly better than expected -3.5 (vs. -5.9 expected), a gain of 6.7pts from a downwardly revised December reading. Meanwhile the latest initial jobless claims print revealed an unexpected 10k rise to 293k (vs. 278k expected) which is the most in six months and continues what has been an upward trend from the October lows now. In the European session and away from the ECB the only data to report of was a slightly softer than expected Euro area consumer confidence print for this month (-6.3 vs. -5.7 expected).

Looking at the day ahead, this morning in Europe will be all about the January flash PMI indicators where we get manufacturing, services and composite readings for Germany, France and the Euro area. Also due out this morning will be the December retail sales and public sector net borrowing data for the UK. Across the pond this afternoon in the US the early print will be the Chicago Fed national activity index reading for last month, before we then get the flash January manufacturing PMI, December's existing home sales data as well as perhaps the most significant data this afternoon - the conference board’s leading indicators. First thing this morning we should also hear from ECB President Draghi again, speaking in Davos at the World Economic Forum, while Governing Council member Weidmann is also scheduled to speak later this morning. So there could be conflicting signals here. On the earnings front just 6 S&P 500 companies are due to report with General Electric being the highlight.


http://www.zerohedge.com/news/2016-...-oil-soars-hopes-central-bank-stimulus-return
 

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#40
Top Economist - Who Predicted the 2008 Crash - Confirms What Alternative Financial Sites Have Been Saying for a Decade


Submitted by George Washington on 01/20/2016 13:59 -0500


William White is one of the world's top economists.

He was the head economist for the Bank for International Settlements (BIS) - the world's most prestigious financial institution, called the "central banks' central bank - comprised of the world's central banks. He is now the chief economist for OECD, made up of most of the world's richest and most powerful countries.

As chief economist for BIS, White predicted the 2008 crash.

While the mainstream financial media like CNBC has been trumpeting fake, happy news for many years, White confirmed yesterday what the best alternative financial sites have said for a decade, telling the Telegraph (at the World Economic Forum in Davos):



The global financial system has become dangerously unstable [he's right] and faces an avalanche of bankruptcies that will test social and political stability .... [Uh-huh]



"The situation is worse than it was in 2007. [Accurate] Our macroeconomic ammunition to fight downturns is essentially all used up" .... [True]



***



"Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief," he said. [Indeed]



"It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something" [Yup]



***



"The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians." [Exactly!]



***



The European banking system may have to be recapitalized on a scale yet unimagined, and new "bail-in" rules mean that any deposit holder above the guarantee of €100,000 will have to help pay for it. [Unfortunately.]



***



"Emerging markets were part of the solution after the Lehman crisis. Now they are part of the problem too," Mr White said. [Could be bad.]



Mr White, who also chief author of G30's recent report on the post-crisis future of central banking, said it is impossible know what the trigger will be for the next crisis since the global system has lost its anchor and is inherently prone to breakdown. [Due to such factors as soaring leverage, incestuous levels of interconnectedness between financial institutions, runaway inequality, a government policy of letting criminals get away with fraud, etc.]



***



Mr White said QE and easy money policies by the US Federal Reserve and its peers have had the effect of bringing spending forward from the future in what is known as "inter-temporal smoothing". [Very true.] It becomes a toxic addiction over time and ultimately loses traction. In the end, the future catches up with you. "By definition, this means you cannot spend the money tomorrow," he said.



***



"Policy makers were seduced into inaction by a set of comforting beliefs, all of which we now see were false. They believed that if inflation was under control, all was well," he said. [Hmmm...]



In retrospect, central banks should have let the benign deflation of this (temporary) phase of globalisation run its course. By stoking debt bubbles, they have instead incubated what may prove to be a more malign variant, a classic 1930s-style "Fisherite" debt-deflation. [Oops.]



***



"It was always dangerous to rely on central banks to sort out a solvency problem when all they can do is tackle liquidity problems [Wrong diagnosis]. It is a recipe for disorder, and now we are hitting the limit," he said.

Indeed, it's not just the past decade ... the mainstream has willfully ignored key economic wisdom which is hundreds or thousands of years old.


http://www.zerohedge.com/news/2016-...confirms-what-alternative-financial-sites-hav