Good morning! Here’s what you need to know.
— Jobs day. Non-farm payrolls are expected to have increased 200,000 in December, a slight decline from the 203,000 in November. The unemployment rate is expected to be unchanged at 7.0%. There’s some data to suggest the number could actually blow out to nearly 300,000. BI’s Joe Weisenthal writes: “A super-strong number will feed two narratives. One will be that the economy is finally (finally) starting to breakout. The other narrative is the most interesting story in the market, and that concerns the increasing tendency of traders to question whether the Fed will really stay on hold for a long time.” WSJ says the S&P 500 rallied after the past eight straight jobs reports, a streak unmatched at least since 1998 (12 of past 13).
— China’s export data disappointed, growing just 4.3% YOY in December versus a 12.7% jump in November and casting doubt on the recovery in Europe. WSJ: “China’s traditionally important export sector faces a range of challenges, from higher labour and land costs to an appreciating currency that eats into its competitiveness. As the U.S. and Europe regain economic momentum, experts expect China to benefit from better export demand. But the slow pace of improvement in December was a letdown for many. ‘The lift from developed markets has not been as strong as expected,” said Junwei Sun, an economist at HSBC Holdings. ‘This year might be a better year [for exporters], but the pace of improvement could be very modest.'”
— Still, data show China overtook the U.S. as the world’s largest goods trader last year. The FT says that the total value of China’s imports and exports in 2013 was $US4.16 trillion, a 7.6% jump from 2012 on a renminbi-adjusted basis, according to figures released by the Chinese government on Friday. Although U.S. data for 2013 has only been released through November, it is nearly mathematically impossible for December data to push the country to China’s level. The U.S. still leads China in services trading.
— Speaking of, at 10 a.m. we get U.S. wholesale trade data. Consensus is for a 0.5% increase in inventories.
— New York Gov. Andrew Cuomo wants to give renters a tax break. NYT: “As part of his sweeping package of tax cuts announced this week, the governor is proposing a new tax break for tenants making less than $US100,000 a year. Nearly 80 per cent of the 3.3 million renter households in New York State would benefit, saving more than $US400 million a year, state officials said.”
— Sears shares crashed more than 15% in after-hours trading yesterday, and are off more than 13% this morning, after the retailer, announced a Q4 adjusted loss of $US2.01-$2.98. Analysts were looking for earnings of $US0.26 per share. Quarter-to-date comparable store sales are down 7.4%. Year-to-date sales are down 3.9%. For the full year ending February 1, 2014, managements expects net loss will be between $US1.3 billion and $US1.4 billion.
— Abercrombie and Fitch shares are soaring nearly 16% pre-market after that retailer raised its full-year earnings outlook to a range of $US1.55 to $US1.65 from $US1.40 to $US1.50 prior. Analysts surveyed by FactSet had forecast $US1.47 a share.
— Markets in Asia saw mixed gains. European markets and U.S. futures were higher across the board.
— The Indian diplomat arrested in New York on visa fraud charges and whose claims of harsh detention spark a diplomatic spat was indicted but granted diplomatic immunity and subsequently expelled from the country. Devyani Khobragade was also charged with lying to authorities about how much she had been paying her maid, and it seems this ought to have been the real focus of the story. Reuters: “As well as this treatment of Khobragade, India was angered that the United States took it upon itself to fly the nanny’s family out of India. The prosecuting attorney, Preet Bharara of Manhattan, an ethnic Indian, said attempts were made in India to ‘silence’ Richard and compel her to return home. While much of the focus has been on Khobragade, the cause of the nanny, Sangeeta Richard, has been taken up by a non-government organisation called Safe Horizon, which campaigns for victims of abuse.”
— BI’s Steve Kovach explains why he’s finally settled on T-Mobile as his mobile service provider after cycling through AT&T and Verizon. “If you switch to T-Mobile from Verizon, AT&T, or Sprint, T-Mobile will now pay the early termination fee (ETF) carriers charge you to cancel your contract, up to $US350 per line. You’re also required to trade in your old smartphone, which T-Mobile will pay you for so you can buy a new one. That means there’s no risk for me to abandon my contract from Verizon. T-Mobile will foot the bill. And T-Mobile’s plans are cheaper. I can pay $US65 per month for 2.5 GB of data and unlimited calling/texting. Unlike Verizon, T-Mobile doesn’t charge you extra if you go over your data allotment. Instead, it slows your data down a bit until the next billing cycle starts. Assuming I get a new iPhone 5S, I’ll also be paying $US25 per month for my phone. (T-Mobile sells you an iPhone 5S for $US0 down plus $US25 per month for 24 months. You also have the option to pay off the phone in full right away if you’d like.).”
Macroeconomic Advisers, one of the most reliable forecasters, is now quite bullish on 2014. Here are the bullet points from their latest note: