- North Korea Threatens Greater Pain If Punished Over Sony Hacking. North Korea warned that any U.S. punishment over the hacking attack on Sony Pictures Entertainment would lead to damage “thousands of times greater,” with targets including the White House and Pentagon. Hackers including the “‘Guardians of Peace’’ group that forced Sony to pull a comedy about the assassination of Kim Jong Un ‘‘are sharpening bayonets not only in the U.S. mainland but in all other parts of the world,’’ the Kim-led National Defense Commission said in a statement published yesterday by the official Korean Central News Agency. Even so, North Korea doesn’t know who the Guardians are, the commission said.
- North Korea: 1.2 Million Troops, Nukes and a 3,000-Strong Cyber-Elite. North Korea’s alleged ability to hack into Sony Pictures Entertainment is extending Kim Jong Un’sreach far beyond the range of his missiles. While North Korea has kept Western defense officials guessing for years about a nuclear program that it may or may not ever use, the regime’s ability to wage cyber war adds a new dimension to its standing abroad.
- Poroshenko Meets Belarus Leader as Ukrainian Peace Efforts Stall. Ukrainian President Petro Poroshenko met the leader of Belarus, whose country hosted negotiations that clinched a cease-fire in September, as efforts faltered to agree on a new round of talks with pro-Russian separatists. The agreements reached in Minsk are the “basis of the peace process in Ukraine,” Poroshenko told Belarusian President Aleksandr Lukashenko yesterday in Kiev. “There’s now no alternative model to de-escalate the situation.”
- China Offers Enhanced Cooperation as Russia Struggles. China offered enhanced economic ties with Russia at a regional summit this week as its northern neighbor struggled to contain a currency crisis. “To help counteract an economic slowdown, China is ready to provide financial aid to develop cooperation,” Premier Li Keqiang said at a Dec. 15 gathering in Astana, Kazakhstan. While the remark applied to any of the five other nations represented at the meeting of the Shanghai Cooperation Organization group, it was directed at Russia, according to a person familiar with the matter who asked not to be named as the plans weren’t public.
- U.S. Soldiers Fight Islamic State in Iraq, Kurds Advance. U.S. soldiers clashed with Islamic State militants, helping the Iraqi army repel attacks against the town of al-Baghdadi in the western Anbar province, Al Jazeera TV reported, as Kurdish forces advanced in the north. The U.S. troops were from al-Assad military base, the biggest in Anbar, First Lieutenant Muneer al-Qoud from the Iraqi police said by phone. Meanwhile, a U.S. senior military official said there are no U.S. ground troops fighting in Iraq, though forces can engage in self-defense if required.
- U.S. to Release Four Guantanamo Bay Prisoners to Afghanistan. Four prisoners from the U.S. detention facility at Guantanamo Bay, Cuba, are to be repatriated to Afghanistan, the Defense Department said. Shawali Khan, Khi Ali Gul, Abdul Ghani and Mohammed Zahir were to be released as part of an effort by President Barack Obama to accelerate transfers and close the facility. An interagency task force reviewed their cases to determine whether the prisoners met the standards for release and examined issues including security before unanimously approving the transfers.
- South Korea Cuts 2015 Growth Forecast, Warns on External Risks. South Korea lowered its growth forecast and said it will revise capital controls to guard against higher U.S. interest rates and other external risks to Asia’s fourth-biggest economy. The economy will expand 3.8 percent next year, less than a July estimate of 4 percent, the finance ministry said, citing weaker-than-expected domestic demand. The ministry may revise rules in 2015 on currency forwards and foreign currency liabilities to prevent abrupt outflows, a statement showed.
- Asian Stocks Rise as Crude Extends Gains While Kiwi Drops. Asian stocks rose, with the regional index headed for its steepest three-day advance in almost two months, as commodity shares climbed amid a rally in crude oil. New Zealand’s dollar dropped while Japanese bonds extended gains. The MSCI Asia Pacific Index climbed 0.6 percent by 11:04 a.m. in Tokyo, bringing its gain since Dec. 18 to 3 percent.
- Iron Ore Price Outlook Cut 33% by Australia as Glut Expands. Australia cut its iron ore price estimate for next year by 33 percent as surging output in the world’s top exporter outpaces Chinese demand growth, adding to a surplus. Prices will average $63 a metric ton, the Department of Industry said today. That compares with $94 a ton forecast in September by the Bureau of Resources and Energy Economics, which is now part of the department. The commodity is set to average about $88 this year, today’s quarterly report says.
