Evening Headlines
Bloomberg:
- Greece Struggles to Win Aid Package. European officials ratcheted up the pressure on the Greek government to deliver budget cuts in exchange for a second bailout as they insisted that default is not an option. Finance ministers canceled a Brussels meeting slated for today and will hold a teleconference instead to prod Greece to do more to clinch an aid package worth 130 billion euros ($170 billion) along with about 100 billion euros of debt relief from private bondholders. Greece needs the aid to make a 14.5 billion-euro bond payment on March 20. “The risk of a disorderly default has risen,” Thomas Costerg, a London-based economist at Standard Chartered Bank, said yesterday in an e-mail. “The timetable is already over- stretched to cover the March redemption and gives no room for maneuver or additional delay. The question remains whether we have reached the point of no return for Greece. I don’t think it’s the case yet, but we’re dangerously close to it.” Two years after pledging to pull Greece back from the brink, European leaders are torn between pouring more aid into the struggling economy or risking an unprecedented national bankruptcy that might force the country out of the euro and prompt renewed market tumult. “The decision was the result of an evaluation by the head of the eurogroup, Jean-Claude Juncker, that there weren’t sufficient elements of consensus to be sure that a meeting would be successful,” Italian Prime Minister Mario Monti said late yesterday on Sky Italy Television.
- Europe's Economy Probably Shrank for First Time Since 2009 on Debt Turmoil. Europe’s economy probably shrank in the fourth quarter for the first time in 2 1/2 years as the region’s debt crisis undermined confidence and prompted governments to toughen austerity measures, economists said. Gross domestic product in the 17-nation euro area fell 0.4 percent from the previous three months, the median forecast of 42 economists in a Bloomberg News survey showed. That would be the biggest drop since the first quarter of 2009, when the economy was in a recession. The European Union’s statistics office in Luxembourg will release the data at 11 a.m. Europe is facing its second recession in less than three years and Moody’s Investors Service cut the ratings of six of the region’s countries on Feb. 13, saying policy makers haven’t done enough to restore investor confidence. Euro-area finance ministers canceled a Brussels meeting slated for today and will hold a teleconference instead to prod Greece to do more to clinch an aid package it needs to make a March bond payment. “The risk of a recession is very high,” said Gerd Hassel, an economist at BHF Bank AG in Frankfurt. “We’ll only see a very, very gradual recovery this year. Countries affected by the debt crisis will take a long time to overcome their difficulties.”
- China Stocks Rebound After PBOC Governor, Premier Wen Vow to Help Europe. China’s stocks rebounded after Premier Wen Jiabao and the head of the central bank said they will help Europe resolve its debt crisis, easing concerns the export slowdown will worsen and drag down the economy. China will participate in resolving Europe’s debt crisis, People’s Bank of China Governor Zhou Xiaochuan said in Beijing today. The nation is ready to be more involved in resolving the crisis through the EFSF and European Stability Mechanism, he said in a speech, echoing comments made yesterday by Premier Wen at a joint press conference with European Union President Herman Van Rompuy.
- China Steel Price Shows Asia Optimism Overdone: Chart of the Day. The best start to the year for Asian currencies and stocks since at least 2006 may falter, as lagging metals prices in China signal a "downbeat" economic outlook for the region, according to Citigroup Inc. The Bloomberg-JPMorgan Asia Dollar Index and MSCI Asia-Pacific Index of shares are both near 5-month highs. However, copper in Shanghai fell this month to the least since October 2008 in relation to its price in New York, while steel, a construction mainstay, reached a 17-month low this week as China maintains curbs on its property market. "For China, steel shows demnad is still low. When one looks at Chinese equities one can argue that the outlook remains fairly downbeat. It's the rest of Asia that seems to be ignoring it," said Patrick Perret-Green, head of foreign exchange at Citigroup in Singapore.
- John Paulson Sells Entire Stakes in Citi(C), BofA(BAC). Billionaire John Paulson sold his entire stakes in Bank of America Corp. and Citigroup Inc. (C) in the fourth quarter before the bank’s shares rallied. Paulson & Co. sold 25.1 million shares of Citigroup valued at $643 million as of Dec. 31, according to a filing today with the U.S. Securities and Exchange Commission. The hedge fund sold about 64.3 million shares of Bank of America worth $394 million.
- LightSquared Faces U.S. Prohibition After Interference Report. The U.S. Federal Communications Commission said it won’t let Philip Falcone’s LightSquared Inc. begin service after an Obama administration adviser found that the wireless venture disrupts navigation gear. Federal agencies have determined that LightSquared’s signals interferes with global-positioning system devices, Tammy Sun, an FCC spokeswoman, said today in an e-mailed statement. The FCC is preparing to withdraw the preliminary approval it granted last year for LightSquared to build a high-speed network serving as many as 260 million people, Sun said. “The commission clearly stated from the outset that harmful interference to GPS would not be permitted,” Sun said. “The commission will not lift the prohibition on LightSquared.”
- Amazon(AMZN) Is Said To Have Fewer Prime Members Than Estimated. Amazon.com Inc.'s Prime service, a linchpin of its effort to keep customers loyal and fuel long- term profit, has attracted fewer than half as many members as analysts estimate, three people familiar with the matter said. As of October, 3 million to 5 million people subscribed to Prime, a program begun in 2005 that provides two-day shipping for $79 a year, said the people, who asked not to be named because the figures are private. Amazon is working to reach 7 million to 10 million in the next 12 to 18 months, the people said. Analysts have pegged the current number at 10 million or more, with expectations for it to climb higher this year. The slower adoption of Prime adds to concerns about Amazon's revenue growth.
- Libor Probe Said to Expose Collusion, Lack of Internal Controls. Global regulators have exposed flaws in banks’ internal controls that may have allowed traders to manipulate interest rates around the world, two people with knowledge of the probe said. Investigators also have received e-mail evidence of potential collusion between firms setting the London interbank offered rate, said the people, who declined to be identified because they weren’t authorized to speak publicly. Regulators are focusing on a lack of so-called Chinese walls between traders and employees making interest-rate submissions on behalf of their banks, the people said. In some cases, the two groups may have sat close to each other, one person said.
- Oil Rises From Two-Day Low as Optimism on Greek Aid Counters U.S. Demand. Oil rose as European leaders pushed Greece for stronger commitments to an austerity package in return for a second bailout, easing concern that the region’s debt crisis will worsen and curb commodity demand. Oil for March delivery rose as much as 63 cents to $101.37 a barrel in electronic trading on the New York Mercantile Exchange and was at $101.27 at 2:21 p.m. Sydney time. It fell 17 cents to $100.74 yesterday, the lowest close since Feb. 10. Prices are 20 percent higher the past year. Brent oil for April settlement gained 57 cents to $117.92 a barrel on the ICE Futures Europe exchange. Motor fuel demand slid to the lowest level since MasterCard Inc.’s SpendingPulse report started in July 2004. U.S. drivers bought 8.01 million barrels of gasoline a day in the seven days ended Feb. 10, down 3.1 percent from a week earlier, the report showed. Gasoline use over the previous four weeks was 5.3 percent below the 2011 period, the 47th consecutive decline in that measure. The U.S. accounts for about 21 percent of the world’s oil use and the EU consumes about 16 percent of the world’s oil demand, according to BP Plc’s Statistical Review of World Energy.
- Chinese local governments shouldn't try to adjust the central government's tightening policies for the property market, citing Wang Juelin, deputy director of the Ministry of Housing and Urban Rural Development's policy research department. China's tightening efforts will continue, Wang said.
- More Doctors 'Fire' Vaccine Refusers. Pediatricians fed up with parents who refuse to vaccinate their children out of concern it can cause autism or other problems increasingly are "firing" such families from their practices, raising questions about a doctor's responsibility to these patients. Medical associations don't recommend such patient bans, but the practice appears to be growing, according to vaccine researchers.
