Financial Markets and Economy
For Dollar Traders, the Most Important Signal Comes Roaring Back (Bloomberg)
If you’re a dollar bull and you’re getting a little nervous about the sustainability of the greenback’s rip-roaring rally, take comfort in knowing that a fundamental gauge of the currency’s worth is on your side.
Big U.S. banks are set on getting Congress this year to loosen or eliminate the Volcker rule against using depositors' funds for speculative bets on the bank's own account, a test case of whether Wall Street can flex its muscle in Washington again.
U.S. Stocks Halt 3-Day Drop as Dollar, Gold Climb: Markets Wrap (Bloomberg)
U.S. stocks rose with the dollar as economic data bolstered confidence that the American economy is poised to accelerate. Gold rose and Treasuries erased losses as a slide in the price of crude sparked demand for haven assets.
The Fallout From Madoff's Fraud Includes an Ironic Twist for Investors (Bloomberg)
The legal fallout from Bernard Madoff’s epic fraud includes an ironic twist: a road map for investors wanting to hold on to profits that seem too good to be true.
Shipping Alliances Shore Up Industry, Unsettle Customers (The Wall Street Journal)
A tumultuous year in the container-shipping industry, which included one big operator going under and others bundling together to stay afloat, ended with three major alliances poised to dominate ocean trade for years to come.
China Gets Strict on Forex Transactions to Stop Money Exiting Abroad (Bloomberg)
The State Administration of Foreign Exchange, the currency regulator, said in a statement Dec. 31 that it wanted to close loopholes exploited for purposes such as money laundering and illegally channeling money into overseas property.
Luxury Apartment Boom Looks Set to Fizzle in 2017 (The Wall Street Journal)
Landlords of upscale properties across the U.S. are bracing for rough conditions in 2017 that will likely force them to slash rents and offer deep concessions as a glut of supply brings a seven-year luxury-apartment boom to an end.
Strong data lifts dollar to 14-year high; oil falls (Reuters)
The U.S. dollar touched a 14-year high and major stock markets got off to a solid start in the new year, boosted by strong data, while debt yields edged up after upbeat economic figures out of China and Europe.
Earnings, Not Donald Trump, Are Stocks’ Best Friend in 2017 (The Wall Street Journal)
Wall Street expects U.S. companies to report gains in fourth-quarter earnings in coming weeks, extending a recent recovery and providing fresh fuel to major U.S. stock indexes after a run of records in late 2016.
The Champions of the 401(k) Lament the Revolution They Started (The Wall Street Journal)
Herbert Whitehouse was one of the first in the U.S. to suggest workers use a 401(k). His hope in 1981 was that the retirement-savings plan would supplement a company pension that guaranteed payouts for life.
Oil dives two percent, strong dollar knocks crude off 18-month high (Reuters)
Oil prices slid more than 2 percent on the first trading day of 2017, knocked off 18-month highs hit in early trade as the U.S. dollar rallied to its highest level since 2002 and traders took profits.
Indonesia’s Message to J.P. Morgan: Accentuate the Positive (The Wall Street Journal)
Indonesia’s decision to cut business ties with J.P. Morgan Chase & Co. after a downgrade highlights the fine line banks and ratings companies walk.
PMI Plunge Adds to Evidence India Cash Ban Is Hurting Growth (Bloomberg)
India’s dominant services sector is set to contract for a second straight month, adding to evidence that Prime Minister Narendra Modi’s surprise ban on cash will trigger a sharp slowdown in Asia’s No. 3 economy.
Is Wall Street’s Big Bet on Soaring Profits a Fantasy? (Fortune)
Wall Street's market strategists are offering a soothing rationale for why investors shouldn't fret over today's lofty equity prices. Their pitch: The big valuations are fully justified by a looming explosion in profits. It's a risky call.
China Goes on $26 Trillion Commodity Binge as Shortages Seen (Bloomberg)
Combined aggregate trading volume on the Shanghai Futures Exchange, Dalian Commodity Exchange and Zhengzhou Commodity Exchange jumped 27 percent from 2015 levels to 4.1 billion contracts, according to data e-mailed by the China Futures Association.
