European
markets plunged as the Euro touched the lowest level against
the US$ since March 2006 after Der Spiegel reported that
Chancellor Angela Merkel was ready to accept Greek exit in case the extreme
left Syriza wins, as polls suggest, the January 25 election.
WTI fell below $50 for
the first time since April 2009. There was no proximate cause for a 5% drop in
oil price but strengthening US$ combined with negative headlines regarding
strong supplies from Iraq and Russia could have been the
reasons for the sharp decline. Needless to say Energy was the worst performing
sector in the S&P500.
VIX captured investors
sentiment as it rose 2.13 points to reach 19.92. Given the risk-off tone of the
market, 10-year treasuries rallied 8bp to 2.3%. Gold also saw bounce.
Elsewhere, the WSJ highlighted the
political tug-of-war over net neutrality in the
upcoming Congress. The outcome could impact a broad swath of industry from
cable to the internet. The fight over HCV drug market continues. GILD won CVS for its drugs
Sovaldi and Harvoni after losing to Express Script last month to ABBV's Viekira
Pak last month. With investors focused on the fall in oil price from $80 to
$50, the decline in cotton price from $80 in June to $60 in December has been
overlooked. This could benefit apparel makers including GPS, which was upgraded by
Jefferies for that reason.
