>>> Asian Update

Asian Mid-session Update: ADB cuts Asia and China GDP forecasts; Japan trade deficit smaller as imports fall


***Economic Data***
- (JP) JAPAN NOV MERCHANDISE TRADE BALANCE: -¥892B V -¥992BE; ADJ TRADE BALANCE: -¥925B V -¥983BE
- (CN) China Dec ANZ Roy Morgan Consumer Confidence Index: 155.5 v 157.1 prior
- (AU) AUSTRALIA NOV SKILLED VACANCIES M/M: -0.8% V 0.0% PRIOR (largest decline in 16 months)
- (AU) AUSTRALIA NOV WESTPAC LEADING INDEX M/M: -0.1% V +0.1% PRIOR
- (NZ) NEW ZEALAND Q3 CURRENT ACCOUNT BALANCE (NZ$): -5.0B V -5.3BE; 2nd quarter of deficit
- (SG) SINGAPORE NOV ELECTRONIC EXPORTS Y/Y: -10.2% V -2.5%E; NON-OIL DOMESTIC EXPORTS M/M: 2.9% V 0.3%E; Y/Y: 1.6% V 3.9%E
- (KR) South Korea Nov PPI Y/Y: -0.9% v -0.8% prior; 4th month of decline

***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +0.5%, S&P/ASX +0.6%, Kospi +0.1%, Shanghai Composite +1.0%, Hang Seng -0.2%, Mar S&P500 +0.2% at 1,969

***Commodities/Fixed Income***
- Feb gold +0.3% at $1,197, Jan crude oil -1.8% at $54.93/brl, Copper -0.2% at $2.86/lb
- (US) API PETROLEUM INVENTORIES: CRUDE: +1.9M (2nd consecutive build) v -2Me, GASOLINE: +2.8M v +2Me, DISTILLATE: -1M v +1Me
- (CN) China iron ore inventory at 34 ports 99.0Mt, down from 102Mt last Friday, first time below 100Mt since Feb 14th - Chinese press
- GLD: SPDR Gold Trust ETF daily holdings fall 1.8 tonnes to 721.6 tonnes ; 1-week low
- SLV: iShares Silver Trust ETF daily holdings fall to 10,606 tonnes from 10,648 tonnes prior
- (CN) China MoF sells 10-yr bonds at 3.77% yield vs 3.75%e
- USD/CNY: (CN) PBoC sets yuan mid point 6.1137 v 6.1182 prior setting (strongest Yuan setting since Feb 19th)
- (JP) BOJ offers to buy ¥450B in 1-3yr JGB, ¥450B in 3-5yr JGB, ¥400B in 5-10yr JGB

***Market Focal Points/Key Themes/FX***
- Regional indices are modestly higher despite the final hour selloff on Wall St and continued uncertainty surrounding Russia, with short-covering flows heading into Wednesday's FOMC policy statement. According to some surveys, more analysts are leaning in favor of the FOMC eliminating the "considerable time" language which would likely pave the way to the first rate hike some time in Q2 of next year.

- Asia Development Bank lowered developing Asia GDP forecast to 6.1% from 6.2% prior and 2015 to 6.2% from 6.4% made in September. Unlike that last report when ADB maintained China projections, today's note also cut China 2014 GDP forecast to 7.4% from 7.5% and 2015 to 7.2% from 7.4%. India GDP forecasts were affirmed at 5.5% in 6.3% respectively. Separately in China, ANZ chief economist speculated the govt would "likely tolerate a slower growth rate in the coming years, under the framework of new normal economy and will strike a balance among social, environmental, and economic targets."

- Japan put out a lower than expected trade deficit even though exports growth of 4.9% was below 7.0% expected, as imports registered an outright contraction of 1.7% against expected rise of 1.6%. This trend could continue, as collapse in oil prices has resulted in November's 13.9% contraction in crude import volume, up from 8.8% decline in the prior month. Japan Econ Min Amari has also set out to complete emergency economic measures by around Dec 27th.

