Bloomberg:
- Weidmann Says Bailouts Could Weaken Even Strongest Euro Members. Bundesbank President Jens Weidmann said Europe’s current framework for bailing out distressed nations will eventually weaken even the single currency’s strongest members unless it is changed. “If things stay the way they are, the consequences of unsound policies will be too easily passed on to others,” Weidmann said in Berlin late yesterday. “Sooner or later the economically solid countries will be weakened. Liability and control have to be brought into balance.” Germany, Europe’s largest economy, has pledged more than 300 billion euros ($407 billion) in loans and guarantees to help shore up the finances of euro member states such as Greece, Ireland and Portugal. Weidmann, who’s also a member of the European Central Bank’s Governing Council, has argued that policies including the OMT bond-purchase program come too close to the banned practice of financing states by printing money. Risks that have been shared via bailouts and ECB emergency measures have already reached a “substantial level,” Weidmann said. “If these risks rise, the culture of stability could be eroded as if we had explicit joint liability.”
- Bank of Italy Seen Vigilant as Monte Paschi Risk Surfaced. The Bank of Italy acted vigilantly in its oversight of Banca Monte dei Paschi di Siena SpA (BMPS), with the discovery of accounting irregularities leading to a criminal investigation targeting previous management, a former senior Bank of Italy official who was involved in the inspections said. Pressure from the central bank prompted a shakeup of executives at the Siena-based lender last year and led to the uncovering in January of secret documents about some transactions hidden from regulators, said the person, who asked not to be identified because the probe is confidential.
- S. Korea Satellite Sends Signal as North Warns of Nuclear Test. South Korea made contact with its first satellite, launched by a civilian space rocket seven weeks after North Korea sent its own satellite into orbit and amid signs the North’s regime is preparing a nuclear test.
- Japan December Industrial Output Rises Less-Than-Forecast 2.5%. Japan’s industrial production rose less than economists forecast, suggesting that a recovery in the nation’s manufacturing sector is lagging a weakening yen. Output rose 2.5 percent from November, when it declined 1.4 percent, the Trade Ministry said in Tokyo today. The median estimate of 25 economists was for a 4.1 percent gain. Production fell 7.8 percent from the previous year.
- U.S. Is Preparing More Tax-Evasion Cases. The U.S. is expanding its crackdown of offshore tax evasion, preparing numerous criminal cases against suspected offenders, defense lawyers involved in the cases say. Four years after an agreement between the U.S. and Switzerland pierced a veil of banking secrecy by requiring Swiss bank UBS AG to turn over names of account holders, defense lawyers estimate that federal prosecutors are conducting at least 100 criminal investigations against suspected tax evaders. The moves come as the U.S. is turning the screws on smaller banks that may have helped taxpayers stash money in secret overseas accounts. On Monday, a federal judge in New York approved an Internal Revenue Service summons demanding still more records from UBS. According to court filings, the government now is focusing on U.S. taxpayers with accounts at smaller Swiss banks that didn't have U.S. branches but served customers through a UBS account in Stamford, Conn.
- Risky Student Debt Is Starting to Sour. The number of student loans held by subprime borrowers is growing, and more of those loans are souring, the latest signs that a weak job market and rising debt loads are squeezing recent graduates. In all, 33% of all subprime student loans in repayment were 90 days or more past due in March 2012, up from 24% in 2007, according to a Wednesday report by TransUnion LLC. Meanwhile, the Chicago-based credit bureau found that 33% of the almost $900 billion in outstanding student loans was held by subprime, or the riskiest, borrowers as of March 2012, up from 31% in 2007.
- Israeli Jets Blast Arms Shipment Inside Syria. Israel bombed a suspected shipment of antiaircraft missiles in Syria on Wednesday, according to regional and U.S. officials, in its most ambitious strike inside its neighbor's territory in nearly two chaotic years of civil war there. The early-morning strike in a border area west of Damascus targeted a convoy of trucks carrying Russian-made SA-17 missiles to Hezbollah, the anti-Israel Shiite militant and political group in Lebanon, according to a Western official briefed on the raid.
- Some Unions Grow Wary Of Health Law They Backed. Labor unions enthusiastically backed the Obama administration's health-care overhaul when it was up for debate. Now that the law is rolling out, some are turning sour. Union leaders say many of the law's requirements will drive up the costs for their health-care plans and make unionized workers less competitive. Among other things, the law eliminates the caps on medical benefits and prescription drugs used as cost-containment measures in many health-care plans. It also allows children to stay on their parents' plans until they turn 26.
