>>> Asian Update

Asia Mid-Session Market Update: China official PMIs slow but remain in expansion; Bulk of Asia indices remain closed for holiday

***Friday US markets on close: Dow -0.3%, S&P500 -0.5%, Nasdaq -0.9%***
- At the close: VIX 14.0 (+0.7pts); Treasuries: 2-yr 1.20% (-2bps), 10-yr 2.45% (-3bps), 30-yr 3.06% (-2bps)
- Best Sector in S&P500: Financials
- Worst Sector in S&P500: Technology

***Weekend US Corporate Headlines***
- DEPO: KKR remains interested in acquiring Depomed - NY Post
- TSLA: Tesla Model X owner files suit in California, claiming the SUV suddenly accelerated while parked - press
- DIS: "Rogue One" remained the top film at the N America box office with $49.7M (3rd consecutive week)

***Politics***
- (US) Incoming White House Press Sec Spicer: Trump plans to repeal many of Obama's regulations and executive actions on his first day in office - US press
- (KR) South Korea impeached President Park denies any wrongdoing, plays down aides influence and says she was "totally framed"

***Key economic data:***
- (CN) CHINA DEC MANUFACTURING PMI (GOVT OFFICIAL): 51.4 V 51.5E (5th consecutive month of expansion); Non-manufacturing PMI: 54.5 v 54.7 prior
- (HK) Macau Dec Casino Rev 19.8B Patacas v 18.8B m/m, +8% y/y (5th consecutive increase) v 14.4% prior; 2016 Casino Rev 223.2B Patacas, -3.3% y/y
- (KR) SOUTH KOREA DEC PMI MANUFACTURING: 49.4 V 48.0 PRIOR (5th consecutive contraction)
- (KR) SOUTH KOREA DEC TRADE BALANCE: $7.0B V $7.1BE

***Asia Session Notable Observations, Speakers and Press***
- Korea's Kospi the only major market open in the first trading session of the year; US and Europe remain closed in extended New Years holiday; FX majors also in extremely narrow ranges.
- China Dec official manufacturing PMI posts 5th straight expansion, though slower than expected; New export orders in expansion for 2nd straight month; Employment component remains in contraction at 48.9 v 49.2 m/m; Input prices at multi-month highs of 69.6 v 68.3 m/m.
- PBoC chief economist notes the new rules on cash transactions and overseas transfers are not capital controls after Chinese central bank increased controls on individuals' FX purchases to convert up to the equivalent of $50K. Recall late last week, PBoC also requested that banks report yuan trading over CNY50K vs CNY200K previously.
- South Korea PMI posts its 5th straight contraction as employment declined at fastest rate in over 2 years, even as new export orders improved for the first time in 5 months. Earlier, South Korea trade balance was in line with expectations, with exports rising for the 2nd straight month by +6.4% v 4.6%e.

China:
- (CN) China Stats Bureau: Manufacturing PMI slowed due to environmental protection measures, but expansion in high-technology and consumer goods sectors accelerated - Chinese press
- (CN) China PBoC chief economist Ma Jun: New rules on cash transactions and overseas transfers are not capital controls - Chinese press
- (CN) China President Xi calls for more efforts on construction of free trade zones (FTZ) - China Daily
- (CN) Hundreds of flights in China were cancelled and many highways shut on Jan 1st due to heavy smog conditions - Chinese press

Japan:
- (JP) Japan Center for Economic Research (JCER): Nov GDP estimated at +0.4% m/m; 3rd consecutive increase - Nikkei
- (JP) Japan Coast Guard: Four China vessels entered into disputed waters near Senkaku islands - press

***Asian Equity Markets/Futures (23:30ET)***
- Nikkei225 closed, S&P/ASX closed, Kospi +0.2%, Shanghai Composite closed, Hang Seng closed
- Equity Futures: S&P500 closed, Dax closed, FTSE100 closed

***FX ranges/Commodities/Futures/Fixed Income (23:30ET):***
- EUR 1.0515-1.0525; JPY 116.70-116.85; AUD 0.7200-0.7220; NZD 0.6915-0.6925
- Feb gold closed, Feb crude oil +0.2% at $53.90/brl, Mar copper closed
- GLD: SPDR Gold Trust ETF daily holdings fall 1.2 tonnes to 822.2 tonnes; 25th straight decline; Lowest since Apr 29th
- (KR) South Korea sells 3-year bonds; avg yields 1.635%

Recode.net : Courier-loving Trump claims he knows ‘things that other people don’

