>>> Asian Update

Asian Market Update: Australia CPI rises to top half of RBA target range; BOJ on hold with policy/assessment and more modest CPI and GDP expectations

***Economic Data*** - (JP) BANK OF JAPAN (BOJ) POLICY STATEMENT: REITERATES TO INCREASE MONETARY BASE AT ANNUAL PACE OF ¥60-70T (AS EXPECTED); Maintains overall economic assessment (5th straight month) - (AU) AUSTRALIA Q4 CONSUMER PRICES (CPI) Q/Q: 0.8% V 0.4%E; Y/Y: 2.7% V 2.4%E; CPI Trimmed Mean Q/Q: 0.9% (10-quarter high) v 0.6%e ; Y/Y: 2.6% v 2.3%e - (AU) AUSTRALIA JAN WESTPAC CONSUMER CONFIDENCE INDEX M/M: 103.3 V 105.0 PRIOR; M/M: -1.7% V -4.8% PRIOR (2nd consecutive decline) - (JP) JAPAN NOV FINAL LEADING INDEX CI: 111.1 V 110.8 PRELIM; COINCIDENT INDEX: 110.7 V 110.5 PRELIM - (JP) JAPAN DEC TOKYO CONDOMINIUM SALES Y/Y: 6.1% V 22.3% PRIOR - (JP) JAPAN NOV ALL INDUSTRY ACTIVITY INDEX M/M: +0.3% V +0.3%E - (TW) TAIWAN DEC UNEMPLOYMENT RATE: 4.1% V 4.2%E

***Observations/Insights*** - Texas Instruments down 1% following better than expected earnings and announcement of 1.1K in job cuts; IBM down 2.6% after missing on the bop line. - BHP quarterly output of iron ore flat q/q; Maintains FY production targets, but shares slump over 1% amid decline in the iron ore price. - Australia quarterly CPI tops estimates, with most notable price inflation in food, alcohol/tobacco, and recreation components following recent weakness in AUD. Aussie dollar spikes as investors backtrack from expectations of more RBA policy easing. - Bank of Japan on hold in terms of policy as expected; Keeps overall economic assessment unchanged despite an upgrade from the cabinet office last week; Board member Shirai adds a dissent to risks component, looking for more pressing language on lagging employment/income trends. BOJ also lowers FY14/15 GDP target by a decimal to 1.4%, maintains all CPI targets, but also warns inflation may remain around 1.25% for some time.

***Fixed Income/Commodities/Currencies*** - (CN) China MOF sells 10-yr bonds; avg yield 4.4483% - USD/CNY: (CN) PBoC sets yuan mid point at 6.1087 v 6.1066 prior setting (Weakest setting since Jan 9th) - Goldman Sachs: Sees lower prices in copper and iron ore in 2014; iron ore price to fall to $108/ton in 2014, $80/ton in 2015 - press

- AUD and JPY are the most notable movers among the dollar majors in the FX space, both rising against the greenback following the respective announcements of Australia CPI and BOJ policy statement. AUD/USD spiked up about 80pips to test $0.8870 after the quarterly inflation print vastly reduced expectations for more RBA easing, particularly in the wake of that disappointing employment report last week. AUD/NZD was up 90pips, hitting NZ$1.0660, while AUD/JPY saw a high of ¥92.50 - up 85pips from the lows. USD/JPY pair fell about 30pips below the ¥104 handle after the BOJ statement, where the central bank lowered its forecast for next year's GDP and also noted inflation would remain around 1.25% for some time.