- In Australia, Westpac leading index fell and the bank also lowered its 2015 GDP target to 2.7% from 3.2%. Resident Westpac economist said this marks "the tenth consecutive month where the growth rate in the index has been below trend", adding "RBA comments are discouraging for our call for an early cut (but) we are retaining our rate call given that much can change over the next six weeks." Also down under, New Zealand Q3 Current Account deficit was smaller than expected but still marked the widest deficit in nearly 6 years. Moody's announced it's comfortable with New Zealand AAA rating despite the Finance Ministry pushing back return to budget surplus by a year yesterday. AUD/USD and NZD/USD have been under some notable pressure in today's session despite the bounce in equities, falling about 0.8% to around 0.8150 and 0.7730 respectively.

***Equities***
US markets/ADRs:
- ASPX: Announces Positive Topline Results From Phase 3 Registration Trial of SD-809 for Chorea Associated With Huntington's Disease; +63.4% afterhours
- CERS: FDA approves first pathogen reduction system to treat plasma; +20.9% afterhours
- APP: Names Paula Schneider as CEO, Terminates Dov Charney; +20.7% afterhours
- PTRY: Said to be nearing a deal to be sold - financial press; +17.8% afterhours
- DRI: Reports Q2 $0.28 v $0.27e, R$1.56B v $1.55Be; +2.3% afterhours

Notable movers by sector:
- Consumer Discretionary: Japan Tobacco 2914.JP -7.0% (Japan may remove tax breaks)
- Financials: CITIC Securities 600030.CN +6.6%, Huatai Securities 601688.CN +2.1% (rumors China to relax capital requirement for brokers); Guotai Junan 1788.HK -9.1% (Dep CEO under investigation)
- Materials: Whitehaven Coal WHC.AU +4.0% (coal railings commenced); Henan Tongli Cement 000885.CN +10.0% (Henan Tianrui discloses 5% stake)
- Energy: Kansai Electric Power 9503.JP +3.4% (plans to raise power rates)
- Industrials: Boart Longyear BLY.AU -8.3% (shareholders to vote on bailout plan); Geely Automobile 175.HK -17.0% (guides FY14 lower); China Railway Construction Group 601186.CN +10.0% (to build 4 major projects)

>>> Catlin rumoured to be in line for takeover approach

Catlin rumoured to be in line for takeover approach

Catlin, the UK-listed insurer based in Bermuda, is rumoured to be a possible target for takeover, the Financial TImes reported.

The market report said Catlin’s share price rose to 582p, up 2.8%, on 16 December amid chatter that an approach could be on the cards.

The report noted that Catlin has been considered a possible target ever since its peer Brit Insurance was bought out by private-equity companies four years ago.

Catlin has a market capitalisation of GBP 2.087bn (USD 3.281bn).


Financial Times

>>> US Close Dow -0,65% S&P -0,85% Nasdaq -1,24% Russell -0,92%

Closing Market Summary: Stocks Slump With One Eye on Russia

The stock market endured a volatile session on Tuesday with investors keeping one eye on the oil market and one on the dollar/ruble exchange rate. The Russell 2000 (-0.1%) registered the slimmest decline while the S&P 500 settled lower by 0.9% after failing to hold its 100-day (1988) and 50-day moving averages (2001).

Yesterday evening, the Central Bank of Russia hiked its key interest rate by 650-basis points to 17.0% with the move aimed at halting the recent freefall in the ruble. The news gave a brief boost to the Russian currency, but the ruble was down more than 18.0% (77.93) against the dollar this morning, which invited concerns about potential economic and financial risks stemming from the continued plunge. This sent participants scrambling in search of safe havens, which boosted Treasuries and the yen.

Meanwhile in the commodity market, crude oil was down in excess of 2.5% this morning, but the energy component spiked off its low shortly after the start of the pit session. Oil was able to return to its flat line, but could not make a sustained move into the green, ending with a nine-cent loss at $55.87/bbl.

The rebound in crude occurred as equities climbed off their lows, while the ruble managed to reclaim its overnight loss. Also of note, the dollar/yen pair narrowed its decline to about 110 pips (116.70), allowing the Dollar Index (87.93, -0.53) to climb off its low. The index hovers just below its November high going into tomorrow's FOMC policy directive, which will be released at 14:00 ET.

