Chillin' out till it needs to be funded
Retail Sales remain positive as snow trucks and card thieves take over?
Neiman Marcus and three other retailers joined Target in reported thefts of Cardholder information. Target’s tally of 70 mln cards compromised makes Neiman Marcus’ score of 1 mln small, but Target is still making even Profits after cutting off the growth estimates for the year. Sales forecasts thus go south for retailers in snow laden January. Advance Retail Sales are still likely to come out positive at 0.1% meaning all’s good with the inventory laden US GDP having crossed 4% in the December quarter. Retail Sales data ex Auto is also highly positive at an estimated 0.7% even in the pre open tomorrow. CPI ticks in at 0.3% with CPI ex Food and the PPI data worth a 0.1% apiece too, nicely positive even as the Patriots blitzed the competition to face a likely challenger in Broncos the coming Saturday firing up the networks
More NFL in the snow?
Seattle Seahawks move in relatively easily to the Superbowl turf unless the Niners can get Harbaugh to jimmy up a Lynch and two Wilsons within the depleted skill sets of that Defence. Patriots definitely can be beat though Brady stands unruffled with two growing kids and a not so sterling record in the first half of the season. After a heady cocktail of Packers ( led by the elusive retiree Brett Favre and the always visible Aaron Rodgers ), Falcons ( with the seemingly stoic Matt Ryan biting into a cheap Top 4 Draft position in a worst ever 2012 record), Bears ( that Defense) and the Saints (The one and Only, but now ready to go Drew Brees) its no shame to have punted for a Broncos Patriots superdome, though they both meet in the AFC Championship game and Seattle may have made it back just in time to just see more of Brady standing Pat with the cup that cheers. The NFL goes more international this year after those early Brady Superbowls from 2006 with 3 fixtures in the next Regular season in London.
Housing Starts stay close to the million mark..Consumer credit still healthy..Oil headed South
2014 also starts with the Housing starts crawling back to 1 million with the Housing permits above that line to drive home the point of the recovery still along way from any possible benchmark after the 2006 cuts but already looking to have tired in the trend when the Starts dipped to 800k at the start of the Holiday season.
The Beige book will also make for pretty stoic readings of the recovery even as the 74k jump in Jobs on Friday was almost shaken off with the lower participation firming up in the snowy weather and the Unemployment rate to that elusive 6.5% benchmark already when it came to 6.7% on Friday.
The Consumer credit numbers however, were more of Old Student Loans getting finally bonded to the Government Balances than anything else though Auto loan numbers were healthy in November. As we mentioned, after the next two holiday season reports, the Consumer credit data may well pinch with a sharp vertical South move as rolling credit clams up again and lower demand at the pump also strengthens oil going South from this month on weaker demand remaining the headline
Central Bank pools win The Yen trade and the Euro finally recedes
Better bank purse strings probably had something to do with it as Basel wielded an axe to its equity to asset calculations and improved European Bank liquidity by $20-30 bln for every $100 Bln up there in the “Cut off Credit Lines, Cut off my lending Book” schema still playing out(Check out FT and bloomberg.com for more of the heads up on these stories)
Draghi unseemingly almost added superlatives to his worn statement promising more liquidity for the banking masses if they gave out more credit but the Euro has indeed receded. The Yen trade, with Central Banks selling out at 105 levels last week, was a surprise as more expected and traded the Yen to 110 levels for 2014 giving the Economics round to Abe on strength of the data
Finally, that deal
The big news of the morning even as the Dow Futures started in the red from new seeming heights, was the $16 Bln purchase of Beam by Suntory. Suntory owns most of the beverage taste buds in Japan and Beam, well Beam owns Jim Beam and Teachers’ Scotch among others, promising Asian drinkers more of the real thing , as they are likely to place these aspirational brands at the head of the charts despite their easier availability in stores hence. Beam inc with $4 in EBIT per share this year, split off its parent ship Fortune Brands (Remember Titleist Golf Balls) in 2010 and started trading public then but was expected to go to Diageo (US:DEO) and/or Bud/Inbev (US:BUD) (The original 10K link courtesy the FT guys here ). Beam gets 55% of its business in the US and Suntory 2 in 3 from Japan. Ackman has apparently something to do with the deal and eeks, the Suntory has only $2 Bln in cash to start off the markers and adds $2.4 Bln in debt in the deal.
Meanwhile the Men’s Wearhouse fence for the Jos A Bank bid also turns out to be a hedge fund on the street. The current hostile offer has gone to the shareholders and more than one think it may be a nod for Wearhouse this time
Bank Earnings are here
With expectations downplayed and bonuses out of the way, Q4 will indeed be a good result adding to an overall big 2013 for the top US banks as a busy Tuesday starts Bank earnings and ends with a bang by Thursday with US Bank and Capital One added to the finale by Goldman Sachs. Things can truly only get better in 2014 and their shares , already trading at the northmost of the four charts will probably find a few heights in the Northern lights . Citi has already given BAC the carte blanche mandate in a BUY rating to cover the ground from its $16 price to its Book Value which remains at $30 and the mortgage markets expected to help them and the finally cleared rough pockets for JP Morgan as well, the last $2.6 Bln non tax deductible. Banks get into the Volcker rule mode in 2014 and that hill would be the toughest for them yet but with the charted map and the discounts from Basel for the new leverage ratio that starts showing up in published result statements from now will be part and parcel of the mystery. Eminent Domain hit Bobbies in Blackrock could still be looking to recoup more losses from the bankers they got to pay them $4.5 Bln from JP Morgan’s mis-selling.
Chinese IPOs get local scrutiny
You might have heard that over last week, Chinese regulators have been going thru Chinese IPO prospectuses with a fine comb to weed out false claims. It seems they have already grounded 5 such IPOs by Monday. Have a great working week, already!