China Has Too Many Shopping Malls (The Wall Street Journal)
CHONGQING, China—On the day after Christmas, the MixC luxury shopping mall in this city’s Jiulongpo district was packed with colorful trees and other holiday decorations but not many people.
Japan December manufacturing activity expands at fastest pace in a year: PMI (Reuters)
Japanese manufacturing activity expanded at the fastest pace in a year in December as orders picked up, a private survey showed on Wednesday, in an encouraging sign that the struggling economy may be regaining momentum.
China Said to Consider Options to Back Yuan, Curb Outflows (Bloomberg)
China has studied possible scenarios for the yuan and capital outflows this year and is preparing contingency plans, according to people familiar with the matter. The offshore yuan surged the most in a year.
Macau Still Gambling King, Even Without High Rollers (The Wall Street Journal)
Gross gambling revenue in Macau has risen year on year for five straight months since August after 26 months of decline. The figure for the year in the semiautonomous city, the only place in China where casino gambling is legal, was down slightly from last year, but it seems likely the bottom has been found.
Solar Could Beat Coal to Become the Cheapest Power on Earth (Bloomberg)
Solar power is now cheaper than coal in some parts of the world. In less than a decade, it’s likely to be the lowest-cost option almost everywhere.
Minutes to Give Few Rate Clues as Fiscal Puzzle Clouds Fed View (Bloomberg)
Details about the closed-door policy discussion Federal Reserve officials held last month could help explain why several of them increased the number of interest-rate hikes they expect in 2017 without significantly upgrading their economic forecasts.
Libya’s Oil Revival Gathers Pace to Highlight Risks on OPEC Deal (Bloomberg)
Libya, the holder of Africa’s biggest crude reserves, is ramping up output from its biggest oil field again after two years of internal conflict, the latest reminder of just how vulnerable OPEC’s quest to clear a global crude glut might be.
Australia's east coast has a ballooning oversupply of houses (Business Insider)
Investment in the Australian housing sector has become a frantic activity, and prices have soared. This has been accompanied by a construction boom, particularly of large multi-family developments.
PBOC Injects Markets With Record MLF Funds Amid Outflow Pressure (Bloomberg)
hina has made unprecedented injections into the financial system through one lending tool amid an acceleration in capital flowing out of the world’s second-largest economy.
Nikkei leads Asian stock market rally amid a higher US dollar and positive manufacturing data (International Business Times)
Most Asian stock market indices were trading higher on Wednesday (4 January), with the Shanghai Composite up 0.49% at 3,151.36 as of 5.21am GMT. The Nikkei 225 saw the highest gain of more than 2% amid a strong US dollar and positive economic data.
Are Chinese Enterprises Being Taxed to Death? (Project Syndicate)
SHANGHAI – A couple of weeks ago, an interview with the Chinese auto-glass tycoon Cao Dewang sparked a heated discussion across China. Cao explained that his recent $600 million investment to establish a US manufacturing branch for his company, Fuyao Glass Industry Group, was driven largely by China’s high taxes, which Cao claims are 35% higher for manufacturers in China than in the US.
Central Bank Independence: Growing Threats (Ritholtz)
The median FOMC participant forecasts that the Committee will raise the target range for the federal funds rate three times this year. That is, by the end of 2017, the range will be 1.25 to 1.50 percent.
Bitcoin Becomes Venezuelans’ Last Resort, Even When Buying Food (The Cointelegraph)
Amidst the worsening economic crisis and financial turmoil, Venezuelans are in search for alternative assets and stores of value to finance their daily living. The imposition of excessive regulation on physical assets such as gold has pushed the demand for Bitcoin in the struggling country.
FTSE 100 struggles to set new peak as retail stocks falter, but UK construction PMI hits nine-month high (The Telegraph)
Eurozone inflation higher than expected in December.
Data from the EU's statistics office Eurostat has this morning showed that eurozone flash CPI beat its forecast of 1pc, rising 1.1pc in December.