- Deal Reached on Payroll Tax. Congressional negotiators reached a tentative a deal Tuesday night on extending the current payroll-tax cut through the end of the year, as well as continuing longer unemployment benefits and avoiding a steep cut in Medicare doctors' fees.
- Zynga(ZNGA) Posts Loss in First Earnings Report. Zynga Inc. rode the wave of investor appetite for fast-growing Internet companies. But it still has a ways to go to prove it's worth the hype. The maker of popular social games such as "FarmVille" and "Words With Friends" posted a loss of $435 million in the fourth quarter, its first period as a public company. The loss came despite a 59% increase in revenue to $311.2 million.
- Washington's Knack for Picking Losers. Former Obama adviser Larry Summers warned the administration against federal loan guarantees to Solyndra, writing in a 2009 email that 'the government is a crappy venture capitalist.'
- Appaloosa Trims Home Builder, Adds Tech Holdings. Appaloosa Management LP, the Short Hills, N.J.-based hedge fund run by investor David Tepper, dropped most of its home builder positions and added shares of Apple Inc. and Oracle Corp. Appaloosa sold off shares of KB Home , PulteGroup Inc. and Ryland Group Inc. , while reducing its stake in Beazer Homes USA Inc. to just over 280,000 shares from 1.8 million last quarter. Appaloosa also increased its stake in Apple to just over 181,000 shares from about 38,000 shares last quarter, and created a new position of 1.2 million shares of Oracle.
- A Bet On Greek Default In March, Drachmas In April.
- This Kosovo Power Plant Has Been Turned Into A Bizarre Alien World As Europe Sits Under 15 FEET Of Snow. (pics)
- The Next 12 Pivotal Dates You Can't Miss In Europe.
- Here's What Tim Cook Just Said About The TV Business.
- A Whole Bunch Of Charts That Will Give You Nightmares About The National Debt.
CNBC:
- Caesars(CZR) CEO Cites Online Gaming Opportunity. Caesars Entertainment Corp stands to benefit from the rise of social media gaming, Chief Executive Gary Loveman said in a speech on Tuesday. Loveman described what he called "the continued remarkable growth of online social games" in remarks at a luncheon in downtown Boston. Although the Las Vegas company's resort plans are often tied up in local proceedings, online games like those Caesars offers through its Playtika business face fewer rules. "These games are legal for anyone to play anywhere in the world," Loveman said.
- Obama to End 'Dozens' of Business Tax Breaks: Geithner. The Obama administration's corporate tax reform plan will end "dozens and dozens" of tax breaks, U.S. Treasury Secretary Timothy Geithner said on Tuesday as he defended the White House's election-year call for higher taxes on the wealthy.
- Greenpeace Targets Duke Energy(DUK). The group said today it has launched a campaign to make Duke "the clean energy company that North Carolina and the United States deserve." Greenpeace faults Duke for its use of coal and for what the group considers inaction on renewable energy. Duke says the campaign ignores its work to reduce pollutants and invest in renewables, especially wind. Duke is an imposing target. It will be the largest U.S. utility if a merger with Progress Energy is approved, and is one of the largest U.S. emitters of heat-trapping carbon dioxide. It is also led by a chief executive, Jim Rogers, who has been outspoken on the industry's need to reduce emissions and address climate change, which has stalled in Congress. Greenpeace says it's calling on Duke to back up its rhetoric. "It's a question of action at this point," said its coal campaign director, Gabe Wisniewski. Greenpeace wants Duke to stop buying coal mined by destructive mountain-removal mining, make one-third of its energy from renewable sources by 2020 and "quit coal altogether" by 2030.
- Hedge Fund Managers Looked to Tech in 4th Quarter. Last year was a dismal one for many U.S. hedge fund managers, but based on their year-end stock holdings, some managers were well positioned to take advantage of this year's strong start in the equity markets.
- EU Moves On Greek Debt Swap. Eurozone finance ministry officials were on Tuesday night moving to begin a €200bn Greek debt restructuring without approving a new bail-out for Athens and in the face of legal warnings – a sign that the European Union will ask for more proof that Greece is living up to austerity commitments before handing over aid urgently needed to avoid a default.
