MONDAY 1/20/14

China Q4 GDP is 7.7% slightly better than expected with consensus at 7.6%. China GDP in Q4 2012 was 7.9%. Q1 2013 was 7.7%. Q2 7.5%. Q3 7.8%. Thus, the GDP average for 2013 is 7.7% (7.675) and will be an important number to reference during 2014. A break under 7.5% in future quarters will be a watershed event. China is trying to engineer a steady slowing of the growth rate as the transition from an export-led economy to a domestic-led economy occurs. This is a difficult task like walking across a trampoline while holding nitroglycerin. The 7-day repo rate surges souring the mood in China and Asia. China property prices are up 23% during 2013; an obscene and unsustainable pace. DB trades down -4.2% due to the negative news last evening. The Deutsche Bank profit numbers appear even weaker than first thought.  NIKK ends -0.6% at 15642. SSEC -0.7%. Nintendo continues lower ending down -6%. Dollar/yen 104.16. Euro 1.3548. Pound 1.6446. Peugeot Citroen auto sales are disappointing and it is crushed -7%. DB -5%. Europe trades flat to lower.

Today is Dr Martin Luther King Jr Day holiday in the States honoring the great civil rights leader and US markets are closed. The 10-year yield is 2.82%. The US Postal Service union workers are concerned over the placement of small USPS stores inside other stores such as office supply chain Staples. The counters at SPLS are manned by store staff indicating that the era of privatization and decreased union participation is beginning for the USPS. US retailers continue to slash prices. The malls and stores are ghost towns with very thin traffic so retailers are anxious to unload inventory.

President Obama expresses a very open and relaxed view on the decriminalization of marijuana. The comments will boost the marijuana industry and probably encourage more States to allow the medical use of pot as well as pass more lenient pot laws. The Obamacare law changes again with a delay to the stipulation that higher-up executives cannot receive a better health care plan than the low-level employees. The IRS cannot identify clear rules for the arcane law causing the delay. Congressional leaders accuse Snowden, the whistleblower that exposed the NSA spying, as having ties with Russia before the leaks occurred, but they do not provide any proof. Investigations are continuing and a potential discrediting campaign against Snowden is likely underway.

The Iran nuclear deal goes into affect beginning today. Billions in sanctions are lifted as Iran supposedly delays its nuclear enrichment. Congress continues developing a bill to actually stiffen the sanctions going against the president’s position. An American missionary held in North Korea begs for help on video. Kim Jong-un is likely using the poor soul as a pawn to receive aid from the US. China’s 7-day REPO rate is approaching the lofty levels from December. The PBOC intervenes with liquidity. China is becoming very shaky and the liquidity injections are needed with greater frequency. Oil and copper move lower. The BOJ begins a 2-day policy meeting. The dollar/yen is moving higher to 104.38 so the NIKK is up +0.9% and S&P futures +3.