"The World Has Materially Changed": Why Morgan Stanley Began To Fade The Trump Rally (Zero Hedge)
Morgan Stanley's Adam Parker has undergone an epistemological catharsis of sorts in the past year: having called 2013-2015 largely accurately, 2016 threw him for a loop, when he entered the year bullish, only to turn bearish, and then to flip again (along with most other sellsiders) shortly after the Trump victory.
‘Widespread misconduct’ at bank run by Steve Mnuchin (New York Post)
California’s attorney general “uncovered evidence suggestive of widespread misconduct” at OneWest, the bank run by President-elect Donald Trump’s pick for Treasury secretary, Steve Mnuchin — but never brought a suit against the company, according to a report.
What 12 'Financial Experts' Predict For The Economy in 2017 (Spoiler Alert: It's Ugly) (The Organic Pepper Blog)
What lies ahead for the economy this year? Will the economy finally collapse as predicted by many or will the early positive signs in stock markets around the world continue and the global economy will flourish?
German Inflation Unexpectedly Hits Three Year High, Driven By Rising Energy, Food Prices (Zero Hedge)
In what may be both good and bad news for the ECB, German inflation jumped more than expected in December, hitting the highest level in more than three years, according to preliminary data.
Donald Trump can bully auto makers all he wants, but he can’t repeal the laws of economics (Market Watch)
As the opening salvo in his “Make America Great Again” playbook, the tweeter-in-chief has been shaming American companies that offshore high-paying American jobs to factories in other countries, with some apparent minor successes that will do more to burnish Trump’s reputation as a dealmaker than they will to help working Americans struggling to make ends meet.
Billionaire Hedge-Fund Manager Ties W.S.J. To "Fake" News Epidemic (Vanity Fair Hive)
If you’ve opened up a newspaper, turned on the TV, or logged onto the Internet over the past few months, you’ve likely encountered a discussion about the scourge of “fake news.”
Bitcoin: The Best Performing Currency For A Second Year In A Row (Zero Hedge)
Bitcoin is no stranger to extreme fluctuations. As Visual Capitalist's Jeff Desjardins notes, for each of the last four years, the cryptocurrency has either been the best or the worst performing currency – with nothing to be found in between.
Technology
Amazon now has 45,000 robots in its warehouses (Business Insider)
Amazon significantly expanded its army of warehouse robots in 2016, according to a report by The Seattle Times.
The newspaper — based in the same city as Amazon's global headquarters — wrote last week that the e-commerce giant now has 45,000 robots across 20 fulfillment centres.
Lego Boost is going to turn all your Lego toys into programmable robots (CNet)
Educational codable robot toys have been a mega-trend in kid tech over the last year, from Jimu to Cozmo. Lego has had its own Mindstorm educational robotics kit for years, but its pieces come from the older-skewed Technics sets, as opposed to the piles of multicolored bricks everyone's basements are full of.
Why Deep LEarning Is Suddenly Changing Your Life (Fortune)
Most obviously, the speech-recognition functions on our smartphones work much better than they used to. When we use a voice command to call our spouses, we reach them now. We aren’t connected to Amtrak or an angry ex.
Anti-surveillance clothing aims to hide wearers from facial recognition (The Guardian)
The use of facial recognition software for commercial purposes is becoming more common, but, as Amazon scans faces in its physical shop and Facebook searches photos of users to add tags to, those concerned about their privacy are fighting back.
When Robots Take All of Our Jobs, Remember the Luddites (Smithsonian.com)
The odds are high, according to recent economic analyses. Indeed, fully 47 percent of all U.S. jobs will be automated “in a decade or two,” as the tech-employment scholars Carl Frey and Michael Osborne have predicted.
Politics
China Warns Donald Trump Not to ‘Escalate’ North Korea Situation With Erratic Tweets (Charlie Campbell, Beijing, TIME)
China has hit back at Donald Trump’s claim that Beijing isn’t doing enough to rein in rogue state North Korea, cautioning the U.S. President-elect not to “escalate” an already tense situation on the Korean Peninsula through his liberal use of social media.