Courier-loving Trump claims he knows ‘things that other people don’t know’ about hacking
In yet another unproven claim, he said he will reveal all later this week.
Last night, President-elect Donald Trump made a series of unusual — okay, outright outlandish — claims about hacking and computers that only served to make what has become a thorny issue for his incipient administration much worse.
According to pool reports, Trump continued to try to undercut substantive worries about Russian interference in the election by essentially saying no one — including intelligence agencies, all of whom posit that Russia did engage in hacking — can ever know exactly what happened.
“I just want them to be sure, because it’s a pretty serious charge,” said Trump about the CIA, the FBI and everyone else with cyber expertise, who all agree Russia was involved. “I think it’s unfair if they don’t know.”
Except him apparently, because having zero tech background except a peculiar talent for writing mean tweets qualifies him as a cyber security expert.
No, really, he is, according to him. “And I know a lot about hacking. And hacking is a very hard thing to prove. So it could be somebody else,” he said, all duded up in a tux, looking like James Bond. “And I also know things that other people don’t know, and so they cannot be sure of the situation.”
Trump then claimed he would reveal all on Tuesday or Wednesday, as if we were all living in some really bad season of “Homeland.”
All I know: Get me Carrie Mathison, stat!
But Trump did not stop at that, sounding like your really ill-informed uncle at the holidays.
“I don’t care what they say, no computer is safe,” said Trump, who has previously claimed the hack of DNC servers could have been done by “someone sitting on their bed weighing 400 pounds.”
Then Trump dragged his 10-year-old son — whose tech skills he has touted before — into the controversy. “I have a boy who’s 10 years old; he can do anything with a computer,” he said about Barron.
And then even more, giving out a tip on how to avoid potential hackers like, say, his own child: “You want something to really go without detection, write it out and have it sent by courier.”
Courier? Courier? Let me just express my incredulity again: COURIER?!?!!?
By the way, couriers can be hacked — see the Revolutionary War — pretty easily, especially if they are riding horses.
It’s all just another feint in Trump’s efforts to try to dismiss the serious issue of Russian hacking by sowing unsubstantiated doubt into the situation. Earlier this week, he issued a statement that we all should “move on” from the topic. Of course, what else would he say, since allegations that he got his job in part due to the nefarious efforts of Russian leader Vladimir Putin undercut his authority drastically.
Trump has made that notion worse by tweeting a series of mash tweets praising Putin, even as the Obama administration aimed a series of retaliatory measures against Russia over the situation, including the expulsion of 35 diplomats suspected of intelligence-gathering violations.
It’s nice to know that top Silicon Valley leaders were heartened by Trump’s tech knowledge at their meeting with him recently.

FT : Inmates escape in ‘armed attack’ on Bahrain jail

Inmates escape in ‘armed attack’ on Bahrain jail
Manhunt under way after policeman killed in assault labelled ‘terrorist operation’

Inmates have escaped after an “armed attack” on a high-security prison in Bahrain, with one policeman killed in what the Gulf state called a “terrorist operation”.

The interior ministry said the escapees from Jaw prison included a number of prisoners held on terrorism-related charges. “Policeman Abdulsalam Saif was martyred trying to deal with the terrorist elements,” it said.
The authorities declined to reveal how many prisoners were on the run but said a manhunt was under way.
Bahrain’s jails have swelled with thousands of inmates since a crackdown on dissent after pro-democracy protests in 2011 led by the Shia majority against the minority Sunni ruling family.
The government’s claim of an “armed attack” raised concerns about the radicalisation of fringes of the Shia opposition. Activists, however, caution that the state’s highlighting of so-called “terrorist operations” diverts attention from its own abuses.
What the government characterises as security and judicial reforms, activists regard as harassment with the use of judicial powers to criminalise political protest.
Jaw prison, in the sparsely populated south, suffered riots in 2015 and has seen other breakouts. Last year, 17 prisoners escaped another jail but most were rearrested the next day.
Jaw’s defences have been fortified and consist of three layers of walls, making breaking out “almost impossible”, according to former inmates.
Pro-regime voices were quick to pronounce the breakout as proof that the inmates were terrorists, rather than peaceful protesters.
Ever present, albeit low-intensity, unrest in Bahrain reflects one of the deepest sectarian sores in the Middle East. The government has in recent months moved to bar the country’s main opposition group and revoke the citizenship of its leading Shia cleric.
The ruling Al Khalifa family is strongly backed by the Sunni Gulf states as a bulwark against Iranian interference in the region.
Saudi Arabia led Gulf Arab troops on to the archipelago in 2011 to back the government’s bloody quelling of pro-democracy protests that had taken off in the wake of Arab spring unrest in north Africa.
Riyadh remains concerned that arch-rival Tehran is intervening in Syria, Iraq and Yemen.
Claims that Iran is behind the unrest in Bahrain are denied by opposition leaders who say they want a more democratic system and an end to discrimination.

