Nomura: Expect Revisions in Guidance to the Upside, Economy Grew in Q4

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“Remember that Q4  GDP report that came in at 0.1%?

It won’t stay negative.

From Nomura:

Data releases today each had a significant impact on our Q4 GDP tracking model, but on net the change was a small positive. We began the day with Q4 GDP tracking a decline of -0.1%, matching the BEA’s advanced estimate. Better-than-expected December trade data lifted Q4 tracking to 0.6%, but December wholesale inventory data pushed it back down to 0.2%.

The trade deficit narrowed sharply in December, much more so than the BEA’s original assumption in its Q4 GDP estimate. The December trade gap was the narrowest since January 2010. Exports jumped by 2.1% in December while imports dropped by 2.7%. Imports tend to reflect movements in inventories and the large inventory drawdown reported in Q4 suggested that imports had declined.”

“Brian Wong is the CEO of Kiip (pronounced “keep”), a category-creating mobile rewards network that is redefining mobile advertising through an innovative platform that leverages “moments of achievement” in games and apps to simultaneously benefit users, developers and advertisers. Backed by Hummer Winblad, Relay Ventures, True Ventures, Verizon Ventures, and others, the company has raised $15.4 million in funding to date. Kiip has been listed by Forbes as one of the 4 Hot Online Ad Companies to Put on Your Watch List, and been named to the Dow Jones FasTech50 List.

Called the youngest person to ever receive venture capital funding by TechCrunch and the Wall Street Journal, Brian received his Bachelors of Commerce degree from the University of British Columbia at age 18, after skipping four K-12 grades. He has been recognized with many awards for his accomplishments and leadership, including: Forbes’ 30 under 30; the Top 20 Under 20 awards for all of Canada; Business Insider’s Top 25 Under 25 in Silicon Valley and 18 Most Important People in Mobile Advertising; Mashable’s Top 5 Entrepreneurs to Watch; and the AdAge Creativity Top 50.

Before starting Kiip, Brian led key publisher and tech partnerships at the social news website Digg.com, where he accelerated the company’s mobile presence by launching the Digg Android mobile app.

Q: You have quite the extensive list of achievements. Not only have you raised $15.4M for your startup Kiip, but you’re also one of the youngest entrepreneurs to receive venture capital. What traits make you different then most people your age?

I think to understand what led to everything I’d have to look back on my upbringing. My childhood was full of sports (I know, surprising – but trust me I used to be super buff), speech arts & drama, FPS gaming (PC), and incessant amounts of graphic design. I also studied marketing & consumer behavior in university. It’s no accident that these things combined led to some level of contribution to my ability to succeed with Kiip. My design obsession led me to becoming frustrated with the state of mobile advertising in the frame of user experience. My gaming background helped me identify the components of gaming that were truly “moments” and potentially a trigger for a reward. My consumer behavior curiosity led to bringing in some innate psychological principles that are built into the Kiip model that has helped it preserve intrinsic motivation amongst users whilst rewarding at a frequency that is the most ideal for brand engagement overall. In hindsight everything is clear, but I’m hoping this explains some of it.

But to pinpoint a couple things that I use as principles that may be different from others my age:

• Generate Serendipity: this is more of a discussion of how your view your locus of control: is it internal or external? I truly believe that you have the ability to generate your own luck and serendipitous outcomes. A lot of this has to do with the environment you’re in. I chose to move to San Francisco because the people in the city and the socioeconomic traits of the region were the most conducive to my strengths: tech and design. I wouldn’t need to explain what I did three times to get my point across. People spoke the same language. Similar to how Einstein once said: you can’t judge a fish by how well it climbs a tree; you have to find the right environment to help you swim freely….”

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On the Wires

“The subprime market for risky mortgage backed securities is hot again and its revival is exceeding many people’s expectations, the chief market strategist at Rosenblatt Securities said. However, he expects it will end badly.