While the FOMC statement is likely to acknowledge continued growth and strength in the U.S. labor market, it is unlikely that it will have a strong hawkish undertone considering the recent weakness in crude oil and the resulting impact on inflation.

Only two sectors ended the day in the green with energy (+0.7%) representing the lone advancer on the cyclical side. The energy sector was able to rally as participants deemed the growth-sensitive sector oversold on a short-term basis after losing 8.1% so far in December. Today's advance trimmed the sector's month-to-date loss to 7.0% with Dow component Chevron (CVX 101.70, +0.84) climbing 0.8%.

Also of note, the industrial ended on its flat line, owing its outperformance to defense contractors, and specifically, shares of Boeing (BA 124.25, +2.17). The stock jumped 1.8% after the company hiked its quarterly dividend 25.0% to $0.91 per share and increased its share repurchase plan to $12 billion.

The remaining cyclical sectors could not stay out of the red with consumer discretionary (-1.6%), financials (-1.0%), and technology (-1.5%) driving the market to fresh lows during afternoon action.

Notably, the tech sector trailed the broader market throughout the day, but its underperformance proved to be a significant drag in the afternoon. Google (GOOGL 498.16, -17.68) and Microsoft (MSFT 45.22, -1.45) posted respective losses of 3.4% and 3.1%, with the latter suffering from a Bank of America/Merrill Lynch downgrade to ‘Underperform' from ‘Neutral.'

The underperformance of technology kept the Nasdaq (-1.2%) behind the S&P 500 throughout the day while afternoon weakness in the biotech space pressured the tech-heavy index to a fresh low ahead of the close. The iShares Nasdaq Biotechnology ETF (IBB 293.67, -3.99) and the health care sector both lost 1.3%.

Treasuries ended near their highs with the 10-yr yield lower by seven basis points at 2.05%.

Participation was ahead of average with more than 996 million shares changing hands at the NYSE floor.

Economic data was limited to Housing Starts and Business Permits:
  • Housing starts declined 1.6% in November to 1.028 million from an upwardly revised 1.045 million (from 1.009 million) while the consensus expected a reading of 1.035 million 
    • Recent gains in the NAHB Homebuilders survey suggested rapid construction growth is on the near-term horizon. Over the last 12 months, however, housing starts have averaged 994,000 per month and recent trends are slightly upward moving. Homebuilders may be saying that they expect strong demand growth, yet the lackluster housing starts data clearly show that they are not actively preparing for accelerated demand 
  • Building Permits declined 5.2% to 1.035 million while the consensus expected a reading of 1.060 million 
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while November CPI (consensus -0.1%), Core CPI (consensus 0.1%), and Q3 Current Account Balance (consensus -$95.00 billion) will all be reported at 8:30 ET. Also of note, the FOMC will release its latest policy directive at 14:00 ET.
  • Nasdaq Composite +8.9% YTD 
  • S&P 500 +6.7% YTD 
  • Dow Jones Industrial Average +3.0% YTD 
  • Russell 2000 -2.0% YTD

(BFW) Genel Energy President Sells 1.4m Shares at GBP6.10/Share

BN 12/16 14:37 *GENEL ENERGY: MEHMET SEPIL SOLD 1.4M SHRS AT £6.10/SHR
Genel Energy President Sells 1.4m Shares at GBP6.10/Share
2014-12-16 14:43:52.802 GMT


By Blanche Gatt
(Bloomberg) -- Genel Energy comments on sale of shares by
President Mehmet Sepil in statement.
Link to Statement:Link
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For Related News and Information:
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To contact the editor responsible for this story:
Blanche Gatt at +44-20-7392-0351 or
bgatt@bloomberg.net

>>> Barclays maintains Neutral outlook on Russian Oil & Gas Sector

Barclays maintains Neutral outlook on Russian Oil & Gas Sector 
- Within the Russian Big 4, firm prefers Lukoil (OW, PT $50) and Novatek (OW, PT $90) owing to better dividends for the former and a key de-risking catalyst for the latter. They have also downgraded Gazprom to Underweight (UW, PT $4.75) and reiterate our rating on Rosneft (UW, PT $4).