***Speakers/Political/In the Papers*** - (CN) China National Development and Reform Commission (NDRC): Continue to implement prudent monetary policy and proactive fiscal policy - financial press - (CN) China Financial Futures Exchange (CFFEX) currently studying 3% 10-yr govt bond futures - Chinese press - (CN) China may take two years to pass property tax law; Likely to implement more tax trials in 2014 - financial press - (CN) PBoC and CSRC to jointly evaluate China financial market facilities - financial press - (AU) Commsec economist: Today's CPI data likely to bring RBA to a more neutral stance from debating the merits of more easing - Australian press - (AU) According to swaps market data, RBA rate cut probability at its Feb meeting has been reduced to 12% from 17% following Q4 inflation data - financial press - (JP) Japan LDP deputy policy chief Shiozaki: Corporate tax 25% is natural level for consideration

- (US) CEO and Co-Chief Investment Officer Mohamed El-Erian has resigned from PIMCO; To remain at Allianz International Executive Committee

***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 -0.7%, S&P/ASX -0.4%, Kospi -0.1%, Shanghai Composite +1.7%, Hang Seng +0.1%, Mar S&P500 flat at 1,837, Feb gold +0.1% at $1,243, Mar crude oil +1.1% at $95.36/brl

US markets: - SMCI: Reports Q2 $0.35 v $0.26e, R$356.4M v $332Me; +17.0% afterhours - NUAN: Guides Q1 higher $0.23-0.24 v $0.20e; R$487-491M v $484Me; Names new head of ww sales; +8.3% afterhours - HURN: Guides FY13 higher to $2.92-2.96 v $2.68e, R$718-720.5M v $695Me ($2.60-2.72, R$685-700M prior guidance); provides initial FY14 outlook; +4.2% afterhours - CA: Reports Q3 $0.84 v $0.72e, R$1.16B v $1.14Be; Names new head of sales; +3.0% afterhours - CREE: Reports Q2 $0.46 v $0.39e, R$415M v $413Me; +1.9% afterhours - BBRY: Announces Plans to Divest Canadian Real Estate Holdings for over 3M sqf of space; Terms not disclosed; +1.6% afterhours

- TXN: Reports Q4 $0.49 (ex $0.03 charge) v $0.47e, R$3.03B v $2.99Be; To eliminate about 1.1K jobs (about 3% of workforce) BOBE: Guides FY14 EPS lower to $2.20-2.30 v $2.60e (prior guided $2.60-2.65 on Dec 3rd); No longer to provide mid-quarter updates to oulook starting this quarter - conf call; -1.0% afterhours - FE: Guides FY13 $2.95-3.05 v $2.96e ($2.90-3.10 prior), Guides initial FY14 $2.45-2.85 v $2.79e, Cuts quarterly dividend by 34.5% to $0.36 from $0.55 prior; -1.3% afterhours - IBM: Reports Q4 $6.13 v $6.01e, R$27.7B v $28.3Be; Exec: challenges in hardware business persist - conf call; -2.6% afterhours - XLNX: Reports Q3 $0.61 v $0.53e, R$587M v $601Me; -3.6% afterhours - IBKR: Reports Q4 $0.07 v $0.15e, R$262.9M v $317Me; -4.7% afterhours - AMD: Reports Q4 $0.06 adj v $0.06e, R$1.59B v $1.54Be; -12.0% afterhours

Notable movers by sector: - Consumer Discretionary: FAW Car 000800.CN +3.9% (FY13 guidance) - Consumer staples: Warrnambool Cheese & Butter WCB.AU +1.3% (update on Saputo's stake in company) - Financials: CITIC Securities 6030.HK +3.9% (prelim FY13 result) - Materials: BHP Billiton BHP.AU -1.0% (Q2 production result); Angang Steel 347.HK +5.2% (FY13 guidance); Jiangsu Yangnong Chemical 600486.CN +6.9% (FY13 guidance) - Technology: Renesas Electronics Corp 6723.JP -5.1% (to reduce workforce) - Energy: China Shenhua Energy 1088.HK +0.9% (2013 sales result); Shanghai Tonva Petrochemical 1103.HK +26.7% (issues positive profit alert) - Industrials: Sany Heavy Equipment International Holdings 600031.CN +3.3%, Zoomlion Heavy Industry Science and Technology 000157.CN +2.6% (Hunan Province on mechanization of agricultural production); Beijing Jiaxun Feihong Electrical 300213.CN +4.9% (special dividend proposal); Dalian Zhiyun Automation 300097.CN +5.8% (FY13 guidance) - Healthcare: Guangzhou Improve Medical Instruments 300030.CN +4.7% (prelim FY13 result)