The subprime mortgage crisis, which led to the financial crash of 2008, involved institutions making loans to those with poor credit who later had difficulty maintaining their repayment schedule.

Wall Street brokerage firm Rosenblatt, which has been monitoring the situation since the last crisis, said the credit-led bull market is well under way.

“The subprime market’s revival is proving to be even stronger than we had anticipated,” Brian Reynolds said, in a research note. “This is just a credit cycle, and it will eventually end badly like the others.”

Rosenblatt Securities has been worried before. It showed outrage when General Motors bought AmeriCredit car loans firm in 2010. The deal repeated the excesses of the last credit cycle, it said at the time, when GM had to hive off its financial subsidiaries which then needed taxpayers’ money to survive.

(Read More: Bond Prices Rebound as Bargain Hunting Emerges)

And it has noticed another huge development this week. The Wall Street Journalreported that a joint venture between AIG and Fortress will be issuing a securitization of personal loans.

“The average coupon on some of these loans is 25 percent, as some of them have no collateral. The A-rated tranche is expected to yield a whopping (for this environment) 2.5 percent, and we’re pretty sure the enhanced cash and cash-plus pseudo-money market funds will gobble this up.”

This search for yield has angered Reynolds, who thought he would never see subprime personal loans again. He said the situation was now reminiscent of the structured finance boom that began in 1994.

“We’re tempted to go check the attic to see if we have some old Beanie Babies that we could securitize,” he said….”

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“Boeing started the year ahead of its European rival Airbus, after clinching the industry’s top spot in 2012, with broadly higher orders and deliveries in January, data showed on Friday.

EADS unit Airbus said it had taken 140 orders during the month, or 121 after adjusting for cancellations, and also delivered 35 passenger jets to airline customers.

Boeing said on Thursday it had delivered 39 aircraft in January, beating Airbus despite a halt in deliveries of its 787 Dreamliner which has been grounded by battery safety concerns.

The U.S. company sold 145 aircraft between Jan. 1 and Feb. 5, the nearest comparable period for which data is available, and took no cancellations.

Both companies’ order books were unusually active for January as American Airlines won court permission to confirm large plane orders while in Chapter 11 bankruptcy protection.”

“TOKYO (AP) — Nissan Motor Co. suffered a 35 percent plunge in October-December profit to 54.1 billion yen ($579 million) as global sales languished, especially in China, where anti-Japanese sentiment flared over a territorial dispute.

Quarterly sales dipped 5.3 percent from a year earlier to 2.2 trillion yen ($23.5 billion), Yokohama-based Nissan said Friday. Nissan’s earnings fell short of the 61 billion yen ($652 million) profit forecast by a FactSet survey of analysts.

All the Japanese automakers have reported sales declines in China, where a territorial dispute set off anti-Japanese riots and boycotts in the last months of 2012. A slowdown in Europe added to Nissan’s woes. Nissan also struggled in the key U.S. market, which was booming for rival Toyota Motor Corp.

Corporate Vice President Joji Tagawa acknowledged Nissan’s performance had not reached its targets, but promised a recovery.

China sales in January showed some recovery and Nissan was also planning new models in the U.S., he told reporters.

Nissan’s sales were strong in other parts of the world, including Brazil, the Middle East and Asia excluding China as well as Japan.

Nissan, based in the port city of Yokohama, stuck to its forecasts for a 320 billion yen ($3.4 billion) profit on 9.82 trillion yen ($105 billion) sales in the fiscal year ending March, despite the solid perk it is getting from a weaker yen….”

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“(Reuters) – McDonald’s Corp said on Friday that January sales at established hamburger restaurants around the world fell 1.9 percent, a steeper decline than analysts expected, as fast-food chains fight hard for diners.

McDonald’s warned last month that same-restaurant sales would be down. Analysts polled byConsensus Metrix had expected a decline of 1.1 percent.

Shares of McDonald’s, which had fallen earlier in the week, slipped 22 cents to $94.41 in premarket trading.