>>> What to look at this Week End 31st of December & 1st of January 2017

Yearly Performance
Dow +13.42% S&P +9.54% Nasdaq +7.50% Russell +19.48% Brazil +38.93% Mexico +6.20% EuroStoxx +0.70% FTSE +14.43% CAC +4.86% Dax+6.87% Ibex -2.01% MIB -10.20% SMI -6.78% Nikkei +0.42% Hang Seng +0.39% CSI -11.28% Shanghai -12.30%
The last week of trading saw a mixed global reaction to the year's end. The FTSE managed to reach new all-time highs and closed the week up 1.4%, while the Shanghai and Hang Seng also finished up on the week. The US instead had a hard time during the last four sessions of the year as profit taking and pension fund rebalancing, in a high vacation period, took its toll. Trading volumes have reflected the absenteeism with average volumes on the NYSE at 35% below the 3 month average. For the week, after getting to within 20 points of the 20,000 milestone the DJIA lost 0.8%, while the Nasdaq dropped 1.5%, and the S&P500 fell 1.1%, causing the S&P to fall just short of a double digit percentage gain on the year.

Macro :
- China December Manufacturing PMI at 51.4; Est. 51.5
- U.K. Sets New Penalties for Enablers of Offshore Tax Evasion
- ECB to Start a Review of EU Banks’ Internal Models: Messaggero
- France Foiled 17 Attacks This Year, Prime Minister Tells JDD
- Einhorn’s Greenlight Fund Gains 9.4% in 2016
- Spain Wants Good Relations With U.K. to Continue, Rajoy Says
- Spain Bad Bank Sareb Exceeded EU1.5B in 2016 Institutional Sales

Keep an eye :
- AI FP : Air Liquide Completes Aqua Lung Sale to Montagu Private Equity
- AAPL US : Apple to Slice IPhone Production 10%, Calculations Show: Nikkei
- AAPL US : Apple Suppliers Fall After Report on IPhone Production Cut
- BMPS IM : Paschi Plans Bonds for Jan., Feb.; Weighs ‘Bad Bank,’ Sole Says
- BMW GY : BMW to Rely on Combustion Engines for Decade, Krueger Tells BZ
- BP IM : Banco Popolare: Got Interest Expressions on 178,859 Shares
- BPM IM : Banco BPM to Hold First Board Meeting on Sunday: Messaggero
- CON GY : Continental AG CEO Sees Jobs Endangered by E-Car Trend: WamS
- CSGN VX : Tanzania Says Seeking $300m Loan From Credit Suisse: Reuters
- FCC SM : FCC delisting offer to run from 30 December 2016 to 13 February 2017
- ITV LN : ITV Said Preparing for Exit of CEO Crozier, Finance Head: Sky
- LLOY LN : Lloyd’s May Pay Record $50m on Fisher Claim: Insurance Insider
- MC FP : Hengdeli Holdings to sell two business units to its chairman for CNY 3.5bn (MC owns 5.97% of Hngdeli)
- MC FP : LVMH’s Biver Says Smartwatches Still in Their Infancy: Blick
- MMT FP : TF1 Audience Fell to 20.4% in 2016, M6 Rose to 10.2%: Le Figaro
- MKS LN : M&S to Lift Some Prices 15% After Supplier Rebellion: S. Times
- UG FP : French New Car Registrations Rose 5.8% in Dec., 5.1% for 2016
- RNO FP : French New Car Registrations Rose 5.8% in Dec., 5.1% for 2016
- UHR VX : Hengdeli Holdings to sell two business units to its chairman for CNY 3.5bn (UHR owns 9.16% of Hngdeli)
- TSLA US : Elon Musk Says HW2 Autopilot Software Uploaded to 1k Cars Today
- TFI FP : TF1 Audience Fell to 20.4% in 2016, M6 Rose to 10.2%: Le Figaro
- VWS DC : Vestas Gets 67 MW Order and 29 MW Order in U.S.
- VIV FP : Vivendi Said to Seek Mediaset Board Seats Amid Fight for Control