>>> US After HourS

After Hours Summary: SMCI +16.6%, NUAN +9.1%, CA +2.2%, CREE +1.9%, AMD -9.6%, BBSI -5.4%, BOBE -4.7%, IBM -2.8% following earnings/guidance

After Hours Gainers: Companies trading higher in after hours in reaction to earnings: SMCI +16.6%, NUAN +9.1%, HURN +5.5%, TPLM +3.1%, CA +2.2%, CREE +1.9%, CBU +0.8%, FULT +0.1%

Companies trading higher in after hours in reaction to news: - TWI +5.7% (MHR Fund Management discloses 10.9% active stake in 13D filing; intends to seek to engage in discussions with management), - BBRY +2.4% (announced plans to divest Canadian Real Estate Holdings; will not comment on potential value of a sale), - GTE +2.4% (confirmed significant reserves at the Breana oil field in Peru), - JCS +2.0% (reported on first phase of restructuring plan; said 'cash position of the company has substantially improved'), - TA +1.5% (settled previously disclosed antitrust case), - RNO +1.4% (provided Q4 operational update; Pennyrile production remains on target for mid-2014), - XCO +1.4% (Fairfax Financial Holdings (FRFHF) discloses 6.4% passive stake in 13G filing)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: AMD -9.6%, BBSI -5.4%, BOBE -4.7%, IBKR -4.4%, XLNX -3.6%, IBM -2.8%, FNB -2.7%, MRTN -1.9%, FE -1.2%, WTFC -0.9%, BGC -0.4%, TXN -0.2%

Companies trading lower in after hours in reaction to news: - BBSI -5.4% (reached agreement in principle for a workers' compensation insurance arrangement with ACE Group to provide coverage to BBSI employees in California beginning in the first quarter of 2014), - NKTR -5.3% (filed mixed securities shelf offering), - KERX -3.9% (commenced a $90 mln underwritten public offering of shares of its common stock), - SPLK -1.5% (announced proposed follow-on offering of 6 mln shares of common stock), - GTI -1.2% (provided update and reconfirmed the savings targets on its previously announced global rationalization initiatives; efforts related to supply chain efficiencies are on track, and co continues to expect $100 mln of cash flow improvement), PODD -1.1% (appointed Patrick Ryan as Chief Operating Officer)

>>> IBM on Conference Call; stock trading at $181.98 in after hours

IBM on Conference Call; stock trading at $181.98 in after hours

Have been impacted by the depreciation in the yen; expect to see continued headwinds in 2014... Services: were down 2% y/y in Q4; see a decline in sales into existing base accounts; Europe grew for the second consecutive quarter; GBS focused on front end digital service growth... generated Q4 cash flow of $8.1 bln... expects at least $18 in operating EPS in 2014... feel very good about the investments made in the software and its profit growth trajectory as enter 2014... From a geographic perspective, performance and growth market was mixed the disappointing overall.... Americas revenue was down 2% year-to-year.... Western Europe can perform in line with the market, and hereto had good software performance... Accounts Receivable provision was up nearly $60 million year-to-year; reserve coverage is up nearly 60 basis point the flat versus September.... M&A- do have capacity to integrate any number of those deals at a single time; not constrained; can do a series of small deals.

>>> Winter Storm Warning in NYC and Southern NY State : Active for next 13 hours

Winter Storm Warning in NYC and Southern NY State

Active for next 13 hours
Locations: Bronx; Kings (Brooklyn); New York (Manhattan); Northern Nassau; Northern Queens; Richmond (Staten Is.); Southern Nassau; Southern Queens
Show less
Posted 1 hour, 17 minutes ago – National Weather Service

How likely:How soon:How severe:
The original text for this alert has been automatically reformatted to correct capitalisation.

Winter Storm to impact the region through tonight.