McDonald’s expected its sales and profit growth to be under pressure in the near term, as diners continue to spend cautiously due to lackluster economic growth in most major markets. At the same time, the leading fast food chain is also bumping up against strong results from a year ago, including a 6.7 percent gain in comparable sales in January 2012.

Comparable sales in Europe, McDonald’s top market, declined 2.1 percent last month, with weakness in countries such as Germany and France.

The United States, a close No. 2, posted a 0.9 percent gain, helped in part by the addition of the Grilled Onion Cheddar burger to the company’s Dollar Menu.

Asia/Pacific, Middle East and Africa (APMEA) turned in a 9.5 percent decline. McDonald’s cited issues such as continued weakness in Japan and in China the shift in the timing of the Chinese New Year.

Analysts expected Europe to be up almost 0.1 percent. They expected the United States to be down 0.3 percent and APMEA to be down 5.8 percent.

McDonald’s comparable sales track sales at all company-owned and franchised restaurants open for at least 13 months.”

“(Reuters) – Credit rating agency Moody’s Corp , which could face a federal lawsuit tied to pre-crisis ratings, said quarterly profit jumped 66 percent and the company forecast strong 2013 earnings.

The company has been benefiting as firms refinance debt to take advantage of rock-bottom interest rates to access cheap funding.

Moody’s said it expects full-year earnings in the range of $3.45 to $3.55 per share and full-year revenue growth rate in the high single digits percent range.

Analysts on average were expecting the company to earn $3.18 per share, excluding items, according to Thomson Reuters I/B/E/S.

The growth rate at the Investor Services unit, which houses the bond rating business, is set to slow. The company forecast revenue growth at the unit in the high-single-digit percent range, compared with the 20 percent rise in 2012.

Net income rose to $160.1 million, or 70 cents per share, in the fourth quarter, from $96.2 million, or 43 cents per share, a year earlier.

Revenue rose 33 percent to $754.2 million.

Global corporate finance business rose 73 percent to $244.9 million.

EYES ON LAWSUIT…”

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“A winter storm that has caused at least 2,000 U.S. flights to be scrubbed has triggered a blizzard warning in New York City and may drop more than 2 feet of snow on Boston, leaving thousands without power…”

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“Brent crude, headed for a fourth weekly advance, climbed to a nine-month high in London after stronger-than-expected trade data from China, the world’s second-biggest user.

Futures rose to more than $118 a barrel for the first time since May 3, boosting their premium to West Texas Intermediate for an eighth day to the most in almost two months. China’s exports climbed 25 percent in January from a year earlier and crude imports increased to the highest level in eight months, customs figures showed. Oil markets will “remain tight” in the first quarter and may push prices above its forecasts, Goldman Sachs Group Inc. said.

“The numbers out of China are good,” said Nic Brown, head of commodity research at Natixis SA in London, who forecasts that Brent will average $107.40 this year. “China appears to be significantly stronger than even we were expecting. This is a clear upside risk for oil prices.”

Brent for March settlement advanced as much as $1.17, or 1 percent, to $118.41 a barrel on the London-based ICE Futures Europe exchange and was at $118.26 at 11:51 a.m. local time. Volumes were 41 percent more than the 100-day average. The European benchmark grade’s premium to WTI futures widened to as much as $22.05, the most since Dec. 14.

Crude for March delivery on the New York Mercantile Exchange added 44 cents to $96.27 a barrel in electronic trading. The volume of all futures traded was in line with the 100-day average. Prices are down 1.5 percent this week, after advancing 14 percent over the prior eight weeks.

China Trade…”

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“Sony Corp. shares dropped the most in four years after reporting an eighth consecutive quarter of losses, an unpleasant surprise for investors who borrowed money to buy the stock on bets the weaker yen would help turn around Japan’s biggest exporter of consumer electronics.