China calls US 'a shooting star' in history as Trump picks protectionist trade chief (The Guardian)
Donald Trump has doubled down on his plans to transform US trade policy, picking a longtime China critic and protectionist to be America’s next chief trade negotiator.
The Problems With ‘Repeal And Delay’ (Health Affairs Blog)
Republican leaders in Congress and the incoming Trump administration have said that they plan to move quickly to repeal the Affordable Care Act (ACA) in the early weeks of 2017, with a delay in the date of when key aspects of the repeal would become effective until perhaps 2019 or 2020.
Trump Knocks U.S. Intelligence Agencies Over Russia Hacking Review (The Wall Street Journal)
WASHINGTON—President-elect Donald Trump challenged U.S. intelligence agencies late Tuesday in a Twitter post, accusing them of delaying a meeting with him over alleged hacking by the Russian government because “perhaps more time needed to build a case.”
Republican Congress Promises to Move Quickly Toward Goals (The Wall Street Journal)
WASHINGTON—The nation’s new, all-Republican leadership begins to take power Tuesday with an ambitious agenda of tax cuts, regulation rollbacks and repeal of President Barack Obama’s health law, but they face a complicated legislative path pocked with unresolved policy details.
It’s the ‘Most Volatile’ Year for Political Risk Since WWII, Eurasia Group Says (Bloomberg)
U.S. unilateralism under Donald Trump, China’s growing assertiveness and a weakened German Chancellor Angela Merkel will make 2017 the “most volatile” year for political risk since World War II, according to Eurasia Group.
Rough start for U.S. Republicans on first day of Trump-era Congress (Reuters)
The Republican-led U.S. Congress had a rough start to its first session of the Donald Trump era on Tuesday when a public outcry that included a dressing-down from the president-elect prompted the House of Representatives to backtrack on its plans to defang an ethics watchdog.
Trump recognizes 'urgency' of North Korea nuclear threat: South Korea (Reuters)
U.S. President-elect Donald Trump's "clear warning" to North Korea shows he is aware of the urgency of the threat posed by North Korea's nuclear program and will not waver from a policy of sanctions against the isolated country, South Korea said on Tuesday.
Trump Taps China Critic Lighthizer for U.S. Trade Representative (Bloomberg)
President-elect Donald Trump has picked lawyer Robert Lighthizer to head the U.S. Trade Representative office, his transition team said Tuesday in a further sign the incoming administration will take a tougher line on China.
Trump team seeks agency records on border barriers, surveillance (Reuters)
In a wide-ranging request for documents and analysis, President-elect Donald Trump's transition team asked the Department of Homeland Security last month to assess all assets available for border wall and barrier construction.
Life on the Home Planet
China navy confirms carrier conducted drills in South China Sea (Reuters)
China's sole aircraft carrier conducted drills in the South China Sea, the navy said, days after neighboring Taiwan said the carrier and accompanying ships had passed 90 nautical miles south of the island amid renewed tension between the two sides.
Heavy Smog Chokes a Third of China’s Cities at Start of New Year (Bloomberg)
Heavy smog has blanketed a third of China’s cities, including its capital Beijing, with 62 issuing health alerts since Jan. 1, officials said. The hazardous air has forced hundreds of flight cancellations or delays and is forecast to linger into the weekend in some areas.
How to Become a ‘Superager’ (NY Times)
Think about the people in your life who are 65 or older. Some of them are experiencing the usual mental difficulties of old age, like forgetfulness or a dwindling attention span. Yet others somehow manage to remain mentally sharp.
Nine Things Successful People Do Differently (Harvard Business Review)
Why have you been so successful in reaching some of your goals, but not others? If you aren’t sure, you are far from alone in your confusion. It turns out that even brilliant, highly accomplished people are pretty lousy when it comes to understanding why they succeed or fail.
Gunman in Istanbul nightclub attack may have trained in Syria (Reuters)
The gunman who killed 39 people in an Istanbul nightclub on New Year's Day in an attack claimed by Islamic State appears to have been well versed in guerrilla warfare and may have trained in Syria, a newspaper report and a security source said on Tuesday.