Winter Storm Warning remains in effect until 6 am EST Wednesday.

Locations: New York City and western Long Island.
Hazard types: Heavy snow and blowing snow.
Accumulations: snow accumulation of 8 to 12 inches.
Winds: north 15 to 25 mph with gusts up to 35 mph.
Wind chills, as low as 10 below zero late tonight.
Temperatures: dropping through teens to around 10 above by Daybreak.
Visibilities: one quarter mile or less at times.
Timing: snowfall will continue through tonight, tapering off early Wednesday morning. The Heaviest snowfall will occur late through this evening.
Impacts: falling, blowing, and drifting snow will cause hazardous travel and walking conditions across the area. Impacting the late afternoon and evening commute. Snow removal will be difficult this afternoon through tonight. Prolonged exposure to frigid cold and low wind chills could cause Frost Bite. Dress Appropriately.

WSJ : Finding the Active Ingredient in Dow Chemical

Finding the Active Ingredient in Dow Chemical
Dan Loeb wants Dow Chemical DOW +6.64% to go down a path it was probably already going to take.

The activist hedge-fund investor's Third Point said in a quarterly letter dated Tuesday that a new position in Dow counts as its biggest investment. It went on to say Dow should separate its petrochemicals business from its specialty-chemicals business.

The reason: The shares have "woefully underperformed over the last decade," said Third Point, noting that Dow had returned just 46% including dividends over the 10 years ended Jan. 10. That compared with returns of 101% for the S&P 500 and 199% for the S&P Chemicals index.

Over a shorter time, however, Dow shares have done well. They returned 42% last year, topping the S&P 500's total return of 32%. Much of that outperformance probably reflected the competitive advantage it has gained at its U.S. facilities as a result of cheap natural-gas liquids, as well as steps it has taken to streamline its business. That included the announcement in December of plans to exit 40 facilities that produce chlorine, epoxy and other commodity chemicals.

Some of the gain, though, was probably due to ongoing chatter that activist investors might target the firm.

Activists or no activists, Dow is probably on course to eventually split off its commodity chemical business to get investors to focus on its higher-margin specialty-chemical business. A sum-of-the-parts analysis suggests the combined company should fetch $75 a share, according Hassan Ahmed of Alembic Global Advisors, compared with around $46 Tuesday.

But if Dow was going to eventually split anyway, the lift Third Point has given its shares might spur it to move more quickly. Given the stock is trading at its highest level since 2007, investors think something is in the works.

Dow might not have to heed Mr. Loeb's call. But it will have to address those market expectations.

>>> Advanced Micro reports EPS in-line, beats on revs; guides Q1 revs in-line

Advanced Micro reports EPS in-line, beats on revs; guides Q1 revs in-line

Reports Q4 (Dec) earnings of $0.06 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.06; revenues rose 37.1% year/year to $1.59 bln vs the $1.54 bln consensus.
Gross margin was 35 percent in Q4 2013. Gross margin decreased 1 percentage point sequentially. Q4 2013 gross margin included a $7 million benefit from the sale of inventory previously reserved in Q3 2012 as compared to a similar benefit of $19 million in Q3 2013.
Cash, cash equivalents and marketable securities balance, including long-term marketable securities, was $1.2 billion at the end of the quarter, in line with expectations.
Co issues in-line guidance for Q1, sees Q1 revs of $1.287-1.382 bln vs. $1.36 bln Capital IQ Consensus Estimate.

>>> Texas Instruments reports EPS in-line, beats on revs; guides Q1 EPS towards

Texas Instruments reports EPS in-line, beats on revs; guides Q1 EPS towards the low end of expectations, revs in-line
Reports Q4 (Dec) earnings of $0.46 per share, in-line with the GAAP Capital IQ Consensus of $0.46 and guidance of $0.44-0.48; revenues rose 1.6% year/year to $3.03 bln vs the $2.99 bln consensus and guidance of $2.92-3.04 bln.