A 59 percent jump this year by the maker of PlayStation game consoles helped drive the number of the shares being held in margin accounts to a 13-year high, according to datacompiled by Bloomberg. The accounts held 5.48 million shares as of yesterday, the most since March 2000, the data show.

Sony shares slumped 10 percent to close at 1,365 yen, the biggest decline since November 2008. The company’s 150 billion yen ($1.6 billion) of convertible bonds due in 2017 fell the most since November, sliding 8.8 percent to 147 yen per 100 yen in face value, according to Nomura Holdings Inc.

“Speculators who have been rushing to buy Sony on expectation that the weakening yen will turn the earnings around must be disappointed,” said Mitsushige Akino, Tokyo-based chief fund officer at Ichiyoshi Asset Management Co., which oversees about $356 million. “They will close their positions to take profits or minimize losses.”

Sony rebounded 92 percent through yesterday from a 32-year low on Nov. 15. Japan’s exporters have rallied on speculation earnings will improve on the weaker yen, said Amir Anvarzadeh, a Singapore-based manager for Asia equity sales at BGC Partners Inc.

Declining Yen…”

“European Central Bank President Mario Draghi has found his most effective weapon is the sound of his own voice.

Draghi yesterday caused the euro’s biggest drop in seven months by suggesting its recent appreciation could damp inflation, a signal that further interest-rate cuts remain a possibility. His pledge in July to buy government bonds precipitated a sea-change in sentiment that helped to shore up the 17-nation euro economy, yet the ECB hasn’t spent a cent so far in its so-called Outright Monetary Transactions program.

The ECB “is becoming a master of verbal intervention,” Danske Bank economists wrote in a research note. Draghi yesterday “managed to dampen recent de facto tightening without taking any action, much as was the case with the OMT program, which has so far managed to lower Spanish and Italian bond yields without buying a single bond,” they said.

Draghi’s oratory is helping the ECB navigate a path out of the sovereign-debt crisis for the economy, whose recovery from recession is being threatened by the stronger euro. The risk is he may eventually be forced to follow through on his promises and ramp up stimulus as looser monetary policies by the Federal Reserve and Bank of Japan weaken their currencies.

Not Convinced…”

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“The U.S. trade deficit shrank in December to its narrowest in nearly three years, suggesting the economy did much better in the fourth quarter than initially estimated.

The country’s trade gap narrowed to $38.5 billion during the month, the Commerce Department said on Friday. Analysts polled by Reuters had expected a deficit of $46 billion.

That suggests the U.S. government will revise upward its advance reading for fourth-quarter gross domestic product, which showed the economy contracted at a 0.1 percent annual rate in part because of a decline in inflation-adjusted exports.

The government had released its estimate for fourth-quarter GDP before the December trade data was available. That GDP report suggested the government was projecting a wider trade deficit in December.

Friday’s data showed U.S. exports surged by $8.6 billion during the month, boosted by sales of industrial supplies, including a $1.2 billion increase of non-monetary gold. In a reflection of a boom in oil output driven by hydraulic fracturing technologies, petroleum exports rose by nearly $1 billion during the month to a record high level.

A fall in petroleum imports led overall purchases from abroad to decline $4.6 billion in December. For the entire year, the country’s imports of crude oil fell to their lowest levels since 1997 in terms of volume.

For all of 2012, the U.S. trade gap fell by 3.5 percent to $540.4 billion. Running trade deficits means the country bleeds dollars, so trade is still a drag on the U.S. economy. But rising exports are helping it to be less of a drag than in prior years.

Exports last year rose 4.4 percent….”

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“German exports rose in December, capping a record year even as the sovereign debt crisis weighed on euro-area demand.

Exports, adjusted for working days and seasonal changes, increased 0.3 percent from November, when they fell 2.2 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a 1.4 percent increase, according to the median of 15 estimates in aBloomberg News survey. Exports rose 3.4 percent in 2012 to a record 1.1 trillion euros ($1.47 trillion), the office said.