NYT : Netflix Could Be Practical Magic for Disney

Netflix Could Be Practical Magic for Disney

Walt Disney may be looking for a bit of two-for-one magic. The $160 billion entertainment conglomerate is on the hunt for technology to connect consumers directly with its movies and television shows. It is also in need of a successor to its chief executive, Bob Iger. A Netflix acquisition including its founder, Reed Hastings, might just answer both dreams — though it would be pricey.
The Magic Kingdom lost some of its zip in 2015, when Mr. Iger indicated that fewer people were paying for ESPN, its cable sports network and profit engine. Shares of Disney are off about 20 percent since then.
All the same, the company has been one of the forward thinkers in its business when it comes to bypassing traditional cable boxes. ESPN is part of new packages like Dish Network’s Sling TV. Mr. Iger splashed out $1 billion for a one-third stake in Major League Baseball’s streaming technology, with the option to buy it out.
Disney could, however, think much bigger. Netflix could provide more streaming know-how and 87 million subscribers worldwide. Mr. Hastings has defied the odds in developing his 20-year-old creation from mail-in DVDs to an online leader and content producer. He could be a candidate to replace Mr. Iger, who is slated to step down in 2018.
Netflix would be expensive, though. It trades at well over 100 times next year’s estimated earnings, compared with Disney’s 16 times multiple. Assuming a standard 30 percent premium, the purchase would cost $65 billion. To match the $15 billion uplift from the market price in present-value terms, Mr. Iger would need to find over $2 billion in annual cost savings. That is a big chunk, but Disney could plausibly substitute a third of the content that Mr. Hastings plans to spend more than $6 billion a year on to make and buy.
Netflix would still offer Disney an inadequate financial return. Sometimes, though, there is more at stake, like leapfrogging into the latest technology and securing the right leader. The House of Mouse paid nearly 50 times earnings for Pixar in 2006, but the purchase solved strategic problems and reinvigorated its animation studio.
Asked recently about acquisitions including Netflix, Mr. Iger did not get specific but did not rule anything out, either. Lots could go awry with a big, bold purchase, from shareholder backlash to culture battles. Still, the storyboard is something Disney might want to sketch out.

NY Post : Massive ‘anomaly’ lurks beneath ice in Antarctica

Massive ‘anomaly’ lurks beneath ice in Antarctica

Scientists believe a massive object that could change our understanding of history is hidden beneath the Antarctic ice.

The huge and mysterious “anomaly” is thought to be lurking beneath the frozen wastes of an area called Wilkes Land. The area is 151 miles across and has a minimum depth of about 2,700 feet.

Some researchers believe it is the remains of a truly massive asteroid more than twice the size of the Chicxulub space rock that wiped out the dinosaurs.

If this explanation is true, it could mean this killer asteroid caused the Permian-Triassic extinction event, which killed 96 percent of Earth’s sea creatures and up to 70 percent of the vertebrate organisms living on land.

However, the wilder minds of the internet have come up with their own theories, with some conspiracy theorists claiming it could be a massive UFO base or a portal to a mysterious underworld called the Hollow Earth.

This “Wilkes Land gravity anomaly” was first uncovered in 2006, when NASA satellites spotted gravitational changes which indicated the presence of a huge object sitting in the middle of a 300-mile-wide impact crater.

Now the internet has lit up with discussions of the mysterious observations after the UFO-hunting crew Secure Team 10 posted a YouTube video about the anomaly.

“To this day, scientists have no idea or way to discover exactly what is buried deep under this thick ice shelf,” the video narrator said.

“This continent has been shrouded in a mystery of its own for years now.”

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Ice floats near the coast of West Antarctica.Getty Images
Secure Team 10 suggested the Nazis built secret bases in Antarctica during World War II, which were designed to be used by flying saucers.

The UFO hunters added: “There is some evidence of this coming to light in recent years, with images purporting to show various entrances built into the side of mountains, with a saucer shape and at a very high altitude.”

“This begs the question: how would you enter these entrances without something that could fly and was the same shape as the hole itself?”

Secure Team also suggested the US Navy led a mission to investigate the mysterious continent.

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A mountain rises out of the West Antarctic Ice Sheet.Getty Images
This expedition was called Operation High Jump, which conspiracy theorists believe was an attempt to find the entrance to a secret world hidden underneath Earth.

However, the scientist who first spotted the anomaly believes it is actually evidence of a massive impact crater.

“This Wilkes Land impact is much bigger than the impact that killed the dinosaurs, and probably would have caused catastrophic damage at the time,” said Ralph von Frese, who was a professor of geological sciences at Ohio State University when he discovered the “killer crater” on 2006.

