Good morning! Here’s what you need to know.
— The Eurozone may be backsliding. Italian unemployment has now hit a 37-year high of 12.7%, while youth unemployment climbed 20 bps to 41.6%. Eurozone-wide unemployment has been at 12.1% literally since April. We’re also seeing signs of deflation, as price growth has now slowed for the past six months. It’s not all bad — retail sales have picked up a bit, and Ireland has just rejoined the bond market — but if you want to be concerned there’s plenty of evidence for you to be so.
— Ford CEO Alan Mulally is now vehemently denying he will become Microsoft’s next head, as the software giant says it is now close to announcing Steve Ballmer’s successor. Reuters: “Sources familiar with the process have told Reuters that Microsoft is down to a “handful” of candidates, including one or more outsiders from the tech industry, former Nokia CEO Stephen Elop and insiders Satya Nadella and Tony Bates.”
— Netflix, shares of which fell more than 5.5% yesterday after a Morgan Stanley downgrade, is banking on the success of the latest season House of Cards to erase doubters. Marketwatch: “…no network may have more riding on a show in terms of its prestige or how its reception could affect its programming efforts than Netflix. ‘There is some risk that if it doesn’t live up to the quality of season one, people will perceive more risk in Netflix’s original content effort,’ said Andy Hargreaves, an analyst with Pacific Crest Securities. ‘That doesn’t necessarily put more pressure on the other shows. It’s just a reflection of the high bar they’ve set and the reality that sub-par shows or seasons are inevitable.'”
— Yahoo is making a huge bet on digital magazines focused on food and tech. “We found our inspiration in magazines,” CEO Marissa Mayer said at CES yesterday. “They are elegant, beautiful and have a distinctive voice.” The tech mag, simply called Yahoo Tech, will be run by former New York Times columnist David Pogue.
— Twitter announced it would hold its first-ever earnings call Feb. 5. It got another downgrade this morning from Cantor Fitzgerald. “While historically we’ve reserved our “SELL” rating to business models with structural challenges, we find TWTR’s valuation to be excessive and currently see materially more downside than upside,” analyst Youssef Squali said.
— Markets in Asia mostly surged on Wednesday, while European markets were falling. U.S. futures were pointing lower. Silver is down more than 1%.
— Fifteen Turkish police chiefs were relieved of their duties in the latest chapter of that country’s corruption probe. The Borsa Istanbul erased yesterday’s gains, falling 1%. Reuters reports Fitch is now warning “strains on institutional integrity” caused by tensions between the government and judiciary could eventually lead to a downgrade. “In the latest move by the ruling AK Party, it sent plans seeking more say over the appointment of judges and prosecutors to parliament late on Tuesday. ‘This is the latest sign that things are not about to calm down ahead of March local elections,’ a research note from Commerzbank said,'” according to Reuters.
— Econ data: At 8:15 a.m. we get the latest ADP payroll numbers in advance of “jobs day” Friday. Consensus for ADP is for 205,000 payroll jobs added in December, down from 215,000 in November. And at 3 p.m. we get November consumer credit, with an increase of $US14.2 billion expected.
— At 2 p.m. we’ll get the latest FOMC minutes. “Economists have many questions,” Marketwatch’s Greg Robb writes. “They want to know if the taper pace is on auto-pilot, continuing at $US10 billion per meeting, and therefore ending by the fourth quarter. Another question is why did the Fed choose not to lower its rate-hike threshold from 6.5% … ? And on inflation, they’re looking for whether the Fed will change its story that inflation will pick up over the next several months, despite all evidence to the contrary.”
— Alibaba, China’s largest e-commerce website, announced it had banned Bitcoin payments. The price on the Mt. Gox exchange is now back down to $US952 after breaching $US1,000 over the weekend.