Co issues guidance for Q1, sees EPS of $0.36-0.44 vs. $0.44 GAAP Capital IQ Consensus; sees Q1 revs of $2.83-3.07 bln vs. $2.95 bln Capital IQ Consensus. TI's fourth-quarter results and first-quarter outlook include restructuring charges for cost-saving actions in Embedded Processing and in Japan. The company is not exiting any markets or discontinuing any existing products but will reduce investments in markets that do not offer sustainable growth and returns. The savings will reflect the elimination of about 1,100 jobs worldwide. The charges are expected to be about $80 million, of which $49 million was included in the fourth quarter of 2013 and about $30 million will be included in the first quarter of 2014. The co expects to achieve annualized savings of about $130 million by the end of 2014.

"Our fourth quarter capped a year in which each quarter's performance increasingly reflected the impact of structural changes we've made to focus TI on Analog and Embedded Processing, where the diversity and longevity of our positions are assets. "The combined revenue from Analog and Embedded Processing grew 12 percent over last year's fourth quarter and comprised 82 percent of total revenue. Individually, Analog was up 12 percent and Embedded Processing was up 11 percent from a year ago."

>>> Xilinx beats by $0.01, misses on revs; guides Q4 revs in-line

Xilinx beats by $0.01, misses on revs; guides Q4 revs in-line

Reports Q3 (Dec) earnings of $0.55 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.54; revenues rose 15.1% year/year to $587 mln vs the $600.62 mln consensus.
Co issues in-line guidance Xilinx sees Q4 revs +2-6% sequentially (~$598.5-622.0 mln) vs $622.14 mln Capital IQ Consensus Estimate.
Gross margin is expected to be approximately 68%.
Operating expenses are expected to be approximately $226 million, including $2.5 million of amortization of acquisition-related intangibles.
Other income and expenses are expected to be a net expense of approximately $7 mil

WSJ : Does IBM Love or Hate Itself?

Does IBM Love or Hate Itself?
Stock Buybacks Make Firms Look Attractive, but Also Deprive Them of Capital for Real Investment

There is a rare type of organism that eats itself alive. One of them is International Business Machines Inc. IBM -2.67%

For the last 20 years, IBM has been an avid, methodical buyer of its own stock. In 1993, it had 2.3 billion shares outstanding. Today it has 1.1 billion, shrinking at more than 1% per quarter over the past few years. At that pace, there will be no more publicly traded IBM shares left by 2034.

Rejoice! You might regard all this buying as good news for shareholders. Buybacks push up earnings per share. They flaunt management's confidence in the future. And they are a reason why retail investors have held on so lovingly to IBM stock.

Look deeper at IBM and dozens of mature U.S. companies, and you can sketch a different, more ominous, story: That CEOs are in fact stuck, reluctant to build new plants, launch products or pursue an acquisition.

By rote and by fear, they are pitching their billions into buybacks, nearly $1 trillion from the 100 largest companies in the S&P since 2008. In the 12 months ending in September, the total dollar amount of all corporate buybacks increased by 15% from a year earlier, according to S&P Dow Jones Indices.

Cheap money from the U.S. Federal Reserve helps sweeten this deal. And one can't underestimate the threat from shareholder activists, who now patrol the market like prison guards with billy clubs. Overspend and get whacked.

Other investment just hasn't materialized at the same rate. Among the entire S&P 500, the median change in capital spending is 16.7% over the past five years, based on a screen of stocks using CapitalIQ data.

The danger is that those buybacks have been substituting for substantive future investment, be it software engineers, new products, or extra marketing. This has two effects:

It stymies the economic growth originally intended by the Fed. And it could eventually leave businesses ill-equipped to adapt to changes in their industries, especially technology-intensive ones. Hewlett-Packard Co. HPQ +0.34% pumped tens of billions into (high-price) buybacks from 2003 to 2011 and is now is struggling to find its way.

IBM competitor Amazon.com Inc., AMZN +1.86% meanwhile, continues to pour in big dollars into actual technology. It grew its capital spending 14-fold since 2008, and R&D spending fivefold.