- Slaying Fuels Anger in Chicago. The seemingly random killing of a 15-year-old girl who performed last week as a majorette at President Barack Obama's second inauguration is crystallizing anger over this city's high murder rate. The slaying of Hadiya Pendleton, as she stood with friends Tuesday afternoon in a park, came on a day that saw the city's 40th, 41st and 42nd murders of the year, according to police. It continued an uptick in homicides that began last year when more than 500 people were killed. The majority were gang-related shootings on the city's troubled south and west sides. Semiautomatic weapons are banned in the city of Chicago, as are stores that sell guns. But guns are available in neighboring suburbs, and gun violence here goes hand in hand with the city's gang culture and a membership police estimate at 100,000.
- Threats Cloud Euro's Flight. With Europe's Economy Still Hobbled, the Currency's Surge Could Soon Stall. The euro, once on death's door, is on a monthslong tear, rising Wednesday to its highest level since November 2011. But even some investors who helped propel the currency above $1.3560 Wednesday say it can't fly much further. Europe's economy is still in the doldrums, they say, and a stronger euro could make the situation worse. And with central banks elsewhere racing to push down their own currencies, boosting the relative value of the euro, the European Central Bank eventually could be compelled to join them.
- Henninger: Obama's Thunderdome Strategy. The president's goal is to make Republican ideas intolerable. Conventional wisdom holds that these unorthodox tactics are a mistake, that he's going to need GOP support on immigration and such. And by now it's conventional wisdom that when our smiling president transforms into Mr. Hyde he is merely channeling Saul Alinsky, deploying the tactics of community-organizing campaigns, the only operational world he knew before this. The real pedigree, though, is a lot heavier than community organizing in Chicago. Speaking last Saturday, Rep. Paul Ryan said that for Barack Obama to achieve his goals, "he needs to delegitimize the Republican Party." Annihilate, delegitimize—it's the same thing. The good news is that John Boehner and Paul Ryan recognize that their relationship with this White House is not as partners in anything. They are prey.
- For millionaire athletes, states with highest tax rates may not make the cut. Is Lefty's stance on California's tax hikes a sign of things to come for millionaire athletes?
- Facebook(FB) is mobile, but investors want more. Facebook Inc. Chief Executive Mark Zuckerberg kicked off the company’s earnings call on Thursday proclaiming that the social network “is a mobile company,” but investors may be more concerned about its spending plans.
- Hackers in China Attacked The Times for Last 4 Months. For the last four months, Chinese hackers have persistently attacked The New York Times, infiltrating its computer systems and getting passwords for its reporters and other employees. After surreptitiously tracking the intruders to study their movements and help erect better defenses to block them, The Times and computer security experts have expelled the attackers and kept them from breaking back in. The timing of the attacks coincided with the reporting for a Times investigation, published online on October 25, that found that the relatives of Wen Jiabao, China's prime minister, had accumulated a fortune worth several billion dollars through business dealings.
- Time to Get Off the China Stocks Train? Chinese shares are having their day in the sun, with the benchmark Shanghai stock index trading at an eight-month high on Thursday. The rally, however, may be close to running its course, some analysts say.
Business Insider:
Washington Times:
- New al Qaeda Threat. A jihadist website posted a new threat by al Qaeda this week that promises to conduct “shocking” attacks on the United States and the West. The posting appeared on the Ansar al Mujahidin network Sunday and carried the headline, “Map of al Qaeda and its future strikes.” The message, in Arabic, asks: “Where will the next strike by al Qaeda be?” A translation was obtained by Inside the Ring. “The answer for it, in short: The coming strikes by al Qaeda, with God’s Might, will be in the heart of the land of nonbelief, America, and in France, Denmark, other countries in Europe, in the countries that helped and are helping France, and in other places that shall be named by al Qaeda at other times,” the threat states. The attacks will be “strong, serious, alarming, earth-shattering, shocking and terrifying.”
- Regulations are killing my business. These small businesses are being squeezed by local regulations requiring specific licenses. All are fighting back with the help of the Institute for Justice, a civil liberties law firm.
Reuters:
- EU freezes 900 mln euros to Poland pending fraud probe. The European Union has frozen about 890 million euros ($1.20 billion) in aid earmarked for building Polish roads because of a suspected fraud by contractors, a Commission spokeswoman said on Wednesday. The suspension, which is likely to be only temporary, comes at an awkward time for the Polish government which is already dealing with a sharp economic slowdown and thousands of lay-offs in the construction industry. Poland's Deputy Minister for Regional Development, Adam Zdzieblo, said the decision was "completely incomprehensible" and based on questionable assumptions.
- Isn't the Chinese property bubble obvious? Divergent views are emerging over whether there is a bubble building in the Chinese property sector, which has produced a string of aggressive high-yield issues this year, the most recent of which was Greentown China's conveniently successful US$400m bond this week. The recent hot flow of money into Chinese high-yield property bonds, much of it from private banks unable to earn a decent return elsewhere, had the look and feel of a sector overheating, and many have indeed traded down in secondary. If it looks like a bubble and inflates like a bubble, then it will ultimately pop like a bubble.
