Good morning. Here's what you need to know.
- Asian markets were mixed in overnight trading. The Japanese Nikkei gained 0.2 percent and the Shanghai Composite was up 0.1 percent, but the Hang Seng fell. In Europe, markets are taking losses – Spain is down 1.9 percent while Italy and France are both down 1 percent. In the United States, futures point to a negative open.
- Japanese industrial production rose 2.5 percent from the previous month in December, missing expectations of a larger 4.1 percent advance after a 1.4 percent contraction last month. A drop in production of electronic parts and devices was the main culprit.
- German unemployment unexpectedly fell to 6.8 percent in December. Economists expected it to remain unchanged at 6.9 percent. However, Frank-Juergen Weise, President of the Federal Labor Agency, warned, “There’s a chance the cold weather in the second half of January may bring an increase in unemployment in February.”
- German retail sales plunged 1.7 percent in December from the previous month. Economists were expecting a smaller loss of 0.1 percent after sales expanded 0.6 percent in November. Year-over-year, December retail sales were down 4.7 percent – well below the 1.5 percent decline predicted by economists and last month's -0.6 percent figure. Deutsche Bank economists think the numbers will be revised higher >
- Deutsche Bank posted a larger than expected fourth-quarter loss of 2.17 billion euros, the biggest in four years, after the bank laid off 1,400 employees and set aside 1 billion euros for legal expenses. The investment bank took a pretax loss of 548 million euros versus expectations of a profit of 359 million euros. However, the bank did exceed estimates on its capital adequacy goal, and shares rose.
- Spanish bank Santander, the biggest bank in the eurozone by market value, reported a stunning $26 billion dollar writedown in its earnings release today. The charge included 12.7 billion euros in provisions for non-performing loans in Spain and another 6.1 billion euros for Spanish real estate exposure, amounting to 18.8 billion euros ($26 billion) in total.
- The U.K.'s four largest banks – Barclays, HSBC, Lloyds, and RBS – face a payout to thousands of small businesses after selling them interest rate swaps in deals that did not comply with regulatory requirements. According to the WSJ, " Analysts estimate that the four banks sold 28,000 hedging products to businesses since 2001 and the eventual payouts could reach hundreds of millions of pounds."
- Facebook earnings and revenues came in above Wall Street's estimates, but the stock fell sharply in after-hours trading anyway. The company reported 40 percent revenue growth year-over-year and improved operating margins.
- Initial jobless claims rose to 368,000 last week from 330,000 the week before. Economists expected initial claims to rise to 350,000. Continuing claims also came in above estimates.
- Personal incomes grew 2.6 percent in December, well above economists' estimates of 0.8 percent growth. Personal spending growth fell to 0.2 percent, below economists' predicted drop to 0.3 percent from 0.4 percent the month before.
- BONUS: Miley Cyrus reportedly went to the beach and did yoga there.
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