(Recode.net) Samsung in Talks to Launch Apple Pay Competitor

Samsung has discussed a deal with a payments startup that would help the smartphone maker unveil a wireless mobile payments system in 2015 to rival Apple, according to multiple sources.

The technology would allow people with certain Samsung phones to pay in the vast majority of brick and mortar stores by waving their phones instead of swiping with a credit card or cash.

It is not yet clear if Samsung has reached a deal with the startup, Burlington, Massachusetts-based LoopPay. One source said the deal could still fall apart. A prototype of the payments system working on a Samsung phone has been created, the other source said.

A Samsung spokesman and LoopPay CEO Will Graylin declined to comment.

The talks between Samsung and LoopPay come as the idea of paying for goods in stores using a phone was rekindled in the U.S. thanks to the launch of Apple Pay. In September, Apple unveiled its payments system, which lets owners of the newest iPhones pay for items in stores by placing their phone in close proximity to checkout equipment.

Apple Pay users complete the purchase through an authentication process that involves pressing one’s finger against the fingerprint identification sensor built into the phone’s Home button. Samsung’s latest Galaxy phone also includes fingerprint identification technology, which would likely be incorporated into the new payments system, sources said. The technology can currently be used in conjunction with PayPal’s app to pay with a phone at stores that accept PayPal. Samsung could be interested in creating its own payments system because it believes such a technology will become table stakes in its battle with Apple.

For LoopPay, a Samsung licensing agreement would go a long way to giving its technology the mainstream credibility it so far lacks. LoopPay’s technology can wirelessly transmit the same information stored on a debit or credit card’s magnetic stripe to a store’s checkout equipment without swiping a card. The company has embedded the technology, which it calls magnetic secure transmission, into a few hardware products it sells directly to consumers: a fob, as well as a LoopPay digital payment card that can be used on its own or while secured in a special LoopPay smartphone case. To complete a purchase, LoopPay users tap any of these devices near the spot on a store’s credit card terminal where a card is usually swiped.

Since the technology mimics a card swipe, it works in far more locations than Apple Pay or Google Wallet, which require a store to upgrade to equipment that includes a technology called near field communication, or NFC. When Re/code’s Walt Mossberg reviewed LoopPay earlier this year, it worked at 10 of the 13 stores he visited.

Graylin, LoopPay’s CEO, told Re/code earlier this month that his company’s technology would be embedded into a mainstream smartphone in 2015 that would have “massive penetration.” He declined to name the phone maker then, and declined again when asked about the Samsung discussions.

He also said the partnership with the unspecified phone maker would allow payment information to be transmitted to the merchant via NFC technology in addition to via LoopPay’s traditional magnetic stripe-mimicking technology. Users would not have to open up an app to transmit their payment, he added.

The inclusion of NFC could be important to LoopPay’s future as retail stores begin to update their checkout equipment to accept a new type of payment card that is inserted into a card reader instead of swiped. This upgraded equipment also often includes NFC technology. Merchants who install this equipment will still be able to accept magnetic stripe cards, but swiping is expected to be phased out over time as card issuers and merchants alike begin to favor the new chip-embedded cards that are already common in Europe and less susceptible to cloning.

Graylin said his company has been in discussions with financial services companies such as Visa, which is an investor in LoopPay, about finding a more secure way to pass payment data from one of its devices, or a phone, to a store’s checkout system. LoopPay hopes to use a system known as tokenization, which substitutes a shopper’s card information with a unique placeholder, to accomplish this. The token is later matched up with a specific credit card account by a card network or bank. A merchant never receives or stores the actual payment information. Apple Pay utilizes tokenization when passing information from a new iPhone to a store’s checkout system.

>>> Brazil Central Bank Gov Tombini: Domestic economy is gradually recovering; c

Brazil Central Bank Gov Tombini: Domestic economy is gradually recovering; consumption to expand slower compared to prior years  - comments from Brazil Senate
- US economy is recovering while other facing headwinds- Faster global growth coupled with weaker BRL currency (Real) should help exports
- Brazil unemployment is at low levels
- Foreign Direct Investment (FDI) continues to flow at significant rate; external sector has more favorable outlook in 2015
- Working to bring CPI back to 4.5% target; 12-month inflation tends to remain elevated