Export growth has slowed as the debt crisis damps sales within the euro area, prompting German companies to target faster-growing markets in Asia. The economy, Europe’s largest, is showing signs of recovering from a fourth-quarter slump as the debt crisis eases. Investor and business confidence improved more than forecast in January and the unemployment rate fell to 6.8 percent, matching a two-decade low.

“Strongly improved business sentiment backs our expectations of a gradual improvement throughout the first quarter,” saidAlexander Koch, an economist at UniCredit Group in Munich.

Trade Balance…”

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“Europe’s top financial regulator said he’s considering forcing banks to participate in setting Libor and Euribor rates after lenders including Citigroup Inc. and HSBC Holdings Plc pulled out of some panels amid the rigging scandal.

Regulators will draw up a list of lenders that should be forced to participate in the setting of interbank rates “in view of their involvement” in those markets, Michel Barnier, the EU’s financial services chief, said in an e-mailed statement today.

“Any banks considering withdrawing from the contributing panels should therefore take into account that they may be required to rejoin,” Barnier said. The plans to force banks to submit data for rate setting will be included in draft legislation on benchmark setting that the European Commission will present in the first half of this year.

Euribor-EBF, the group that administers the setting of Euribor rates warned last month that it may face an Exodus of banks from its rate-setting panel. Rabobank International, the biggest Dutch savings bank, withdrew from the panel that sets the euro interbank offered rate in January, while Deutsche Bank AG said this week that it would end participating in some Euribor-EBF rates.

Rate-Rigging…”

“European Union leaders prepared the first-ever cuts in the bloc’s budget, bowing to U.K. Prime Minister David Cameron’s insistence on thrift.

After an all-night bargaining session interspersed with catnaps on couches at EU headquarters in Brussels, the leaders neared agreement on a 2014-2020 spending ceiling of 960 billion euros ($1.3 trillion), down from an original proposal of 1.047 trillion euros and less than the 994 billion euros spent in the current budget cycle.

At the center of the controversy was Cameron, making his first EU summit appearance since announcing plans for a referendum that could result in Britain leaving the 27-nation bloc as early as 2017. Britain’s demands for savings ran into opposition from France, Italy and eastern and southern European economies keen to tap EU subsidies.

“The numbers that were put forward were much too high,” Cameron told reporters before the summit started yesterday afternoon. “They need to come down, and if they don’t come down, there won’t be a deal.”

Leaders, each of whom has a veto, were set to convene at 2:30 p.m. The meeting should be wrapped up today, said a French official who spoke to reporters under ground rules that he not be identified. The breakdown of spending between agriculture, infrastructure and regional development aid is still up for debate. An accord today must also be ratified by the European Parliament….”

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“Japanese Prime Minister Shinzo Abe signaled he will implement a more robust foreign policy in the midst of disputes with Russia and China that underscore his push to boost defense spending.

Japan yesterday said two Russian fighter jets intruded on its airspace, which Russia’s Defense Ministry denied. The alleged incursion followed accusations that Chinese ships used weapons-targeting radar on a Japanese destroyer and helicopter last month near islands claimed by both countries. China today issued a denial and accused Japan of spreading falsehoods, while the Foreign Ministry in Tokyo summoned the Chinese ambassador.

“When our sovereignty and national interests are threatened we must change our foreign policy to firmly express our point of view,” Abe told parliament today.

An escalating of tensions with Russia may distract Abe as he copes with a dispute with China that has prolonged Japan’s recession and brought U.S. calls for a diplomatic solution. The government is proposing the first increase in Japan’s defense budget in 11 years to cope with mounting incursions by Chinese ships and planes into Japanese-administered waters.

Abe this week denounced China’s use of fire-control radar on Japanese naval targets last month, calling it a “one-sided provocation.” Yesterday he said the dispute highlighted the need to keep lines of communications open, adding that summits are good forums for addressing friction.

‘Too Silent’…”

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