Good morning. Here’s what you need to know.
- Asian markets were mixed in overnight trading. The Japanese Nikkei gained 0.2 per cent and the Shanghai Composite was up 0.1 per cent, but the Hang Seng fell. In Europe, markets are taking losses – Spain is down 1.9 per cent while Italy and France are both down 1 per cent. In the United States, futures point to a negative open.
- Japanese industrial production rose 2.5 per cent from the previous month in December, missing expectations of a larger 4.1 per cent advance after a 1.4 per cent contraction last month. A drop in production of electronic parts and devices was the main culprit.
- German unemployment unexpectedly fell to 6.8 per cent in December. Economists expected it to remain unchanged at 6.9 per cent. However, Frank-Juergen Weise, President of the Federal labour Agency, warned, “There’s a chance the cold weather in the second half of January may bring an increase in unemployment in February.”
- German retail sales plunged 1.7 per cent in December from the previous month. Economists were expecting a smaller loss of 0.1 per cent after sales expanded 0.6 per cent in November. Year-over-year, December retail sales were down 4.7 per cent – well below the 1.5 per cent decline predicted by economists and last month’s -0.6 per cent figure. Deutsche Bank economists think the numbers will be revised higher >
- Deutsche Bank posted a larger than expected fourth-quarter loss of 2.17 billion euros, the biggest in four years, after the bank laid off 1,400 employees and set aside 1 billion euros for legal expenses. The investment bank took a pretax loss of 548 million euros versus expectations of a profit of 359 million euros. However, the bank did exceed estimates on its capital adequacy goal, and shares rose.
- Spanish bank Santander, the biggest bank in the eurozone by market value, reported a stunning $26 billion dollar writedown in its earnings release today. The charge included 12.7 billion euros in provisions for non-performing loans in Spain and another 6.1 billion euros for Spanish real estate exposure, amounting to 18.8 billion euros ($26 billion) in total.
- The U.K.’s four largest banks – Barclays, HSBC, Lloyds, and RBS – face a payout to thousands of small businesses after selling them interest rate swaps in deals that did not comply with regulatory requirements. According to the WSJ, “Analysts estimate that the four banks sold 28,000 hedging products to businesses since 2001 and the eventual payouts could reach hundreds of millions of pounds.”
- Facebook earnings and revenues came in above Wall Street’s estimates, but the stock fell sharply in after-hours trading anyway. The company reported 40 per cent revenue growth year-over-year and improved operating margins.
- Initial jobless claims rose to 368,000 last week from 330,000 the week before. Economists expected initial claims to rise to 350,000. Continuing claims also came in above estimates.
- Personal incomes grew 2.6 per cent in December, well above economists’ estimates of 0.8 per cent growth. Personal spending growth fell to 0.2 per cent, below economists’ predicted drop to 0.3 per cent from 0.4 per cent the month before.
- BONUS: Miley Cyrus reportedly went to the beach and did yoga there.
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