Most global equity markets are posting big losses as traders fret about a recession following Friday's disappointing U.S. jobs report, indicating Wall Street may carry on with the heavy casualties seen at the end of last week. Investors are also looking ahead to testimony from Fed Chair Janet Yellen on Wednesday and Thursday, triggering continued uncertainty around the potential for the central bank to still raise interest rates in 2016.
Although major Asian markets are closed this week for the Lunar New Year holiday, China kicked off the celebration by reporting a $99.5B foreign currency reserve drop in January to $3.23T, marking the lowest level since 2012. Beijing has been fiercely struggling to underpin the yuan amid slower economic growth, plunging stocks and increasing capital outflows that have been burning through the reserves.
Washington is vowing to ensure the United Nations Security Council imposes serious consequences on North Korea after it launched a space rocket in a purported satellite program widely considered to be a cover for developing ICBMs. The latest launch, which follows Pyongyang's Jan. 6 nuclear test, may kick off a rapid buildup of American missile defenses in Asia and further strain ties between the United States and China.
If Congress does not act soon, major defaults are likely this spring, Puerto Rican officials proclaimed in Washington on Friday, making their case for a law that would allow a broad restructuring of the territory's multibillion-dollar debt. The officials also said they knew that any legislative help would come at a stiff price: Puerto Rico would have to submit to a federal control board, something viewed by some on the island as colonialist-style interference.
Argentina has offered to pay about $6.5B in cash to U.S. holdouts that refused debt restructurings after its 2001 default, implying a haircut of about 25% on the amount bondholders say they are owed. If accepted by all the holdouts, which are led by billionaire Paul Singer's Elliott Management, the deal would clear the way for Argentina's return to the international capital markets.
Russia is exploring an international bond issuance for the first time since the war in Ukraine sparked sanctions from the West, in a sign that the Kremlin is keen to find additional sources of revenue as the economy heads for a second year of recession. The country, which last raised cash on international markets with a $7B bond in 2013, has already approached 25 Western investment banks and big Russian lenders Sberbank (OTCPK:SBRCY), VTB, and Gazprombank about a possible eurobond.
Oil prices are about to head back into the $20s after a weekend meeting between Saudi Arabia and Venezuela to discuss coordination on crude costs ended with few signs there would be steps taken to boost prices. "They seem like just general talk about cooperation, but nothing about cutting production," OPEC sources said. "The issue is not with Venezuela, it is with Iran." Crude futures -2.6% $30.10/bbl.
Chipotle is closing its more than 2,000 restaurants until 3 p.m. today to address employees about the food-borne illnesses that have put a severe crimp in its financial performance and have led to lawsuits and a federal investigation. According to Chipotle (NYSE:CMG), the event will be used to thank employees for their hard work in learning new food safety protocols and explain the steps the company is taking to improve food safety.
Privately held Chobani has rejected overtures from PepsiCo (NYSE:PEP) to take a stake, Bloomberg reports, preferring to go it alone in a contentious yogurt market. The main issue was how much of a stake PepsiCo would acquire: Chobani wanted to sell a minority stake, while PepsiCo desired the majority of the company. In the fall, rival Coca-Cola (NYSE:KO) also ended talks to invest in Chobani, deciding it wasn't a great fit.
Speaking with Jim Cramer of CNBC's "Mad Money" on Friday, Verizon (NYSE:VZ) CEO Lowell McAdam confirmed that his company is weighing a bid for Yahoo (NASDAQ:YHOO). "At the right price, I think marrying up some of their assets with AOL and the leadership would be good," he declared. Verizon previously described its strategy as being broken into three tiers: having great connectivity, holding traffic-driving platforms, and owning content.
Apple is on course to win clearance to open its first retail stores in India, as the tech giant seeks fresh sources of growth following last month's forecast of a sales decline for the first time in more than a decade. Apple (NASDAQ:AAPL) should also qualify as a provider of cutting-edge technology, sources told Bloomberg, exempting the company from a rule forcing foreign businesses that retail a single brand in India to procure 30% of a product's inputs locally. Apple makes most of its devices in China.
Although a weekend BuzzFeed report suggested Twitter (NYSE:TWTR) might launch an algorithmic (non-chronological) Timeline view as soon as next week, CEO Jack Dorsey shot down the rumor in a number of tweets. "Regarding #RIPTwitter: I want you all to know we're always listening. We never planned to reorder timelines... I *love* real-time. We love the live stream. It's us." Facebook's (NASDAQ:FB) core news feed has long used an algorithmic view - it relies on data about user activity to order content.
Fantasy sports sites FanDuel (Private:DUEL) and DraftKings (Private:DRAFT) are running into more trouble in New York after Citigroup (NYSE:C) said it would block transactions by state residents. The move by the world's largest credit-card lender follows NY Attorney General Eric Schneiderman's lawsuit against the companies in November. Citigroup's ban will stand until the courts make a final decision, spokeswoman Jennifer Bombardier said in an e-mailed statement.
You don't see this every day...Credit Suisse (NYSE:CS) CEO Tidjane Thiam has asked the company's board to reduce his bonus, days after the Swiss bank reported a fourth-quarter multibillion-dollar loss that sent its share price tumbling. Thiam, who joined the bank in July, did not indicate the size of the cutback, but said his was the largest bonus reduction within the management team.
Ford is planning to build a new assembly plant in Mexico to sharply increase output from the country, representing the latest shift of investment abroad by a Detroit automaker following the signing of a costly new labor deal. Ford (NYSE:F) expects to add 500K units of annual Mexican capacity starting in 2018 (more than double what it built in 2015), by constructing a new assembly complex in San Luis Potosí and expanding an existing factory near Mexico City.
Volkswagen will offer generous compensation packages to the roughly 600K U.S. owners of diesel vehicles whose emissions are over the legal limit, the head of its claims fund told Frankfurter Allgemeine Sonntagszeitung, but the automaker still hasn't decided whether to give cash, buy-backs, repairs or replacement vehicles. On Friday, VW (OTCPK:VLKAY) postponed the publication of its 2015 results and delayed its annual shareholders' meeting as it struggled to put an exact price on its emissions scandal.
Meanwhile, Volkswagen's trucks business is open to acquisitions or even a public listing, as it seeks to reap the benefits of more independence. "We're keeping all options open on our way to becoming a global champion," VW trucks executive Andreas Renschler told Bloomberg. Unlike most of its passenger-car siblings, Volkswagen's (OTCPK:VLKAY) trucks unit isn't dealing directly with fallout from the company's emissions scandal, but the crisis is rapidly reorganizing its parent company.
In Asia, Japan +1.1% to 17004. Hong Kong closed. China closed. India -1.3% to 24287.
In Europe, at midday, London -1.9%. Paris -2.5%. Frankfurt -2.7%.
Futures at 6:20, Dow -1.3%. S&P -1.3%. Nasdaq -1.8%. Crude -2.6% to $30.10. Gold +1.5% to $1175.40.
Ten-year Treasury Yield -2 bps to 1.82%
Companies reporting earnings today