- Electronic Arts(EA) slashes 2013 outlook as industry struggles. Electronic Arts Inc slashed its fiscal 2013 earnings forecast after a weaker-than-expected holiday quarter marked by disappointing sales of its "Medal of Honor" title, as the industry struggles with flagging demand. Chief Financial Officer Blake Jorgensen said the earnings forecast had been adjusted downward, to take into account uncertainties in the seasonally weaker March quarter. "The economy hasn't gotten any stronger," he told Reuters in an interview.
- Qualcomm(QCOM) beats street, raises guidance, shares rise. Qualcomm Inc beat Wall Street expectations for its fiscal first-quarter earnings and revenue and raised its financial targets for 2013 due to growing demand for smartphones and high-speed wireless services. Qualcomm shares rose 6 percent in late trade on Wednesday as the outlook from the leading supplier of chips for cellphones wowed investors in contrast with sluggish demand at chip makers such as Texas Instruments and Broadcom Corp.
- Sands 4th-qtr profit below view as Las Vegas weak. Casino operator Las Vegas Sands Corp, owned by billionaire Sheldon Adelson, on Wednesday posted lower-than- expected fourth-quarter earnings as weak results in Las Vegas dampened a strong performance in Asia. But revenues topped estimates and the company boosted its quarterly dividend by 40 percent to 35 cents a share, helping to drive shares of Sands up 3.8 percent in after-hours trade.
- Italy risks political crisis as MPS bank scandal turns 'explosive'. Italian magistrates investigating losses at Banca Monte dei Paschi say the mushrooming scandal has taken a dramatic turn, with political fallout that threatens to rock the country’s elections next month and upset eurozone plans for a banking union.
- EU must be more competitive, says Bundesbank's Jens Weidmann. Bundesbank President Jens Weidmann has agreed with David Cameron that the EU must be more open and competitive.
- Facebook(FB) warns costs will grow faster than sales. Facebook has warned Wall Street that its costs will grow faster than sales this year, as the social networking site battles for a larger slice of the mobile advertising market.
- The China Securities Regulatory Commission may raise the leverage ratio for securities companies to help "boost profitability", citing Li Geping, secretary general of the Securities Association.
- China's Beijing city has submitted a property tax trial plan to the State Council for approval, citing an unnamed person close to the local finance and tax department. The property tax may be imposed in the city as early as 1H, citing the person.
- None of note
- Asian equity indices are -.50% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 114.0 +4.0 basis points.
- Asia Pacific Sovereign CDS Index 89.0 +3.0 basis points.
- FTSE-100 futures -.25%.
- S&P 500 futures -.10%.
- NASDAQ 100 futures -.18%.
Earnings of Note
Company/Estimate
- (DOW)/.34
- (TEN)/.67
- (COCO)/.06
- (MA)/4.80
- (MDC)/.48
- (ENR)/2.14
- (WHR)/2.22
- (AET)/.94
- (AN)/.64
- (PHM)/.31
- (HSY)/.75
- (MO)/.54
- (UA)/.46
- (ZMH)/1.49
- (CL)/1.40
- (CNX)/.23
- (VIAB)/.90
- (ADS)/1.80
- (D)/.69
- (CAM)/.95
- (UPS)/1.38
- (R)/1.10
- (SHW)/1.16
- (RGLD)/.43
- (MCK)/1.63
- (CB)/-.46
- (PBI)/.51
- (WYNN)/1.26
- (EMN)/1.19
- (BYI)/.76
- (BX)/.46
- (HGG)/.51
8:30 am EST
- The 4Q Employment Cost Index is estimated to rise +.5% versus a +.4% gain in 3Q.
- Personal Income for December is estimated to rise +.8% versus a +.6% gain in November.
- Personal Spending for December is estimated to rise +.3% versus a +.4% gain in November.
- The PCE Core for December is estimated to rise +.1% versus unch. in November.
- Initial Jobless Claims are estimated to rise to 351K versus 330K the prior week.
- Continuing Claims are estimated to rise to 3171K versus 3157K prior.
- The Chicago Purchasing Manager report for January is estimated to rise to 50.5 versus 50.0 in December.
- None of ntoe
- The China Official PMI data/HSBC PMI data, Challenger Job Cuts report for January, Canadian gdp report, weekly EIA natural gas inventory report, RBC Consumer Outlook Index for February, weekly Bloomberg Consumer Comfort Index and the NAPM-Milwaukee report for January could also impact trading today.
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