Investor Jim Chanos is starting to worry about just this problem. As one of Wall Street's best-known short sellers, he's quietly been building an investment thesis around the idea that buybacks are a sign of corporate weakness, not strength.


Introducing WSJD, the Journal's new home for tech news, analysis and product reviews.

Mr. Chanos shared his analysis with me from a bright conference room in his Midtown Manhattan office. We were both left agog at what the numbers seem to show about how companies are allocating their dollars. Can this really be right?

By his count, for instance, the recent return on IBM's buybacks is about 6.5%. Not a terrible number. But IBM's return on what he dubs its "net business assets"—actual stuff used in actual business—is far better. It is 18.1%.

Wouldn't this be a sign to immediately raise investment and shrink buybacks?

Maybe IBM has concluded there is no better place to put its money. Or that it is simply doing what stockholders want. It is hard to tell.

"Our capital allocation model drives reinvestment in the business through R&D, capital expenditures, and acquisitions, it pays the dividend every quarter since 1916, and it returns excess capital to shareholders through share repurchase," said IBM spokesman Michael Fay. "We can do both, invest and return cash, and we do."

IBM is no outlier. Honeywell International Inc. HON +0.71% has been earning about 3.8% on its buybacks, according to Mr. Chanos's numbers, compared with 13.4% on business assets. Honeywell spokesman Robert Ferris said that the company's total return—which combines share-price appreciation and dividends—had outpaced its peers and the broader S&P 500 over the past decade. During that stretch, Honeywell has split cash flows roughly in two—between business investment and returns to shareholders, Mr. Ferris said.

Oracle Corp.'s ORCL -0.26% numbers also showed a large split, between 4.8% return on buybacks and 32.1% on assets. Oracle declined to comment.

"Corporate CEOs, with their massive share-buyback programs are in effect investing in the stock market rather than in expanding business opportunities at their companies," said Mr. Chanos. "Either they expect higher returns from the market, or lower returns in their business, or some combination of both. Given their questionable track record in timing the market, this may be a cause for concern."

Mr. Chanos said that he was shorting stocks based on this thesis. He wouldn't specify which ones.

As for IBM, buybacks still rule. It has raised the amount in recent years and since 2007 has spent $60.4 billion. The company just made announcements about new investments in data centers and its Watson analytics product. But annual capital spending and research and development have been roughly flat for nearly a decade.

Many on Wall Street are now beginning to regard IBM as a company more focused on its stock price than its long-term path. "Only IBM knows what it might be forgoing," says Barclays BARC.LN -0.78% analyst Ben Rietzes. But "one can make an argument for organic investments," especially with revenues shrinking 3% and fresh competition from cloud-computing competitors.

This question of investment isn't a conundrum just for IBM. It is for every CEO protective of his job, unsure about the economy, and fearful of the activists with the prison-guard eyes.

And so here it is in 2014, five years since the worst of the financial crisis. Are they playing to win? Or still playing not to lose?

(Makor) Top Trading Ideas : LONG PRADA / short luxury

Top Trading Ideas - luxury switch / listing arb

- SWITCH FROM TOD'S AND BURBERRY INTO PRADA LONG / VS. SHORT THE WHOLE LUXURY SECTOR

We strongly recommend to be long Prada (1913 HK) and short the luxury sector as a hedge - in particular Brunello Cucinelli, Ferragamo, and Kering. Prada is by far the cheapest and most profitable stock in the luxury space. The stock has been hit harder than the others in a very weak luxury sector. One of the reasons may be from the HK listing, where the shares may find it hard to be efficiently valued on the same basis as the companies listed in Italy and France. The significant price dislocation, along with a clear relative value advantage, and mean reversion justify a significant position in this long/short trade. We had been recommending long Prada, Tod's and Burberry vs. short Cucinelli, Ferragamo, and Boss. After the better performance of Tod's and Burberry, we now recommend concentrating on a long luxury allocation on Prada. FULL REPORT ATTACHED