- Greeks Direct Cries of Pain at Germany. Rioters burn the German flag in street protests. A demonstrator defaces the façade of the Bank of Greece, the central bank, so that it reads “Bank of Berlin”. Most shockingly, a rightwing Greek newspaper depicts Angela Merkel, Germany’s chancellor, in a Nazi uniform above the headline “Memorandum macht frei” – an allusion to the memorandum in which Greece’s foreign creditors demand more austerity measures and to the Auschwitz slogan.
- Greek Economy Spirals Down as EU Forces Final Catharsis. A Greek default and traumatic ejection from the euro moved a step closer last night after eurozone finance ministers cancelled a crucial meeting, accusing Athens of failing to flesh out austerity cuts. The escalating brinkmanship came as fresh data showed that Greece's economy contracted by 6.8pc last year and at an accelerating 7pc rate in the last quarter, far worse than expected by the European Union (EU), the European Central Bank (ECB) and the International Monetary Fund (IMF) "troika". The country appears to be in a self-feeding downward spiral that is playing havoc with budget targets, leaving Greece with a Sisyphean task of ever deeper cuts. Premier Lucas Papademos called his cabinet together late last night to find a further €325m (£272m) of fiscal austerity demanded by the troika, likely to be defence cuts and lower salaries. The coalition parties failed to convince the Eurogroup that they would stick to the deal, and the mood has been poisoned by EU demands for an escrow account to seize Greek budget revenues at source. Blackened buildings set alight by protesters on Sunday were cordoned off on streets around parliament in Syntagma Square, a vivid reminder to Greece's politicians that any misjudgment could push the country towards anarchy.
- None of note
- Asian equity indices are -.50% to +2.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 164.5 +.5 basis point.
- Asia Pacific Sovereign CDS Index 137.50 +2.5 basis points.
- FTSE-100 futures +.53%.
- S&P 500 futures +.60%.
- NASDAQ 100 futures +.48%.
Earnings of Note
Company/Estimate
- (DPS)/.74
- (DVN)/1.48
- (DF)/.23
- (OC)/.48
- (WCG)/1.120
- (ANF)/1.12
- (DE)/1.24
- (CMCSA)/.42
- (JAH)/.91
- (A)/.69
- (NVDA)/.24
- (MAR)/.47
- (GGC)/.12
- (VMC)/-.37
- (CBS)/.53
- (NTAP)/.58
- (CLF)/1.43
- (TEX)/.25
- (Z)/.00
- (IPI)/.30
- (CAR)/.06
- (CF)/6.83
- (NILE)/.42
8:30 am EST
- Empire Manufacturing for February is estimated to rise to 15.0 versus 13.48 in January.
9:00 am EST
- Net Long-Term TIC Flows for December are estimated to fall to $45.0B versus $59.8B in November.
9:15 am EST
- Industrial Production for January is estimated to rise +.7% versus a +.4% gain in December.
- Capacity Utilization for January is estimated to rise to 78.6% versus 78.1% in December.
10:00 am EST
- The NAHB Housing Market Index for February is estimated to rise to 26 versus 26 in January.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,500,000 barrels versus a +304,000 barrel gain the prior week. Distillate inventories are estimated to fall by -1,100,000 barrels versus a +1,174,000 barrel gain the prior week. Gasoline inventories are estimated to rise by +700,000 barrels versus a +1,629,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.15% versus a +1.0% gain the prior week.
2:00 pm EST
- Minutes of FOMC Meeting.
Upcoming Splits
- (MNST) 2-for-1
Other Potential Market Movers
- The Fed's Fisher speaking, Euro Group Finance Ministers Meeting, Portugal bond auction, weekly MBA mortgage applications report, BB&T Transports Conference, BofA Merrill Insurance Conference, (JBLU) Analyst Day and the Leerink Swann Healthcare Conference could also impact trading today.
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