- Age of Plenty Seen Over for Gulf Arabs as Oil Tumbles. The boom that adorned Gulf Arab monarchies with glittering towers, swelled their sovereign funds and kept unrest largely at bay may be over after oil prices dropped by almost 50 percent in the last six months. The sheikhdoms have used the oil wealth to remake their region. Landmarks include man-made islands on reclaimed land, as well as financial centers, airports and ports that turned the Arabian desert into a banking and travel hub. The money was also deployed to ward off social unrest that spread through the Middle East during the Arab Spring.
- White House Weighs Options Against North Korea. Moves Include Financial Sanctions, Restoring to List of Terror Sponsors. The White House is considering an array of options for responding to North Korea’s alleged hacking of Sony Pictures, including measures that would intensify financial pressure on Pyongyang by targeting banks and trading companies controlled by leader Kim Jong Un and his ruling elite, according to senior administration officials.
- Killings of New York Police Officers Spark Backlash to Protests. The assassination of two New York City police officers this weekend has emboldened police and their supporters to lash out at weeks of nationwide protest and criticism that they say have left officers more vulnerable.
- Obama Plans More Gitmo Transfers in Coming Weeks. President Aims to Shift National Debate by Framing Guantanamo’s Closure as a Fiscal Issue, Putting Pressure on Lawmakers.
- Castro thanks US in speech but reaffirms Communism. President Raúl Castro declared victory for the Cuban Revolution on Saturday in a wide-ranging speech, thanking President Obama for “a new chapter” while also reaffirming that restored relations with the United States did not mean the end of Communist rule in Cuba.
- Just What Is China Buying? (graph)
- China Tests Nuclear ICBMs, US Analyst Warns "Arms Control Is Failing To Increase American Security".
- Bond Yields Set To Plunge In 2015: Next Year Global Treasury Supply Will Tumble By 20% As ECB Joins The Party.
- "Houston, You Have A Problem" - Texas Is Headed For A Recession Due To Oil Crash, JPM Warns. (graph)
- The Hidden Leverage In "Shiny Objects" - Banks Sell Record Amount Of Equity-Linked Structured Notes. (graph)
- US regulator probes ETF pricing structures. Extreme movements in the prices of bonds, commodities and other assets have prompted regulators at the Federal Reserve Bank of New York to take a closer look at the inner workings of exchange traded funds. Wall Street’s top regulator has been talking to the firms responsible for ensuring the smooth functioning of such ETFs as it seeks to gauge the resilience of the structures to sharp fluctuations in the underlying market they track.
- QE addiction has made us too complacent. If and when enthusiasm for extreme monetary policy as the cure for all ills dries up, we don’t have many options left.
- ECB's Constancio Sees Negative Inflation Rate. Oil Price decline "doesn't create a simple situation for us in the short-term," ECB Vice President Vitor Constancio cited as saying in interview. Sees negative inflation rate in coming months. ECB wants to prevent "dangerous vicious circle of declining prices, rising real wage costs, falling profits, shrinking demand and further declining prices," he said. Given that many economist expect weak economy in euro area until 2018 sees downward pressure on inflation expectations.
- N. Korea threatens ultra-harsh action on U.S. soil over hacking allegation. North Korea threatened to carry out ultra-harsh military action on U.S. soil Sunday, one day after U.S. President Barack Obama vowed a proportional response against the North's alleged hacking attack into Sony Picture. In a follow-up to the FBI's recent hacking accusation against Pyongyang, Obama vowed Friday (U.S time) to "respond proportionally," hinting at retaliatory action over the communist country's alleged hacking attack on the distributor of a controversial movie about North Korea, "The Interview."
- China building military base on islands near Senkakus: sources. China's military is building large-scale base facilities on islands near the Senkaku Islands southwest of mainland Japan, several Chinese sources said Sunday. Construction is under way in the Nanji Islands in Zhejiang Province, lying about 300 kilometers to the northwest of the Japanese-administered, uninhabited Senkaku Islands in the East China Sea. China claims the Senkakus as Diaoyu.
- Asian indices are +.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 105.0 unch.
- Asia Pacific Sovereign CDS Index 67.75 -.75 basis point.
- S&P 500 futures -.02%.
- NASDAQ 100 futures -.05%.
Earnings of Note
8:30 am EST
- The Chicago Fed National Activity Index for November is estimated to rise to .25 versus .14 in October.
- Existing Home Sales for November are estimated to fall to 5.2M versus 5.26M in October.
- (MARA) 2-for-1
- The China Leading Economic Index and the 2Y T-Note auction could also impact trading today.