“All the environmental changes that would have resulted from the impact would have created a highly caustic environment that was really hard to endure. So it makes sense that a lot of life went extinct at that time.”

NY Post : Disney could receive $50M for Carrie Fisher’s death

Carrie Fisher’s death could be a windfall for Disney.
The entertainment company, the distributor of “Star Wars: The Force Awakens” and the next two films in the franchise, could receive $50 million thanks to an insurance policy the company took out in the event Fisher was unable to fulfill her three-film contract.
It’s set to be the largest single personal accident insurance claim payout ever, according to Insurance Insider.
Fisher reprised her career-making role of Princess Leia from the original 1977 “Star Wars” flick for the new trilogy. “The Force Awakens,” released in December 2015, made $2.068 billion at the box office worldwide.
Filming on “Episode VIII” was already complete at the time of Fisher’s death on Dec. 27 at the age of 60, after she suffered a heart attack aboard a flight from London to Los Angeles.
Fisher was due to appear in “Episode IX,” forcing the film’s creators to either rewrite the plot or possibly use visual effects to insert her in the film. The latter was implemented for “Rogue One,” in which the late Peter Cushing reprised his role as Grand Moff Tarkin.
It’s unclear if a similar insurance policy was taken out on Fisher’s co-star, Mark Hamill.
An autopsy Friday determined Fisher’s cause of death was “not obvious” and that further testing will be required, TMZ reported.
Fisher’s mother, Debbie Reynolds, passed away the day after her daughter’s death. She was 84 years old.
Hamill gave his first extended interview after the mother-daughter pair’s passing, calling the two “mothering types, both opinionated and determined.”
“I can’t think of [Fisher] in the past tense. I think of her in the present tense, in the future tense,” Hamill told Entertainment Weekly. “I’m angry and so sad.”

WSJ : China’s Factory Activity Remains in Expansionary Territory, Despite Decemb

China’s Factory Activity Remains in Expansionary Territory, Despite December Slide
Index has stayed above mark that separates expansion from contraction for five straight months

BEIJING—A key gauge of factory output edged down last month, pointing to slowing momentum in China’s economy, though leaving it on target to hit the government’s growth target of at least 6.5% for 2016.
China’s official manufacturing purchasing managers index fell to 51.4 in December from 51.7 the previous month, according to official data released Sunday, indicating the world’s second-largest economy continued to expand, though at a slower rate. The index has stayed above the 50 mark that separates an expansion of activity from a contraction for five straight months.
“The momentum is becoming less strong, but it’s still in expansionary territory,” said HSBC economist Ma Xiaoping. “The momentum will weaken further, but not likely run into contraction in coming months.”

The slightly weaker PMI reading for December comes as Beijing pulls back from the easy money policy it depended on much of the year to bolster the economy. Policy makers are confident the economy will reach the annual growth target of 6.5% to 7%, while they are growing increasingly concerned about rising corporate debt levels, economists said. China’s nonfinancial corporate debt is about 145% of gross domestic product, which is “high by any measure,” according to the International Monetary Fund.
Components of the PMI showed stable demand, which would likely cushion any slowing of growth, economists said. A subindex measuring new orders held steady from 53.2 in November, while a production subindex decreased to 53.3 from 53.9, the government’s statistics bureau said.
“As long as there is demand, the production will not be too much affected,” said Zhang Yiping, an economist at China Merchants Securities.
Economic growth in each of the first three quarters of 2016 was 6.7% and the fourth quarter is expected to come in close to that figure when results are announced later this month.
At a key economic conference last month, Chinese leaders signaled less expansionary policies for this year and called for dealing with soaring prices in residential property and emerging bubbles other parts of the economy. Such policies, economists said, could create headwinds for manufacturers, particularly large state-owned companies in industries suffering from overproduction and high debt levels.
In recent months, Beijing’s efforts to cool the property market have begun to affect other parts of the economy. Restrictions have been imposed for purchasing homes in at least 20 major real-estate markets in a bid to ease speculative pressure that is starting to cool this hugely important sector.
This deceleration is starting to cool factory output in industries related to raw materials, such as copper and steel production, and construction and interior design, said HSBC’s Ms. Ma.

Manufacturing activity was helped in December by improved exports, which rose 0.1% year on year in November, their first increase since March and a reversal of October’s 7.3% decline.
Meanwhile, China’s official nonmanufacturing purchasing managers index, a measure of activity in the services sector, fell to 54.5 in December from 54.7.